Schmitt v Carter [2014] FCA 1370

Schmitt v Carter [2014] FCA 1370

The plaintiff's claim for damages for breach of contract upon termination of employment is not a 'retrenchment payment' within s 556(1)(h), as it does not arise 'by virtue of' the contract but by virtue of its termination. Alternatively, if it were a retrenchment payment, it would be attributable only to a non-priority day, disqualifying it from priority status under s 556(1C). Therefore, the decision to classify the plaintiff as a Class C Creditor is confirmed.

Jurisdiction
Australia
Judgment Date
15 December 2014
Procedural Posture
Appeal / Judgment After Hearing
Outcome
Appeal dismissed. Decision confirmed.
Legal Topics
['employee Entitlements' 'corporate Insolvency' 'priority Payments' 'deed of Company Arrangement']
['corporations'] ['employee Entitlements' 'corporate Insolvency' 'priority Payments' 'deed of Company Arrangement']

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Procedural Posture

Appeal / Judgment After Hearing

Legal Issues

  1. 1 ["Whether the plaintiff's claim for unpaid salary is a 'retrenchment payment' within the meaning of s 556(1)(h) of the Corporations Act 2001 (Cth)" "Whether the plaintiff's claim is attributable to non-priority days under s 556(1C) of the Corporations Act 2001 (Cth)"]

Ratio Decidendi

The plaintiff's claim for damages for breach of contract upon termination of employment is not a 'retrenchment payment' within s 556(1)(h), as it does not arise 'by virtue of' the contract but by virtue of its termination. Alternatively, if it were a retrenchment payment, it would be attributable only to a non-priority day, disqualifying it from priority status under s 556(1C). Therefore, the decision to classify the plaintiff as a Class C Creditor is confirmed.

Court Disposition

Appeal dismissed. Decision confirmed.

Orders

  • ['The time for filing the originating process is extended to 15 September 2014.' "The defendants' decision to reject the plaintiff's proof of debt as a 'Class B Creditor' is confirmed." "The plaintiff is to pay the defendants' costs."]