FEDERAL COURT OF AUSTRALIA
SBA Music Pty Ltd v Hall (No 2) [2014] FCA 1116
Citation: SBA Music Pty Ltd v Hall (No 2) [2014] FCA 1116 Parties: SBA MUSIC PTY LTD (ACN 009 310 525) and SBA MUSIC SOLUTIONS PTY LTD (ACN 009 434 584) v WAYNE HALL File number: NSD 1587 of 2013 Judge: WIGNEY J Date of judgment: 13 October 2014 Catchwords: BANKRUPTCY – application for leave to continue with and take fresh steps in proceedings against a bankrupt under s 58(3) of the Bankruptcy Act 1966 – whether proceedings are in respect of a provable debt – whether the demand the subject of the proceedings arises otherwise than by reason of a contract, promise or breach of trust – whether Court should proceed on the basis that leave is required – whether discretion should be exercised to grant leave under s 58(3) – principles relevant to the exercise of discretion – leave under s 58(3) to commence proceedings in the Family Court Legislation: Bankruptcy Act 1966 (Cth)
Competition and Consumer Act 2010 (Cth)
Corporations Act 2001 (Cth)
Family Law Act 1975 (Cth)
Federal Court Rules 2011 (Cth)Cases cited: Allanson v Midland Credit Ltd (1977) 16 ALR 43
Australian Competition and Consumer Commission v Black on White Pty Ltd (2004) 138 FCR 314
Barewa Oil and Mining NL (in liq) v Isim Mineral Development Pty Ltd & Ors (1981) 38 ALR 288
Cornelius v Barewa Oil and Mining NL (in liq) (1982) 42 ALR 83.
Fraser v Commissioner of Taxation (1996) 69 FCR 99
Macquarie Bank Ltd v Bardetta (2005) 216 ALR 670
Pedersen v Delaveris [2010] FCA 536
Re Rose; Ex parte Devaban Pty Ltd (unreported, Federal Court of Australia, Hill J, 7 October 1994)
Re Sharp; Ex parte Tietyens Investments Pty Ltd [1998] FCA 1367Date of hearing: 13 October 2014 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 36 Counsel for the Plaintiffs: A Moses SC with Y Shariff Solicitor for the Plaintiffs: Sparke Helmore Defendant: Did not appear. Counsel for Ms Sylvie Comeau-Hall: W Lloyd
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 1587 of 2013
BETWEEN: SBA MUSIC PTY LTD (ACN 009 310 525)
First PlaintiffSBA MUSIC SOLUTIONS PTY LTD (ACN 009 434 584)
Second PlaintiffAND: WAYNE HALL
Defendant
JUDGE:
WIGNEY J
DATE OF ORDER:
13 OCTOBER 2014
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.If and to the extent that it is necessary by reason of the provisions of s 58(3) of the Bankruptcy Act 1966 (Cth), the plaintiffs be granted leave to take fresh steps in and to continue with the Federal Court of Australia proceedings number NSD1587 of 2013 (the “Proceedings”), including any interlocutory application made in the Proceedings.
2.The Trustee of the Property of Wayne Edwin Hall, a Bankrupt (the “Trustee”), be joined as a party to the Proceedings.
3.The defendant and/or the Trustee be granted leave to file any application to set…
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- Case
- [2014] FCA 1116
- Decision Date
CaseChat Overview and Summary
The court found that the proceedings involved claims for compensation for breach of fiduciary duties, damages for breach of contract, and compensation for breaches of statutory duties as a director or officer. These claims, while overlapping with the statutory provisions of the Corporations Act 2001, were considered to be in respect of a provable debt. The court reasoned that the discretion under section 58(3) should be exercised in favour of granting leave to SBA Music Pty Ltd to continue with the proceedings, taking into account the substantial claims and the need for asset preservation orders to prevent potential asset dissipation by the bankrupt. The court also allowed SBA Music Pty Ltd to commence proceedings in the Family Court to set aside or vary consent orders made earlier.
The court granted the leave under section 58(3) of the Bankruptcy Act 1966 to SBA Music Pty Ltd to continue with and take fresh steps in the Federal Court proceedings, including the right to apply for asset preservation orders against certain companies and individuals associated with Mr Hall. The Trustee of Mr Hall's bankruptcy estate was also joined as a party to the proceedings. The court further directed that any applications to set aside or vary the orders or to adjourn the hearing must be supported by a notice of motion and affidavit, and filed by a specified date. Additionally, the court reserved costs and allowed the asset preservation order application to be relisted on short notice.
Orders
Orders of the court
1. If and to the extent that it is necessary by reason of the provisions of s 58(3) of the Bankruptcy Act 1966 (Cth), the plaintiffs be granted leave to take fresh steps in and to continue with the Federal Court of Australia proceedings number NSD1587 of 2013 (the “Proceedings”), including any interlocutory application made in the Proceedings.
