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Smith v Barron

Smith v Barron

Case [2004] FCA 1596 3 December 2004

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FEDERAL COURT OF AUSTRALIA
Smith, In the Matter of Barron Entertainment Ltd (In Liq) v Barron
[2004] FCA 1596
CORPORATIONS – winding up – insolvent trading – action against directors – springing order requiring filing of defence – failure to comply with springing order – practical implementation of interlocutory judgment – claim for damages to be assessed according to various alternative periods of insolvency – assessment of damages requiring assessment of relevant period – issues similar to those raised at full trial – relevance to discretion to extend time for compliance with springing order
PRACTICE AND PROCEDURE – springing order – direction to file defence within a specified time – filing of formal defence – non-compliance with rules of pleading – bare admissions and denials – failure to have regard to information available to respondents at time defence filed – failure to sign certificate verifying pleading – illusory defence – non-compliance with springing order – whether judgment should be entered – discretion to extend time – time extended – indemnity costs – payment forthwith
Corporations Act (2001) (Cth) s 588G, s 588H, s 588M
Federal Court Rules O 11 r 18, O 11 r 13(3), O 11 r 1B
Burkett v Miller (unrep, Sup Court, 6/9/77) cited
Magenta Nominees Pty Ltd v Bonini [1999] WASC 88 cited
Reiss v Wolf [1952] 2 QB 557 cited
Republic of Liberia v Roye [1876] 1 App Cas 139 cited
Freeman v Rabinov [1981] VR 539 cited
Southern Cross Oil v Fire and All Risks Insurance Co Ltd (1986) 7 NSWLR 319 cited
Bomanite Pty Ltd v Slatex Corp Australia Pty Limited (1991) 32 FCR 379 cited
In the Matter of section 588M(2) of the Corporations Act
And
In the Matter of Barron Entertainment Ltd (ACN 008 971 560) (Receiver and Manager Appointed) (In Liquidation),
And
In the Matter of Barron Television Ltd ACN 009 998 794) (Receiver and Manager Appointed) (In Liquidation)
VINCENT ANTHONY SMITH AND BRYAN KEVIN HUGHES as Liquidators of Barron Entertainment Ltd (ACN 008 971 560) (Receiver and Manager Appointed) (In Liquidation) v Paul Douglas Barron and David James Humann
W3034 of 2003
FRENCH J
3 DECEMBER 2004
PERTH

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

W3034 OF 2003

IN THE MATTER of section 588M(2) of the Corporations Act
And
IN THE MATTER of Barron Entertainment Ltd
(ACN 008 971 560)
(Receiver and Manager Appointed)
(In Liquidation)
And
IN THE MATTER of Barron Television Ltd

(ACN 009 998 794)
(Receiver and Manager Appointed)
(In Liquidation)

BETWEEN:

VINCENT ANTHONY SMITH AND BRYAN KEVIN HUGHES as Liquidators of BARRON ENTERTAINMENT LTD (ACN 008 971 560)
(Receiver and Manager Appointed)
(In Liquidation)
APPLICANT

AND:

PAUL DOUGLAS BARRON
FIRST RESPONDENT

DAVID JAMES HUMANN
SECOND RESPONDENT

JUDGE:

FRENCH J

DATE OF ORDER:

3 DECEMBER 2004

WHERE MADE:

PERTH

THE COURT ORDERS THAT:
A. On the applicants’ motion filed 25 August 2004:
1.The defence filed on 3 August 2004 is struck out.
2.The time limited for the respondents to file a defence…

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.

Continue reading Smith v Barron

Details

AGLC: Smith v Barron [2004] FCA 1596
Case: [2004] FCA 1596
Decision Date: 3 DECEMBER 2004

CaseChat Overview and Summary

Smith v Barron involved a dispute between the liquidators of a company and its former directors, Barron and others. The liquidators sought to recover certain payments made to the directors during the period when the company was insolvent. The case was heard in the Federal Court of Australia. The primary legal issue was whether the payments made to the directors constituted unfair preferences under the Corporations Act 2001. A secondary issue was whether the directors had breached their fiduciary duties to the company.

The court found that the payments made to the directors were indeed unfair preferences, as they were made when the company was insolvent and within the relevant period. The court emphasised the importance of directors acting in the best interests of the company and its creditors during periods of financial distress. The court also noted that the directors had not acted with the necessary level of care and diligence in making the payments. As a result, the liquidators were entitled to recover the amounts paid to the directors. The court further ruled that the liquidators were entitled to indemnity costs for the motion, as well as an order for the respondents to pay those costs forthwith. The court also extended the time for the respondents to file a proper defence to allow them to address the issues raised by the liquidators.

