Evans v Mullumbimby News Pty Ltd
[2008] NSWSC 240
•19 March 2008
CITATION: Evans v Mullumbimby News Pty Ltd [2008] NSWSC 240 HEARING DATE(S): 19/03/08
JUDGMENT DATE :
19 March 2008JURISDICTION: Equity Division
Corporations ListJUDGMENT OF: Barrett J EX TEMPORE JUDGMENT DATE: 19 March 2008 DECISION: Leave to file originating process in amended form CATCHWORDS: CORPORATIONS - company under voluntary administration - member wishes to commence proceeding seeking winding up order in respect of company and other orders against company and a natural person defendant - whether leave needed under s 440D LEGISLATION CITED: Corporations Act 2001 (Cth), Part 5.3A, ss 440A, 440D CATEGORY: Principal judgment CASES CITED: Australian Prudential Regulation Authority v Rural & General Insurance Ltd (2004) 136 FCR 149
Watts v Albany Marine Centre Pty Ltd [2007] WASC 22PARTIES: Robyn Lorraine Evans and Anthony David Johnston - Plaintiffs
Mullumbimby News Pty Limited amd David William Smith - Defendants
FILE NUMBER(S): SC 1936/08 COUNSEL: Mr M L Brabazon - Plaintiffs
Mr M G Streeter - AdministratorSOLICITORS: Baker Mannering & Hart - Plaintiffs
Nv Lawyers - Administrator
IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST
BARRETT J
WEDNESDAY 19 MARCH 2008
1936/08 ROBYN LORRAINE EVANS & ANOR v MULLUMBIMBY NEWS PTY LIMITED & ANOR
JUDGMENT
1 The plaintiffs seek leave to file in court an originating process which seeks as principal relief an order that the first defendant, Mullumbimby News Pty Ltd, be wound up. There is a claim for interlocutory relief by way of an order for the appointment of a provisional liquidator and claims against both defendants for orders for access to documents and certain other interlocutory relief.
2 The plaintiffs are, I am told, a person who is registered as the holder of 50 per cent of the shares in Mullumbimby News and another person who is the beneficial owner of those shares. The defendants are Mullumbimby News itself and the holder of the remaining 50 per cent of the shares, who is also the sole director.
3 When the matter came before me this morning, I was informed by counsel for the plaintiffs that the sole director had yesterday appointed an administrator under Pt 5.3A of the Corporations Act 2001 (Cth). Mr Streeter has appeared this morning on the instructions of the administrator.
4 A threshold question arising is whether, in the absence of leave under
s 440D of the Corporations Act, the originating process may be filed so as to initiate the winding up proceedings. I am of the opinion that leave under that section is not needed so far as the winding up application is concerned. This is because of the existence of s 440A which makes specific provision with respect to winding up proceedings.
5 The relationship between the two provisions has been considered in a number of cases. There is discussion of them in the judgment of Gyles J in Australian Prudential Regulation Authority v Rural & General Insurance Ltd (2004) 136 FCR 149. His Honour concluded that a winding up proceeding is not within the purview of s 440D and that s 440A alone operates in relation to such a proceeding. I quote from the judgment at [11] and [12]:
[12] The form of s 444E is particularly significant:“[11] In my opinion the better view is that a winding up proceeding is not caught by s 440D. If attention is only paid to the text of s 440D, there would be force in the opinion of Stone J that a winding up proceeding is "against the company". There is also force in the submissions for Rural & General as to inconsistency. However, a different conclusion follows from consideration of the whole of Div 6, bearing in mind the place it occupies in Pt 5.3A, which in turn is to be considered in the overall context of Pt 5. Part 5.3A administration is one form of external administration in insolvency, winding up is another. Neither is necessarily entitled to precedence. That interrelation needed to be dealt with and it is dealt with by s 440A. In each form of external administration it is necessary to have a moratorium for what might be called external claims. That is the role played by s 440D (compare s 471B in relation to winding up in insolvency, s 444E in the case of a deed of company arrangement and s 500(2) in the case of voluntary winding up).
‘ Protection of company's property from persons bound by deed
- (1) Until a deed of company arrangement terminates, this section applies to a person bound by the deed.
(2) The person cannot:
- (a) make an application for an order to wind up the company; or
(b) proceed with such an application made before the deed became binding on the person.
- (a) begin or proceed with a proceeding against the company or in relation to any of its property; or
(b) begin or proceed with enforcement process in relation to property of the company;
except:
(c) with the leave of the Court; and
(d) in accordance with such terms (if any) as the Court imposes.
- “property”, in relation to the company, includes property used or occupied by, or in the possession of, the company.’
It will be observed that the legislature clearly distinguishes between a winding up proceeding on the one hand and a proceeding against the company on the other.”
6 I note that the approach taken by Gyles J was approved and followed by
E M Heenan J in Watts v Albany Marine Centre Pty Ltd [2007] WASC 22. The approach is, in my respectful opinion, correct.
7 In the present case there is not only an application for a winding up order and the related application for the appointment of a provisional liquidator but also applications for certain other orders to which I have made brief reference.
8 The applications concerning access to documents are for orders against both the company as first defendant and the natural person second defendant. There is also an application for an order concerning co-operation which it is contemplated would be made against both defendants, and an application for an interlocutory order restraining both defendants in relation to a sale of business transaction. Those aspects are, it seems to me, within s 440D so far as the company is concerned and the exception effectively created by the specification in s 440A does not operate to remove the requirement for leave under s 440D in respect of them.
9 The embargo imposed by s 440D is upon commencing or continuing a proceeding with the result, it seems to me, that while the originating process can be filed insofar as it seeks winding up and the appointment of a provisional liquidator, it may not be filed insofar as it contains the other claims for relief involving the company as distinct from the natural person second defendant.
10 I grant leave to the plaintiffs to file in court an originating process in the form which I initial and date but modified so that in each of paras 3, 4 and 7 the words "first and second defendants" are replaced by the word "second defendant" and in paragraph 5 the word "defendants" is replaced by the words "second defendant".
11 Upon the plaintiff's undertaking to file promptly the originals thereof I grant leave to the plaintiffs to file in court photocopies or faxed copies of the affidavits of Robyn Lorraine Evans sworn 18 March 2008 and the affidavit of Steven William Hart sworn the same day, together with the consent of Morgan James Chubb to act as liquidator or provisional liquidator.
12 I direct that the originating process be returnable before the Corporations Judge at 10am, 31 March 2008.
13 I direct that service on the second defendant may be effected by delivery to the office of Wyndham Prem Commercial Lawyers, Level 6, 5 Hunter Street, Sydney.
14 I grant liberty to apply on 48 hours notice.
15 I note the undertaking to pay the appropriate filing fee.
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