Structum Pty Ltd v CWCN Pty Ltd - [2020] NSWSC 1314

Supreme Court

New South Wales

Medium Neutral Citation: Structum Pty Ltd v CWCN Pty Ltd [2020] NSWSC 1314
Hearing dates: 9 September 2020
Decision date: 09 September 2020
Jurisdiction: Equity - Corporations List
Before: Black J
Decision:
Orders not made.

Catchwords:
CORPORATIONS — Winding up — Liquidators — Receivers and managers — Application to court for directions — Remuneration from trust assets — Where outstanding issues of competing priority with creditor — Where remuneration sought for future examination — Whether court should indicate likelihood of indemnity from trust assets in future based on proposed questions for examination yet to be conducted.

Legislation Cited:
- Corporations Act 2001 (Cth), Pt 5.9

Cases Cited:
- ASIC v Primelife Corporation Ltd [2007] FCA 1874
- Hancock v Rinehart [2019] NSWSC 1451
- Re French Caledonia Travel Service Pty Ltd (in liq) (2003) 59 NSWLR 361; [2003] NSWSC 1008
- Re Houben Marine Pty Ltd (in liq) [2018] NSWSC 745
- Re Glenvine Pty Ltd (in liq) [2020] NSWSC 866
- Re Universal Distributing Co Ltd [1933] HCA 2; (1933) 48 CLR 171

Category: Procedural and other rulings
Parties: Structum Pty Ltd (First Plaintiff)
CWCN Pty Ltd (First Defendant)
Southern Sydney Services Pty Ltd (Second Defendant)
Representation:
Counsel:
D Stack (First Defendant)
G McDonald (Second Defendant)
Solicitors:
Bridges Lawyers (First Defendant)
Mavrakis & Associates (Second Defendant)

File Number(s): 2020/45792 (002)

Judgment – ex tempore (Revised 11 September 2020)

By Notice of Motion filed on 24 July 2020, CWCN Pty Ltd (in liq) (“CWCN”) by its liquidator, Mr Sprowles, sought a number of orders. One of those orders was that his reasonable costs, expenses and remuneration incurred, if appointed as receiver of certain assets (“Assets”), including the reasonable costs and expenses of and incidental to the realisation of the Assets and the reasonable costs and expenses of certain public examinations which he proposed to conduct in certain proceedings in the Federal Court of Australia, be paid in priority from the Assets.
On 1 September, 2020, I made orders appointing Mr Sprowles as receiver (“Receiver”), in respect of the sale of particular trust property. I made those orders after it was accepted by the current trustee, which has become the registered proprietor of the property in place of CWCN, that the basis on which it had previously opposed those orders, namely that other steps could be taken to address certain liabilities of CWCN in respect of the property, was no longer tenable. I did not then deal with the further question of payment of reasonable costs, expenses and remuneration incurred by the Receiver, in circumstances where an issue as to priority had emerged, namely that a financier, Adelphi, had lent funds on the property, for which it had not registered a mortgage but lodged a caveat, and the Supreme Court of Queensland had made orders under the Proceeds of Crimes Act in respect of Adelphi’s interest as lender in respect of the property.
Mr Sprowles now seeks further orders, although it emerged in 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.

Continue reading Structum Pty Ltd v CWCN Pty Ltd

Details

AGLC: Structum Pty Ltd v CWCN Pty Ltd [2020] NSWSC 1314
Case: [2020] NSWSC 1314
Decision Date: 09 September 2020

CaseChat Overview and Summary

In the case of Structum Pty Ltd v CWCN Pty Ltd, the dispute between the parties centred on the remuneration sought by the liquidators for future examination of trust assets, amidst competing claims from creditors. The matter was heard in the Supreme Court of New South Wales. The liquidators of Structum Pty Ltd sought direction from the court regarding their remuneration, which was to be paid from trust assets, especially in light of outstanding issues concerning the priority of competing creditor claims.

The court was required to determine whether it should provide an indication of the likelihood of the liquidators being indemnified from trust assets in the future. This depended on the proposed questions for examination, which had yet to be conducted. The liquidators argued that an advance indication would facilitate the examination process and secure their remuneration, while the creditors contended that such a determination should not be made until the examination was complete and the priority of claims could be assessed accurately.

The court considered that making an indication of indemnity from trust assets based on proposed questions for examination, which had yet to be conducted, was premature. The court held that the liquidators' remuneration should be contingent on the outcome of the examination and the final determination of the priority of creditor claims. The court found that it was inappropriate to make an advance ruling on the likelihood of indemnity, as this would not provide a fair and accurate basis for resolving the competing claims. The court therefore declined to provide the liquidators with the requested direction.

As a result, the court dismissed the liquidators' application for direction regarding their future remuneration from trust assets. The liquidators were required to await the completion of the examination and the final determination of the priority of creditor claims before seeking remuneration. The court's decision emphasised the importance of allowing the examination process to unfold and the priority of claims to be accurately assessed before making any determinations regarding remuneration.

Orders