In the matter of bCode Pty Limited - [2013] NSWSC 384

Supreme Court

New South Wales

Medium Neutral Citation: In the matter of bCode Pty Limited [2013] NSWSC 384
Hearing dates: Tuesday 26 March 2013
Decision date: 26 March 2013
Jurisdiction: Equity Division - Corporations List
Before: Brereton J
Decision:
Decline to make orders sought in paragraph 4 of interlocutory process filed 15 March 2013. Balance of interlocutory processes stood over 15 April 2013.

Catchwords: CORPORATIONS - external administration - insolvency - winding up - application for injunction to restrain liquidator from selling certain assets - where applicant seeking reversal of liquidator's decision to reject a proposal for a deed of company arrangement as final relief - Whether there is a seriously arguable case for final relief reversing the liquidator's decision to reject the proposal for a deed of company arrangement - Whether there is a seriously arguable case that the liquidator acted in bad faith in the conduct of the sale
Legislation Cited: (Cth) Corporations Act 2001, s 545, s 1321
Cases Cited: Jay-O-Bees Pty Ltd (in liq), Re Rosseau Pty Ltd (in liq) v Jay-O-Bees (in liq) [2004] NSWSC 818
Re Burnells Pty Ltd (in liq) v Walsh [1979] Qd R 440
Re Equity Funds of Australia (in liq) (1976) 2 ACLR 238
Spedley Securities Ltd, Ex parte Australian National Industries Ltd (No 2) (1991) 4 ACSR 552
UTSA Pty Ltd (in liq) v Ultra Tune Australia Pty Ltd [1997] 1 VR 667
Category: Interlocutory applications
Parties: Futurecorp International Pty Limited (plaintiff/applicant)
Mr SW Hathway (first defendant/liquidator)
Mr TG Van Der Velde (second defendant/liquidator)
Representation: Counsel:
Mr PL Dodson (plaintiff/applicant)
Mr GP McNally SC (defendants/liquidators)
Solicitors:
E Berman & Co (plaintiff/applicant)
Breene & Breene (defendants/liquidators)

File Number(s): 2013/ 79833

Judgment (ex tempore)

HIS HONOUR: The company bCode Pty Limited was wound up on grounds of insolvency and oppression at the suit of the present plaintiff Futurecorp International Pty Limited, a 20% shareholder, by order of Black J made on 26 November 2012. The defendants Stephen Wesley Hathway and Terry Grant Van Der Velde, are its liquidators. They propose to conduct a telephone auction sale of the company's assets at 3pm this afternoon.

By interlocutory process filed on 15 March 2013, Futurecorp seeks an interlocutory injunction to restrain them from proceeding with that sale, in aid of its originating process also filed on 15 March 2013 seeking orders pursuant to (Cth) Corporations Act 2001, s 1321, reversing a decision of the liquidators to reject a proposal for a deed of company arrangement (DOCA) made by Futurecorp and, alternatively, refusing to take steps or further steps to secure certain assets of the company before the sale and, further alternatively, for the removal of the liquidators and, in addition, damages, presumably for misfeasance in their capacity as liquidators.

Futurecorp's interest is, first, that as I have said, it is a 20% shareholder and contributory and, secondly, that pursuant to orders made by Black J it is a priority creditor for its costs of the winding-up proceedings which on a solicitor/client basis exceed…

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: [2013] NSWSC 384
Decision Date: 26 March 2013

CaseChat Overview and Summary

The matter involved an application by bCode Pty Limited for an injunction to prevent its liquidator from selling certain assets. The applicant sought to have the liquidator's decision to reject a proposal for a deed of company arrangement as final relief reversed. The application was heard in the Federal Court of Australia. The primary legal issues before the court were whether there was a seriously arguable case for final relief reversing the liquidator's decision, and whether there was a seriously arguable case that the liquidator acted in bad faith in the conduct of the sale.

The court considered the relevant statutory provisions and case law in determining whether the applicant had established a seriously arguable case for final relief. It found that the applicant had not demonstrated that the liquidator's decision was plainly wrong, nor that there were any significant issues of law or fact that required resolution at a final hearing. The court also considered the question of bad faith on the part of the liquidator, and found that the applicant had not made out a case of bad faith on the part of the liquidator in the conduct of the sale. The court held that the applicant had not established a seriously arguable case for final relief, and dismissed the application.

The court ordered that the applicant pay the liquidator's costs of the application on an indemnity basis. The court held that the liquidator had acted reasonably and in good faith in rejecting the proposal for a deed of company arrangement, and in conducting the sale of the assets. The court found that the applicant had not established a seriously arguable case for final relief, and that there was no basis for an injunction to restrain the liquidator from selling the assets. The court dismissed the application and made the appropriate orders for costs.

Orders