Re Akron Roads Pty Ltd (in liquidation) (Ruling No 2) - [2016] VSC 199

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST

S CI 2013 01736

IN THE MATTER of AKRON ROADS PTY LTD (IN LIQUIDATION)
ROSS BLAKELEY, MICHAEL RYAN & QUENTIN OLDE (AS JOINT AND SEVERAL LIQUIDATOR OF AKRON ROADS PTY LTD (IN LIQUIDATION) and AKRON ROADS PTY LTD (IN LIQUIDATION)	Plaintiffs
v
TREVOR PAUL CREWE & ORS	Defendants

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JUDGE:	ROBSON J
WHERE HELD:	Melbourne
DATE OF HEARING:	28 April 2016
DATE OF RULING:	29 April 2016
CASE MAY BE CITED AS:	Re Akron Roads Pty Ltd (in liquidation) (Ruling No 2)
MEDIUM NEUTRAL CITATION:	[2016] VSC 199

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PRACTICE AND PROCEDURE – Whether challenge to standing must be determined at the commencement of the proceeding – Whether challenge to standing can be determined at the conclusion of the proceeding – Relevance of Civil Procedure Act 2010 (Vic) – Resolution of objection to standing deferred to the conclusion of the proceeding.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr PD Crutchfield QC with Dr O Bigos	King & Wood Mallesons
For the Fifth Defendant	Mr DJ O’Callaghan QC with Ms RL Enbom	Norton Rose Fulbright

HIS HONOUR:

Introduction

This is a proceeding by the first and second plaintiffs (Akron Roads Pty Ltd (in liquidation) (Akron) and its liquidators) for claims:

(a) against the first defendant (Mr Crewe), the second defendant and third defendant (together, the Sills) and the fourth defendant (Crewe Sharp), for liability, as directors, for insolvent trading under s 588M of the Corporations Act 2001 (Cth); and

(b) against the fifth defendant (CGU), for liability, under a professional indemnity insurance policy, to indemnify Mr Crewe and Crewe Sharp in respect of their insolvent trading liability.

Judgment, by consent, has been given against Mr Crewe. Akron and its liquidators have settled their claims against the Sills. That leaves for determination only the claims against Crewe Sharp and CGU.

CGU is defending the claims. Crewe Sharp, having itself gone into liquidation in 2014, is not defending the claims against it, and Akron and its liquidators wish to proceed to judgment against it as an undefended trial.

On Monday 18 April 2016, the trial of this proceeding commenced before me. I heard opening submissions from both parties.

The insurer, CGU, submitted in their opening that they assumed that the plaintiffs relied on s 117 of the Bankruptcy Act 1966, as the basis of the plaintiffs’ claims to be entitled to the moneys that CGU was obliged to indemnify Mr Crewe for under his policy with CGU. CGU submitted that s 117 was no longer apposite by reason of the deed of settlement that the plaintiffs and Mr Crewe had entered into.

The deed of settlement

On or around 23 March 2016, the plaintiffs and Mr Crewe entered into a deed of settlement resolving their claim against Mr Crewe. The deed of settlement provided in paragraph 2.1 under the heading, ‘Consent to judgment’:

(a) Trevor Crewe and Crewe Sharp consent to judgment being entered against them in…

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: [2016] VSC 199
Decision Date: 29 April 2016

CaseChat Overview and Summary

Akron Roads Pty Ltd, in liquidation, was the subject of a proceeding brought by its liquidators. The dispute centred on whether a challenge to the liquidators' standing to bring the proceeding could be deferred until the conclusion of the proceeding, rather than being determined at its commencement. The Supreme Court of Victoria was tasked with resolving this procedural issue.

The court needed to address whether the challenge to the standing of the liquidators could be deferred until the end of the proceeding, and if this was consistent with the provisions of the Civil Procedure Act 2010 (Vic). Specifically, the court considered whether the objection to standing could be deferred in light of the general principle that questions of standing should be determined as soon as possible, and the statutory requirement that the court must consider the merits of a proceeding without delay.

The court determined that the challenge to the liquidators' standing could indeed be deferred until the conclusion of the proceeding. The court reasoned that there were exceptional circumstances that justified deferring the challenge, including the liquidators' assertion that the challenged actions were necessary to preserve the estate and that the respondents were aware of the potential challenge. The court also noted that the statutory requirement to consider the merits of a proceeding without delay did not preclude deferring a challenge to standing in certain circumstances. The court found that the liquidators' actions were justifiable under the circumstances and that the respondents had not been prejudiced by the deferral.

The final orders of the court allowed the challenge to the liquidators' standing to be deferred until the conclusion of the proceeding. The court also directed the parties to proceed with the proceeding on the basis that the liquidators had standing, subject to the outcome of any final determination on the issue of standing. The court's decision provided clarity on the circumstances in which a challenge to standing could be deferred, and reinforced the importance of considering the merits of a proceeding without unnecessary delay.

Orders