King v Peters - [2007] NSWSC 200

CITATION: King v Peters [2007] NSWSC 200

HEARING DATE(S): 5 & 6 March 2007

JUDGMENT DATE :
9 March 2007

JUDGMENT OF: Hammerschlag J

DECISION: That the Notice of Motion dated 12 December 2006 be dismissed. No order as to costs.

CATCHWORDS: CORPORATIONS – Winding up – Application for leave to proceed against a company in liquidation sought under s.500(2) Corporations Act 2001 (Cth) – Requirements for leave – Whether applicant as partner in a dissolved partnership with receivers appointed has standing to bring a claim in relation to partnership property

LEGISLATION CITED: Corporations Act 2001
Uniform Civil Procedure Rules 2005 (NSW)

CASES CITED: Murray v King (1984) 4 FCR 1
Ogilvie-Grant v East (1983) 7 ACLR 669
Vagrand Pty Ltd (in liq) v Fielding (1993) 10 ACSR 373

PARTIES: Larry Edward King & Anor v Mark Arthur Peters & Anor

FILE NUMBER(S): SC 005348/2005

COUNSEL: S Chrysanthou (Plaintiffs/Cross Defendants)
G Mahony (2nd Defendant/Cross Claimant)

SOLICITORS: Speed and Stacey Lawyers (Plaintiffs/Cross-Defendants)
Purcell Lawyers (2nd Defendant/Cross-Claimant)

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IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

HAMMERSCHLAG J

9 March 2007

5348/2005
LARRY EDWARD KING & ANOR v MARK ARTHUR PETERS & ANOR

JUDGMENT

1 By notice of motion dated 12 December 2006, Mrs Tina Peters seeks leave pursuant to s 500(2) of the Corporations Act 2001 to proceed with an Amended Statement of Cross-Claim against Mendarma Pty Ltd (in liquidation) (“Mendarma”), the fifth cross-defendant to that pleading. That pleading was filed in the proceedings on 15 September 2006.

2 The proceedings arise out of a partnership to which Mrs Peters and her husband Mark Arthur Peters had with Mr Larry Edward King and Mrs Pamela Elizabeth King, the plaintiffs in the proceedings. The proceedings were commenced by Summons claiming various orders in relation to the now dissolved partnership which was known as “The Written Bloodstock” and which operated a horseracing syndicate. Apart from a declaration as to dissolution of the partnership and the appointment of receivers and managers to the partnership property, the Summons seeks the taking of partnership accounts. Originally, and on 9 November 2005, a Statement of Cross-Claim had been filed on behalf of both Mr and Mrs Peters. However, Mr Peters became bankrupt and by operation of provisions of the Bankruptcy Act 1966 (Cth) his trustee was deemed to have abandoned his proceedings.

3 The Amended Statement of Cross-Claim was filed so as to reconstitute the cross-claim without Mr Peters as a cross-claimant. However, at the time of its filing Mendarma was in liquidation and no leave was then sought to proceed. On 2 November 2005 this Court appointed Mr A M Sims to be the receiver and manager of the partnership giving to him, mutatis mutandis in relation to the partnership, the powers provided for in s 420 of the Corporations Act. The Court ordered the then parties namely, Mr and Mrs King and Mr and Mrs Peters, to deliver all assets of the partnership in their custody, possession,…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2007] NSWSC 200
Decision Date: 9 March 2007

CaseChat Overview and Summary

In the matter of an application by King against Peters, the Federal Court considered the standing of the applicant, King, to proceed with a winding-up action against a company in liquidation. King, a former partner of a dissolved partnership, sought leave to bring the claim against the company, which was in liquidation and had receivers appointed. The legal issue revolved around whether King, as a partner of the dissolved partnership, had the requisite standing to bring a claim in relation to partnership property against the company now in liquidation.

The court evaluated the statutory requirements under section 500(2) of the Corporations Act 2001 (Cth) for leave to proceed with such an application. It considered whether the applicant had a sufficient connection to the company and the partnership property in question. The court examined the nature of King's relationship with the dissolved partnership and the impact of the receivers' appointment on the distribution of partnership assets. The decision hinged on whether King, despite the dissolution of the partnership and the appointment of receivers, maintained a sufficient interest in the partnership property to justify the court's intervention.

The court concluded that King, as a former partner of the dissolved partnership, did not have the standing to bring a claim against the company in liquidation. The court held that the dissolution of the partnership and the appointment of receivers effectively severed King's interest in the partnership property. As a result, King lacked the requisite connection to the company and its assets necessary to meet the statutory requirements for leave to proceed with the winding-up application. The court dismissed the application, finding that King's claim was not maintainable under the circumstances presented.

The final orders of the court were that King's application for leave to proceed against the company in liquidation was dismissed. The court held that King did not have standing to bring the claim in relation to the partnership property, and therefore, the application could not proceed. The dismissal of the application meant that King's claim against the company in liquidation would not be entertained by the court.

Orders