CATCHWORDS

CORPORATIONS - claim against administrator personally for damage caused by removal of fixtures and fittings to premises - administrator not personally liable merely because acting as agent of the company at the time.

CORPORATIONS - definition of debt in s443A(1) of Corporations Law - debt used with its usual meaning - usual meaning does not include a claim for damages for a failure to comply with a covenant in a lease to make good damage caused to the leased premises.

Corporations Law ss 440D, 443A(1) and 443C

Molit (No 55) Pty Ltd v Lam Soon Australia Pty Ltd   (admin apptd) (1996) 135 ALR 280

Ogdens Ltd v Weinberg (1906) 95 LT 567

Young v Queensland Trustees Limited (1956) 99 CLR 560

Hawkins & Ors v Bank of China (1992) 26 NSWLR 562

Jelin Pty Ltd v Johnson & Anor (1987) 5 ACLC 463

Commonwealth Bank of Australia v Butterell (1994) 14 ACSR 343

No SG 3037 of 1995

MOLIT (NO.55) PTY LTD ACN 008 214 739  v  LAM SOON AUSTRALIA PTY LTD (ADMINISTRATOR APPOINTED) ACN 008 273 694 and PETER IVAN MACKS

[No.2]

Branson J

Adelaide

1 August 1996

IN THE FEDERAL COURT OF AUSTRALIA)

                                  )

SOUTH AUSTRALIA DISTRICT REGISTRY)    No SG 3037 of 1995

                                  )

GENERAL DIVISION                  )

                                  BETWEEN:

                                  MOLIT (NO.55) PTY LTD

                                  ACN 008 214 739

                                                   Applicant

                                  - and -

                                  LAM SOON AUSTRALIA PTY LTD

                                  (ADMINISTRATOR APPOINTED)

                                  ACN 008 273 694 and

                                  PETER IVAN MACKS

                                                 Respondents

                                           [No.2]

                      MINUTES OF ORDER

CORAM     Branson J

PLACE:    Adelaide

DATE:     1 August 1996

THE COURT ORDERS THAT:

1.   The claim in paragraph 6 of the amended application filed on 11 June 1996 for the Administrator to pay to the Applicant the sum of $92,900 for damage done or caused by the Administrator is dismissed.

Note:     Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA)

                                  )

SOUTH AUSTRALIA DISTRICT REGISTRY)    No SG 3037 of 1995

                                  )

GENERAL DIVISION                  )

                                  BETWEEN:

                                  MOLIT (NO.55) PTY LTD

                                  ACN 008 214 739

                                                   Applicant

                                  - and -

                                  LAM SOON AUSTRALIA PTY LTD

                                  (ADMINISTRATOR APPOINTED)

                                  ACN 008 273 694 and

                                  PETER IVAN MACKS

                                                 Respondents

                                           [No.2]

                    REASONS FOR DECISION

CORAM     Branson J

PLACE:    Adelaide

DATE:     1 August 1996

By an application dated 7 April 1995 the applicant sought various declarations and orders.  On 16 February 1996 I pronounced judgment with respect to certain of the claims contained in the application (Molit (No 55) Pty Ltd v Lam Soon Australia Pty Ltd (admin apptd) (1996) 135 ALR 280).  Such judgment is the subject of an appeal to the Full Court of this Court which has been heard but not yet determined.

On 19 July 1996 I heard argument with respect to the only outstanding substantive claim for relief made by the

application.  Such claim ("the claim"), in its amended form, reads as follows:-

     "... the applicant claims ... [a]n order that the Administrator, or alternatively Lam Soon Australia Pty Ltd (Administrator Appointed) pays (sic) the sum of $92,900 for the damage done or caused by the Administrator."

The applicant does not have either the administrator's consent, or the leave of the Court, to proceed with the claim against Lam Soon Australia Pty Ltd (Administrator Appointed) ("the Company") (Corporations Law s440D).  The hearing before me was limited to the claim so far as it seeks relief against Peter Ivan Macks, the administrator of the Company ("the Administrator").

