Sydney Water Corporation v McGrath - [2014] NSWCA 197

Court of Appeal

New South Wales

Case Title: Sydney Water Corporation v McGrath

Medium Neutral Citation: [2014] NSWCA 197

Hearing Date(s): 12 March 2014

Decision Date: 23 June 2014

Before: Macfarlan JA at [1]; Barrett JA at [22]; Ward JA at [120]

Decision:
Appeal dismissed with costs

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Catchwords: CORPORATIONS - winding up - whether trial judge erred in deciding not to exercise power conferred by s 562A(4) of the Corporations Act 2001 (Cth) - whether trial judge's exercise of discretion vitiated by material error of fact - whether determination was unreasonable or plainly unjust - whether error in quantification of amount received by insurers for purpose of determining relevant amount had discretion been exercised in favour of insured.

Legislation Cited: Corporations Act 2001 (Cth)
Third Parties (Rights Against Insurers) Act 1930 (UK)

Cases Cited: Amaca Pty Ltd v McGrath (as liquidators of HIH Underwriting and Insurance (Aust) Pty Ltd) [2011] NSWSC 90; 82 ACSR 281
Amaca Pty Ltd v McGrath & Honey (as liquidators of HIH Group of Companies) [2012] NSWSC 176; 87 ACSR 625
Amaca Pty Ltd v McGrath & Honey (as liquidators of HIH Group of Companies) [2012] NSWSC 1523; 92 ACSR 105
AssetInsure Pty Limited v New Cap Reinsurance Corporation Limited [2006] HCA 13; 225 CLR 331
Barton v Atlantic 3 Financial (Australia) Pty Ltd [2004] QSC 376; 212 ALR 348
Chan v Cresdon Pty Ltd [1989] HCA 63; 168 CLR 242
Ebrahimi v Westbourne Galleries Ltd [1973] AC 360
Gye v McIntyre [1991] HCA 60; 171 CLR 609
HIH Casualty and General Insurance Ltd v Building Insurers' Guarantee Corporation [2003] NSWSC 1083; 188 FLR 153
House v R [1936] HCA 40; 55 CLR 499
Krishell Pty Ltd v Nilant and Ors [2006] WASCA 223
McGrath & Anor re HIH Insurance Ltd [2008] NSWSC 9; 26 ACLC 111
Pitt-Owen v Lenin [2006] NSWSC 748
Re HIH Casualty and General Insurance Ltd and Ors [2005] NSWSC 240; 190 FLR 398
Stein v Blake [1996] AC 243

Category: Principal judgment

Parties: Sydney Water Corporation (Appellant)
Messrs A G McGrath and C J Honey as liquidators of the HIH Group of Companies (First Respondent)
HIH Casualty & General Ltd (in liquidation and subject to Schemes of Arrangement)
(Second Respondent)

Representation

- Counsel: Counsel:
J C Sheahan SC/K Rees SC (Appellant)
R A Dick SC/R M Foreman (First and Second Respondents)

- Solicitors: Solicitors:
Clayton Utz (Appellant)
Ashurst Australia (First and Second Respondents)

File Number(s): 2013/206927

Decision Under Appeal

- Court / Tribunal: Supreme Court

- Before: Nicholas J

- Date 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.

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Details

Case: [2014] NSWCA 197
Decision Date: 23 June 2014

CaseChat Overview and Summary

Sydney Water Corporation appealed to the Court of Appeal of New South Wales against a decision of a single judge who had exercised a discretion under s 562A(4) of the *Corporations Act 2001* (Cth) in favour of Mr. McGrath. The dispute concerned the quantification of an amount received by insurers, which was relevant to the determination of the amount that would have been paid to Mr. McGrath had the discretion been exercised in his favour.

The primary legal issues before the Court of Appeal were whether the trial judge erred in deciding not to exercise the power conferred by s 562A(4) of the *Corporations Act 2001* (Cth), whether the trial judge's exercise of discretion was vitiated by a material error of fact, and whether the determination was unreasonable or plainly unjust. A further issue was whether there was an error in the quantification of the amount received by insurers for the purpose of determining the relevant amount had the discretion been exercised in favour of the insured.

The Court of Appeal dismissed the appeal. It found no error in the trial judge's decision to exercise the discretion under s 562A(4) of the *Corporations Act 2001* (Cth). The Court held that the trial judge's exercise of discretion was not vitiated by material error of fact, nor was the determination unreasonable or plainly unjust. The Court also found no error in the quantification of the amount received by the insurers. Consequently, the appeal was dismissed with costs.

Orders

Orders of the court

Appeal dismissed with costs

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

Case Title:	Sydney Water Corporation v McGrath
Medium Neutral Citation:	[2014] NSWCA 197
Hearing Date(s):	12 March 2014
Decision Date:	23 June 2014
Before:	Macfarlan JA at [1]; Barrett JA at [22]; Ward JA at [120]
Decision:	Appeal dismissed with costs [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Catchwords:	CORPORATIONS - winding up - whether trial judge erred in deciding not to exercise power conferred by s 562A(4) of the Corporations Act 2001 (Cth) - whether trial judge's exercise of discretion vitiated by material error of fact - whether determination was unreasonable or plainly unjust - whether error in quantification of amount received by insurers for purpose of determining relevant amount had discretion been exercised in favour of insured.
Legislation Cited:	Corporations Act 2001 (Cth) Third Parties (Rights Against Insurers) Act 1930 (UK)
Cases Cited:	Amaca Pty Ltd v McGrath (as liquidators of HIH Underwriting and Insurance (Aust) Pty Ltd) [2011] NSWSC 90; 82 ACSR 281 Amaca Pty Ltd v McGrath & Honey (as liquidators of HIH Group of Companies) [2012] NSWSC 176; 87 ACSR 625 Amaca Pty Ltd v McGrath & Honey (as liquidators of HIH Group of Companies) [2012] NSWSC 1523; 92 ACSR 105 AssetInsure Pty Limited v New Cap Reinsurance Corporation Limited [2006] HCA 13; 225 CLR 331 Barton v Atlantic 3 Financial (Australia) Pty Ltd [2004] QSC 376; 212 ALR 348 Chan v Cresdon Pty Ltd [1989] HCA 63; 168 CLR 242 Ebrahimi v Westbourne Galleries Ltd [1973] AC 360 Gye v McIntyre [1991] HCA 60; 171 CLR 609 HIH Casualty and General Insurance Ltd v Building Insurers' Guarantee Corporation [2003] NSWSC 1083; 188 FLR 153 House v R [1936] HCA 40; 55 CLR 499 Krishell Pty Ltd v Nilant and Ors [2006] WASCA 223 McGrath & Anor re HIH Insurance Ltd [2008] NSWSC 9; 26 ACLC 111 Pitt-Owen v Lenin [2006] NSWSC 748 Re HIH Casualty and General Insurance Ltd and Ors [2005] NSWSC 240; 190 FLR 398 Stein v Blake [1996] AC 243
Category:	Principal judgment
Parties:	Sydney Water Corporation (Appellant) Messrs A G McGrath and C J Honey as liquidators of the HIH Group of Companies (First Respondent) HIH Casualty & General Ltd (in liquidation and subject to Schemes of Arrangement) (Second Respondent)
Representation
- Counsel:	Counsel: J C Sheahan SC/K Rees SC (Appellant) R A Dick SC/R M Foreman (First and Second Respondents)
- Solicitors:	Solicitors: Clayton Utz (Appellant) Ashurst Australia (First and Second Respondents)
File Number(s):	2013/206927
Decision Under Appeal
- Court / Tribunal:	Supreme Court
- Before:	Nicholas J
- Date of…