Cribb, in the matter of Shields Contracting Pty Ltd (ACN 059 029 506) (In Liquidation)
[2008] FCA 1116
•17 June 2008
FEDERAL COURT OF AUSTRALIA
Cribb, in the matter of Shields Contracting Pty Ltd (ACN 059 029 506)
(In Liquidation) [2008] FCA 1116CORPORATIONS – failure by liquidators to obtain approval under s 477(2B) of the Corporations Act 2001 (Cth)
Corporations Act 2001 (Cth) ss 477(2B), 1322(4)(a), 1322(6)
Re Read (2007) 164 FCR 237
IN THE MATTER OF SHIELDS CONTRACTING PTY LTD (ACN 059 029 506) (IN LIQUIDATION)
NEIL RAYMOND CRIBB AND MARK ANTHONY CONLAN (IN THEIR CAPACITY AS JOINT AND SEVERAL LIQUIDATORS OF SHIELDS CONTRACTING PTY LTD (ACN 059 029 506) (IN LIQUIDATION))
WAD 111 OF 2008SIOPIS J
17 JUNE 2008
PERTH
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
WAD 111 OF 2008
IN THE MATTER OF SHIELDS CONTRACTING PTY LTD (ACN 059 029 506) (IN LIQUIDATION)
BETWEEN:
NEIL RAYMOND CRIBB AND MARK ANTHONY CONLAN (IN THEIR CAPACITY AS JOINT AND SEVERAL LIQUIDATORS OF SHIELDS CONTRACTING PTY LTD (ACN 059 029 506) (IN LIQUIDATION))
Plaintiffs
JUDGE:
SIOPIS J
DATE OF ORDER:
17 JUNE 2008
WHERE MADE:
PERTH
THE COURT ORDERS THAT:
1.The agreement dated 27 January 2005 between the plaintiffs on behalf of Shields Contracting Pty Ltd (In Liq) and Meteore Minerals Limited (formerly known as Select Minerals Pty Ltd), Renwick Nominees Pty Ltd and Donald Stephen McManus (Agreement) is approved.
2.The plaintiffs are directed that they may act on the Agreement as though it had been approved by the Court pursuant to s 477(2B) of the Corporations Act 2001.
3.Pursuant to s 1322(4)(a) of the Corporations Act 2001, the entry by the plaintiffs into the Agreement and the Agreement itself are not invalid by reason of the failure of the plaintiffs to obtain any prior approval required by s 477(2B) of the Corporations Act 2001.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
WAD 111 OF 2008
IN THE MATTER OF SHIELDS CONTRACTING PTY LTD (ACN 059 029 506) (IN LIQUIDATION)
BETWEEN:
NEIL RAYMOND CRIBB AND MARK ANTHONY CONLAN (IN THEIR CAPACITY AS JOINT AND SEVERAL LIQUIDATORS OF SHIELDS CONTRACTING PTY LTD (ACN 059 029 506) (IN LIQUIDATION))
Plaintiffs
JUDGE:
SIOPIS J
DATE OF ORDER:
17 JUNE 2008
WHERE MADE:
PERTH
REASONS FOR JUDGMENT
The plaintiffs are liquidators of the company, Shields Contracting Pty Ltd (the company). On 27 January 2005, the plaintiffs, on behalf of the company, entered into an agreement (the agreement) with Meteor Minerals Limited (which was formerly known as Select Minerals Pty Ltd), Renwick Nominees Pty Ltd and Donald Stephen McManus. The agreement was for the disposal of the company’s interest in mining tenements known as the “Mt Thirsty Tenements”. It contained a term which contemplated performance by a party after three months from the date of the agreement. The plaintiffs entered into the agreement without having first obtained approval in the manner prescribed in s 477(2B) of the Corporations Act 2001 (Cth) (the Act).
The plaintiffs now seek relief to the effect that the agreement be approved and that the Court direct that the plaintiffs may act on the agreement as though it had been approved by the Court pursuant to s 477(2B) of the Act. Further, the plaintiffs also seek relief pursuant to s 1322(4)(a) of the Act that the entry into the agreement and that the agreement itself are not invalid by reason of the failure of the plaintiffs to obtain any prior approval required by s 477(2B) of the Act.
