Tilley Air Conditioning Pty Ltd v Austruc Constructions Ltd - [2009] NSWSC 757

CITATION: Tilley Air Conditioning Pty Ltd v Austruc Constructions Ltd [2009] NSWSC 757

HEARING DATE(S): 9 June 2009

JURISDICTION: Equity Division
Corporations List

JUDGMENT OF: Brereton J

EX TEMPORE JUDGMENT DATE: 9 June 2009

DECISION: Applications refused

CATCHWORDS: CORPORATIONS - Applications pursuant to (CTH) Corporations Act 2001, s 456B(1), to be substituted as plaintiff - where applicant contends it is a creditor of the defendant - where defendant contends it has off-setting claim against the applicant - where Court cannot be affirmatively satisfied that applicant is a creditor – Held: A party with an untried claim for unliquidated damages is not a contingent or prospective creditor

LEGISLATION CITED: (CTH) Corporations Act 2001 s 456B(1), s 459P

CATEGORY: Procedural and other rulings

CASES CITED: Alati v Wei Sheung (2000) 34 ACSR 489, [2000] NSWSC 601
R v Dunwoody [2004] 212 ALR 103
Re A Company [1973] 1 WLR 1566, [1974] 1 All ER 256
Roy Morgan Research Centre Pty Ltd v Wilson Market Research Pty Ltd (1996) 39 NSWLR 311, 20 ACSR 108
South East Water Ltd v Kitoria Pty Ltd (1996) 21 ACSR 465
Tokich Holdings Pty Ltd v Sheraton Constructions (NSW) Pty Ltd (in liq) [2004] NSWSC 527

PARTIES: Tilley Air Conditioning Pty Ltd (plaintiff)
Austruc Constructions Ltd (defendant/respondent)
HC Constructions & Formwork (Aust) Pty Ltd (first applicant)
PC Holdings (Aust) Pty Ltd (second applicant)

FILE NUMBER(S): SC 2617/09

COUNSEL: Mr T Russell (sol) (applicants)
Mr A Cheshire w Mr S Adair (defendant/respondent)

SOLICITORS: ERA Legal (applicants)
Crisp Legal Pty Ltd (defendant/respondent)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

BRERETON J

Tuesday 9 June 2009

2617/09 Tilley Air Conditioning Pty Ltd v Austruc Constructions Ltd

JUDGMENT (ex tempore)

1 HIS HONOUR: By interlocutory process filed on 2 June 2009 the applicant HC Constructions and Formwork Australia Pty Limited claims an order pursuant to (CTH) Corporations Act 2001, s 456B(1), that it be substituted as plaintiff in these proceedings, in which Tilley Air Conditioning Pty Limited claims an order that the defendant, Austruc Constructions Ltd, be wound up in insolvency. It appears that the original plaintiff is not proceeding with its application, and has been excused from further attendance or granted leave to withdraw. There is no evidence before the Court as to the basis upon which Tilley's demand has been resolved, nor any evidence as to the solvency of Austruc. In the absence of evidence of solvency, I think I must treat more closely the evidence than might otherwise have been necessary.

2 It is true, as Mr Russell has submitted, that on 11 March 2009 an officer of Austruc signed a note promising to pay HC Constructions $58,000 that day, and that that amount has not been paid. Essentially, Austruc alleges that it has counter claims (or “back charges”) which excuse it from having to pay that or any amount to HC Constructions. Its arguments in that respect were anticipated in a letter from its solicitors to Austruc of 7 May…

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: [2009] NSWSC 757
Decision Date: 9 June 2009

CaseChat Overview and Summary

The matter between Tilley Air Conditioning Pty Ltd and Austruc Constructions Ltd was before the court. Tilley Air Conditioning sought to be substituted as the plaintiff under section 456B(1) of the Corporations Act 2001. Tilley Air Conditioning claimed to be a creditor of Austruc Constructions, whereas Austruc Constructions asserted that it had an off-setting claim against Tilley Air Conditioning. The court was tasked with determining whether Tilley Air Conditioning was a creditor of Austruc Constructions and whether it was appropriate to substitute Tilley Air Conditioning as the plaintiff in the proceedings.

The central legal issue was whether Tilley Air Conditioning could be considered a creditor of Austruc Constructions. This hinged on whether Tilley Air Conditioning's claim for unliquidated damages was a current or prospective debt owed by Austruc Constructions. Austruc Constructions argued that the claim for unliquidated damages did not constitute a debt, and therefore, Tilley Air Conditioning was not a creditor. The court needed to examine the nature of Tilley Air Conditioning's claim and decide if it met the criteria of a creditor under the Corporations Act.

The court found that Tilley Air Conditioning's claim for unliquidated damages did not constitute a current or prospective debt. A party with an untried claim for unliquidated damages was not considered a contingent or prospective creditor. Consequently, the court held that Tilley Air Conditioning was not a creditor of Austruc Constructions, and it was not appropriate to substitute Tilley Air Conditioning as the plaintiff. The court emphasised that a creditor must have a current or prospective debt, and Tilley Air Conditioning's claim for unliquidated damages did not satisfy this requirement. The court dismissed the application to be substituted as the plaintiff.

Orders