In the matter of Angstrom Assets Pty Ltd (in liq)

[2014] NSWSC 1779

Supreme Court

New South Wales

Medium Neutral Citation:	In the matter of Angstrom Assets Pty Ltd (in liq) [2014] NSWSC 1779
Hearing dates:	24 November 2014
Decision date:	11 December 2014
Jurisdiction:	Equity Division - Corporations List
Before:	Black J
Decision:	Orders made that the liquidators be granted special leave to distribute the surplus assets of the company and dispensing with requirement for the annexing of a schedule of contributories to that order. Order made determining the liquidators' remuneration for the period 12 March 2012 to 31 August 2014 and for the period from 1 September 2014 until and including the deregistration of the Company.
Catchwords:	CORPORATIONS - winding up - winding up voluntarily - application by liquidators for special leave to distribute surplus of assets in the liquidation of company and approval for remuneration - where no creditors of company have been identified - where company has a sole shareholder - whether special leave should be granted to liquidators to distribute surplus assets of company - whether requirement for schedule of contributories to be annexed to order authorising distribution should be dispensed with - whether retrospective approval should be granted for liquidator's remuneration in relevant period - whether prospective approval should be granted for liquidator's remuneration in relevant period.
Legislation Cited:	- Corporations Act 2001 (Cth) ss 473(3), 473(3)(b)(ii), 478(1A), 479(3), 488, 488(2) - Corporations Regulations 2001 (Cth) reg 5.6.71(1) - Supreme Court (Corporations) Rules 1999 (NSW) r 7.9
Cases Cited:	- CGU Workers Compensation (NSW) Ltd v Ascom Service Automation (Australia) Pty Ltd [2005] NSWSC 747 - Poulter in his capacity as liquidator of Haulton Construction Services Pty Ltd (in liq) v Haulton Construction Services Pty Ltd (in liq) [2013] VSC 366 - Re DS Millard & Son Pty Ltd (1997) 24 ACSR 71; 15 ACLC 808 - Re FAI Investments Pty Ltd (in liq); Re Valusi Pty Ltd (in liq) [2014] NSWSC 1300 - Re HIH Services Pty Ltd (in liq) [2012] NSWSC 118 - Re Klaus Maertin Pty Ltd (in liq); Maertin v Klaus Maertin Pty Ltd [2009] NSWSC 618; (2009) 232 FLR 239 - Re FAI Car Owners Mutual Insurance Co Pty Ltd [2009] NSWSC 1350; (2009) 262 ALR 552
Texts Cited:	- Austin & Black's Annotations to the Corporations Act [5.473]
Category:	Interlocutory applications
Parties:	William John Fletcher as liquidator of Angstrom Assets Pty Ltd (in liq) (First Plaintiff) Katherine Elizabeth Barnet as Liquidator of Angstrom Assets Pty Ltd (in liq) (Second Plaintiff) Angstrom Assets Pty Ltd (in liq) (Defendant)
Representation:	Counsel: T. Hamilton (Sol) (Plaintiffs) Solicitors: Henry Davis York (Plaintiffs)
File Number(s):	2012/19183

Judgment

1. By Interlocutory Application filed on 30 October 2014, Mr William Fletcher and Ms Katherine Barnet as liquidators of Angstrom Assets Pty Ltd (in liq) ("Liquidators") seek orders under s 473(3)(b)(ii), s 479(3) and s 488(2) of the Corporations Act 2001 (Cth) for special leave to distribute a surplus of assets in the liquidation of the Company and approving their remuneration as liquidators of Angstrom Assets Pty Ltd (in liq) ("Company").

Application for special leave to distribute surplus

1. First, the Liquidators seek an order under s 488(2) of the Corporations Act that they be granted special leave to distribute the surplus assets of the Company. The application is supported by the affidavit of Ms Barnet dated 26 September 2014. Ms Barnet refers to the circumstances of the Liquidators' appointment as liquidators of the sole member of the Company, MFS Alternative Assets Ltd (in liq) ("MFSAAL"), and to their appointment as liquidators of the Company by this Court in March 2012, after MFSAAL passed a special resolution that the Company should be wound up by the Court. Ms Barnet refers to the steps taken by the Liquidators to realise the only assets of the Company, being nearly 667,000 shares in Aurora Funds Ltd ("Aurora"), which were sold in an on-market transaction in May 2012. Ms Barnet notes that investigations into the Company's business and affairs conducted by staff under her supervision have not identified any creditors and no proofs of debt or claims have been lodged in the liquidation. She indicates that notices of the Liquidators' appointment were published and letters confirming their appointment were sent to institutions that are commonly creditors in a liquidation, and a notice of a meeting of creditors and inviting formal proofs of debt or claim was also placed on the insolvency notices website of the Australian Securities and Investments Commission ("ASIC"). No formal proofs of debt were lodged by any creditor and no persons claiming to be a creditor attended either a first creditors' meeting or an adjournment of that meeting. Ms Barnet indicates that, on that basis, she has formed the view that there are no creditors of the Company. She also indicates that she has formed the view, by reference to records maintained by ASIC, that MFSAAL is the Company's sole shareholder. There is evidence that a notice of application for leave to distribute a surplus, under r 7.9 of the Supreme Court (Corporations) Rules 1999 (NSW) was published on 7 November 2014.

