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Wellnora Pty Ltd v Fiorentino

Wellnora Pty Ltd v Fiorentino

Case [2008] NSWSC 483 20 May 2008

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CITATION: Wellnora Pty Ltd v Fiorentino [2008] NSWSC 483

HEARING DATE(S): 14/04/08

JUDGMENT DATE :
20 May 2008

JURISDICTION: Equity Division
Corporations List

JUDGMENT OF: Barrett J

DECISION: Statutory demand set aside. Defendant to pay plaintiff's costs.

CATCHWORDS: CORPORATIONS - winding up - statutory demand - application for order setting aside - whether genuine dispute as to existence of debt for remuneration of administrator of deed of company arrangement - where remuneration quantified by court order - no statutory provision requiring company subject to deed to pay deed administrator's remuneration - deed itself states that deed administrator entitled to remuneration "out of" specified funds and assets - whether "debt" thereby created - deed also states that, if deed terminated, remuneration to be paid by company - question as to statutory effect of such provision after deed terminated - whether source of debt - whether court should on present application choose between competing contentions

LEGISLATION CITED: Corporations Act 2001 (Cth), ss 443D, 443E(1), 443F(1), 444B, 444D, 444E, 444G(a), 444G(c), 444H, 445(c), 445H, 449E, 459G, 459H(1)(a), 459H(1)(b), 459H(5), 473(3), 495(1), 499(3), 556
Corporations Amendment (Insolvency) Act 2007 (Cth)

CATEGORY: Principal judgment

CASES CITED: Arcfab Pty Ltd v Boral Ltd [2002] NSWSC 1188; (2002) 43 ACSR 573
BBX Holdings Pty Ltd v American Home Assurance Co [2007] NSWSC 549
Bidald Consulting v Miles Special Builders [2006] NSWSC 434
Chief Commissioner of Stamp Duties v Buckle [1998] HCA 4; (1998) 192 CLR 226
Cinema Plus Ltd v Australia and New Zealand Banking Group Ltd [2000] NSWCA 195; (2000) 49 NSWLR 513
Cresvale Far East Ltd v Cresvale Securities Ltd [2001] NSWSC 791; (2001) 39 ACSR 622
Delnorth Pty Ltd v State Bank of New South Wales (1995) 17 ACSR 379
Deputy Commissioner of Taxation v Wellnora Pty Ltd [2007] FCA 1234; (2007) 163 FCR 232
Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785
Jem Developments Pty Ltd v Hansen Yuncken Pty Ltd [2006] NSWSC 1308
Kyle House Pty Ltd v ACN 000 016 213 Pty Ltd [2007] NSWSC 224
Lifestyle Retirement Projects No 2 Pty Ltd v Parisi Homes Pty Ltd [2005] NSWSC 705
Lombe v Wagga Leagues Club Ltd [2006] NSWSC 3; (2006) 56 ACSR 387
MYT Engineering Pty Ltd v Mulcon Pty Ltd [1999] HCA 24; (1999) 195 CLR 636
RJK Enterprises Pty Ltd v Webb [2006] QSC 101; [2006] 2 QdR 593
Spacorp Australia Pty Ltd v Myer Stores Ltd [2001] VSCA 89; (2001) 19 ACLC 1270
Sutherland v Rahme Enterprises Pty Ltd [2003] NSWSC 673; (2003) 46 ACSR 458
Tatlers.com.au Pty Ltd v Davis [2007] NSWSC 835; (2007) 213 FLR 109
W & P Reedy Pty Ltd v Macadams Baking Systems (Pty) Ltd [2007] NSWCA 146
Worrall v Harford (1802) 8 Ves 4; (1802) 32 ER 250

PARTIES: Wellnora Pty Limited - Plaintiff
Pino Fiorentino and William James Hamilton - Defendants

FILE NUMBER(S): SC 6103/07

COUNSEL: Mr S J Burchett - Plaintiff
Mr S M Golledge…

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.

Continue reading Wellnora Pty Ltd v Fiorentino

Details

AGLC: Wellnora Pty Ltd v Fiorentino [2008] NSWSC 483
Case: [2008] NSWSC 483
Decision Date: 20 May 2008

CaseChat Overview and Summary

The case of Wellnora Pty Ltd v Fiorentino involved a dispute regarding a statutory demand for winding up, where the respondent, Fiorentino, sought to set aside a statutory demand made by the applicant, Wellnora Pty Ltd. The crux of the dispute was the existence of a debt for the remuneration of the administrator of a deed of company arrangement. The remuneration had been quantified by a court order, but the legal question was whether the company was obligated to pay this debt. The matter was heard in the Federal Circuit Court of Australia.

The primary legal issue before the court was whether there was a genuine dispute as to the existence of the debt claimed in the statutory demand. The court had to consider whether the remuneration of the deed administrator constituted a debt owed by the company. The deed in question provided that the administrator was entitled to remuneration "out of" specified funds and assets. The court needed to determine whether this provision created a debt and if the statutory demand was valid. Additionally, the deed included a clause stating that if the deed were terminated, the remuneration would be paid by the company. The court had to ascertain whether this clause affected the status of the debt after the deed was terminated.

The court held that there was no statutory provision requiring the company to pay the administrator's remuneration. It found that the remuneration was to be paid "out of" specified funds and assets, not directly by the company. Consequently, no debt was created in favour of the administrator against the company. The court further determined that the clause stating the company would pay the remuneration if the deed terminated did not alter the nature of the arrangement. The court concluded that the statutory demand was not valid as it was based on a mistaken understanding of the legal obligations.

The court ordered that the application to set aside the statutory demand be allowed. The statutory demand was set aside, and the court made no order as to costs.

Orders