Australian Receivables Ltd v Tekitu Pty Ltd (Subject to Deed of Company Arrangement) (Deed Administrators Appointed) & ors [2012] NSWSC 170

Supreme Court New South Wales

Medium Neutral Citation: Australian Receivables Ltd v Tekitu Pty Ltd (Subject to Deed of Company Arrangement) (Deed Administrators Appointed) & ors [2012] NSWSC 170 Hearing dates: 31 January 2012 Decision date: 05 March 2012 Jurisdiction: Equity Division Before: Ward J Decision: Finding in favour of applicant on motion for payment out of Court of moneys over which solicitor's lien has arisen. Catchwords: EQUITY - "fruits of the action" lien - prior to commencement of hearing in main proceedings solicitor acted for company defending a claim and prosecuting a cross-claim - judgment in favour of the company on the cross-claim - HELD - lien arose in favour of the solicitor over moneys recovered in the litigation by reference to the cross-claim - EQUITY - trust over litigation proceeds claimed - no question of principle - HELD - no trust was created - CORPORATIONS - deed of company arrangement - charges registrable under s 262(1) Corporations Act 2001 (Cth) - whether a "fruits of the action" lien is registrable - whether equitable charge created by deed over money to be recovered by company in litigation is registrable - HELD - "fruits of the action" not registrable under s 262(1) as it arises by operation of law and is exempt under s 262(2) - express charge over money claimed in litigation registrable as a book debt insofar as secured claim was for reimbursement of expenses incurred in ordinary course of business - CORPORATIONS - deed of company arrangement - competing priorities between a fixed charge and an administrator's statutory and/or equitable lien - circumstances in which an equitable lien may arise in favour of the administrator and take priority over a fixed charge - AGENCY - claim that a grant of irrevocable authority to current solicitor to pay former solicitor created a secured interest in favour of former solicitor - HELD - no such secured interest - CONTRACT - whether personal obligation of directors of company to pay solicitors' costs - created by either the retainer or the deed - HELD - no personal obligation created by deed, but personal obligation arose from joint retainer under which the directors were joint and severally liable with the company for costs of the proceedings Legislation Cited: Corporations Act 2001 (Cth) Duties Act 1997 (NSW) Legal Profession Act 2004 (NSW) Legal Profession Regulation 2005 (NSW) Cases Cited: Akki P/L v Martin Hall P/L (1994) 35 NSWLR 470 Australian Securities and Investments Commission; In the Matter of Richstar Enterprises Pty Ltd ACN 099 071 968 v Carey (No 13) [2007] FCA 57 Bertrand v Davies (1862) 54 ER 1204 Bolster v McCallum (1966) 85 W.N. (Pt 1) (N.S.W.) 281 Clark Equipment Credit of Australia Ltd v Como Factors Pty Ltd (1988) 14 NSWLR 552 Coad v Wellness Pursuit Pty Ltd (in liq) (2009) 226 FLR 91; 71 ACSR 250 Commercial Banking Co of Sydney v Colonial Financiers of Australia Pty Ltd [1972] VR 702; (1972) 20 FLR 220 Commonwealth Bank v Butterell (1994) 35 NSWLR 64 Commonwealth Bank of Australia v The Estate of the Late Mahmoud Slieman [2010] NSWSC 661 Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226 Davies v Littlejohn (1923) 34 CLR 174 Doyles Construction Lawyers v Harsands Pty Ltd (NSWSC, McLelland CJ in Eq, 24 December 1996, unreported) Ex Parte Patience; Makinson v Minister (1940) 40 SR (NSW) 96 Firth v Centrelink [2002] NSWSC 564; (2002) 55 NSWLR 451 Glegg v Bromley [1912] 3 KB 474 Grogan v Orr [2001] NSWCA 