2. The Trustee of the Property of Wayne Edwin Hall, a Bankrupt (the “Trustee”), be joined as a party to the Proceedings.
3. The defendant and/or the Trustee be granted leave to file any application to set aside or vary order 1 by 4.00pm on 30 October 2014.
4. This matter be listed for directions on 31 October 2014 at 9.30am.
5. This mater be listed for hearing on 25 November 2014 commencing at 10.15am.
6. Any application by the defendant or the Trustee to adjourn the hearing will need to be made by notice of motion and supporting affidavit. Any such application and supporting affidavits are to be filed and served by 4.00pm on 30 October 2014.
7. Leave be granted to the plaintiffs and the Trustee, to commence proceedings in the Family Court of Australia for orders under s 79A of the Family Law Act 1975 (Cth) setting aside or varying consent orders made by the Family Court of Australia on 5 February 2014 in proceedings number SYC7141 of 2013 including any application for asset preservation orders.
8. Leave be granted to the plaintiffs to issue a subpoena returnable at 9.30am on 31 October 2014 to:
(a) the legal practitioners previously acting for the defendant in these proceedings; and
(b) Ms Sylvie Comeau-Hall.
9. Leave is granted to the plaintiffs to issue a Notice to Produce to the defendant returnable at 9.30am on 31 October 2014.
10. Costs of the interlocutory applications filed 16 September 2014 and 3 October 2014 and costs thrown away of the hearing which was due to commence on 13 October 2014 are reserved.
11. The asset preservation order application filed on 16 September 2014 is stood over generally with the plaintiffs being granted leave to have it relisted on short notice.
THE COURT NOTES:
1. The undertakings to the Court of the plaintiffs and Ms Sylvie Comeau-Hall in the attached document which is marked with the letter “A” and attached to these Short Minutes of Order; and
2. That in relation to Order 1, the plaintiffs do not intend to forego their rights to prove in the bankruptcy and expressly reserve such rights.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
On 6 August 2013 SBA filed an originating process and statement of claim seeking relief against Mr Hall that included: (a)Compensation for breach by Mr Hall of fiduciary duties he owed SBA; (b)Damages or compensation for breach by Mr Hall of his contractual engagement with SBA; (c)Compensation pursuant to s 1317H of the Corporations Act 2001 (Cth) (CorporationsAct) arising from Mr Hall’s breach of his statutory duties as director or officer under ss 181, 182 and 183 of the Corporations Act. (the substantive proceedings). SBA subsequently amended its application and statement of claim, however the essential allegations against Mr Hall and the relief sought remained in substance the same. Mr Hall filed a defence (and an amended defence) and a cross-claim in which he claimed damages or equitable compensation from SBA for alleged breach of a consultancy agreement with SBA. Mr Hall also alleged, in the cross-claim, that SBA was in breach of another agreement related to a business venture called MyStore. The essence of SBA’s case in the substantive proceedings is that, whilst engaged as a senior manager in SBA’s business, Mr Hall directed business opportunities away from SBA and towards himself and his own businesses. Evidence filed by SBA quantifies SBA’s damages or compensation claim against Mr Hall as being in the order of $2.3 million. Following numerous interlocutory skirmishes and directions hearings, the parties filed their respective evidence and the matter was listed for hearing to commence on 13 October 2014. Following a directions hearing on 4 September 2014, on 5 September 2014 I made a series of pre-trial directions relating to objections to evidence, submissions, a court book and a tender bundle. Mr Hall was represented by counsel at this directions hearing. There was no suggestion that the matter would not be ready to proceed to trial on 13 October 2014. Counsel for Mr Hall gave no hint of any issue that might imperil the trial date, such as the possible bankruptcy of Mr Hall. The matter was next listed before me at short notice and ex parte on 16 September 2014. SBA was granted leave to file in court an interlocutory application and supporting affidavit. The interlocutory application sought asset preservation or freezing orders against various companies allegedly associated with Mr Hall and against Mr Hall’s wife, Ms Sylvie Comeau-Hall. The time for service of the application was abridged and the application was made returnable on 19 September 2014. SBA’s case for freezing orders against Ms Comeau-Hall is based on the fact that in mid-2014 Mr Hall transferred his interest in two properties to Ms Comeau-Hall for no consideration. The transfers were apparently made pursuant to consent orders made by the Family Court on 5 February 2014. SBA, as a prospective creditor of Mr Hall, was given no notice of these transfers. The timing and circumstances surrounding the transfers, on SBA’s case, give rise to an inference that Mr Hall carried out the transfers so as to defeat his creditors or prospective creditors.