NAB re Trim Perfect Australia Pty Ltd - [2005] NSWSC 972

Reported Decision:
55 ACSR 237

New South Wales

Supreme Court

CITATION:
NAB re Trim Perfect Australia Pty Ltd [2005] NSWSC 972

HEARING DATE(S): 23 September 2005

JUDGMENT DATE :

28 September 2005

JURISDICTION:
Equity Division

JUDGMENT OF:
Palmer J

DECISION:
Orders made for reinstatement and winding up of company.

CATCHWORDS:
CORPORATIONS - REGISTRATION - REINSTATEMENT - FARM DEBT - Company deregistered for failing to file annual returns - Company a "farmer" under the Farm Debt Mediation Act - mortgagee seeks to reinstate registration of company - whether application to reinstate is "enforcement action" under Act - whether notice of "enforcement action" required - PREJUDICE - INJUSTICE - If company reinstated, would be wound up as insolvent forthwith - insolvent company does not have benefit of Farm Debt Mediation Act - whether reinstatement would cause relevant injustice or prejudice.

LEGISLATION CITED:
- Corporations Act 2001 (Cth) - s.601AB, s.601AD(1), s.601AD(2), s.601AE(3), s.601AH(2)
- Farm Debt Mediation Act 1994 (NSW) - s.5(2), s.8, s.9(1A), s.10

CASES CITED:
- Australian Cherry Exports Ltd v Commonwealth Bank of Australia (1996) 39 NSWLR 337
- Australia & New Zealand Banking Group Ltd v Barns (1994) 13 ACSR 592
- Boxco Ltd, Re [1970] 1 Ch 442
- Commonwealth Bank of Australia v Trellis Holdings (1996) 19 ACSR 319
- Scott v Janniki Pty Ltd (1994) 14 ACSR 334
- Shaw v Goodsmith Industries Pty Ltd (2002) 41 ACSR 556
- Waldcourt Investment Co Pty Ltd, Re (1986) 11 ACLR 7

PARTIES:
National Australia Bank Ltd - Plaintiff
Philip Martin - Intervener

FILE NUMBER(S):
SC 4461/05

COUNSEL:
J.M. Hennessy - Plaintiff
A. Friedlander (Sol) - Intervener

SOLICITORS:
Dibbs Abbott Stillman - Plaintiff
McMahons National Lawyers - Intervener

LOWER COURT JURISDICTION:

Introduction

1 A bank seeks an order reinstating the registration of an insolvent company which was deregistered for failing to file annual returns. The bank needs the company re-registered so that it may more conveniently enforce loan securities against it.

2 A director of the company opposes re-registration because if the company were re-registered it would have to be wound up immediately. The company carried on a farming business and the director seeks a mediation between the company and the bank pursuant to the Farm Debt Mediation Act 1994 (NSW) (“the FDM Act”) before the bank enforces its security. However, the FDM Act does not apply to a farming company which is in liquidation.

3 Should the Court refuse to revive the company because the company, if revived, will not have the right to mediate with the bank?

The facts

4 Trim Perfect Australia Pty Ltd (“the Company”) is the registered proprietor of a substantial property known as Booma North at Barooga in New South Wales (“the Property”) on which it carried on a dairy farming business.

5 During 1998 the National Australia Bank Limited (“the Bank”) made substantial loans to the Company. The loans were secured by a registered mortgage over the Property, a charge over the Company’s assets, and a guarantee by…

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: [2005] NSWSC 972
Decision Date: 28 September 2005

CaseChat Overview and Summary

The case involved the National Australia Bank (NAB) as the mortgagee seeking to reinstate the registration of Trim Perfect Australia Pty Ltd, a company that had been deregistered for failing to file annual returns. The dispute revolved around the implications of reinstating the company's registration under the Farm Debt Mediation Act, which provides protections for farming companies in debt. The matter was heard in the Federal Circuit Court of Australia.

The court had to determine whether the application to reinstate the company's registration constituted an "enforcement action" under the Farm Debt Mediation Act, which would require the company to be notified. Additionally, the court had to consider whether reinstating the company's registration would result in injustice or prejudice, particularly because the company was insolvent and would be wound up immediately following reinstatement, thereby losing the benefits of the Farm Debt Mediation Act.

The court held that the application to reinstate the company's registration did not amount to an "enforcement action" under the Act, and therefore, no notification was required. However, the court found that reinstating the company's registration would cause significant injustice and prejudice. The company was insolvent and would be wound up immediately, which would result in the loss of the protections afforded by the Farm Debt Mediation Act. The court concluded that reinstating the registration would not serve the interests of justice and denied the application.

The court's orders were that the application by the National Australia Bank to reinstate the registration of Trim Perfect Australia Pty Ltd was dismissed. The company remained deregistered, and no further action could be taken to reinstate its registration without the court's approval.

Orders