Wabbits Pty Limited v Godfrey - [2009] NSWSC 1299

CITATION: Wabbits Pty Limited v Godfrey [2009] NSWSC 1299

HEARING DATE(S): 10 and 11 November 2009

JUDGMENT DATE :
27 November 2009

JURISDICTION: Equity Division
Corporations List

JUDGMENT OF: Ward J

DECISION: Adminstrator's decision reversed. Proof of debt admitted in part.

CATCHWORDS: CORPORATIONS - application to reverse rejection by Deed of Company Administrator of proof of debt - proof of debt claiming damages for breach of building contract under Bellgrove v Eldridge (1954) 90 CLR 613 and claim in respect of Local Court judgment - whether administrator erred in rejecting building contract damages claim - whether administrator rejected or erred in failing to adjudicate Local Court judgment claim - held that proof of debt should be admitted in part. - INSURANCE - subrogation - administrator asserted that insurer not subrogated to insured’s rights as insured had not fulfilled conditions of policy - held that insurer subrogated even had it not been strictly obliged to pay out claim as payment made in good faith - King v Victoria Insurance Co Limited [1896] AC 250 applied.

LEGISLATION CITED: Corporations Act 2001 (Cth)
Corporations Regulations 2001 (Cth).
Home Building Act 1989 (NSW)

CASES CITED: ASIC v Forestview Nominees Pty Limited (2006) 236 ALR 652
Bellgrove v Eldridge (1954) 90 CLR 613
Bull v Lee (No 2) [2009] NSWCA 362
Director of War Services Homes v Harris [1968] Qd R 275
Gange v Sullivan (1966) 116 CLR 418
Hyder Consulting (Australia) Pty Limited v Wilh Wilhelmsen Agency Pty Limited (2002) 18 BCL 122
Johnston v McGrath [2008] NSWSC 639
King v Victoria Insurance Co Limited [1896] AC 250
Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537
R & N Holdings Pty Limited v Mark Fraser Cooper [2008] NSWSC 225
Re Equity Funds of Australia Limited (1976) 2 ACLR 238
Sydney Turf Club v Crowley [1971] 1 NSWLR 724
Tanning Research Laboratories Inc v O’Brien (1990) 169 CLR 33
Ventura v Svirac [1961] WAR 63
Westpac Banking Corporation v Totterdell (1998) 20 WAR 150
Woodward Pty Limited v Kelleher [1989] NSWCA 82
Yeomans v Walker (1986) 5 NSWLR 378

TEXTS CITED: Goff & Jones The Law of Restitution
Meagher, Gummow & Lehane Equity Doctrines and Remedies,

PARTIES: Wabbits Pty Limited (First Plaintiff)
Vero Insurance Limited (Second Plaintiff)
Murray Roderick Godfrey (First Defendant)
Scarfone Building (Subject to Deed of Company Arrangement) Pty Limited (Second Defendant)

FILE NUMBER(S): SC 3577 of 2008

COUNSEL: A J Grant (Plaintiffs)
J Tomaras (Defendants)

SOLICITORS: Mills Oakley (Plaintiffs)
JT Law (Defendants)

- 58 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

WARD J

FRIDAY 27 NOVEMBER 2009

3577/08 WABBITS PTY LIMITED V MURRAY RODERICK GODFREY

JUDGMENT

1 These are proceedings brought by the plaintiffs pursuant to s 1321 of the Corporations Act 2001 (Cth) following the rejection by the first defendant (Mr Godfrey), as Deed Administrator of the second defendant (Scarfone Building Pty Limited (Subject to Deed of Company Arrangement)), of a Proof of Debt lodged by the first plaintiff (Wabbits Pty Limited) on 19 February…

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: [2009] NSWSC 1299
Decision Date: 27 November 2009

CaseChat Overview and Summary

Wabbits Pty Limited, a creditor of the insolvent company Godfrey, sought to challenge the rejection of its proof of debt by the Deed of Company Administrator (DCA). The proof of debt included claims for damages from a breach of a building contract, under the authority of Bellgrove v Eldridge, and for a sum owing pursuant to a Local Court judgment. The Federal Court was tasked with determining whether the DCA was correct in rejecting the proof of debt and, if not, whether the rejection was due to an error in adjudicating the building contract damages claim or the Local Court judgment claim.

The court examined whether the DCA had erred in rejecting the proof of debt, specifically considering the claims for damages from the building contract and the sum owed under the Local Court judgment. The court had to decide if the DCA's rejection of the debt proof was justified or if it resulted from an error in the assessment of either claim. Additionally, the court considered the insurer's subrogation rights, assessing whether the insurer was entitled to those rights even if the insured had not fulfilled the conditions of the policy, as per the precedent set in King v Victoria Insurance Co Limited.

The Federal Court found that the DCA had erred in rejecting the proof of debt. The court held that while the DCA was correct in rejecting the claim for damages under the building contract, the rejection of the claim for the sum owed under the Local Court judgment was erroneous. Furthermore, the court ruled that the insurer was subrogated to the insured's rights, applying the principle from King v Victoria Insurance Co Limited, regardless of whether the insured had strictly complied with the conditions of the policy. The court ordered that the proof of debt be admitted in part, reflecting the court's findings.

Orders