Doran Constructions Pty. Ltd. v Beresfield Aluminium Pty. Ltd. [1999] NSWSC 499 (21 May 1999)

Last Updated: 27 May 1999

NEW SOUTH WALES SUPREME COURT

CITATION: DORAN CONSTRUCTIONS PTY. LTD. V. BERESFIELD ALUMINIUM PTY. LTD. [1999] NSWSC 499

CURRENT JURISDICTION: Common Law Construction List

FILE NUMBER(S): 55003/99

HEARING DATE{S): 21/05/99

JUDGMENT DATE: 21/05/1999

PARTIES:

DORAN CONSTRUCTIONS PTY. LTD. (IN LIQ) (RECEIVER AND MANAGER APPOINTED) - Plaintiff

BERESFIELD ALUMINIUM PTY. LIMITED - Defendant

JUDGMENT OF: Brownie AJ

LOWER COURT JURISDICTION: Not Applicable

LOWER COURT FILE NUMBER(S): Not Applicable

LOWER COURT JUDICIAL OFFICER: Not Applicable

COUNSEL:

Mr. Jim Doyle - Solicitor for plaintiff

Mr. M. Jacobs QC with Mr. P. Bambiagiotti for defendant

SOLICITORS:

Doyles Construction Lawyers, Sydney for plaintiff

Hills Solicitors, Raymond Terrace for defendant

CATCHWORDS:

Corporations - winding up - stay of proceedings. Held: an arbitrator's award, published after liquidation, is not a nullity by reason only of the liquidation and the absence of leave to proceed.

ACTS CITED:

Corporations Law s.500(2)

DECISION:

See para.12 of judgment

JUDGMENT:

- 4 -

THE SUPREME COURT

OF NEW SOUTH WALES

COMMON LAW DIVISION

CONSTRUCTION LIST

BROWNIE AJ

FRIDAY 21 MAY 1999

NO.55003 OF 1999

DORAN CONSTRUCTIONS PTY LIMITED (IN LIQUIDATION) (RECEIVER AND MANAGER APPOINTED) v BERESFIELD ALUMINIUM PTY LIMITED

JUDGMENT

1 HIS HONOUR: The question for determination now is whether the awards of the arbitrator were nullities by virtue solely of the fact that prior to the publication of the awards the plaintiff entered into liquidation. Section 500(2) of the Corporations Law provides relevantly:

After the passing of the resolution for voluntary winding up no action or other civil proceedings shall be proceeded with ... against the company except by leave of the Court and subject to such terms as the Court imposes.

2 The expression "the Court" is defined in s 58AA. The present argument has proceeded on the agreed basis that there was a resolution for the voluntary winding up of the company passed on 24 December 1997. There were two relevant awards, both after that date. After the second of those awards was published a receiver was appointed to the plaintiff company on 22 January 1999. It is the receiver who now wishes to attack the awards on various bases. The question now posed for determination arose before I had embarked on any details of the disputes relating to those several bases for attacking the awards.

3 I take it that the correct approach to the question of the proper construction of s 500(2) of the Corporations Law is that described by Glass JA in National Mutual Fire Insurance Limited v Commonwealth of Australia (1981) 1 NSWLR 400 at 408. His Honour said that it was encouragement to error to investigate whether a particular statute such as s 500(2) of the Corporations Law is mandatory or directory in its terms by assimilating it to other statutory requirements of like kind and then noting whether these have been held to be mandatory or directory by nature.

4 A little later his Honour said:

By having regard to the nature of the pre-condition, its place in the legislative scheme and the extent of the failure to observe the requirement, the question is posed as a matter of construction whether there was a legislative intention that such a failure should nullify the act in question.

5 Here the pre-condition is the requirement in s 500(2) to obtain the leave of the Court before proceeding with the arbitration. It seems that the arbitrator had heard evidence for a long time, I gather for some weeks, and that a further period of time had elapsed, so that the time had come when it was thought that he was about to publish his award, when there was a resolution for the voluntary winding up of the plaintiff company. Thereafter the arbitrator published his first award.

6 In Re Sydney Formworks Pty Limited (1965) NSWLR 646, McLelland CJ in Eq, dealt with a predecessor of s 500 of the Corporations Law. At pp 649-650 his Honour considered the obvious intention of the section and said that it was to ensure that the assets of the company in liquidation will be administered in accordance with the provisions of the Companies Act and that no person will get a benefit to which under these provisions he is not properly entitled and to enable the Court effectively to supervise all claims brought against the company which is being wound up. There are other authorities to the same general effect.

7 At first blush the situation which had arisen in this case was that the arbitrator, having heard for a very long time evidence and submissions in relation to a series of hotly disputed questions, was about to publish his award. I do not think it is relevant but I really cannot imagine that the liquidator would not want to know what the arbitrator thought, or that any judge, if asked at that stage, would have failed to grant leave to proceed to publish the award. It would, of course, be necessary to obtain leave to enforce the award.

8 However, the matter is not that simple because the plaintiff, through the receiver, now contends that the arbitrator had to rule upon one outstanding procedural matter, and further that the arbitrator had been guilty of certain misconduct which, if the arbitrator was to publish an award, would have meant that it was likely to be set aside, unless the misconduct was first cured.

9 I do not think either of those circumstances, assuming they existed, changes the way in which a court should approach the question of the proper construction of s 500(2). Looking at that section in its place in the legislative scheme and accepting what McLelland J said in Re Sydney Formworks Pty Limited, it does not seem to me that the legislative intention disclosed was that an act taken in contravention of s 500(2) would, by virtue of those circumstances alone, be a nullity.

10 In the course of submissions various factual examples have been raised which point in my respectful view to the absurdity of the proposition that the legislative intention was that the delivery of the award would be a nullity. One has only to think of instances such as a judge about to deliver a judgment just before that judge had to retire upon attaining the age of seventy-two, or a judge or a magistrate or an arbitrator about to go away overseas on leave for some months, or such a person advised that he or she had a terminal illness, to wonder whether Parliament should be thought to have had the intention for which the plaintiff contends.

11 The plaintiff sought to take comfort from the decision of the High Court in Emanuele v Australian Securities Commission [1997] HCA 20; (1997) 144 ALR 359. In that case, however, the High Court was considering a different provision in the Corporations Law, the language of which was very different. One could say the same about the result in National Mutual Fire Insurance Co v The Commonwealth of Australia, but each of these cases turns upon the construction of an individual section.

12 In the result I hold that the awards of the arbitrator are not nullities by reason only of the fact that there had been a resolution passed for the voluntary winding up of the plaintiff company before the awards had been published.

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LAST UPDATED: 26/05/1999