Shafston Avenue Construction Pty Ltd, in the matter of CRCG-Rimfire Pty Ltd (subject to deed of company arrangement) v McCann (No 3)

In this case, Shafston Avenue Construction Pty Ltd, in the matter of CRCG-Rimfire Pty Ltd (subject to deed of company arrangement) v McCann (No 3), the plaintiffs, Shafston, Baxter and Lincoln, applied for orders that their Proofs of Debt be allowed in full under s 90-15 of Schedule 2 to the Corporations Act 2001 (Cth) (the Insolvency Practice Schedule). The case arose from multiple property development corporations lodging Proofs of Debt in the administration of CRCG, a construction company. The administrators rejected these Proofs of Debt on various grounds, and the plaintiffs sought to overturn this decision.

The primary legal issues the court had to address were whether certain documentary evidence was admissible under ss 69 and 79 of the Evidence Act 1995 (Cth), whether Shafston was entitled to damages related to an alleged non-completion of a contract with CRCG, whether CRCG was required to provide confirmation that Shafston and Baxter could use intellectual property in work performed under Letters of Intent, and whether Lincoln was entitled to claim costs relating to the rectification of defects under its contract with CRCG. The court also had to determine the correct valuation methodology for the assessment of damages related to warranties.

The court held that the plaintiffs had discharged their onus to prove that the Administrators were wrong to reject their Proof of Debt in certain respects. Specifically, the court allowed the amended Proof of Debt for Lincoln in the sum of $409,945.22 on the defects claim and $570,000 on the warranties claim. These amounts were exclusive of Goods and Services Tax. The court directed the parties to prepare and submit a draft set of orders to reflect the contents of these reasons and to address the question of costs.

In conclusion, the court allowed in part the plaintiffs' application for their Proofs of Debt to be allowed in full. The court found that the plaintiffs had discharged their onus to prove that the Administrators were wrong to reject their Proof of Debt in relation to certain sums relating to the Lincoln defects and warranties claim. The court directed the parties to prepare and submit a draft set of orders to reflect the contents of these reasons and to address the question of costs.