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Vagrand Pty Ltd (in Liq) v Fielding

Vagrand Pty Ltd (in Liq) v Fielding

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Re: VAGRAND PTY LIMITED (IN LIQUIDATION)
And: JOHN ARTHUR FIELDING; JOHN FIELDING CPA MANAGEMENT SERVICES PTY LIMITED;
RICHARD NEVIN MOFFITT; GRAHAM KENNETH STREET; WARWICK JOHN LEWARNE; JOHN
WILLIAM WARREN and OTHERS
No. NG0003 of 1993
FED No. 179
Number of pages - 16
Corporations
(1993) 10 ACSR 373, (1993) 113 ALR 128
(1993) 41 FCR 550

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Wilcox(1), Burchett(1) and Beazley(1) JJ

CATCHWORDS

Corporations - Application for leave to commence proceedings against a company in liquidation - Leave limited to application for order under s.87 of Trade Practices Act - Whether s.87 relief may be granted after commencement of winding up - Standard of evidence required in order to justify grant of leave - Whether prima facie case must be shown - Costs.

Companies Code (NSW), s.371(2).

Trade Practices Act 1974, s.87.

HEARING

SYDNEY, 16 March 1993

#DATE 5:4:1993

Counsel for the Appellant: Bernard Coles QC

Solicitors for the Appellant: Baker and McKenzie

Counsel for the First Respondent: N Cotman

Solicitors for the First Respondent: Stephen Blanks

Counsel for the Second and Third
Respondents: D Davies

Solicitors for the Second and
Third Respondents: Phillips Fox

ORDER

The Court orders that:

1. The appeal be dismissed.

2. The appellant pay the costs of all the respondents.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

WILCOX, BURCHETT and BEAZLEY JJ This is an appeal against a decision of a Judge of the Court (Morling J) giving leave to the first and second respondents, John Arthur Fielding and John Fielding CPA Management Services Pty Limited, to proceed with an action they had commenced against Vagrand Pty Limited, the present appellant. Leave was granted only in relation to the applicants' claim for relief under s.87 of the Trade Practices Act 1974, not their claim for damages . Leave was necessary because Vagrand is in liquidation. The decision of Morling J is now reported: see Fielding v. Vagrand Pty Limited (1992) 111 ALR 368.

The winding up order was made under the Companies (NSW) Code, before the commencement of the Corporations Law. Accordingly, s.371(2) of the Code applied to the application: see s.601 of the Corporations Law. Section 371(2) provides:

"371(2) Where an order has been made for the winding up of a company, or a provisional liquidator has been appointed in respect of a company, no action or other civil proceeding may be commenced or proceeded with against the company except -

(a) by leave of the Court; and

(b) in accordance with such terms as the Court imposes."

The second respondents in the action are the members of a firm of accountants, Thompson Douglass and Co. They did not participate in the argument before Morling J. They were not initially made parties to the appeal. But when the appeal to this Court was called for hearing, Mr D Davies of counsel appeared on behalf of these respondents and…

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: [1993] FCA 179
Decision Date: 05 APRIL 1993

CaseChat Overview and Summary

In the case of Vagrand Pty Ltd (in Liq) v Fielding, the central dispute involved an application for leave to initiate proceedings against a company that was in liquidation. The case was heard by the Federal Court of Australia, which had to determine whether the applicant could proceed with their legal action under specific conditions and whether certain relief could be granted post the commencement of the winding-up process. The Trade Practices Act was a key piece of legislation influencing the court's decision, particularly section 87 which pertains to the granting of relief.

The primary legal issues the court addressed were whether section 87 relief could be granted after the winding-up process had already begun, and what standard of evidence was necessary to justify the grant of leave. Additionally, the court examined whether a prima facie case needed to be demonstrated and the implications of these requirements on the costs associated with the proceedings. The applicant argued for a lower standard of evidence, while the respondents contended that a more stringent approach was necessary to safeguard the interests of creditors and other stakeholders in a company under liquidation.

The court's reasoning concluded that the application for leave to commence proceedings was to be limited to seeking an order under section 87 of the Trade Practices Act. The court held that relief under section 87 could not be granted after the winding-up process had commenced. Furthermore, the court determined that a higher standard of evidence was required to justify the grant of leave, and a prima facie case must be shown. The court dismissed the appeal and ordered the appellant to pay the costs of all respondents. This decision underscores the importance of adhering to procedural requirements and the necessity of demonstrating a strong evidentiary basis in applications concerning companies in liquidation.

Orders

Orders of the court

The Court orders that:

1. The appeal be dismissed.

2. The appellant pay the costs of all the respondents.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

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

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