In the matter of Pinata Pty Limited (in liquidation) (ACN 001 777 920) Bryce Geoffrey Lyle Killen -v- William James Hamilton [2012] NSWSC 162

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Pinata Pty Limited (in liquidation) (ACN 001 777 920) Bryce Geoffrey Lyle Killen -v- William James Hamilton [2012] NSWSC 162 Hearing dates: 14,16 & 17 February 2012 Decision date: 05 March 2012 Jurisdiction: Equity Division - Corporations List Before: Hammerschlag J Decision: Proceedings dismissed Plaintiffs to pay the defendant's costs on an indemnity basis Catchwords: CORPORATIONS - s 423(1) Corporations Act 2001 (Cth) - defendant was appointed as a joint receiver to wind up a partnership between a corporation (Pinata) and a number of individuals by a deed of dissolution made on 9 April 1996 - the plaintiffs are, and have at all times, been associated with Pinata - Pinata brought proceedings in 2001 against its individual former partners and the joint receivers claiming that the individual partners owed monies to the partnership and for an accounting - Pinata also made claims by way of cross-claim against the defendant - the proceedings failed as against the individual partners because Pinata did not put up security for costs in accordance with orders of the court and the claims against the defendant were statute barred - the plaintiffs complain that the defendant, as receiver to the partnership, should have brought claims against the individual former partners and move the court for an inquiry under s 423(1) of the Act - whether the defendant was a controller - whether the plaintiffs are entitled to invoke the section - EQUITY - PARTNERSHIP - whether the plaintiffs have established that the defendant should have brought the claims the plaintiffs say he should have brought - whether the plaintiffs have established that the defendant did not faithfully perform a requirement of the instrument under which he entered into possession or took control of property or that he committed an act or omission appropriate to inquire into - HELD - plaintiffs have not satisfied the requirements of s 423 - HELD - Pinata was the party which could and should have motivated the complaints - HELD - the plaintiffs guilty of gross delay in bringing the proceedings without explanation - HELD proceedings are an attempt to obtain a collateral advantage beyond what the law offers and are an abuse of process - COSTS - HELD - the plaintiffs maintained these proceedings although they should have known that they had no real prospects of success - order for indemnity costs appropriate Legislation Cited: Corporations Act 2001 (Cth) Cases Cited: Bolton v Federal Commissioner of Taxation [1965] ALR 481 Canny Gabriel Castle Jackson Advertising Pty Limited v Volume Sales (Finance) Pty Limited (1974) 131 CLR 321 Commissioner of State Taxation v Cyril Henschke Pty Ltd (2010) 272 ALR 440 Belvista Pty Ltd v Murphy (1993) 11 ACSR 628 Richardson v Bank of England 41 ER 65 Hurst v Bryk [2002] 1 AC 185 Artistic Builders Pty Ltd v Elliott & Tuthill (Mortgages) Pty Ltd [2002] NSWSC 16 Williams v Spautz (1992) 174 CLR 509 Texts Cited: Peter Watts and FMB Reynolds, Bowstead and Reynolds on Agency (17th ed, 2001) Category: Principal judgment Parties: Bryce Geoffrey Lyle Killen - First Plaintiff Edward Darrel Lyle Killen - Second Plaintiff Baldon Pty Ltd (ACN 000 211 782) - Third Plaintiff Cinema Center Services Pty Ltd (ACN 008 542 612) - Fourth Plaintiff Castanair Pty Ltd (ACN 008 513 157) - Fifth Plaintiff William James Hamilton - Defendant Representation: T.J. Morahan - Plaintiffs D.A. Lloyd - Defendant Mitry Lawyers - Plaintiffs Kennedys - Defendant File Number(s): 2010/417532