James v Australia and New Zealand Banking Group Ltd [2018] NSWCA 41

James v Australia and New Zealand Banking Group Ltd [2018] NSWCA 41

After consent judgment was entered against the appellant under the guarantees, his rights as guarantor were merged in the judgment, so he could not later offset losses purportedly arising from the receivers' sale at undervalue; the rule against double recovery applies only to actual receipts, not hypothetical ones, and s 420A of the Corporations Act does not provide a post-judgment defence or remedy to a guarantor whose rights have merged into a judgment debt.

Parties
Appellant: David Andrew James; First Respondent: Australia and New Zealand Banking Group Ltd; Second Respondents: David Paul Merryweather and Greg Hall both in their personal capacities as Receivers and Managers of each of TLT Nominees Pty Ltd (Receivers and Managers Appointed) (in liquidation) and Newcastle Liquor Wholesalers Pty Ltd (Receivers and Managers Appointed) (in liquidation)
Jurisdiction
Australia
Judgment Date
15 March 2018
Procedural Posture
Appeal / Appeal From Dismissal of Application for Leave to Amend and Summary Dismissal of Proceedings
Outcome
Appeal dismissed with costs.
Legal Topics
Guarantees, Receivership, Power of Sale, Judgment, Double Recovery, Section 420 a Corporations Act, Set Off, Merger of Rights, Remedies
Commercial Law Equity Corporations Guarantees Receivership Power of Sale Judgment Double Recovery +4 more

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Parties

David Andrew James

Appellant

Australia and New Zealand Banking Group Ltd

First Respondent

David Paul Merryweather and Greg Hall both in their personal capacities as Receivers and Managers of each of TLT Nominees Pty Ltd (Receivers and Managers Appointed) (in liquidation) and Newcastle Liquor Wholesalers Pty Ltd (Receivers and Managers Appointed) (in liquidation)

Second Respondents

Procedural Posture

Appeal / Appeal From Dismissal of Application for Leave to Amend and Summary Dismissal of Proceedings

Legal Issues

  1. 1 Whether a guarantor against whom judgment has been entered can, in subsequent proceedings, have liability reduced due to a receiver's alleged sale of secured assets at undervalue after judgment;
  2. 2 Whether s 420A of the Corporations Act 2001 (Cth) provides a remedy or defence to a guarantor as judgment debtor;
  3. 3 Whether rule against double recovery applies to hypothetical or notional receipts by a creditor after judgment.

Ratio Decidendi

After consent judgment was entered against the appellant under the guarantees, his rights as guarantor were merged in the judgment, so he could not later offset losses purportedly arising from the receivers' sale at undervalue; the rule against double recovery applies only to actual receipts, not hypothetical ones, and s 420A of the Corporations Act does not provide a post-judgment defence or remedy to a guarantor whose rights have merged into a judgment debt.

Court Disposition

Appeal dismissed with costs.

Orders

  • Appeal dismissed with costs.