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  • Unreported Judgment

Robson v Mine & Quarry Equipment International Ltd

 

[2012] QSC 13

 

SUPREME COURT OF QUEENSLAND

  

PARTIES:

FILE NO/S:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

DELIVERED ON:

10 February 2012

DELIVERED AT:

Brisbane 

HEARING DATE:

2 and 3 February 2012

JUDGE:

Byrne SJA

ORDER:

The application is dismissed

CATCHWORDS:

CORPORATIONS - WINDING UP – WINDING UP IN INSOLVENCY – WHAT CONSTITUTES INSOLVENCY – Where the applicant seeks that the respondent be wound up in insolvency – where debts are not likely to fall due for payment in the immediate future –  Whether the respondent is able to pay all its debts as and when they become due and payable

Corporations Act 2001 (Cth), s 95A,

Bentley Smythe Pty Ltd v Anton Fabrications (NSW) Pty Ltd (2011) 248 FLR 384

Bonnyview Pty Ltd v David Deane & Associates Pty Ltd (2007) 213 FLR 388

Box Valley Pty Ltd v Kidd (2006) 24 ACLC 471

Coates Hire Operations Pty Limited v D-Link Homes Pty Limited [2011] NSWSC 1279

The Bell Group Ltd (In Liq) v Westpac Banking Corporation (No 9) (2008) 39 WAR 1

COUNSEL:

A J H Morris QC with J W Peden for the applicant

D de Jersey for the respondent

SOLICITORS:

Russells Law for the Applicant

Flower and Hart Lawyers for the Respondent

[1] Gary Robson is the sole director and shareholder of Mine & Quarry Equipment International Ltd (“MQEI”).  His brother, Charles, is the applicant for a winding up order on the basis that MQEI is insolvent because it cannot pay all its debts as and when they become due and payable.[1] 

[2] MQEI owes the applicant money pursuant to costs orders.  The applicant contends for more than $36,000; MQEI for somewhat less than $33,000.  The difference is immaterial.  More than $30,000 was paid into MQEI’s solicitors’ trust account so that the funds can be applied towards discharging the debt.  MQEI has about $12,000 cash at bank. 

[3] MQEI is able to pay the costs.  It is also willing to do so.  The liability has not been discharged only because the applicant refuses to accept payment.

[4] MQEI owes others money which may well eventually become payable.  But not in the near term.[2]

[5] Sylvia Robson is Gary’s ex-wife.  He borrowed from her to fund litigation.  MQEI charged its assets to secure its guarantee of repayment of the loan. 

[6] Pursuant to the loan agreement and guarantee, MQEI furnished a list of stock over which it would give a fixed charge. 

[7] The loan is repayable on the earliest of: seven days after written demand; 30 days after “settlement of the proceeds of the litigation”; and “sale of the equipment in the list” of stock.

[8] Mrs Robson has not sought repayment.  The litigation has not been settled.  And although at least one item of the charged equipment has been sold, not all of it has been. 

[9] Mrs Robson does not contend that the sale of an item from the list triggers an obligation to repay; but the applicant does. 

[10] Many of the items of equipment in the stock list, if sold individually, would fetch much less than the more than $300,000 borrowed.  That suggests that the parties did not expect that the sale of one item made the loan immediately repayable.  Moreover, no extrinsic evidence was adduced to indicate that the parties intended that a single sale would render the entire borrowing repayable.

[11] The loan from Mrs Robson is not payable now[3].  Nor is it likely to fall due for payment in the near future. 

[12] Gary Robson and his ex-wife enjoy a good relationship.  They have spoken recently.  He is left with no reason to anticipate a request for repayment until after finalisation of litigation with his brother and the payment of costs that are yet to be claimed in a costs statement.  Assessment of the costs looks to be quite some time away.  And it is highly improbable that all the equipment in the list will be sold in the foreseeable future.

