In the matter of Swan Services Pty Limited (in liquidation) [2016] NSWSC 1724

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Swan Services Pty Limited (in liquidation) [2016] NSWSC 1724 Hearing dates: 13 – 16, 20 – 23 September, 5 – 7 October 2016 Decision date: 06 December 2016 Jurisdiction: Equity - Corporations List Before: Black J Decision: Parties to bring in agreed orders to give effect to judgment including as to costs, within 14 days or, if there is no agreement between parties, their respective draft orders and short submissions as to differences between them, indicating whether an oral hearing is required. Catchwords: CORPORATIONS — charges, debentures and other borrowings — charges – whether the plaintiff was a secured creditor of the company at the time of a repayment by the company to the plaintiff – where liquidator contended that if plaintiff was not a secured creditor at the relevant time certain transactions involving the plaintiff were voidable transactions – whether loan agreement and any equitable charge derived from it fails for lack of sufficient certainty in circumstances where loan agreement did not identify which assets of the company were subject to the fixed charge and which were subject to the floating charge – whether ASIC Form 309 document was effective to create charge – whether loan agreement was partly written and partly oral such that it included terms for payment of certain interests and charges – whether there was collateral contract requiring payment of certain interests and charges. CORPORATIONS — Winding up — Winding up in insolvency — Insolvent trading — Claim by liquidator against cross-defendants under ss 558G and 588M of the Corporations Act 2001 (Cth) for insolvent trading – where liquidator contended that first cross-defendant was de facto director of companies – whether first cross-defendant was de facto director during relevant time period – whether companies were insolvent or became insolvent by incurring the debts – whether presumption of insolvency arises under s 588E(4) of the Corporations Act 2001 (Cth) – whether contravention of s 588G established – whether "loss or damage" in s 588M of the Corporations Act 2001 (Cth) is reduced by recoveries by the liquidator that will allow distribution to creditors – whether creditors with benefit of retention of title clause whose security vests in company due to company's winding up fall within scope of s 588M of the Corporations Act 2001 (Cth) – Defences – whether defences under s 588H of Corporations Act 2001 (Cth) established – whether Court should relieve cross-defendants wholly or partly from liability under s 1317S of the Corporations Act 2001 (Cth) if contravention of s 588G is established. Legislation Cited: - Corporations Act 2001 (Cth), ss 9, 95A, 266, 286, 436A, 556, 588E, 588FB, 588FC, 588FDA, 588FE, 588FF, 588FL, 588FM, 588FP, 588G, 588H, 588M, 588R, 588V, 1317S, Pt 5.7B - Evidence Act 1995 (NSW), ss 136, 140 - Fair Entitlements Guarantee Act 2012 (Cth) - Income Tax Assessment Act 1997 (Cth) - Personal Property Securities Act 2009 (Cth), ss 12, 267A Cases Cited: - Armagas Ltd v Mundogas SA [1985] 1 Ll R 1 - Australian Securities and Investments Commission v Edwards (No 3) [2006] NSWSC 376; (2006) 57 ACSR 209 - Australian Securities and Investments Commission v Edwards [2005] NSWSC 831; (2005) 54 ACSR 583 - Australian Securities and Investments Commission v Healey (No 2) [2011] FCA 1003; (2011) 85 ACSR 654 - Australian Securities and Investments Commission v Plymin (No 1) [2003] VSC 123; (2003) 46 ACSR 126 - Australian Securities and Investments Commission v Plymin (No 2) [2003] VSC 230; (2003) 21 ACLC 1237 - Ball (in his capacity as official liquidator of Wealthfarm Group Services) v Sinclair [2015] NSWSC 2103 - Bentley Smythe Pty Ltd v Anton Fabrications (NSW) Pty Ltd [2011] NSWSC 186; (2011) 248 FLR 384 - Bon McArthur Transport Pty Ltd (in liq) v Caruana [2013] NSWCA 101 - Briginshaw v Briginshaw [1938] ALR 334; (1938) 60 CLR 336 - Buzzle Operations Pty Ltd (in liq) v Apple Computer Australia Pty Ltd [2011] NSWCA 109; (2011) 81 NSWLR 47 - Camden v McKenzie [2007] QCA 136; [2008] 1 Qd R 39 - Campbell Street Theatre Pty Ltd (recs & mgrs apptd) (in liq) v Commercial Mortgage Trade Pty Ltd [2012] NSWSC 669 - Commercial Union Insurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 - Cradock v Scottish Provident Institution (1893) 69 LT 380 - Craig v Silverbrook [2013] NSWSC 1687 - Daniels