Surfers Paradise Investments P/L (in liq) v Davoren Nominees P/L

[2003] QCA 458

Queensland Court of Appeal

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Interrogate

Catchwords

1. Corporations
2. › Winding up
3. › Proof of debt
4. › Secured creditor
5. › Whether secured creditor elected to surrender security by proving for whole debt without valuing security and accepting dividend
6. › Whether election is determined objectively or subjectively
7. › Corporations Act 2001 (Cth), s 554E
1. Equity
2. › Election
3. › Election between inconsistent rights
4. › Deemed election by unequivocal conduct
5. › Whether subjective intention of party relevant where conduct is unequivocal
6. › Whether conduct unknown to other party can displace deemed election

Quick Take

A secured creditor who proves for the whole of its debt in a winding up without valuing or surrendering its security, and then accepts and banks a dividend cheque calculated on the whole debt, will be deemed to have elected to surrender the security by operation of law, regardless of the creditor's subjective intention. Conduct of the creditor unknown to the liquidator (such as continuing efforts to sell the mortgaged property) cannot displace the deemed election. The question whether the doctrine of mistake can relieve against a deemed election remains open.