case_text: On 14 May 2003, Finkelstein J delivered reasons for judgment giving approval to Mr Rambaldi as liquidator of Irlmond to enter into the funding agreement in the form attached to his counsel's supplementary submission of 12 May 2003: see Anstella Nominees Pty Ltd v St George Motor Finance Ltd [2003] FCA 466 (" Anstella "). His Honour wrote (at [5]-[8]): "The initial version of the draft agreement required the liquidator to surrender his power to control the destiny of the action in the event of disagreement between the liquidator and the other applicants concerning the settlement or discontinuance of the action. The draft agreement provided that the liquidator could not instruct his solicitors to settle or discontinue the proceeding without obtaining the consent of the other applicants. If there was a dispute, the matter had to go to arbitration. ... It seemed to me ... that the proposal gave rise to a ... difficulty, namely whether there are any circumstances under which a liquidator can lawfully give up his statutory powers or duties. There is a view that, while a liquidator may listen to the opinion of others on what steps he should take in a particular situation, in the end he must exercise his own judgment on what is or is not in the best interests of the creditors or contributories. For this reason he cannot give up control of litigation in which his company is a party. This is the view taken by Lightman J in Grovewood Holdings Plc v James Capel & Co Ltd [1995] Ch 80. ... Recognising the potential difficulty he was in, the liquidator sought time to see whether Insolvency Litigation Fund Pty Ltd ("ILF") (the company providing the funding) could be persuaded to change the terms. This is in fact what occurred. The liquidator was able to negotiate the removal of the restriction on his ability to settle or discontinue the proceeding if Irlmond became a party to the action." 37 On 15 May 2003, the litigation funding agreement (hereafter referred to as "the LFA") was executed by Mr and Mrs Spalla, Mr Still, Anstella, Mr Rambaldi, Irlmond, and ILF. Other significant provisions of the LFA include: • Clause 4(a)(iv) provided that the "Spalla Interests shall pay and shall at all times remain liable to pay all Legal Costs charged by the Solicitors, Senior Counsel and Junior Counsel in respect to ... Irlmond and the Liquidator's participation in and conduct of the Proceeding." Clause 4.2 required the Spalla Interests to provide the liquidator with a letter confirming that the Spalla Interests have sufficient funds to settle these costs. • Pursuant to Clause 5.1, the Spalla Interests agreed to indemnify Irlmond and the liquidator in respect of legal costs claimed by their joint representatives in the proceeding. • Clause 6.1 provided that ILF would indemnify the liquidator for any costs for which he becomes personally liable in relation to his and Irlmond's participation in the primary proceeding. Pursuant to Clause 6.2, "[t]he indemnity provided by ILF to the Liquidator in respect of any Costs Order will not be a continuing indemnity, but may be terminated by ILF, in its absolute discretion by giving 7 days written notice to the Liquidator". This right of termination was subject to a proviso that ILF would remain liable for any personal costs orders against the liquidator up to the time of termination. • Clause 7 related to the appointment of solicitors and counsel and provided that solicitors and junior and senior counsel would be retained to act for the liquidator, Irlmond and the Spalla Interests. In accordance with clause 1.1, the solicitors were to be HWL "or such other firm of solicitors retained to act for the Liquidator and Irlmond from time to time" and senior counsel was to be Peter Hayes QC "or such other lead Counsel retained to act for the Liquidator and Irlmond from time to time". • Clause 15 contained certain warranties, including that the "Spalla Interests warrants [sic] that it [sic] has sufficient financial resources to carry out its [sic] obligations under this Agreement and shall continue to have such financial resources." 38 HWL and the Spalla Interests entered into a costs agreement with respect to the primary proceeding in May 2003. Mr Spalla's original retainer with HWL required Mr Spalla to pay $80,000 upfront with the balance to be at HWL's prevailing hourly rates, plus a 20% uplift fee to be paid on the successful outcome of the matter. Mr Spalla was to meet all HWL's disbursements and counsel fees. Mr Spalla reached a similar "no win, no fee" arrangement with Mr Hayes QC. Mr Spalla paid the initial amount of $80,000 to HWL and funded the litigation in accordance with these agreements. He did not, however, have sufficient funds to meet the costs of the litigation had all of the lawyers' costs been due at the time they were incurred.


case_outcome: referred to

case_text: On 28 September 2004, French J struck out the applicants' further amended statement of claim but gave liberty to file and serve, by 21 October 2004, a substituted application and statement of claim: see Spalla v St George Motor Finance Ltd (No 5) [2004] FCA 1262 (" Spalla (No 5) "). His Honour also ordered that the applicants pay the respondents' costs of their respective motions. Amongst other things, his Honour held that many of the allegations in the further amended statement of claim involved allegations of fact that contradicted the factual findings made by Finkelstein J in proceeding V 74 of 1999. In these respects, the further amended statement of claim could not stand "against the res judicata estoppel and the issue estoppels generated by the judgment in the first proceedings": see Spalla (No 5) at [4]-[5] and [44]. 46 The primary proceeding was originally fixed for trial beginning on 19 July 2004. As a result of the various strike-out motions, that date was vacated and the matter was re-listed for hearing in February 2005. On 13 October 2004, HWL advised Mr Spalla (by a letter, which was also copied to Mr Rambaldi) that they would terminate their retainer with Mr Spalla if the February 2005 hearing date were vacated for any reason. Amongst other things, the letter said, "[w]hilst we regret having to take this position, we simply cannot afford the ongoing burden of the case and the impact it is having on the firm overall". 47 Some days later, on 19 October 2004, HWL wrote to Mr Spalla that: "In line with our obligation to keep you apprised of the costs incurred thus far, we advise that as at 18 October 2004 the total time recorded on this matter is $620,519.50 of which $80,000.00 has been paid leaving an unpaid work in progress of $540,519.50. This does not include any uplifting fee which was outlined in our costs agreement." HWL copied this letter to Mr Rambaldi. 48 Also on 19 October 2004, Mr Beck sent Mr Bowman a facsimile on Deloittes' letterhead. In this facsimile, Mr Beck referred, amongst other things, to the order for costs that French J had made on 28 September 2004 against the applicants and in favour of the Deloitte parties. He stated that his solicitors had informed him that the Deloitte parties' costs were about $50,000 on a party and party basis and that the Deloitte parties sought these costs from ILF "in its capacity as a non-party". He also wrote that if "the matter proceeds and Irlmond is unsuccessful, we will look to ILF for its entire costs of the matter and we reserve all our rights to seek those costs from ILF, not only on a party and party basis but on an indemnity basis". 49 The next day, on 20 October 2004, Mr Beck sent a facsimile to Mr Rambaldi in similar terms to that sent to Mr Bowman. Mr Beck again referred to the order for costs that French J had made in favour of the Deloitte parties and to the Deloitte parties' solicitors' estimate of the amount of these costs. He wrote that the Deloitte parties sought these costs from Mr Rambaldi personally and added that, should the matter proceed and Irlmond fail, the Deloitte parties "will look to you personally for [their] entire costs of the matter ... not only on a party and party basis but on an indemnity basis". 50 Pursuant to French J's orders of 28 September 2004, a third further amended application and a third further amended statement of claim were filed in the primary proceeding on 19 October 2004. This statement of claim named Mr Spalla, Mr Still and Irlmond as the first, second and third applicants. No other applicants were named. The first to fifth and seventh and eighth respondents were the same as those in the present proceeding. The sixth respondent was the Australian Securities and Investments Commission ("ASIC"). 51 By the third further amended statement of claim, Irlmond brought numerous claims against the St George parties and the Deloitte parties arising out of the receivership of Irlmond. Against the St George parties, Irlmond claimed breach of mortgagee's duties, conversion and contravention of s 52 of the Trade Practices Act 1974 (Cth). Against the Deloitte parties, Irlmond claimed breach of receiver's duties and conversion and sought restitution of the receiver's fees. Irlmond claimed restitution of the sum of $1.3 million together with other payments against St George Motor Wholesale. 52 Also by the third further amended statement of claim, Mr Spalla and Mr Still brought claims against Messrs Beck and Home for malicious prosecution and injurious falsehood. Mr Spalla and Mr Still also brought a claim for malicious prosecution against ASIC.


