In the matter of Halal Meats Australia Pty Limited

[2016] NSWSC 1946

Supreme Court

New South Wales

Medium Neutral Citation:	In the matter of Halal Meats Australia Pty Limited [2016] NSWSC 1946
Hearing dates:	15 November 2016
Decision date:	15 November 2016
Jurisdiction:	Equity - Corporations List
Before:	Black J
Decision:	Grant leave pursuant to Corporations Act 2001 (Cth) s 490(1)(a), nunc pro tunc, for the Defendant to be wound up voluntarily.
Catchwords:	CORPORATIONS — Winding up — Voluntary winding up – Application for leave nunc pro tunc pursuant to Corporations Act 2001 (Cth) s 490(1)(a) for company to be wound up voluntarily – where application for company to be wound up in insolvency filed by creditor one day before resolution for voluntary winding up passed – where creditor consents to grant of leave
Legislation Cited:	- Corporations Act 2001 (Cth), ss 490–491, 497, 556(1)(b) - Supreme Court (Corporations) Rules 1999 (NSW), r 5.8
Cases Cited:	- Bredenkamp; Re Rapid Fleet Rentals Pty Ltd (in liq) [2014] FCA 1307 - Re Camarda and Cantrill Pty Ltd [2015] NSWSC 2067 - Re North Western Fruit Growers Pty Ltd [1965] VR 306 - Re Pendonna Pty Ltd [2012] NSWSC 631 - Re U-Nited Warranties Pty Ltd [2012] NSWSC 1087
Category:	Procedural and other rulings
Parties:	Manildra Meat Company Pty Ltd (Plaintiff) Halal Meats Australia Pty Limited (Defendant/Applicant)
Representation:	Counsel: M Rosenblatt (Solicitor – Defendant)   Solicitors: Somerset Ryckmans (Defendant/Applicant)
File Number(s):	2016/310090

Judgment – ex tempore

1. By Interlocutory Process filed on 15 November 2016, the Defendant, Halal Meats Australia Pty Limited (in liq) (“Company”) applies for an order that leave be granted nunc pro tunc, pursuant to s 490(1)(a) of the Corporations Act 2001 (Cth), for it to be wound up voluntarily. That section relevantly provides that, except with the leave of the Court, a company cannot resolve that it be wound up voluntarily if an application for the company to be wound up in insolvency has been filed. The Company also seeks leave, pursuant to r 5.8 of the Supreme Court (Corporations) Rules 1999 (NSW) for an application filed on 18 October 2016 by the Plaintiff, Manildra Meat Company Pty Limited (“Manildra”) for the Company to be wound up to be discontinued. The latter application is, of course, somewhat untidy since it is Manildra’s application for which such leave is sought by the Company. However, that untidiness is technical rather than substantive, where this application is made with Manildra’s consent and necessarily contemplates that the winding up application be discontinued.

2. The chronology in this matter emerges from the affidavit of Mr Carson dated 4 November 2016. Mr Carson was appointed as voluntary liquidator of the Company, by a resolution of members passed under s 491 of the Corporations Act on 19 October 2016. A winding up application had been filed by Manildra, commencing these proceedings, the day before. Mr Carson's evidence is that he was not aware that that application had been filed at the time he was appointed, and he could not readily have been aware of that matter, so far as a company search of the records maintained by the Australian Securities and Investments Commission records that notice of the winding up application was lodged on 20 October 2016, two days after it was commenced and the day after Mr Carson's appointment. Mr Carson's evidence is that he only became aware of the winding up application on or about 24 October 2016.

3. Mr Carson sets out the tasks which have been completed since his appointment which have included issuing a report to creditors and convening a meeting of creditors under s 497 of the Corporations Act, which it appears was to be held on 8 November 2016; corresponding with the Company's banks to close existing bank accounts; corresponding with the Australian Taxation Office advising it of the appointment of a liquidator; and taking other steps which would ordinarily be taken by a liquidator on his appointment. Since these issues arose, there has been correspondence between the solicitors for the liquidator and the solicitors for Manildra, and Manildra has indicated its consent for the position that the winding up summons should be dismissed on the basis that its costs would be paid as a priority in the winding up under s 556(1)(b) of the Corporations Act, as would ordinarily occur if the Court had ordered the winding up. Mr Carson's solicitors have rightly recognised that leave under s 490 of the Act would be required for the company to be wound up voluntarily, in the relevant circumstances, and the solicitors for Manildra have indicated that they are comfortable with the grant of that leave if Manildra’s costs are treated as the parties proposed.

