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Re Swan Services Pty Ltd (in liq)

Re Swan Services Pty Ltd (in liq)

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Case Copied 2 June 2017 34 min read

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Supreme Court

New South Wales

Medium Neutral Citation: In the matter of Swan Services Pty Limited (in liquidation) [2017] NSWSC 692
Hearing dates: 12 May 2017
Decision date: 02 June 2017
Jurisdiction: Equity - Corporations List
Before: Black J
Decision:
The Court holds that the Plaintiff should pay the costs of her claim and the Cross-Claim in respect of the Plaintiff’s 2013 charge on an ordinary basis to 18 July 2016 and an indemnity basis from 19 July 2016 to 6 December 2016, including the costs of the Cross-Claimants’ proof of the First Cross-Claimant’s insolvency in that Cross-Claim (being a proportion of their wider costs of proof of insolvency); and that the Cross-Claimants pay the Cross-Defendant’s costs of their Cross-Claim for insolvent trading, excluding costs referable to proof of insolvency, on an ordinary basis.

Catchwords:
PRODEDURE — Costs — Departing from the general rule – where Plaintiff and Cross-Claimants did not accept Calderbank offers in respect of the Plaintiff’s claim and the cross-claim respectively – whether it was unreasonable for the parties not to accept the Calderbank offers
PROCEDURE — Costs — General rule – where First Cross-Claimant required to prove insolvency of a company as at particular dates in defending the Plaintiff’s claim and prosecuting a Cross-Claim as to the 2013 charge and Cross-Claimants required to prove insolvency as at other dates in prosecuting a cross-claim for insolvent trading – whether Cross-Defendant should be ordered to pay the Cross-Claimants’ costs of proving insolvency where she was successful in defending a cross-claim for insolvent trading but unsuccessful in her own claim and in defending the cross-claim relating to the 2013 charge – whether costs ordered in favour of the Cross-Defendant of the unsuccessful cross-claim for insolvent trading should exclude the costs of proof of the companies’ solvency
Legislation Cited: - Civil Procedure Act 2005 (NSW), ss 98, 100
- Corporations Act 2001 (Cth), ss 588E(3), 588FF, 588FM, 588G, 588M, 588W, 1317S
- Uniform Civil Procedure Rules 2005 (NSW), Pt 42, rr 20.26, 42.1, 42.5, 42.15
Cases Cited: - Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304
- Calderbank v Calderbank [1975] 3 WLR 586
- Commonwealth of Australia v Gretton [2008] NSWCA 117
- Corbett Court Pty Ltd v Quasar Constructions (NSW) Pty Ltd [2008] NSWSC 1423
- County Securities Pty Ltd v Challenger Group Holdings Pty Ltd (No 2) [2008] NSWCA 273
- Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219
- Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20
- Hamod v State of New South Wales [2011] NSWCA 375
- Heath v Greenacre Business Park Pty Ltd [2016] NSWCA 34
- Kraissa v Hair Industrie Penrith Pty Ltd [2015] NSWSC 1905
- Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15
- Nu Line Construction Group Pty Ltd v Fowler (aka Grippaudo) [2012] NSWSC 81
- Re Alsafe Security Products Pty Ltd atf The Alsafe Trust (in liq) [2016]…

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: [2017] NSWSC 692
Decision Date: 02 June 2017

CaseChat Overview and Summary

In the liquidation of Swan Services Pty Ltd, the plaintiff, Swan Services, and the cross-claimants, two directors of the company, engaged in a dispute concerning the company's financial status and related claims. The case was heard by the Federal Court of Australia. The central issue was the allocation of costs in relation to the unsuccessful Calderbank offers made by the plaintiff and cross-claimants and the determination of whether the cross-defendant should bear the costs of proving insolvency in specific circumstances.

The legal issues revolved around whether it was unreasonable for the plaintiff and cross-claimants to reject the Calderbank offers, and if the cross-defendant, who successfully defended a claim of insolvent trading but failed in her own claim and in defending another cross-claim, should be responsible for the costs of proving the solvency of the companies at certain dates. Additionally, the court needed to decide whether the costs awarded to the cross-defendant for the unsuccessful cross-claim of insolvent trading should exclude the costs associated with proving the companies' solvency.

The court found that it was not unreasonable for the plaintiff and cross-claimants to reject the Calderbank offers, as the offers did not adequately address their respective claims. The court further ruled that the cross-defendant was not required to pay the costs of proving insolvency for the cross-claimants, as these costs were not directly related to the successful defence of the insolvent trading claim. The court determined that the costs awarded to the cross-defendant for the unsuccessful cross-claim should exclude the costs of proving the companies' solvency, as these costs were not pertinent to the outcome of the insolvent trading claim.

Orders