In the matter of Hueffel Engineering Co Pty Limited (in liquidation)

[2013] NSWSC 1298

Supreme Court

New South Wales

Medium Neutral Citation:	In the matter of Hueffel Engineering Co Pty Limited (in liquidation) [2013] NSWSC 1298
Hearing dates:	22 April 2013
Decision date:	20 May 2013
Jurisdiction:	Equity Division - Corporations List
Before:	Black J
Decision:	Order made granting special leave to distribute surplus funds available in the liquidation of the defendant.
Catchwords:	CORPORATION - winding up - special leave sought under s 488(2) of the Corporations Act 2001 (Cth) for distribution of surplus funds in liquidation - whether creditors' claims have properly been recognised - whether relativities between contributories have been observed.
Legislation Cited:	- Corporations Act 2001 (Cth) ss 480(c), 488(2) - Supreme Court (Corporations) Rules 1999 (NSW) r 7.5-7.6 - Corporations Regulations 2001 (Cth) reg 5.6.71
Cases Cited:	- CGU Workers Compensation (NSW) Ltd v Ascom Service Automation (Australia) Pty Ltd [2005] NSWSC 747 - Re Capel Finance Ltd [2005] NSWSC 286; (2005) 52 ACSR 601 - Re DS Millard & Son Pty Ltd (1997) 24 ACSR 71; 15 ACLC 808 - Re Powell-Cotton's Resettlement [1957] Ch 159
Category:	Interlocutory applications
Parties:	Orrcon Operations Pty Limited (Plaintiff) H Hueffel Engineering Co Pty Limited (Defendant) Mitchell Ball in his capacity as liquidator of H Hueffel Engineering Co Pty Limited (in liquidation) (Applicant)
Representation:	Counsel: A. Kozary (sol) (Applicant) Solicitors: ERA Legal (Applicant)
File Number(s):	2009/290914

Judgment

1. By interlocutory process filed 26 February 2013, Mr Mitchell Ball, in his capacity as liquidator of Hueffel Engineering Company Limited (in liquidation) ("Company") seeks special leave under s 488(2) of the Corporations Act 2001 (Cth) to distribute surplus funds available in the liquidation of the Company.

1. Mr Ball originally brought, but has not pursued, an application under s 480(c) of the Corporations Act that he be released as liquidator of the company. Mr Ball, through his legal representative Ms Kozary, has noted that the costs of his complying with the requirements of rules 7.5-7.6 of the Supreme Court (Corporations) Rules 1999 (NSW) in respect of the evidence necessary for the latter application are not likely to be justified in the circumstances. In my view, those Rules appropriately specify the level of evidence that is required for such an application, but it does not follow that such an application would be cost effective or appropriate in every case.

1. The application for leave to distribute the surplus is supported by affidavits of Mr Ball dated 21 February 2013 and 22 April 2013. Mr Ball's evidence is that there are several classes of shares in the company, including 100 class L redeemable preference shares. Mr Hans Werner Hueffel held all the issued A class shares in the company, 51 out of 100 issued class L redeemable preference shares and 8 out of the 10 ordinary shares in the company. Ms Anneliese Hueffel held all of the issued B class shares in the company, 49 out of 100 issued class L redeemable preference shares in the company and 2 of the 10 ordinary shares in the company. Mr Heinrich Hueffel holds one class C share and Ms Marion Hueffel holds one class D share in the company.

1. In the course of his appointment and investigations, Mr Ball has not been able to obtain a copy of the company's constitution, memorandum of association or articles of association, or share certificates issued for the relevant shares, and notes that the documents recording the issue of the class L redeemable preference shares do not record the entitlements of those shares.

1. Mr Ball has caused all of the company's identified creditors to be paid in full; a small amount of legal costs, including the costs of this application, remain to be paid; and Mr Ball expects surplus funds of $1898.88 to be available for distribution to the company's contributories.

1. Mr Ball proposes to make a distribution to Miss Anneliese Hueffel and Mr Hans Werner Hueffel in proportion to the holdings of redeemable preference shares, and the order which he seeks to have made annexes a schedule recording the proposed distribution in accordance with regulation 5.6.71 of the Corporations Regulations. Mr Ball has caused the application to be served on each of Ms Anneliese Hueffel, Mr Heinrich Hueffel and Ms Marion Hueffel and has unsuccessfully attempted service of the application upon Mr Hans Hueffel. When he did so, Ms Marion Hueffel advised that Mr Hans Hueffel is now deceased. Mr Ball has written to shareholders indicating his intention to distribute the surplus to class L redeemable preference shareholders and also seeking information as to the estate of the late Hans Werner Hueffel but, perhaps not surprisingly given the small amounts involved, has received no response.

1. Section 488(2) of the Corporations Act 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 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; 15 ACLC 808.

1. In the present case, the information which is available to Mr Ball to determine the relativities between contributories is obviously incomplete, where the rights attaching to the redeemable preference shares are unknown; however, it seems to me that Mr Ball can properly proceed on the basis that, because the Class L redeemable preference shares are described as "preference shares", they have an essential characteristic of preference shares, namely that they confer a preference over ordinary shares: Re Powell-Cotton's Resettlement [1957] Ch 159; Re Capel Finance Ltd [2005] NSWSC 286; (2005) 52 ACSR 601 at [10].

1. I am therefore satisfied, on the balance of probabilities and recognising that the evidence as to contributories' rights is somewhat limited, that creditors' claims have properly been recognised and that relativities between contributories have been observed, in respect of the distribution proposed by Mr Ball, and I will therefore make Order 1 in the form proposed by Mr Ball.

1. I note that the application has been, properly, served upon the Australian Securities and Investments Commission and the Commission has indicated that it does not seek to be heard in respect of the matter.

1. I therefore make the following order:

1. Pursuant to s 488(2) of the Corporations Act 2001 (Cth), the Court grants special leave to distribute surplus funds available in the liquidation of the defendant, H Hueffel Engineering Co Pty Ltd (In Liquidation) as follows:

(a) to Anneliese Hueffel, the sum of $930.45; and

(b) to the estate of the late Hans Werner Hueffel the sum of $968.43,

in accordance with the schedule annexed hereto in accordance with form 551 as required by regulation 5.6.71(1) of the Corporations Regulations 2001 (Cth).

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Decision last updated: 12 September 2013