4. This situation here is similar to that addressed by Brereton J in Re Pendonna Pty Ltd [2012] NSWSC 631 and by me in Re U-Nited Warranties Pty Ltd [2012] NSWSC 1087. It is well established that leave under s 490 of the Corporations Act may be granted retrospectively, and it will generally be necessary to show that it is preferable that a company be wound up voluntarily, rather than compulsorily, before such leave is granted: Re North Western Fruit Growers Pty Ltd [1965] VR 306; Re Pendonna above at [3]; Re U-Nited Warranties above at [3]. The approach adopted in Re Pendonna above and in Re U-Nited Warranties above has subsequently being taken in other decisions, by this Court and the Federal Court of Australia, including Re Camarda and Cantrill Pty Ltd [2015] NSWSC 2067 and Bredenkamp; Re Rapid Fleet Rentals Pty Ltd (in liq) [2014] FCA 1307.

5. Relevant factors, as identified in Re Pendonna Pty Ltd above and Re U-Nited Warranties Pty Ltd above, include that the winding up will, in the relevant circumstances, be a creditors’ voluntary winding up and not a members’ voluntary winding up and that the powers of the liquidator will not differ significantly from those of a Court-appointed liquidator. The work undertaken by the liquidator since his appointment is relevant, since it has the consequence that there would be duplication of work and additional expense, which would ultimately reduce the returns to the Company's creditors, if Mr Carson cannot remain as liquidator and a different Court-appointed liquidator is ultimately appointed. One would anticipate that there may also be some disruption to the steps already taken by the liquidator to deal with stakeholders, such as, for example, the Australian Taxation Office and the Company's banks, if another liquidator is now appointed.

6. In this case, there is little difference between the relation back day arising on the appointment of a Court-appointed liquidator and on the appointment of Mr Carson, since the winding up application was filed only a day before the date of Mr Carson's appointment, and it is unlikely that any voidable transactions would be affected by a difference of one day. I give weight, as Brereton J did in Re Pendonna and I did in Re U-Nited Warranties, to the fact the petitioning creditor, Manildra, does not oppose the relief sought. That is an important factor in the circumstances and indicative of the view of an interested creditor, who had sufficient interest in the matter to commence a winding up application, that its interests will be as well served by a creditors’ voluntary winding up continuing as by the alternative of the appointment of a Court-appointed liquidator.

7. For the reasons set out above, I am satisfied that this is a proper case to grant leave to the Company to resolve that it be wound up voluntarily, nunc pro tunc, notwithstanding that an application for it to be wound up in insolvency has been filed on 18 October 2016. I am also satisfied that this is a proper case to make an order, of a similar kind to that made in Re Pendonna and Re U-Nited Warranties, that Manildra's costs of the winding up be treated as costs under s 556(1)(b) of the Corporations Act. There is strong reason to take that course, where those costs would have ranked under that section, had the winding up been pursued to completion, and the discontinuance of the winding up, on that basis, is in the interests of creditors generally so far as it will reduce wasted costs.

8. I therefore make the following orders:

1. Leave be granted nunc pro tunc, pursuant to s 490(1)(a) of the Corporations Act 2001 (Cth) for the Defendant to be wound up voluntarily.

2. Leave be granted, pursuant to rule 5.8 of the Supreme Court (Corporations) Rules 1999 (NSW) for the Plaintiff's application filed on 18 October 2016 to be discontinued.

3.    The Plaintiff's costs of the proceedings to be paid in priority as though the Defendant were wound up in these proceedings.

4.    The listing of the winding up application before the Registrar on 17 November 2016 be vacated.

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Decision last updated: 18 July 2017