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Visnic v Sywak

Visnic v Sywak

Case [2011] NSWSC 1246 21 October 2011

Winding Up & Liquidation

Equitable Interests

Trustee in Bankruptcy

Claims of Creditors

Dispute Resolution

Corporate Law & Governance

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Supreme Court

New South Wales

Amendment notes

Medium Neutral Citation: Visnic v Sywak [2011] NSWSC 1246
Hearing dates: 10, 17 October 2011
Decision date: 21 October 2011
Jurisdiction: Equity Division - Corporations List
Before: Barrett J
Decision:
Matter to be listed for further directions

Catchwords: CORPORATIONS - winding up - winding up by the court - debts and claims satisfied in full - surplus in liquidator's hands - who is entitled to surplus - trustee in bankruptcy of shareholder is on the register - wife of that shareholder has interest in shares under Family Court order - two financiers with whom the shareholder dealt claim equitable interests - former lawyers of the shareholder claim fruits of the action lien - whether equitable interests in shares cognisable when deciding entitlements to surplus - whether surplus should be paid into court - pending applications by liquidator, one financier and the former lawyers - whether these should be cross-vested to the Federal Court - further submissions required on regime to allow liquidator to play minimal role and to determine the conflicting claims to surplus
Legislation Cited: Australian Securities and Investments Commission Act 2001 (Cth), s 133
Bankruptcy Act 1966 (Cth), ss 27(1), 58(3)
Companies Act 1862 (Eng), s 109
Companies (New South Wales) Code, Table A, Schedule 3
Corporations Act 2001 (Cth), Part 9.7, ss 9, 140(1), 169, 468A, 479(3), 485, 488, 501, 543(1), 1072E(10), 1337H
Corporations Law of New South Wales, Table A, Schedule 1, regulation 6
Corporations Regulations 2001 (Cth), regulations 5.6.71, 5.6.72
Supreme Court (Corporations) Rules 1999, rule 7.10
Uniform Civil Procedure Rules 2005, Part 41, rule 25.3(3)
Cases Cited: Binney v The Ince Hall Coal and Cannel Co (1866) 35 LJ Ch 363
Bluebottle UK Ltd v Deputy Commissioner of Taxation [2007] HCA 54; (2007) 232 CLR 598
Bradford Banking Co v Briggs (1886) 12 App Cas 29
Cheney v Spooner [1929] HCA 12; (1929) 41 CLR 532
Ilhan v Cvitanovic [2009] NSWSC 160; (2009) 73 NSWLR 644
Re Doran Constructions Pty Ltd [2002] NSWSC 215; (2002) 194 ALR 101
Re Hogg Robinson & Co Pty Ltd [1933] VR 416
Re J Earle Hermann Ltd (1914) 14 SR (NSW) 397
Re Klaus Maertin Pty Ltd; Maertin v Klaus Maertin Pty Ltd [2009] NSWSC 618; (2009) 232 FLR 239
Re Paragon Holdings Ltd [1961] Ch 346
Re Perkins (1890) 24 QBD 613
Re Phoenix Oil and Transport Co Ltd (No 2) [1958] Ch 565
Re The Australian Gold Mining Co [1877] WN 37
Re The Mount Dundas and Zeehan Railway Co Ltd (1900) 26 VLR 197
Re Weston; Employers Mutual Indemnity (Workers Compensation) Ltd v Omni Corporation Pty Ltd [2009] NSWSC 264; (2009) 255 ALR 362
Visnic v Sywak [2007] NSWSC 701
Texts Cited: M G R Gronow, "McPherson's Law of Company Liquidation", 5th edition (looseleaf)
Category: Interlocutory applications
Parties: Michael Gregory Jones (Liquidator) - Applicant
Peter Orest Sywak (First Defendant) - by leave
Maxwell William Prentice (Bankruptcy Trustee of Milan Visnic) - by…

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: Visnic v Sywak [2011] NSWSC 1246
Case: [2011] NSWSC 1246
Decision Date: 21 October 2011

CaseChat Overview and Summary

The case of Visnic v Sywak involved the winding up of a corporation by the court and the distribution of any surplus funds held by the liquidator. The central dispute was over the entitlement to the surplus funds after all debts and claims had been satisfied. The parties included the liquidator of the corporation, the trustee in bankruptcy of a shareholder, the wife of the shareholder, two financiers with whom the shareholder had dealings, and the former lawyers of the shareholder. Each party asserted their own claim to the surplus funds, based on differing legal and equitable grounds.

The primary legal issues before the court were whether the equitable interests of the wife, the financiers, and the former lawyers could be considered when determining the entitlement to the surplus funds, and if the surplus should be paid into court pending resolution of these claims. The court had to balance the statutory framework governing the winding up of corporations with the equitable claims that might affect the distribution of the surplus. Additionally, the court needed to decide whether certain applications made by the liquidator, one of the financiers, and the former lawyers should be transferred to the Federal Court for further consideration.

The court ruled that the equitable interests of the wife, the financiers, and the former lawyers were indeed relevant in determining the entitlement to the surplus funds. The court held that these interests were cognisable under the law and needed to be considered in the distribution process. The surplus was ordered to be paid into court until the claims could be resolved. The court also decided that the applications made by the liquidator, the financier, and the former lawyers should be transferred to the Federal Court for further consideration, allowing for a more comprehensive examination of the conflicting claims. The case highlighted the complexity of winding up proceedings, particularly when multiple equitable interests and statutory obligations are in play.

Orders