KD Morris & Sons Pty Ltd (In Liq) v Bank of Queensland Ltd

High Court of Australia|1980-07-24|Before: Wilson JJ

For the reasons which Connolly J. gave in respect of the post-liquidation charges, the absence of consent by the Court or the committee of inspection did not prevent the Bank from recovery on the outstanding bills, or on the substituted agreements if, contrary to my view, the liability arose under the agreement and not under the bills for on that basis the source of the obligation was the agreements made after the winding up had commenced.

The remaining question raised before us was the contention on behalf of the Company that it could rely upon a "promissory estoppel". It had alleged in its defence that the Bank had represented that:

(a) the rolling over of the bills on 3rd February 1975 and subsequent rolling over of other bills would not result in any alteration of the Bank's status as a secured creditor,

(b) that any increase in the liability of the Company would be secured by the mortgagee, and

(c) such transactions were simply to maintain the status quo as at the date of the petition and in order to defer the need for the Bank to pay the amount due to holders of the bills, and that the Company entered in the transactions comprising the rolling over of the bills in reliance on those presentations.

The defence then alleged that by reason of the representations and the Company's reliance thereon the Bank was estopped from asserting that the amounts claimed were costs and expenses of the liquidation within s. 292(1)(a) of the Companies Act.

The trial judge did not make any finding of fact in relation to this matter. On the view which he took of the case it was not necessary for him to deal with it. This argument was rejected in the Full Court of the Supreme Court. The particulars furnished of the representations alleged that they had been made orally by Bray and Murrell, officers of the Bank, on 28th and 29th January in the course of discussions with the solicitors for the liquidators. In the case of the conversations with Bray they related to the discussion of the form of affidavit which was being drafted by the liquidators' solicitor for the purpose of the application to the Court on 31st October 1975. He had asked the bank officer to explain to him the mechanics of the operation of the commercial bill market and the use of accommodation bills. The affidavit prepared by the Company's solicitors contained a statement that:

Such transactions would represent an extension or repetition of the same type of fund raising operation previously carried out by the company on a number of previous occasions as deposed to above. Implementation of the proposed transactions would represent a maintaining of the status quo so far as the financing arrangements of the company in relation to the said lands are concerned with the exception only that the company will incur liability for the sums which will become payable by way of costs charges expenses and fees arising upon the drawing acceptance and discounting of the new series of bills and in addition the liability which will be incurred by the company by reason of the discounting of the bills.

It is not necessary in the present case to consider the content or extent of the doctrine of "promissory estoppel", or to consider whether the alleged representations were incorrect, because even if what took place can be regarded as a "promise" in the relevant sense, it is clear on the evidence that the liquidators did not rely on the alleged representations. The provisional liquidator then handling the matter (Mr. L. G. Rees) stated expressly in his evidence that he did not rely on what Mr. Bray had said. In argument no reliance was placed on anything said by Mr. Murrell. I am therefore of opinion that there is no basis for the application of the rule of promissory estoppel in this case.

In the result therefore I am of opinion that this appeal should fail and I would dismiss it with costs.

High Court of Australia Stephen, Mason, Murphy, Aickin and Wilson JJ. KD Morris & Sons Pty Ltd (In Liq) v Bank of Queensland Ltd [1980] HCA 20

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