CITATION: Employers' Mutual Indemnity (Workers Compensation) Ltd v Surf City Holdings Pty Ltd [2004] NSWSC 1024 HEARING DATE(S): 21 October 2004 JUDGMENT DATE:
21 October 2004JURISDICTION:
EquityJUDGMENT OF: Hamilton J DECISION: Adjournment granted of proceedings to wind up company under administration. CATCHWORDS: CORPORATIONS [230] - Application under Corporations Act 2001 (Cth) s 440A(2) to adjourn hearing - Relevant considerations - Whether it is in the interests of creditors for company to continue under administration rather than be wound up - Evidence slight - Application granted. LEGISLATION CITED: Corporations Act 2001 (Cth), s 440A CASES CITED: Deputy Commissioner of Taxation: In the matter of First Netcom Pty Limited [2000] NSWSC 989
Re First Netcom Pty Ltd; Deputy Commissioner of Taxation v First Netcom Pty Ltd 35 ACSR 615PARTIES :
Employers' Mutual Indemnity (Workers Compensation) Ltd (P)
Surf City Holdings Pty Limited (D)FILE NUMBER(S): SC 4953/04 COUNSEL: J F Merewether, Solicitor (P)
S Mullette, Solicitor (D)
A Johnson, Solicitor (Supporting creditors)SOLICITORS: Forbes Dowling (P)
The Argyle Partnership (D)
A Johnson, Solicitor (Supporting creditors)
IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
HAMILTON J
THURSDAY, 21 OCTOBER 2004
4953/04 EMPLOYERS’ MUTUAL INDEMNITY (WORKERS COMPENSATION) LTD v SURF CITY HOLDINGS PTY LTD
JUDGMENT
1 HIS HONOUR: What is before me is an application to wind up the defendant, which was for hearing before the Registrar today. The adjournment application has been referred to me as Duty Judge by the Registrar. The application for adjournment is supported by the affidavit of Sule Arnautovic, a registered liquidator, who deposes that he was yesterday, 20 October 2004, appointed administrator of the defendant.
2 The situation as Mr Arnautovic sees it is there are no assets of the company and no likelihood of the creditors receiving a dividend if the company is put into liquidation today. The administrator is informed by Donna Batiste, a director of the company, that she intends to make a proposal to the administrator for the provision of funds which would permit a deed of company arrangement (“DOCA”) to be entered into under which the creditors would receive something. The company as well as being without funds is not trading.
3 Section 440A(2) of the Corporations Act 2001 (Cth) provides for the Court to adjourn the hearing of an application for an order to wind up a company if the company is under administration and the Court is satisfied that it is in the interests of the company's creditors for the company to continue under administration rather than be wound up.
4 The principles that govern these applications were set out by Santow J in Re First Netcom Pty Ltd; Deputy Commissioner of Taxation v First Netcom Pty Ltd (2000) 35 ACSR 615.
5 Whilst the evidence is slight and not in very precise form, I have formed the view that it is in the interests of the company's creditors for the company to continue under administration. There appears to me to be little downside for this company being left for three or four weeks to see whether a DOCA can be entered into which will provide something for creditors who would otherwise receive nothing. The supporting creditor, the Deputy Commission of Taxation, consents to the application for adjournment.
6 The plaintiff came to oppose the application for adjournment, but now that the evidence is available, does not, I think, oppose it outright, but suggests that this is one of those middle course cases referred to by Santow J in Deputy Commissioner of Taxation: In the matter of First Netcom Pty Limited [2000] NSWSC 989, so that there should not be an adjournment until after 18 November, when the second creditors' meeting would have been held, but a shorter adjournment and the matter should be brought back before the Court at an earlier time to see what the proposal for a DOCA is to be.
7 However, in the circumstances, I have formed the view that that would create extra expense and there is not much downside from the matter going over for three or four weeks.
8 The result is that I propose to adjourn the winding up proceedings to 22 November 2004 in the Registrar's Corporations List.
Last Modified: 12/14/2004
- AGLC
- Employers' Mutual Indemnity (Workers Compensation) Ltd v Surf City Holdings Pty Ltd [2004] NSWSC 1024
- Case
- [2004] NSWSC 1024
- Decision Date
CaseChat Overview and Summary
The court was tasked with determining whether there was sufficient evidence to conclude that continuing the administration of Surf City Holdings Pty Ltd would serve the interests of its creditors better than winding up the company. The court needed to weigh the minimal evidence presented against the potential consequences for the creditors in either scenario.
The Federal Circuit Court of Australia found that the evidence provided was slight but sufficient to warrant an adjournment. The court considered it was in the interests of the creditors for the company to continue under administration, as it offered a better opportunity to maximize the return to creditors. Given the precarious state of the evidence, the court granted the application for an adjournment. This decision allowed further time for the company's affairs to be managed and for more comprehensive evidence to be gathered, potentially benefiting the creditors.
The final orders of the court included granting the application for an adjournment and allowing Surf City Holdings Pty Ltd to continue under administration. This decision was made in the interests of the creditors, who would benefit from the continued efforts to manage the company's assets and liabilities effectively.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Reasons for decision
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Ratio Decidendi
Legal Principle Established
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