In the Matter Of Santos Petroleum Operations Pty Ltd (in Liquidation)
[2016] SASC 201
•12 December 2016
SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
IN THE MATTER OF SANTOS PETROLEUM OPERATIONS PTY LTD (IN LIQUIDATION)
[2016] SASC 201
Judgment of Judge Dart a Master of the Supreme Court (ex tempore)
12 December 2016
CORPORATIONS - WINDING UP - CONDUCT AND INCIDENTS OF WINDING UP - DISSOLUTION - GENERALLY
Final meeting of company held - report filed at ASIC - company due to be deregistered - liquidators' application to defer deregistration.
Corporations Act 2001 (Cth) s 509, 601AD(2), referred to.
Kerol Pty Ltd & Anor v Vergeld Engineering Pty Ltd & Ors Unreported, Supreme Court of South Australia, Judge Burley, 30 April 1998; Rosaub Pty Ltd (in liq) [2005] NSWSC 689, considered.
IN THE MATTER OF SANTOS PETROLEUM OPERATIONS PTY LTD (IN LIQUIDATION)
[2016] SASC 201JUDGE DART:
The plaintiffs are the liquidators of a company being wound up pursuant to provisions of the Corporations Act 2001 (“the Act”). Santos Petroleum Operations Pty Ltd (“SPO”) has, as its sole shareholder, another company in the Santos Group of Companies. Its winding up was part of a process of rationalisation of the corporate structure of Santos Ltd and its subsidiaries.
This application is made pursuant to s 509 of the Act:
509Final meeting and deregistration
(1)As soon as the affairs of the company are fully wound up, the liquidator must make up an account showing how the winding up has been conducted and the property of the company has been disposed of and, when the account is so made up, he or she must convene a general meeting of the company, or, in the case of a creditors’ voluntary winding up, a meeting of the creditors and members of the company, for the purpose of laying before it the account and giving any explanation of the account.
(2)The meeting must be convened by a notice published in the prescribed manner at least 1 month before the meeting specifying the date, time, place and purpose of the meeting.
(3)The liquidator must, within 7 days after the meeting, lodge a return of the holding of the meeting and of its date with a copy of the account attached to the return.
(4)At a meeting of the company, 2 members constitute a quorum and, at a meeting of the creditors and members of the company, 2 creditors and 2 members constitute a quorum and, if a quorum is not present at the meeting, the liquidator must, in place of the return mentioned in subsection (3), lodge a return (with account attached) stating that the meeting was duly convened and that no quorum was present and, upon such a return being lodged, the provisions of that subsection as to the lodging of the return are taken to have been complied with.
ASIC must deregister at the end of 3 month period
(5)ASIC must deregister the company at the end of the 3 month period after the return was lodged.
ASIC must deregister on a day specified by the Court
(6)On application by the liquidator or any other interested party, the Court may make an order that ASIC deregister the company on a specified day. The Court must make the order before the end of the 3 month period after the return was lodged.
(7)The person on whose application an order of the Court under this section is made must, within 14 days after the making of the order, lodge an office copy of the order.
The provision in 509(6) permits a liquidator to apply to the Court to seek an order fixing a date on which a company is to be deregistered. ASIC must, in the absence of such an order, deregister a company at the end of the three-month period after the filing of a return in respect of the final meeting of the company. The final return was lodged at ASIC by the liquidators on 19 September 2016 and, therefore, SPO will be deregistered on 19 December 2016. ASIC takes the view that it is not able to vary that date.
After the lodging of the final return, it was discovered by employees of Santos Limited, the ultimate holding company, that SPO holds a 50% interest in petroleum lease No. 218 registered on the Queensland Petroleum Register. It also holds a 50% interest in four easements in gross registered on the Queensland Titles Register in respect of petroleum pipeline licence No.11. The ownership of these assets was overlooked during the liquidation process.
The consequence for a company which is deregistered while owning property is that the property vests in ASIC.[1] This application seeks to avoid that outcome. It seeks to do so by deferring the date on which deregistration is to occur for a period of 12 months. ASIC does not oppose the Court making an order extending the time at which deregistration is to occur.
[1] Corporations Act 2001 s 601AD(2).
The affidavit material makes clear that the Santos Group of Companies propose to transfer the abovementioned asset of SPO to other companies in the group. The approval of the Queensland government will be required to undertake that transfer. It is not known at the moment how long the approval process will require to complete. The application seeks to fix the date of deregistration as 19 December 2017.
There is limited authority in respect of the operation of s 509(6). In Kerol Pty Ltd & Anor v Vergeld Engineering Pty Ltd & Ors Judge Burley stated:[2]
It seems to me that the absence of the ability of the Court to give directions under s509(6) of the Law indicates that the discretion to defer the dissolution should only be exercised where:
(a)an interested party who has standing under any of the provisions of the Law, needs to take an application relating to the administration of the liquidation;
(b)the continued existence of the company is necessary in order to effect some proper purpose.
[2] Unreported, Supreme Court of South Australia, Judge Burley, 30 April 1998.
The provision was further considered in Rosaub Pty Ltd (in liq) where Barrett J said: [3]
10In relation to the substantive question, the legislation does not seek to define or qualify the court’s discretion except in a timing sense (in that an order under s.509(6) can only be made before the end of three months after the lodgment of the s.509(3) return or, as here, the s.509(4) return). Case law provides little guidance as to considerations relevant to the exercise of the discretion. Judge Burley, a Master of the Supreme Court of South Australia, dealing with an earlier version of s.509(6) in Kerol Pty Ltd v Vergeld Engineering Pty Ltd (unreported, SASC, 30 April 1998) expressed the opinion that the discretion is properly exercised where “the continued existence of the company is necessary in order to effect some proper purpose”. To like effect is the decision of Austin J in Application of Walker (as liquidator of SC Australia Pty Ltd) [1999] NSWSC 176 where an order was made because, if deregistration was not deferred, certain persons “would suffer a loss to which there is no particular reason to subject them”.
…
12I am satisfied that, if some apparently beneficial purpose will, according to the evidence, be served by a deferral, the deferral should be granted, particularly where it is the liquidator who puts forward the need for deferral. Creation of an opportunity to explore fully the possibility of further and hitherto unrecognised avenues of recovery for the benefit of the administration must, of its nature, represent such a beneficial purpose.
[3] [2005] NSWSC 689.
The provision is a beneficial or remedial provision which permits a court to avoid an unintended outcome arising from a rigid application of the three month time period for deregistration required by s 509(5). As such, it provides a broad discretion and should not be read narrowly. As Judge Burley said, it is available to be used for a proper purpose of the company.
I am satisfied in the circumstances of this matter that it is appropriate to make the order sought for the period which is sought. It is a proper purpose of SPO to have its liquidators deal with its assets prior to its deregistration.
2
2
1