case_text: On 20 December 2004, French J ordered that most of the statement of claim in the primary proceeding be struck out: see Spalla v St George Motor Finance Ltd (No 6 ) [2004] FCA 1699 (" Spalla (No 6) "). In essence, his Honour held that most of the statement of claim was an abuse of process because it sought to relitigate issues that had been determined by Finkelstein J in proceeding V 74 of 1999: see Spalla (No 6) at [2]-[3], [71]-[108]. His Honour struck out all of Irlmond's claims for conversion and breach of duties against the St George and the Deloitte parties. 54 The only claim of Irlmond that was not struck out was the claim for $1.3 million against St George Motor Wholesale. That claim related to the application of proceeds of the sale of Essendon Mitsubishi which was a discrete event that post-dated the judgment of Finkelstein J. For this reason, his Honour concluded (at [91]-[92]) that the claim should not be struck out as an attempt to relitigate a matter already determined by Finkelstein J. At [92], however, his Honour expressed doubt as to whether "the impugned payment of $1.3 million" would be shown "to be anything other than a continuation" of practices already approved by Finkelstein J. His Honour did not strike out Mr Spalla's and Mr Still's claims for malicious prosecution and injurious falsehood: see Spalla (No 6) at [110]-[116]. 55 On 24 December 2004, Messrs Beck and Home filed a notice of motion seeking leave to appeal from the interlocutory orders of French J allowing Mr Spalla and Mr Still liberty to continue their claims for malicious prosecution and injurious falsehood. This application was given proceeding number VID 54 of 2005. On 31 January 2005, Irlmond also sought leave to appeal from the orders of French J that were unfavourable to it. This application was given proceeding number VID 83 of 2005. These two proceedings (hereafter "the appeals") were to be heard together. 56 With the judgment of French J in December 2004 and the institution of the appeals in January 2005, the primary proceeding entered a new stage and, so far as ILF, Irlmond, Mr Rambaldi and HWL were concerned, led to their reappraisal of the litigation. 57 On 13 January 2005, prior to Irlmond filing its appeal, Mr Vasudevan, Mr Bowman and Mr Stephen Foale from ILF, and Mr Borden and Ms April Arslan met at the offices of Pitcher Partners, in order to discuss French J's judgment. Mr Rambaldi did not attend although, as copies of Mr Vasudevan's emails of 13 and 23 January 2005 attest, Mr Vasudevan kept him informed. In these emails, Mr Vasudevan reported to Mr Rambaldi that Mr Bowman was concerned about ILF's exposure to any personal costs liability incurred by Mr Rambaldi or its own liability for costs as a "third party" beneficiary of the action. Mr Vasudevan also reported to Mr Rambaldi that HWL estimated that solicitor/client costs for the respondents would be between $1 million and $2 million. Significantly for present purposes, Mr Vasudevan notified Mr Rambaldi that: "There may be a possibility that Delloites [sic] may entertain the possibility of settling the matter or ending the matter where each party bears [its] own costs, and in that regard, Borden was prepared to help with the appeal. Spalla will not be a factor in settlement negotiations as if he does not come to the party, then IMF, HWL and the liquidator will drop this matter." Mr Vasudevan advised Mr Rambaldi that, after HWL left, Mr Bowman told Mr Vasudevan, that ILF was considering withdrawing its indemnity, although it would not do so until after the appeal was lodged and "if settlement negotiations do not go well".


case_title: Beck v Spalla [2005] FCAFC 82

case_text: As already noted, the applications for leave to appeal and the appeals were listed for hearing on 10 and 11 May 2005. The mediation was scheduled for 29 April 2005. A Full Court, which was constituted by Hill, Finn and Kenny JJ, heard argument in proceeding VID 54 of 2005 on 10 May 2005 and, on 13 May 2005, granted leave to appeal and dismissed the appeal: see Beck v Spalla [2005] FCAFC 82. On account of what happened at the mediation on 29 April 2005, proceeding VID 83 of 2005 did not proceed before the Full Court on 10 May 2005. 71 On 27 April 2005, two days prior to the mediation, Mr Rambaldi and Mr Vasudevan, Mr Foale, Mr Borden and Ms Arslan, and Mr Spalla and Mr Ian Still attended a meeting, to discuss the forthcoming mediation. I accept that a file note of that meeting, which Mr Borden had prepared the following day, accurately records the discussions at that meeting. 72 At the meeting of 27 April 2005, Mr Rambaldi repeated that ILF was considering withdrawing its litigation support and that he would be unable to continue with the litigation if it did so. He also said that, if ILF withdrew after the mediation, he would take whatever offer was made, including a walk-away offer. Mr Borden's file note of the meeting specifically recorded that: "Gess [Rambaldi] reported that he had been informed that ILF was considering withdrawing its support. He reported that if ILF withdrew its support, he would not be able to proceed any further with the litigation. He requested ILF to advise whether they would continue support past Friday, as he will need to know this when taking on board any offers that might be made. If the support is withdrawn after Friday, Gess advised that he would take whatever offer was made including a walk-away if that was available." Mr Rambaldi also asked the solicitors what they thought the Irlmond claim was worth. Mr Borden's file note records that Ms Arslan "advised that the bottom line was somewhere between $2 [million] and $3 [million] plus interest and costs".


case_title: Rambaldi v Spalla [2005] VSC 162

case_text: The application was heard by Hansen J on 6 May 2005. Mr Randall appeared for Mr Rambaldi. Mr Spalla appeared in person. Mr Randall said that, although Mr Rambaldi had come to Court to put the option of allowing the officers of Irlmond to take over the litigation, "his preference is that the court declines to make the orders". Mr Spalla spoke also. He expressed disapproval of how Mr Rambaldi had acted in signing the Deed and said that he wished to take control of the litigation. At the conclusion of the hearing, his Honour declined to make the orders sought and gave reasons: see Rambaldi v Spalla [2005] VSC 162 (" Rambaldi "). 116 Hansen J found that he had insufficient information to form a view on the likelihood of success of Irlmond on appeal or at trial: Rambaldi at [19]. Therefore, he was unable to determine if it was in the best interests of the company to continue with the litigation. He noted that Mr Spalla had not made any "proposal by which the position of the company in relation to the adverse costs orders which are to be released under the settlement could be secured, that is to say if authority was given to Mr Spalla to continue with the proceeding, that the company would be no worse off than it would be in that respect under the settlement": Rambaldi at [20]. Similarly, his Honour noted that he had no "assurance beyond that stated by Mr Spalla, as to how the company's ongoing costs are to be paid": Rambaldi at [20]. 117 Later that day (but before 5.00 pm), Mr Rambaldi procured the consent of his partners to the Deed. 118 Before turning to the parties' submissions, I note that Mr Borden properly conceded that he could not recollect the precise words used at the mediation or in pre-mediation conferences and that, in general, his file notes are likely to be more reliable than his present recollection. I accept this and further I accept that Mr Borden's handwritten notes, which were made at the time of the mediation, are even more reliable than his typed notes of the mediation. 202 On legal advice, Mr Spalla did not make an application to take over the carriage of the primary proceeding for Irlmond. Having sought his own independent legal advice, Mr Rambaldi did apply to the Supreme Court. Mr Spalla claims that the application to the Supreme Court was not made in good faith because Mr Rambaldi did not support it. Mr Rambaldi explained that he did not support the orders sought by the application because he did not believe that Mr Spalla was an appropriate person to have conduct of the Irlmond claim in the primary proceeding. He explained that, in his view, Mr Spalla was too emotionally involved with the litigation and might not be able to bring sufficient objectivity to the commercial decisions associated with managing litigation on behalf of a company in liquidation. This does not show that Mr Rambaldi brought the application in bad faith. As liquidator of Irlmond, Mr Rambaldi was required to advise the Court of his position in relation to the application. Although he did not support the application, by bringing it he gave Mr Spalla the opportunity to seek an order giving him authority to conduct the litigation. As Hansen J explain in Rambaldi at [18]: " [D] oubtless out of some thought for the other interests involved, [Mr Rambaldi] has brought this application which may be thought to have been designed to draw Mr Spalla to seek authority to conduct the litigation under the guise of the originating process. As I have said, Mr Spalla takes the opportunity to seek that authority. He wishes to be able to conduct the litigation and, as discussed with counsel, I could make such an order under s.511(1)(b) of the Act if, in my view, it was otherwise appropriate to do so." Similarly, I do not find that the application was brought in bad faith. I find that it was filed in a good faith attempt to seek the guidance of the Court and to allow Mr Spalla an opportunity to put his case to the Court. Overall, I find no reason to conclude that Mr Rambaldi acted in bad faith in the week before the Deed was ratified.


case_text: Mr Spalla relied on s 1321 of the Corporations Act 2001 (Cth) ("the Act ") as a basis for his application. That section allows a "person aggrieved by any act ... or decision" of a liquidator to appeal to the Court in respect of the act or decision. The Court can "confirm, reverse or modify the act or decision". Citing Westpac Banking Corporation v Totterdell (1998) 29 ACSR 448 (" Westpac v Totterdell ") , Mr Spalla submitted that he had standing to bring an appeal under this section as a creditor of Irlmond, of which he was also the sole director. Mr Spalla also maintained that he had standing as an applicant and the funder in the primary proceeding. He also pointed out that he and his wife were the owners and controllers of Anstella, which in turn held all the issued shares in Irlmond. Mr Spalla identified "the decision of Mr Rambaldi to execute the Deed of Settlement on 29 April 2005 and subsequently seek and obtain the ratification of the Deed by his partners on 6 May 2005" as the subject of the appeal. 123 Under r 14.1(2) of the Federal Court (Corporations) Rules ("the Rules") any appeal under s 1321 of an act, omission or decision of a liquidator must be filed within "21 days after the date of the act, omission or decision appealed against". Mr Spalla argued that his appeal was not out of time because, even though his initial notice of motion did not refer to s 1321 of the Act , this proceeding was initiated within 21 days of the execution of the Deed. In the alternative, Mr Spalla sought an extension of time to bring an appeal under s 1321. He argued that an extension of time was appropriate because his initial notice of motion put Mr Rambaldi and other interested parties on notice of the nature of Mr Spalla's complaints against him. 124 Mr Spalla also sought to rely on s 536 and s 1324 of the Act . As I accept that s 1321 is an appropriate vehicle for Mr Spalla's challenge to the Deed, it is unnecessary to discuss these sections of the Act further. 169 In the context of this case, two considerations must be borne steadily in mind. First, s 545(1) of the Act provides that a liquidator is not liable to incur any expense in relation to the winding up of a company unless there is sufficient available property. Secondly (by way of reiteration) the courts are generally "loath to enter into the area where the professional liquidator has made a commercial decision which he considers benefits the stakeholders whom he represents, at least unless something is pointed to which suggests that there are some vitiating factors which entered into the making of the decision": see Star v Silvia (No 1) (1994) 12 ACLC 600 at 604 per Young J; Sanderson v Classic Car Insurances Pty Ltd (1986) 4 ACLC 114 at 116 per Young J; Northbourne at 440; Westpac v Totterdell at 453-454 per Ipp J (with whom Pidgeon and White JJ agreed); and Cook v Northoak Holdings Pty Ltd (1997) 25 ACSR 517.


