Harris Health Care Pty Ltd (receivers and managers appointed) (in liq) v Hayes [2024] NSWCA 301

Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Harris Health Care Pty Ltd (receivers and managers appointed) (in liq) v Hayes [2024] NSWCA 301 Hearing dates: 28 November 2024 Decision date: 19 December 2024 Before: Bell CJ at [1]; Leeming JA at [2]; McHugh JA at [158] Decision: 1. Appeal dismissed. 2. Appellant to pay the costs of the first respondent. 3. Remit the notice of motion filed on 12 December 2024 to be heard and determined by a single Judge of Appeal. Catchwords: CORPORATIONS – winding up – liquidators – after paying all creditors, liquidator achieved a surplus – where company being wound up had large unsatisfied judgment debt against its majority shareholder – where majority shareholder also being wound up – application of "rule in Cherry v Boultbee" – where liquidator sought and obtained special leave to distribute whole of surplus to shareholders other than majority shareholder – relationship between common law, equity and statute – whether continuing operation of "rule in Cherry v Boultbee" incoherent with purposes and policy of the Corporations Act – consideration of history and nature of "rule in Cherry v Boultbee" Legislation Cited: Bankruptcy Act 1966 (Cth) Civil Liability Act 2002 (NSW), s 5S Companies Act 1862 (25 & 26 Vict. c. 89), ss 102, 109 Companies Act 1867 (30 & 31 Vict. c. 131) Companies Act 1899 (NSW), s 117 Companies Act 1936 (NSW), s 250 Companies Act 1961 (NSW), ss 245, 247, 291 Companies Act 1981 (NSW), ss 386, 438 Corporations Act 2001 (Cth), Pts 5, 5.4, 5.4A, 5.4B, 5.6, ss 247A, 485, 488, 553, 553C, 555, 556, 558, 559, 560, 561, 562, 562A, 563, 563AA, 563AAA Court of Probate Act 1857 (20 & 21 Vict. c. 77) Insurance Contracts Act 1984 (Cth), s 7 Joint Stock Companies Act 1844 (7 & 8 Vict. c. 110) Judicature Act 1873 (36 & 37 Vict. c. 66), s 25 Judicature Act 1875 (38 & 39 Vict. c. 77), s 10 Jurisdiction of Courts (Foreign Land) Act 1989 (NSW), s 3 Limited Liability Act 1855 (18 & 19 Vict. c. 133) Personal Property Securities Act 2009 (Cth) Supreme Court Act 1970 (NSW), s 46 Supreme Court (Corporations) Rules 1999 (NSW), r 7.10 Trustee Act 1925 (NSW), s 100A Cases Cited: Baker v Bolton (1808) 1 Camp 493; 170 ER 1033 Bankstown City Council v Alamdo Holdings Pty Ltd (2005) 223 CLR 660; [2005] HCA 46 Bevan v Coolahan (2019) 101 NSWLR 86; [2019] NSWCA 217 Carbone v Fowler Homes Pty Ltd; Carbone v Fowler Homes Pty Ltd [2024] NSWCA 192 Cassaniti v Ball as liquidator of RCG CBD Pty Ltd (in liq) (2022) 109 NSWLR 348; [2022] NSWCA 161 Cherry v Boultbee (1838) 2 Keen 319; 48 ER 651 Cherry v Boultbee (1839) 4 Myl & Cr 442; 41 ER 171 China Life Trustees Ltd v China Energy Reserve and Chemicals Group Overseas Company Ltd [2024] HKCFA 15 Corporate Law Reform Act 1992 (Cth) Courtenay v Williams (1846) 15 LJ Ch 204 Day & Dent Constructions Pty Ltd v North Australian Properties Pty Ltd (1982) 150 CLR 85; [1982] HCA 20 Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498; [2012] HCA 7 Franklin's Selfserve Pty Ltd v Federal Commissioner of Taxation (1970) 125 CLR 52; [1970] HCA 33 Fused Electrics Pty Ltd (in liq) v Donald [1995] 2 Qd R 7 Gray v Gray [2004] NSWCA 408; 12 BPR 22,755 Gye v McIntyre (1991) 171 CLR 609; [1991] HCA 60 Harris v Harris [2021] NSWCA 3 In re Akerman [1891] 3 Ch 212 In re Auriferous Properties Ltd [1898] 1 Ch 691 In re Auriferous Properties Ltd (No 2) [1898] 2 Ch 428 In re Glen Express Ltd [2000] BPIR 456 (Ch D, 15 October 1999) In re Goy & Co Ltd [1900] 2 Ch 149 In re Melton; Milk v Towers [1918] 1 Ch 37 In re Overend, Gurney and Company; ex parte Oakes