French v Chapple [2001] NSWSC 574

French v Chapple [2001] NSWSC 574

Although the demand allowed a very short time, there was no evidence that EHAI could have paid the demand even on longer notice, so the demand was good and the appointment of Mr Nicols as receiver was valid. The deed of charge contained no power to appoint a person called a controller and conferred no powers on a controller, so Poignand's appointment and his purported sale of the patents were invalid. Chapple was not denied his contractual rights as chargee and lender merely because he was also a director, but his exercise of mortgagee powers would be restrained pending accounts only if EHAI paid $600,000 within forty five days.

Jurisdiction
Australia
Judgment Date
10 July 2001
Procedural Posture
Equity Division Proceedings Concerning a Deed of Charge, Appointment of a Receiver or Controller, Sale of Company Patents, Accounts, and Alleged Breach of Directors' Duties / Final Judgment; Parties to Bring in Short Minutes and Costs Reserved
Outcome
Appointment of Poignand as controller and his sale of the patents to be declared invalid; appointment of Nicols as receiver held valid; Chapple to be conditionally restrained from exercising powers as mortgagee in possession pending accounts if EHAI pays $600,000 within forty five days; costs to be argued.
Legal Topics
['loan Repayable on Demand' 'fixed and Floating Charge' 'appointment of Receiver' 'appointment of Controller' 'mortgagee in Possession' "director's Duties and Conflict of Interest" 'redemption and Accounts' 'sale of Charged Assets']
['mortgages' 'corporations Law' 'equity'] ['loan Repayable on Demand' 'fixed and Floating Charge' 'appointment of Receiver' 'appointment of Controller' 'mortgagee in Possession' "director's Duties and Conflict of Interest" 'redemption and Accounts' 'sale of Charged Assets']

Case Brief

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Procedural Posture

Equity Division Proceedings Concerning a Deed of Charge, Appointment of a Receiver or Controller, Sale of Company Patents, Accounts, and Alleged Breach of Directors' Duties / Final Judgment; Parties to Bring in Short Minutes and Costs Reserved

Legal Issues

  1. 1 ["Whether Chapple's demand for repayment on 3 August 2000 was valid despite allowing about four and a half hours for payment." 'Whether the appointment of Mr Nicols as receiver and manager under the deed of charge was valid.' 'Whether the appointment of Mr Poignand as controller was valid under the deed of charge.' "Whether Chapple, as a director and creditor, was precluded by conflict of interest or directors' duties from enforcing the charge." 'Whether Chapple should be restrained from exercising powers as mortgagee in possession pending accounts and on what condition.' 'Whether the purported sale of the patents by Poignand to EHA Media Pty Limited was valid.']

Ratio Decidendi

Although the demand allowed a very short time, there was no evidence that EHAI could have paid the demand even on longer notice, so the demand was good and the appointment of Mr Nicols as receiver was valid. The deed of charge contained no power to appoint a person called a controller and conferred no powers on a controller, so Poignand's appointment and his purported sale of the patents were invalid. Chapple was not denied his contractual rights as chargee and lender merely because he was also a director, but his exercise of mortgagee powers would be restrained pending accounts only if EHAI paid $600,000 within forty five days.

Court Disposition

Appointment of Poignand as controller and his sale of the patents to be declared invalid; appointment of Nicols as receiver held valid; Chapple to be conditionally restrained from exercising powers as mortgagee in possession pending accounts if EHAI pays $600,000 within forty five days; costs to be argued.

Orders

  • ['The parties should bring in short minutes to give effect to the reasons.' 'The short minutes should provide for declarations that the appointment of Poignand was invalid and the sale by him of the patents was invalid.' 'Chapple should be restrained from exercising powers as mortgagee in possession pending the...