The background to the application is set out in my reasons for judgment in this matter dated 16 February 1996.  I shall not repeat it here.  The present claim relates to damages caused to the premises known as the Market Plaza Supermarket ("the premises") by the removal, on the instructions of the Administrator, of fixtures and fittings between 31 December 1994 and either 3 or 5 January 1995.  At the relevant time the applicant was the lessor and the Company was the lessee of the premises.

Mr Clayton QC, who appeared with Mr Britten-Jones for the respondents, conceded that the Company has a liability as lessee under the covenants in the lease of the premises to make good any damage done on the removal of fixtures and
fittings.  He contended, however, that the Administrator, who is not a party to the lease, is not liable personally to make good any such damage.

Mr Wilkinson, who appeared for the applicant, contended as follows:-

     (a)  in causing the fixtures and fittings to be removed, the Administrator was performing a function, or exercising a power, as the administrator of the Company and is to be taken to have been acting as the Company's agent (Corporations Law s437B);

     (b)  the failure to make good damage resulting from the removal of fixtures and fittings resulted in a breach by the Company of the covenants in the lease of the premises; and

     (c)  by reason of the provisions of s443A(1) of the Corporations Law, the Administrator is liable for the damage suffered by the applicant by reason of the breach by the Company of such covenants.

Section 443A(1) of the Corporations Law provides as follows:-

     "The administrator of a company under administration is liable for debts he or she incurs, in the performance or exercise, or purported performance or exercise, of any of his or her functions and powers as administrator, for:

     (a)  services rendered; or

     (b)  goods bought; or

     (c)  property hired, leased, used or occupied."

Mr Wilkinson's contentions give rise to three issues.  First, does the applicant here claim a "debt"?  Secondly, if it does, is such debt one which was incurred by the Administrator?  Thirdly, assuming an answer to the first two questions in favour of the applicant, was such debt incurred "for ... property hired, leased, used or occupied"?  It was not contended that the claim relates either to services rendered or to goods bought.

Mr Clayton referred to the well recognised distinction between the incurring of a debt and the incurring of a liability for unliquidated damages (see Ogdens Ltd v Weinberg (1906) 95 LT 567; Young v Queensland Trustees Limited (1956) 99 CLR 560; Hawkins & Ors v Bank of China (1992) 26 NSWLR 562).  The following passage from the speech of Lord Davey in Ogdens Ltd v Weinberg at 567 has been frequently quoted:-

     'The word "debts", no doubt, means something recoverable by an action for debt, and nothing can be recovered in an action for debt except what is ascertained or can be ascertained.  A claim for an amount which is uncertain, and cannot be adjusted in an account, cannot, I think, be justly called a "debt".'

There is authority for the proposition that the term "debt" is used in the Corporations Law in its usual sense which invokes the well recognised distinction between a debt and a liability for unliquidated damages (Jelin Pty Ltd v Johnson & Anor (1987) 5 ACLC 463; Commonwealth Bank of Australia v Butterell (1994) 14 ACSR 343).  Nothing in the language of s443A(1) of the Corporations Law, or in the context in which it is found,
suggests, in my view, that the term "debt" is not used in that section with its usual meaning.  In its usual meaning it does not include a claim for damages for a failure to comply with a covenant in a lease to make good damage caused to the leased premises.

For this reason, the claim of the applicant presently under consideration must fail.  It is therefore not necessary for me to determine whether, had the obligation under the lease to make good amounted to a debt, such debt would have been a debt incurred by the Administrator within the meaning of s443A(1) of the Corporations Law, or whether such debt would have been "for" one of the subject matters listed in s443A(1).  I consider it appropriate to state, however, that, in my view, the argument of Mr Clayton that an administrator does not personally incur liability merely because he or she is acting at the relevant time as the agent of the company of which he or she is the administrator is plainly right (see Corporations Law s443C).

The claim of the applicant against the Administrator is dismissed.

                             I certify that this and the preceding         pages are a true copy of the Reasons for Decision of the Honourable Justice Branson.

                             Associate:

                             Dated:

Counsel for the Applicant         :    Mr J M Wilkinson

Solicitors for the Applicant      :    Patel & Co

Counsel for the Respondents       :    Mr D E Clayton QC

                                      with him

                                      Mr P A Britten-Jones

Solicitors for the Respondents    :    Barratt Lindquist

Hearing Date                      :    19 July 1996