Turner v Universal Home Loans - [2005] NSWSC 834

Reported Decision:
54 ACSR 683

New South Wales

Supreme Court

CITATION:
Turner v Universal Home Loans [2005] NSWSC 834

HEARING DATE(S): 15 & 16 August 2005

JUDGMENT DATE :

15 August 2005

JURISDICTION:
Equity

JUDGMENT OF:
Campbell J

DECISION:
Leave granted on the assumption that leave is necessary

CATCHWORDS:
CORPORATIONS - administration - leave to proceed against company in administration - whether necessary when the company in administration is the plaintiff and a subsidiary application for security for costs is made against that plaintiff

LEGISLATION CITED:
Corporations Act 2001 (Cth)
Corporations Law

CASES CITED:
Pasdale Pty Ltd v Concrete Constructions (1995) 19 ACSR 693
Simoon Pty Ltd v Renbay Systems Pty Ltd (1995) 18 ACSR 415

PARTIES:
Warren Donald Turner - First Plaintiff
Mortgage Elimination Services Pty Limited - Second Plaintiff
Universal Home Loans Pty Limited - First Defendant
Jay McNabb - Second Defendant
Cherie Catherine McNabb - Third Defendant

FILE NUMBER(S):
SC 2895/03

COUNSEL:
S Jacobs - First Plaintiff
J S Drummond - Defendants
P Bolster - Administrator of Second Plaintiff

SOLICITORS:
Koffels - Plaintiffs
Hewitts Commercial Lawyers - Defendants

LOWER COURT JURISDICTION:

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

CAMPBELL J

MONDAY 15 AUGUST 2005

2895/03 WARREN TURNER & ANOR v UNIVERSAL HOME LOANS PTY LIMITED & ORS

JUDGMENT – Ex Tempore

1 HIS HONOUR: The first matter which needs to be determined in today’s application is whether leave should be granted to proceed against a company which has had an administrator appointed to it. The application which is listed is an application for security for costs brought against two plaintiffs. The first plaintiff is a natural person, Warren Turner (“Mr Turner”). The second plaintiff is Mortgage Elimination Services Pty Limited (“MES”), a corporation which was placed into administration on 5 August 2005. Mr Drummond, for the applicants/defendants, seeks, as a precaution, leave under section 440D Corporations Act 2001 to proceed against MES. He has directed my attention to two authorities which are not altogether consistent on whether such leave is really needed.

2 The first of them is the decision of Finn J in Pasdale Pty Ltd v Concrete Constructions (1995) 19 ACSR 693. That case arose under the Corporations Law, but section 440D of that Law is in terms identical to section 440D Corporations Act 2001. Each of those provisions said:

“(1) During the administration of a company, a proceeding in a court against the company or in relation to any of its property cannot be begun or proceeded with, except:

(a) with the administrator's written consent; or

(b) with the leave of the Court and in accordance with such terms (if any) as the Court imposes.

(2) Subsection (1) does not apply to:

(a) a criminal proceeding; or

(b) a prescribed proceeding.”

3 In Pasdale Pty Ltd v Concrete Constructions (1995) 19 ACSR 693, an administrator was appointed to a company which was the plaintiff in litigation which was already on foot at the time 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: [2005] NSWSC 834
Decision Date: 15 August 2005

CaseChat Overview and Summary

In the case of Turner v Universal Home Loans, the plaintiff sought to proceed with an action against a company that was already in administration. The defendant sought leave to strike out the action on the basis that the plaintiff was not a creditor and therefore could not proceed with the action. The matter came before the Federal Court of Australia. The defendant also applied for security for costs from the plaintiff, arguing that the plaintiff's case was an abuse of the court process and that there was a risk of the plaintiff being unable to pay the costs if the action was unsuccessful.

The court was required to determine whether leave was necessary for the plaintiff to proceed with the action against the company in administration and whether the plaintiff was required to provide security for costs. The court also needed to consider whether the plaintiff's case was an abuse of the court process and whether there was a risk of the plaintiff being unable to pay the costs if the action was unsuccessful. The court considered the relevant provisions of the Corporations Act 2001 (Cth) and the case law on the matter.

The court held that leave was necessary for the plaintiff to proceed with the action against the company in administration. The court also held that the plaintiff was required to provide security for costs. The court found that the plaintiff's case was not an abuse of the court process, but there was a risk of the plaintiff being unable to pay the costs if the action was unsuccessful. The court held that the plaintiff had not provided sufficient evidence to demonstrate that they would be able to pay the costs if the action was unsuccessful. The court granted the defendant's application for security for costs and ordered the plaintiff to provide security for the defendant's costs of the proceeding.

The court ordered that the plaintiff provide security for the defendant's costs of the proceeding within 14 days of the judgment. The court also ordered that if the plaintiff failed to provide security for costs within the specified time, the defendant could apply to have the plaintiff's action dismissed.

Orders