Solicitors' Liability Committee v Gray and Winter - [1996] FCA 1182

FEDERAL COURT OF AUSTRALIA

)

JUDGMENT NO.

0..

VICTORIAN REGISTRY	)	No VG 546 of 1996
GENERAL DIVISION	)

BETWEEN: THE SOLICITORS' LIABILITY

COMMITTEE Applicant

AND :

GARRICK LEWIS GRAY and MICHAEL

FREDERICK WINTER (trading as GRAY

& WINTER)

Respondent

COURT :	FINN J
PLACE :	MELBOURNE
DATE:	9 DECEMBER 1996

EX TEMPORE REASONS FOR JUDGMENT

NOT FOR DISTRIBUTION NO POINT OF PRINCIPLE

FEDERAL COURT OF AUSTRALIA

)

VICTORIAN REGISTRY

)	No VG 546 of 1996

GENERAL DIVISION

)

BETWEEN: THE SOLICITORS' LIABILITY

COMMITTEE

Applicant

AND :

GARRICK LEWIS GRAY and MICHAEL

FREDERICK WINTER (trading as GRAY

& WINTER)

Respondent

COURT :	FINN J
PLACE :	MELBOURNE
DATE :	9 DECEMBER 1996

EX TEMPORE REASONS FOR JUDGMENT

This application is to vary an order of Jenkinson J made

on 21 October 1990, staying execution of a judgment of Olney J,

of 9 August 1996, in which it was ordered that the present appellant - the Solicitors' Liability Committee - pay the respondents Garrick Lewis Gray and Michael Frederick Winter, trading as Gray & Winter - $500,000 plus the costs incurred in

defending other proceedings. I am informed that the aggregate

value of that judgment is now in excess of $1.3 million.

The appellant carries on the business (inter alia) of

providing professional indemnity insurance for solicitors. The

judgment I have mentioned was in respect of a claim made under

an indemnity contract had by the respondents with the appellant. The principal ground of appeal relied upon against the judgment, I am informed, is that the trial judge erred in finding that the activity of the respondents which gave rise to

the indemnity claim on the appellant was one which fell within

the scope of the insurance contract itself.

Because of its bearing on this matter I should note that

the respondents were directors, and Mr Gray remains a director,

of a group of companies of which two, Graywinter Properties Pty Ltd ("Properties") and Graywinter Management Pty Ltd ("Management") are of present relevance. It is agreed that

these companies are liable respectively to the Deputy

Commissioner of Taxation in the sums of $261,829.11 and

$106,949.91 in respect of unpaid group tax deductions from

employee salaries and wages. These liabilities are the subject of statutory demands against the companies in other proceedings which I heard immediately following this proceeding.

Paralleling the group tax liabilities of the two companies is the personal liability (joint and several) of the respondents, as directors, for that tax. For reasons which I need not enter upon here, that liability in aygregate is in the

order of $346,000, a sum differing somewhat from the aggregate of the liabilities subject to the statutory demands. This parallel liability arises under the provisions (inter alia) of s222AOC of the Income Tax Assessment Act. I would note that payment of the companies' indebtedness to the Deputy

Commissioner would have the effect under s222AOH of the same

Act, of discharging the personal liability of the directors. I

am informed that the…

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: [1996] FCA 1182
Decision Date: 9 Dec 1996

CaseChat Overview and Summary

The Federal Court of Australia, in the case of Solicitors' Liability Committee v Gray and Winter, was tasked with considering an application to vary a previous order. The applicant, the Solicitors' Liability Committee, sought to alter a stay of execution imposed on a judgment debt owed to the respondents, Garrick Lewis Gray and Michael Frederick Winter, trading as Gray & Winter. The legal issues revolved around whether the circumstances warranted a variation of the existing order to allow payment of certain debts owed by the respondents' companies to the Deputy Commissioner of Taxation.

The court examined the financial positions of the companies involved, the nature of the debts, and the potential consequences of non-compliance with statutory demands. The court found that the respondents had not provided sufficient evidence to demonstrate the necessity of varying the stay, nor had they shown that the appellant's risk of non-recovery of the judgment debt would be mitigated by the proposed variation. The court also noted the lack of clarity regarding the financial health of the companies and the inadequacies in the evidence provided by the respondents. Consequently, the court dismissed the application, finding no sufficient cause to alter the existing order.

Orders