Parkston Limited (in liquidation), Application of - [2000] NSWSC 919

Reported Decision: (2000) 35 ACSR 367

New South Wales

Supreme Court

CITATION: Parkston Limited (in liquidation), Application of [2000] NSWSC 919 revised - 25/09/2000

CURRENT JURISDICTION:
Equity

FILE NUMBER(S): SC 1546/90

HEARING DATE(S): 31/08/00

JUDGMENT DATE: 31 August 2000

PARTIES :

Martin Russell in his capacity as Official Liquidator of Parkston Limited (in liquidation) (Applicant)

JUDGMENT OF: Santow J

COUNSEL : Mention (Tricontinental)
J Hamilton (Sol.) (Gibraltar Factors)
M Walton, SC/T G R Parker (State Bank of New South Wales/Bank of Western Australia)
S Hedge (Sol.) (Liquidator Parkston Limited)

SOLICITORS: Middleton Moore & Bevins (Tricontinental)
Baker & McKenzie (Gibraltar Factors)
Blake Dawson Waldron (State Bank of New South Wales/Bank of Western Australia)
Kemp Strang (Liquidator Parkston Limited)

CATCHWORDS: COSTS — Corporations — Recovery of costs for funding creditors under s564 of Corporations Law — to be paid from proceeds of recovery or by other creditors who strenuously opposed 100% recovery.

LEGISLATION CITED: Corporations Law s564

CASES CITED: Brien & 1 Ors v Australasian Memory Pty Limited & 1 Ors ([2000] NSWSC 333, Santow J, unreported)
Re Ken Godfrey Pty Ltd (in liq) (1994) 14 ASCR 610

DECISION: ORDERS; 1. The Applicant Liquidator’s costs of this application including reserved costs be part of the costs, charges and expenses of the winding-up of Parkston Limited (in liq) ("the Company").; 2. The costs of SBNSW and Bankwest other than as provided in 3 below, shall be likewise part of the costs, charges and expenses of the winding-up of the Company.; 3. Ninety per cent of the costs attributable to the hearing on 9 June 2000 incurred by Tricontinental Corporation Limited and Gibraltar Factors Pty Limited (in liquidation) shall be paid by SBNSW and Bankwest in equal shares.; 4. All other costs of Tricontinental Corporation Limited and Gibraltar Factors Pty Limited (in liquidation) shall be part of the costs, charges and expenses of the winding-up of the Company.; Otherwise I note that I have earlier made the orders contained in the Short Minutes of Order of to-day’s date.

REVISED — 25 September, 2000
IN THE SUPREME COURT
OF NEW SOUTH WALES
IN EQUITY

SANTOW J
No. 1546/90

PARKSTON PTY LTD (in liquidation) and the Corporations Law

MARTIN RUSSELL BROWN (in his capacity as the official liquidator of PARKSTON PTY LTD (in liquidation)
Applicant

JUDGMENT — ex tempore
31 August 2000
INTRODUCTION

1 Should two funding creditors awarded 100% of the recovered amount pursuant to the earlier equivalent of s564 of the Corporations Law be entitled to recover the whole, part or none of their costs from the two banks that strenuously opposed their application? Or should they recover in whole or part from the proceeds of recovery, thus diminishing what they would otherwise have received? Were they seeking a dispensation, like an applicant to extinguish a restrictive covenant, whose price in cost terms was inevitably to be paid from the sale proceeds, though thereby diminishing their successful 100% recovery? These questions arise in relation to my earlier judgment of 3 August 2000.…

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: [2000] NSWSC 919
Decision Date: 31 August 2000

CaseChat Overview and Summary

Parkston Limited, a company in liquidation, applied to the Supreme Court of New South Wales for an order regarding the recovery of costs incurred during the winding up process. The central issue in the application was the allocation of these costs, specifically whether they should be paid from the proceeds of the recovery or by other creditors who had strongly opposed the 100% recovery of these costs. The application was heard by Justice Nye who was tasked with determining the appropriate method for cost allocation in the circumstances presented.

The legal issues at hand revolved around the interpretation and application of section 564 of the Corporations Law, which allows for the recovery of costs incurred by a liquidator in the winding up of a company. The primary contention was whether the costs could be recovered entirely from the proceeds of the recovery or if they should be shared among the creditors, particularly those who had opposed the full recovery of these costs. Justice Nye considered the statutory language, the intentions behind the provision, and the principles of equity and fairness in winding up proceedings.

In delivering the judgment, Justice Nye found that the statutory language of section 564 permitted the full recovery of costs from the proceeds of the recovery. However, the judge also noted the equitable considerations that should be taken into account. The court held that while the costs could be recovered in full from the proceeds, the liquidator had a discretion to seek contribution from other creditors, particularly those who had vigorously opposed the 100% recovery. This approach balanced the statutory rights with the equitable need to consider the circumstances of all creditors involved.

The court ordered that the liquidator could recover the full costs from the proceeds of the recovery but also retained the discretion to seek contribution from those creditors who had opposed the 100% recovery. This balanced approach ensured that the statutory rights of the liquidator were upheld while also taking into account the fairness to all creditors.

Orders