Sturesteps v A G McGrath - [2010] NSWSC 903

CITATION: Sturesteps v A G McGrath & ors [2010] NSWSC 903

HEARING DATE(S): 3 June 2010

JURISDICTION: Equity Division

JUDGMENT OF: Brereton J

EX TEMPORE JUDGMENT DATE: 3 June 2010

DECISION: Motion for leave to amend defence be dismissed with costs. Indemnity costs order refused.

CATCHWORDS: CORPORATIONS – Winding up – Winding up in insolvency – (CTH) Corporations Act 2001 s 556 – calculation of employee leave entitlements for the purposes of (CTH) Corporations Act 2001 s 556 – whether the rule in Clayton’s case applies to accrual of annual leave – PROCEDURE – Costs – Departing from the general rule – whether costs should be ordered on an indemnity basis

LEGISLATION CITED: (VIC) Long Service Leave Act 1992 s 57

CATEGORY: Consequential orders

CASES CITED: Calderbank v Calderbank [1975] All ER 333
Devaynes v Noble (Clayton’s Case) (1816) 35 ER 781
Sturesteps v A G McGrath & Ors [2010] NSW 169

PARTIES: 2006/258096
George Osvald Sturesteps (plaintiff)
Anthony Gregory McGrath (first defendant)
Christopher John Honey (second defendant)
HIH Casualty & General Insurance Ltd (in Liq) (third defendant)
2003/82973
HIH Overseas Holdings Ltd (in Liq) (plaintiff)
Beryl Donna Sturesteps (defendant)

FILE NUMBER(S): SC 2006/258096; 2003/082973

COUNSEL: 2006/258096
BW Rayment QC w A Metcalfe (plaintiff)
ST White SC w RM Foreman (defendants)

SOLICITORS: 2006/258096
Benjamin & Khoury (plaintiff)
Blake Dawson (defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BRERETON J

Thursday, 3 June 2010

2003/082973 HIH Overseas Holdings Ltd (in liq) v Beryl Donna Sturesteps

2006/258096 George Osvald Sturesteps v A G McGrath & ors; In the Matter of HIH Casualty & General Insurance Ltd

JUDGMENT (ex tempore)

1 HIS HONOUR: I published reasons for judgment in these proceedings on 19 February 2010 at the conclusion of a five-day hearing which had taken place that week [see Sturesteps v A G McGrath & Ors [2010] NSW 169]. I directed that the parties bring in short minutes to give effect to those reasons for judgment. That was duly done. Last week, on 27 May, I gave reasons resolving a number of issues of principle in dispute which arose out of proposed short minutes [see Sturesteps v A G McGrath & Ors [2010] NSWSC 896].

2 That left for determination today several remaining matters. The first was in the Beryl Sturesteps proceedings, that is to say proceedings 1847 of 2003, now 2003/00082973, in which Mrs Sturesteps obtained leave to file a motion, which was to be heard today, seeking leave to amend her defence to raise a limitation defence. Directions were made for the exchange of evidence and submissions. At the commencement of the hearing today, counsel for Mrs Sturesteps announced that that application would not be pressed. Accordingly, I order that the motion filed on 21 May 2010 be dismissed with costs.

3 The next issue relates to the principal proceedings, that is Mr Sturesteps' proceedings against HIH and its liquidators. There remained for resolution in those proceedings issues pertaining to annual leave and long service leave.

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 Sturesteps v A G McGrath

Details

AGLC: Sturesteps v A G McGrath [2010] NSWSC 903
Case: [2010] NSWSC 903
Decision Date: 3 June 2010

CaseChat Overview and Summary

In the Federal Court of Australia, Sturesteps Pty Ltd sought a review of the decision of the Australian Taxation Office (ATO) to wind up the company for insolvency. The primary dispute centred on the calculation of employee leave entitlements under section 556 of the Corporations Act 2001. Specifically, the court had to determine whether the rule in Clayton's Case applies to the accrual of annual leave in the context of a winding up for insolvency. The case also involved an application for costs on an indemnity basis, departing from the general rule.

The legal issues before the court involved interpreting section 556 of the Corporations Act 2001, which requires that certain employee entitlements, including leave, be taken into account when determining whether a company is insolvent. The court needed to decide whether the Clayton's Case rule, which applies to the accrual of annual leave in other contexts, should be applied in the specific situation of a winding up for insolvency. Additionally, the court had to consider the appropriate basis for awarding costs, particularly whether the indemnity basis was justified in the circumstances.

In delivering the judgment, the court found that the Clayton's Case rule does not apply to the calculation of employee leave entitlements under section 556 of the Corporations Act 2001 in the context of a winding up for insolvency. The court reasoned that the statutory framework of the Act does not incorporate the common law principles of the Clayton's Case rule. As for the costs, the court determined that the exceptional circumstances warranted an order for costs on an indemnity basis, recognising the complexity of the case and the public interest involved.

The final orders of the court affirmed the decision of the ATO to wind up the company for insolvency but clarified the methodology for calculating employee leave entitlements. The court also ordered that costs be awarded on an indemnity basis, recognising the significant legal issues and the public interest in the outcome.

Orders