Acer Computer Australia Pty Limited v Carter (No 2) - [2007] FCA 1943

FEDERAL COURT OF AUSTRALIA
Acer Computer Australia Pty Limited v Carter (No 2) [2007] FCA 1943
PRACTICE AND PROCEDURE – application for joinder of nine separate actions by suppliers of goods to companies within a retail chain where relief sought against the receivers and managers of the various companies – leave to amend in circumstances where there may be no reasonable prospect of the claims the subject of the amendment being successfully prosecuted
CORPORATIONS – application for an extension of time within which to file originating process in an appeal under s 1321 of the Corporations Act – circumstances in which relief may be ordered under ss 1321 and 1324(10) of the Act
Federal Court of Australia Act 1976 (Cth) s 31A
Federal Court Rules Order 6 r2, Order 13 r2(1), r2(2) and r3(1)
Federal Court (Corporations) Rules 2000 Rule 14.1
Corporations Act 2001 (Cth) ss 421(1), 554A, 1321 and 1324(10)
Companies Act 1981 (Cth) s 538
Uniform Companies Act 1961 s 279
Companies Act 1958 (Vic) s 175
Companies Act 1938 (Vic) s 192
Companies Act 1936 (NSW) s 232
Bankruptcy Act 1924 (Cth) s 148
Bankruptcy Act 1966 (Cth) s 178
Companies Act 1948 (UK) s 246
Re Tyndall, Ex parte Official Receiver (1977) 17 ALR 182
Re Allebart Pty. Ltd. (in Liq.) and the Companies Act (1971) 1 NSWLR 24
Leon v York-O-Matic Ltd. [1966] 1 WLR 1450
In re Peters, Ex parte Lloyd (1882) 47 LT 64
Yeomans v Walker (1986) 5 NSWLR 378
Australian Securities and Investments Commission v Forestview Nominees Pty Ltd(ACN 063 440 102) (recs and mgrs apptd) (2006) 236 ALR 652
Barnes v Addy (1874) 9 Ch App 244
Jovanovic v Commonwealth Bank of Australia (2004) 87 SASR 570
Porter v OAMPS Ltd [2005] FCA 232
Bishop v Bridgelands Securities (1990) 25 FCR 311
General Steel Industries Inc. v Commissioner for Railways (N.S.W.) (1964) 112 CLR 125
Theseus Exploration N.L. v Foyster (1972) 126 CLR 507
Flexible Manufacturing Systems Pty Ltd v Fernandez [2003] FCA 1491
Derwinto Pty Ltd (in liq) v Lewis (2002) 42 ACSR 645
ACER COMPUTER AUSTRALIA PTY LIMITED ACN 003 872 768, AUDIO PRODUCTS GROUP PTY LIMITED ACN 054 550 499, HAGEMEYER BRANDS AUSTRALIA PTY LIMITED ACN 001 375 686, INGRAM MICRO PTY LIMITED ACN 112 487 966, PANASONIC AUSTRALIA PTY LIMITED ACN 001 592 187, PEBBLE ELECTRONICS PTY LIMITED ACN 104 094 993, THINK APPLICANCES PTY LIMITED ACN 104 094 993, GRUNDIG AUSTRALIA PTY LIMITED ACN 089 579 279 AND FUJITSU GENERAL (AUST.) PTY LIMITED ACN 001 229 554 v PHILIP PATRICK CARTER AND DAVID LAURENCE MCEVOY (IN THEIR CAPACITY AS JOINT & SEVERAL RECEIVERS & MANAGERS OF BETTA STORES LIMITED (IN LIQUIDATION) (RECEIVERS & MANAGERS APPOINTED) ACN 009 710 605, BETTA STORES (SOUTHERN) PTY LIMITED (IN LIQUIDATION) (RECEIVERS & MANAGERS APPOINTED) ACN 059 881 220, BETTA STORES (NORTHERN) PTY LIMITED (IN LIQUIDATION) (RECEIVERS & MANAGERS APPOINTED) ACN 112 330 944, A.K. TRUSCOTT INVESTEMENTS PTY LIMITED (IN LIQUIDATION) (RECEIVERS & MANAGERS APPOINTED) ACN 007 818 493…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2007] FCA 1943
Decision Date: 7 December 2007

CaseChat Overview and Summary

The case of Acer Computer Australia Pty Limited v Carter (No 2) involved the court being asked to intervene in the actions of a liquidator, Carter, in relation to the winding up of a company. The primary legal issue before the court was whether the court had the authority to intervene in the liquidator's decision-making process under section 178 of the Corporations Law, now known as the Corporations Act 2001. The court had to determine the extent of its jurisdiction in reviewing the actions of a liquidator in the administration of a company's winding up.

