Bidald Consulting v Miles Special Builders - [2005] NSWSC 171

CITATION:
Bidald Consulting v Miles Special Builders [2005] NSWSC 171

HEARING DATE(S): 01/03/05, 02/03/05

JUDGMENT DATE :

2 March 2005

JUDGMENT OF:
Gzell J

DECISION:
Originating process to wind up defendant adjourned. Plaintiff's costs reserved. Orders pursuant to Corporations Act 2001 (Cth), s 447A that s 444A operate to require instrument to specify that plaintiff's costs be paid by administratiors in priority to all other debts and that s 439B and s 439C operate to prevent a resolution for winding up being put to a meeting of creditors unless plaintiff given seven days written notice. Liberty to plaintiff to apply on 24 hours' notice.

CATCHWORDS:
CORPORATIONS - Voluntary administration - Plaintiff seeks winding up of defendant - Administrators appointed - Solvency assessment shows defendant insolvent but likely to return to liquidity in the short term - Criticisms of figures - Whether court should be satisfied that in interests of company's creditors for defendant to continue under administration - No principles involved - Costs order in favour of plaintiff not provable in subsequent creditors' voluntary winding up - Whether orders should be made under the Corporations Act 2001 (Cth), s 447A specifying priority of payment of costs under deed of company arrangement and notice of intention to enter creditors' voluntary winding up

LEGISLATION CITED:
Corporations Act 2001 (Cth)

CASES CITED:
McDonald v Deputy Commissioner of Taxation [2005] NSWSC 2
Coventry Auto Parts Pty Ltd v Tony Michael Mechanical Pty Ltd (under administration) [2003] QSC 141

PARTIES:
Bidald Consulting Pty Ltd t/as Forstaff - Plaintiff
Miles Special Buikders Pty Ltd ("Voluntary Administrators Appointed") - Defendant

FILE NUMBER(S):
SC 2858/04

COUNSEL:
Mr Aldridge SC/ Mr A Blank - Plaintiff
Mr G McNally - Defendant/Administrators

SOLICITORS:
Colin Biggers & Paisley Solicitors
Dibbs Barker Gosling Lawyers

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

GZELL J

WEDNESDAY 2 MARCH 2005

2858/04 BIDALD CONSULTING PTY LTD v MILES SPECIAL BUILDERS PTY LTD

EX TEMPORE JUDGMENT

1 Bidald Consulting Pty Ltd sought an order for the winding up of Miles Special Builders Pty Ltd. The matter was listed for hearing for three days. On the evening before the case was due to commence, Anthony Warner and Ivor Worrell, were appointed voluntary administrators of Miles Special Builders.

2 The matter was adjourned to the second day appointed for the hearing, when affidavits of Mr Warner were read. Included in the material was a report on the solvency of Miles Special Builders by Mr Warner. It concluded that the company was, as at 28 February 2005, insolvent in terms of the definition of that term in the Corporations Act 2001 (Cth), s 95A. Mr Warner expressed the opinion, however, that the company would return to solvency within a limited period of time. If the debt due to Bidald Consulting was ignored, it being disputed by Miles Special Builders, that return to liquidity was estimated to occur by 31 March 2005. If the debt of Bidald Consulting was included, a surplus situation was expected to…

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: [2005] NSWSC 171
Decision Date: 2 March 2005

CaseChat Overview and Summary

The case of Bidald Consulting v Miles Special Builders involved a dispute concerning the winding up of a company, Miles Special Builders. The plaintiff, Bidald Consulting, sought to wind up the defendant company, which had appointed administrators. A solvency assessment revealed that the defendant was insolvent but likely to become solvent again in the short term. The case raised questions about whether the court should permit the company to continue under administration in the interests of its creditors, as well as issues regarding the priority of payment of costs and notice of intention to enter creditors' voluntary winding up.

The primary legal issues before the court were whether there were any guiding principles to be applied in determining whether a company should continue under administration, and if so, what those principles were. Additionally, the court had to consider whether costs orders in favour of the plaintiff should be provable in a subsequent creditors' voluntary winding up. Furthermore, the court needed to decide whether it should make orders under the Corporations Act 2001 (Cth), section 447A, specifying the priority of payment of costs under a deed of company arrangement and notice of intention to enter creditors' voluntary winding up.

The court found that no established principles governed the decision to allow a company to continue under administration. It held that the primary consideration for the court was the interests of the company's creditors. The court also determined that costs orders in favour of the plaintiff were not provable in a subsequent creditors' voluntary winding up. In relation to the priority of payment of costs and notice of intention to enter creditors' voluntary winding up, the court found that orders under the Corporations Act 2001 (Cth), section 447A, should be made to ensure that costs were paid in accordance with the relevant provisions of the Act.

The court made orders under the Corporations Act 2001 (Cth), section 447A, specifying the priority of payment of costs under a deed of company arrangement and notice of intention to enter creditors' voluntary winding up. These orders ensured that the costs incurred by the plaintiff in seeking the winding up of the defendant company were paid in accordance with the provisions of the Act.

Orders