Sullivan v Energy Services International Pty Ltd - [2006] NSWSC 843

CITATION: Sullivan v Energy Services International Pty Ltd [2006] NSWSC 843

HEARING DATE(S): 01/08/06

JUDGMENT DATE :
21 August 2006

JURISDICTION: Equity Division

JUDGMENT OF: Young CJ in Eq

DECISION: The second defendant, being a voluntary liquidator, to pay personally costs of the plaintiff that were not paid by the first defendant, including the costs that the plaintiff is liable to pay to the third defendant.

CATCHWORDS: COSTS [566]- First defendant company had insufficient money to pay plaintiff's costs- Whether plaintiff's costs and plaintiff's costs paid to third defendant be paid by defendant voluntary liquidator personally- Special circumstances- Voluntary liquidator not an officer of the court- Liquidator involved in the first defendant's scheme- Liquidator paid himself in priority to the costs orders to be paid by the first defendant- Liquidator acted unreasonably and is to pay costs personally.

CASES CITED: Cresvale Far East Ltd v Cresvale Securities Ltd (No 2) (2001) 39 ACSR 622
Hypec Electronics Pty Ltd v Mead (2004) 61 NSWLR 169
Kirwan v Cresvale Far East Ltd (2002) 44 ACSR 21
Mead v Watson (2005) 23 ACLC 718
Re Home Investment Society (1880) 14 Ch D 167
Re London Metallurgical Company [1895] 1 Ch 758
Re Pacific Coast Syndicate Ltd [1913] 2 Ch 26
Tubbs v Futurity Investments Ltd [1998] 1 NZLR 471

PARTIES: Emily Sullivan t/as Sullivan's Transport and General Services (P)
William Balfour Rangott (D2)

FILE NUMBER(S): SC 2180/02

COUNSEL: R Weaver (P)
I M Jackman SC (D2)

SOLICITORS: Adams Raves Marsh & Co (P)
Gillespie-Jones & Co (D2)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

YOUNG CJ in EQ

Monday 21 August 2006

2180/02 – SULLIVAN v ENERGY SERVICES INTERNATIONAL PTY LTD

JUDGMENT

1 HIS HONOUR: I gave judgment in this matter on 11 October 2002. For reasons then delivered I set aside two disclaimers issued by the second defendant as liquidator of the first defendant, the first with respect to 481 two hundred litre drums containing PCB contaminated Fullers Earth and the second, 48 intermediate bulk containers together with the PCB contaminated transformer oil in those containers. For reasons set out in my judgment [2002] NSWSC 937 the judgment only concerned the 481 barrels. I said at para 32 of the judgment that the disclaimer should be set aside, both for the reasons given by Hansen J in Tubbs v Futurity Investments Ltd [1998] 1 NZLR 471 as well as the ground that "the evidence strongly suggests that the present is a device by those controlling the Company to avoid liability for the contaminated waste …".

2 I said at para 54:

"The plaintiff should have an order for costs against the first defendant which order should include the costs she has been ordered to pay the third defendant. The position of the second defendant then arises."

3 I then pointed out that when a disclaimer was involved it was the liquidator who issued the disclaimer and was thus a proper party, but where the liquidator went no further than…

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: [2006] NSWSC 843
Decision Date: 21 August 2006

CaseChat Overview and Summary

Sullivan v Energy Services International Pty Ltd was a case before the court where the plaintiff sought to recover costs from the first defendant, Energy Services International Pty Ltd, and the costs paid to a third defendant. The dispute arose out of the winding-up of the first defendant, and the court had to determine whether the plaintiff's costs and the costs paid to the third defendant could be paid by the defendant's voluntary liquidator personally, given that the first defendant did not have sufficient funds. The court also had to decide if there were special circumstances that justified the liquidator paying these costs personally.

The legal issues the court needed to resolve included whether the voluntary liquidator was personally liable for the costs despite not being an officer of the court and whether the liquidator's involvement in the first defendant's scheme justified personal liability. Additionally, the court considered whether the liquidator's actions in paying himself before fulfilling the costs orders were reasonable and if these actions warranted personal liability for the costs.

The court ruled that the voluntary liquidator was not an officer of the court, but his involvement in the first defendant's scheme and his unreasonable actions in paying himself before the costs orders meant he was liable for the costs personally. The liquidator had acted unreasonably by prioritizing his own payment over the costs owed to the plaintiff and the third defendant. As a result, the court held that the liquidator was to pay the costs personally.

The court ordered that the voluntary liquidator pay the plaintiff's costs and the costs paid to the third defendant personally, given the special circumstances and the liquidator's unreasonable actions. This decision underscores the importance of liquidators acting in the best interests of creditors and not prioritizing personal gain over the obligations owed to other parties.

Orders