WESTMEX OPERATIONS PTY LTD (IN LIQ) and ORS v WESTMEX LTD (IN LIQ) [1993] NSWCA 286

WESTMEX OPERATIONS PTY LTD (IN LIQ) and ORS y WESTMEX LTD (IN LIQ)

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

CLARKE, HANDLEY and SHELLER JJA 11 June 1993, 11 June 1993 [1993] NSWCA 286

CONSTRUCTION OF DEEDS — Parent and subsidiary companies enter into a deed whereby parent guarantees to meet liabilities of subsidiaries in the event of their being wound up and subsidiaries guarantee to met parent's liabilities in the event of its being wound up — Both parent and subsidiaries in the process of being wound up — issue as to operations of the deed — literal reading results in a situation of 'infinite regress' in the proving of debts in the winding up. HELD: The infinite regression results from the changing of tense in the deed — the Court is entitled to depend from the literal meaning of the words in order to avoid an absurdity — in this case by aligning the tenses in which the deed is expressed the absurdity could and should be avoided.

Grey v Pearson (1857) 6 HLC 61 (10 ER 1216). In re Gulbenkian's Settlements [1970] AC 508. Re J N Taylor Holdings Ltd (In Liq) (1991) 6 ACSR 187. ORDERS Appeal is dismissed with costs.

Handley JA This is an appeal by the liquidator of the subsidiary companies in the former Westmex Group against orders made by McLelland J in which he determined questions arising in the liquidation of those subsidiaries and the parent company.

Problems arose as a result of the deeds which the former National Companies and Securities Commission (NCSC) required the companies in the group to enter into as a condition of exempting them from preparing and filing group and individual accounts in accordance with the provisions of the then Companies Code.

As a result of the requirements of the NCSC, the subsidiaries and the parent company entered into the various deeds between 15 April 1988 and 10 May 1989. The last deed is in a slightly different form, but Mr Coles QC, who appeared for the appellants, has taken no point based on this difference and the appeal has been conducted on the basis that if the appellants fail in respect of the earlier deeds, then they will also fail in relation to the deed of 10 May 1989.