Amalta Holdings Pty Ltd v Magenta Mining Pty Ltd
[2001] WASC 28
AMALTA HOLDINGS PTY LTD -v- MAGENTA MINING PTY LTD [2001] WASC 28
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2001] WASC 28 | |
| Case No: | COR:299/2000 | 31 JANUARY 2001 | |
| Coram: | MASTER BREDMEYER | 5/02/01 | |
| 5 | Judgment Part: | 1 of 1 | |
| Result: | Application adjourned | ||
| PDF Version |
| Parties: | AMALTA HOLDINGS PTY LTD (ACN 009 202 975) MAGENTA MINING PTY LTD (ACN 054 284 939) |
Catchwords: | Application to wind up Company in administration |
Legislation: | Corporations Law, s 440A(2) |
Case References: | Nil Nil |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
BETWEEN : AMALTA HOLDINGS PTY LTD (ACN 009 202 975)
- Applicant
AND
MAGENTA MINING PTY LTD (ACN 054 284 939)
Respondent
Catchwords:
Application to wind up - Company in administration
Legislation:
Corporations Law, s 440A(2)
Result:
Application adjourned
(Page 2)
Representation:
Counsel:
Applicant : Mr M J McPhee
Respondent : Mr M D Evans
Solicitors:
Applicant : Michell Sillar McPhee
Respondent : Corsers
Case(s) referred to in judgment(s):
Nil
Case(s) also cited:
Nil
(Page 3)
1 MASTER BREDMEYER : This is an application by the applicant to wind up the respondent company in insolvency. The application is based on the creditor's statutory demand which was issued on 29 August 2000 for a debt of $12,425.80. That was a judgment debt entered in favour of the applicant against the respondent in the Local Court at Kalgoorlie on 16 February 2000. This application to wind up the respondent was filed on 10 November 2000.
2 On 30 November 2000 the directors of the respondent, Mr and Mrs Halbert, appointed Garry Trevor and Martin Jones as joint and several administrators of the company under s 436A of the Corporations Law. In appointing them they declared that the company was, in the opinion of directors, insolvent. Meetings of creditors were held on 7 and 29 December 2000. At the latter meeting the creditors accepted a recommendation from the administrators to enter into a deed of company arrangement under which the two administrators would be the administrators of the deed; the creditors would give a moratorium of 12 months on pursuing their claims against the company; and the company would pursue its litigation against Nea Pty Ltd ("Nea"). The background to this is that Nea has sued the respondent in CIV 2348 of 1996 for the hire of a certain crusher in late 1995 for unpaid hire fees of $28,040.06, plus interest and costs. The company, in its defence and counterclaim to that action admits, that it received the two invoices for that sum and that it has not paid the sum. Its counterclaim is based on a plea of misleading and deceptive conduct, in that the director of Nea represented that the crusher was of merchantable quality and fit for the purpose of crushing ore of the size of 2 inches to 3 inches to a size of less than 3mm with a bond index of 18, and that, for ore to a size of 220mm the plant could operate at the rate of approximately 50 tonnes per hour. Damages are claimed because of that conduct. The case has not yet been entered for trial but, according to the notes of Case Management Registrar, it is very close to entry for trial. Pursuant to a consent order made on 6 February 1998 the defendant has paid into a trust account $21,543 as security for costs on its counterclaim.
3 Under the Deed of Company Arrangement cl 8.1, no creditor is permitted to begin or continue any claim, action, proceeding etc against the company during the moratorium period and that includes the presentation of any application to wind up the company. I consider that the applicant is not caught by that clause, as its application to wind up was lodged prior to the deed and, indeed, prior to the appointment of administrators. Its legal position is governed by s 440A(2) of the Corporations Law which provides:
(Page 4)
- "[Winding up application to be adjourned]
The Court is to adjourn the hearing of an application for an order to wind up the company if the company is under administration and the Court is satisfied that it is in the interests of the company's creditors for the company to continue under administration than be wound up."
4 I have heard the applicant's arguments on this, namely that the meeting of creditors approving the Deed was unfair in that it was dominated by a major creditor, K B & M Nominees Pty Ltd, which claimed $140, 203.47 out of the total claimed debts of $200,597.22. That creditor is a company controlled by Mr Halbert and, indeed, is the sole shareholder of the respondent. Three other creditors were also represented by Mr Halbert, so it was obvious that he was able to control the vote of the meeting. Nevertheless, I consider that the Corporations Law permits that. There is no requirement that independent creditors get any special say in voting on a deed of company arrangement. The deed also provides that the control of the action, meaning the defence of the other action and the pursuit of the counterclaim is in the hands of the directors. That means that the control of the litigation is not in the independent hands of the administrators and I can see that that is less satisfactory to independent creditors. However, it has the undoubted advantage that the administrators are not incurring substantial fees giving instructions during the course of the litigation. Also, K B & M Nominees Pty Ltd is to fund the litigation. If I permitted this application to wind up to go ahead, a liquidator would be appointed and he would exercise his independent judgment on whether to pursue the counterclaim or not and make decisions which may need to be made in the course of the litigation, for example, whether to settle or not. However, there is no guarantee of funding to him for that purpose. The independent creditors are owed relatively small amounts and I think it unlikely that they would want to fund this litigation. The costs of that might well exceed their debts. The present funding provided by K B & M Nominees Pty Ltd might not be available to a liquidator. Weighing up these various factors, I am satisfied that it is in the interests of the company's creditors to continue under administration rather than to be wound up. It therefore follows that this winding up application should be adjourned sine die. I will extend the time within which this application must be heard until further order. I will grant liberty to apply. If something transpires which favours the winding up of the company at a later time, then the applicant can bring on this application on notice to the company.
(Page 5)
5 A point was made by the applicant that the administrators have not made any independent assessment of the company's prospects in the litigation. I am not sure that that is of great concern because the litigation is likely to go on anyway. I say that in the sense that the litigation is not entirely in the hands of the company directors. It is in the hands of Nea, the plaintiff, and it has, since 1996, been pursuing the litigation. The directors of the company, who are funding the counterclaim as I have stated, have probably already spent a considerable sum of money in the interlocutory stages and may not want to see that wasted by withdrawing their counterclaim. Also, the sum of $21,543 is held in a trust account as security for costs and is also at risk if the counterclaim is not pursued. I will give the applicant's solicitor permission, however, to search the file CIV 2348 of 1996 and make a copy of the pleadings if he wants to.
6 The orders will be:
1. Application adjourned sine die.
2. The time for the hearing of this application is extended until further order.
3. The applicant has liberty to apply on notice to the company.
4. I give leave to the applicant's solicitor to inspect file CIV 2348 of 1996 and to make a copy of the pleadings.
5. Costs reserved.
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