Dr Stokes, N.J. v IMT Ltd

[1993] FCA 1007

JUDGMENT No. ........ ,.......,. ........ 10071 93

5 J h F ) )

) NO. NG 3291 of 1993 ) N

)

GENERAL DIVISION )

BETWEEN : PR NORMAN JOHN STOKES & ORS

Applicants

AND :  IMT LIMITED

First Respondent

m

Second Kespondent

D T L - A S

Third Respondent

Fourth Respondent

L -

Fifth Respondent

R -

Sixth Respondent

Seventh Respondent

m

Eighth Respondent

16 DECEMBER 1993

The case has reached the stage where pleadings have been filed and a number of affidavits have been filed. It is a very

- R

LOCKHART J.

This is a motion by the applicants in the substantive proceeding for leave to proceed against the second respondent, Horizon Properties Limited (in liquidation) pursuant to S. 471B of the Corporations Law.

complex case, as the statement of claim illustrates. I need not recite the basic issues, except to say that the matters of which the applicants complain go back in some years to the formation of a venture which later assumed corporate form through the first respondent, relating to the development of certain medical technology.

The application is brought by the applicants as representative parties under Part 4A of the Federal Court of Australia Act 1976 and the relevant provisions of the Corporations Law. Having perused the statement of claim and the application, and having read the affidavits to which I have been referred, it seems to me that Horizon Properties is a necessary party to the litigation if the applicants are to succeed in substance in due course. Whether they will or not, of course, I have no idea.

It places the liquidator in a difficult position, because defends this proceeding, and that decision is inevitably wrapped	he will have to make a decision as to what extent, if at all, he	up with the decision by him as to what money he can afford,in the proceeds of the winding up to spend on this litigation. Assets under his control now total about $125,000 and other moneys may be forthcoming, which are referred to in his affidavit. He has unsecured creditors in the winding up in excess of $20 million, so that on no view of it will the unsecured creditors receive very much at all by way of a dividend in the winding up.
The Australian Securities Commission appears in the matter and supports the application. I take that into account also.
I think, however, on balance it is not right to shut the applicants out from litigatingtheir case when Horizon Properties is, as I perceive it at the moment, a necessary party. Any leave would, of course be subject to the usual constraint that the judgement is obtained against Horizon Properties by the applicants, then they cannot enforce that judgment without prior leave of the Court. The liquidator will have to make his own decision as to what extent he intervenes in the proceeding and no doubt he will do that upon advice being given to him.

Accordingly, I am of the view that leave to proceed should

be granted.

The Court orders that:

1.    The applicants have leave to continue proceeding G3291 of 1993 against the second respondent, in respect of the causes of action described in the statement of claim or any other causes of action reasonably referrable thereto which may be the subject of any amended statement of claim.

2.    Such leave does not extend to the taking of any step to enforce any judgment obtained in proceeding G 3291 of 1991 against the property of Horizon Properties Limited in Liquidation, without the prior leave of this Court or of the leave of the Supreme Court of New South Wales, assuming that the order for winding-up of Horizon Properties Limited was made by that court.

The motion that the Court has before it, is brought in the substantive proceeding, G3291 of 1993. Technically it should have been brought in the winding up matter of Horizon Properties Limited (in liquidation) because a motion of this kind is, in truth, an administrative matter in the winding up. I shall proceed on the basis that the motion will be treated as if it had been brought in the winding up. The liquidator, who is represented by Mr Somerset, has asked the Court to order that the liquidator's costs of the motion be paid out of the assets of the company in the usual way. Mr Thomson who appears for the applicants has made it clear that, though he does not opyose that order, nevertheless if the substantive litigation ultimately results in the success of his clients such that there would be

nothing answering the description of assets available to
unsecured creditors in the winding up and the liquidator may have

been liable, in effect, to recoup the moneys.

I say nothing about that, because that touches on questions of personal liability of liquidators which is not free from complexity. That matter is purely hypothetical at this stage.

I think it is right however that the liquidator have an order for

costs of the kind Mr Somerset seeks, but any order I make will say nothing whatever about the point that Mr Thomson has foreshadowed. Accordingly, in the winding up matter, the Court orders that the liquidator's costs of the motion for leave shall be his costs in the winding up.

I also order in proceeding G3291 of 1993, that the cost of

the motion in the winding up matter shall be costs in the

proceeding.

I certify that this and the

preceding four (4) pages are a true copy of the reasons for judgment herein of the Honourable Mr. Justice Lockhart.

Associate

Dated: 16 December 1993

Counsel for the Applicants	J E Thomson and K E Burke
Solicitors for the Applicants :	Gordon and Johnstone
Solicitors for Second Respondent:	P A Somerset and CO
Solicitor for Australian
Securities Commission	Peter J Stepek (ASC)
Date of Hearing	16 December 1993
Date of Judgment	16 December 1993