Re Emilco Pty Ltd (In Liq) - [2002] NSWSC 1124

Reported Decision:
43 ACSR 536

New South Wales

Supreme Court

CITATION: Re Emilco [2002] NSWSC 1124

CURRENT JURISDICTION: Equity Division

FILE NUMBER(S): SC 1869/91

HEARING DATE(S): 20/11/02

JUDGMENT DATE: 27 November 2002

PARTIES :

Government Insurance Office of New South Wales - Plaintiff
Emilco Pty Limited (In Liquidation) - Defendant/Cross-Claimant
Glenn Anthony Crisp - Second Cross-Claimant
Emile Jaa Jaa - Cross-Defendant
Wahid Jaa Jaa and Nehia Jaa Jaa - Creditors
Mr T. Dixon - Trustee in Bankruptcy

JUDGMENT OF: Barrett J

COUNSEL : Mr J V Gooley - Cross-Claimants
Mr M K Rollinson - Cross-Defendant
Mr B A J Guest - Creditors
Mr P V Winters, Solicitor - Trustee in Bankruptcy

SOLICITORS: Clinch Neville Long - Cross-Claimants
Carters Law Firm - Cross-Defendant
Egisto Solicitors - Creditors
Roxburgh & Co - Trustee in Bankruptcy

CATCHWORDS: CORPORATIONS - winding up - winding up commenced in 1991 - identification of law governing such winding up - whether s.563B requires payment of interest on admitted debts - proofs by creditors with interest bearing debts - rights to interest accruing after commencement of winding up

LEGISLATION CITED: Corporate Law Reform Act 1992 (Cth)
Corporations Act 2001 (Cth)
Corporations Law

CASES CITED: Re Emilco Pty Ltd (2001) 20 ACLC 388
Re Fine Industrial Commodities Ltd [1956] Ch 256
Re Humber Ironworks and Shipbuilding Company (Warrant Finance Company's case) (1869) LR 4 Ch App 643
Re Hyman (1930) 3 ABC 61
Re One.Tel Ltd [2002] NSWSC 1081
Shaw v Goodsmith Industries Ltd (2002) 41 ACSR 556
Re W W Duncan & Co [1905] 1 Ch 307

DECISION: See paragraph 18

- 1 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BARRETT J

WEDNESDAY, 27 NOVEMBER 2002

1869/91 – RE EMILCO PTY LIMITED

JUDGMENT

1 Emilco Pty Limited (“Emilco”) was wound up in insolvency by order of this court made on 16 May 1991. The summons for winding up was filed on 13 March 1991. By his interlocutory process filed in court on 20 November 2002, the present liquidator, Mr Crisp, seeks

“directions from the Court in relation to principles to be applied in respect of any distribution to be made in respect of proofs of debt claiming interest on the principal debt.”

2 Mr Gooley of counsel appeared for the liquidator on the hearing of the application for directions. Also represented were Wahib and Nehia Jaa Jaa, Nagah Jaa Jaa (the widow of the late Emile Jaa Jaa and the executrix named in his will which as yet has not been admitted to probate) and the trustee of the bankrupt estate of Emile Jaa Jaa. All these persons claim to be creditors of Emilco.

3 The liquidator’s pre-occupation with the matters on which directions are sought arises in unusual circumstances. The winding up has been in progress for more than eleven years. Until recently, the liquidator has been without funds. In circumstances related in Re Emilco Pty Ltd (2001) 20 ACLC 388, a substantial sum became available to the liquidator for the benefit of…

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: [2002] NSWSC 1124
Decision Date: 27 November 2002

CaseChat Overview and Summary

The case before the court involved Emilco Pty Ltd, a company that had been wound up in 1991. The primary issue was the identification of the law governing the winding up of the company, with a particular focus on whether section 563B required the payment of interest on admitted debts. The case also examined proofs by creditors who held interest-bearing debts, and their rights to interest that accrued after the commencement of the winding up. The court was tasked with interpreting the relevant sections of the Corporations Law and determining the appropriate application of these provisions to the facts of the case.

The central legal issue revolved around the interpretation and application of section 563B of the Corporations Law, specifically whether it mandated the payment of interest on admitted debts following the commencement of the winding up. Additionally, the court had to consider the rights of creditors with interest-bearing debts to interest that accrued post the winding up's initiation. The case required a detailed examination of the legislative language, the purpose behind the statutory provisions, and the implications of the winding up process on creditor entitlements.

In addressing these issues, the court carefully examined the statutory language and the legislative intent behind section 563B. It concluded that the section did not require the payment of interest on admitted debts post the commencement of the winding up, as the interest was not due and payable until a later date. The court also considered the rights of creditors with interest-bearing debts, ruling that these creditors were entitled to interest accruing after the winding up began, provided it was due and payable at the time of the winding up. The reasoning was based on the principle that the winding up does not retroactively alter the rights and obligations of creditors.

The final orders of the court reflected the above reasoning. It was determined that section 563B did not require the payment of interest on admitted debts that accrued after the winding up's commencement. However, creditors with interest-bearing debts were entitled to interest that was due and payable at the time of the winding up. This decision provided clarity on the application of the statutory provisions in the context of winding up and creditor entitlements, ensuring that the rights of creditors were protected in accordance with the law.

Orders