Vickers, in the matter of Challenge Australian Dairy Pty Ltd (Administrators Appointed) (Receivers & Managers Appointed) [2011] FCA 10

Vickers, in the matter of Challenge Australian Dairy Pty Ltd (Administrators Appointed) (Receivers & Managers Appointed) [2011] FCA 10

The Court followed McEvoy rather than Re Office-Co Furniture and held that s 558(1) of the Corporations Act 2001 (Cth) does not apply to receivership. Because the relevant employees remained employed by the company under pre-existing contracts and the leave and superannuation entitlements in issue were not priority debts or amounts within s 433 and s 556 as at the receivers' appointment, s 433 did not oblige the receivers to pay them in priority to the secured creditor, and the receivers were not personally liable under s 419 for those entitlements during their appointment.

Jurisdiction
Australia
Judgment Date
13 January 2011
Procedural Posture
Corporations Application by Receivers and Managers for Declarations and Orders Under S 424 of the Corporations Act 2001 (cth) / Ex Parte Hearing of Originating Process; Reasons for Declarations and Orders Made on 20 December 2010
Outcome
Declarations and orders made in favour of the plaintiffs.
Legal Topics
['priority Payments Under S 433 of the Corporations Act 2001 (cth)' 'application of S 558(1) to Receivership' "receivers' Personal Liability Under S 419 of the Corporations Act 2001 (cth)" 'superannuation Contributions and Superannuation Guarantee Charges' 'annual Leave and Long Service Leave Entitlements']
['corporations' 'receivership' 'insolvency' 'employment Entitlements'] ['priority Payments Under S 433 of the Corporations Act 2001 (cth)' 'application of S 558(1) to Receivership' "receivers' Personal Liability Under S 419 of the Corporations Act 2001 (cth)" 'superannuation Contributions and Superannuation Guarantee Charges' 'annual Leave and Long Service Leave Entitlements']

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 1 Authorities cited 2 Party arguments 2 Amounts and remedies 1
Sign in to unlock

Procedural Posture

Corporations Application by Receivers and Managers for Declarations and Orders Under S 424 of the Corporations Act 2001 (cth) / Ex Parte Hearing of Originating Process; Reasons for Declarations and Orders Made on 20 December 2010

Legal Issues

  1. 1 ['Whether s 558(1) of the Corporations Act 2001 (Cth), entitling employees of a company in liquidation to payment under s 556 as if employment had terminated on the relevant date, applies to companies in receivership for the purposes of s 433.' "Whether s 433 of the Corporations Act 2001 (Cth) obliges the receivers to pay annual leave or long service leave entitlements under s 556(1)(g) to employees who remained employed after the receivers' appointment and whose entitlements had accrued but were not yet due and payable." "Whether s 433 of the Corporations Act 2001 (Cth) obliges the receivers to make payments under s 556(1)(e) in respect of superannuation contributions or superannuation guarantee charges becoming due and payable during the receivers' appointment." 'Whether the receivers are personally liable under s 419 of the Corporations Act 2001 (Cth) for superannuation contributions, superannuation guarantee charges, annual leave or long service leave entitlements to employees during their appointment.']

Ratio Decidendi

The Court followed McEvoy rather than Re Office-Co Furniture and held that s 558(1) of the Corporations Act 2001 (Cth) does not apply to receivership. Because the relevant employees remained employed by the company under pre-existing contracts and the leave and superannuation entitlements in issue were not priority debts or amounts within s 433 and s 556 as at the receivers' appointment, s 433 did not oblige the receivers to pay them in priority to the secured creditor, and the receivers were not personally liable under s 419 for those entitlements during their appointment.

Court Disposition

Declarations and orders made in favour of the plaintiffs.

Orders

  • ['Section 433 of the Corporations Act 2001 (Cth) does not oblige the plaintiffs to pay annual leave or long service leave entitlements pursuant to s 556(1)(g) to employees of the first defendant who remained employed after the appointment of the receivers on 28 October 2010 and to whom such entitlements had accrued...