case_text: Mr Spalla conceded that, where an appeal under s 1321 of the Act is against a liquidator's discretionary decision or a decision involving business judgment, the Court would not reverse the liquidator's decision unless it was satisfied that the liquidator acted unreasonably or in bad faith: see Re Jay-O-Bees Pty Ltd (In Liquidation); Rosseau Pty Ltd (In Liquidation) v Jay-O-Bees Pty Ltd (In Liquidation) (2004) 50 ACSR 565 (" Jay-O-Bees ") at 575 per Campbell J. Mr Spalla submitted that there were many grounds for concluding that Mr Rambaldi acted in bad faith by executing the Deed. As he raised so many grounds, Mr Spalla's submissions were somewhat diffuse. In what follows, I attempt to outline his main arguments. 126 Perhaps foremost among Mr Spalla's arguments is his claim that Mr Rambaldi acted in breach of the LFA. Additionally, he argues that, by his conduct, Mr Rambaldi breached his obligations under the Act , including under s 180. In particular, in breach of the LFA, Mr Spalla alleges that Mr Rambaldi breached clauses 9.1, 9.3, 14 and 21 of the LFA. Under clause 9.1, HWL were to "conduct the Proceeding on behalf of the Liquidator and the Spalla Interests". In Mr Spalla's view, Mr Rambaldi breached clause 9.1 by negotiating the terms of the Deed without consulting his solicitors. 127 Under clause 9.3, the Liquidator was not permitted to instruct the solicitors to settle the "proceedings as a whole" or to "settle, amend, vary, abandon or discontinue any claim made or the relief sought by the Spalla Interests" without consent of the Spalla Interests. Mr Spalla argued that the words "any claim made" included the claim made on behalf of and in the name of Irlmond. 165 The decision to accept a settlement on behalf of Irlmond, and the preliminary decision to sign the Deed, were clearly discretionary decisions of the liquidator. They also involved matters of business judgment. It is well settled that where an appeal is brought against such a decision "the court will reverse the liquidator's decision only when it is satisfied that he was acting unreasonably or in bad faith": see Jay-O-Bees at 575 and the authorities referred to. This is in contrast to an appeal against a rejection of a proof of debt where the Court hears the issue de novo: see Jay-O-Bees at 575-576. The "general approach ... in a case like this is that [the Court] should not interfere with a decision made by the liquidator unless either there is fraud, or it can be said that the discretion has not been exercised bona fide, or it can be said that the liquidator has acted in a way which no reasonable liquidator could have acted": Bridgeport at 161-162 quoting Yeomans v Walker (1986) 5 NSWLR 378 at 383 per Hodgson J.


case_title: Re Luxtrend Pty Ltd (In Liquidation) (1996) 135 FLR 170; [1997] 2 Qd R 86

case_text: Mr Spalla also argued that Mr Rambaldi breached s 477(2A) of the Act by compromising a debt for an amount over $20,000 without approval of the Court, or of the committee of inspection or creditors in general meeting. This submission was based on a misunderstanding as to what constitutes a "debt" under the relevant section: see Re Luxtrend Pty Ltd (In Liquidation) (1996) 135 FLR 170 at 171-172; [1997] 2 Qd R 86 at 87-89 per Moynihan J; Farrow Finance Co Ltd (In Liquidation) v ANZ Executors and Trustees Company Ltd (1996) 136 FLR 154 at 179-180; [1998] 1 VR 50 at 74 per Hansen J; and Re Tietyens Investments Pty Ltd (Receivers and Managers Appointed) (In Liquidation) (1999) 31 ACSR 1 at 20-22 per Weinberg J. It is unnecessary to discuss it further.


case_title: Farrow Finance Co Ltd (In Liquidation) v ANZ Executors and Trustees Company Ltd (1996) 136 FLR 154; [1998] 1 VR 50


case_title: Re Tietyens Investments Pty Ltd (Receivers and Managers Appointed) (In Liquidation) (1999) 31 ACSR 1


case_title: Watson v Foxman (2000) 49 NSWLR 315

case_text: Although Mr Rambaldi asked the Court to prefer his evidence to that of Mr Spalla in so far as their evidence conflicted, he did not ask the Court to make a negative credibility finding with respect to Mr Spalla. Rather, Mr Rambaldi relied on the principles referred to by McLelland CJ in Watson v Foxman (2000) 49 NSWLR 315 at 319: " [H] uman memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience." Mr Rambaldi said that these considerations were especially apposite in this case where Mr Spalla has a very high degree of personal involvement in the proceedings. Mr Rambaldi noted that Mr Spalla has been caught up in litigation including the failed criminal prosecution for many years now. Mr Rambaldi submitted that these difficult circumstances have impacted on Mr Spalla's ability to consider the issues and events relating to this case in a dispassionate manner. According to Mr Rambaldi, this has lead to Mr Spalla misremembering some conversations such as the meeting at the conclusion of the mediation. 146 Mr Rambaldi submitted that, as Mr Spalla alleged bad faith, the Court is not being asked to decide whether Mr Rambaldi achieved the best settlement possible. Mr Rambaldi sought to distinguish bad faith from negligence. With bad faith, he submitted, the enquiry is directed to the actual state of mind of the decision-maker against whom bad faith is alleged. He argued that there is no such thing as constructive bad faith.


case_text: Mr Rambaldi argued that bad faith is a serious allegation and that the Court must reach a comfortable satisfaction that the case is made out in accordance with the Briginshaw test: see Briginshaw v Briginshaw [1938] HCA 34 ; (1938) 60 CLR 336 (" Briginshaw ") at 361-362 per Dixon J. He submitted that, as there is no precise definition of bad faith, whether the case is made out will depend on the particular facts. Mr Rambaldi contested that there were any grounds in this case for concluding that he had acted in bad faith. Mr Spalla had failed, so Mr Rambaldi said, to adduce evidence to satisfy the Court, on the balance of probabilities, that, in entering into the irrevocable offer, Mr Rambaldi was actuated by bad faith. 148 Further, counsel for Mr Rambaldi contended that Mr Rambaldi, at all times, acted in good faith. Counsel asked for a positive finding that Mr Rambaldi was acting in good faith when he entered into the offer and recommended to his partners that it should be given effect. A key element of Mr Rambaldi's submissions was his claim that a liquidator who is not funded or is without indemnity is not expected to continue a proceeding. Accordingly, Mr Rambaldi could not have been expected to continue his involvement in the primary proceeding beyond 6 May 2005. Mr Rambaldi noted that Mr Borden, who was the lawyer of Mr Rambaldi and Mr Spalla jointly, had said that Mr Rambaldi could not be expected to continue the proceedings without an indemnity and would be entitled to accept a walk-away offer in those circumstances. 149 Mr Rambaldi argued that, once he was informed on 29 April 2005 that his indemnity was to be withdrawn, he knew that he would not be able to continue with the litigation after 6 May 2005 and he behaved reasonably to protect the interests of creditors in those circumstances. He said that he procured an offer at the mediation that would stay open for seven days, thereby providing an opportunity for options for continuing the litigation to be explored. He claimed that he procured his partners' consent to the Deed only after no reasonable way to continue the litigation was found. He said that his conduct was consistent with the LFA. Mr Spalla was utterly wrong to characterize what he did to preserve Mr Spalla's position for seven days as a "facade". 166 Mr Spalla has attempted to satisfy this standard of review by showing that Mr Rambaldi acted in bad faith in executing the Deed. This is a serious allegation, involving the imputation of moral turpitude. The standard of proof to be applied is proof on the preponderance of probability with due regard to the seriousness of the particular issue being determined. As Dixon J said in Briginshaw at 361-362: " [W] hen the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found. It cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality. ... Except upon criminal issues to be proved by the prosecution, it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal. But reasonable satisfaction is not a state of mind that is attained or established independently of the nature or consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters 'reasonable satisfaction' should not be produced by inexact proofs, indefinite testimony, or indirect inferences." An allegation of bad faith is a serious claim affecting reputation and the Court should have regard to this when considering the evidence. 167 Section 181(1) of the Act relevantly provides that an officer of a corporation a term that includes a liquidator (s 9) - must exercise powers and discharge duties in good faith in the best interests of the corporation and for a proper purpose. Whether there has been bad faith will depend on the particular circumstances of the case.


case_text: Various statutes have used the expression "person aggrieved" and courts have discussed its meaning in numerous cases: compare the much quoted passage in Ex parte Sidebotham; In re Sidebotham (1880) 14 Ch D 458 at 465-466 per James LJ; Northbourne Developments Pty Ltd v Reiby Chambers Pty Ltd (1989) 19 NSWLR 434 (" Northbourne ") at 437-438 per McLelland J; and Bridgeport Advisers & Asset Managers Pty Ltd (2005) 221 ALR 146 (" Bridgeport ") at 162 per Barrett J. As Gibbs CJ said in Koowarta v Bjelke-Peterson [1982] HCA 27 ; (1982) 153 CLR 168 at 184-185, the meaning of the expression must ultimately depend on the context of the particular statute. Having regard to the circumstances outlined above, I find that Mr Spalla has standing under this provision. None of the respondents contended that he did not.


