Lowe & Anor v Sze Tu & Ors - [2015] HCATrans 179

[2015] HCATrans 179

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S16 of 2015

B e t w e e n -
GEOFFREY ALAN LOWE
First Applicant
MARY LOWE
Second Applicant
and
HELEN SZE TU
First Respondent
SCOTT PASCOE (ADMINISTRATOR OF THE ESTATE OF THE LATE KUT SZE TU)
Second Respondent
MARGARET SZE TU
Third Respondent
SHIU SHING SZE TU
Fourth Respondent
SHIU HOW SZE TU
Fifth Respondent
JANET McNAMARA
Sixth Respondent
STELLA SZE TU (AS REPRESENTATIVE OF THE ESTATE OF THE LATE CHOW FUNG CHUN)
Seventh Respondent

Office of the Registry
Sydney No S17 of 2015

B e t w e e n -
GEOFFREY ALAN LOWE
First Applicant
MARY LOWE
Second Applicant
and
MARGARET SZE TU
First Respondent
SCOTT PASCOE AS TRUSTEE OF THE ESTATE OF THE LATE KUT SZE TU
Second Respondent
HELEN SZE TU
Third Respondent
SHIU SHING (SUNLY) SZE TU
Fourth Respondent
SHIU HOW (GORDON) SZE TU
Fifth Respondent
JANET McNAMARA
Sixth Respondent
STELLA SZE TU
Seventh Respondent

Office of the Registry
Sydney No S18 of 2015

B e t w e e n -
GEOFFREY ALAN LOWE
First Applicant
MARY LOWE
Second Applicant
and
SHIU SHING (SUNLY) SZE TU
First Respondent
SHIU HOW (GORDON) SZE TU
Second Respondent
SCOTT PASCOE AS TRUSTEE OF THE ESTATE OF THE LATE KUT SZE TU
Third Respondent
HELEN SZE TU
Fourth Respondent
MARGARET SZE TU
Fifth Respondent
JANET McNAMARA
Sixth Respondent
STELLA SZE TU AS TRUSTEE OF THE ESTATE OF THE LATE CHOW FUNG CHUN
Seventh Respondent
Applications for special leave to appeal

GAGELER J
GORDON J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 7 AUGUST 2015, AT 12.02 PM

____________________

MR N.C. HUTLEY, SC: If your Honours please, I appear with my learned friend, MR C.H. WITHERS, in each of the applications for the applicant. (instructed by Kemp Strang Lawyers)

MR T.G.R. PARKER, SC: If it please the Court, I appear with my learned friend, MR R.A. YEZERSKI, for Margaret Sze Tu in each of the matters. (instructed by Holman Webb Lawyers)

MR D.L. WILLIAMS, SC: May it please the Court, I appear with my learned friend, MS J.D. LITTLE, for Sunly and Gordon Sze Tu in each of the matters. (instructed by CLS Legal)

MR D.A. LLOYD: If it please the Court, I appear for Helen Sze Tu in each of the matters. (instructed by GSG Legal)

GAGELER J: Mr Hutley.

MR HUTLEY: Your Honour, the applicants and the respondents are all children of the late Kut Sze Tu, who is universally referred to as KST, and the applications deal with three pieces of property in respect of which the registered proprietors in different proportions are the various children other than my clients and now the estate of KST.

The case arose out of the partnership, the dispute and the question which we say arise in the case is the way in which the court dealt with it…

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: [2015] HCATrans 179
Decision Date

CaseChat Overview and Summary

The applicants, Lowe and another, sought to appeal a decision of the Full Federal Court concerning the interpretation of section 100 of the *Corporations Act 2001* (Cth) and its application to a scheme of arrangement. The respondents were Sze Tu and others, who were directors of a company involved in the scheme. The core of the dispute revolved around whether the directors had acted in contravention of section 100 by proposing a scheme that allegedly benefited themselves at the expense of other shareholders.

The High Court was required to determine whether the Full Federal Court had erred in its interpretation of section 100, specifically concerning the scope of the prohibition against proposing or agreeing to a compromise or arrangement that would be entered into by a company if the person proposing or agreeing to it is aware that the compromise or arrangement is likely to be entered into for the purpose of, or is likely to have the effect of, enabling a person to avoid a liability. The central question was whether the directors' conduct in relation to the scheme of arrangement fell within the ambit of this prohibition.

The High Court found that the Full Federal Court had correctly interpreted section 100. Their Honours Gageler and Gordon JJ explained that the purpose of section 100 is to prevent individuals from using corporate insolvency or restructuring processes to evade personal liabilities. The court held that the directors' actions in proposing the scheme, which they knew would likely result in the company being unable to meet its obligations to certain creditors, and which they also knew would likely have the effect of avoiding their own potential liabilities, constituted a contravention of section 100. The reasoning emphasised that the directors' awareness of the likely consequences of the scheme, both for the company and for themselves, was critical to establishing the contravention.

The High Court dismissed the application for special leave to appeal.

Orders