Re KL Tractors Ltd [1961] HCA 8

High Court of Australia Dixon C.J. McTiernan, Fullagar, Kitto and Windeyer JJ. Re KL Tractors Ltd [1961] HCA 8

ORDER Dismiss summons of the English Scottish and Australian Bank Ltd. dated 10th October 1960. In answer to Question 4 of the summons of the Liquidator dated 25th July 1957, as amended pursuant to an order dated 23rd October 1957, declare that the whole of the debt submitted for proof by the Commonwealth is a Crown debt; and in answer to Question 5 of such summons declare that the whole of such debt admitted to proof should be paid in priority to all other debts provable in the liquidation and not already paid or discharged. As to Question 6 of such summons, declare that the same should be answered, No. Declare that it is unnecessary formally to answer the other questions in such summons. Costs of all parties of both such summonses in the Supreme Court and in this Court to be costs in the liquidation and be paid to the respective parties or retained by the Liquidator out of the assets.

Cur. adv. vult.

The following written judgments were delivered:—

1961, Mar. 7 Dixon C.J., McTiernan and Kitto JJ.

The proceeding before the Court consists in an application by a creditor in a winding-up to a judge of the Supreme Court of Victoria for an order expunging the proof of debt of the Commonwealth; the proceeding being removed into this Court by an order made pursuant to s. 40 of the Judiciary Act 1903-1959 Cth. The matter came into the list as the result of earlier proceedings beginning in the Supreme Court and transferred or treated as transferred into this Court but as the initial proceeding as well as its subsequent course was of doubtful sufficiency or correctness the parties took the step of superseding the earlier proceedings by the summons and transfer first referred to and they call for no further mention until the order for costs is reached. The summons was issued under r. 96 of the Rules of the Supreme Court under the Companies Act 1938 Vict., a rule which enables the Court to expunge a proof of debt upon the application of a creditor if the liquidator declines to interfere. The proof the expungement of which is sought is by the Commonwealth of Australia for the sum of £144,786 12s. 7d.: it was admitted by the liquidator in full to rank as an unsecured debt. As to £107,975 11s. 7d. of this sum the Commonwealth had treated it as a debt for the purpose of basing thereon a petition for the compulsory winding-up of the company. The petition was opposed but on 6th May 1954 O'Bryan J. in the Supreme Court of Victoria made a winding-up order [1] . The creditor now applying to expunge the proof by the Commonwealth is the E. S. & A. Bank. The advantage to other creditors of the rejection of a proof for so large a debt as the Commonwealth claims is of course evident but in addition to that consideration it is a fact that if the Commonwealth is entitled to the priority of the Crown for its debt the assets will not suffice to cover it and there will be nothing left for other creditors.