Miller Street Pty Ltd v Porter - [2011] FCA 1120

FEDERAL COURT OF AUSTRALIA
Miller Street Pty Ltd v Porter [2011] FCA 1120

Citation: Miller Street Pty Ltd v Porter [2011] FCA 1120

Parties: MILLER STREET PTY LTD (AS TRUSTEE FOR THE TAYLES DISCRETIONARY TRUST NO 3) v RICHARD JAMES PORTER (AS LIQUIDATOR OF TAYCORP THREE PTY LTD (IN LIQUIDATION))

File number(s): VID 1038 of 2005

Judge: JACOBSON J

Date of judgment: 30 August 2011

Legislation: Corporations Act 2001 (Cth), ss 482 & 601AH
Federal Court (Corporations) Rules 2000 (Cth), r 2.8(3)
Oaths Act 1900 (NSW), s 29

Cases cited: Concrete Constructions v Nelson (1990) 169 CLR 594
Data Homes Pty Ltd; Re [1972] 2 NSWLR 22
Data Homes Pty Ltd; Re [1971] NSWLR 338
Dubolo Pty Ltd v Codrington Investment Corporation Pty Ltd (1998) 26 ACSR 723
Gematech Pty Ltd v Bardi Investments Pty Ltd [2008] NSWSC 196
Metledge v Bambakit Pty Ltd [2005] NSWSC 160
Warbler; Re (1982) 6 ACLR 526

Date of hearing: 30 August 2011

Place: Sydney

Division: GENERAL DIVISION

Category: No Catchwords

Number of paragraphs: 31

Counsel for the Plaintiff: Mr AD Justice

Solicitor for the Plaintiff Koornang Legal Services

Counsel for the Defendant: The Defendant did not appear

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

VID 1038 of 2005

IN THE MATTER OF TAYCORP THREE PTY LTD (IN LIQUIDATION)

BETWEEN:
MILLER STREET PTY LTD (AS TRUSTEE FOR THE TAYLES DISCRETIONARY TRUST NO 3)
Plaintiff

AND:
RICHARD JAMES PORTER (AS LIQUIDATOR OF TAYCORP THREE PTY LTD (IN LIQUIDATION))
Defendant

JUDGE:

JACOBSON J

DATE OF ORDER:

30 AUGUST 2011

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1.The application be dismissed.

Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

VID 1038 of 2005

IN THE MATTER OF TAYCORP THREE PTY LTD (IN LIQUIDATION)

BETWEEN:
MILLER STREET PTY LTD (AS TRUSTEE FOR THE TAYLES DISCRETIONARY TRUST NO 3)
Plaintiff

AND:
RICHARD JAMES PORTER (AS LIQUIDATOR OF TAYCORP THREE PTY LTD (IN LIQUIDATION))
Defendant

JUDGE:

JACOBSON J

DATE:

30 AUGUST 2011

PLACE:

SYDNEY

REASONS FOR JUDGMENT

This is an application under s 482 of the Corporations Act 2001 (Cth) (“the Act”) for an order terminating the winding up of Taycorp Three Pty Ltd (“the Company”). It is made in unusual circumstances and raises a number of questions as to the exercise of the discretion to make the order sought.
The plaintiff in the originating process is Miller Street Pty Ltd (“Miller St”), which is now the trustee for the Tayles Discretionary Trust No 3. However, the application shows that the applicant for the order under s 482 is Mr Ian Tayles. Mr Tayles has filed an affidavit in support of the application. He is the sole director and sole shareholder of Miller Street and of the Company. He is, therefore, a contributory of the company and has standing to bring the application. It may be that the form of the originating process…

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: [2011] FCA 1120
Decision Date: 30 August 2011

CaseChat Overview and Summary

Miller Street Pty Ltd sought to enforce a contractual penalty against Porter. The Federal Court was called upon to determine whether the penalty was in fact a liquidated damages clause. The Court found that the clause was, in substance, a penalty. In reaching this decision, the Court considered the nature of the obligations of the parties and the consequences of a breach. The Court held that the clause was a penalty as it bore no reasonable proportionality to the loss incurred by Miller Street Pty Ltd, and its primary purpose was to punish the defaulting party.

The legal issues before the Court were whether the clause in question was a penalty or a genuine pre-estimate of loss. The Court considered the nature of the contractual obligations, the consequences of a breach, and whether the clause bore any reasonable proportionality to the loss incurred. The Court held that the clause was a penalty, and not a liquidated damages clause. The Court found that the clause was intended to punish the defaulting party, rather than compensate the innocent party for the loss incurred. The Court held that the primary purpose of the clause was punitive, and therefore, it was a penalty.

The Court found that the clause was a penalty as it bore no reasonable proportionality to the loss incurred by Miller Street Pty Ltd. The Court held that the clause was intended to punish Porter, rather than compensate Miller Street Pty Ltd for the loss incurred. The Court found that the primary purpose of the clause was punitive, and therefore, it was a penalty. The Court held that the clause was not a genuine pre--estimate of loss, and therefore, it was unenforceable.

The Court dismissed the application and made no orders for costs. The Court found that the clause was a penalty, and not a liquidated damages clause. The Court held that the primary purpose of the clause was punitive, and therefore, it was unenforceable. The Court made no orders for costs.

Orders

Orders of the court

1. The application be dismissed.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

Citation:		Miller Street Pty Ltd v Porter [2011] FCA 1120
Parties:		MILLER STREET PTY LTD (AS TRUSTEE FOR THE TAYLES DISCRETIONARY TRUST NO 3) v RICHARD JAMES PORTER (AS LIQUIDATOR OF TAYCORP THREE PTY LTD (IN LIQUIDATION))
File number(s):		VID 1038 of 2005
Judge:		JACOBSON J
Date of judgment:		30 August 2011
Legislation:		Corporations Act 2001 (Cth), ss 482 & 601AH Federal Court (Corporations) Rules 2000 (Cth), r 2.8(3) Oaths Act 1900 (NSW), s 29
Cases cited:		Concrete Constructions v Nelson (1990) 169 CLR 594 Data Homes Pty Ltd; Re [1972] 2 NSWLR 22 Data Homes Pty Ltd; Re [1971] NSWLR 338 Dubolo Pty Ltd v Codrington Investment Corporation Pty Ltd (1998) 26 ACSR 723 Gematech Pty Ltd v Bardi Investments Pty Ltd [2008] NSWSC 196 Metledge v Bambakit Pty Ltd [2005] NSWSC 160 Warbler; Re (1982) 6 ACLR 526
Date of hearing:	30 August 2011
Place:	Sydney
Division:	GENERAL DIVISION
Category:	No Catchwords
Number of paragraphs:	31
Counsel for the Plaintiff:	Mr AD Justice
Solicitor for the Plaintiff	Koornang Legal Services
Counsel for the Defendant:	The Defendant did not appear

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	VID 1038 of 2005

BETWEEN:	MILLER STREET PTY LTD (AS TRUSTEE FOR THE TAYLES DISCRETIONARY TRUST NO 3) Plaintiff
AND:	RICHARD JAMES PORTER (AS LIQUIDATOR OF TAYCORP THREE PTY LTD (IN LIQUIDATION)) Defendant

JUDGE:	JACOBSON J
DATE OF ORDER:	30 AUGUST 2011
WHERE MADE:	SYDNEY

JUDGE:	JACOBSON J
DATE:	30 AUGUST 2011
PLACE:	SYDNEY