Commonwealth of Australia v Emanuel Projects Pty Ltd
[1996] FCA 612
•22 JULY 1996
CATCHWORDS
CORPORATIONS - WINDING UP - application to wind up in insolvency companies already the subject of orders that they be wound up in insolvency - Corporations Law displays no intention that two orders can be made to wind up the same company in insolvency - abuse of process to apply to a court for relief already granted by an order of the court in full force and effect.
CORPORATIONS - WINDING UP - nature of winding up - winding up order invokes a process of collecting and realising assets and distributing the proceeds - winding up order does not of itself wind up the company.
CORPORATIONS - WINDING UP - leave to proceed with an application to wind up companies being wound up in insolvency refused.
Corporations Law ss 459P, 467B, 471B, 490, 513 and 513A
Russian and English Bank and Florance Montefiore Guedalla v Baring Bros & Co Ltd [1936] AC 405
Joye v Beach Petroleum NL & Anor (Federal Court, Beaumont, Spender and Lehane JJ, 14 June 1996, unreported)
Re Crust 'n' Crumbs Bakers (Wholesale) Pty Ltd [1992] 2 QdR 76
Beneficial Finance Corporation Ltd v East Coast Printed Circuits Pty Ltd (1992) 10 ACLC 426
IN THE MATTERS OF
No SG 3097 of 1995 EMANUEL PROJECTS PTY LTD ACN 007 683 418
No SG 3098 of 1995 EMANUEL (RUNDLE MALL) PTY LTD ACN 007 983 851
No SG 3099 of 1995 CC LOT 4 PTY LTD ACN 008 037 036
No SG 3100 of 1995 EMANUEL (NO.4) PTY LTD ACN 008 036 995
No SG 3101 of 1995 HERIOT PTY LTD ACN 010 731 021
No SG 3102 of 1995 EMANUEL PROPERTIES PTY LTD ACN 007 740 123
No SG 3103 of 1995 GIUSEPPE NOMINEES PTY LTD ACN 007 771 486
No SG 3104 of 1995 EMANUEL MANAGEMENT PTY LTD ACN 007 840 913
No SG 3105 of 1995 P.B.R.S. PTY LTD ACN 007 799 546
No SG 3122 of 1995 GRANGEVILLE PTY LTD ACN 008 104 854
No SG 3123 of 1995 WOODVILLE INDUSTRIAL PARK PTY LTD ACN 008 037 018
No SG 3125 of 1995 CARSIM PTY LTD ACN 007 760 116
No SG 3126 of 1995 COFORDO 260 PTY LTD ACN 010 685 775
No SG 3127 of 1995 EMANUEL HOLDINGS PTY LTD ACN 007 653 974
No SG 3128 of 1995 PATERSON & CO. PTY LTD ACN 007 679 763
No SG 3129 of 1995 LONSDALE STAGE 2 PTY LTD ACN 007 812 928
COMMONWEALTH OF AUSTRALIA Applicant
- and -
EMANUEL PROJECTS PTY LTD, EMANUEL (RUNDLE MALL) PTY LTD, CC LOT 4 PTY LTD, EMANUEL (NO.4) PTY LTD, HERIOT PTY LTD, EMANUEL PROPERTIES PTY LTD, GIUSEPPE NOMINEES PTY LTD, EMANUEL MANAGEMENT PTY LTD, P.B.R.S. PTY LTD, GRANGEVILLE PTY LTD, WOODVILLE INDUSTRIAL PARK PTY LTD, CARSIM PTY LTD, COFORDO 260 PTY LTD, EMANUEL HOLDINGS PTY LTD, PATERSON & CO. PTY LTD, LONSDALE STAGE 2 PTY LTD
Respondents
Branson J
Adelaide
22 July 1996
IN THE FEDERAL COURT OF AUSTRALIA )
SOUTH AUSTRALIAN DISTRICT REGISTRY )
GENERAL DIVISION )
IN THE MATTERS OF
No SG 3097 of 1995 EMANUEL PROJECTS PTY LTD
ACN 007 683 418
No SG 3098 of 1995 EMANUEL (RUNDLE MALL) PTY LTD
ACN 007 983 851
No SG 3099 of 1995 CC LOT 4 PTY LTD
ACN 008 037 036
No SG 3100 of 1995 EMANUEL (NO.4) PTY LTD
ACN 008 036 995
No SG 3101 of 1995 HERIOT PTY LTD
ACN 010 731 021
No SG 3102 of 1995 EMANUEL PROPERTIES PTY LTD
ACN 007 740 123
No SG 3103 of 1995 GIUSEPPE NOMINEES PTY LTD
ACN 007 771 486
No SG 3104 of 1995 EMANUEL MANAGEMENT PTY LTD
ACN 007 840 913
No SG 3105 of 1995 P.B.R.S. PTY LTD
ACN 007 799 546
