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Re Gladstone Mortgagee No 1 Pty Ltd

Re Gladstone Mortgagee No 1 Pty Ltd

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Case Copied 20 October 2015 64 min read

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Supreme Court

New South Wales

Amendment notes

Medium Neutral Citation: In the matter of Gladstone Mortgagee No 1 Pty Ltd [2015] NSWSC 1551
Hearing dates: 28 August, 3 September 2015
Decision date: 20 October 2015
Jurisdiction: Equity - Corporations List
Before: Black J
Decision:
Order that the First Defendant, Gladstone Mortgagee No 1 Pty Ltd, be wound up in insolvency. Order that Robert Kite and Mark Hutchins be appointed joint and several liquidators. The Plaintiffs’ costs of and incidental to the application be assessed and reimbursed out of the Defendant’s assets.

Catchwords:
CORPORATIONS – winding up – application based on failure to comply with creditor’s statutory demand – where the debt the subject of the statutory demand was a judgment debt of the Supreme Court of Queensland – where payments were paid into Court as security for costs exceeding the demand amount – whether demand complied with because the sum was paid, secured or compounded to the reasonable satisfaction of the Plaintiffs.

CORPORATIONS – winding up – standing to bring winding up application – where creditors who brought application were judgment creditors – where Defendant argued that the amount the subject of the demand was effectively paid as a result of a court ordering payment of that debt – whether the Plaintiffs have standing.
CORPORATIONS – winding up – abuse of process – where Defendant argued the winding up application was a collateral attack on orders of the Supreme Court of Queensland – whether application to wind up the company an abuse of process or brought for an improper purpose.
Legislation Cited:
- Corporate Law Reform Act 1992 (Cth)
- Corporations Act 2001 (Cth) ss 9, 95A(1), 95A(2), 459E, 459E(2), 459E(3), 459J, 459P, 459S, 466(2), 467, 467(1), 588FE, 588FA(1)
- Evidence Act 1995 (NSW) s 136
- Supreme Court (Corporations) Rules 1999 (NSW) r 5.2
- Uniform Civil Procedure Rules 1999 (Qld) rr 660, 661(4), 687
- Uniform Civil Procedure Rules 2005 (NSW) sch 7
Cases Cited: - Ace Contractors and Staff Pty Ltd v Westgarth Development Pty Ltd [1999] FCA 728
- Australian Beverage Distributor Pty Ltd v Evans & Tate Premium Wines Pty Ltd [2007] NSWCA 57; (2007) 61 ACSR 441
- Australian Beverage Distributors v Redrock [2007] NSWSC 966
- Australian Mid-Eastern Club v Yassim (1989) 1 ACSR 399
- Australian Securities and Investments Commission v Lanepoint Enterprises Pty Ltd (recs and mgrs apptd) [2011] HCA 18; (2011) 244 CLR 1
- Australian Securities and Investments Commission v Plymin (No 1) [2003] VSC 123; (2003) 175 FLR 124
- Bentley Smythe Pty Ltd v Anton Fabrications (NSW) Pty Ltd [2011] NSWSC 186; (2011) 248 FLR 384
- Bidald Consulting Pty Ltd v Miles Special Builders Pty Ltd [2005] NSWSC 397; (2005) 54 ACSR 228
- Braams Group Pty Ltd v Miric [2002] NSWCA 417
- Campbell Street Theatre Pty Ltd (recs and mgrs apptd) (in liq) v Commercial Mortgage Trade Pty Ltd [2012] NSWSC 669
- Commonwealth Bank of Australia v Parform…

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: [2015] NSWSC 1551
Decision Date: 20 October 2015

CaseChat Overview and Summary

In the matter of Re Gladstone Mortgagee No 1 Pty Ltd, the primary issue before the court was the validity of a winding-up application filed by creditors of the company. The creditors argued that the company had failed to comply with a statutory demand due to the payment of the debt into court as security for costs, which exceeded the amount of the demand. The company contended that the demand had been satisfied because the sum was paid, secured, or compounded to the creditor's reasonable satisfaction. Furthermore, the company claimed that the application was brought for an improper purpose and was an abuse of process.

The court considered the requirement for creditors to have standing to bring a winding-up application, particularly when they were judgment creditors. The company argued that since the debt had been paid as ordered by the Supreme Court of Queensland, the creditors did not have standing to bring the application. The court had to determine whether the creditors retained their standing despite the payment of the debt into court.

The court concluded that the statutory demand had been effectively complied with as the debt had been paid, secured, or compounded in a manner that satisfied the creditors. The court also found that the creditors had standing to bring the winding-up application as the satisfaction of the debt did not preclude them from doing so. Additionally, the court rejected the argument that the application was an abuse of process, holding that the application was not brought for an improper purpose.

The court ordered that the company be wound up, dismissing the company's contentions that the creditors lacked standing and that the application was an abuse of process.

Orders