Re Linknarf Management Services; Scarcella v Davies - [2006] NSWSC 497

Reported Decision:
57 ACSR 511

New South Wales

Supreme Court

CITATION: Re Linknarf Management Services; Scarcella & Ors v Davies [2006] NSWSC 497

HEARING DATE(S): 10 March 2006

JUDGMENT DATE :
26 May 2006

JURISDICTION: Equity

JUDGMENT OF: Austin J

DECISION: See under heading "Conclusions"

CATCHWORDS: CORPORATIONS - winding up - appeal against liquidator's decision to reject proof of debt - lessee repudiates lease by non-payment of rent - lessor sues for rent on basis that lease remains on foot - court enters judgment for lessor for rent up to termination of lease by lessor's acceptance of lessee's repudiation - lessor then proves in lessee's liquidation for damages for loss of rent from date of termination of lease to date of expiration of term of lease - whether lessor's proof of debt prevented by Anshun estoppel or on grounds of abuse of process

LEGISLATION CITED: Corporations Act 2001 (Cth), s 1321

CASES CITED: Blair v Curran (1939) 62 CLR 464
Boles v Esanda Finance Corporation Ltd (1989) 18 NSWLR 666
Brisbane City Council v Attorney-General (Q) [1979] AC 411
Buchanan v Byrnes (1906) 3 CLR 704
Gibbs v Cruikshank (1873) LR 8 CP 454
Greenhalgh v Mallard [1947] 2 All ER 255
Haines v Australian Broadcasting Commission (1995) 43 NSWLR 404
Henderson v Henderson (1843) 3 Hare 100
Jones v Carter (1846) 15 M & W 718
Lamson Store Service Co Ltd v Russell Wilkins & Sons Ltd (1906) 4 CLR 672
Mahesan v Malaysia Housing Society [1979] AC 374
New York Life Insurance Co v Viglas (1936) 297 US 672
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589
Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17
Rippon v Chilton Pty Ltd (2001) 53 NSWLR 198
Scarcella v Linknarf Management Services Pty Ltd (in liq) [2004] NSWSC 360
Scarcella v Linknarf Management Services Pty Ltd (in liq) [2004] NSWSC 1168
Sea Culture International Pty Ltd v Scoles (1991) 32 FCR 275
United Australia Ltd v Barclays Bank Ltd [1941] AC 1
Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC 581

PARTIES: Francisco Scarcella, Helen Scarcella and Rocky Scarcella (Ps)
Ronald George Davies (D)

FILE NUMBER(S): SC 3999/05

COUNSEL: V R Gray (P)
D B Studdy (D)

SOLICITORS: Corporate & Civil Legal (P)
Gilbert + Tobin (D)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

AUSTIN J

FRIDAY 26 MAY 2006

3999/05 IN THE MATTER OF LINKNARF MANAGEMENT SERVICES PTY LTD (IN LIQ); FRANCISCO SCARCELLA & ORS V RONALD GEORGE DAVIES

JUDGMENT

1 HIS HONOUR: This is an appeal, brought under s 1321 of the Corporations Act 2001 (NSW), against a decision of a liquidator. The defendant is the liquidator of Linknarf Management Services Pty Ltd (in liq) ("Linknarf"). The plaintiffs seek an order reversing his decision to reject their proof of debt dated 20 April 2005 for $792,266.65, and an order requiring the liquidator to admit the plaintiffs as creditors of Linknarf for…

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: [2006] NSWSC 497
Decision Date: 26 May 2006

CaseChat Overview and Summary

In this case, the liquidator of Linknarf Management Services was asked to consider a proof of debt submitted by Scarcella, the former lessor of Linknarf's premises. The liquidator rejected the proof of debt, and Scarcella appealed to the court. The dispute centred around whether Scarcella's claim for damages for loss of rent was barred by the Anshun estoppel or constituted an abuse of process.

The court was required to determine whether the Anshun estoppel applied to prevent Scarcella from pursuing his claim for damages for loss of rent in the liquidation proceedings. The court also had to decide whether the claim amounted to an abuse of process. The Anshun estoppel is a principle of equity that prevents a party from asserting a claim that is inconsistent with a judgment or order made in a previous proceeding between the same parties or involving the same subject matter. Abuse of process refers to the improper use of legal proceedings to achieve an end that is not within the scope of the legal process.

The court found that the Anshun estoppel did not apply to prevent Scarcella's claim for damages for loss of rent. The court held that the previous judgment for rent up to the termination of the lease did not prevent Scarcella from pursuing his claim for damages for loss of rent after the termination of the lease. The court also found that Scarcella's claim did not amount to an abuse of process. The court held that Scarcella's claim was within the scope of the legal process and was not an improper use of legal proceedings.

The court allowed Scarcella's appeal and ordered the liquidator to consider his proof of debt. The liquidator was directed to determine whether Scarcella's claim for damages for loss of rent was a provable debt in the liquidation proceedings. The court held that the Anshun estoppel did not apply to prevent Scarcella's claim and that his claim did not amount to an abuse of process. The liquidator was directed to consider Scarcella's proof of debt on its merits.

Orders