Ansell Ltd v Davies

Case [2008] SASC 203

SUPREME COURT OF SOUTH AUSTRALIA

(Full Court)

ANSELL LIMITED & ORS v DAVIES & ORS

[2008] SASC 203

Judgment of The Full Court

(The Honourable Chief Justice Doyle, The Honourable Justice Anderson and The Honourable Justice David)

23 July 2008

CORPORATIONS - WINDING UP - CONDUCT AND INCIDENTS OF WINDING UP - EFFECT OF WINDING UP ON OTHER TRANSACTIONS

CORPORATIONS - WINDING UP - LIQUIDATORS

Two appeals against decisions of a single Judge of the Supreme Court dated 16 May 2007 and 14 March 2008 - original liquidators parties - original liquidators resign and new liquidators appointed - whether the new liquidators can be substituted for the retired liquidators in the proceedings.

Whether liquidators can pursue application to extend limitation period in s 588FF(3) of Corporations Act - whether "unidentified creditors" need to be joined as defendants - whether application can be pursued without joinder.

Held: appeals dismissed. Judge had power under r 31.02 of the Supreme Court Rules 1987 to order that new liquidators be substituted for retired liquidators. Current liquidators may apply for an order joining each of the relevant creditors as a defendant.

Corporations Act 2001 (Cth) s 588FF(1), s 588FF(3), s 588FE; Supreme Court Rules 1987 (SA) r 27.05, r 28.01, r 28.02, r 28.05, r 31, r 31.02, r 63.04, r 103; Corporations Rules 2003 (SA) r 2.7; Administration and Probate Act 1919 (SA) s 69; Supreme Court Rules 2006 (SA) r 206, referred to.
BP Australia Ltd v Brown (2003) 58 NSWLR 322; Gordon v Tolcher (2006) 81 ALJR 507, applied.
Greig v Stramit Corporation Pty Ltd [2004] 1 Qd R 17, distinguished.
Harris Scarfe (In Liq) & Harris Scarfe Wholesale Pty Ltd (In Liq) (No 2) [2007] SASC 186; Harris Scarfe (In Liq) & Harris Scarfe Wholesale Pty Ltd (In Liq) (No 3) [2008] SASC 74, discussed.
New Cap Reinsurance Corporation v Reaseguros Alianza SA (2004) 186 FLR 175; Harris Scarfe Ltd (In Liq) (2006) 203 FLR 46; O'Brien v Komesaroff (1981-1982) 150 CLR 310; Tolcher v Capital Finance Australia Ltd (2005) 52 ACSR 328; Re McGrath; HIH Insurance Ltd (In Liq) (2004) 205 ALR 643; ASIC v Karl Suleman Enterprises Pty Ltd (2004) 52 ACSR 103, considered.

ANSELL LIMITED & ORS v DAVIES & ORS
[2008] SASC 203

Full Court:  Doyle CJ, Anderson and David JJ

  1. DOYLE CJ.          The Court has before it appeals against orders made by a Judge of this Court in these proceedings.  One appeal (the first appeal) is an appeal against orders made on 16 May 2007.  The other appeal (the second appeal) is against orders made on 14 March 2008.

  2. The orders in each case were made on the application of the liquidators of Harris Scarfe Limited (“HSL”) and Harris Scarfe Wholesale Pty Ltd (“HSW”).  The two companies are being wound up in a voluntary winding up.

  3. The period for the making of an application under s 588FF(1) of the Corporations Act 2001 (Cth) to recover payments…

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Ansell Ltd v Davies [2008] SASC 203
Case
[2008] SASC 203
Decision Date

CaseChat Overview and Summary

Ansell Ltd v Davies is a case that involves two appeals against decisions of a single Judge of the Supreme Court. The first appeal concerns the resignation of the original liquidators and the appointment of new liquidators, and whether the new liquidators can be substituted for the retired liquidators in the proceedings. The second appeal concerns whether the liquidators can pursue an application to extend the limitation period in section 588FF(3) of the Corporations Act, and whether "unidentified creditors" need to be joined as defendants, and whether the application can be pursued without joinder. The case revolves around the winding up of two companies, Harris Scarfe Limited and Harris Scarfe Wholesale Pty Ltd, and the role of the liquidators in pursuing claims against creditors.

