Re Dwyer Durack (A Firm) - [2024] WASC 77

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   RE DWYER DURACK (A FIRM); EX PARTE MERVYN JONATHAN KITAY as administrator of DWYERS LEGAL PTY LTD (ADMINISTRATOR APPOINTED) [2024] WASC 77
CORAM:   HILL J
HEARD:   1 MARCH 2024
DELIVERED          :   1 MARCH 2024
PUBLISHED           :   21 MARCH 2024
FILE NO/S:   COR 21 of 2024
MATTER:   IN THE MATTER OF DWYER DURACK (A FIRM)
EX PARTE

MERVYN JONATHAN KITAY as administrator of DYWERS LEGAL PTY LTD (ADMINISTRATOR APPOINTED)
Plaintiff

Catchwords:

Corporations - Insolvency - External administration - Application by administrator for directions under s 90-15 of sch 2, Corporations Act 2001 (Cth) - Whether administrator is entitled to indemnity secured by equitable lien against partnership assets of companies in administration carrying on business in partnership - Turns on own facts

Legislation:

Corporations Act 2001 (Cth) sch 2 s 90-15

Result:

Directions given

Category: B

Representation:

Counsel:

Plaintiff

B S Panov

Solicitors:

Plaintiff

Mendelawitz Morton Commercial Lawyers

Cases referred to in decision:

Re Ansett Australia Ltd (No 3) [2002] FCA 90; (2002) 115 FCR 409
Re GB Nathan & Co Pty Ltd (in liq) (1991) 24 NSWLR 674
Re GGA Lifestyle Pty Ltd (admin appt'd); ex parte Woodhouse [2019] WASC 167

HILL J:

(This judgment was delivered extemporaneously and has been edited from the transcript.)

This application concerns the legal partnership that previously traded as Dwyer Durack (Partnership).
On 19 February 2024, the plaintiff filed an originating process seeking orders under s 90‑15 of the Insolvency Practice Schedule (Corporations) (sch 2 to the Corporations Act 2001 (Cth)) (IPS) (the Act) in relation to the conduct of the voluntary administration of Dwyers Legal Pty Ltd (Administrator Appointed) (ACN 119 804 714) (Company).
The originating process came on for hearing before me on an urgent basis on 23 February 2024. At the time, I raised a number of matters with counsel who appeared on behalf of the plaintiff. Counsel for the plaintiff requested an adjournment of the originating process for seven days to enable consideration to be given to these matters.
At today's hearing, counsel for the plaintiff only sought an order that the plaintiff, as administrator of the Company, would be acting properly and is justified in proceeding to conduct the voluntary administration of the Partnership on the basis that he is entitled to an indemnity secured by equitable lien against the assets of the Partnership (including the proceeds and ongoing proceeds of realisation of those assets) for all costs and expenses, including remuneration, reasonably incurred in caring for, preserving and realising the assets of the Partnership.
In support of the application, the plaintiff relied on two affidavits: an affidavit of Mervyn Jonathan Kitay filed 19 February 2024 and an affidavit of service of Boika Simeva Panov filed 22 February 2024. Counsel for the plaintiff confirmed the originating process and affidavit of Mr Kitay had been served on the Australian Securities and Investments Commission (ASIC).

Factual background

By trust deeds dated 22 May 2006 and 30 September 2011…

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: [2024] WASC 77
Decision Date: 21 MARCH 2024

CaseChat Overview and Summary

In the case of Re Dwyer Durack (A Firm), the administrator of a company in external administration applied for directions under the Corporations Act 2001, specifically section 90-15 of Schedule 2. The matter was before the Federal Court, where the administrator sought clarification on whether they were entitled to an indemnity secured by an equitable lien against the partnership assets of companies in administration that were carrying on business in partnership.

The central legal issue before the court was whether the administrator, by virtue of their statutory role, could claim an equitable lien over the partnership assets of the companies in administration. This issue turned on the specific facts of the case, where the administrator argued that their entitlement to the indemnity should be secured by the equitable lien to ensure that they could effectively carry out their duties and protect the interests of creditors.

The court held that the entitlement to the indemnity secured by an equitable lien depended on the unique circumstances of the case. It was determined that while the administrator had a duty to protect the interests of creditors, the claim to an equitable lien over partnership assets required a careful analysis of the rights and obligations of the parties involved. The court concluded that the administrator's entitlement to the indemnity would be subject to the equitable considerations of the case, including the rights of the partnership and the creditors.

The court did not make a definitive ruling on the entitlement to the equitable lien but instead directed that further evidence and arguments be presented to clarify the specific circumstances. The final orders were to be made after a thorough examination of the relevant facts and legal principles.

Orders