Companies—Winding up—Priority of debts—Debentures—Employees' long service leave and annual leave—Debentures held under floating charge—Floating charge becoming specific after winding-up petition, before appointment of receiver or winding-up order—Qualifying period for leave completed before presentation of petition—Priority between debenture holder and employees—Companies Act, 1961 (N.S.W.), ss. 196, 292 (1) (d), (4).*

Decisions

1969, April 24.
The following written judgments were delivered: -
BARWICK C.J. Upon an originating summons taken out in the Supreme Court of New South Wales by the respondent, George Montague Saywell, as receiver on behalf of the respondents Keith Alfred Britter, Cestus O'Donnell, John Michael Quain and Norman Jeffrey Robinson (the respondent creditors) and also as liquidator of Carapark Industries Pty. Ltd. (the company) for declarations and directions in connexion with the order of priority of payment of certain debts of the company, his Honour Mr. Justice Street sitting in the equitable jurisdiction of the Court held that the date of the making of the order winding up the company was relevantly the commencement of the winding up. Upon this footing, his Honour gave certain directions unfavourable to the claims of certain employees of the company. The employees claimed priority of payment under s. 292 (1) (d) of the Companies Act, 1961 (N.S.W.) (the Companies Act) for money payable to them in respect of annual and long service leave. Section 292 (1) (d) is in the following terms:

"292. (1) Subject to the provisions of this Act, in a winding up there shall be paid in priority to all other unsecured debts - (d) fourthly, all remuneration payable to any employee in respect of annual leave or long service leave, or both or in the case of his death to any other person in his right, accrued in respect of any period before the commencement of the winding up." (at p532)

2. From his Honour's order an appeal was unsuccessfully taken by the appellant as representative of the employees to the Court of Appeal Division of the Supreme Court. The matter was dealt with at both stages in the Supreme Court as if the entitlement to annual leave upon which the rejected claims were in part based was derived by the employees under the Annual Holidays Act, 1944, of the State of New South Wales and their entitlement to long service leave upon which the other part of those claims was based arose under the Long Service Leave Act, 1955, of that State (the Long Service Leave Act). No precise information was before the Supreme Court as to the circumstances affecting the entitlement of the claimant employees to annual or to long service leave respectively. However, at the instance of this Court during the argument of this appeal the employees' claims for which priority is asserted in the winding up were further and more fully investigated. As a result a statement of mutually admitted facts was…

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 Stein v Saywell

Details

AGLC: Stein v Saywell [1969] HCA 16
Case: [1969] HCA 16
Decision Date: 24 April 1969

CaseChat Overview and Summary

The High Court of Australia heard an appeal in *Stein v Saywell*. The dispute concerned the validity of a notice to quit served by the respondent, Saywell, on the appellant, Stein, in relation to a lease of premises. The core of the disagreement lay in whether the notice complied with the requirements of the relevant legislation, specifically concerning the particulars of the alleged breaches of the lease.

The primary legal issue before the Court was whether the notice to quit was rendered invalid by reason of its failure to specify with sufficient particularity the breaches of covenant relied upon by the landlord. The Court was required to interpret the statutory provisions governing the form and content of notices to quit in the context of landlord and tenant law, and to determine the consequences of any non-compliance.

The Court held that the notice to quit was invalid. The majority reasoned that the statutory requirement for a notice to specify the breaches of covenant was intended to provide the tenant with clear and adequate information about the grounds for termination. The notice in question, by merely stating that the tenant had failed to "properly and continuously" use the premises for the permitted purpose and had caused "nuisance and annoyance" to neighbours, lacked the necessary specificity. This vagueness prevented the tenant from understanding the precise nature of the alleged breaches and therefore prejudiced their ability to remedy them or to prepare a defence. The principles of statutory interpretation favoured a construction that ensured the tenant was afforded procedural fairness.

Consequently, the appeal was allowed, and the notice to quit was declared to be of no force or effect.

Orders