Deputy Commissioner of Taxation v. Cherbourg Food Processing Company Pty Ltd

[2008] QSC 126

[2008] QSC 126

SUPREME COURT OF QUEENSLAND

CIVIL JURISDICTION

MCMURDO J

No 780 of 2004

DEPUTY COMMISSIONER OF TAXATION	Applicant
and
CHERBOURG FOOD PROCESSING COMPANY PTY LTD	Respondent

BRISBANE

..DATE 06/05/2008

ORDER

HIS HONOUR:  The company Cherbourg Food Processing Company Pty Ltd in liquidation at present has no liquidators.  The liquidators who had been appointed have resigned.  There is an application by Mr K J Hoey and Mr W F Bailey, former directors of the company, and through their own companies members of the company, to appoint Mr D J Hambleton and Mr R E Murphy as liquidators pursuant to s 473(7) of the Corporations Act. 

That is for the purpose of then having the company as a first plaintiff and Mr Hoey and Mr Bailey as second and third plaintiffs commence proceedings against Enterprises (Qld) Pty Ltd, a Mr McDougall and a Mr Voll, in this Court to claim damages and other relief in amounts up to about $1.5 million. 

The proposed proceedings are the subject of some evidence.  It is unnecessary to say anything about their apparent strength but there is advice which Mr Hoey and Mr Bailey have as to their prospects which has apparently motivated these present applications. 

It is clear that the application made under section 473(7) should be granted.  The vacancy should be filled by the appointment of Mr Hambleton and Mr Murphy.  The creditor who applied for the winding up was the Deputy Commissioner of Taxation who has been informed of that application and has written to say that there is no objection to it. 

What is then proposed is that Mr Hambleton and Mr Murphy appoint themselves as administrators pursuant to section 436B of the Corporations Act.  Again this is for the purpose of having the company, together with Mr Hoey and Mr Bailey, prosecute those proposed proceedings. 

Mr Hoey and Mr Bailey propose to effectively give the instructions for the conduct of those proceedings on behalf of all plaintiffs and they have offered to indemnify Mr Hambleton and Mr Murphy against any liability they might incur for costs out of these proceedings to the extent of $100,000. 

The appointment of the liquidators as administrators and the entering into of a proposed deed of company arrangement are not matters which are necessary for the conduct of that proposed litigation.  But there are some advantages to do with convenience and costs in that course and hence the application made by Mr Hambleton and Mr Murphy upon their appointment as liquidators to appoint themselves as administrators. 

The appointment of the liquidators as administrators would not terminate the winding up, see Re: Nardell Coal Corporation Pty Ltd & Anor (2004) 182 FLR 290. The Deputy Commissioner of Taxation was not clearly informed of an application by the liquidators to appoint themselves as administrators but there was effective notification of that in the provision of Mr Hambleton's affidavit to the Deputy Commissioner. It is not a lengthy affidavit and in that affidavit Mr Hambleton swore that, for reasons he there set out, that in the event that he and Mr Murphy were appointed liquidators they would seek leave to be appointed administrators.
The question under section 436B is not whether the liquidators should be permitted to appoint administrators at all but rather whether they should be permitted to appoint themselves.  There are no circumstances here suggesting any real potential for any conflict between those two roles.  I am persuaded then to give Mr Hambleton and Mr Murphy leave to appoint themselves as administrators pursuant to section 436B. 

The result is that there will be orders in terms of the draft which I have initialled and will place with the file. 

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