1. In submissions, Ms Hamilton, solicitor, who appeared for the Liquidators, noted that the purpose of seeking leave under s 488 of the Corporations Act is to ensure that appropriate investigations have been undertaken to identify any creditors of the Company and its shareholders before any distribution is made. That provision is intended to ensure that there is in reality a surplus, in that creditors' claims have been recognised and met in full, and that the correct relativities among the contributories have been observed: CGU Workers Compensation (NSW) Ltd v Ascom Service Automation (Australia) Pty Ltd [2005] NSWSC 747 at [4]. The phrase "special leave" requires that a special application be made to the Court, as has occurred in this matter, rather than the matter being dealt with as part of some other administrative procedure: Re DS Millard & Son Pty Ltd (1997) 24 ACSR 71 at 72; 15 ACLC 808; Re Klaus Maertin Pty Ltd (in liq); Maertin v Klaus Maertin Pty Ltd [2009] NSWSC 618; (2009) 232 FLR 239; Re HIH Services Pty Ltd (in liq) [2012] NSWSC 118 at [10]. I am satisfied, having regard to Ms Barnet's evidence set out above, that no creditors' claims have been identified after appropriate inquiry, that there is a surplus in the liquidation and that there is only one contributory to which a distribution should be made. Accordingly, I will make an order under s 488(2) of the Corporations Act that the Liquidators be granted special leave to distribute the surplus assets of the Company.

1. The Liquidators also seek a direction under s 479(3) of the Corporations Act, which permits the Court to make a direction in respect of a matter arising in a voluntary winding up, that the order authorising the distribution of surplus assets of the Company need not have annexed to it a schedule in accordance with Form 511 as otherwise required under reg 5.6.71(1) of the Corporations Regulations 2001 (Cth). Ms Barnet's evidence is that she considers that it is unnecessary to settle a list of contributories under s 478(1A) of the Corporations Act where the shares in the Company are fully paid up and there is only one contributory, so that MFSAAL is solely entitled to the balance of surplus assets remaining in the Company's estate after the Company's liabilities have been satisfied. In oral submissions, Ms Hamilton noted that this direction was sought on the basis that there was only one shareholder and the annexing of a schedule in Form 511 would provide no useful purpose in that regard, and drew attention to the observations of Barrett J (as his Honour then was) in Re FAI Car Owners Mutual Insurance Company Pty Ltd [2009] NSWSC 1350; (2009) 262 ALR 552 at [28] where his Honour made a similar order in similar circumstances. The same approach was taken in Re Klaus Maertin Pty Ltd above and in Re HIH Services Pty Ltd (in liq) above at [12]. I am satisfied that such a direction should be made for the reasons indicated by Ms Barnett's evidence. Consistent with the approach taken in those cases, I will amend the form of the order approving the distribution of the surplus to specify the entity to which it is to be distributed, where the relevant schedule is not to be annexed to the order.

Approval of remuneration

1. The Liquidators seek an order, under s 473(3)(b)(ii) of the Corporations Act, that their remuneration for the period 12 March 2012 to 31 August 2014 (inclusive) is determined to be $17,940.45 (including GST) plus filing fees of $862, for a total of $18,802.45 and that their remuneration for the period from 1 September 2014 until and including the Company's deregistration is determined to be a maximum amount of $2,200 including GST. Ms Barnett gives evidence, in her affidavit dated 26 September 2014, of the work performed since the Liquidators' appointment, including realisation of the shares in Aurora, investment of the proceeds of that sale, and performance of the investigations necessary to comply with the Liquidators' statutory obligations. She also refers to the steps which were taken to seek approval of remuneration by creditors. Not surprisingly, where no creditors have been identified or attended the creditors' meeting, no such approval could be obtained. Ms Barnet expresses the view, which seems to me to be plainly justifiable, that this is a proper matter in which to seek a determination of the Liquidators' remuneration under s 473(3)(b)(ii) of the Corporations Act.

