New South Wales Supreme Court CITATION : QBE Insurance (International) Ltd v Cycand Pty Ltd [2009] NSWSC 1177 HEARING DATE(S) : 02/11/09 JUDGMENT DATE : 2 November 2009 JURISDICTION : Equity Division Corporations List JUDGMENT OF : Barrett J EX TEMPORE JUDGMENT DATE : 2 November 2009 DECISION : Leave to proceed granted CATCHWORDS : CORPORATIONS - winding up - winding up by the court - application for leave to commence proceedings against company in liquidation - where claim is for declaratory relief that company's right to recover costs in other proceedings is held by it for itself and plaintiff - proprietary claim by plaintiff - leave granted LEGISLATION CITED : Corporations Act 2001 (Cth), s 471B CATEGORY : Principal judgment CASES CITED : Dovuro Pty Ltd v Wilkins [2003] HCA 51; (2003) 215 CLR 317 Hewlitt Packard Australia Ltd v Siltek Holdings Pty Ltd [2005] NSWSC 672 PARTIES : QBE Insurance (International) Limited - Plaintiff Cycand Pty Limited - Defendant FILE NUMBER(S) : SC 4544/09 COUNSEL : Ms L Young - Plaintiff Mr C Jaramillo - Receiver SOLICITORS : Wotton & Kearney - Plaintiff William Roberts Lawyers - Receiver IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST BARRETT J MONDAY 2 NOVEMBER 2009 4544/09 - QBE INSURANCE (INTERNATIONAL) LIMITED V CYCAND PTY LIMITED JUDGMENT 1 The plaintiff ("QBE") makes application under s 471B of the Corporations Act 2001 (Cth) for leave to commence certain proceedings against Cycand Pty Limited (formerly Dovuro Pty Ltd), a company in the course of court-ordered winding up and in respect of which an appointment of receivers and managers is extant. 2 The leave is sought to enable QBE to pursue in this court a claim for declaratory relief to the effect that an entitlement of Cycand under an order for costs made by the High Court of Australia is, in effect, held by Cycand in trust for both itself and QBE in certain proportions. 3 The costs order was made in favour of Cycand by the High Court in proceedings 5357/2002 Dovuro Pty Ltd v Wilkins [2003] HCA 51; (2003) 215 CLR 317 in which QBE had indemnified Cycand for costs and had provided funds to enable Cycand to meet costs. 4 The view QBE takes, broadly stated, is that, because QBE made a contribution in the way I have described to enable the High Court proceedings to be brought to a conclusion, equity will intervene to ensure that QBE receives benefit as to an appropriate proportion in respect of the costs recovered by Cycand. 5 The claim that has been foreshadowed is put on various bases but the common theme is that there is, as it were, a propriety interest of QBE in the right that Cycand has to recover costs. 6 Recent communication from the Deputy Registrar of the High Court indicates that a certificate of taxation is about to issue for $105,898 in respect of the costs in question. 7 The claim QBE makes cannot be said to be one that would more appropriately be pursued by means of proof of debt. The claim is essentially of a propriety nature with QBE saying, in effect, that certain rights of Cycand are, in truth, held by it subject to a propriety interest of QBE (compare Hewlitt Packard Australia Ltd v Siltek Holdings Pty Ltd [2005] NSWSC 672 at 7). 8 As in the case just mentioned, the claim of QBE goes beyond the money based concepts relevant to proof of debt in a winding up and there are features which take the case outside the province of the proof of debt system. The objective of the foreshadowed proceeding is not to seek to have the court order judgment for debt, damages or other money liability against Cycand but rather to define the extent of the property available to the liquidator in the winding up by virtue of the High Court costs order after allowing for any diminution represented by any propriety interest of QBE. 9 I have spoken of the liquidator. In practical terms, the availability of assets to Cycand is probably more of a concern at this point of the receivers and managers. It is relevant to note that the liquidator consents to the present application and that the receivers neither consent to nor oppose the making of the orders sought. 10 The case is one in which leave ought to be granted. I accordingly make order 1 in the originating process filed on 15 September 2009. The exhibit may be returned. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.