In the matter of Sultan Trad Pty Limited
[2017] NSWSC 1857
•24 March 2017
Supreme Court
New South Wales
Medium Neutral Citation: In the matter of Sultan Trad Pty Limited [2017] NSWSC 1857 Hearing dates: 24 March 2017 Date of orders: 24 March 2017 Decision date: 24 March 2017 Jurisdiction: Equity - Corporations List Before: Brereton J Decision: The first plaintiff would be justified in accepting the offer, or an offer on more favourable terms, and treating any moneys received pursuant to the acceptance of any such offer as assets in the liquidation of the second plaintiff.
Catchwords: CORPORATIONS – winding up – liquidators – judicial advice – whether liquidator is justified in accepting an offer less than the value of property – where no valid contract – offer includes a discount and items which may not be deductible – where acceptance in the commercial judgment of the liquidator probably provides a better result than the risk, delay and costs associated with litigation – where open to negotiate more favourable terms – where monies received to be treated as assets in the liquidation - held liquidator would be justified in accepting the offer or an offer on more favourable terms. Cases Cited: Sultan Trad Pty Limited, In the matter of (in liquidation) ACN 132 643 228 [2016] NSWSC 1633 Category: Principal judgment Parties: Brad William Morelli in his capacity as liquidator of Sultan Trad Pty Limited (in liquidation) ACN 132 643 228 (first plaintiff)
Sultan Trad Pty Limited (in liquidation) ACN 132 643 228 (second plaintiff)Representation: Counsel:
Solicitors:
H K Insall SC
Hugh & Associates Lawyers
File Number(s): 2016/ 320832
Judgment (ex tempore)
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Before the Court is the resumed hearing of the application by the liquidator of the company Sultan Trad Pty Limited for judicial advice in respect of certain wine currently in the possession of Inland Trading Company (Australia) Pty Limited, in respect of which I gave an earlier judgment on 8 November 2016 (see [2016] NSWSC 1633), with which this judgment should be read, in which I expressed the view that while it may well be that property in the wine had passed to the company and then to Canterbury, it was not yet clear that that was so, and further submissions and evidence might show that it had not. For those reasons, I did not consider it then appropriate to give the advice sought in the originating process, which was to the effect that the liquidator would be justified, first, in making payments to Inland in order to obtain delivery of the wine, or causing the company to enter into an agreement with Inland whereby it obtained delivery of some or all of the wine, or Inland retained some or all of it in exchange for the repayment of money; and secondly, in dealing with any of the wine received from Inland, or moneys received from Inland pursuant to any such agreement, as assets of the company to be realised and applied for the purpose of the winding up and for the benefit of the company's creditors generally.
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The proceedings were adjourned in order to enable the issues raised in that judgment to be addressed.
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Since then, further evidence has been adduced – which it is unnecessary to traverse in detail – which provides a reasonable basis for the proposition that there was no concluded contract between the company and Inland, as there was no consensus as to the terms of sale and, in particular, whether it was a GST inclusive or GST exclusive transaction. If that be so – namely, that there was no concluded contract – then prima facie the company would have a good claim against Inland for return or restitution of the sum of $164,141 paid by the company to Inland on 16 February 2016.
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In a letter dated 16 March 2017, solicitors acting for Inland have offered to refund a lesser sum – namely $120,895.62 calculated as 70% of the consideration for the Penfolds Rawson's Retreat, and 100% of the consideration for the Bin 707 and Bin 389, less storage costs of $11,965.80 and insurance costs of $902.78. The letter sets out reasons why it is said to be appropriate that a 30% discount be applied in relation to the Rawson's Retreat, and contends that insurance and storage costs are payable.
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If there be no contract – and that may well be the logical consequence of the position advanced by Inland that there was no valid purchase order – then the whole of the $161,000 paid would be returnable, and storage costs and insurance costs would not be deductible. On that footing, it may reasonably be said that the offer that has been made is suboptimal. Nonetheless, the costs of litigation to recover the full $161,000, the delay and protraction of the liquidation that would ensue, and the risk inherent in such litigation, make an early offer and opportunity to recover funds for the liquidation attractive.
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As it seems to me, while it is ultimately a matter for the commercial judgment of the liquidator, and while it may well be that attempts can be made to negotiate a better outcome, this offer (which is expressed to expire today), probably provides a better result than the risk, delay and costs associated with litigation.
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Advice that the liquidator would be justified in accepting the offer does not mean that the liquidator must accept the offer, and certainly does not preclude further negotiation for more favourable terms.
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If the offer, or an offer on similar but more favourable terms – is accepted, then the liquidator will receive a cash sum. There is nothing in the evidence to suggest that the moneys paid by Canterbury to the company were segregated or required to be kept separate; to the contrary, it appears to have been an outright payment to Sultan Trad, which the company was then at liberty to deal with as it pleased.
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In those circumstances, the receipt of moneys from Inland pursuant to acceptance of the offer would enhance the general funds of Sultan Trad, and any claim by Canterbury would be a claim for damages for breach of contract by failure to deliver the goods, rather than a restitutionary claim for the amount it has paid Sultan Trad. The position might be otherwise if the liquidator procured delivery of the wine, rather than return of the funds paid, but it is unnecessary to determine that, at least at this stage, because that is not what the liquidator now contemplates doing.
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Because the liquidator may well wish to negotiate further, and his ability to do so might be compromised if the content of this advice were known, at least for the time being the advice that I give in this judgment will remain confidential to the liquidator.
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The court orders that:
The first plaintiff would be justified in accepting the offer contained in the letter dated 16 March 2017 from Hall and Wilcox to Jirsch Sutherland, or an offer on more favourable terms, and treating any moneys received pursuant to the acceptance of any such offer as assets in the liquidation of the second plaintiff.
Costs of the application be costs in the liquidation.
Until 24 April 2017 order this judgment and these orders are to be kept on the court file in a sealed envelope marked "To Be Opened Only By Leave Of A Judge Of The Court" save that a copy may be obtained by and provided to the liquidator.
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Decision last updated: 25 May 2018
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