v Anderson (1995) 37 NSWLR 438 - Deputy Commissioner of Taxation v Austin (1998) 28 ACSR 565 - Deputy Commissioner of Taxation v Clark [2003] NSWCA 91; (2003) 57 NSWLR 113 - Edenden v Bignell [2007] NSWSC 1122 - Elliott v Australian Securities and Investments Commission [2004] VSCA 54; (2004) 10 VR 369 - Emanuel Management Pty Ltd v Foster's Brewing Group Ltd [2003] QSC 205; (2003) 178 FLR 1 - First Strategic Development Corporation Ltd (in liq) v Chan [2014] QSC 60 - Fisher v Divine Homes Pty Ltd [2011] NSWSC 8; (2011) 85 ACSR 512 - Grimaldi v Chameleon Mining NL (No 2) [2012] FCAFC 6; (2012) 200 FCR 296 - Hall v Poolman [2007] NSWSC 1330; (2007) 65 ACSR 123 - Hussain v CSR Building Products Ltd [2016] FCA 392; (2016) 112 ACSR 507 - Illingworth v Houldsworth [1904] AC 355 - International Cat Manufacturing Pty Ltd (in liq) v Rodrick [2013] QSC 91 - International Cat Manufacturing Pty Ltd (in liq) v Rodrick [2013] QCA 372; (2013) 97 ACSR 200 - Lewis (as liquidator of Doran Constructions Pty Ltd) v Doran [2005] NSWCA 243; (2005) 54 ACSR 410 - Lewis v Doran [2004] NSWSC 608; (2004) 208 ALR 385 - Lewis, Re Damilock Pty Ltd (in liq) v VI SA Australia Pty Ltd [2008] FCA 1801; (2008) 68 ACSR 493 - McGraddie v McGraddie [2013] UKSC 58; [2013] 1 WLR 2477 - McLellan (in his capacity as liquidator of Stake Man Pty Ltd) v Carroll [2009] FCA 1415; (2009) 76 ACSR 67 - Metropolitan Fire Systems Pty Ltd v Miller & Ewins (1997) 23 ACSR 699 - Mistmorn Pty Ltd (in liq) v Yasseen (1996) 21 ACSR 173; 14 ACLC 1387 - Morley v Australian Securities and Investments Commission (No 2) [2011] NSWCA 110; (2011) 83 ACSR 620 - Morris v Danoz Directions Pty Ltd (in liq) (No 2) [2010] FCA 836 - Mulherin v Bank of Western Australia Ltd [2006] QCA 175 - Natcomp Technology Australia Pty Ltd v Graiche [2001] NSWCA 120; (2001) 19 ACLC 1117 - National Provincial & Union Bank of England v Charnley [1924] 1 KB 431 - Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1992) 110 ALR 449 - Playspace Playground Pty Ltd v Osborn [2009] FCA 1486 - Powell v Fryer [2001] SASC 59; (2001) 37 ACSR 589 - Queensland Bacon Pty Ltd v Rees [1966] HCA 21; (1966) 115 CLR 266 - Re Accolade Wines Australia Ltd [2016] NSWSC 1023 - Re Ashington Bayswater Pty Ltd (in liq) [2013] NSWSC 1008 - Re Salfa Pty Ltd (in liq) [2014] NSWSC 1423 - Re SSET Constructions Pty Ltd (in liq) – Sims v Khattar [2010] NSWSC 102 - Re Yorkshire Woolcombers Association, Ltd [1903] 2 Ch 284 - Roberts v Investwell Pty Ltd (in liq) [2012] NSWCA 134; (2012) 88 ACSR 689 - Sands and McDougall Wholesale Pty Ltd (in liq) v Commissioner of Taxation [1998] VSCA 76; (1998) 147 FLR 323 - Sandtara Pty Ltd v Longreach Group Ltd [2008] NSWSC 373 - Smith v Bone [2015] FCA 319; (2015) 104 ACSR 528 - Smith v Offermans [2015] QCA 55; (2015) 105 ACSR 230 - Societe d'Avances Commerciales (Societe Anonyme Egyptienne) v Merchants' Marine Insurance Co (The "Palitana") (1924) 20 LI L Rep 140 - Southern Cross Interiors Pty Ltd (in liq) v Deputy Commissioner of Taxation [2001] NSWSC 621; (2001) 39 ACSR 305 - State of New South Wales v Hunt [2014] NSWCA 47; (2014) 86 NSWLR 226 - Swiss Bank Corporation v Lloyds Bank Ltd [1982] AC 584 - Tourprint International Pty Ltd (in liq) v Bott [1999] NSWSC 581; (1992) 32 ACSR 201 - United Builders Pty Ltd v Mutual Acceptance Ltd [1980] HCA 43; (1980) 144 CLR 673 - White Constructions (ACT) Pty Ltd (in liq) v White [2004] NSWSC 71; (2004) 49 ACSR 220 - Williams (as liquidator of Scholz Motor Group Pty Ltd (in liq) v Scholz [2008] QCA 94 - Woodgate v Davis [2002] NSWSC 616; (2002) 42 ACSR 286 - Woodgate v Fawcett [2008] NSWSC 868; (2008) 67 ACSR 611 Category: Principal judgment Parties: Judith Louise Swan (Plaintiff/First Cross-Defendant) Robert John Swan (Second Cross-Defendant) Swan Services Pty Limited (in liquidation) (Defendant/First Cross-Claimant) Anthony Wayne Elkerton (Second Cross-Claimant) Superior Cleaners WA Pty Limited (in liquidation) (Third Cross-Claimant) Cleaners ACT Pty Limited (in liquidation) (Fourth Cross-Claimant) Cleaners Vic Pty Limited (in liquidation) (Fifth Cross-Claimant) Cleaners SA Pty Limited (in liquidation) (Sixth Cross-Claimant) Cleaners Qld Pty Limited (in liquidation) (Seventh Cross-Claimant) Cleaners New South Wales Pty Limited (in liquidation) (Eighth Cross-Claimant) Representation: Counsel: P S Braham SC/M Rose (Plaintiff/First Cross-Defendant) C R C Newlinds SC/J Hynes (Defendants/Cross-Claimants) R Notley (Second Cross-Defendant)