In the Matter of Interchase Corporation Ltd (in Provisional Liquidation) & sections 460, 461 of the Corporations Law Australian Company Number 010 663 993

[1991] FCA 884

IN THE FEDERRfr COURT OF AUSTRALIA	)	No., NG 3018 of 1991
NEW SOUTH WALES DISTRICT REGISTRY	1
GENERAL DIVISION	1

IN THE MATTER OF INTERCHASE CORPORATION LIMITED
/IN PROVISIONAL LIOUIDATIONl AND SECTIONS 460
AND 461 OF THE CORPORATIONS LAW

AUSTRALIAN COMPANY NUMDER 010 663 993

The application of

INTERCHASE CORPORATION

LIMITED

NINUTES OF ORDER

JUDGE MAKING ORDES:	PINCUS J.
DATE OF ORDER:	19 SEPTEMBER 1991
WHERE MADE:	BRISBANE

1. The provisional liquidators be authorised to compromise a certain action commenced in the District Court of Oueensland at Brisbane bv ~laint ~~ ~~

no. 5284 of 1984 with J . JACKSON & SONS PT?.~LTD., GEOFFREY KEMPLER, SONIA KEMPLER and LEONARD KEMPLER in the terms of the deed of compromise, a copy of

which i.s exhibited to the affidavit of RICHARD
ANTHONY BARBER sworn the 30th day of August, 1991

and filed herein.

NOTE:	Settlement and entry of orders is
Order 36 of the Federal Court Rules.

2. The provisional liquidators' costs of and incidental
to this application be costs in the provisonal
liquidation.

IN THE FEDERAh COURT OF AUSTRALIA	)	No. NG 3018 of 1991
NEW SOUTH WALES DISTRICT REGISTRY	)
GENERAL DIVISION	)

IN THE MATTER OF INTERCHASE CORPORATION LIMITED
1IN PROVISIONAL LIOUIDATION) AND SECTIONS 460
AND 461 OF THE CORPORATIONS LAW

AUSTRALIAN COMPANY NUMBER 010 663 993

The application of

INTERCHASE CORPORATION

LIMITED

MINUTES OF ORDER

JUDGE MAKING ORDER:  PINCUS 3.

DATE OF ORDER:	19 SEPTEMBER 1991
WHERE MADE:	BRISBANE
THE COURT ORDERS THAT:

1.   The provisional liquidators of INTERCHASE CORPORATION LIMITED be authorised to compromise a certain action commenced in the Supreme Court of Queensland by writ of summons no. 4376 of 1988 with SENBERG PTY. LTD., HAROLD AVELLANEDA in terms of the draft deed of agreement and release, a copy of which is exhibited to the affidavit of RICHARD ANTHONY BARBER sworn the 30th day of August, 1991.

2.	The provisional liquidators' costs of and incidental
to this application be costs in the provisonal liquidation.

m:	Order 36 of the Federal Court Rules.
Settlement and entry of orders is dealt with in

IN THE FEDERAt- COURT OF AUSTRALIA ) No. NG 3018 of 1991

NEW SOUTH WALES DISTRICT REGISTRY	)
GENERAL DIVISION	)

IN THE MATTER OF INTERCHASE CORPORATION LIMITED
(IN PROVISIONAL LIOUIDATION) AND SECTIONS 460
AND 461 OF TfIE CORPORATIONS LAW

AUSTRALIAN COMPANY NUMBER 010 663 993

The application of

INTERCHASE CORPORATION

LIMITED

MINUTES OF ORDER

JUDGE MAKING ORDER:	PINCUS J.
DATE OF ORDER:	19 SEPTEMBER 1991
WHERE MADE:	BRISBANE
THE COURT ORDERS THAT:

1. The provisional liquidators of INTERCHASE
CORPORATION LIMITED be authorised to compromise a
debt owing by THE CHRISTOPHER LAMB GROUP-LIMITED and
CHRISTOPHER LESLIE LAMB pursuant to a lease between
INTERCHASE CORPORATION LIMITED and THE CHRISTOPBER
LAMB GROUP PTY LIMITED in the terms of the deed of
surrender of lease, a copy of which is exhibited to
the affidavit of RICHARD ANTHONY BARBER sworn the
30th day of August, 1991 and filed herein.

