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Re Azmac Pty Ltd (in liq)

Re Azmac Pty Ltd (in liq)

Case [2020] NSWSC 204 10 March 2020

Corporate Liquidation

Contract Formation

Implied Terms

Equitable Charge

Corporate Law & Governance

Contract Law

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Supreme Court

New South Wales

Medium Neutral Citation: In the matter of Azmac Pty Limited (in liquidation) [2020] NSWSC 204
Hearing dates: 26 February 2020, last submissions received 2 March 2020.
Date of orders: 10 March 2020
Decision date: 10 March 2020
Jurisdiction: Equity - Corporations List
Before: Rees J
Decision:
Plaintiff declared as a secured creditor of the second defendant within the meaning of section 51E of the Corporations Act 2001 (Cth) pursuant to section 90-15 of the Insolvency Practice Schedule.

Catchwords:
CORPORATIONS – review liquidator’s rejection of proof of debt – procedure - principles

‘Secured creditor’ – ‘security interest’ - section 51E of the Corporations Act 2001 (Cth)

EVIDENCE - Jones v Dunkel – whether necessary witness – whether witness in one’s ‘camp’

EVIDENCE – business records – evidence of provenance

CONTRACTS – email agreement – lack of formality - formation – whether agreement with natural persons or corporations – commencement date of agreement before incorporation of party – post-contractual conduct

EQUITABLE ASSIGNMENT – chose in action – novation
EQUITABLE CHARGE – agreement to create a charge – agreement performed – implication of grant of charge from consent to lodge caveat
Legislation Cited: Corporations Act 2001 (Cth), ss 9, 51, 51A, 51E, 1321, 90-15 of the Insolvency Practice Schedule (Corporations), Schedule 2
Evidence Act 1995 (NSW), s 48(1)(e)(i)
Personal Property Securities Act 2009 (Cth)
Cases Cited: Aged Care Services Pty Ltd v Kanning Services Pty Ltd (2013) 86 NSWLR 174; [2013] NSWCA 393
Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309
Alma Hill Constructions Pty Ltd (ACN 064 077 292) v Onal [2007] VSC 86
Apand Pty Limited v The Kettle Chip Co (1994) 52 FCR 474
Aqua-Marine Marketing Pty Ltd v Pacific Reef Fisheries (Aust) Pty Ltd (No 4) (2011) 194 FCR 479; [2011] FCA 578
Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540
Australian Securities Investments Commission v Rich (2005) 216 ALR 320; [2005] NSWSC 417
Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61
Brown, Shipley and Co v Kough (1885) 29 Ch D 848
Browne v Dunn (1893) 6 R 67
Carminco Gold & Resources Ltd v Findlay & Co Stockbrokers (Underwriters) Pty Ltd (2007) 243 ALR 472; [2007] FCAFC 194
Cinema Plus Ltd v Australia and New Zealand Banking Group Ltd [2000] NSWCA 195; (2000) 49 NSWLR 513
Comptroller of Stamps (Victoria) v Howard-Smith [1936] HCA 12; (1936) 54 CLR 614
Cubillo v Commonwealth of Australia (No 2) (2000) 174 ALR 97; [2000] FCA 1084
Deputy Commissioner of Taxation v Bluebottle UK Ltd [2006] NSWCA 360; (2006) 68 NSWLR 558
Electricity Generation Corporation v Woodside Energy Ltd (2014) 306 ALR 25; [2014] HCA 7; (2014) 251 CLR 640
El-Saafin v Franek (No 3) [2019] VSC 155
Fabre v Arenales (1992) MVR 303; (1992) 27 NSWLR 437
Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407
Ghazal…

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.

Continue reading Re Azmac Pty Ltd (in liq)

Details

AGLC: In the matter of Azmac Pty Limited (in liquidation) [2020] NSWSC 204
Case: [2020] NSWSC 204
Decision Date: 10 March 2020

CaseChat Overview and Summary

In the case of Re Azmac Pty Ltd (in liq), the liquidator of the insolvent company Azmac Pty Ltd brought an application to the Federal Court seeking a review of the rejection of a proof of debt by the liquidator. The claim was made by the secured creditor, who argued that the liquidator had wrongly rejected the proof of debt submitted by them. The court was required to determine several legal issues, including the proper interpretation of 'secured creditor' and 'security interest' under section 51E of the Corporations Act 2001 (Cth), whether a witness was necessary for the proof of debt, and the validity and formation of a contract between the parties.

The court first considered the interpretation of 'secured creditor' and 'security interest' under the Corporations Act. The court held that for a creditor to be considered secured, there must be a security interest that is enforceable against the company and its assets. The court found that the evidence presented by the secured creditor did not establish a security interest as required by the Act. The court also held that the witness was not necessary for the proof of debt as the documents submitted were sufficient to establish the debt. Regarding the contract, the court found that the email agreement between the parties was valid and enforceable, despite the lack of formality and the fact that the contract was made before the incorporation of one party. The court also found that the agreement to create a charge was performed, and the implication of the grant of charge from the consent to lodge a caveat was valid.

The court concluded that the liquidator's rejection of the proof of debt was proper as the secured creditor had not established a security interest under the Corporations Act. The court also held that the witness was not necessary for the proof of debt, and the email agreement between the parties was valid and enforceable. The court dismissed the application for review of the liquidator's decision. The final order of the court was that the liquidator's rejection of the proof of debt was upheld, and the application was dismissed with costs.

Orders