case_text: Various statutes have used the expression "person aggrieved" and courts have discussed its meaning in numerous cases: compare the much quoted passage in Ex parte Sidebotham; In re Sidebotham (1880) 14 Ch D 458 at 465-466 per James LJ; Northbourne Developments Pty Ltd v Reiby Chambers Pty Ltd (1989) 19 NSWLR 434 (" Northbourne ") at 437-438 per McLelland J; and Bridgeport Advisers & Asset Managers Pty Ltd (2005) 221 ALR 146 (" Bridgeport ") at 162 per Barrett J. As Gibbs CJ said in Koowarta v Bjelke-Peterson [1982] HCA 27 ; (1982) 153 CLR 168 at 184-185, the meaning of the expression must ultimately depend on the context of the particular statute. Having regard to the circumstances outlined above, I find that Mr Spalla has standing under this provision. None of the respondents contended that he did not. 162 I am satisfied that Mr Spalla has standing because of his role in the primary proceeding. Mr Spalla is a moving party in the primary proceeding, which is the subject of the Deed and settlement, and, under the LFA, he (and others) undertook to pay the legal costs in the primary proceeding of Irlmond and Mr Rambaldi. Even though the Spalla Interest claims were not settled (see below), it is reasonable to assume that the settlement of the Irlmond claim would significantly affect Mr Spalla as a party to the primary proceeding and deprive him of the advantage of Irlmond's participation. It also affected his rights and obligations under the LFA. Thus, for example, the Deed did not include any release against costs orders in favour of Mr Spalla and the Spalla Interests. Because of this, Mr Spalla claims that the Deed left him exposed to adverse costs orders in relation to Irlmond's claim in the primary proceeding. Mr Spalla has a "legal grievance": compare Northbourne at 438. Mr Spalla's role in the primary proceeding, both as a principal party and under the LFA, is sufficient to give him the standing as a "person aggrieved" under s 1321. 163 Under r 14.1 of the Rules, Mr Spalla requires an extension of time to bring an appeal pursuant to s 1321 of the Act . Mr Spalla did not purport to bring an appeal under this section until 18 April 2006 well outside the 21 day period for which r 14.1(2)(a) provides. The Court has the power to grant an extension of time under r 14.1(3) of the Rules. When deciding whether to grant such an extension, the Court has regard to all the circumstances of the case, including the extent and circumstances of the delay and any potential prejudice to other parties. In this case an extension is warranted. As Mr Spalla submitted, his notice of motion of 18 May 2005 was filed within 21 days of the challenged act and put Mr Rambaldi on notice of the points he wishes to raise in the appeal. In all the circumstances of the case, and in light of this fact and the fact that the respondents have not opposed an extension of time, I would grant the extension Mr Spalla seeks. 169 In the context of this case, two considerations must be borne steadily in mind. First, s 545(1) of the Act provides that a liquidator is not liable to incur any expense in relation to the winding up of a company unless there is sufficient available property. Secondly (by way of reiteration) the courts are generally "loath to enter into the area where the professional liquidator has made a commercial decision which he considers benefits the stakeholders whom he represents, at least unless something is pointed to which suggests that there are some vitiating factors which entered into the making of the decision": see Star v Silvia (No 1) (1994) 12 ACLC 600 at 604 per Young J; Sanderson v Classic Car Insurances Pty Ltd (1986) 4 ACLC 114 at 116 per Young J; Northbourne at 440; Westpac v Totterdell at 453-454 per Ipp J (with whom Pidgeon and White JJ agreed); and Cook v Northoak Holdings Pty Ltd (1997) 25 ACSR 517.


case_text: Various statutes have used the expression "person aggrieved" and courts have discussed its meaning in numerous cases: compare the much quoted passage in Ex parte Sidebotham; In re Sidebotham (1880) 14 Ch D 458 at 465-466 per James LJ; Northbourne Developments Pty Ltd v Reiby Chambers Pty Ltd (1989) 19 NSWLR 434 (" Northbourne ") at 437-438 per McLelland J; and Bridgeport Advisers & Asset Managers Pty Ltd (2005) 221 ALR 146 (" Bridgeport ") at 162 per Barrett J. As Gibbs CJ said in Koowarta v Bjelke-Peterson [1982] HCA 27 ; (1982) 153 CLR 168 at 184-185, the meaning of the expression must ultimately depend on the context of the particular statute. Having regard to the circumstances outlined above, I find that Mr Spalla has standing under this provision. None of the respondents contended that he did not. 165 The decision to accept a settlement on behalf of Irlmond, and the preliminary decision to sign the Deed, were clearly discretionary decisions of the liquidator. They also involved matters of business judgment. It is well settled that where an appeal is brought against such a decision "the court will reverse the liquidator's decision only when it is satisfied that he was acting unreasonably or in bad faith": see Jay-O-Bees at 575 and the authorities referred to. This is in contrast to an appeal against a rejection of a proof of debt where the Court hears the issue de novo: see Jay-O-Bees at 575-576. The "general approach ... in a case like this is that [the Court] should not interfere with a decision made by the liquidator unless either there is fraud, or it can be said that the discretion has not been exercised bona fide, or it can be said that the liquidator has acted in a way which no reasonable liquidator could have acted": Bridgeport at 161-162 quoting Yeomans v Walker (1986) 5 NSWLR 378 at 383 per Hodgson J. 203 Finally, I turn to the issue of whether the settlement was so unfavourable for Irlmond that it evidences that Mr Rambaldi acted in bad faith. Absent any other evidence of bad faith, the question must be whether or not, in executing the Deed and ultimately settling Irlmond's claim, Mr Rambaldi acted in a way that no reasonable liquidator could have acted: compare Bridgeport at 161-162. In this context, it must be borne in mind that courts are especially reluctant to second-guess settlement decisions. Public policy favours settlement. As Chesterman J said in Dew v Richardson [1999] QSC 192 at [42] , settlement helps "reduce the level of disharmony in society and conserve the resources both of litigants themselves and the community which funds the courts." Others have seen the virtue of settlement in promoting certainty that permits litigants to deal with their affairs in an orderly way looking to the future. For example, in Kelley v Corston [1998] 3 WLR 246 at 259, Judge LJ said: "Every lawyer in practice and every judge knows that there is no such thing as the case which is bound to succeed. Experience shows that cases with the brightest prospects of success somehow fail and it is difficult to underestimate the value of the certainty provided by a settlement as opposed to the continuing risks of litigation through to judgment".


case_title: Koowarta v Bjelke-Petersen [1982] HCA 27 ; (1982) 153 CLR 168


case_text: I do not base this finding on Mr Spalla's claim to be a creditor of Irlmond. Mr Spalla's claim to be a creditor is in tension with the fact that, in this and the primary proceeding, Mr Spalla relied on the report by Banks Group Services, which, amongst other things, estimated directors' loans to be $1,230,000. The evidence as it stands does not permit me to find whether in fact Mr Spalla was a creditor of Irlmond. As previously noted, some important issues concerning the financial status and dealings of Irlmond have already been found to be subject to res judicata and issue estoppels. This proceeding has focussed on the conduct of Mr Rambaldi, particularly in entering the Deed. I have not been required to make findings about the financial affairs of Irlmond. Nor have I been presented with a proper evidentiary foundation to make such findings. It is unnecessary to decide whether it is sufficient for standing under s 1321 that Mr Spalla claims to be a creditor of Irlmond: compare Starmaker (No 51) Pty Ltd v Mawson KLM Holdings Pty Ltd [2005] SASC 313 at [49] - [51] per Layton J.


case_text: Section 1321 of the Act provides an appropriate vehicle for Mr Spalla's challenge to Mr Rambaldi's actions. The section confers jurisdiction in respect of matters arising in liquidations and "provides a species of review into the decisions of ... liquidators in the original jurisdiction of the court notwithstanding the reference in the section to an 'appeal to the court'": see Re Hedge (No 2) (2002) 196 ALR 557 at 574 per French J. Also, it provides the Court with broad discretion regarding remedies. Therefore, I find it unnecessary to consider any other bases of jurisdiction. Some of these bases, such as s 536 of the Act , would apparently require Mr Spalla to meet a higher threshold before securing the Court's scrutiny: see Re Glowbind Pty Ltd (In Liquidation); Takchi v Parbery [2003] NSWSC 1190 ; (2003) 181 FLR 208 (" Glowblind ") at 217 per Burchett AJ (noting that an inquiry under s 536 will be appropriate only if the Court "considers that inquiry to be 'in the public interest'" and "'it is satisfied that there is a prima facie case' to justify subjecting the liquidator to it").


case_title: Re Glowbind Pty Ltd (In Liquidation); Takchi v Parbery [2003] NSWSC 1190 ; (2003) 181 FLR 208


case_title: Yeomans v Walker (1986) 5 NSWLR 378

case_text: The decision to accept a settlement on behalf of Irlmond, and the preliminary decision to sign the Deed, were clearly discretionary decisions of the liquidator. They also involved matters of business judgment. It is well settled that where an appeal is brought against such a decision "the court will reverse the liquidator's decision only when it is satisfied that he was acting unreasonably or in bad faith": see Jay-O-Bees at 575 and the authorities referred to. This is in contrast to an appeal against a rejection of a proof of debt where the Court hears the issue de novo: see Jay-O-Bees at 575-576. The "general approach ... in a case like this is that [the Court] should not interfere with a decision made by the liquidator unless either there is fraud, or it can be said that the discretion has not been exercised bona fide, or it can be said that the liquidator has acted in a way which no reasonable liquidator could have acted": Bridgeport at 161-162 quoting Yeomans v Walker (1986) 5 NSWLR 378 at 383 per Hodgson J.