[13] MQEI’s financial statements show loan accounts for Hannover International Ltd ($356,069.81) and Minquep Australia Pty Ltd ($1,947.55).  Gary Robson controls those companies.  His own loan account stands at $1,870,646.15.  He deposes, however, that neither he nor Hannover will call on MQEI to repay “at any time in the foreseeable future”, which means that these loans are not debts that will fall due in the near future.[4]  There is more than enough ready cash to pay Minquep in the highly unlikely event that it seeks repayment. 

[14] MQEI was lent $30,000 by Mr Zanow.  A valuable crusher of MQEI’s has been transported to his yard.  It is to remain there until the loan is repaid.  Mr Zanow does not intend to call for repayment of the debt “on the basis that he has possession of the crusher”, as Gary Robson puts it.  So this debt will not become payable in the near term.

[15] There is a liability for GST.

[16] Last November, MQEI agreed to sell a crushing plant for $450,000.  A couple of $50,000 instalments of the price have been paid.  Payment of the balance is due within seven days of work being completed on the plant, which is expected within a few days.  The balance is more than sufficient to pay the GST[5] arising on the sale. 

[17] Next, the applicant points to a $530,000 contingent debt to him. 

[18] In October 2011, MQEI and Gary Robson were ordered to pay the applicant’s costs of their unsuccessful debt claim against him.  The same day, this applicant was ordered to pay Gary’s costs of separate proceedings against the applicant and his wife. 

[19] The applicant claims the $530,000 under his costs orders.

[20] Gary Robson deposes that his costs of prosecuting the claim that resulted in the costs order in his favour against the applicant exceeded $1.25 million. 

[21] When making those costs orders, the trial judge, who had managed the cases from about 2008, remarked that Gary’s costs would likely exceed the costs that he and MQEI had been ordered to pay to the applicant. 

[22] As Gary Robson is jointly liable with MQEI to pay the applicant’s costs, it is well on the cards that MQEI’s liability will be set off entirely by the costs the applicant will have to pay Gary at the end of the assessment processes. 

[23] So the applicant has not established that his costs claim will ever mature into a debt due for payment by MQEI.

[24] In any event, the applicant has not yet prepared a costs statement let alone submitted his claim for assessment.  A judgment debt may be quite some time hence.  In these circumstances, the applicant has not shown that MQEI’s unassessed costs liability[6] could crystallise into a debt falling due in the near term.

[25] The only debt now due and payable has not been paid because the applicant refuses to accept payment.

[26] The applicant has not established that the only debt falling due for payment in the near term – the GST – cannot be paid when due.

[27] Accordingly, the application is dismissed. 

Footnotes

[1] See s.95A Corporations Act 2001 (Cth).

[2] As to the time frame to be considered, see Bentley Smythe Pty Ltd v Anton Fabrications (NSW) Pty Ltd (2011) 248 FLR 384, 395-397 [44]-[49]; Coates Hire Operations Pty Limited v D-Link Homes Pty Limited [2011] NSWSC 1279, [68]; The Bell Group Ltd (In Liq) v Westpac Banking Corporation (No 9) (2008) 39 WAR 1, 152-153 [1123]-[1128].

[3] Which makes it unnecessary to consider whether MQEI’s potential liability under its guarantee is likely ever to become a debt: cf Box Valley Pty Ltd v Kidd (2006) 24 ACLC 471, 488 [59]-[60];

[4] See Coates Hire Operations, [69]-[82].

[5] $35,000 remains to be paid.

[6] cf Bonnyview Pty Ltd v David Deane & Associates Pty Ltd (2007) 213 FLR 388, 391-392.

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Editorial Notes

  • Published Case Name:

    Charles William Robson v Mine & Quarry Equipment International Ltd ARBN 079 139 683 [

  • Shortened Case Name:

    Robson v Mine & Quarry Equipment International Ltd

  • MNC:

    [2012] QSC 13

  • Court:

    QSC

  • Judge(s):

    Byrne SJA

  • Date:

    10 Feb 2012

Litigation History

No Litigation History

Appeal Status

No Status