Hausmann v Smith [2006] NSWSC 682

Hausmann v Smith [2006] NSWSC 682

The plaintiffs have not established a serious question to be tried concerning any breach of duty by the administrators or liquidators to obtain 'the best possible price.' Such a duty is not imposed by law; the relevant duty is to act with care, diligence and good faith, exercising commercial judgment. Courts will not interfere with such judgment unless it is completely unreasonable. The balance of convenience clearly favours the defendants, given exposure to claims from third parties and adequacy of remedies for the general body of creditors and shareholders if wrong occurs.

Parties
First Plaintiff: Judith Hausmann and Howard Studniberg as partners known as the H & J Partnership; Second Plaintiff: Ganeden Investments Pty Limited; Third Plaintiffs: Judith Hausmann and John Landerer; First Defendant: Michael John Morris Smith as Liquidator of ACN 099 115 698 Pty Limited; Second Defendant: ACN 099 115 698 Pty Limited
Jurisdiction
Australia
Judgment Date
03 July 2006
Procedural Posture
Corporations External Administration / Interlocutory Application for Injunction
Outcome
Interlocutory injunction refused; plaintiffs to pay defendants' costs on ordinary basis.
Legal Topics
External Administration, Duties of Administrators and Liquidators, Sale of Company Assets, Standing of Creditors and Shareholders, Interlocutory Injunctions
Corporations Law Equity External Administration Duties of Administrators and Liquidators Sale of Company Assets Standing of Creditors and Shareholders Interlocutory Injunctions

Case Brief

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Parties

Judith Hausmann and Howard Studniberg as partners known as the H & J Partnership

First Plaintiff

Ganeden Investments Pty Limited

Second Plaintiff

Judith Hausmann and John Landerer

Third Plaintiffs

Michael John Morris Smith as Liquidator of ACN 099 115 698 Pty Limited

First Defendant

ACN 099 115 698 Pty Limited

Second Defendant

Procedural Posture

Corporations External Administration / Interlocutory Application for Injunction

Legal Issues

  1. 1 Whether administrators/liquidators owed a duty to obtain 'the best possible price' for company assets
  2. 2 Whether serious question to be tried regarding administrators’ conduct in sale process
  3. 3 Balance of convenience for granting interlocutory injunction

Ratio Decidendi

The plaintiffs have not established a serious question to be tried concerning any breach of duty by the administrators or liquidators to obtain 'the best possible price.' Such a duty is not imposed by law; the relevant duty is to act with care, diligence and good faith, exercising commercial judgment. Courts will not interfere with such judgment unless it is completely unreasonable. The balance of convenience clearly favours the defendants, given exposure to claims from third parties and adequacy of remedies for the general body of creditors and shareholders if wrong occurs.

Court Disposition

Interlocutory injunction refused; plaintiffs to pay defendants' costs on ordinary basis.

Orders

  • Claim for interlocutory injunction dismissed.
  • Plaintiffs to pay defendants' costs of interlocutory application and hearing on ordinary basis.