case_text: Want of good faith on a liquidator's part in the present context and elsewhere in the Act (e.g., in s 181) is not precisely the same as the concept of want of good faith in other areas of the law, as for example, in public law. The Act does not, however, define the concept of "good faith"; and the concepts of good and bad faith in the common law and elsewhere in statute are plainly related to the present matter. Thus, "there are many ways in which bad faith can occur and it is not possible to give a comprehensive definition": SBBS v Minister for Immigration and Multicultural and Indigenous Affairs (2002) 194 ALR 749 (" SBBS ") at 756 per Tamberlin, Mansfield and Jacobson JJ. The focus of an inquiry concerning an allegation of bad faith is the state of mind of the decision-maker. The Court is not simply evaluating the wisdom of an impugned decision. In Minister for Immigration and Multicultural and Indigenous Affairs v SBAN [2002] FCAFC 431 , Heerey and Kiefel JJ said at [8]: "As with other areas of the law where wrongful intent is in issue, reckless indifference may be the equivalent of intent. But this is not to say that the test is objective. The inquiry is directed to the actual state of mind of the decision-maker. There is no such thing as deemed or constructive bad faith. It is the ultimate decision ... which must be shown to have been taken in bad faith." Compare also Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 152 ALR 127 at 130 per Finn J. This means that "mere error or irrationality does not of itself demonstrate lack of good faith ... [b]ad faith is not to be found simply because of poor decision-making": SBBS at 756 [45]. Rather, the circumstances must show dishonesty (or capriciousness) on the part of the decision-maker: compare Pledger v Secretary, Department of Family and Community Services [2002] FCA 1576 at [70] - [78] per Weinberg J. Something is done in "good faith" when done honestly. Something is done in "bad faith" when done dishonestly. These general principles must be applied to each of the purported bases of bad faith as alleged by Mr Spalla.


case_title: Minister for Immigration and Multicultural and Indigenous Affairs v SBAN [2002] FCAFC 431


case_title: Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 152 ALR 127


case_title: Pledger v Secretary, Department of Family and Community Services [2002] FCA 1576


case_title: Star v Silvia (No 1) (1994) 12 ACLC 600

case_text: In the context of this case, two considerations must be borne steadily in mind. First, s 545(1) of the Act provides that a liquidator is not liable to incur any expense in relation to the winding up of a company unless there is sufficient available property. Secondly (by way of reiteration) the courts are generally "loath to enter into the area where the professional liquidator has made a commercial decision which he considers benefits the stakeholders whom he represents, at least unless something is pointed to which suggests that there are some vitiating factors which entered into the making of the decision": see Star v Silvia (No 1) (1994) 12 ACLC 600 at 604 per Young J; Sanderson v Classic Car Insurances Pty Ltd (1986) 4 ACLC 114 at 116 per Young J; Northbourne at 440; Westpac v Totterdell at 453-454 per Ipp J (with whom Pidgeon and White JJ agreed); and Cook v Northoak Holdings Pty Ltd (1997) 25 ACSR 517.


case_title: Sanderson v Classic Car Insurances Pty Ltd (1986) 4 ACLC 114


case_title: Cook v Northoak Holdings Pty Ltd (1997) 25 ACSR 517


case_text: Further, I reject Mr Spalla's suggestion that I should draw inferences (under the rule in Jones v Dunkel [1959] HCA 8 ; (1959) 101 CLR 298) against Mr Rambaldi because Mr Rambaldi failed to call those with whom he negotiated the terms of Deed. Mr Spalla claimed that there was no explanation for the failure to call these witnesses and that they could have provided evidence as to whether the parties understood the Deed to operate as an offer of settlement. While the surrounding circumstances may be relevant to construction, the terms of the condition precedent are clear. No reasonable observer could have interpreted the Deed as anything other than an offer. The language of the document admits of only one meaning: compare Australian Broadcasting Commission v Australian Performing Right Association Ltd [1973] HCA 36 ; (1973) 129 CLR 99 (" ABC v APRA ") at 105-107 per Barwick CJ and 114-115 per Stephen J. The subjective views of the parties to the Deed are not relevant: see Pacific Carriers Ltd v BNP Paribas [2004] HCA 35 ; (2004) 218 CLR 451 (" Pacific Carriers ") at 461-462 per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ and Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52 ; (2004) 219 CLR 165 (" Toll ") at 179 per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ. Accordingly, the fact that Mr Rambaldi did not call the other parties to the Deed does not bear on the issue.


case_title: Australian Broadcasting Commission v Australian Performing Right Association Ltd [1973] HCA 36 ; (1973) 129 CLR 99


case_text: Further, I reject Mr Spalla's suggestion that I should draw inferences (under the rule in Jones v Dunkel [1959] HCA 8 ; (1959) 101 CLR 298) against Mr Rambaldi because Mr Rambaldi failed to call those with whom he negotiated the terms of Deed. Mr Spalla claimed that there was no explanation for the failure to call these witnesses and that they could have provided evidence as to whether the parties understood the Deed to operate as an offer of settlement. While the surrounding circumstances may be relevant to construction, the terms of the condition precedent are clear. No reasonable observer could have interpreted the Deed as anything other than an offer. The language of the document admits of only one meaning: compare Australian Broadcasting Commission v Australian Performing Right Association Ltd [1973] HCA 36 ; (1973) 129 CLR 99 (" ABC v APRA ") at 105-107 per Barwick CJ and 114-115 per Stephen J. The subjective views of the parties to the Deed are not relevant: see Pacific Carriers Ltd v BNP Paribas [2004] HCA 35 ; (2004) 218 CLR 451 (" Pacific Carriers ") at 461-462 per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ and Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52 ; (2004) 219 CLR 165 (" Toll ") at 179 per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ. Accordingly, the fact that Mr Rambaldi did not call the other parties to the Deed does not bear on the issue. 176 The LFA was a commercial contract. The High Court outlined the principles for construing such contracts in Pacific Carriers and Toll . In Pacific Carriers at 462 the High Court said that the process of construction "requires consideration not only of the text of the documents, but also the surrounding circumstances known to [the parties to the contract], and the purpose and object of the transaction": Pacific Carriers at 462. This approach was reaffirmed in Toll , where the High Court said at 179: "It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction ." (Citations omitted; emphasis added)


case_title: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52 ; (2004) 219 CLR 165


case_text: In the afternoon of 29 April 2005, Mr Spalla had asked Mr Rambaldi not to come to an agreement with the respondents without first consulting him. At no time that day, did Mr Rambaldi conclude an agreement with the respondents. Mr Spalla was notified of the respondents' offer at the close of business that day. At that point, he had seven days in which to satisfy Mr Rambaldi that Irlmond, with Mr Rambaldi as liquidator, should continue to pursue the primary proceeding and the appeals, alternatively, to make some other arrangement that would permit Irlmond to litigate its claims, though without Mr Rambaldi. It is true that it was not for Mr Spalla to decide whether to continue with or terminate Irlmond's participation in the primary proceeding. This decision was left with Mr Rambaldi, who might or might not act to secure his partners' consent. This was, however, in keeping with the LFA and the duty of a liquidator to act independently, in the best interests of the company and its creditors: compare Re Club Superstores Australia Pty Ltd (In Liquidation) (1993) 10 ACSR 730 at 734-735 per Thomas J (and the cases there cited); Re Allebart Pty Ltd (In Liquidation) and the Companies Act [1971] 1 NSWLR 25 at 28 per Street J; and AR Keay, McPherson The Law of Company Liquidation (4 th ed, LBC information Services, 1999) at 291. In any event the effect of the offer was made clear at the meeting at the coffee shop on the Monday morning. Mr Rambaldi acted consistently with this in the days prior to 6 May 2005.


case_title: Re Allebart Pty Ltd (In Liquidation) and the Companies Act [1971] 1 NSWLR 25


case_title: Dew v Richardson [1999] QSC 192

case_text: Finally, I turn to the issue of whether the settlement was so unfavourable for Irlmond that it evidences that Mr Rambaldi acted in bad faith. Absent any other evidence of bad faith, the question must be whether or not, in executing the Deed and ultimately settling Irlmond's claim, Mr Rambaldi acted in a way that no reasonable liquidator could have acted: compare Bridgeport at 161-162. In this context, it must be borne in mind that courts are especially reluctant to second-guess settlement decisions. Public policy favours settlement. As Chesterman J said in Dew v Richardson [1999] QSC 192 at [42] , settlement helps "reduce the level of disharmony in society and conserve the resources both of litigants themselves and the community which funds the courts." Others have seen the virtue of settlement in promoting certainty that permits litigants to deal with their affairs in an orderly way looking to the future. For example, in Kelley v Corston [1998] 3 WLR 246 at 259, Judge LJ said: "Every lawyer in practice and every judge knows that there is no such thing as the case which is bound to succeed. Experience shows that cases with the brightest prospects of success somehow fail and it is difficult to underestimate the value of the certainty provided by a settlement as opposed to the continuing risks of litigation through to judgment".


case_title: Kelley v Corston [1998] 3 WLR 246


case_outcome: cited

case_text: The applicants submit however that the "context otherwise requires" that the term "Leased Premises", when used in the option provision in special cl 11(2) of the Schedule, should not be given its defined meaning if that meaning is construed to refer to part only of the Land. Such a construction, it submits, would impute to the parties the absurd and commercially unreasonable intention of recording the grant of a void option. They point to the traditional doctrine that courts should be astute to adopt a construction that will preserve the validity of the contract: Meehan v Jones [1982] HCA 52 ; (1982) 149 CLR 571 at 589, and to prefer a construction which will encourage performance rather than avoidance of contractual relations: Ankar Pty Ltd & Arnick Holdings Ltd v National Westminster Finance (Australia) Ltd [1987] HCA 15 ; (1987) 162 CLR 549 at 556-557; Westminster Properties Pty Ltd v Comco Constructions Pty Ltd (1991) 5 WAR 191 at 202. The Contract to Lease and the Lease each created a valid demise in that a demise of part of the Land for less than 20 years did not contravene the subdivision provisions of the Planning Act : s 136(1)(a). However the option to purchase would contravene s 136(1)(d) of the Planning Act and hence would be void, if it is construed as referrable to a purchase of part only of the Land. The proper construction, in that context, the applicants submit, is that the option is in respect of the whole of the Land.


