In the matter of Better Drums Pty Ltd (in liq)

[2019] NSWSC 1262

Supreme Court

New South Wales

Medium Neutral Citation:	In the matter of Better Drums Pty Ltd (in liq) [2019] NSWSC 1262
Hearing dates:	5 September 2019
Decision date:	05 September 2019
Jurisdiction:	Equity - Corporations List
Before:	Black J
Decision:	Order that the Plaintiff be released as liquidator of the Company from 4pm on 8 October 2019 and that ASIC deregister the Company on or after 4pm on 7 November 2019.
Catchwords:	CORPORATIONS – winding up – liquidators – application to be released as liquidator – where remaining steps in liquidation relate to distribution of surplus – where no utility in deferring an order for release – whether court should order that liquidator be released.
Legislation Cited:	- Corporations Act 2001 (Cth) ss 480(d), 488(2), 533 - Supreme Court (Corporations) Rules 1999 (NSW) rr 7.5, 7.5(3), 7.5(4)(a), 7.5(4)(b), 7.5(6)
Cases Cited:	- Re One.Tel Ltd (in liq) [2014] NSWSC 1892 - Re RR Impex Pty Ltd (in liq) [2013] NSWSC 1667
Category:	Principal judgment
Parties:	David Ingram as liquidator of Better Drums Pty Ltd (in liq) (Plaintiff) Better Drums Pty Ltd (in liq) (Defendant)
Representation:	Counsel: D S Weinberger (Plaintiff)   Solicitors: Edwards Kirby Lawyers (Plaintiff)
File Number(s):	2019/173471

Judgment – ex tempore (revised 9 september 2019)

Background and affidavit evidence

1. By Amended Originating Process filed on 2 September 2019, Mr Ingram as liquidator of Better Drums Pty Ltd (in liq) (“Company”) seeks an amendment, nunc pro tunc, to an order made by Ward CJ in Eq on 5 August 2019 granting special leave to him under s 488(2) of the Corporations Act 2001 (Cth) to distribute the whole of the surplus funds of the Company to a contributory, Mr Osman-Kerim, in the amount of $161,183.02. That amendment is to replace that figure with the amount $151,173.22 plus any GST refund received. The amendment reflects, on the one hand, an increase in the legal costs and other costs incurred in connection with the liquidation and, on the other, the expectation that a GST refund will be received by the Company. Mr Ingram also seeks an order that he be released as liquidator of the company after 30 days of the making of this order and that the Australian Securities and Investments Commission (“ASIC”) then deregister the Company within a further 30 days. Mr Weinberger, who appears for Mr Ingram, draws attention to two matters as to which dispensation is sought, although it does not seem to me that formal orders are necessary in that respect, where those matters have been drawn to the Court’s attention.

2. Mr Ingram relies, first, on his affidavit dated 3 June 2019 which had previously been read in the application for leave to distribute the surplus before Ward CJ in Eq and to which reference is made in further affidavits. By a second affidavit dated 2 September 2019, Mr Ingram refers to the change in legal fees incurred, from an estimate of $20,000 on which the application before Ward CJ in Eq proceeded to a capped figure of $30,000, apparently involving a discount agreed with his legal representatives. Mr Ingram also refers to the matters which lead to an expectation that the Company will receive a GST refund approximating $15,588 which would ultimately exceed the amount of the reduction now sought in the distribution.

3. Two issues had arisen when the matter was first listed in the Corporations Directions List on 2 September 2019. The first was the need for Mr Ingram to address the matters set out in rr 7.5(3)-(6) of the Supreme Court (Corporations) Rules 1999 (NSW) which provide important information to the Court in applications of this character. By a further affidavit dated 4 September 2019, Mr Ingram addresses the matters indicated in those rules, including confirming that the whole of the Company's property has been realised, based upon his investigations, and that the only contributory of the Company is Mr Osman-Kerim. He also indicates that he had lodged a report with ASIC in respect of s 533 of the Act and that ASIC had indicated it would not be commencing an investigation. He refers to his remuneration, and, importantly, provides the confirmation contemplated by rr 7.5(4)(a)-(b) that he is not aware of any act done or default made in the administration in the affairs of the Company and that there has been no claim made by any person that there has been such act or default. He also addresses one of the matters as to which a dispensation is sought, namely that correspondence has occurred throughout the liquidation by email, and notice of this application was given to Mr Osman-Kerim by email. There is no difficulty with that course, in circumstances that it is plain that the matter has come to Mr Osman-Kerim's attention.

4. By a further affidavit dated 4 September 2019, Mr Edwards, a solicitor acting for Mr Ingram in the application, refers to notification of these matters, including the change in the amount to be distributed and the application today, to Mr Osman-Kerim. Mr Osman-Kerim confirmed that he did not require notice beyond email and confirmed that he was content with the outcome and did not propose to attend Court today. I will, however, have the matter called for good order's sake before making the relevant orders. There was, as anticipated by Mr Osman-Kerim's correspondence, no further appearance today.

Amendment to orders made on 5 August 2019

5. I am satisfied that the first order sought by Mr Ingram, amending the order made by Ward CJ in Eq on 5 August 2019, should be made. Her Honour was satisfied that special leave should be granted to distribute the surplus funds of the Company, and the order sought simply amends the amount to have regard to further legal expenses, and the GST refund that is expected. Significantly, the sole contributory, Mr Osman-Kerim, does not object to that amendment.

Release of liquidator and deregistration of company

6. As I noted above, Mr Ingram also seeks an order under s 480(d) of the Act that he be released as liquidator and that ASIC deregister the Company, to have effect 30 and 60 days in the future respectively. As I noted above, Mr Ingram has led the evidence contemplated by r 7.5 of the Supreme Court (Corporations) Rules in respect of such an application. I reviewed the relevant authorities in respect of an application for release as a liquidator in Re RR Impex Pty Ltd (in liq) [2013] NSWSC 1667, and again in Re One.Tel Ltd (in liq) [2014] NSWSC 1892. As I noted in Re RR Impex Pty Ltd above at [3], s 480(d) of the Actimplies that, once the Court is satisfied that the necessary notifications have been given to interested persons, that no creditors or contributories had objected to a liquidator's release or raised any concern as to the performance of his or her duties, and the other evidence contemplated by the Supreme Court (Corporations) Rules is placed before the Court, then the Court would ordinarily make an order releasing the liquidator unless any reason emerges that it should not do so. I am satisfied that such an order should be made in this case, for those reasons.

7. Strictly, an order for release would ordinarily only be made after all steps in the liquidation had been completed. However, there are occasions where the Court has made such an order where remaining steps are of a mechanical character, here, the payment of the relevant amount to Mr Osman-Kerim and the dealing with the GST refund received. There would here be no utility in deferring an order for release, where that would incur further costs for the liquidator, at the expense of contributories, of another Court application. In those circumstances, the Court has previously taken, and I will now take, the course of making an order for release which has effect from a specified date.

Orders

8. Accordingly, I make orders substantially in the form sought in paragraphs 1A and 3 of the Amended Originating Process filed by the liquidator as follows:

1.   Order 1 made on 5 August 2019 be amended, nunc pro tunc, to replace the figure "$161,183.02" with the figure and words "$151,173.22 plus any GST refund received".

2. Order, pursuant to s 480(d) of the Corporations Act, that the Plaintiff be released as liquidator of the Company from 4pm on 8 October 2019 and that ASIC deregister the Company on or after 4pm on 7 November 2019.

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Decision last updated: 22 September 2019