2. The provisional liquidators' costs of and incidental
to this applicaton be costs in the provisional
liquidation.

NOTE:	Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDER~I	COURT OF AUSTRALIA ) ho. NG 3p18 of 1991

NEW SOUTH WALES DISTRICT REGISTRY ) GENERAL DIVISION )

IN THE MATTER OF INTERCHASE CORPORATION LIMITED
JIN PROVISIONAL LIOUIDATION) AND SECTIONS 460
AND 461 OF THE CORPORATIONS LAW

AUSTRRLIAN COMPANY NUMBER 010 663 993

The application of

INTERCHASE CORPORATION

LIMITED

MINUTES OF ORDER

JUDGE MAKING ORDER:	PINCUS J.
DATE OF ORDER:	19 SEPTEMBER 1991
WHERE MADE:	BRISBANE
THE COURT ORDERS THAT:

1.

The provisional liquidators be authorised to compromise a certain action commenced in the Supreme Court of Queensland by writ of summons no. 3169 of 1989 with GAUCI AUSTRALIA PTY. LTD., JONATHON YULE, TREVOR YULE, CHARLES GAUCI, BERNARD JANECKA, ALDFORD PTY. LTD., TERCERO PTY. LTD., GREENBELL PTY. LTD., ABIRAM PTY. LTD., PROPERTY ESTATE (OLD) PTY. LTD., BOONJIE PTY. LTD., REMM PROPERTY AUSTRALIA PTY. LTD. and EWAN GILLIES in the terms of the deed of

affidavit of RICHARD ANTHONY BARBER sworn the 28th release, a copy of which is exhibited to the

day of August, 1991 and filed herein.

2 . The provisional liquidatorsf costs of and incidental
to this application be costs in the provisional
liquidation.

NOTE :

- Settlement and entry of orders is dealt with in
Order 36 of the Federal Court Rules.

IN THE FEDE& COURT OF AUSTRALIA 1 No. NG 3018 of 1991

NEW SOUTH WALES DISTRICT REGISTRY	1
GENERAL DIVISION	)

C	D
JIN PROVISIONAL LIOUIDATION) AND SECTIONS 460 AND 461 OF THE CORPORATIONS LAW

The application of

INTERCHASE CORPORATION

LIMITED

CORAM: PINCUS J.

PLACE: BRISBANE

m: 19 SEPTEMBER 1991

EX TEMPORE REASONS FOR JUDGMENT

These are four applications for approval of

compromises. The applications are made by the provisional
liquidators of Interchase Corporation Limited who were
appointed by an order of 4 April 1991. The appointment was

made under s.472 of the Coruorations Law and I note that sub-

s.3 of that provision is as follows:

"A liquidator appointed provisionally has or may

exercise such functions and powers:

(a)	as are conferred on him or her by this Law or by rules of the Court that appointed him or her: or
(b)	as the Court specifies in the order appointing him or her".

In pursuance of the power given by paragraph (b) of

s.472(3), the Court on 4 April 1991 provided as follows:

2   \

namely, that the said Gregory Paul Kelly and Richard Turthony
Barber, who are the applicants, have the power to carry on the

business of the applicant and have the powers specified in

ss.477(2)(a) to 477(2)(k) inclusive of the Cor~orations Law.

Of those paragraphs, the relevant one is 477(2)(j) which gives power to "compromise any debt due to the company other than calls and liabilities for calls and other than a

debt where the amount claimed by the company to be due to it

exceeds $20,000". In each of the four applications before

me, the amount claimed to be due exceeds $20,000 - although in
one case, by a narrow margin - and it seems clear, then, that
the powers originally given by the Court on 4 April 1991 do

not include power to enter into any of these compromises.

MS OrReilly, who has appeared for the applicants,

has, however, urged upon me the view that there is an implicit
or inherent power in the Court to approve what the applicants

propose.

As to liquidators, as opposed to provisional

liquidators, the Court has power to approve a compromise under

s.477(l)(c). This has the effect that the liquidator may,

with the approval of the Court, "make any compromise or

arrangement with creditors or persons claiming to be creditors

or having or alleging that they have any claim ... against the

company or whereby the company may be rendered liable", and

(d) is a similar provision with respect to calls

and the like.

