Stewart v Atco Controls Pty Ltd (in Liquidation) [2014] HCA 15

HIGH COURT OF AUSTRALIA

CRENNAN, KIEFEL, BELL, GAGELER AND KEANE JJ

JAMES HENRY STEWART (IN HIS CAPACITY AS LIQUIDATOR OF NEWTRONICS PTY LTD (IN LIQUIDATION)) & ANOR APPELLANTS

AND

ATCO CONTROLS PTY LTD (IN LIQUIDATION) RESPONDENT

Stewart v Atco Controls Pty Ltd (in Liquidation) [2014] HCA 15 7 May 2014 M141/2013

ORDER

1. Appeal allowed with costs.

2. Set aside the order of the Court of Appeal of the Supreme Court of Victoria made on 25 June 2013 and, in its place, order that the appeal to that Court be dismissed with costs.

On appeal from the Supreme Court of Victoria

Representation

A J Myers QC with P G Willis for the appellants (instructed by Gadens Lawyers)

P D Crutchfield SC with C T Moller for the respondent (instructed by K & L Gates)

Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS

Stewart v Atco Controls Pty Ltd (in Liquidation)

Equity – Equitable charges and liens – Liquidator's equitable lien for costs, expenses and remuneration – Where asset realised by liquidator's efforts in pursuing litigation – Where litigation involved unsuccessful attack on interest of secured creditor – Where liquidator acting with propriety and in course of his duties – Whether liquidator entitled to equitable lien over asset in priority to secured creditor.

Words and phrases – "come in to the winding up", "costs and expenses of realisation", "equitable lien", "Universal Distributing principle".

Corporations Act 2001 (Cth), s 564.

1 CRENNAN, KIEFEL, BELL, GAGELER AND KEANE JJ. The second appellant, Newtronics Pty Ltd (receivers and managers appointed) (in liquidation) ("Newtronics"), is a wholly owned subsidiary of the respondent, Atco Controls Pty Ltd (in liquidation) ("Atco"). Atco was a lighting manufacturer and Newtronics designed, manufactured and supplied electronic components. From Newtronics' inception in 1993, Atco provided it with financial support and, later, took a fixed and floating charge over Newtronics' assets. As at December 2001, just before Newtronics was wound up, it owed Atco in the order of $19 million.