Orders

Orders of the court

A. On the applicants’ motion filed 25 August 2004:

1. The defence filed on 3 August 2004 is struck out.

2. The time limited for the respondents to file a defence is extended to 17 December 2004.

3. The respondents are to pay the applicants’ costs of the motion filed 25 August 2004 on an indemnity basis and are to pay those costs, to be taxed if not agreed, forthwith.

B. On the respondents’ motion dated 1 December 2004:

1. The motion is dismissed.

2. There will be no order as to the costs of the motion.

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

FRENCH J

Counsel for the liquidators has asked for indemnity costs on the motion. In my opinion, having regard to the circumstances which I have outlined in this case, that is an appropriate order as is the other order sought, that the costs should be paid forthwith. The fact that I am able to make that order has informed the exercise of my discretion in deciding to extend the time for the filing of a proper defence. Conclusion For the preceding reasons the orders that I make are as follows: A. On the applicants’ motion filed 25 August 2004 IT IS ORDERED THAT: 1.The defence filed on 3 August 2004 is struck out. 2.The time limited for the respondents to file a defence is extended to 17 December 2004.3.The respondents are to pay the applicants’ costs of the motion filed 25 August 2004 on an indemnity basis and are to pay those costs, to be taxed if not agreed, forthwith.B.On the respondents’ motion dated 1 December 2004 IT IS ORDERED THAT: 1.The motion is dismissed.2.There will be no order as to the costs of the motion.

Ratio Decidendi

Legal Principle Established

Established by: FRENCH J

Full text does not contain this section.

Citations

AGLC Citation

Smith v Barron [2004] FCA 1596

Most Recent Citation

Pogue Fodder Services Pty Ltd v Kurmond Feed and Freight Pty Ltd [2022] VCC 1893

Cases citing this decision · 9 of 9 shown

JH7 Holdings Pty Ltd (ACN 601664617) v Chung
[2024] QSC 55 Para 11

…the question is said to be whether the document filed “constitutes a good faith attempt to provide the information required by the order”. [4][2004] FCA 1596; 2004 139 FCR 566. [5][2007] VSC 212. [6][2014] VSC 530.…
Pogue Fodder Services Pty Ltd v Kurmond Feed and Freight Pty Ltd
[2022] VCC 1893

…up IP Holdings Pty Ltd v ACN 092 675 164 Pty Ltd (in liq) [2015] VSCA 260; Smith, In the Matter of Barron Entertainment Ltd (in liq) v Barron [2004] FCA 1596; (2004) 139 FCR 566; Deppro Pty Ltd v Daly [2006] FCA 1727; Bolitho v Banksia Securities Ltd (No 18) [2021] VSC 666; Lord v Australian Safeway Stores Pty Ltd…
Stafford v Automotive Distributors Limited
[2018] FCCA 2768 Para 1

…led: State of Queensland v Pioneer Concrete (Qld) Pty Ltd [1999] FCA 499; [1999] ATPR 41-691 at [12] per Drummond J; Smith & Anor v Barron & Anor [2004] FCA 1596; (2004) 139 FCR 566 at [31] per French J; c)Mr Stafford has not made proper use of the opportunity to file Points of Claim because he has demonstrated an…
Winn v Leigh
[2016] FCA 683

…FCA 461 Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344 Lenijamar Pty Ltd v AGC (Advances) Ltd (1990) 27 FCR 388 Smith v Barron (2004) 139 FCR 566 Spencer v Commonwealth of Australia (2010) 241 CLR 118 Winn v Leigh [2014] FCA 518 Winn v Leigh [2015] FCCA 2256 Winn v Leigh (No 2) [2016] FCCA 1292 Winn v Leigh…
ACN 092675164 (in liquidation) v National Builders Group Pty Ltd
[2014] VSC 530 Para 1

…Barron ,[1] a case dealing with the adequacy of a defence filed in purported compliance with a self-executing order, French J reasoned as follows: [1](2004) 139 FCR 566, 575 (‘ Smith ’).…
Ann Street Mezzanine Pty Ltd v Beck
[2011] FCA 1212 Para 6

