Carob Industries Pty Ltd (in Liq) Trading as Foremost Equipment v Simto Pty Ltd Trading as Simto Australia

The case before the Supreme Court of Western Australia involved an application by Carob Industries Pty Ltd (in liquidation) trading as Foremost Equipment to terminate the arbitration proceedings against Simto Pty Ltd trading as Simto Australia. The court was required to decide whether the arbitration should be terminated for want of prosecution due to inordinate and inexcusable delay and if the application to lift the stay of proceedings should be granted. Additionally, the court had to consider whether to approve a deed under the Corporations Law s 477(2B) permitting the liquidator to enter into an agreement to sell a chose in action.
The court found that the arbitration had been delayed for an unreasonable length of time without a valid reason, leading to substantial prejudice to the defendants. The court held that the liquidator had not exercised due diligence in prosecuting the dispute referred to arbitration and that the delay was inordinate and inexcusable. The court also found that the proposed funding arrangement between the liquidator and a third party, while not beneficial to the company's unsecured creditors or members, would at least allow the liquidator to be paid his proper fees and conclude the liquidation in an orderly fashion. As a result, the court granted the application to terminate the arbitration for want of prosecution, lifted the stay of proceedings, and declined to make an order on the application for approval of the deed under the Corporations Law s 477(2B).