The plaintiffs rely upon an affidavit of Mr Neil Raymond Cribb who is one of the two plaintiffs. Mr Cribb deposes to a long history of trials and tribulations that the plaintiffs have endured in their attempts to dispose of the company’s interest in the Mt Thirsty Tenements during the period 2000 to 2005.
Some of the difficulties that the plaintiffs confronted in their attempts to dispose of the company’s interest in the mining tenements arose from the fact that the tenements were not absolutely owned by the company. There were other interests in the tenements referred to as the “minority interests”, namely, those of Renwick Nominees Pty Ltd and Mr Donald Stephen McManus. There were also difficulties for sometime in relation to the lack of demand in the market for tenements of the nature of the Mt Thirsty Tenements. Further, the plaintiffs had to deal with plaints which were lodged in the Wardens Court for the forfeiture of the tenements; and also with a few offers that were made to purchase the tenements which then did not reach fruition.
The relief which the plaintiffs seek is founded on the relief which was granted by French J in the case of Re Read (2007) 164 FCR 237 (Re Read).
I deal first with the approval of the agreement under s 477(2B) of the Act.
In Re Read, French J at 247‑248, at [43]‑[45] referred with approval to the observations of Austin J in Corporate Affairs Commission v ASC Timber Pty Ltd (1998) 29 ACSR 109 at 117 and the principles espoused by Mandie J in Re Aslor Pty Ltd (1997) 24 ACSR 612 and Giles J in Re Spedley Securities Ltd (in liquidation) (1992) 9 ACSR 83, and then went on to say:
On those principles the Court does not rubber stamp the liquidator’s proposal. Nevertheless it will not generally interfere unless there is some want of good faith, error of law or principle, or real and substantial grounds for doubting the prudence of the liquidator’s proposal. While the principles so adopted by Mandie J and approved by Austin J related to approval of compromises, they seem to me to have wider application to the exercise of the discretion generally under s 477(2B).
In applying those principles, I am of the view that on the evidence, there is no absence of good faith or error of law or principle in the decision of the plaintiffs to enter into the agreement, nor are there any real and substantial grounds for doubting the prudence of the plaintiffs’ entry into the agreement. The plaintiffs have deposed that in their judgment it was in the best interests of the creditors to enter into the agreement. Bearing in mind the considerable difficulties which the plaintiffs experienced in seeking to dispose of the company’s interest in the tenements in the preceding five year period, there is no reason to question the plaintiffs’ judgment in this regard. Accordingly, I approve the agreement entered into by the plaintiffs.
The second element of the relief sought, is the giving of a direction that the plaintiffs act on the agreement as if the approval had been granted prior to the execution of the agreement. I would give that direction for the reasons which I have already mentioned.
The third element of the relief is a claim for a declaration under s 1322(4)(a) of the Act that the entry into the agreement and the agreement itself are not invalid by reason of the failure of the plaintiffs to obtain the prior approval required by s 477(2B) of the Act.
The grant of this relief requires the Court to have regard to the provisions of s 1322(6) of the Act. I will consider the requirements of that subsection.
First, I am satisfied that the requirement to obtain the approval of the creditors, alternatively of the Court, was essentially procedural in nature. Secondly, I am satisfied that the plaintiffs acted honestly. Mr Cribb deposed, and I accept, that the failure to obtain the approval occurred through inadvertence. Thirdly, there is no evidence which would cause me to believe that any substantial injustice has been or is likely to be caused to any person. To the contrary, the agreement contains a term which requires the purchaser to pay $370,000 to the company in the event that the tenements reach commercial production. Therefore, if the tenements ever reach production, the creditors are likely to benefit. Fourthly, for the reasons set out above, it is just and equitable that the declaration sought be granted.
Accordingly, the conditions in s 1322(6) of the Act having been satisfied, I make the declaration sought.
I will make the orders in terms of the claim for relief which has been filed in Court.
I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis. Associate:
Dated: 30 July 2008
Counsel for the Plaintiffs: Mr TP O’Leary Solicitor for the Plaintiffs: Blakiston & Crabb
Date of Hearing: 17 June 2008 Date of Judgment: 17 June 2008
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