McCluskey v Pasminco Ltd

Case [2002] FCA 231

FEDERAL COURT OF AUSTRALIA

In the matter of Pasminco Limited (Administrators Appointed) [2002] FCA 231

CORPORATIONS LAW – external administration – application for directions pursuant to s 447D of the Corporations Act 2001 (Cth) – whether liabilities of companies for employees’ legal costs and expenses of claims for compensation for injuries sustained in employment attract priority for payment under s 556(1) of the Corporations Act 2001 (Cth) – where orders made and settlement agreements reached under which companies liable for legal costs incurred by employees in respect of injury compensation claims against companies – injuries incurred prior to administration – distinction between orders made and agreements entered into before and after commencement of administration – whether payments of legal costs and expenses pursuant to orders made and agreements entered into prior to commencement of administration are amounts due in respect of injury compensation under s 556(1)(f) of the Corporations Act 2001 (Cth) – whether payments of legal costs and expenses pursuant to orders made and agreements entered into after commencement of administration are expenses incurred in preserving property of company under s 556(1)(a) or s 556(1)(dd) of the Corporations Act 2001 (Cth).

Corporations Act 2001 (Cth): Pt 5.3A, ss 443A, 443D, 447D, 556(1), 563(1)

State Government Insurance Office v Rees (1979) 144 CLR 549 considered
Construction Industry Long Service Leave Board v Irving (1997) 74 FCR 587 applied
Re Wenborn & Co [1905] 1 Ch 413 considered
Brash Holdings Ltd (Administrator appointed) v Katile Pty Ltd [1996] 1 VR 24 considered
Daydream Island International Resort Pty Ltd v Cushway Blackford & Associates (Aust) Pty Ltd (1995) 13 ACLC 82 considered
Federal Commissioner of Taxation v Gosstray [1986] VR 876 referred to
Re SBA Properties Ltd [1967] 1 WLR 799 considered
Sandtara Pty Ltd v Abigroup Ltd (No 2) (1995) 16 ACSR 494 referred to

McPherson The Law of Company Liquidation (4th ed) 1999  considered

IN THE MATTER OF PASMINCO LIMITED (ADMINISTRATORS APPOINTED)

PETER DAMIEN McCLUSKEY and JOHN MENZIES SPARK v PASMINCO LIMITED (ADMINISTRATORS APPOINTED) (ACN 004 368 674) & ORS (according to attached Schedule)
V 3044 of 2001

GOLDBERG J
9 APRIL 2002
MELBOURNE


IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

V 3044 of 2001

IN THE MATTER OF PASMINCO LIMITED (ADMINISTRATORS APPOINTED)

BETWEEN:

PETER DAMIEN McCLUSKEY
and
JOHN MENZIES SPARK
Plaintiffs

AND:

PASMINCO LIMITED (Administrators Appointed)
(ACN 004 368 674)
and
OTHERS (see attached Schedule)
Defendants

JUDGE:

GOLDBERG J

DATE OF ORDER:

9 APRIL 2002

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:

1.Pursuant to s 447D(1) of the Corporations Act 2001 (Cth) (“the Act”), the Court directs that any legal costs or expenses:

(a)incurred by an employee of Pasminco Cockle Creek Smelter Pty Ltd (Administrators Appointed), Pasminco Australia Limited (Administrators Appointed) and Pasminco Port Pirie Smelter Pty Ltd (Administrators Appointed), prior to the appointment of the administrators of those companies, in connection with a claim for “injury compensation” (as that expression is defined in s 9 of the Act) against those companies, being compensation the liability…

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Details
AGLC
McCluskey v Pasminco Ltd [2002] FCA 231
Case
[2002] FCA 231
Decision Date

CaseChat Overview and Summary

The case of McCluskey v Pasminco Ltd involves the issue of legal costs incurred by employees in claims against Pasminco Cockle Creek Smelter Pty Ltd, Pasminco Australia Limited, and Pasminco Port Pirie Smelter Pty Ltd, which are now under administration. The primary dispute concerns the liability of these companies to pay for injury compensation claims, including those filed before the appointment of administrators. The matter was heard in the Federal Court of Australia.

The court was tasked with determining whether the legal costs incurred by employees in their claims for injury compensation, which arose before the companies were placed under administration, should be considered as expenses due in respect of injury compensation under section 556(1)(f) of the Corporations Act 2001 (Cth). This involved interpreting the scope of the term "injury compensation" and whether it encompassed pre-administration legal costs.

The court ruled that the legal costs incurred by the employees prior to the appointment of the administrators, which were related to injury compensation claims against the companies, are indeed amounts due in respect of injury compensation under the Act. This decision ensures that such costs are treated as priority debts in the administration process. The court also granted the administrators the liberty to seek further orders or directions concerning the legal costs of specific injury compensation claims, and it determined that the costs of the application by the plaintiffs would be costs in the administration of the companies.

In summary, the court's decision clarifies the treatment of pre-administration legal costs in injury compensation claims and sets the stage for further applications related to these costs. The administrators are now equipped with the authority to manage and address specific claims for legal costs in the ongoing administration proceedings.

Orders

Orders of the court

1. Pursuant to s 447D(1) of the Corporations Act 2001 (Cth) (“the Act”), the Court directs that any legal costs or expenses:

(a) incurred by an employee of Pasminco Cockle Creek Smelter Pty Ltd (Administrators Appointed), Pasminco Australia Limited (Administrators Appointed) and Pasminco Port Pirie Smelter Pty Ltd (Administrators Appointed), prior to the appointment of the administrators of those companies, in connection with a claim for “injury compensation” (as that expression is defined in s 9 of the Act) against those companies, being compensation the liability for which arose before the appointment of the administrators of those companies; and

(b) which Pasminco Cockle Creek Smelter Pty Ltd (Administrators Appointed), Pasminco Australia Limited (Administrators Appointed) and Pasminco Port Pirie Smelter Pty Ltd (Administrators Appointed) (as the case may be) are liable to pay to, or on behalf of, the employee by agreement or pursuant to an order of a court or tribunal entered into or made either before or after the appointment of the administrators of those companies,

are amounts due in respect of injury compensation for the purposes of s 556(1)(f) of the Act.

2. Liberty is reserved to the administrators to apply for any further orders or directions in this matter which might arise in relation to the legal costs or expenses of any particular claim for injury compensation made by an employee against any of the said companies.

3. The costs of the application of the plaintiffs be costs in the administration of Pasminco Cockle Creek Smelter Pty Ltd (Administrators Appointed), Pasminco Australia Limited (Administrators Appointed) and Pasminco Port Pirie Smelter Pty Ltd (Administrators Appointed).

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

GOLDBERG J

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Ratio Decidendi

Legal Principle Established

Established by: GOLDBERG J

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