Thomas v Bradnam's Windows and Doors P/L Summary

COURT OF APPEAL	[1999] QCA 487b
de JERSEY CJ McMURDO P HELMAN J
Appeal No 10123 of 1999
PETER ANDREW THOMAS AND
KAREN ELIZABETH THOMAS	Appellant (Plaintiff)
and
BRADNAM'S WINDOWS & DOORS PTY LTD	Respondent (Defendant)
BRISBANE
..DATE 23/11/99
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THE CHIEF JUSTICE: A District Court Judge gave summary judgment against two guarantors

of a company's debt. The guarantors, the present applicants, were the directors and

shareholders of the debtor company.

When the summary judgment application came on for hearing they took the point that the

company had just been placed under the administration of two chartered accountants. The

company was itself a defendant to the action.

The guarantee could not be enforced against the applicants as directors of the company in

administration without the leave of the Court because of section 44J subsection 1 of the

Corporations Law. The reference to "the Court" in section 44J(1) is to "the Court" spelt

significantly with a capital "C".

The applicants had submitted that that referred only to the Supreme Court. The learned District

Court Judge was however persuaded that he had jurisdiction and granted leave. He relied on

section 42B of the Corporations (Queensland) Act 1990 which confers jurisdiction with respect

to civil matters under the Corporations Law on the lower Courts.

On the other hand it specifically excepts "superior Court matters" which are defined by section

41 of subsection 1 of that Act to mean civil matters which the Corporations Law "quite clearly

intends (for example, by use of 'the Court') to be dealt with only by a superior Court".

The provision requiring the grant of leave, section 440J(1) refers, as I have said, to "the Court",

using the capital "C" designation. I believe that must be taken to indicate unequivocally that the

granting of leave in such situations as this is confined to the Supreme Court, and I observe that

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that accords with what I believe to be established practice.

Further support for this emerges indeed from section 58AA subsection 2 of the Ccorporations

Law itself, which is to similar effect. Regrettably, therefore the order granting leave must be set

aside. In the course of submissions we raised with the parties the question whether this Court,

which is, of course, the Supreme Court, should not now consider exercising a discretion to grant

leave.

The approach taken by the learned District Court Judge based on the observations of Thomas

JA in BBC Hardware Limited v. GT Homes Limited [1997] 2 Queensland Reports 123 seems

unexceptional. However, it is also a matter of practice that on applications for leave of this

character the liquidator or the administrator as the case may be is given the opportunity to be

heard, particularly with relation to the issue of whether the granting of leave might unduly impede

the due liquidation or administration of the company in question.

The administrators here have not been given that opportunity. If it emerges that leave should be

granted in this case then the further question will arise whether the Judgment given summarily

below should not be confirmed. It is a case where the learned District Court Judge was satisfied

that no defence had been shown.

The appropriate practical course for us now, I believe, is to stand the matter down so that this

morning the administrators may be apprised of the course taken by the Court and given an

opportunity to be heard if they wish at 2.15 p.m. today on the question whether or not this Court

should now grant leave under section 440J(1) of the Corporations Law.

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For my part, I would think, assuming the accessibility of the administrators, there would then be

sufficient opportunity for them to give appropriate consideration to the matter. They must be

taken to have been aware of the Judgment given in the District Court now for quite some time.

That judgment was given on 5 November and the administration has now been proceeding for an

appreciable period within which the administrators have no doubt become familiar with the affairs

of the company and any likely effect on the creditors of the judgment which was given in the

District Court against the guarantors.

I would, for those reasons, stand the matter down until 2.15 p.m. today.

THE PRESIDENT Yes, I agree.

HELMAN J: I agree.

THE CHIEF JUSTICE: Costs will be reserved pending the Court's further consideration of the

matter.

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The Court of Appeal in the case of Thomas v Bradnam's Windows and Doors P/L was asked to consider an appeal against a decision made by a District Court Judge, who had granted summary judgment against the two guarantors of a company's debt. The guarantors, who were also directors and shareholders of the debtor company, argued that the summary judgment could not be enforced against them as directors of the company, which had recently been placed under the administration of two chartered accountants. The primary legal issue before the Court of Appeal was whether the District Court Judge had the jurisdiction to grant leave to enforce the guarantee against the guarantors, and if not, whether the Court of Appeal should exercise its discretion to grant leave. The Court of Appeal found that the District Court Judge did not have jurisdiction to grant leave as the reference to "the Court" in section 44J(1) of the Corporations Law indicated that leave could only be granted by a superior Court, such as the Supreme Court. Furthermore, the Court of Appeal noted that it was a matter of practice for the liquidator or administrator to be given the opportunity to be heard on such applications for leave, which had not occurred in this case. As a result, the Court of Appeal decided to stand the matter down to allow the administrators to be heard on the question of whether leave should be granted. The Court of Appeal also decided to reserve costs pending its further consideration of the matter.

The reasoning of the Court of Appeal was based on the interpretation of the relevant statutory provisions and the established practice of the Courts. The Court of Appeal noted that section 44J(1) of the Corporations Law referred to "the Court" with a capital "C", which they interpreted as indicating that leave could only be granted by a superior Court. Furthermore, the Court of Appeal found that it was a matter of practice for the liquidator or administrator to be given the opportunity to be heard on such applications for leave. In light of these factors, the Court of Appeal decided to stand the matter down to allow the administrators to be heard on the question of whether leave should be granted. The Court of Appeal also decided to reserve costs pending its further consideration of the matter. This decision highlights the importance of established practice and statutory interpretation in determining the jurisdiction of the Courts in matters relating to the enforcement of guarantees against directors of companies in administration.

Thomas v Bradnam's Windows and Doors P/L

CaseChat Overview and Summary

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Background to the litigation

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Legal Principle Established