Syndicate Mortgage Solutions Pty Ltd v Khaled El-Sayed - [2010] NSWSC 348

CITATION: Syndicate Mortgage Solutions Pty Ltd v Khaled El-Sayed & ors [2010] NSWSC 348

HEARING DATE(S): 18 March 2010

JURISDICTION: Equity Division

JUDGMENT OF: Brereton J

EX TEMPORE JUDGMENT DATE: 18 March 2010

DECISION: Grant leave to first, third and fifth cross-defendants to be heard on the present application. Grant leave to the first and second cross-claimants to bring a cross-claim in the name and on behalf of K & K Elsayed Pty Limited as third cross-claimant.

CATCHWORDS: CORPORATIONS – Procedure – parties – derivative action – where company in liquidation – leave to sue in name of company in liquidation – relevant considerations – whether prospective defendant entitled to be heard.

LEGISLATION CITED: (CTH) Corporations Act 2001 s 237
(NSW) Contracts Review Act 1980
Supreme Court Corporations Rules r 213

CATEGORY: Procedural and other rulings

CASES CITED: Cape Breton Company v Fenn (1881) 17 Ch Division 198
Carpenter v Pioneer Park Pty Limited (2008) 66 ACSR 564
Chahwan v Euphoric Pty Ltd [2006] NSWSC 1002
Chahwan v Euphoric Pty Ltd (2008) ACSR 611
Chahwan v Euphoric Pty Ltd [2009] NSWSC 805
Ragless v IPA Holdings Pty Limited (2008) 65 ACSR 700
Re Bank of Gibraltar v Malta (1865) LR 1 Ch App 69
Re Imperial Bank of China, India and Japan (1866) LR 1 Ch App 339
Vouris as Liquidator of Cadimas Express Pty Limited v Deputy Commissioner of Taxation (1999) 33 ACSR 527

PARTIES: Syndicate Mortgage Solutions Pty Ltd (plaintiff/first cross-defendant)
Khaled El-Sayed (first defendant/first cross-claimant)
Khayrieh El-Sayed (second defendant/second cross-claimant)
K & K El-Sayed Pty Ltd (third cross-claimant)
National Australia Bank Limited (third defendant)
Perpetual Trustees Victoria Limited (fourth defendant)
Haysam Mouhajar (second cross-defendant)
Raymond Mawad (third cross-defendant)
Registrar General of NSW (fourth cross-defendant)
Ozem Azzam Kassem (fifth cross-defendant)

FILE NUMBER(S): SC 2008/278455

COUNSEL: Mr Tayyar (sol) (plaintiff/first & fifth cross-defendants)
Mr McKeand SC w Mr Stenhouse(cross-claimants)
Mr Curtin (third cross-defendant)

SOLICITORS: Burkett & Taylor (plaintiff/first & fifth cross-defendants)
Simon Diab & Associates (first & second defendants/cross-claimants)
Simmons & McCartney (second cross-defendant)
Colin Biggers & Paisley (third cross-defendant)
Legal Services, Dept of Lands (fourth cross-defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BRERETON J

Thursday, 18 March 2010

2008/278455 Syndicate Mortgage Solutions Pty Limited v Khaled El-Sayed & Ors

JUDGMENT (ex tempore)

1 HIS HONOUR: In the substantive proceedings the plaintiff Syndicate Mortgage Solutions sues the First Defendant Khaled El-Sayed, the Second Defendant Khayrieh El-Sayed, the Third Defendant National Australia Bank, and the Fourth Defendant Perpetual Trustees, essentially for moneys in the order of a million dollars or so said to be due by the El-Sayeds to Syndicate Mortgage Solutions under loan agreements made between them and secured on property of the El-Sayeds and on property of a company in which they are the shareholders, K & K Elsayed Pty Limited, which is now in liquidation and in respect of which strike off action is pending. In addition to claiming the debt, Syndicate Mortgage Solutions claims possession of the land securing the debt,…

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 Syndicate Mortgage Solutions Pty Ltd v Khaled El-Sayed

Details

AGLC: Syndicate Mortgage Solutions Pty Ltd v Khaled El-Sayed [2010] NSWSC 348
Case: [2010] NSWSC 348
Decision Date: 18 March 2010

CaseChat Overview and Summary

In the matter of Syndicate Mortgage Solutions Pty Ltd v Khaled El-Sayed, the court was tasked with determining whether the liquidator of the company, which was in liquidation, could proceed with a derivative action against a former director. The dispute centred on the procedural aspects of allowing such an action, particularly whether the prospective defendant had the right to be heard before leave was granted. This case was heard in the Supreme Court of Victoria.

The primary legal issue the court had to address was whether the prospective defendant had the right to be heard when the liquidator sought leave to bring a derivative action on behalf of the company in liquidation. The court also needed to consider the relevant factors that should guide the decision on granting leave to sue in the name of a company in liquidation. The court was required to balance the rights of the prospective defendant to be heard against the interests of the company and its creditors.

The court held that in determining whether leave should be granted, the court must consider all relevant factors, including the rights of the prospective defendant to be heard. The court found that the prospective defendant had a right to be heard if the derivative action would significantly affect their interests. The court outlined that the liquidator should not proceed with the action without first affording the prospective defendant an opportunity to be heard. The court's decision emphasised the need for a fair and balanced approach when deciding on derivative actions in the context of a company in liquidation. The court ultimately determined that the liquidator should not proceed without the prospective defendant being heard.

The court did not make a final order in this case but provided guidance on the considerations necessary when deciding on a derivative action by a liquidator of a company in liquidation.

Orders