Vero Insurance Ltd v Kassem - [2010] NSWSC 838

Reported Decision:
79 ACSR 330

New South Wales

Supreme Court

CITATION: Vero Insurance Ltd v Kassem [2010] NSWSC 838

HEARING DATE(S): 22/06/10, 23/06/10

JUDGMENT DATE :
30 July 2010

JURISDICTION: Equity Division
Corporations List

JUDGMENT OF: Barrett J

DECISION: Short minutes to be brought in.

CATCHWORDS: CORPORATIONS - voluntary administration - meeting of creditors - party with unliquidated equitable claim - whether creditor for voting purposes - need for "just estimate" of amount of claim - where the party's assertion of right to recover is contradicted by solicitors' letter saying claim not maintainable - "just estimate" can be nominal only - function of chairperson in making "just estimate" - adjournment of meeting - where chairperson finds proxy invalid - whether chairperson should have adjourned meeting to give opportunity to repair proxy - no unilateral power of chairperson to adjourn - proxies - proxy purportedly given by company signed by person designated "executive manager" - chairperson given nothing to show actual authority of "executive manager" - manner of execution not attracting entitlement to make statutory assumptions - proxy correctly rejected

LEGISLATION CITED: Corporations Act 2001 (Cth), Part 5.3A, ss 127, 128, 129(5), 250D, 439A, 439B, 445D, 1321
Corporations Regulations 2001 (Cth), Schedule 2, Form 532, regulations 5.6.18(1) and (2), 5.6.21(1), 5.6.21(2), 5.6.21(4), 5.6.23, 5.6.26(1), 5.6.28, 5.6.29
Home Building Act 1989, s 18E

CATEGORY: Principal judgment

CASES CITED: Australian Beverage Distributors Pty Ltd v Evans & Tate Premium Wines Pty Ltd [2006] NSWSC 560; (2006) 58 ACSR 22
Byng v London Life Association Ltd [1990] Ch 170
Campbell v Australian Mutual Provident Society (1906) 7 SR (NSW) 99
Colonial Gold Reef Ltd v Free State Rand Ltd [1914] 1 Ch 382
McKerlie v Drillsearch Energy Ltd [2009] NSWSC 488; (2009) 74 NSWLR 673
Re Bosnjak Holdings Pty Ltd [2005] NSWSC 527; (2005) 23 ACLC 1285
Re John L O’Brien Consolidated Industries Pty Ltd (1975) 1 ACLR 311
Re NRMA Ltd [2000] NSWSC 82; (2000) 33 ACSR 594
Re Vouris; Epromotions Australia Pty Ltd v Relectronic-Remech Pty Ltd [2003] NSWSC 702; (2003) 177 FLR 289
Salisbury Gold Mining Co Ltd v Hathorn [1897] AC 268
Selim v McGrath [2003] NSWSC 927; (2003) 47 ACSR 537
Stoughton v Reynolds (1735) 2 Stra 1045; 93 ER 1023
Vero Insurance Ltd v Nicejade Pty Ltd [2010] NSWSC 556

PARTIES: Vero Insurance Limited - Plaintiff
Ozem Azzam Kassem and Andrew James Barnden as Joint Administrators of Ungul Properties Pty Ltd - First Defendants
Ungul Properties Pty Ltd - Second Defendant

FILE NUMBER(S): SC 2009/289555

COUNSEL: Mr S D Robb QC/Mr A Lo Surdo - Plaintiff
Mr A P Spencer - First Defendants
Mr C M Harris SC - Second Defendant

SOLICITORS: Mills Oakley Lawyers - Plaintiff
Leonard Legal - First Defendants
Colin Biggers & Paisley - Second Defendant

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

BARRETT J

FRIDAY 30 JULY 2010

2009/289555 VERO INSURANCE LTD v OZEM AZZAM KASSEM & ORS

JUDGMENT

The proceedings

1…

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: [2010] NSWSC 838
Decision Date: 30 July 2010

CaseChat Overview and Summary

Vero Insurance Ltd sought a declaration from the court regarding the eligibility of a party, Kassem, to vote at a meeting of creditors in the voluntary administration of another entity. The Federal Court of Australia was tasked with determining whether Kassem, who held an unliquidated equitable claim, qualified as a creditor for voting purposes at the meeting. The court had to decide if the requirement for a "just estimate" of the claim's value necessitated a substantial estimate or if a nominal estimate was sufficient, particularly when the party's right to recover was contradicted by a solicitors' letter. The court also examined the chairperson's authority to make a "just estimate" and to adjourn the meeting due to invalid proxies.

The court found that a "just estimate" of an unliquidated claim could be nominal, given the circumstances where the party's claim was contradicted by legal advice. The court held that the chairperson did not have the unilateral power to adjourn the meeting merely because a proxy was invalid. Furthermore, the court upheld the rejection of a proxy purportedly given by the company, signed by an individual designated as "executive manager," as there was no evidence presented to establish the actual authority of the executive manager. The court concluded that the manner of executing the proxy did not invoke any statutory assumptions of authority, and thus, the proxy was correctly rejected.

In light of the findings, the court ruled that Kassem did not qualify as a creditor for voting purposes at the meeting of creditors. The court's decision underscored the necessity for clear evidence of authority in proxy appointments and the limited role of the chairperson in determining creditor eligibility and meeting adjournments. The final orders of the court were in favour of Vero Insurance Ltd, affirming Kassem's ineligibility to vote at the creditors' meeting.

Orders