The legal issues that the court had to decide in this case were complex and multifaceted. Firstly, the court had to determine whether the new liquidators could be substituted for the retired liquidators in the proceedings, and if so, under what circumstances. Secondly, the court had to determine whether the liquidators could pursue the application to extend the limitation period in section 588FF(3) of the Corporations Act, and whether "unidentified creditors" needed to be joined as defendants. Thirdly, the court had to determine whether the application could be pursued without joinder.

The court's reasoning and outcome in this case were based on a careful analysis of the relevant statutory provisions and case law. The court found that the new liquidators could be substituted for the retired liquidators in the proceedings, as the substitution was in the interests of justice and would not prejudice any of the parties. The court also found that the liquidators could pursue the application to extend the limitation period in section 588FF(3) of the Corporations Act, and that "unidentified creditors" did not need to be joined as defendants. The court held that the application could be pursued without joinder, as the unidentified creditors had not been prejudiced by the proceedings.

In conclusion, the court dismissed both appeals and held that the current liquidators could apply for an order joining each of the relevant creditors as a defendant. The court's decision was based on a careful analysis of the statutory provisions and case law, and its outcome was in the interests of justice and would not prejudice any of the parties. The final orders of the court were that both appeals should be dismissed for the reasons given by the Chief Justice.

Orders

Orders of the court

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Background

Background to the litigation

The second appeal raises the issue of whether the liquidators can now pursue the application under s 588FF(3) for the fixing of a longer period for the making of an application under s 588FF(1). They wish to pursue the application as against 19 creditors, now identified, but when the order of 14 April 2004 was made, being unidentified creditors. The issue is whether that application can now be prosecuted as against these 19 creditors, with or without them being joined as defendants, with a view to orders being made for the fixing of a longer period that will bind them. How this issue arises will need to be explained in due course.Facts My summary of the facts is taken from the reasons of the Judge: Harris Scarfe (In Liq) & Harris Scarfe Wholesale Pty Ltd (In Liq) (No 2) [2007] SASC 186 and Harris Scarfe Ltd (In Liq) & Harris Scale Wholesale Pty Ltd (In Liq) (No 3) [2008] SASC 74. On 3 April 2001 Mr Dwyer and Mr Maxsted were appointed administrators of HSL and HSW. On 3 January 2002 a meeting of creditors carried a resolution for the voluntary winding up of HSL and HSW. Mr Dwyer and Mr Maxsted were appointed as liquidators. I will refer to them as “the original liquidators”. The relation-back day for the purposes of s 588FF of the Corporations Act is 3 April 2001. The period for the making of an application under s 588FF(1) would expire on 2 April 2004, unless the Court made an order under s 588FF(3) fixing a “longer period”. On 31 March 2004 the original liquidators issued proceedings in this Court. They applied for an order under s 588FF(3)(b) fixing a longer period within which they could make an application for orders under s 588FF(1). The defendants to the application were a number of named creditors. They were called “the ascertained creditors”. But the order fixing a longer period was also sought as against unidentified creditors, the creditors in relation to whom the original liquidators had not completed their investigations and in relation to whom the original liquidators were not in a position to say whether or not a claim would be made against them. On 14 April 2004 a Master of this Court made an order extending the period within which the original liquidators could make an application under s 588FF(1) with respect to voidable transactions “not being transactions with identified creditors”, to 2 October 2005. On 11 November 2004 Mr Maxsted resigned as liquidator. On 4 January 2005 Mr Dwyer applied to be removed as liquidator. On 21 January 2005 a Master of this Court made an order removing Mr Dwyer as liquidator of HSL and HSW, and appointing Mr Nicol and Mr Davies as joint and several liquidators of both companies. I will refer to them as the current liquidators. The current liquidators then instituted proceedings for orders under s 588FF(1) against 19 creditors who were not, for the purposes of the order of 14 April 2004, “identified creditors”. In other words, they were said to be unidentified creditors for the purposes of the order of 14 April 2004. The proceedings were instituted, in most cases, on 30 September 2005, not long before the longer period fixed by the Master was due to expire.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

DOYLE CJ ANDERSON J (dissent) DAVID J (dissent)
I would dismiss the second appeal. In light of these reasons, it is open to the current liquidators to apply for an order joining each of the relevant creditors as a defendant.Conclusion For those reasons both appeals should be dismissed. I agree that both appeals should be dismissed for the reasons given by the Chief Justice. I would dismiss the appeals for the reasons given by the Chief Justice.

Ratio Decidendi

Legal Principle Established

Established by: DOYLE CJ,

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