The court examined the nature of the jurisdiction provided by section 178, noting that it differed from previous statutory provisions and English bankruptcy legislation. The court highlighted that the new section did not require the applicant to be a person "aggrieved" and did not focus on confirming, reversing or modifying the act or decision complained of. Instead, the court was empowered to make an order "as it thinks just and equitable." This broad discretion was recognised as a significant departure from the previous legal framework which required the court to intervene only if the trustee was acting unreasonably or in bad faith.

In light of the statutory language and its broader discretion, the court concluded that it had the power to intervene in the liquidator's decisions if it deemed an order just and equitable. This decision underscored the importance of the liquidator's role in the winding-up process but also affirmed the court's ability to ensure that the administration of the company's affairs was conducted fairly and in the best interests of the company and its creditors.

The court's decision in this case has significant implications for the administration of companies in liquidation, affirming the broad discretion of the court to intervene in the liquidator's actions when necessary to ensure justice and equity.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

GRAHAM J

However, at 185 Deane J said:‘The provisions of s 178 of the Act differ, in a number of important respects, from the provisions of s 148 of the Bankruptcy Act 1924.…The provisions of the old s 148 corresponded closely with comparable provisions of English bankruptcy legislation. It was established that, under these English provisions, the Courts would only interfere with the decision of a trustee if it appeared that the trustee was acting unreasonably or in bad faith (see, eg, Re Peters; Ex parte Lloyd (1882) 47 LT 64 at 65; Re a Debtor; Ex parte Debtor v Dodwell [1949] Ch 236 at 241 …; and Leon v York-O-Matic Ltd [1966] 1 WLR 1450 at 1454-5). The principles laid down in such decisions were stated, in at least two Australian cases, to be applicable to the provisions of s 148 of the Bankruptcy Act 1924 (see per Clyne J in Re Carson; Ex parte Carson (1960) 19 ABC 108 at 122; [1961] ALR 118, and in Re Hall (1957) 20 ABC 21 at 29). …The critical differences in wording between s 148 of the 1924 Act and s 178 of the present Act are that the present act does not require that the applicant be a person “aggrieved” as did the previous Act and the English bankruptcy legislation and that the present Act does not make the focal point of the jurisdiction the confirming, reversing or modifying of “the act or decision complained of”. Under s 178 … the court, in express terms [is no longer] required to approach the matter on the basis that the appropriate question is whether “the act or decision complained of” should be confirmed, reversed or modified. Once the matter is properly before the court, the court is empowered – and obliged – to make such order in the matter “as it thinks just and equitable”.’ (emphasis added) It has long been recognised that it is the prerogative of a liquidator to decide what steps should be taken in administering the winding up of a company. Furthermore it is his duty to exercise himself, according to the dictates of his own opinions, what should and what should not be done in the course of any given winding up. It is for him to decide what steps are to be taken, and when, how and by what means such steps are to be taken (per Street J, as his Honour then was, in Re Allebart Pty. Ltd. (in Liq.) and the Companies Act (1971) 1 NSWLR 24 at 28). This, of course, is not to deny the rights of unpaid vendors of goods that may have been supplied. Leon v York-O-Matic Ltd [1966] 1 WLR 1450 (‘York-O-Matic’) was a decision of Plowman J on an application for an interlocutory injunction to restrain the completion of the sale of certain freehold and leasehold properties and certain equipment and fixtures and fittings in those properties which belonged to York-O-Matic Limited, a company in liquidation. York-O-Matic Limited operated a number of launderettes, the machinery for which was being acquired on hire-purchase. In the course of his reasons for judgment Plowman J observed that a liquidator is not a trustee for individual creditors. He observed that, prima facie, if there had been a sale at an undervalue, the proper person to complain was the company itself and not an individual creditor. He went on to refer to s 246(5) of the Companies Act 1948 (UK).

Ratio Decidendi

Legal Principle Established

Established by: GRAHAM J

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