In the matter of Hillsea Pty Ltd

[2021] NSWSC 1593

Supreme Court

New South Wales

Medium Neutral Citation:

In the matter of Hillsea Pty Ltd [2021] NSWSC 1593

Hearing dates:

In Chambers

Date of orders:

26 November 2021

Decision date:

09 December 2021

Jurisdiction:

Equity - Corporations List

Before:

Black J

Decision:

Leave to distribute surplus granted.

Catchwords:

CORPORATIONS — Winding up — Liquidators — Grant of leave to distribute a surplus — Remuneration — Where contributory had appeared to oppose application for further remuneration — Where consent orders then agreed between the liquidator and contributory.

Legislation Cited:

Corporations Act 2001 (Cth), s 488

Cases Cited:

- CGU Workers Compensation (NSW) Ltd v Ascom Service Automation (Australia) Pty Ltd [2005] NSWSC 747

- Re Allseal Floor Preparations Pty Ltd (in liq) [2015] NSWSC 1990

-Re DS Millard & Son Pty Ltd (1997) 24 ACSR 71

- Re HIH Services Pty Ltd (in liq) [2012] NSWSC 1188

Category:

Principal judgment

Parties:

Andrew Barnden in his capacity as liquidator of Hillsea Pty Ltd (in liquidation) (Plaintiff)

Representation:

Counsel:
B Douglas-Baker (Plaintiff)
A Grant (Interested party – Mrs McIvor)

Solicitors:
Holding Redlich (Plaintiff)
W K Cahill & Associates (Interested party - Mrs McIvor)

File Number(s):

2021/276628

Judgment

1. By Originating Process filed on 28 September 2021, Mr Andrew Barnden sought an order under s 488(2) of the Corporations Act 2001 (Cth) that he be granted special leave to distribute the surplus in respect of the liquidation of Hillsea Pty Ltd (in liq) (“Company”). He initially also sought an order under s 60-10 of the Insolvency Practice Schedule that his further remuneration be approved in the amount of $20,000 (excluding GST) from 8 September 2021 to the completion of the liquidation.

2. When the matter was listed on 15 November 2021, one of the contributories, Mrs McIvor, appeared under r 2.13 of the Supreme Court (Corporations) Rules and indicated her intent to oppose Mr Barnden’s application for further remuneration. I made orders for Mr Barnden to advise whether he would be pressing an application for the variation of the amount of his remuneration, which would have required a review of that remuneration for the entire period of the liquidation, and file and serve further evidence in that respect.

3. On 25 November 2021, the parties subsequently submitted consent orders resolving the matter, which I made in Chambers, including an under s 488(2) of the Corporations Act that Mr Barnden is granted special leave to distribute the surplus in respect of the liquidation of the Company and an order under reg 5.6.71(1) of the Corporations Regulations 2001 (Cth) that there need not be a schedule in accordance with Form 551. These are my reasons for making those consent orders.

4. Pursuant to the consent orders, I granted special leave to Mr Barnden to distribute the surplus in respect of the liquidation of the Company. The applicable principles in respect of the grant of leave to distribute a surplus are well established. Section 488(2) of the Corporations Act relevantly provides that a liquidator may distribute a surplus only with the Court's special leave. 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 also to ensure that the correct relativities amongst contributories have been observed: CGU Workers Compensation (NSW) Ltd v Ascom Service Automation (Australia) Pty Ltd [2005] NSWSC 747 at [4]; Re Allseal Floor Preparations Pty Ltd (in liq) [2015] NSWSC 1990 at [4]. The phrase “special leave” requires that a special application be made to the Court, as has occurred in this case: Re DS Millard & Son Pty Ltd (1997) 24 ACSR 71 at 72; Re HIH Services Pty Ltd (in liq) [2012] NSWSC 1188 at [10].

5. By his affidavit dated 27 September 2021, Mr Barnden led sufficient evidence to support the order for distribution of the surplus. He referred to the background of the liquidation, including orders previously made by the Court in proceedings between the Company’s shareholders. He referred to the current shareholding in the Company and to steps which he had taken to bring in the Company’s assets and to identify its liabilities. He identified the provisions of the Company’s memorandum and articles of association applicable to a distribution of the surplus, which limited the entitlement of holders of “A” Class shares to the payment of the capital subscribed by them in respect of a winding up. The distribution of the surplus will proceed on that basis, where the surplus will be distributed between the holders of class “C”, “D”, “E” and “F” shares. No shareholder has raised any objection to the distribution of the surplus on that basis and I am satisfied that an order granting leave to distribute the surplus on that basis may properly be made.

6. Mr Barnden also sought, and I made, an order commonly made in an application of this kind dispensing with the requirements under reg 5.6.71(1) of the Corporations Regulations for an order distributing the surplus to have annexed to it a schedule in accordance with Form 551. The relevant information is contained in Mr Barnden's affidavit, the identities of the contributories are clear and they consent to the distributions to them, and there would be no useful purpose in annexing such a schedule to the orders.

7. The parties agreed to the dismissal of that part of the Amended Originating Process which provided for variation of Mr Barnden’s remuneration, with the intention that Mr Barnden receive the amount of remuneration previously determined by creditors. That order is properly made with Mr Barnden’s consent, and is sensibly made where the costs incurred in a review of the amount of Mr Barnden’s remuneration across the entirety of the liquidation, in order to establish the basis of his claim for additional remuneration for the last part of the period, might well have been disproportionate to the amount of the additional remuneration claimed in any event. The parties also agreed a provision for the costs of the proceedings, and the amount of those costs, and I am satisfied that order may properly be made.

8. I reserved liberty to Mr Barnden to apply for his release under s 480(d) of the Act and the deregistration of the company upon the distribution of the surplus. An application for such an order is properly determined after the distribution is complete.

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