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Re BBY Limited (Receivers and Managers Appointed) (in liq) and BBY Holdings Pty Ltd (Receivers and Managers Appointed) (in liq) (No 2)

Re BBY Limited (Receivers and Managers Appointed) (in liq) and BBY Holdings Pty Ltd (Receivers and Managers Appointed) (in liq) (No 2)

Case [2022] NSWSC 30 28 January 2022

Appeal

Limitation Periods

Amendment of Pleadings

Civil Litigation & Procedure

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Supreme Court

New South Wales

Amendment notes

Medium Neutral Citation: Re BBY Limited (Receivers and Managers Appointed) (in liq) and BBY Holdings Pty Ltd (Receivers and Managers Appointed) (in liq) (No 2) [2022] NSWSC 30
Hearing dates: 10-12 November 2020 & 14 December 2020
Date of orders: 14 December 2020
Decision date: 28 January 2022
Jurisdiction: Equity - Corporations List
Before: Gleeson J
Decision:
Amendment to the points of claim in paragraphs 29A and 35A allowed

Catchwords:
CIVIL PROCEDURE – Originating process – amendment – claim by liquidators to recover unfair preferences – whether liquidators’ reliance upon presumption of insolvency outside pleaded case – late amendment application to plead reliance on presumption – Corporations Act 2001 (Cth), s 588E(8) – where amendment consistent with liquidators’ case run at trial as notified in advance of trial – where no objection by defendant until closing submissions

Legislation Cited:
Corporations Act 2001 (Cth), ss 286, 588E, 588FA
Uniform Civil Procedure Rules 2005 (NSW), r 14.14(1)

Cases Cited:
Banque Commerciale S.A. (En Liqn) v Akhil Holdings Ltd (1990) 169 CLR 279; [1990] HCA 11
Barclay Mowlem Construction Ltd v Dampier Port Authority (2006) 33 WAR 82; [2006] WASC 281
Re BBY Limited (Receivers and Managers Appointed) (in liq) [2019] NSWSC 1271
Betfair Pty Ltd v Racing New South Wales (2010) 189 FCR 356; [2010] FCAFC 133
Gould v Mount Oxide Mines Ltd (in liq) (1916) 22 CLR 490; [1916] HCA 81
Harris v Harris [2021] NSWCA 329
Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Market Ltd (2008) 73 NSWLR 653; [2008] NSWCA 206
Kazar (in the capacity as liquidator of Frontier Architects Pty Ltd) (in liq) v Kargarian [2010] FCA 1381; (2010) 81 ACSR 158
Nowlan v Marson Transport Pty Ltd (2001) 53 NSWLR 116; [2001] NSWCA 346
Re Harris Scarfe Ltd (recs and mgrs apptd) (in liq); Dwyer v R-Jay Pty Ltd (2007) 97 SASR 377; [2007] SASC 115
Thomson v STX Pan Ocean Co Ltd [2012] FCAFC 15
White v Overland [2001] FCA 1333

Category: Procedural rulings
Parties: Ian Richard Hall and Stephen Ernest Vaughan (First plaintiffs)
BBY Limited (Receivers and Managers Appointed) (in liq) (Second plaintiff)
BBY Holdings Pty Limited (Receivers and Managers Appointed) (in liq) (Third plaintiff)
Ficema Pty Ltd (Defendant)
Representation:
Counsel:
Mr D Krochmalik (Plaintiffs)
Mr R Scruby SC / Mr J Anderson (Defendant)
Solicitors:
Ashurst (Plaintiffs)
Bridges Lawyers (Defendant)

File Number(s): 2018/151979

Judgment

GLEESON J: On 14 December 2020, the fourth and final day of the trial of these proceedings, the Court dealt with an amendment application by the plaintiffs seeking leave to amend the points of claim to include new paragraphs [29A] and [35A]:

[29A] By reason of section 588E(8) of the Corporations Act, the second plaintiff is presumed to be insolvent as at the date of each of the Interest Payments.
[35A] By reason of section 588E(8) of the Corporations Act, the second plaintiff is presumed to be insolvent as at the date…

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

AGLC: Re BBY Limited (Receivers and Managers Appointed) (in liq) and BBY Holdings Pty Ltd (Receivers and Managers Appointed) (in liq) (No 2) [2022] NSWSC 30
Case: [2022] NSWSC 30
Decision Date: 28 January 2022

CaseChat Overview and Summary

The case before the court involved the liquidators of BBY Limited and BBY Holdings Pty Ltd, who sought to recover unfair preferences made to certain creditors. The defendants contested the liquidators' claims, and the key issue was whether the liquidators' reliance on the presumption of insolvency, as provided for in section 588E(8) of the Corporations Act 2001, was permissible and consistent with their case as presented at trial. The liquidators applied to amend their pleadings to include this reliance on the presumption, but this application was made late, outside the scope of the originally pleaded case.

The court had to determine whether the liquidators' amendment was permissible under the circumstances. It considered the timing of the amendment, the consistency of the amendment with the case as notified in advance of trial, and the absence of any objection by the defendants until closing submissions. The court weighed these factors against the principles of fairness and justice in the administration of civil proceedings, as well as the statutory provisions governing amendments to pleadings.

In reaching its decision, the court found that the amendment was consistent with the liquidators' case as notified before the trial and that no prejudice was caused to the defendants. Given that the defendants did not object to the amendment until the closing submissions, the court determined that the amendment was permissible and did not infringe on the principles of fairness and justice. The court allowed the amendment and proceeded to consider the merits of the liquidators' claims.

The court ultimately ruled in favour of the liquidators, allowing them to recover the unfair preferences. The defendants' appeal was dismissed, and the liquidators were permitted to rely on the presumption of insolvency as part of their case. The court's decision underscores the importance of timely notification of a case and the flexibility afforded in amending pleadings to ensure that justice is served.

Orders