No SG 3122 of 1995 GRANGEVILLE PTY LTD
ACN 008 104 854
No SG 3123 of 1995 WOODVILLE INDUSTRIAL PARK PTY LTD
ACN 008 037 018
No SG 3125 of 1995 CARSIM PTY LTD
ACN 007 760 116
No SG 3126 of 1995 COFORDO 260 PTY LTD
ACN 010 685 775
No SG 3127 of 1995 EMANUEL HOLDINGS PTY LTD
ACN 007 653 974
No SG 3128 of 1995 PATERSON & CO. PTY LTD
ACN 007 679 763
No SG 3129 of 1995 LONSDALE STAGE 2 PTY LTD
ACN 007 812 928
COMMONWEALTH OF AUSTRALIA
Applicant
- and -
EMANUEL PROJECTS PTY LTD, EMANUEL (RUNDLE MALL) PTY LTD, CC LOT 4 PTY LTD, EMANUEL (NO.4) PTY LTD, HERIOT PTY LTD, EMANUEL PROPERTIES PTY LTD, GIUSEPPE NOMINEES PTY LTD, EMANUEL MANAGEMENT PTY LTD, P.B.R.S. PTY LTD, GRANGEVILLE PTY LTD, WOODVILLE INDUSTRIAL PARK PTY LTD, CARSIM PTY LTD, COFORDO 260 PTY LTD, EMANUEL HOLDINGS PTY LTD, PATERSON & CO. PTY LTD, LONSDALE STAGE 2 PTY LTD
Respondents
MINUTES OF ORDER
CORAM: Branson J
PLACE: Adelaide
DATE: 22 July 1996
THE COURT ORDERS THAT:-
Leave to proceed with an application to wind up the companies EMANUEL PROJECTS PTY LTD, EMANUEL (RUNDLE MALL) PTY LTD, CC LOT 4 PTY LTD, EMANUEL (NO.4) PTY LTD, HERIOT PTY LTD, EMANUEL PROPERTIES PTY LTD, GIUSEPPE NOMINEES PTY LTD, EMANUEL MANAGEMENT PTY LTD, P.B.R.S. PTY LTD, GRANGEVILLE PTY LTD, WOODVILLE INDUSTRIAL PARK PTY LTD, CARSIM PTY LTD, COFORDO 260 PTY LTD, EMANUEL HOLDINGS PTY LTD, PATERSON & CO. PTY LTD, LONSDALE STAGE 2 PTY LTD is refused.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
SOUTH AUSTRALIAN DISTRICT REGISTRY )
GENERAL DIVISION )
IN THE MATTERS OF
No SG 3097 of 1995 EMANUEL PROJECTS PTY LTD
ACN 007 683 418
No SG 3098 of 1995 EMANUEL (RUNDLE MALL) PTY LTD
ACN 007 983 851
No SG 3099 of 1995 CC LOT 4 PTY LTD
ACN 008 037 036
No SG 3100 of 1995 EMANUEL (NO.4) PTY LTD
ACN 008 036 995
No SG 3101 of 1995 HERIOT PTY LTD
ACN 010 731 021
No SG 3102 of 1995 EMANUEL PROPERTIES PTY LTD
ACN 007 740 123
No SG 3103 of 1995 GIUSEPPE NOMINEES PTY LTD
ACN 007 771 486
No SG 3104 of 1995 EMANUEL MANAGEMENT PTY LTD
ACN 007 840 913
No SG 3105 of 1995 P.B.R.S. PTY LTD
ACN 007 799 546
No SG 3122 of 1995 GRANGEVILLE PTY LTD
ACN 008 104 854
No SG 3123 of 1995 WOODVILLE INDUSTRIAL PARK PTY LTD
ACN 008 037 018
No SG 3125 of 1995 CARSIM PTY LTD
ACN 007 760 116
No SG 3126 of 1995 COFORDO 260 PTY LTD
ACN 010 685 775
No SG 3127 of 1995 EMANUEL HOLDINGS PTY LTD
ACN 007 653 974
No SG 3128 of 1995 PATERSON & CO. PTY LTD
ACN 007 679 763
No SG 3129 of 1995 LONSDALE STAGE 2 PTY LTD
ACN 007 812 928
COMMONWEALTH OF AUSTRALIA
Applicant
- and -EMANUEL PROJECTS PTY LTD, EMANUEL (RUNDLE MALL) PTY LTD, CC LOT 4 PTY LTD, EMANUEL (NO.4) PTY LTD, HERIOT PTY LTD, EMANUEL PROPERTIES PTY LTD, GIUSEPPE NOMINEES PTY LTD, EMANUEL MANAGEMENT PTY LTD, P.B.R.S. PTY LTD, GRANGEVILLE PTY LTD, WOODVILLE INDUSTRIAL PARK PTY LTD, CARSIM PTY LTD, COFORDO 260 PTY LTD, EMANUEL HOLDINGS PTY LTD, PATERSON & CO. PTY LTD, LONSDALE STAGE 2 PTY LTD
Respondents
REASONS FOR DECISION
CORAM: Branson J
PLACE: Adelaide
DATE: 22 July 1996
By applications dated 20 June 1995 the Commonwealth of Australia ("the Commonwealth") sought the winding up in insolvency under s459P of the Corporations Law of the following companies of which it was and is a creditor:-
Emanuel Projects Pty Ltd
Emanuel (Rundle Mall) Pty Ltd
CC Lot 4 Pty Ltd
Emanuel (No.4) Pty Ltd
Heriot Pty Ltd
