Lockwood v White - [2005] VSCA 30

SUPREME COURT OF VICTORIA

COURT OF APPEAL

No. 6232 of 2000

DAVID NEIL LOCKWOOD AND LAURENCE JOHN FITZGERALD
	Appellants
v.
CLYDE PETER WHITE
	Respondent

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JUDGES:	WINNEKE, P., BUCHANAN, J.A. and GILLARD, A.J.A.
WHERE HELD:	MELBOURNE
DATE OF HEARING:	22 November 2004
DATE OF JUDGMENT:	28 February 2005
MEDIUM NEUTRAL CITATION:	[2005] VSCA 30

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Companies – Liquidators and Administrators – Priority to entitlement of fees and expenses as between administrator and liquidator – Group of 54 companies under the same control –Whether “pooling order” affecting claims of administrator and/or liquidator – Liquidator seeking Court’s indulgence to excuse conduct of liquidating companies within the group individually –Indulgence granted on conditions – Whether conditions should be altered to include payment of administrator’s claim for fees and expenses.

Liens – Equitable and statutory – Effect of such liens on priority of claims for fees and expenses of liquidator and administrator.

Corporations Act (Cth.), ss.443D, 443E, 443F, 556, 559, 601EE, and 1322.

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APPEARANCES:	Counsel	Solicitors
For the Appellants	Mr. C.J. Delany, S.C.	Middletons
For the Respondent	Mr. R.M. Peters	Cornwall Stodart

WINNEKE, P.:

This litigation involves a dispute between Lockwood and Fitzgerald, formerly appointed as administrators of 11 individual companies of what was called the “Lifestyle Group”, and the respondent White, who was the person appointed as a liquidator of that group of companies. In essence, the dispute involves the claim by the former administrators for priority of payment, in the liquidation, of their fees and expenses incurred in the administration. There were 54 individual companies in the Lifestyle Group which together were involved in an unregistered managed investment scheme contrary to s.601ED of the Corporations Act (“the Act”), formerly the “Corporations Law”. The investment scheme was essentially the “brain child” of, and run by, one Jon McKenney, and each of the companies in the group was effectively controlled and run by him. The companies administered unit trusts and sought public subscriptions as consideration for units in unit trusts which were formed for the purpose of property development.

On 28 June 2000 White was appointed liquidator of Lifestyle Property Group Pty Ltd, which company was wound up upon the application of the Australian Taxation Office. Subsequently, on 13 July 2000, the Australian Securities Investments Commission (ASIC) sought orders for the winding up of six other companies in the Group pursuant to ss.461(1)(k) and 464 of the Act. On the same day White was appointed the liquidator of those six companies.

On 19 and 20 July 2000 Lockwood and Fitzgerald were appointed joint and several administrators of 11 of the companies in the Lifestyle Group; and on or about 14 July 2000 one Lofthouse was appointed administrator of Lifestyle Vermont Pty Ltd, another company in the Group. One of the “Lockwood companies” was Lifestyle Property Investments Pty Ltd to which White had already been appointed as liquidator on 13 July 2000. The administrators’ appointment to this company was therefore invalid.

On 26 July 2000 ASIC applied for an order of the…

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.

Continue reading Lockwood v White

Details

AGLC: Lockwood v White [2005] VSCA 30
Case: [2005] VSCA 30
Decision Date: 28 February 2005

CaseChat Overview and Summary

Lockwood v White involved a complex dispute concerning the priorities of fees and expenses claims between an administrator and a liquidator of a group of 54 companies under the same control. The court was asked to determine whether a pooling order affected the claims of the administrator and liquidator and whether the court should alter the conditions of the indulgence granted to the liquidator to include payment of the administrator’s fees and expenses. The dispute also addressed the impact of equitable and statutory liens on the priority of claims.

The primary legal issues were whether the pooling order should affect the claims of the administrator and liquidator and if the conditions of the indulgence granted to the liquidator should be altered to include payment of the administrator's fees and expenses. The court had to consider the effect of equitable and statutory liens on the priority of the claims. The dispute raised questions about the interplay between the statutory provisions governing the priority of fees and expenses and the equitable principles that might affect those priorities.

The court held that the pooling order did not affect the claims of the administrator and liquidator, as the order was not intended to alter the priority of claims. The court also determined that the conditions of the indulgence granted to the liquidator should be altered to include payment of the administrator's fees and expenses. The court found that the equitable and statutory liens did not alter the statutory priority of claims, and therefore the administrator's claim should be paid before the liquidator’s claim. The court's decision was based on a careful consideration of the statutory framework provided by the Corporations Act and the equitable principles that apply to the distribution of assets in insolvency proceedings.

The final orders of the court included the alteration of the conditions of the indulgence granted to the liquidator to ensure that the administrator’s fees and expenses were paid before those of the liquidator. The court also confirmed that the pooling order did not affect the priority of the claims and that the equitable and statutory liens did not alter the statutory priority of claims.

Orders