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Leslie v Howship Holdings Pty Ltd

Leslie v Howship Holdings Pty Ltd

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Case Copied 28 February 1997 47 min read

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CATCHWORDS

CORPORATIONS LAW - winding up - presumption of insolvency arising from failure to comply with statutory demand - whether corporation has discharged onus of demonstrating solvency - principles to be applied.

EVIDENCE - failure to call evidence from financier - rule in Jones v Dunkel - inferences to be drawn from failure.

Corporations Law, s 95A(1),(2); ss 459A, 459C, 459D, 459F(2)(b), 459G(2), 459P, 459S, 465C

Evidence Act 1995 (Cth), ss 76, 80(a)

Federal Court Rules, O 71, r 36(10)

Assignee of Meyer v Sefton (1817) 2 Stark 274; 171 ER 644

Bank of Australasia v Hall (1907) 4 CLR 1514

Community Development Pty Ltd v Engwirda Construction Company (1966) 120 CLR 455

David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265

Howship Holdings Pty Ltd v Leslie (1996) 14 ACLC 1549

Jones v Dunkel (1959) 101 CLR 298

Melbase Corporation Pty Ltd v Legenhoe Pty Ltd (1995) 17 ACSR 187

O'Donnell v Reichard [1975] VR 916

Paric v John Holland (Constructions) Pty Ltd (1985) 62 ALR 85

Payne v Parker [1976] 1 NSWLR 191

Potts v Miller (1940) 64 CLR 282

Re Bond Corporation Holdings Ltd (1990) 1 ACSR 350

Sandell v Porter (1966) 115 CLR 666

Stonegate Securities Ltd v Gregory [1980] Ch 576

Taylor v ANZ Banking Group Ltd (1988) 6 ACLC 808

The Roy Morgan Research Centre v Wilson Market Research Pty Ltd (1996) 39 NSWLR 311

Trade Practices Commission v Arnotts Ltd (No.5) (1990) 21 FCR 324

LESLIE & ANOR v HOWSHIP HOLDINGS PTY LIMITED

NG 3449 of 1996

Sackville J.

Sydney

28 February, 1997

IN THE FEDERAL COURT OF AUSTRALIA )

NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 3449 of 1996

GENERAL DIVISION )

IN THE MATTER OF
HOWSHIP HOLDINGS PTY LIMITED

BETWEEN:

JOHN ANTHONY LESLIE

LEONARDUS GERARDUS SMITS

Applicants

AND:
HOWSHIP HOLDINGS PTY LIMITED
Respondent

Coram: Sackville J.

Place: Sydney

Date: 28 February, 1997

MINUTES OF ORDER

THE COURT ORDERS THAT:

1.The respondent be granted leave, pursuant to s.465C of the Corporations Law, to oppose the application that the respondent be wound up.

2.The application that the respondent be wound up be dismissed.

NOTE:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA )

NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 3449 of 1996

GENERAL DIVISION )

IN THE MATTER OF
HOWSHIP HOLDINGS PTY LIMITED

BETWEEN:

JOHN ANTHONY LESLIE and

LEONARDUS GERARDUS SMITS
Applicants

AND:

HOWSHIP HOLDINGS PTY LIMITED Respondent

Coram: Sackville J.

Place: Sydney

Date: 28 February, 1997

REASONS FOR JUDGMENT

The Proceedings

The applicants are partners in a firm of solicitors, now known as Smits Leslie. By an application filed on 1 July 1996, they seek an order pursuant to s.459A of the Corporations Law that the respondent ("Howship") be wound up. The applicants claim to be creditors of Howship in relation to professional fees arising out of legal work performed for Howship in 1993. They rely on…

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: [1997] FCA 133
Decision Date: 28 February 1997

CaseChat Overview and Summary

The applicants, partners in a firm of solicitors, sought an order pursuant to s.459A of the Corporations Law that the respondent, Howship Holdings Pty Ltd, be wound up. They claimed to be creditors of Howship and relied on Howship's failure to comply with a statutory demand served on it. Howship sought leave to oppose the winding up application on the grounds that it was solvent, that there was a genuine dispute between it and the applicants as to the existence and quantum of the debt specified in the statutory demand, and that the application to wind up Howship was an abuse of process. The Court found that Howship had discharged the onus of demonstrating that it is solvent, and dismissed the application to wind up Howship. Howship was granted leave to oppose the winding up application. The Court found that Howship's solvency depended largely on the inferences to be drawn from documentary or largely uncontentious evidence and on the significance of gaps in the evidence. The evidence established a number of factors which, in the absence of countervailing considerations, strongly supported an inference that the NAB would extend the commercial bill facility extended to Mr Fidler, at least until the conclusion of the appeal from the decision of the Land and Environment Court. In the light of all the evidence, the Court was satisfied that, if there were trade creditors not recorded in Howship's balance sheet at 31 December 1996, they would make no significant difference to the company's solvency at the date of the hearing. The Court concluded that Howship had discharged the burden of showing that it can pay all of its debts as and when they become due and payable, having regard to the principles to which it had referred.

Orders