Emanuel Properties Pty Ltd
Giuseppe Nominees Pty Ltd
Emanuel Management Pty Ltd
P.B.R.S. Pty Ltd.
By applications dated 5 July 1995 the Commonwealth sought the winding up in insolvency under s459P of the Corporations Law of the following additional companies of which it was and is a creditor:-
Grangeville Pty Ltd
Woodville Industrial Park Pty Ltd
Carsim Pty Ltd
Cofordo 260 Pty Ltd
Emanuel Holdings Pty Ltd
Paterson & Co Pty Ltd
Lonsdale Stage 2 Pty Ltd.
When each of the above applications (together "the applications") came on for hearing on 30 August 1995, each company (together "the companies") was in fact ordered by O'Loughlin J to be wound up on an application of the Australian Securities Commission ("the ASC"). On that day his Honour appointed a liquidator of each company. On 18 September 1995 an appeal was lodged on behalf of Rocco Emanuele and Lynton Emanuele against the orders of O'Loughlin J of 30 August 1995 ("the appeal").
On the appeal the issue of the failure of the ASC to obtain the leave of the Court pursuant to s459P(2) to apply to the Court for the companies to be wound up in insolvency was raised. Section 459P(2) of the Corporations Law provides that such an application by any of certain classes of persons or by the ASC may only be made with the leave of the Court. On 15 December 1995 the Full Court of this Court ordered that the ASC have leave nunc pro tunc pursuant to s459P(2) of the Corporations Law to apply to wind up the companies in insolvency. The appeal was dismissed. On 24 April 1996 the High Court granted to Rocco Emanuele and Lynton Emanuele special leave to appeal to that court from that part of the order of the Full Court of this Court as gave leave nunc pro tunc to the ASC to apply to wind up the companies in insolvency.
The time for the determination of the applications has on occasions been extended. That time will now expire on 30 December 1996.
The Commonwealth now seeks orders:-
(a)pursuant to s471B of the Corporations Law giving it leave to proceed with its applications to wind up the companies in insolvency; and
(b)pursuant to s459P of the Corporations Law winding up the companies in insolvency.
The Commonwealth does not seek the appointment of a liquidator in respect of any of the companies. No application is made by the Commonwealth to set aside the orders made by O'Loughlin J on 30 August 1995. It was indicated by counsel for the Commonwealth, Ms Maharaj, that should the orders sought be made, an application would be made for the winding up orders to be stayed pending the hearing and determination of the appeal to the High Court for which special leave was granted on 24 April 1996.
The first question which falls for determination is that of whether an order can be made pursuant to s459A of the Corporations Law for the winding up in insolvency of a company which is already the subject of a order that it be wound up in insolvency.
It is contended on behalf of the Commonwealth that "the statutory scheme of the Corporations Law appears to be based on the unquestionable premise that a wound up company (compulsory or otherwise) can be wound up again". The provisions of the Corporations Law upon which the Commonwealth places particular reliance are contained in ss513 and 513A.
