Court of Appeal
Supreme Court
New South Wales
Medium Neutral Citation: McGrath v Sturesteps; Sturesteps v HIH Overseas Holdings Ltd (in liquidation) [2011] NSWCA 315 Hearing dates: 8 August 2011 Decision date: 30 September 2011 Before: Bathurst CJ at [1]; Macfarlan JA at [101]; Sackville AJA at [109] Decision: (1) Appeal allowed.
(2) Cross appeal dismissed.
(3) Orders 1, 2 and 3 of the orders made by the primary judge on 10 June 2010 and entered on 22 June 2010 be set aside and the following orders be made.
(4) Order that the first and second appellants admit the respondent to proof in the scheme of arrangement of the third appellant for the following amounts and the following classes applicable to s 556 of the Corporations Act 2001 (Cth):
(a) The amount of $216,690.17 for unpaid wages under s 556(1)(e);
(b) The amount of $18,493.31 for unpaid superannuation under s 556(1)(e);
(c) The amount of $37,578.33 for accrued annual leave under s 556(1)(g);
(d) The amount of $241,388.36 for accrued long service leave under s 556(1)(g);
(e) The amount of $132,523.42 for the retrenchment payment under s 556(1)(h);
being a total of $646,673.59.
(5) Order that the first and second appellants admit the claim of the respondent to proof in the scheme of arrangement of the third appellant for the following amounts as an ordinary unsecured creditor:
(a) The amount of $551,148.88 for accrued annual leave;
(b) The amount of $131,354.63 for accrued long service leave;
(c) The amount of $1,426,575.58 for the retrenchment payment;
being an unsecured total of $2,109,079.09.
(6) Order that the respondent pay the appellants' costs of the appeal and cross-appeal.
(7) Direct each party within 10 days of the date hereof to file submissions as to the appropriate order of the costs of the proceedings before the primary judge.
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Catchwords: CONTRACT - employment contract - redundancy clause - construction - identification of employer - whether surrounding circumstances favour wider construction despite narrow definition
CONTRACT - oral contract - evidence of contract - whether evidence of agreement to reimburse employee for any loses while residing overseas - whether evidence that liability for employee's spouse's loan discharged
CORPORATIONS - winding up - winding up in insolvency - calculation of employee leave entitlements for the purposes of s 556(1B) Corporations Act 2001 - whether accrued leave should be attributed to period when employee was a director - whether the rule in Clayton's case applies to accrual of annual leave - (CTH) Corporations Act 2001 s 556(1B)
CORPORATIONS - winding up - winding up in insolvency - calculation of employee retrenchment…
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- AGLC
- McGrath v Sturesteps [2011] NSWCA 315
- Case
- [2011] NSWCA 315
- Decision Date
CaseChat Overview and Summary
The central legal issues before the Court of Appeal were the proper construction of the employment contract, particularly regarding redundancy provisions and the identification of the employer, and the correct calculation and attribution of employee entitlements for the purposes of priority under section 556 of the *Corporations Act 2001* (Cth). Specifically, the court had to determine whether accrued leave should be attributed to periods when the employee was also a director, whether the rule in Clayton's case applied to the accrual of annual leave, and how retrenchment payments should be attributed when termination occurred on a "priority day" but included entitlements for "non-priority days." The court also considered whether a liquidator had the power to pay post-liquidation interest outside the provisions of section 563B of the *Corporations Act 2001*.
The Court of Appeal allowed the appeal and dismissed the cross-appeal. The court reasoned that the primary judge had erred in certain calculations and attributions of entitlements. The court clarified that for the purposes of section 556 of the *Corporations Act 2001*, accrued leave and retrenchment payments should be calculated and attributed in a manner that recognised the employee's entitlements. The court found that the rule in Clayton's case was not applicable to the accrual of annual leave. Furthermore, the court determined that the liquidators did not have the power to pay post-liquidation interest other than in accordance with section 563B.
Consequently, the Court of Appeal set aside the orders of the primary judge and made new orders. These orders admitted Mr. Sturesteps to proof for specific amounts as priority claims under section 556 of the *Corporations Act 2001*, including unpaid wages, superannuation, accrued annual leave, accrued long service leave, and the retrenchment payment. The court also admitted his claim for further amounts of annual leave, long service leave, and retrenchment payment as an ordinary unsecured creditor. The respondent was ordered to pay the appellants' costs of the appeal and cross-appeal.
Orders
Orders of the court
(1) Appeal allowed.
(2) Cross appeal dismissed.
(3) Orders 1, 2 and 3 of the orders made by the primary judge on 10 June 2010 and entered on 22 June 2010 be set aside and the following orders be made.
(4) Order that the first and second appellants admit the respondent to proof in the scheme of arrangement of the third appellant for the following amounts and the following classes applicable to s 556 of the Corporations Act 2001 (Cth):
(a) The amount of $216,690.17 for unpaid wages under s 556(1)(e);
(b) The amount of $18,493.31 for unpaid superannuation under s 556(1)(e);
(c) The amount of $37,578.33 for accrued annual leave under s 556(1)(g);
(d) The amount of $241,388.36 for accrued long service leave under s 556(1)(g);
(e) The amount of $132,523.42 for the retrenchment payment under s 556(1)(h);
being a total of $646,673.59.
(5) Order that the first and second appellants admit the claim of the respondent to proof in the scheme of arrangement of the third appellant for the following amounts as an ordinary unsecured creditor:
(a) The amount of $551,148.88 for accrued annual leave;
(b) The amount of $131,354.63 for accrued long service leave;
(c) The amount of $1,426,575.58 for the retrenchment payment;
being an unsecured total of $2,109,079.09.
(6) Order that the respondent pay the appellants' costs of the appeal and cross-appeal.
(7) Direct each party within 10 days of the date hereof to file submissions as to the appropriate order of the costs of the proceedings before the primary judge.
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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