Vatera Pty Limited v Meribal Interiors NSW Pty Limited (Under Deed of Company Arrangement) - [2008] FCA 468

FEDERAL COURT OF AUSTRALIA
Vatera Pty Limited v Meribal Interiors NSW Pty Limited (Under Deed of Company Arrangement); in the Matter of Meribal Interiors NSW Pty Limited (Under Deed of Company Arrangement) [2008] FCA 468
CORPORATIONS LAW – orders to be made on termination of a deed of company arrangement and consequent liquidation
COSTS – submitting defendants liable for a proportion of costs of proceeding where partly responsible for need for proceeding
Vatera Pty Limited v Meribal Interiors NSW Pty Limited (Under Deed of Company Arrangement); in the Matter of Meribal Interiors NSW Pty Limited (Under Deed of Company Arrangement) [2008] FCA 404 related
IN THE MATTER OF MERIBAL INTERIORS NSW PTY LIMITED (UNDER DEED OF COMPANY ARRANGEMENT) ACN 095 830 041
VATERA PTY LIMITED ACN 003 645 494 v MERIBAL INTERIORS NSW PTY LIMITED (UNDER DEED OF COMPANY ARRANGEMENT) ACN 095 830 041, CORYNNE LEE MCARTHUR, ANTONY DE VRIES and RIAD TAYEH
NSD 2201 OF 2007
GYLES J
8 APRIL 2008
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 2201 OF 2007

IN THE MATTER OF MERIBAL INTERIORS NSW PTY LIMITED (UNDER DEED OF COMPANY ARRANGEMENT) ACN 095 830 041

BETWEEN:

VATERA PTY LIMITED ACN 003 645 494
Plaintiff

AND:

MERIBAL INTERIORS NSW PTY LIMITED (UNDER DEED OF COMPANY ARRANGEMENT) ACN 095 830 041
First Defendant

CORYNNE LEE MCARTHUR
Second Defendant

ANTONY DE VRIES
Third Defendant

RIAD TAYEH
Fourth Defendant

JUDGE:

GYLES J

DATE OF ORDER:

8 APRIL 2008

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1.The Deed of Company Arrangement entered into by the First Defendant on 21 August 2007 is terminated.
2.The First Defendant be wound up under the provisions of the Corporations Act 2001 and that Mr John Lord be appointed liquidator.
3.The Third and Fourth Defendants pay to the liquidator all funds which they received from the First Defendant, including without limitation, funds received for their fees pursuant to the said Deed of Company Arrangement.
4.The Second Defendant pay 50% of the Plaintiff’s costs of the proceeding and the Third and Fourth Defendants jointly and severally pay 50% of the Plaintiff’s costs of the proceeding.

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

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 2201 OF 2007

IN THE MATTER OF MERIBAL INTERIORS NSW PTY LIMITED (UNDER DEED OF COMPANY ARRANGEMENT) ACN 095 830 041

BETWEEN:

VATERA PTY LIMITED ACN 003 645 494
Plaintiff

AND:

MERIBAL INTERIORS NSW PTY LIMITED (UNDER DEED OF COMPANY ARRANGEMENT) ACN 095 830 041
First Defendant

CORYNNE LEE MCARTHUR
Second Defendant

ANTONY DE VRIES
Third Defendant

RIAD TAYEH
Fourth Defendant

JUDGE:

GYLES J

DATE:

8 APRIL 2008

PLACE:

SYDNEY

REASONS FOR JUDGMENT

On 1 April 2008 I delivered reasons for judgment in this matter (Vatera Pty Limited v Meribal Interiors NSW Pty Limited (Under Deed of Company Arrangement); in the Matter of Meribal Interiors NSW Pty Limited (Under Deed of Company Arrangement) [2008] FCA…

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

AGLC: Vatera Pty Limited v Meribal Interiors NSW Pty Limited (Under Deed of Company Arrangement) [2008] FCA 468
Case: [2008] FCA 468
Decision Date: 8 April 2008

CaseChat Overview and Summary

The case involved Vatera Pty Limited, the plaintiff, and Meribal Interiors NSW Pty Limited, the first defendant, along with two other defendants. The dispute centred on the termination of a Deed of Company Arrangement entered into by Meribal on 21 August 2007. Vatera sought the termination of this arrangement and the winding up of Meribal under the Corporations Act 2001. The court was also asked to appoint a liquidator and to order the third and fourth defendants to repay funds received from Meribal, including fees paid to them under the Deed of Company Arrangement. Additionally, Vatera sought an order for costs.

The primary legal issues the court had to decide were whether the Deed of Company Arrangement was valid and binding, and if it was, whether there were any grounds for its termination. Furthermore, the court needed to determine whether the third and fourth defendants were entitled to retain the funds they received from Meribal, including their fees under the arrangement. The court also had to consider the appropriate allocation of costs between the parties.

The court found that the Deed of Company Arrangement was valid and binding, but it was not being implemented in good faith by the first defendant. This finding was sufficient to justify the termination of the arrangement. The court held that the third and fourth defendants were not entitled to retain the funds they received from Meribal, including their fees, and ordered them to repay these funds to the liquidator. The court also made an order for costs, requiring the second defendant to pay 50% of Vatera’s costs and the third and fourth defendants to jointly and severally pay the other 50%.

The court terminated the Deed of Company Arrangement, ordered the winding up of Meribal under the Corporations Act 2001, and appointed Mr John Lord as liquidator. It also ordered the third and fourth defendants to repay all funds received from Meribal, including their fees under the Deed of Company Arrangement. Additionally, the court ordered the second defendant to pay 50% of Vatera’s costs, and the third and fourth defendants to jointly and severally pay the remaining 50%.

Orders

Orders of the court

1. The Deed of Company Arrangement entered into by the First Defendant on 21 August 2007 is terminated.

2. The First Defendant be wound up under the provisions of the Corporations Act 2001 and that Mr John Lord be appointed liquidator.

3. The Third and Fourth Defendants pay to the liquidator all funds which they received from the First Defendant, including without limitation, funds received for their fees pursuant to the said Deed of Company Arrangement.

4. The Second Defendant pay 50% of the Plaintiff’s costs of the proceeding and the Third and Fourth Defendants jointly and severally pay 50% of the Plaintiff’s costs of the proceeding.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

GYLES J

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Ratio Decidendi

Legal Principle Established

Established by: GYLES J

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IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 2201 OF 2007

JUDGE:	GYLES J
DATE OF ORDER:	8 APRIL 2008
WHERE MADE:	SYDNEY

JUDGE:	GYLES J
DATE:	8 APRIL 2008
PLACE:	SYDNEY