In the matter of Azmac Pty Limited (in liquidation) [2020] NSWSC 204

In the matter of Azmac Pty Limited (in liquidation) [2020] NSWSC 204

The Court found that an enforceable agreement existed between the parties binding Azmac to secure certain debts by equitable charge over its land in favour of the plaintiff; the agreement was sufficiently performed and security granted via caveat with Azmac’s consent. This created a proprietary equitable interest satisfying the statutory definition of 'security interest', rendering the plaintiff a secured creditor under s 51E of the Corporations Act 2001 (Cth); the liquidator’s rejection of the proof of debt was not proper.

Parties
Plaintiff: Stylequity Advisory (Australia) Pty Limited; First Defendant: Schon Condon as liquidator of Azmac Pty Limited; Second Defendant: Azmac Pty Limited (in liquidation)
Jurisdiction
Australia
Judgment Date
10 March 2020
Procedural Posture
Corporations – Review of Liquidator’s Rejection of Proof of Debt / First Instance Judgment on Appeal Under S 90 15 IPS
Outcome
Plaintiff declared a secured creditor of the second defendant within s 51E of the Corporations Act 2001 (Cth); the decision of the liquidator to reject the plaintiff's proof of debt reversed.
Legal Topics
Proof of Debt, Secured Creditor, Security Interest, Equitable Assignment, Novation, Equitable Charge, Business Records as Evidence, Contracts – Formation and Assignment
Corporations Law Equity Proof of Debt Secured Creditor Security Interest Equitable Assignment Novation Equitable Charge +2 more

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Parties

Stylequity Advisory (Australia) Pty Limited

Plaintiff

Schon Condon as liquidator of Azmac Pty Limited

First Defendant

Azmac Pty Limited (in liquidation)

Second Defendant

Procedural Posture

Corporations – Review of Liquidator’s Rejection of Proof of Debt / First Instance Judgment on Appeal Under S 90 15 IPS

Legal Issues

  1. 1 Whether the plaintiff is a secured creditor of Azmac Pty Limited within the meaning of s 51E of the Corporations Act 2001 (Cth)
  2. 2 Whether there was an enforceable agreement assigning or novating debt and securing it over Azmac’s land
  3. 3 Whether a valid security interest or equitable charge was created and performed

Ratio Decidendi

The Court found that an enforceable agreement existed between the parties binding Azmac to secure certain debts by equitable charge over its land in favour of the plaintiff; the agreement was sufficiently performed and security granted via caveat with Azmac’s consent. This created a proprietary equitable interest satisfying the statutory definition of 'security interest', rendering the plaintiff a secured creditor under s 51E of the Corporations Act 2001 (Cth); the liquidator’s rejection of the proof of debt was not proper.

Court Disposition

Plaintiff declared a secured creditor of the second defendant within s 51E of the Corporations Act 2001 (Cth); the decision of the liquidator to reject the plaintiff's proof of debt reversed.

Orders

  • Pursuant to section 90-15 of the Insolvency Practice Schedule (Corporations), Schedule 2 to the Corporations Act 2001 (Cth), the plaintiff is declared a secured creditor of the second defendant within the meaning of section 51E of the Corporations Act 2001 (Cth).