Re Summit Design & Construction Pty Ltd - [1999] NSWSC 1136

Reported Decision: (1999) 33 ACSR 301
(2000) 18 ACLC 125

New South Wales

Supreme Court

CITATION: Re Summit Design & Construction [1999] NSWSC 1136

CURRENT JURISDICTION: Equity

FILE NUMBER(S): 4217/99

HEARING DATE(S): 22 November 1999

JUDGMENT DATE:
22 November 1999

PARTIES :

Summit Design & Construction Pty Limited (Applicant)

JUDGMENT OF: Austin J

COUNSEL : M J Heath (Applicant)
J Johnson (Respondent)

SOLICITORS: Cutler Hughes & Harris (Applicant)
Watson Mangioni (Respondent)

CATCHWORDS: CORPORATIONS - provisional liquidation - application for leave to bring proceedings against company - where proceedings will permit applicant to recover payment from company's debtor under Contractors Debts Act 1997 (NSW) - application refused; BUILDING & CONSTRUCTION - Contractors Debts Act 1997 (NSW) - subcontractor sought leave to sue building company in provisional liquidation, in order to obtain payment from principal under the Act - leave refused

ACTS CITED: Contractors Debts Act 1997 (NSW), ss 5, 6, 7, 8, 11, 14, 17, 19
Corporations Law, ss 471B, 472, 555, 556, 559

CASES CITED: Barclays Bank Ltd v Quitclose Investments Ltd [1970] AC 567
Bell Coal Pty Limited v UB Minerals Inc (in liq) [1999] NSWSC 3O1 (7 April 1999)
Costain Australia Ltd v Superior Pipe Installations Pty Ltd (Receiver Appointed) [1975] 1 NSWLR 491
Ogilvie-Grant v East (1983) 7 ACLR 669
Vagramd Pty Limited (in liq) v Fielding & Ors (1993) 10 ACSR 373

DECISION: Leave to bring proceedings refused, except to the extent of commencing them

THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

AUSTIN J

MONDAY 22 NOVEMBER 1999

4217/99 - RE SUMMIT DESIGN & CONSTRUCTION PTY LIMITED
JUDGMENT (Ex tempore; revised on 23 November 1999)

1   HIS HONOUR: This matter began with the filing of a summons and notice of motion on 6 October 1999. The summons seeks an order for the winding up of Summit Design & Construction Pty Limited, and the appointment of a liquidator of the company, and the notice of motion sought the appointment of a provisional liquidator. A provisional liquidator was duly appointed on that day.

2 By notice of motion filed on 9 November 1999 Wagstaff Piling Pty Limited seeks an order granting leave to it to commence proceedings against the company under s 471B of the Corporations Law. This is the application before the Court today.

3   The provisional liquidator of the company has appeared at today's hearing in order to make submissions to assist the Court to deal with the application. In effect, the provisional liquidator has drawn the Court's attention to matters which imply that the application should be denied.

4   The applicant is a manufacturer and supplier of piles used in construction. It is a subcontractor to the company. The company was appointed by another company called Sydney Park Development Pty Limited (the developer) to carry out building work on a development project in Alexandria, Sydney. The company defaulted in the payment of three invoices for work carried out by the applicant on this project. The first invoice, which the applicant rendered…

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: [1999] NSWSC 1136
Decision Date: 22 November 1999

CaseChat Overview and Summary

The applicant, a subcontractor, sought leave to bring proceedings against the respondent, a building company, which was in provisional liquidation. The dispute arose from an agreement between the parties, whereby the subcontractor provided services and materials to the respondent, but had not been fully paid. The subcontractor sought to recover the outstanding payment from the respondent's principal under the provisions of the Contractors Debts Act 1997 (NSW). The court was required to determine whether the subcontractor could proceed with its application for leave to sue the respondent, despite the respondent being in provisional liquidation.

The primary legal issue was whether the court had the jurisdiction to grant the subcontractor leave to bring proceedings against the respondent, given that the respondent was in provisional liquidation. The court considered the relevant statutory provisions, including section 11 of the Contractors Debts Act 1997 (NSW), which provides that a subcontractor may bring proceedings against a principal to recover any monies owed to the subcontractor by the principal. The court also considered the effect of the respondent's provisional liquidation on the subcontractor's ability to recover the outstanding payment.

The court held that, despite the respondent's provisional liquidation, the subcontractor could not be granted leave to bring proceedings against the respondent. The court found that the statutory provisions of the Contractors Debts Act 1997 (NSW) did not permit the subcontractor to recover payment from the respondent's principal while the respondent was in provisional liquidation. The court further held that the statutory provisions did not provide any mechanism for the subcontractor to recover the outstanding payment from the respondent's principal while the respondent was in provisional liquidation. The court therefore refused the subcontractor's application for leave to bring proceedings against the respondent.

The court did not make any orders in relation to the subcontractor's application for leave to bring proceedings against the respondent. The court's decision effectively prevented the subcontractor from recovering the outstanding payment from the respondent's principal while the respondent was in provisional liquidation.

Orders