Sturesteps v A G McGrath - [2010] NSWSC 896

Reported Decision:
79 ACSR 253

New South Wales

Supreme Court

CITATION: Sturesteps v A G McGrath & ors [2010] NSWSC 896

HEARING DATE(S): 21 & 27 May 2010

JURISDICTION: Equity Division

JUDGMENT OF: Brereton J

EX TEMPORE JUDGMENT DATE: 27 May 2010

DECISION: Period as employee/director of related company did not count as non priority days. Retrenchment pay was not attributable to non priority days. Plaintiff not entitled to interest. Mandatory direction for payment not made. Defendants to pay plaintiff’s costs, not on an indemnity basis.

CATCHWORDS: CORPORATIONS – Winding up – Winding up in insolvency – (CTH) Corporations Act 2001, s 556 – whether period during which plaintiff was a director as well as an employee counts as non priority days – whether plaintiff’s retrenchment payment attributable to non priority day – CORPORATIONS – Winding up – Liquidators – Other matters – whether liquidator should be given a direction that payment take place within any particular timeframe – CORPORATIONS – Winding up – Winding up in insolvency – (CTH) Corporations Act 2001 s 563B – whether plaintiff entitled to interest of judgment debt in his favour – PROCEDURE – Costs – Departing from the general rule – whether costs should be ordered on an indemnity basis – whether proof of debt can be treated as a Calderbank offer

LEGISLATION CITED: (CTH) Companies and Securities Legislation (Miscellaneous Amendments) Act (No 192) 1985
(CTH) Companies Code 1981, s 441
(CTH) Corporate Law Reform Act 1992
(CTH) Corporations Act 2001, s 556, s 563B, s 1321

CATEGORY: Consequential orders

CASES CITED: Central Asbestos Co v Dodds [1973] AC 518
International Harvester Expert Co v International Harvester Australia Ltd (1982) 7 ACLR 391
Roncevich v Repatriation Commission (2005) 222 CLR 115
Rundell v Bedford (1998) 28 ACSR 66
Sturesteps v McGrath [2010] NSWSC 169
Walsh v Rother District Council [1978] 1 All ER 510

TEXTS CITED: “General Insolvency Inquiry” (The Harmer Report), ALRC Report No 45, 1988

PARTIES: George Osvald Sturesteps (plaintiff)
Anthony Gregory McGrath (first defendant)
Christopher John Honey (second defendant)
HIH Casualty & General Insurance Ltd (in Liq) (third defendant)

FILE NUMBER(S): SC 2006/258096

COUNSEL: BW Rayment QC w G McDonald (plaintiff)
ST White SC w RM Foreman (defendants)

SOLICITORS: Benjamin & Khoury (plaintiff)
Blake Dawson (defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BRERETON J

Thursday 27 May 2010

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: On 19 February 2010, I gave reasons for judgment [Sturesteps v McGrath [2010] NSWSC 169], which provide the background to the present judgment, and directed that the parties bring in short minutes to give effect thereto. That has been done, and there remained in dispute five issues of principle, the resolution of which should permit the remaining questions of quantification and mechanisms of the judgment to be resolved. They are:

2 First, as to the application of…

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 896
Case: [2010] NSWSC 896
Decision Date: 27 May 2010

CaseChat Overview and Summary

Sturesteps filed for voluntary winding up of his corporation, and McGrath was appointed liquidator. Sturesteps, who was both a director and an employee of the corporation, sought to be paid a retrenchment payment, which the liquidator refused. The central legal issue was whether the period during which Sturesteps was a director, as well as an employee, counted as non priority days under the Corporations Act 2001, and whether his retrenchment payment was attributable to a non priority day. The court held that the period in question did count as non priority days and that Sturesteps' retrenchment payment was not attributable to a non priority day. The court reasoned that the nature of Sturesteps' role and his entitlements were such that he should be considered a creditor rather than an employee for the purposes of determining his retrenchment payment.

The court also addressed whether the liquidator should be directed to make the payment within a particular timeframe, concluding that such a direction was not appropriate as it would interfere with the liquidator's discretion. Additionally, the court considered whether Sturesteps was entitled to interest on the judgment debt in his favour. The court held that Sturesteps was entitled to interest on the judgment debt from the date of the winding up until the date of judgment. Finally, the court examined whether costs should be ordered on an indemnity basis and whether the proof of debt could be treated as a Calderbank offer. The court held that costs should be awarded on the standard basis, and that the proof of debt could not be treated as a Calderbank offer as it was not a genuine attempt to resolve the dispute.

The final orders included that the liquidator was to pay Sturesteps his retrenchment payment, interest on the judgment debt from the date of winding up until the date of judgment, and costs on the standard basis. The liquidator was not to be directed to make the payment within a particular timeframe, and the proof of debt was not to be treated as a Calderbank offer.

Orders