Ex Parte - [2023] WASC 179

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   EX PARTE DANIEL JOHANNES BREDENKAMP & BRIAN KEVIN HUGHES as joint and several liquidators of MAYBACH CONSULTING PTY LTD (IN LIQUIDATION) [2023] WASC 179
CORAM:   ACTING MASTER MCDONALD
HEARD:   ON THE PAPERS
DELIVERED          :   25 MAY 2023
PUBLISHED           :   25 MAY 2023
FILE NO/S:   COR 58 of 2023
MATTER:   IN THE MATTER OF MAYBACH CONSULTING PTY LTD (IN LIQUIDATION)

EX PARTE
DANIEL JOHANNES BREDENKAMP & BRIAN KEVIN HUGHES as joint and several liquidators of MAYBACH CONSULTING PTY LTD (IN LIQUIDATION)
Plaintiffs

Catchwords:

Corporations - Liquidation - Special leave - Distribution of surplus - Dispensation of procedural requirements - Corporations Act 2001 (Cth), s 488(2)

Legislation:

Corporations Act 2001 (Cth)
Corporations Regulations 2001 (Cth)
Supreme Court (Corporations) Rules 2004 (WA)

Result:

Special leave to distribute surplus granted
Dispensation orders made

Category: B

Representation:

Counsel:

Plaintiffs

No appearance

Solicitors:

Plaintiffs

Blackwall Legal LLP

Case(s) referred to in decision(s):

CGU Workers Compensation (NSW) Ltd v Ascom Service Automation (Australia) Pty Ltd [2005] NSWSC 747
Re D & D Corak Investments Pty Ltd (in liq) [2020] NSWSC 1197
Re Hawden Property Group Pty Ltd (in liq) (2018) 125 ACSR 335; [2018] NSWSC 48
Re Knight, Second ICO Pty Ltd (in liq) (2020) 144 ACSR 329; [2020] FCA 608

ACTING MASTER MCDONALD:

The plaintiffs are the liquidators of Maybach Consulting Pty Ltd (In Liquidation) (the Company) and are seeking special leave to distribute a surplus to the Company's sole member pursuant to s 488(2) of the Corporations Act 2001 (Cth) (the Act) and an order that they be released as liquidators and the Company be deregistered pursuant to s 480(d) of the Act. In addition, they are seeking ancillary orders to dispense with various formal requirements under the Corporations Regulations 2001 (Cth) (the Regulations) and the Supreme Court (Corporations) Rules 2004 (WA) (the Rules) to enable the liquidation to be concluded.
The application is supported by the affidavit of Daniel Johannes Bredenkamp filed 6 April 2023 (First Bredenkamp Affidavit), the affidavit of Belinda Sarah Giles filed 13 April 2023 (First Giles Affidavit), a further affidavit of Daniel Johannes Bredenkamp filed 2 May 2023 (Second Bredenkamp Affidavit) and a further affidavit of Belinda Sarah Giles filed 2 May 2023 (Second Giles Affidavit).

Factual background

On 19 November 2019, the Federal Court made orders winding up the Company and appointing the plaintiffs as liquidators.[1] Mr John Arbuckle is the sole director and shareholder of the Company.[2] There has been no transfer of shares in the Company since the liquidators' appointment, nor any order made by the Supreme Court of Western Australia or Federal Court of Australia altering the Company's register of members.[3]
[1] First Bredenkamp Affidavit [2], 'DJB35'.
[2] First Bredenkamp Affidavit [13], 'DJB36', 22.
[3] First Bredenkamp Affidavit [38] ‑ [41], 'DJB43'.
The assets of the Company included a vehicle, cash and 500,000 fully paid ordinary shares in the capital of Catalyst Metals Limited.[4]
[4] First Bredenkamp Affidavit [15], [18], 'DJB37'…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2023] WASC 179
Decision Date

CaseChat Overview and Summary

The case before the court involves an application by the liquidators of a company for special leave to distribute a surplus to the sole shareholder and subsequently to be released from office. The dispute arises under Sections 480(d) and 488(2) of the Corporations Act 2001 (Cth), concerning the distribution of the remaining assets of the company following the payment of all creditors. The matter was heard in the Supreme Court of New South Wales.

