MGM Bailey Enterprises v Austin Australia - [2002] NSWSC 259

Reported Decision:
(2002) ATPR 41-875
(2002) 20 ACLC 765

New South Wales

Supreme Court

CITATION: MGM Bailey Enterprises v Austin Australia [2002] NSWSC 259

CURRENT JURISDICTION: Equity

FILE NUMBER(S): SC 1948/02

HEARING DATE(S): 26 March 2002 (with further written submissions on 27 March 2002)

JUDGMENT DATE: 3 April 2002

PARTIES :

MGM Bailey Enterprises Pty Ltd (P/R)
Austin Australia Pty Ltd (D/A)

JUDGMENT OF: Austin J

COUNSEL : M Dicker (P/R)
W G Muddle (D/A)

SOLICITORS: Purcell Lancione Cureton (P/R)
Colin Biggers & Paisley (D/A)

CATCHWORDS: CORPORATIONS - creditor's statutory demand - debtor company relies on creditor's incorrect representation as to last day for application to set aside the demand - estoppel not available - TRADE AND COMMERCE - misleading conduct - whether solicitor's letter to another solicitor expressing opinion about time limit was misleading - whether stay of winding up should be ordered under s 87 of Trade Practices Act - whether other equitable grounds support stay of winding up

LEGISLATION CITED: Corporations Act 2001 (Cth) ss 105, 459E, 459G, 459H, 459P
Fair Trading Act 1987 (NSW) ss 42, 72
Trade Practices Act 1974 (Cth) ss 52, 87

CASES CITED: Brolrik Pty Ltd v Sambah Holdings Pty Ltd [2001] NSWSC 1171
David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265
Hill v Tooth & Co Ltd (1998) ATPR 41-649
Johnson Tiles Pty Ltd v Esso Australia Ltd [2000] FCA 1673
Pacific Rim Developments Pty Ltd v Anketell [1999] NSWSC 304
Redglove Holdings Pty Ltd v GNE & Associates Pty Ltd (2001) NSWSC 867
Redgrave v Hurd (1881) 20 ChD 1
Roach v Bickle (1915) 20 CLR 663
State Bank of New South Wales v Tela Pty Ltd [2002] NSWSC 20
Sutton v A J Thompson Pty Ltd (1987) 73 ALR 233
Sweetman v Bradfield Management Services Pty Ltd (1994) ATPR 41-290
Trade Practices Commission v Optus Communications Pty Ltd (1996) 34 IPR 176

DECISION: Application for stay of winding up dismissed

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

AUSTIN J

WEDNESDAY 3 APRIL 2002

1948/02 MGM BAILEY ENTERPRISES PTY LTD v AUSTIN AUSTRALIA PTY LTD

JUDGMENT

1 HIS HONOUR: On 13 December 2001 the plaintiff served a creditor's statutory demand on the defendant company under s 459E of the Corporations Act 2001 (Cth). According to s 459G, a company may apply to the Court for an order setting aside a statutory demand served on it, but only if the application is made within 21 days after the demand has been served. An application is made in accordance with the section only if, within those 21 days, an affidavit supporting the application is filed with the Court and a copy of the application and of the supporting affidavit are served on the person who served the demand on the company.

2 In David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265, the High Court held that s 459G defines the jurisdiction…

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: [2002] NSWSC 259
Decision Date: 3 April 2002

CaseChat Overview and Summary

The case of MGM Bailey Enterprises versus Austin Australia was heard by the Federal Court. MGM Bailey Enterprises, the creditor, issued a statutory demand to Austin Australia, the debtor. The debtor sought to set aside the demand, claiming they relied on a mistaken representation by the creditor about the deadline to apply for the setting aside. The court was tasked with determining whether the debtor's reliance on this mistaken representation could be a ground for estoppel and whether misleading conduct by the creditor's solicitor warranted a stay of the winding up. Additionally, the court examined if other equitable grounds supported a stay of the winding up.

The central legal issues the court had to address were whether the debtor could rely on estoppel due to the creditor's incorrect representation and whether the creditor's solicitor's misleading conduct justified a stay of the winding up under section 87 of the Trade Practices Act. The court needed to determine if the creditor's solicitor's opinion about the time limit was misleading and whether this constituted misleading conduct. Furthermore, the court had to consider if the misleading conduct warranted a stay of the winding up and if other equitable grounds supported such a stay.

The Federal Court ruled that the debtor could not rely on estoppel due to the creditor's incorrect representation. The court held that estoppel was not available in this context. The court further found that the solicitor's letter did not constitute misleading conduct, as it was not intended to be acted upon by the debtor. The court determined that there were no other equitable grounds to support a stay of the winding up. Consequently, the debtor's application to set aside the statutory demand was dismissed, and the winding up order was upheld.

The final orders of the court dismissed the debtor's application to set aside the statutory demand and upheld the winding up order. The court found that the debtor's reliance on the creditor's incorrect representation did not amount to estoppel and that there was no misleading conduct by the creditor's solicitor. The court concluded that no other equitable grounds existed to warrant a stay of the winding up.

Orders