case_text: The process of construction normally requires a consideration of not only the text and context of the written agreement, but also the surrounding circumstances known to the parties, as well as the purpose and object of the transaction: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52 ; (2004) 219 CLR 165 at 179, [40] ; Pacific Carriers Ltd v BNP Paribas [2004] HCA 35 ; (2004) 218 CLR 451 at 461-2. The "history" of a contract is part of the context in which a contract takes its meaning: International Air Transport Association v Ansett Australia Holdings Ltd [2008] HCA 3 ; (2008) 242 ALR 47 at [8] . Even where there is no linguistic ambiguity extrinsic evidence may be considered in aid of construction: Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd [2006] FCAFC 144 ; (2006) 156 FCR 1 , particularly at 49-53. Ambiguity is not confined to a competition between two meanings. It extends to meanings which, for example, are doubtful, uncertain, or indistinct and which therefore require a consideration not only of text but also context: Colby Corporation Pty Ltd v Commissioner of Taxation (2008) 165 FCR 133 at [42]-[43]. It may also be admitted to identify the subject matter of a contract, its nature and scope: Codelfa Constructions Proprietary Limited v State Rail Authority (NSW) [1982] HCA 24 ; (1982) 149 CLR 337 at 349. The meaning arrived at in this way may not be the most obvious or most grammatically correct: Australian Broadcasting Commission v Australian Performing Right Association Limited [1973] HCA 36 ; (1973) 129 CLR 99 at 109. Words may generally be supplied, omitted, or corrected in an instrument, where it is clearly necessary in order to avoid absurdity or inconsistency: Fitzgerald v Masters [1956] HCA 53 ; (1956) 95 CLR 420 at 426-427 and 437.


case_title: Bond v Barry (2007) 73 IPR 490

case_text: Success under s 31A does not require a demonstration that the case is hopeless or bound to fail. The following principles are of general application to an application under s 31A: (a) the Court must be very cautious not to do a party an injustice by summarily dismissing proceedings; (b) the Court ought not dismiss a claim based on a predictive assessment of prospects, where it is possible that if the claim went to trial, it may succeed; (c) in a case where evidence can give colour and content to allegations, and where questions of fact and degree are important, the Court should be more reluctant to dismiss a proceeding on the face of a pleading; (d) it is not Parliament's intention to require the Court to engage in lengthy and elaborate trials on an interlocutory basis for the purposes of determining whether or not a proceeding has no reasonable prospects of success. It may be necessary for the opposing party to provide no more than an outline of evidence, sufficient to show that there is a genuine dispute, to prevent the summary application becoming a trial; (e) if there is a real issue of fact or law to be decided, and the rights of the parties depend upon it, it is obviously appropriate that the matter goes to trial. It cannot be said that where there is a real factual dispute and that factual dispute must be resolved to determine whether the claim succeeds that there is 'no reasonable prospect of success'; (g) it ought not be used to shut out proceedings where, on a proposition of law, there may be room for doubt. On questions of law, an inquiry as to their merit should not be for the purpose of resolving them and also not simply to determine whether the argument is hopeless, but in order to decide if it is sufficiently strong to warrant a trial; (h) evidence of an ambivalent character will usually be sufficient to amount to reasonable prospects; (i) in determining if there are real issues of fact in issue so as to preclude summary judgment the courts must draw all reasonable inferences in favour of the non-moving party. See Genovese v BGC Construction Pty Ltd [2007] FCA 923 at [5] ; Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd [2006] FCA 1352 ; (2006) 70 IPR 146 at [42] - [48] ; Hicks v Ruddock [2007] FCA 299 ; (2007) 156 FCR 574 at [13] ; Bond v Barry (2007) 73 IPR 490 at [46]; Commonwealth Bank of Australia v ACN 000 247 601 Pty Ltd (in Liq) (formerly Stanley Thompson Valuers Pty Ltd) [2006] FCA 1416 at [30] ; Fortron Automotive Treatments Pty Ltd v Jones (No 2) [2006] FCA 1401 at [21] ; Jefferson Ford Pty Ltd v Ford Motor Company of Australia Limited [2008] FCAFC 60. .


case_text: Section 31A lowers the bar for obtaining summary judgment: White Industries Australia Ltd v Commissioner of Taxation [2007] FCA 511 ; (2007) 160 FCR 298. The second reading speech of the Migration Litigation Reform Bill 2005 which introduced s 31A stated that its purpose was to strengthen "the power of the courts to deal with unmeritorious matters by broadening the grounds on which federal courts can summarily dispose of unsustainable cases": Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd [2006] FCA 1352 ; (2006) 70 IPR 146 at [45] ; Jefferson Ford Pty Ltd v Ford Motor Company of Australia Ltd [2008] FCAFC 60 at [124] . 6 Success under s 31A does not require a demonstration that the case is hopeless or bound to fail. The following principles are of general application to an application under s 31A: (a) the Court must be very cautious not to do a party an injustice by summarily dismissing proceedings; (b) the Court ought not dismiss a claim based on a predictive assessment of prospects, where it is possible that if the claim went to trial, it may succeed; (c) in a case where evidence can give colour and content to allegations, and where questions of fact and degree are important, the Court should be more reluctant to dismiss a proceeding on the face of a pleading; (d) it is not Parliament's intention to require the Court to engage in lengthy and elaborate trials on an interlocutory basis for the purposes of determining whether or not a proceeding has no reasonable prospects of success. It may be necessary for the opposing party to provide no more than an outline of evidence, sufficient to show that there is a genuine dispute, to prevent the summary application becoming a trial; (e) if there is a real issue of fact or law to be decided, and the rights of the parties depend upon it, it is obviously appropriate that the matter goes to trial. It cannot be said that where there is a real factual dispute and that factual dispute must be resolved to determine whether the claim succeeds that there is 'no reasonable prospect of success'; (g) it ought not be used to shut out proceedings where, on a proposition of law, there may be room for doubt. On questions of law, an inquiry as to their merit should not be for the purpose of resolving them and also not simply to determine whether the argument is hopeless, but in order to decide if it is sufficiently strong to warrant a trial; (h) evidence of an ambivalent character will usually be sufficient to amount to reasonable prospects; (i) in determining if there are real issues of fact in issue so as to preclude summary judgment the courts must draw all reasonable inferences in favour of the non-moving party. See Genovese v BGC Construction Pty Ltd [2007] FCA 923 at [5] ; Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd [2006] FCA 1352 ; (2006) 70 IPR 146 at [42] - [48] ; Hicks v Ruddock [2007] FCA 299 ; (2007) 156 FCR 574 at [13] ; Bond v Barry (2007) 73 IPR 490 at [46]; Commonwealth Bank of Australia v ACN 000 247 601 Pty Ltd (in Liq) (formerly Stanley Thompson Valuers Pty Ltd) [2006] FCA 1416 at [30] ; Fortron Automotive Treatments Pty Ltd v Jones (No 2) [2006] FCA 1401 at [21] ; Jefferson Ford Pty Ltd v Ford Motor Company of Australia Limited [2008] FCAFC 60. .


case_title: Codelfa Constructions Proprietary Limited v State Rail Authority (NSW) [1982] HCA 24 ; (1982) 149 CLR 337


case_title: Colby Corporation Pty Ltd v Commissioner of Taxation (2008) 165 FCR 133


case_title: Commonwealth Bank of Australia v ACN 000 247 601 Pty Ltd (in Liq) (formerly Stanley Thompson Valuers Pty Ltd) [2006] FCA 1416


