Sims v TXU Electricity Ltd

Case [2005] NSWCA 12

Reported Decision:

 53 ACSR 295
(2005) 23 ACLC 536

Court of Appeal


CITATION:

Sims and Singleton as Liquidators of Enron Australia Pty Limited v TXU Electricity Limited & Anor [2005] NSWCA 12
HEARING DATE(S):

7 December 2004
 
JUDGMENT DATE: 


11 February 2005

JUDGMENT OF:

Spigelman CJ at 1; Sheller JA at 45; Brownie AJA at 46
DECISION:

Appeal dismissed with costs
CATCHWORDS:

CORPORATIONS - liquidation - disclaimer of onerous property - whether s 568(1B) of the Corporations Act empowers the Court to make an order varying contractual rights and liabilities that is not necessary in order to release the company or its property from liability
LEGISLATION CITED:

Bankruptcy Act 1883, 46 & 47 Vict, c 52
Corporations Act 2001 (Cth): Pt 5.6 Div 7A; s568(1B)(b)
Insolvency Act 1986 (UK)
CASES CITED:

Anthony Hordern & Sons Ltd v Amalgamated Clothing & Allied Trades Union of Australia (1932) 47 CLR 1
Bowtell v Goldsborough Mort (1905) 3 CLR 444
CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384
Global Television Pty Ltd v Sportsvision Australia Pty Ltd (in liq) (2000) 35 ACSR 484
Hindcastle Ltd v Barbara Attenborough Associates Ltd [1997] AC 70
K&S Lake City Freighters Pty Ltd v Gordon & Gotch Limited (1985) 157 CLR 309
Nintendo Co Ltd v Centronics Systems Pty Ltd (No 2) (1994) 181 CLR 13
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR
Re Middle Harbour Investments Limited (in liq) (No 2) [1977] 2 NSWLR 652
R v Wallis; Ex parte Employers Association of Wool Selling Brokers & HV McKay Massey Harris Pty Ltd (1949) 78 CLR 529
R v Young (1999) 46 NSWLR 681
Re Lavies; Ex parte Stephens (1877) 7 Ch D 127
Re Moser (1884) 13 QBD 738
Re Park Air Services plc (2000) 2 AC 172
Re Yates; Ex parte Walsh & Johnson (1925) 37 CLR 36
Stradling v Morgan (1560) 1 Plowd 199; 75 ER 305
Switz Pty Ltd v Glowbind Pty Ltd (2000) 48 NSWLR 661
Tokyo Mart Pty Ltd v Campbell (1988) 15 NSWLR 275
PARTIES:

Anthony Milton SIMS and Neil John SINGLETON in their capacity as liquidators of Enron Australia Finance Pty Ltd (in liq) (Appellants)
TXU Electricity Ltd (First Respondent)
Yallourn Energy Pty Ltd (Second Respondent)

FILE NUMBER(S):

CA 40155/04
COUNSEL:

J Sheahan SC / V Kerr (Appellants)
A Archibald QC / S Horgan (Respondents)
SOLICITORS:

Blake Dawson Waldron (Appellants)
Baker & McKenzie (Respondents)

LOWER COURT JURISDICTION:

Supreme Court - Equity Division

LOWER COURT FILE NUMBER(S):

4873 of 2002

LOWER COURT JUDICIAL OFFICER:

Austin J

- 11 -


                          CA 40155/04

                          SPIGELMAN CJ
                          SHELLER JA
                          BROWNIE AJA

                          Friday 11 February 2005
SIMS AND SINGLETON AS LIQUIDATORS OF ENRON AUSTRALIA FINANCE PTY LIMITED v TXU ELECTRICITY LIMITED & ANOR

      The Appellants were first the voluntary administrators, and later liquidators, of Enron Australia Finance Pty Ltd (“Enron”), in which latter capacity the present appeal was brought.

      Enron participated in the Australian electricity derivatives market by entering into “electricity swap contracts” with various…

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AGLC
Sims v TXU Electricity Ltd [2005] NSWCA 12
Case
[2005] NSWCA 12
Decision Date

CaseChat Overview and Summary

The case of *Sims v TXU Electricity Ltd* concerned an appeal before the Supreme Court of New South Wales, Court of Appeal. The appellant, Sims, sought to challenge an order made by the primary judge concerning the disclaimer of onerous property by a liquidator. The dispute centred on the scope of the liquidator's power to disclaim property under section 568(1B) of the *Corporations Act 2001* (Cth).

The central legal issue before the Court of Appeal was whether section 568(1B) of the *Corporations Act* empowered the Court to make an order varying contractual rights and liabilities in a manner that was not strictly necessary for the purpose of releasing the company or its property from liability. In essence, the Court had to determine the extent of the court's discretion when considering applications for the disclaimer of onerous property.

The Court of Appeal, in dismissing the appeal, reasoned that section 568(1B) of the *Corporations Act* confers a broad discretion on the court to make such orders as it thinks fit in relation to the disclaimer of property. However, this discretion is not unfettered and must be exercised in accordance with the purpose of the section, which is to release the company and its property from onerous liabilities. The Court held that the primary judge had correctly applied this principle and that the order made was within the scope of the court's power under the section. The appeal was accordingly dismissed with costs.

Orders

Orders of the court

Appeal dismissed with costs

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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