Sections 513 and 513A are in the following terms:-
Except so far as the contrary intention appears, the provisions of this Law about winding up apply in relation to the winding up of a company whether in insolvency by the Court or voluntarily."
"513A.If the Court orders under section 260, 459A, 459B or 461 that a company be wound up, the winding up is taken to have begun or commenced:
(a)if, when the order was made, a winding up of the company was already in progress - when the last-mentioned winding up is taken because of this Division to have begun or commenced; or
(b) . . . .
(c). . . .
(d). . . .
(e)otherwise - on the day when the order was made."
(underlining indicates the words upon which the Commonwealth places particular reliance).
The submission made on behalf of the Commonwealth with respect to the above provisions is as follows:-
"It is clearly evident from these provisions that the legislation contemplates in section 513A that a winding up order may be made, even when the, "winding up of the company was already in progress", and section 513 expects application of section 513A across the board to all winding up, compulsory or otherwise. Indeed, it is difficult to visualise conceptually why a compulsorily wound up company cannot be wound up again, when a voluntarily wound up company can be."
It was further contended on behalf of the Commonwealth that each of ss467B and 490 of the Corporations Law adds "momentum to the argument that there can be no legal bar to a wound up company being wound up again".
The notion of winding up a company that has been wound up involves, in my view, considerable conceptual difficulty. As Lord Russell of Killowen pointed out in Russian and English Bank and Florance Montefiore Guedalla v Baring Bros & Co Ltd [1936] AC 405 at 433, "[a] company is wound up when its affairs are wound up; and its affairs are wound up by getting in such assets as can be got in, and paying therewith such debts as are ascertainable, and disposing of the surplus (if any) to those entitled thereto." Plainly a company once wound up cannot be wound up again. However, notwithstanding the terms of the submissions made on behalf of the Commonwealth, it is not here suggested that any of the companies has in fact been wound up: each of them is in the process of being wound up in insolvency by its liquidator pursuant to orders of O'Loughlin J dated 30 August 1995. The crucial issue on the present application is that earlier identified by me, namely whether an order can be made pursuant to s459A of the Corporations Law for the winding up in insolvency of a company which is already the subject of an order under that section.
It is useful, in my view, to consider in more detail the nature of an order that a company be wound up. As the statement of Lord Russell of Killowen quoted above makes clear, an order that a company be wound up does not of itself wind up the company. Such an order invokes a process which includes the collecting and realising of assets and the distribution of the proceeds (see Joye v Beach Petroleum NL & Anor at p22 [Federal Court, Beaumont, Spender and Lehane JJ, 14 June 1996, unreported]).
In Re Crust 'n' Crumbs Bakers (Wholesale) Pty Ltd [1992] 2 QdR 76 at 78 McPherson SPJ considered the meaning of an expression "winding up" in the phrase "[t]he provisions of this Law with respect to winding up" appearing in s601 of the Corporations Law. His Honour said:-
"What is meant by "winding up" in this context? In my opinion it does not comprehend steps or proceedings taken for the purpose of obtaining an order that the company be wound up. Winding up is a process that consists of collecting the assets, realising and reducing them to money, dealing with proofs of creditors by admitting or rejecting them, and distributing the net proceeds, after providing for costs and expenses, to the persons entitled. It is a process, comparable to an administration in equity, that begins or "starts" with an order of the Court. However it is not the court order itself that "winds up" the company; the order does no more than direct that the company be wound up, which is then carried into effect by an officer of the court, the liquidator, who does the things that I have identified in order to liquidate the company's assets and wind up its affairs. In referring to "winding up" or to the company being "wound up", and to the manner and the incidents of doing so, s601 therefore speaks not of proceedings aimed at obtaining an order of court to wind up the company but of the process that ensues from and follows such an order. Leaving aside the case of a successful appeal, winding up thus "starts" when, and not before, an order to wind up is made appointing a liquidator."
