B.E.S.T. Australia (ACN 003 179 771) v The Corporations Law

[1991] FCA 210

P~tW,U,-&\ v.c&43

JUDGMENT NO ...A.!.O../...q! ,,,, , ,

NOT FOR CIRCULATION

IN THE FEDERAL COURT OF AUSTRALIA	)
)
NEW SOUTH WALES DISTRICT REGISTRY )	No. NG3019 of 1991

)

GGNERAL DIVISION )

IN THE MATTER OF B.E.ST.

AUSTRALIA, ACN 003 179 771

8 April 1991

REASONS FOR JUDGMENT

LOCKHART J.

This morning, B.E.S.T. Australia Limited ("the company") seeks the appointment of a provisional liquidator to itself. This follows a meeting of the directors of the company held on 5 April 1991, in which it was resolved that the company make application for the appointment of a provisional liquidator.

The company has some 300 shareholders and its shares are presently listed on the second board of the Hobart Stock

The appointment of the provisional liquidator was opposed

by a substantial unsecured creditor of the company, namely," arisen through costs incurred by the company in proceedings in this court in relation to patent licences. The debt however is said to be disputed by the company.

Exchange. There is evidence before me of the company's financial position, the evidence being in some reasonable detail and in short it satisfies me that the company is plainly insolvent. It has a secured creditor, it has priority creditors in respect of unremitted group tax and wages and it has unsecured creditors being those internal and external to the company. The external creditors have debts totalling in excess of $400,000 which includes $247,000 owed to the solicitors who opposed the appointment of a provisional liquidator. The total amount due to creditors is in excess of $1 million. The company has no trade debtors. The solicitors who are a major unsecured creditor obtained an order from the Supreme Court of New South Wales on 3 April last in the form of a Mareva Injunction which in essence restrained the company and others from dealing with their assets to the extent of a quarter of a million dollars, until further order of that court.

The motion to appoint the provisional liquidator is, as has been correctly pointed out by counsel for the solicitors who

oppose the provisional liquidation in a sense a tactical.

b

manoeuvre. It is plainly a tactical manoeuvre but it does not follow because it has that hue, that it is tarnished or that it should not succeed. It seems to me that, with a company in the financial position of this company, the best course to take in the interests of the creditors, of the company and the public, is that there be a provisional liquidator appointed.

Counsel for the solicitor who opposes the provisional liquidation, does so primarily on the basis that he says to appoint the provisional liquidator will immediately cause costs to be incurred, which will not be insubstantial, and that there is no reason why the company cannot remain in the control of its directors until, if and when, a winding up order is finally made.

In my view, it is a case where the assets of this company should be placed in independent hands and that is best done by appointing a provisional liquidator. In all the circumstances I think a provisional liquidator should be appointed. I should add there are proceedings on foot in which the company is an applicant before this Court, due to commence in a few minutes time before another Judge of the Court involving an intellectual property matter and I have taken that into account in reaching the conclusion which I have.

A consent to act has been handed up by Mr John William Murphy. The order of the Court is that: '*

(1) John William Murphy, an official liquidator, be appointed liquidator of the assets and undertaking of the applicant provisionally, under the provisions of section 472 of the Corporations law;

(2) that Mr Murphy have the power to carry on the business of

the applicant and have the powers specified in sectoin
477(2)(a) to (k) of The Corporations Law; and

(3) that the cost of the motion to appoint the provisional liquidator be costs in the application for winding up.

I do not think that costs should be ordered against the

creditor; it has been of assistance to have all that
material and argument put on it.

I will refer the matter to the Registrar to appoint the time for the directions hearing of the winding up application. The application has been filed in court. An undertaking to pay the appropriate filing fee has been given on behalf of the applicant.

I certify that this and the

preceding three (3) pages are a true copy of the reasons for judgment herein of the Honourable Mr. Justice Lockhart.

Associate ,

Dated: 8 April 1991

Counsel for the Applicant	Mr P J Kelso
Counsel for Gillis Delaney & Brown :	Mr G B Evans
Date of Hearing	8 April 1991
Date of Judgment	8 April 1991