The difficulty about the present applications is

that the matter is not covered by s.477(l)(c) or (d) because
there is no liquidation in being, and it is not covered by the

order made by the Court on 4 April 1991.

Hs OrReilly has, therefore, relied upon a

proposition that the Courtrs power under s.472(3)(b) may be
exercised from time to time. On the face of it, that is by no
means clear, but she has referred me to the decision of the
Supreme Court of Queensland in Re Rothwells Ltd. (1989) 7
A.C.L.C. 545. In that case, Cooper J. has a similar problem
before him, and his Honour remarked at p.549:

"There is no specific power in the Code, nor in the English company legislation, to enable the provisional liquidator to apply for additional powers. Yet, it has been the practice in the

United Kingdom for such orders to be sought and granted".

I interpolate that his Honour was speaking about the previous companies legislation. His Honour went on:

"The position is stated in Palmer's Company

Precedents (17th ed.) (1960) Pt 2 at p. 103 thus :

'If the interim provisional liquidator finds
that his powers are not sufficiently wide,
e.g., if he is appointed merely to take
possession of and protect the assets, and he
finds that there is a going business which can
be sold to advantage if continued or would
suffer irreparable damage if discontinued at
once, he can apply to the Court for liberty to
carry it on with consequential directions and

so in regard to other matters'".

His Honour added:

"Although the passage cited above doe* not refer
to any authority to support it, it has been
applied in this Court".

And Cooper J. then referred to a decision in which the principle stated in Palmer was applied.

I do not find particularly compelling the notion

that the Court has an inherent or implied power to enable the
provisional liquidator to do things other than those specified
in the order. The proposition that s.472(3)(b) should be read
sufficiently broadly to enable the Court, as the situation
unfolds, to alter the powers initially given to the liquidator
has more appeal. It is true that, on the face of it, the
words "as the Court specifies in the order appointing
him or her" are intractable, but MS O'Reilly points out that
the appointment of a provisional liquidator is in the nature
of or analogous to an interlocutory order; it would not be
surprising if the legislature were taken to have intended not
to allow the Court to change its initially-stated intention.

Therefore - and although the matter is not as clear as one

would expect it to be - I accept MS O'Reillyrs contention that	the Court has power to so act under s.472(3)(b) as to enable a
liquidator to perform functions, whether specific or general, which the initial order did not contemplate.

Coming now to the substance of each application:

they all relate to the same problem and that is the tenancy of
the Myer Centre, not far from this Court. There has been a
number of disputes in relation to that centre, as is well

known, and these are four of them. In three of these cases, the provisional liquidator applicants have taken independent advice and have been advised to compromise. In the other

case, they have formed their own decision to do so. The problem is, in each instance, that the tenant, and those associated with it, claims to have been misled on the occasion

of entering into a lease.

The result of such proceedings is quite

unpredictable, unless one can analyse the facts and statements

in detail, and they are not before me. I therefore do not

purport to form my own opinion as to what the likely outcome of these suits would be. However, the liquidators' material satisfies me that they have honestly and bona fide formed the

view that the proposed compromises are beneficial.

The other matter which should be mentioned is that, although the material is somewhat skimpy on this point, it is said by MS O'Reilly that the liquidator simply has not the

funds to litigate. It is said in the material that the

returns from the Myer Centre are insufficient to meet the
moneys due to the secured creditors, and MS O'Reilly
understands that the litigation to date engaged in by the
applicants has been funded by the applicants themselves, and

not out of the company's funds.

This is, of course, a common problem: that

liquidators and provisional liquidators find themselves in
difficulty collecting debts due to the company, because the
money necessary to achieve that result is not available, and
creditors are commonly unwilling to fund litigation. In the
circumstances, then, the compromises seem to me to be
reasonable and I have formed the view that I should apply to

the Cor~orations Law the decision of the Supreme Court of

Queensland in Re Rothwells.

The order will be in each matter in accordance with

the notice of motion.

I certify that this and the

five preceding pages are a
true copy of the reasons
for judgment herein of his

Honour Mr. Justice Pincus

-

Associate

Date wewbw l??'