The Corporations Law provides for companies to be wound up in a number of circumstances. In certain circumstances the Court may order the winding up of a company irrespective of the wishes of its members. Part 5.4 of the Corporations Law makes provision with respect to winding up in insolvency. Part 5.4A provides for the Court to order the winding up of a company on grounds other than insolvency. Such grounds include that the company has not commenced business within one year from its incorporation or suspends its business for a whole year, that the directors have acted in the affairs of the company in their own interests rather than in the interests of the members as a whole, and that the Court is of opinion that it is just and equitable that the company be wound up. Part 5.4A also allows the ASC to apply to the Court for the winding up of a company in circumstances relating to an ASC investigation of affairs of the company. Part 5.4B of the Corporations Law contains provisions applicable both to winding up in insolvency and to winding up by the Court on grounds other than insolvency. Part 5.5 of the Corporations Law contains provisions for the voluntary winding up of companies. A voluntary winding up may be either a members' voluntary winding up (i.e. where a declaration of solvency has been filed) or a creditors' voluntary winding up. Division 4 of Part 5.5 contains provisions applicable to voluntary winding up generally. Part 5.6 of the Corporations Law contains provision applicable to winding up generally.
The details of the process of winding up vary depending upon the circumstances which gave rise to the winding up. The Court has only a minor role to play in voluntary winding up: its role is central to winding up by the Court. Circumstances may arise in which the public interest requires that a voluntary winding up become a winding up by the Court. Such is expressly recognised by s467B of the Corporations Law. A particular example of such a circumstance is provided by s496 of the Corporations Law. That section lists the making of an application for the company to be wound up in insolvency as one of the options available to a liquidator on a members' voluntary liquidation should he or she form the view that the company will be unable to pay or provide for the payment of its debts in full within the period stated in the directors' declaration of solvency. Circumstances may also arise in which the public interest will be served by the Court granting leave for a company that is being wound up in insolvency to resolve that it be wound up voluntarily (see s490 of the Corporations Law). Such leave will ordinarily only be granted where advantage to creditors and members can be shown to flow from such a course.
The recognition by the Corporations Law that circumstances may arise in which a company which is being wound up voluntarily ought, in the public interest, to be wound up by the Court, and the reverse, provides no support, in my view, for the contention that the Corporations Law discloses an intention that two orders for the same company to be wound up in insolvency may co-exist. Nor do I do not consider that either ss513 or 513A of the Corporations Law provides any support for such contention.
In Beneficial Finance Corporation Ltd v East Coast Printed Circuits Pty Ltd (1992) 10 ACLC 426 at 427 Young J of the Supreme Court of New South Wales stated:-
"Generally speaking it is an abuse of process to have two claims before the court for the same relief. That principle is usually associated with the same person bringing more than one claim, but it seems to me that when one has a class right, such as the right to wind up a company for insolvency, it applies where there are two quasi representative actions to bring about the same result. Certainly over the years this court has never encouraged more than one petition and, indeed, the practice is that solicitors, before they file a summons for winding up, should search to see whether there is an existing summons on file."
I endorse his Honour's remarks, and point out that it would be, in my view, an even more obvious abuse of process to apply to a court for relief already granted by an order of the court in full force and effect.
As Ms Maharaj frankly conceded, if her contentions were to be accepted, it may also have to be accepted that not only could the one company be the subject of a number of orders operative at the same time that it be wound up by the Court in insolvency, it could have a number of liquidators appointed by different orders made at different times and without any requirement that such liquidators act in concert. In my view, it is only necessary to formulate the above propositions to recognise that they fail to have regard to the nature of a winding up order and the duties of a liquidator appointed consequent upon the making of such an order. More than the discretion of the Court, in my view, stands in the way of the situation hypothetically envisaged.
As to the submission made on behalf of the Commonwealth to the effect that it is "trite law" that a party who does not desire a liquidator to be appointed to wind up a company may seek and obtain an order that a company be wound up without any consequential order being sought or made that a liquidator be appointed, it is, I consider, sufficient to say that none of the authorities to which I was referred provide any support for such submission.
I decline to grant the leave sought by the Commonwealth pursuant to s471B of the Corporations Law to proceed with its application to wind up the companies in insolvency.
I certify that this and the preceding pages are a true copy of the Reasons for Decision of the Honourable Justice Branson.
Associate:
Dated:
Counsel for the Applicant : Ms S J Maharaj
with her
Mr R J Chrzaszcz
Solicitors for the Applicant : Australian Government
Solicitor
Counsel for liquidator and : Mr J R Marsh
the companies
Solicitors for liquidator and : Fisher Jeffries
the companies
Counsel for Messrs Rocco and : Mr G B Hevey
and Lynton Emanuele with him
Mr J C Clarke
Solicitors for Messrs Rocco and : Cowell Clarke
and Lynton Emanuele
Hearing Date : 5 June 1996
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