1. Ms Barnett gives evidence that the Liquidators consider that the appropriate method of charging their remuneration in the liquidation is on a time-based basis, for reasons which she indicates. She exhibits to her affidavit an account of the work undertaken by herself and her staff in respect of the Company's winding up from 12 March 2012 until 31 August 2014 which contains detail of the work undertaken, the time taken to perform the relevant tasks, the person who undertook the task and their position and the hourly charge-out rate, which in turn appears to reflect the charges of the Sydney and Brisbane offices of the Liquidators' firm at relevant times. Ms Barnet expresses the view, which there is no reason to doubt, that the work performed was necessary to realise the Company's assets to generate surplus funds in the liquidation for distribution to the Company's sole member in order to comply with the Liquidators' statutory duties and obligations. By her further affidavit dated 29 October 2014, Ms Barnet gives evidence of having given notice of the Liquidators' intention to apply for determination of their remuneration to MFSAAL. MFSAAL has not objected to the application, although the weight to be given to that matter may be limited by the fact that Mr Fletcher and Ms Barnet are also the liquidators of MFSAAL.

1. Where a liquidator's remuneration is determined by the Court in a court-ordered winding up under s 473(3) of the Corporations Act, that is usually done by a summary procedure analogous to taxation of solicitors' costs; see the cases cited in Austin & Black's Annotations to the Corporations Act [5.473]. Such a determination is also usually done by a Registrar in the exercise of delegated powers rather than by a judge. However, in the particular circumstances, where the amount claimed is relatively small and the Court has detailed information as to the work done before it, it does not seem to me to be necessary to refer the matter to a Registrar for further review. I note that Brereton J took the same approach in Re HIH Services Pty Ltd (in liq) above at [7]. I am satisfied, on the basis of Ms Barnett's evidence, that the Court should determine the Liquidators' remuneration for the period 12 March 2012 to 31 August 2014 (inclusive) in the amount of $17,940.45 (including GST).

1. Ms Barnett also identifies the additional steps that need to be taken prior to finalising the winding up, namely, to distribute any surplus in the liquidation, take steps to deregister the Company and undertake statutory reporting and filing with ASIC. Ms Barnet seeks a prospective determination of the remuneration referable to the tasks necessary to finalise the liquidation, based on an estimate of $2,000 plus GST. This Court has been prepared to determine reasonable amounts payable for a liquidator's future remuneration in applications of this kind, at the same time as approving the distribution of a surplus: see for example, Re HIH Services Pty Ltd (in liq) above at [7]; Re FAI Investments Pty Ltd (in liq); Re Valusi Pty Ltd (in liq) [2014] NSWSC 1300 at [6], [11]. The amount of the prospective remuneration claimed seems to me to be reasonable and I will take the same approach. I take that course although I note that Gardiner AsJ recently declined to determine prospective remuneration, in very different factual circumstances and for a much larger amount in Poulter in his capacity as liquidator ofHaulton Construction Services Pty Ltd (in liq) v Haulton Construction Services Pty Ltd (in liq) [2013] VSC 366 at [49]. It is, however, not possible to grant approval for the filing fees claimed by the Liquidators in an application under s 473 of the Corporations Act since they do not comprise part of the Liquidators' remuneration.

1. Accordingly, I make the following orders:

1. Order pursuant to s 488(2) of the Corporations Act 2001 (Cth) that Mr William Fletcher and Ms Katherine Barnet ("Liquidators") as liquidators of Angstrom Assets Pty Ltd (in liq) ("Company") be granted special leave to distribute the surplus assets of the Company to the sole contributory, MFS Alternative Assets Ltd (in liq).

2. Direct, pursuant to s 479(3) of the Corporations Act, that the order authorising the distribution of surplus assets of the Company need not have annexed to it a schedule in accordance with Form 551 pursuant to Reg 5.6.71(1) of the Corporations Regulations 2001 (Cth).

3. Order, under s 473(3)(b)(ii) of the Corporations Act that the Liquidators' remuneration:

(a) for the period 12 March 2012 to 31 August 2014 (inclusive) is determined to be $17,940.45 (including GST); and

(b) the Liquidators' remuneration for the period from 1 September 2014 until and including the deregistration of the Company is determined to be up to a maximum sum of $2,200 (including GST).

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