114 Guy v Churchill (1887) 35 Ch D 489 Halsted (Bankrupt) v Official Trustee in Bankruptcy [2011] FCA 1242 Hamilton v Donovan Oates Hannaford Mortgage Corp Limited [2007] NSWSC 10; (2007) 25 ACLC 95 Hammerstone Pty Ltd v Lewis [1994] 2 Qd R 267 Hart v Barnes [1983] 2 VR 517 Hewett v Court (1982-1983) 149 CLR 639 In the Matter of an Application by Weedman (Federal Court of Australia, 17 December 1996, Unreported) Independent Automatic Sales Ltd v Knowles & Foster [1962] 3 All ER 27 Jackson v Richards [2005] NSWSC 630 Jeffcott Holdings Ltd (in liq) v Paior & ors (1995) 18 ACSR 213 Johns v Cassel (1993) 6 BPR 13,134; FLC 92-364 Kirkwood v Gadd [1910] AC 422 Lesser v Shire of Wannon (1987) 23 VLR 446 Lockwood v White (2005) 11 VR 402 Matter of Tharp (1852) 65 ER 533 Moodemere Pty Ltd (in liq) v Waters [1988] VR 215 Motor Credits Ltd v WF Wollaston Ltd (in liq) (1929) SR (NSW) 227 National Westminster Finance Australia Ltd v JD Johnson & Co [1991] 1 Qd R 130; (1990) 2 ACSR 649 Palette Shoes Pty Ltd v Krohn (1937) 58 CLR 1 Paul Frank v Discount Bank (Overseas) [1966] 2 All ER 922 Perrins v State Bank of Victoria [1991] 1 VR 749 Philippa Power & Associates v Primrose Couper Cronin Rudkin (1997) 2 Qd R 266 Re Appln of Central Commodities Services Pty Ltd [1984] 1 NSWLR 25 Re Berkeley Applegate (Investment Consultants) Ltd (in liq); Harris v Conway [1988] 3 All ER 71 Re Brightlife Ltd [1987] Ch 200 Re Old Inns of NSW Pty Ltd; Millar v Leach (1994) 13 ACSR 141 Re Spectrum Plus Ltd [2005] 2 AC 680 Re Universal Distributing Co Ltd (in liq) (1933) 48 CLR 171 Re Yorkshire Woolcombers' Association Ltd [1903] 2 Ch 284 Read v Dupper (1795) 6 TR 361; 101 ER 595 Roam Australia Pty Ltd v Telstra Corporation Ltd (t/as Telecom Australia) (FCA, Lehane J, 22 September 1997, Unreported) Robertson v Grigg (1932) 47 CLR 257 Rodick v Gandell (1852) 1 De GM & G 763 Seka Pty Ltd v Fabric Dyeworks (1991) 9 ACLC 586 Shirlaw (Now Rodgers) v Malouf (1989) 97 FLR 382; (1989) 15 ACLR 641; (1989) 7 ACLC 1043 Stephenson Nominees Pty Ltd v Official Receiver (1987) 16 FCR 536 Swiss Bank Corporation v Lloyds Bank Ltd [1982] AC 584 Trio Capital Limited (admin apptd) v ACT Superannuation Management Pty Limited (2010) 79 ACSR 425 Waters v Widdows [1984] 1 VR 503 Watson v Parapara Coal Co Ltd (1915) 17 GLR 791 Weston v Carling Constructions Pty Ltd (2000) 35 ACSR 100 WF Le Cornu Ltd v Federal Traders Ltd [1931] SASR 425 Worrell (as trustee of the estate of Wedgewood) v Power & Power (1993) 118 ALR 237 Texts Cited: J C Campbell, Some Historical and Policy Aspects of the Law of Equitable Liens H L McClintock, Handbook of the Principles of Equity (2nd ed, 1948) Ford Principles of Corporations Law Category: Interlocutory applications Parties: Rodd Andrew Peters trading as Rodd Peters Lawyers (Applicant on motions 16/12/11 and 22/12/11; Respondent on motion 15/12/11) Malcolm Johns Legal Pty Ltd t/as Malcolm Johns & Company (Respondent on motion 22/12/11) Tekitu Pty Ltd (Subject to Deed of Company Arrangement) (Plaintiff/Applicant on motion 15/12/11; Respondent on motion 16/12/11) Australian Receivables Limited (First Defendant/Applicant on motion 16/12/11) Ross Edward Smith (Second Defendant) Lynette Mary Smith (Third Defendant) Representation: Counsel M R Aldridge SC with P Reynolds (Applicant on motions 16/12/11 and 22/12/11; Respondent on motion 15/12/11) E Hyde (Respondent on motion 22/12/11) Solicitors Peters Linnette Lawyers (Applicant on motions 16/12/11 and 22/12/11; Respondent on motion 15/12/11) Malcolm Johns Legal Pty Ltd (Respondent on motion 22/12/11) File Number(s): 07/257468