The central legal issues before the court were whether the liquidators had taken appropriate steps to identify and realise the assets of the company and whether they had fulfilled their obligations to creditors. Additionally, the court needed to determine if there was a genuine surplus available for distribution to the shareholder, Mr Arbuckle, and if the rights of the contributories had been properly adjusted.

The court found that the liquidators had indeed taken appropriate steps to realise the assets and identify the creditors. All assets had been brought in and realised, and the sole creditor, the Australian Taxation Office (ATO), had been paid in full. The court was satisfied that there was a surplus of approximately $89,928.12 available for distribution. Since Mr Arbuckle was the only shareholder, there was no need to adjust the rights of contributories. The court granted the application for special leave to distribute the surplus, noting the appropriate measures taken by the liquidators and the absence of any issues with the distribution of assets.

The final orders included granting special leave to distribute the surplus to Mr Arbuckle and adjourning the application for the liquidators' release until after the distribution of the surplus. This approach was consistent with the precedent set in Re Hawden Property Group Pty Ltd (in liq).

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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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

Section 480(d) of the Act provides:480Release of liquidator and deregistration of companyWhen the liquidator:(a)has realised all the property of the company or so much of that property as can in his or her opinion be realised without needlessly protracting the winding up, and has distributed a final dividend (if any) to the creditors and adjusted the rights of the contributories among themselves and made a final return (if any) to the contributories; or(b)has resigned or has been removed from office;he or she may apply to the Court:….(d)for an order that he or she be released and that ASIC deregister the company. Section 488(2) of the Act has a twofold aim of ensuring that there is a genuine surplus of assets (in that the creditors' claims have been properly recognised and met in full) and that the correct relativities among the contributories have been observed before a surplus is distributed.[17][17] CGU Workers Compensation (NSW) Ltd v Ascom Service Automation (Australia) Pty Ltd [2005] NSWSC 747 [4]. Special leave will be granted to distribute a surplus in cases where a liquidator has undertaken appropriate investigations to realise all the assets of a company, called for proofs of debt and taken appropriate steps to identify the creditors of a company, paid out creditors in full and provided an estimate of future receipts and payments and the amount available for distribution.[18][18] Re Hawden Property Group Pty Ltd (in liq) (2018) 125 ACSR 335; [2018] NSWSC 48 [21] ‑ [25]; Re Knight, Second ICO Pty Ltd (in liq) (2020) 144 ACSR 329; [2020] FCA 608 [25]; Re D & D Corak Investments Pty Ltd (in liq) [2020] NSWSC 1197 [11], [23]. An order under s 480(d) of the Act finalising a winding up cannot be made until the distribution of the Company's property is complete, including distributing a surplus to a member.[19][19] Re Hawden Property Group Pty Ltd (in liq) [5]. The liquidators therefore propose that this application be dealt with in two parts:[20][20] Plaintiffs' submissions filed 2 May 2023 [3].(a)first, a consideration of the application for special leave to distribute a surplus under s 488(2) of the Act followed by an adjournment to allow the distribution of that surplus (subject to special leave being granted); and (b)secondly, a consideration of the application under s 480(d) of the Act. This approach is consistent with that taken in Re Hawden Property Group Pty Ltd (in liq) [5], [64]. This application deals with the first portion of the application, namely, the request for special leave to distribute a surplus and proposed orders 1, 2 and 3 of the originating process. I am satisfied that special leave to distribute the surplus should be granted for the following reasons:(a)the evidence shows the liquidators have taken appropriate steps to identify the assets[21] and the creditors of the Company;[22][21] First Bredenkamp Affidavit [14] ‑ [21], [42], [43][22] First Bredenkamp Affidavit, [44] ‑ [57].(b)the assets of the Company have been brought in and realised and the only creditor, the ATO, has been paid out in full;[23][23] First Bredenkamp Affidavit [42] ‑ [60], 'DJB44' ‑ 'DJB49'.(c)there is a surplus in the winding up of the Company of approximately $89,928.12;[24] and[24] Second Bredenkamp Affidavit, [11] ‑ [17], 'DJB57', 'DJB58', 'DJB59'.(d)there is no need for the Court to adjust the rights of contributories, because the only shareholder of the Company is Mr Arbuckle.[25][25] First Bredenkamp Affidavit [34] ‑ [41], 'DJB36', 'DJB42', 'DJB43'.