In the matter of Orinoco Gold Limited

Case •

[2020] NSWSC 1867

•

15 December 2020

No judgment structure available for this case.

Supreme Court


New South Wales

Medium Neutral Citation: In the matter of Orinoco Gold Limited [2020] NSWSC 1867
Hearing dates: 15 December 2020
Date of orders: 15 December 2020
Decision date: 15 December 2020
Jurisdiction:Equity - Corporations List
Before: Henry J
Decision:

Plaintiff granted access to the company’s records. See paragraph [16].

Catchwords:

CORPORATIONS – statutory right of access to books and records – where liquidators consent to proposed orders – no issue of principle

Legislation Cited:

Corporations Act 2001 (Cth), ss 247A, 500(2)

Cases Cited:

Eopply New Energy Technology Co Ltd v EP Solar Pty Ltd [2013] FCA 356

In the matter of DSHE Holdings Limited (receivers and managers appointed) (in liq) [2018] NSWSC 82

In the matter of Orinoco Gold Limited (subject to Deed of Company Arrangement) [2019] NSWSC 1771

Texts Cited:

Nil

Category:Consequential orders (other than Costs)
Parties: Tony Palasovski (Plaintiff)
Orinoco Gold Limited (Defendant)
Representation:

Counsel:
G Drew (Plaintiff)

Solicitors:
Levitt Robinson (Plaintiff)

No appearance for the Defendant.
File Number(s): 19/322265
Publication restriction: Nil

Judgment – EX TEMPORE (REVISED)

  1. Before me for hearing today is an application for an order under s 247A of the Corporations Act 2001 (Cth) authorising the plaintiff, Mr Palasovski, to inspect the books of the defendant, Orinoco Gold Limited, a company in liquidation.

  2. Mr Palasovski is a shareholder of the company who seeks to avail himself of his statutory right under the Corporations Act to inspect its books and records. This is Mr Palasovski’s second application for access to the company’s books and records in these proceedings.

  3. The first application was granted by Rees J on 9 December 2019: In the matter of Orinoco Gold Limited (subject to Deed of Company Arrangement) [2019] NSWSC 1771. Her Honour's judgment sets out the background to these proceedings which I will not repeat here. Her Honour granted Mr Palasovski leave to begin and proceed with his application pursuant to s 444E(3) of the Corporations Act in circumstances where the company was subject to a deed of company arrangement (DOCA) at the time. The company was also ordered to provide Mr Palasovski access to a limited set of documents.

  4. On 22 May 2020, the creditors held a meeting and resolved to terminate the DOCA, appoint joint and several liquidators and wind up the company.

  5. On 27 October 2020, Mr Palasovski filed the second application, which seeks access to a larger set of company documents that are held by or are in the power and control of the liquidators.

  6. Mr Palasovski’s application is supported by an affidavit of his solicitor, Blaise Prentice-Davidson, affirmed 15 December 2020.

  7. In addition to the application under s 247A for access to documents, Mr Palasovski’s counsel also seeks, by way of oral application made at the hearing, leave under s 500(2) of the Corporations Act to proceed with his application in circumstances where the company’s creditors voluntarily put the company in liquidation.

  8. As Black J stated in In the matter of DSHE Holdings Limited (receivers and managers appointed) (in liq) [2018] NSWSC 82, s 500(2) relevantly provides that, after the passage of a resolution for voluntary winding up, no action or other civil proceeding is to be proceeded with or commenced against a company except by leave of the Court and subject to the terms as the Court imposes. Broadly, the purpose of the section is to prevent a company's assets being dissipated by unnecessary litigation and an applicant for leave will be required to show why it should not be left to prove its debt in the winding up: at [18].

  9. His Honour went on to refer to Foster J’s observation in Eopply New Energy Technology Co Ltd v EP Solar Pty Ltd [2013] FCA 356 at [22(b)]:

In determining whether leave should be granted, the Court considers whether the balance of convenience lies in allowing the applicant to proceed by way of action to judgment, or whether the applicant should be left to pursue [their] claim by lodging a proof of debt with the liquidator. The matter is one of discretion and the onus is on the applicant to demonstrate why it is more appropriate in respect of the particular claim, to proceed by way of action.

  1. At this stage, Mr Palasovski does not seek monetary relief by way of lodgement of a proof of debt. His application is for access to the company’s books and records for the purposes of investigating whether a class action may be brought against the company in due course. It is, therefore, a different type of application to many of the applications seeking the Court’s leave under s 500(2).

  2. The liquidators have not been joined to the proceedings and there is no appearance from them in Court today. However, there is evidence before the Court that Mr Palasovski’s solicitors have been in communication with the liquidators regarding his application for access to the company’s books and records and that they have reviewed and consent to the orders proposed by Mr Palasovski.

  3. The proposed orders relevantly provide that Mr Palasovski will bear the cost of inspecting and copying the physical records of the company. At the hearing, Mr Palasovski’s counsel confirmed that providing access to the digital records stored in a Dropbox folder will involve no cost to the liquidators. Thus, this is not a case where the liquidators will incur costs or be impeded in their work if access to the company’s books and records is granted in the terms sought.

  4. The evidence also indicates that Mr Palasovski and the liquidators have negotiated and agreed to a confidentiality regime in relation to the documents to be accessed by Mr Palasovski.

  5. Having regard to these matters, I am satisfied that it is appropriate to grant leave to Mr Palasovski to proceed with his application under s 500(2) of the Corporations Act. I am also satisfied that it is appropriate to make orders that the company provide Mr Palasovski access to the digital and physical records of the company in accordance with the proposed consent orders.

  6. Finally I note that, although Mr Palasovski’s application has been identified as an interlocutory process, the orders are final in the sense that upon making them there will be no further application by Mr Palasovski before the Court.

  7. For these reasons, I make the following orders:

  1. Pursuant to s 500(2) of the Corporations Act 2001 (Cth), grant leave to the Plaintiff to proceed with the application under s 247A of the Corporations Act 2001 (Cth) against Orinoco Gold Ltd (in liquidation).

  2. Subject to the undertakings having been given in the form attached to the consent orders that I have initialled, dated and placed with the papers and which are marked "A", the Defendant is forthwith to:

  1. provide access to the Plaintiff to the Digital Records (as that term is defined in the letter from the liquidator of the company, Mr Bryan Hughes, to the Plaintiff's solicitors dated 5 August 2020); and

  2. permit the Plaintiff or his representatives to inspect and copy the Physical Records (as that term is defined in the letter from the liquidator of the company, Mr Bryan Hughes, to the plaintiff's solicitors dated 5 August 2020) such inspection and copying to be at the Plaintiff's own cost.

  1. These orders be entered forthwith.

**********

Decision last updated: 22 January 2021

Cases Citing This Decision

0