case_title: Fitzgerald v Masters [1956] HCA 53 ; (1956) 95 CLR 420


case_title: Fortron Automotive Treatments Pty Ltd v Jones (No 2) [2006] FCA 1401


case_title: Genovese v BGC Construction Pty Ltd [2007] FCA 923


case_text: Success under s 31A does not require a demonstration that the case is hopeless or bound to fail. The following principles are of general application to an application under s 31A: (a) the Court must be very cautious not to do a party an injustice by summarily dismissing proceedings; (b) the Court ought not dismiss a claim based on a predictive assessment of prospects, where it is possible that if the claim went to trial, it may succeed; (c) in a case where evidence can give colour and content to allegations, and where questions of fact and degree are important, the Court should be more reluctant to dismiss a proceeding on the face of a pleading; (d) it is not Parliament's intention to require the Court to engage in lengthy and elaborate trials on an interlocutory basis for the purposes of determining whether or not a proceeding has no reasonable prospects of success. It may be necessary for the opposing party to provide no more than an outline of evidence, sufficient to show that there is a genuine dispute, to prevent the summary application becoming a trial; (e) if there is a real issue of fact or law to be decided, and the rights of the parties depend upon it, it is obviously appropriate that the matter goes to trial. It cannot be said that where there is a real factual dispute and that factual dispute must be resolved to determine whether the claim succeeds that there is 'no reasonable prospect of success'; (g) it ought not be used to shut out proceedings where, on a proposition of law, there may be room for doubt. On questions of law, an inquiry as to their merit should not be for the purpose of resolving them and also not simply to determine whether the argument is hopeless, but in order to decide if it is sufficiently strong to warrant a trial; (h) evidence of an ambivalent character will usually be sufficient to amount to reasonable prospects; (i) in determining if there are real issues of fact in issue so as to preclude summary judgment the courts must draw all reasonable inferences in favour of the non-moving party. See Genovese v BGC Construction Pty Ltd [2007] FCA 923 at [5] ; Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd [2006] FCA 1352 ; (2006) 70 IPR 146 at [42] - [48] ; Hicks v Ruddock [2007] FCA 299 ; (2007) 156 FCR 574 at [13] ; Bond v Barry (2007) 73 IPR 490 at [46]; Commonwealth Bank of Australia v ACN 000 247 601 Pty Ltd (in Liq) (formerly Stanley Thompson Valuers Pty Ltd) [2006] FCA 1416 at [30] ; Fortron Automotive Treatments Pty Ltd v Jones (No 2) [2006] FCA 1401 at [21] ; Jefferson Ford Pty Ltd v Ford Motor Company of Australia Limited [2008] FCAFC 60. . 31 I do not think that it can be said that the applicants have no reasonable prospects of success of demonstrating that the proper construction of the option in the Lease is as they contend, aided by a consideration of the above extrinsic circumstances. There are real issues of fact and law to be determined. The rights of the parties depend upon their resolution. In these circumstances it is appropriate that the matter should go to trial: Hicks v Ruddock at [13]. 32 Harbeth contends that there is no evidence to support the pleas that Mr Healey was its agent to prepare and negotiate with potential purchasers the terms of the documents, to effect the sale of the business and the lease including the option. The second and third respondents submit that neither of them were agents to effect the commercial relations between Dandaven and Harbeth. This, they say, was the function of Performance Business Brokers. Mr Pannekoek, in his affidavit sworn on 21 December 2007 at [6] said that, in January 2006 he arranged for the Signs Business to be advertised for sale through Russell Lyon of Performance Business Brokers and that subsequently he instructed Mr Healey to assist. He did not explain what assistance it was that Mr Healey was to render. He said that Mr Healey provided accounting services to Harbeth and related entities as a consultant to PA (2004) Pty Ltd, the third respondent. In his affidavit sworn 10 March 2008 at [6.2] Mr Pannekoek said that PA (2004) acted as Harbeth's settlement agent. 33 The emails of 13 February 2006 from Mr Healey to each of Mr Reynolds and Mr Pannekoek concerned the Contract to Lease. The contents of each, in my opinion, arguably, is evidence that he, or by implication PA (2004), to which he consulted, acted as agent for Harbeth in relation, at least, to the Contract to Lease as pleaded by the applicants. Arguably, any such agency may extend to the formation of the Lease including the option. The Contract to Lease was inextricably tied up with the Lease and both were interrelated with the agreement for the sale of the business. Accordingly there are questions of fact and law as to the allegations of agency, which will require further exploration at trial. This is sufficient to overcome the dismissal application on this ground.


case_title: International Air Transport Association v Ansett Australia Holdings Ltd [2008] HCA 3 ; (2008) 242 ALR 47


case_text: Section 31A lowers the bar for obtaining summary judgment: White Industries Australia Ltd v Commissioner of Taxation [2007] FCA 511 ; (2007) 160 FCR 298. The second reading speech of the Migration Litigation Reform Bill 2005 which introduced s 31A stated that its purpose was to strengthen "the power of the courts to deal with unmeritorious matters by broadening the grounds on which federal courts can summarily dispose of unsustainable cases": Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd [2006] FCA 1352 ; (2006) 70 IPR 146 at [45] ; Jefferson Ford Pty Ltd v Ford Motor Company of Australia Ltd [2008] FCAFC 60 at [124] . 6 Success under s 31A does not require a demonstration that the case is hopeless or bound to fail. The following principles are of general application to an application under s 31A: (a) the Court must be very cautious not to do a party an injustice by summarily dismissing proceedings; (b) the Court ought not dismiss a claim based on a predictive assessment of prospects, where it is possible that if the claim went to trial, it may succeed; (c) in a case where evidence can give colour and content to allegations, and where questions of fact and degree are important, the Court should be more reluctant to dismiss a proceeding on the face of a pleading; (d) it is not Parliament's intention to require the Court to engage in lengthy and elaborate trials on an interlocutory basis for the purposes of determining whether or not a proceeding has no reasonable prospects of success. It may be necessary for the opposing party to provide no more than an outline of evidence, sufficient to show that there is a genuine dispute, to prevent the summary application becoming a trial; (e) if there is a real issue of fact or law to be decided, and the rights of the parties depend upon it, it is obviously appropriate that the matter goes to trial. It cannot be said that where there is a real factual dispute and that factual dispute must be resolved to determine whether the claim succeeds that there is 'no reasonable prospect of success'; (g) it ought not be used to shut out proceedings where, on a proposition of law, there may be room for doubt. On questions of law, an inquiry as to their merit should not be for the purpose of resolving them and also not simply to determine whether the argument is hopeless, but in order to decide if it is sufficiently strong to warrant a trial; (h) evidence of an ambivalent character will usually be sufficient to amount to reasonable prospects; (i) in determining if there are real issues of fact in issue so as to preclude summary judgment the courts must draw all reasonable inferences in favour of the non-moving party. See Genovese v BGC Construction Pty Ltd [2007] FCA 923 at [5] ; Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd [2006] FCA 1352 ; (2006) 70 IPR 146 at [42] - [48] ; Hicks v Ruddock [2007] FCA 299 ; (2007) 156 FCR 574 at [13] ; Bond v Barry (2007) 73 IPR 490 at [46]; Commonwealth Bank of Australia v ACN 000 247 601 Pty Ltd (in Liq) (formerly Stanley Thompson Valuers Pty Ltd) [2006] FCA 1416 at [30] ; Fortron Automotive Treatments Pty Ltd v Jones (No 2) [2006] FCA 1401 at [21] ; Jefferson Ford Pty Ltd v Ford Motor Company of Australia Limited [2008] FCAFC 60. . 30 The respondents contend however that, whatever be the position in relation to the Contract to Lease, none of this extrinsic material is even arguably relevant to the construction of the option in the Lease itself which they say is clear in its terms and was drawn by the applicants' solicitors. I do not consider that this necessarily follows. The context, background or history to the Contract to Lease may arguably, in my view, also be relevant to a consideration of what is intended by the option in the Lease. The Contract for Lease, as I observed earlier, by clause 23 contemplated that any Lease would contain the terms of the offer in the Contract to Lease. Both are inter-related in this sense. There was no evidence as to what instructions were given by the applicants to their solicitors for the preparation of the Lease. It is reasonable to infer however that they were provided with the Contract to Lease: Jefferson Ford Pty Ltd v Ford Motor Co of Australia Ltd [2008] FCAFC 60 at [132] per Gordon J. It is hardly surprising then that any ambiguity, absurdity or shortcoming in the Contract to Lease, could be repeated in the Lease. Additionally, in respect to the Lease, relevant extrinsic evidence would arguably also include a consideration of the conversations which, on the applicants' case, took place on 3 April 2006, concerning payment of rates and taxes as well as the content of the settlement statements sent to Mr Reynolds on 3 and 4 April 2006.


case_title: Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd [2006] FCAFC 144 ; (2006) 156 FCR 1


case_title: Pacific Carriers Ltd v BNP Paribas [2004] HCA 35 ; (2004) 218 CLR 451


case_title: Westminster Properties Pty Ltd v Comco Constructions Pty Ltd (1991) 5 WAR 191


case_text: Section 31A lowers the bar for obtaining summary judgment: White Industries Australia Ltd v Commissioner of Taxation [2007] FCA 511 ; (2007) 160 FCR 298. The second reading speech of the Migration Litigation Reform Bill 2005 which introduced s 31A stated that its purpose was to strengthen "the power of the courts to deal with unmeritorious matters by broadening the grounds on which federal courts can summarily dispose of unsustainable cases": Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd [2006] FCA 1352 ; (2006) 70 IPR 146 at [45] ; Jefferson Ford Pty Ltd v Ford Motor Company of Australia Ltd [2008] FCAFC 60 at [124] .