and Peek (1867) LR 3 Eq 576 In re Overend, Gurney, and Co (1866) LR 1 Ch App 528 In Re Savage; Cull v Howard [1918] 2 Ch 146 In the matter of Anglican Development Fund Diocese of Bathurst (receivers & managers appointed) [2015] NSWSC 440; 33 ACLC 15-010 In the matter of Anne Lewis Pty Ltd [2016] NSWSC 1860 In the matter of Hawden Property Group Pty Ltd (in liq) (ACN 003 528 345) [2018] NSWSC 481; 125 ACSR 355 In the matter of Klaus Maertin Pty Ltd (in liq); Maertin v Klaus Maertin Pty Ltd [2009] NSWSC 618; 232 FLR 239 In the matter of Sirrah Pty Ltd [2018] NSWSC 1802 In the matter of Sirrah Pty Ltd (in prov liq) [2021] NSWSC 413; 152 ACSR 212 In the matter of Sirrah Pty Ltd (in prov liq) [2021] NSWSC 492 In the matter of Sirrah Pty Ltd (in liq) [2024] NSWSC 784 Jeffs v Wood (1723) 2 P Wms 128; 24 ER 668 John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19 Knight as liquidator of Wenshang Developing Pty Ltd (in liq) v Wenshang Developing Pty Ltd (in liq) [2024] FCA 1395 Metal Manufactures Pty Ltd v Morton (2023) 275 CLR 100; [2023] HCA 1 Miller v Miller (2011) 242 CLR 446; [2011] HCA 9 Minister for Home Affairs v Benbrika (2021) 272 CLR 68; [2021] HCA 4 Otis Elevator Co Pty Ltd v Guide Rails Pty Ltd (in liq) [2004] NSWSC 383; 49 ACSR 531 PM v Childrens Court of the Australian Capital Territory [2018] ACTSC 258 Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1; [2018] HCA 4 Re DS Millard & Son Pty Ltd (1997) 24 ACSR 71 Re Kaupthing Singer and Friedlander Ltd [2012] AC 804; [2011] UKSC 48 Re Minister for Immigration and Multicultural Affairs; ex parte Miah (2001) 206 CLR 57; [2001] HCA 22 Re Peruvian Railway Construction Co Ltd [1915] 2 Ch 144 Re Rhodesia Goldfields Ltd [1910] 1 Ch 239 Re SSSL Realisations (2002) Ltd (in liq) [2006] Ch 610; [2006] EWCA Civ 7 Sons of Gwalia Ltd v Margaretic (2007) 231 CLR 160; [2007] HCA 1 Teubner v Humble (1963) 108 CLR 491; [1963] HCA 11 Thompson v Australian Capital Television Pty Ltd (1996) 186 CLR 574; [1996] HCA 38 Wynbergen v Hoyts Corporation Pty Ltd [1997] HCA 52; 72 ALJR 65 Texts Cited: American Law Reports, "Right of retainer in respect of indebtedness of heir, legatee or distribute" 1 ALR 991 (1919) TT Arvind and C Burset, "Partisan Legal Traditions in the Age of Camden and Mansfield" (2024) 44 Oxford Journal of Legal Studies 376 JC Campbell, "The New Section 100A of Trustee Act 1925 (NSW): When a Beneficiary is Personally Liable to Indemnify a Trustee" (2020) 14 Journal of Equity 103 R Derham, Derham on the Law of Set-off (5th ed, 2024, Oxford University Press) A Fell, "The Concept of Coherence in Australian Private Law" (2018) 41 Melbourne University Law Review 1160 Hanbury, Modern Equity (2nd ed, 1937, Stevens & Sons) Lewin, A practical treatise on the law of trusts and trustees (8th ed, 1885, Maxwell) N Lindley, A treatise on the law of partnership (7th ed, 1905) R Stevens, The Laws of Restitution (Oxford University Press, 2023) J Story, Commentaries on Equity Jurisprudence (1st ed, 1836) Toller, The law of executors and administrators (7th ed, 1838) Category: Principal judgment Parties: Harris Health Care Pty Ltd (Receivers and Managers Appointed) (In liquidation) (Appellant) Alan John Hayes in his capacity as liquidator of Sirrah Pty Ltd (In Liquidation) (First Respondent) Gregory Thomas Harris and Monica Mary Brown as Executors of the Estate of the Late Aileen Joyce Harris (Second Respondents) The Bankrupt Estate of William Francis Harris (Third Respondent) Michelle Joy Harris (Fourth Respondent) Representation: Counsel: F T Roughley SC, B Lambourne (Appellant) B F Katekar SC, J R Anderson (First Respondent) G Carolan (Second Respondent)