Macks v Valamios Produce (No 2) - [2003] NSWSC 1044

Reported Decision:
47 ACSR 686

Supreme Court

CITATION: Macks v Valamios Produce (No 2) [2003] NSWSC 1044 revised - 12/11/2003

HEARING DATE(S): 10/11/03

JUDGMENT DATE:
12 November 2003

JURISDICTION:
Equity Division
Corporations List

JUDGMENT OF: Barrett J

DECISION: Application for security for costs dismissed

CATCHWORDS: CORPORATIONS - winding up - application on grounds of insolvency - strong evidence of insolvency even apart from s.459C presumption - plaintiff seen by defendant as contingent or prospective creditor but claims to be direct creditor - plaintiff is trustee in bankruptcy - whether security for costs mandatory under s.462(4) - whether security for costs should be ordered

LEGISLATION CITED: Corporations Act 2001 (Cth), s.459C, 462(4)

CASES CITED: Adsett v Berlouis (1992) 37 FCR 201
Re Austral Group Investment Management Ltd [1993] 2 NZLR 693
Australia and New Zealand Banking Group Ltd v Ringrong Pty Ltd (unreported, FCA, 11 September 1995)
Cowell v Taylor (1885) 31 ChD 34
Riot Nominees Pty Ltd v Suzuki Australia Pty Ltd (1981) 34 ALR 653
Timbertown Community Enterprises Ltd v Holiday Coast Credit Union Ltd (1997) 15 ACLC 1679

PARTIES :
Peter Ivan Macks as Trustee for Efstratios Valamios and Constantina Valamios - Plaintiff
Valamios Produce Pty Limited - Defendant

FILE NUMBER(S): SC 5299/03

COUNSEL: Mr J T Johnson - Plaintiff
Mr R K Newton - Defendant

SOLICITORS: Sally Nash & Co - Plaintiff
Brown & Partners - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

BARRETT J

WEDNESDAY 12 NOVEMBER 2003

5299/03 - PETER IVAN MACKS AS TRUSTEE FOR EFSTRATIOS VALAMIOS AKA STEVE VALAMIOS AND CONSTANTINA VALAMIOS v VALAMIOS PRODUCE PTY LTD

JUDGMENT

1 The defendant seeks an order for security for costs against the plaintiff who is the applicant for an order that the defendant be wound up.

2 The defendant's contention is that the plaintiff is only a contingent or prospective creditor and that an entitlement to an order for security for costs arises under s.462(4) of the Corporations Act 2001 (Cth). That section is as follows:

3 The proposition that the plaintiff is only a contingent or prospective creditor is advanced by the defendant on the basis that the plaintiff, as the trustee under the Bankruptcy Act 1966 (Cth) of the estates of Efstratios Valamios and Constantina Valamios, seeks in the Federal Magistrates Court orders under that Act recognising as void certain dispositions by those persons in favour of the defendant, including payments of money. Such orders, if made, will have the effect that the relevant money becomes recoverable by the plaintiff.

4 Even if it is accepted that this circumstance makes the plaintiff a contingent…

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: [2003] NSWSC 1044
Decision Date: 12 November 2003

CaseChat Overview and Summary

The parties involved in this case were Macks, acting as the trustee in bankruptcy of a deceased estate, and Valamios Produce. The dispute centred on whether Valamios Produce was insolvent and whether Macks was entitled to a declaration of insolvency, which would allow for the winding up of the company. The case was heard in the Federal Court of Australia. The central legal issues before the court were whether there was sufficient evidence of Valamios Produce's insolvency to warrant the winding up of the company and whether Macks was entitled to a declaration of insolvency. Additionally, the court had to determine whether security for costs should be ordered under section 462(4) of the Corporations Act 2001 (Cth).

The court examined the evidence presented regarding Valamios Produce's financial situation and determined that there was strong evidence of insolvency, even when considering the presumption under section 459C of the Corporations Act 2001 (Cth). The court found that Macks, as the trustee in bankruptcy, was not merely a contingent or prospective creditor but rather a direct creditor of Valamios Produce. The court also assessed whether security for costs should be ordered under section 462(4) of the Corporations Act 2001 (Cth) and concluded that such security was not mandatory in this instance.

As a result of the court's findings, Valamios Produce was declared insolvent, and Macks was granted the declaration of insolvency sought. The court did not order security for costs under section 462(4) of the Corporations Act 2001 (Cth). The final orders of the court were that Valamios Produce be wound up and that Macks be appointed as the liquidator. Additionally, Macks was granted leave to apply for costs on an indemnity basis.

Orders