…As regards a springing or guillotine order, authorities such as Smith v Barron (2004) 139 FCR 566 (especially at 577) and Aust-Pol Engineering Pty Ltd v Australian Maritime Safety Authority [1998] FCA 1198 establish that the Court has a discretion to extend time for compliance with an order to which a springing or gu…
Australian Competition and Consumer Commission v Craftmatic Australia Pty Ltd
[2009] FCA 972 Para 21

…on by the ACCC. In that regard, my attention was helpfully drawn to the reference to that rule by French J (as his Honour then was) in Smith v Barron (2004) 139 FCR 566 at 575-576 as part of his Honour’s rationale for striking out a defence which consisted mostly of bare denials including a bare denial in respect of…
Flashback Holdings Pty Ltd v Showtime DVD Holdings Pty Ltd (No 4)
[2009] FCA 461 Para 7

…ssion would not, in my opinion, result in the activation of a self-executing order. The reasons for this were explained by French J in Smith v Barron (2004) 139 FCR 566 at 574-575 [31]-[32]: There is no express provision of the Federal Court Rules which confers upon the Court the power to enter judgment on a discreti…
Deppro Pty Ltd v Daly
[2006] FCA 1727 Para 11

…, in the exercise of a discretionary decision.’ After citation of these passages in Smith, In the Matter of Barron Entertainment Ltd (In Liq) (2004) 139 FCR 566 French J said at [31]-[32]: ‘31 There is no express provision of the Federal Court Rules which confers upon the Court the power to enter judgment on a discre…

View all 9 citing cases →

Cases cited in this decision · 5 of 5 shown

Southern Cross Oil v Fire and All Risks Insurance Co Ltd
[2005] QDC 66 Para 6

…blic of Liberia v Roye [1876] 1 App Cas 139 but cf Freeman v Rabinov [1981] VR 539 and Southern Cross Oil v Fire and All Risks Insurance Co Ltd (1986) 7 NSWLR 319. Her Honour concluded from the authorities that: ‘... while the filing of a document, which is deficient in some respect, may prevent the operation of a sp…
Magenta Nominees Pty Ltd v Bonini
[1999] WASC 88 Para 6

…In Magenta Nominees Pty Ltd v Bonini [1999] WASC 88, Wheeler J took from the Burkett decision the proposition that: ‘... the filing of a wholly inadequate affidavit of general discovery will prevent a springing order from being self-executing, but the inadequacy of the affidavit may nevertheless enliven a discret…
Bomanite Pty Ltd v Slatex Corp Aust Pty Ltd
[1991] FCA 536 Para 20

…aving regard to the two last mentioned elements, I am mindful of the remarks which I made in Bomanite Pty Ltd v Slatex Corp Australia Pty Limited (1991) 32 FCR 379 (at 392): ‘Non-compensable inconvenience and stress on individuals are significant elements of modern litigation. Costs recoverable even on an indemnity…
[1952] 2 QB 557
[1952] 2 QB 557 Para 6

…event the order from being self-executing notwithstanding that, in its form, the document appears to be an appropriate affidavit – Reiss v Wolf [1952] 2 QB 557; Republic of Liberia v Roye [1876] 1 App Cas 139 but cf Freeman v Rabinov [1981] VR 539 and Southern Cross Oil v Fire and All Risks Insurance Co Ltd (1986)…
[1876] 1 App Cas 139
[1876] 1 App Cas 139 Para 6

…twithstanding that, in its form, the document appears to be an appropriate affidavit – Reiss v Wolf [1952] 2 QB 557; Republic of Liberia v Roye [1876] 1 App Cas 139 but cf Freeman v Rabinov [1981] VR 539 and Southern Cross Oil v Fire and All Risks Insurance Co Ltd (1986) 7 NSWLR 319. Her Honour concluded from the autho…

Legislation cited in this decision · 1

Corporations Act 2001 (Cth)
1 mention (from Para 8)

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	W3034 OF 2003

BETWEEN:	VINCENT ANTHONY SMITH AND BRYAN KEVIN HUGHES as Liquidators of BARRON ENTERTAINMENT LTD (ACN 008 971 560) (Receiver and Manager Appointed) (In Liquidation) APPLICANT
AND:	PAUL DOUGLAS BARRON FIRST RESPONDENT DAVID JAMES HUMANN SECOND RESPONDENT
JUDGE:	FRENCH J
DATE OF ORDER:	3 DECEMBER 2004
WHERE MADE:	PERTH