In the matter of Dalma No 1 Pty Limited (in liquidation) (ACN 111 772 260); Application of Bruce Gleeson and David Shannon in their capacity as joint and several liquidators of Dalma No 1 Pty Limited (in liquidation) and anor [2013] NSWSC 1335

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Dalma No 1 Pty Limited (in liquidation) (ACN 111 772 260); Application of Bruce Gleeson and David Shannon in their capacity as joint and several liquidators of Dalma No 1 Pty Limited (in liquidation) and anor [2013] NSWSC 1335 Hearing dates: 9 September 2013 Decision date: 17 September 2013 Jurisdiction: Equity Division - Corporations List Before: Brereton J Decision: Answers provided to questions in originating process: (a) No (b) No (c) Does not arise. (d) Does not arise. Catchwords: CORPORATIONS - EXTERNAL ADMINISTRATION - Winding up - priorities - subrogation - Where third party voluntarily paid certain employee entitlements owing by company after date on which winding up deemed to have commenced - whether third party entitled to be subrogated, pursuant to Corporations Act 2001 s 560, to priority position enjoyed by employees in respect of liabilities of the company that it had discharged - No entitlement to subrogation per s 560 because company in liquidation did not pay the employee related liabilities using monies lent to it by third party, instead, the third party paid those liabilities directly itself.

EQUITY - SUBROGATION - Whether Corporations Act 2001 s 560 leaves any room for operation of equitable doctrine of subrogation - section 560 creates right of subrogation where one would not otherwise exist - in context of liquidation, equitable subrogation not excluded by provisions of Corporations Act - whether requirements for equitable subrogation satisfied - only context in which spontaneous voluntary payment by a third party may found a claim for subrogation is in exceptional category of the payment off of existing securities - basis for equitable subrogation not established because third party made payments spontaneously and voluntarily, in absence of any circumstances affecting the company's conscience. Legislation Cited: (Cth) Corporations Act 2001, s 439A, s 445F, s 511(1)(a), s 513B(b), s 556, s 560, s 561 Cases Cited: Aetna Life Insurance Co v Middleport 124 US 534 (1888) B Liggett (Liverpool), Ltd v Barclays Bank, Ltd [1928] 1 KB 48 Bofinger v Kingsway Group Ltd [2009] HCA 44; 239 CLR 269 Boscawen v Bajwa [1995] 4 All ER 769 Butler v Rice [1910] 2 Ch 277 Campbell Auto Finance Co v Warren [1933] 4 DLR 509 Capt'n Snooze Management Pty Limited v McLellan [2002] VSC 432 Carter, Re Damilock Pty. Limited (in liquidation) [2012] FCA 1445 Challenger Managed Investments Ltd v Direct Money Corporation Pty Ltd [2003] NSWSC 1072; (2003) 12 BPR 222,57 Chetwynd v Allen [1899] 1 Ch 353 Cochrane v Cochrane (1985) 3 NSWLR 403 Cook (as liquidators of Italiano Family Fruit Co Pty Limited (in liquidation)) v Italiano Family Fruit Co Pty Limited (in liquidation) [2010] FCA 1355 Coptic Ltd v Bailey [1972] Ch 446; [1972] 1 All ER 1242 Exall v Partridge (1799) 8 Term Rep 308 Falcke v Scottish Imperial Insurance Co (1886) 34 Ch D 234 Ghana Commercial Bank v Chandiram [1960] AC 732 Hart v Barnes; Deputy Commissioner of Taxation v Barnes [1983] 2 VR 517; (1982) 7 ACLR 310 Hecimovic v Schembri (NSWSC, Holland J, 28 June 1974, unreported Hill v ANZ Banking Group Ltd and Ericksen (1974) 4 ALR 634 Lombe v Wagga Leagues Club Limited [2006] NSWSC 3 Louisville Joint Stock Land Bank v Bank of Pembroke 9 SW (2d) 113 (Ky CA)(1928) Paul v Speirway Ltd (in liq) [1976] Ch 220 Porter v Associated Securities Ltd (1976) 1 BPR 9279 Re Cleadon Trust Ltd [1939] Ch 286; [1938] 4 All ER 518 Re Jick Holdings Pty Ltd (in liquidation) [2009] NSWSC 574 Re Sara Properties Pty. Limited (in liquidation) and the Companies Act, 1961 [1982] 2 NSWLR 277; (1982) 7 ACLR 186; 1 ACLC 454 Re Trivan Pty Ltd (1996) 134 FLR 368 Waikato Savings Bank v Andrews Furniture Limited [1982] 2 NZLR 520 Texts Cited: Halsbury Laws of Australia, 3rd ed Ashburner's Principles of Equity, D Browne (ed), 2nd ed, Butterworths, London, 1933 Meagher Gummow & Lehane's Equity Doctrines and Remedies (4th ed, Butterworths Lexis Nexis, 2002 Category: Principal judgment Parties: Bruce Gleeson and David Shannon (as Liquidators of Dalma No 1 Pty Ltd (in liq)) - first plaintiffs Dalma No 1 Pty Limited (in liq) - second plaintiff Representation: Counsel: Mr T Russell (solicitor) Solicitors: ERA Legal File Number(s): 2013/240107