case_title: Expile Pty Limited v Jabb's Excavations Pty Limited (2004) 22 ACLC 667

case_text: Whilst costs normally follow the event the award of costs is almost invariably in the discretion of the court (see s 43(2) of the Federal Court of Australia Act 1976 (Cth) and Order 62 r15 of the Federal Court Rules . See also Expile Pty Limited v Jabb's Excavations Pty Limited ('Expile') (2004) 22 ACLC 667 at 675 [33]). 24 In the foregoing circumstances the plaintiff instituted the current proceedings on 21 April 2006 with a view to securing the right to vote at the adjourned meeting of creditors on 23 June 2006 for an amount in excess of $1.4m. 25 By an amended originating process filed in Court on 11 May 2006 the plaintiff sought, inter alia, a declaration that the administrator's rejection or partial rejection of the plaintiff's proof of debt 'made on 7 April 2006' was invalid, an order that the plaintiff's proof of debt be admitted in full or, alternatively, an order that the administrator's rejection of the plaintiff's proof of debt be modified or varied so as to allow the plaintiff's proof of debt in whole or in part as the court may deem appropriate. 74 In FAI Workers Compensation (NSW) Limited v Philkor Builders Pty Limited ('Philkor') (1996) 20 ACSR 592, Young J, as his Honour then was, held that the prospect of a plaintiff securing an entitlement to costs in winding up proceedings under the Corporations Law did not enable such a plaintiff to contend that a contingent debt was payable by the company to the plaintiff in circumstances where, before a winding up order was made, the company was placed in administration and a deed of company arrangement was thereafter executed following a resolution of the majority of creditors of the company that it should do so. Such resolution had not been supported by the plaintiff. This decision is quite unexceptional and has no real bearing on the resolution of the issues in the present case. As his Honour said at 597: 'As under s 466 there is a personal obligation to bear one's own costs of a winding up petition until the winding up order is made and then a statutory right to get costs which commences as at that day, it does not appear to me that a claim for costs before the order is made can be classed as a contingent debt.' (see also Expile at 673-5 and McDonald at 474-5) 75 After referring to Philcor and Expile Barrett J said in respect of the costs of winding up proceedings in McDonald at 474-5 [45]-[46]: '... The preferable analysis ... is that it is the state of insolvency found by the court to exist that forms the basis of the winding up order. The applicant's debt is the source of the applicant's standing to seek a winding up order. That debt may also cause a presumption of insolvency to apply via the statutory demand process provided for in Div 2 of Pt 5.4 for the purposes of the winding up application. But even then, it is the court's positive decision that insolvency exists, rather than the particular circumstance of non-payment of the applicant's debt, that forms the basis for the exercise of the jurisdiction to make a winding up order.' 88 In Expile at 675, Palmer J distinguished claims for costs against a company arising incidentally to a claim for damages or other relief against wrongdoing from costs incurred in an application to wind a company up for insolvency. His Honour found it unnecessary to explore the nature of a costs claim against a company arising incidentally to a claim for damages or other relief against wrongdoing. However he did observe that substantive claims depend upon the existence of legal rights, whilst awards of costs are always in the discretion of the Court, even though the way in which the discretion will be exercised will be fairly predictable in most cases. 89 Palmer J addressed what was meant by 'future claims' and 'contingent claims' in s 553(1) of the Act. At 675 [37] his Honour said: 'A future claim is distinguishable from a contingent claim in that, while both are founded on an obligation existing as at the commencement of the winding up ... a future claim will arise at some time thereafter while a contingent claim may arise. A typical example of a future claim is a claim for rent which will become due in the future under a lease which is in existence at the commencement of the winding up.' (emphasis in original)


case_text: Upon the matter being called for hearing on 22 May 2006 the administrator sought and was granted leave to file in Court an interlocutory process in which he now seeks directions pursuant to s 447D of the Act as to whether in the circumstances of the making of the costs orders by the Full Court on 19 May 2006 he would be justified in admitting the plaintiff to proof for the purpose of voting at the adjourned creditors meeting in the amount claimed in the 'costs Proof of Debt dated 6 April 2006 or in some other amount.' (see generally Lofthouse, Re Riverside Nursing Care Pty Limited (Subject to Deed of Company Arrangement) (2004) 22 ACLC 215 per Finkelstein J at [2] as to the effect of directions under s 447D) 27 In the light of the administrator's application the parties have agreed that both the plaintiff's application and the administrator's interlocutory application should be heard together with evidence in one matter being evidence in the other. 28 The parties have agreed that the issues now requiring determination are: (a) Whether the plaintiff's proof of debt should be admitted for the purposes of voting at the adjourned creditors' meeting on 23 June 2006 in respect of the costs of the earlier proceedings for which the Full Court's orders of 19 May 2006 provide, in addition to the amount of $1.4m (the First Question). (b) If the said proof of debt should not be so admitted, should an order now be made under section 447A of the Act which would cause the Act to operate so as to allow the plaintiff to vote in respect of its costs entitlement (the Second Question).


case_text: The 'creditors' who may pass a resolution of one of the types mentioned above at the decision meeting are not defined in the Act. The traditional approach has been to treat as creditors for the purposes of s 439C those persons who would be entitled to prove in a winding up of the company in accordance with s 553 of the Act (see Brash Holdings Limited (Administrator Appointed) v Katile Pty Limited (1994) 13 ACSR 504 per Brooking, J D Phillips and Hansen JJ at 513; see also Selim v McGrath ('Selim') [2003] NSWSC 927 ; (2003) 47 ACSR 537 per Barrett J at 554-5 and in particular [67]-[68]). Section 553(1) provides as follows: '553(1) Subject to this Division, in every winding up, all debts payable by, and all claims against, the company (present or future, certain or contingent, ascertained or sounding only in damages), being debts or claims the circumstances giving rise to which occurred before the relevant date, are admissible to proof against the company.'


case_title: Selim v McGrath [2003] NSWSC 927 ; (2003) 47 ACSR 537

case_text: The 'creditors' who may pass a resolution of one of the types mentioned above at the decision meeting are not defined in the Act. The traditional approach has been to treat as creditors for the purposes of s 439C those persons who would be entitled to prove in a winding up of the company in accordance with s 553 of the Act (see Brash Holdings Limited (Administrator Appointed) v Katile Pty Limited (1994) 13 ACSR 504 per Brooking, J D Phillips and Hansen JJ at 513; see also Selim v McGrath ('Selim') [2003] NSWSC 927 ; (2003) 47 ACSR 537 per Barrett J at 554-5 and in particular [67]-[68]). Section 553(1) provides as follows: '553(1) Subject to this Division, in every winding up, all debts payable by, and all claims against, the company (present or future, certain or contingent, ascertained or sounding only in damages), being debts or claims the circumstances giving rise to which occurred before the relevant date, are admissible to proof against the company.' 54 In Selim Barrett J observed at 548 [39]: '... there are significant differences between proof of debts and claims for voting purposes in relation to Pt 5.3A meetings and proof of debts and claims for the purposes of entitlement upon a distribution in a winding up.' 55 His Honour proceeded to deal extensively with the issue of 'Proof of debts in voluntary administration', 'Decided cases on regs 5.6.23 and 5.6.26' and 'Analysis of regs 5.6.23 and 5.6.26' in his reasons for judgment at 557-566 (see [78]-[106]). 56 The regulation making power contained in the Act is to be found in s 1364. That section relevantly provides as follows: '1364(1) The Governor-General may make regulations prescribing matters: ... (b) necessary or convenient to be prescribed by such regulations for carrying out or giving effect to this Act. (2) Without limiting subsection (1), the regulations may make provision: ... (f) for or in relation to the convening of, conduct of, and procedure and voting at, meetings of creditors, ... and generally regulating the conduct of, and procedure at, any such meeting; and ...' 57 In accordance with the regulation making power, regulations have, relevantly, been made which are to be found in Part 5.6 of the Corporations Regulations 2001 ('the Regulations'). 58 In relation to meetings of creditors convened under Part 5.3A of the Act regulations 5.6.12 to 5.6.36A are to apply to the convening and conduct of and voting at such meetings by virtue of subregulation 5.6.11(2). Subregulation 5.6.11(2) is expressed to be 'Subject to subregulation (3)'. By virtue of subregulation 5.6.11(3) the relevant regulations do not apply to meetings of creditors convened under Part 5.3A if the regulations are inconsistent with a particular requirement of the Act, the regulations or the rules [in this case the Federal Court Rules ]. 59 Whilst regulation 5.6.17(1)(c) of the Regulations provides for meetings convened by administrators to be chaired by the relevant administrator 'or a person nominated by [the administrator]' it is clear that by virtue of regulation 5.6.11(3)(c) of the Regulations an administrator may not nominate another person to chair a meeting of creditors under s 439C of the Act. Section 439B(1) of the Act makes it clear that decision meetings, convened under s 439A, at which resolutions may be passed under s 439C, must be presided over by the relevant administrator. 60 Plainly, the Regulations cannot be used to determine what is meant by the expression 'the creditors' in s 439C of the Act. However under the Regulations the rights of creditors to vote at decision meetings may be restricted. Hence the relevance, in particular, of regulations 5.6.23 and 5.6.26. 61 In relation to the taking of polls at meetings of creditors, regulation 5.6.21(2) provides: '5.6.21(2) A resolution is carried if: (a) a majority of the creditors voting ... vote in favour of the resolution; and (b) the value of the debts owed by the corporation to those voting in favour of the resolution is more than half the total debts owed to all the creditors voting ... .' 62 In relation to creditors who may vote, regulation 5.6.23 of the Regulations relevantly provides as follows: '5.6.23(1) A person is not entitled to vote as a creditor at a meeting of creditors unless: (a) his or her debt or claim has been admitted wholly or in part by the liquidator or administrator of a company under administration ...; or (b) he or she has lodged, with the chairperson of the meeting or with the person named in the notice convening the meeting as the person who may receive particulars of the debt or claim: (i) those particulars; or (ii) if required a formal proof of the debt or claim. (2) A creditor must not vote in respect of: (a) an unliquidated debt; or (b) a contingent debt; or (c) an unliquidated or a contingent claim; or (d) a debt the value of which is not established; unless a just estimate of its value has been made. ...' 64 As Barrett J observed in Selim at 558 [81]: 'It is clear, despite these unqualified references to proofs being admitted or rejected [references to proofs in regulation 5.6.26], that a concept of partial admission of a debt exists.' 65 Subject to the foregoing observations the analysis of Barrett J in respect of proofs of debt for voting purposes in voluntary administrations as recorded in Selim and referred to above should, in general terms, be followed. Given their length they have not been repeated in these reasons.


case_text: When an administrator has been appointed to a company, whether followed by a deed of company arrangement or not, provable debts are those where the circumstances giving rise to them occurred before the date of commencement of the administration (per Cohen J in Re Crawford House Press Pty Limited (1995) 17 ACSR 295 at 298). So also, with provable claims.