Thirteenth Corp Pty Ltd v E M Mactec Pty Ltd [2006] FCA 20 (25 January 2006)

THIRTEENTH CORP PTY LTD v E M MACTEC PTY LTD (IN LIQ)

NSD 69 OF 2006

GRAHAM J

25 JANUARY 2006
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 69 OF 2006

BETWEEN:	THIRTEENTH CORP PTY LTD (ACN 007 380 449) PLAINTIFF
AND:	E M MACTEC PTY LTD (IN LIQUIDATION) (ACN 069 272 135) DEFENDANT
JUDGE:	GRAHAM J
DATE OF ORDER:	25 JANUARY 2006
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The proceedings be adjourned to 9.30 am on Tuesday 7 February 2006 for directions before the docket judge assigned to consider the matter.

2. Leave be granted to the Plaintiff to make any application to amend the originating process or the Statement of Claim returnable at that time.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 69 OF 2006

BETWEEN:	THIRTEENTH CORP PTY LTD (ACN 007 380 449) PLAINTIFF
AND:	E M MACTEC PTY LTD (IN LIQUIDATION) (ACN 069 272 135) DEFENDANT

JUDGE:	GRAHAM J
DATE:	25 JANUARY 2006
PLACE:	SYDNEY

1 What is presently before the Court is an originating process filed 16 January 2006. The Plaintiff seeks firstly, an order granting leave to commence this proceeding against the Defendant in accordance with s 500(2) of the Corporations Act 2001 (Cth) ("the Act") and secondly an order that the so-called "Land Fill Disposal Rights Agreement Mortgage" ("the mortgage") between the Plaintiff and the Defendant dated 19 April 2002 be declared void ab initio.

2 A statement of claim dated 22 December 2005 was filed on 16 January 2006. That statement of claim refers to a number of documents to which Counsel for the Plaintiff has drawn to my attention in the course of his opening. Most of the documents are exhibits to affidavits of Charles Leonidas which have not as yet been read. In the course of Counsel for the Plaintiff's opening it has been indicated that the liquidator of the Defendant company acquiesces in the making of the proposed orders, although proof of that acquiescence has yet to be provided.

3 The application is a curious one in that it is an application by a mortgagee to have a mortgage which confers rights on the mortgagee set aside as void ab initio.

4 The reason for this application would appear to be that the Plaintiff has brought separate proceedings in the Supreme Court of Victoria in which relief is sought against directors of the Defendant company for insolvent trading in accordance with s 588M(3) of the Act. Those proceedings, so I understand, are due to come before the Court in Victoria for hearing in mid February this year. For the Plaintiff to have standing as a creditor in those proceedings, the Plaintiff must be owed a debt which is wholly or partly unsecured when its loss or damage was suffered within the meaning of s 588M(1)(c) of the Act. On the basis that the Plaintiff may not qualify under that provision with rights under the mortgage the Plaintiff seeks to have the mortgage declared void ab initio in the current proceedings.

5 Following interchanges between Counsel for the Plaintiff and the Bench during the course of the opening, Counsel for the Plaintiff has now, after approximately two hours of hearing time, applied for an adjournment of the proceedings. It has been indicated that the Plaintiff would wish to consider its position and the possibility that it may "regroup".

6 The mortgage in respect of which relief is presently sought is said to have been dated 19 April 2002. It may be that that date is expressed erroneously and that the correct date is 19 April 2000. For present purposes I will assume that the originating process incorporates a typographical error in that regard. This is made clear by paragraph 4 of the statement of claim.

7 It would seem that by the terms of the mortgage the Defendant mortgaged "all of its right, title and interest in the Mortgaged Property to the Mortgagee". The Mortgaged Property was described as being "all of the present and future right, title and interest of the Mortgagor as are comprised in, or arise under, the Landfill Agreement". The Landfill Agreement was defined to be a Landfill Project Operation Agreement ("the Agreement"), said to have been dated 22 July 1999, between the Defendant, National Landfill Technologies Pty Limited, Queensland Trade-Waste Pty Limited, Environautics Waste Management Pty Limited and Environautics Pty Limited.

8 The Agreement provided for further agreements and in this regard it is appropriate to note the terms of paragraphs 3.2.3, 3.2.5 and 3.2.6.

9 In paragraph 9 of the statement of claim, it is contended that by clause 2.1 of the mortgage the Defendant purported to mortgage all of its right, title and interest in a Waste Supply and Acceptance Agreement, being one of the subsidiary agreements contemplated by clause 3.2 of the Agreement.

10 Whilst it would be inappropriate at this time to draw any binding conclusions, I would simply observe that the mortgage appears not to be directed at mortgaging the right title and interest of the Defendant under the subsidiary Waste Supply and Acceptance Agreement, but rather at mortgaging the Defendant's right, title and interest in the Agreement itself.

11 If this be the case, then it may be that there is no substance in the Plaintiff's case as presently propounded. The originating process suggests that the application is made under s 266 of the Act, however Counsel for the Plaintiff has indicated that reliance is no longer placed upon that section.

12 I would have some hesitation in granting leave to commence this proceeding against the Defendant if there were no more to the case than what has been briefly summarised by me above. However, it seems to me that the interests of justice require an opportunity to be afforded to the Plaintiff, which apparently advanced $500,000 to the Defendant company at a time when it is said that the company was insolvent, to consider its position and, to use the expression of Counsel for the Plaintiff, "re-group".

13 In light of the above, I order that the proceedings be adjourned to 9.30 am on Tuesday 7 February 2006 for directions before the docket judge assigned to consider the matter. I grant leave to the Plaintiff to make any application to amend the originating process or the statement of claim returnable at that time.

I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham.

Counsel for the Plaintiff:	G Parncutt

Solicitor for the Plaintiff:	Comlaw

The Defendant did not appear.

Date of Hearing:	25 January 2006

Date of Judgment:	25 January 2006

Federal Court of Australia

Thirteenth Corp Pty Ltd v E M Mactec Pty Ltd [2006] FCA 20 (25 January 2006)