Javorsky v Rico Pty Limited (in liq) & 1 Ors

[2001] NSWSC 746

CITATION:	Javorsky v Rico Pty Limited (in liq) & 1 Ors [2001] NSWSC 746 revised - 30/08/2001
CURRENT JURISDICTION:	Equity
FILE NUMBER(S):	SC 5128/99
HEARING DATE(S):	27/08/01
JUDGMENT DATE:	27 August 2001
PARTIES :	THOMAS JAVORSKY (Plaintiff) RICO PTY LIMITED (in liquidation) (ACN 000 967 331) (First Defendant) AUSTRAL BRONZE CRANE COPPER LIMITED (ACN 008 466 840) (Second Defendant)
JUDGMENT OF:	Santow J

COUNSEL :	P Fury (Plaintiff) S Skelton (Solicitor) (Second Defendant)
SOLICITORS:	Gordon & Johnstone (Plaintiff) Middletons Moore & Bevins (Second Defendant)
CATCHWORDS:	CORPORATIONS — Invalid appointment of liquidator — Remedial orders under s1322(4) and s447A of Corporations Act 2001 — No substantial injustice in denying an unforeseen windfall benefit — Cost orders allowed to compensate Second Defendant for costs in taking the point in defending proceedings by liquidator.
LEGISLATION CITED:	Corporations Act 2001 s447A s1322
CASES CITED:	Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270 Re Ricon Constructions Pty Ltd (in liq) ex parte McDonald (1997) 43 NSWLR 174 Super John Pty Ltd & Ors v Futuris Pty Ltd (1999) 17 ACLC 1,242
DECISION:	Remedial orders made.

REVISED — 30 August, 2001
IN THE SUPREME COURT
OF NEW SOUTH WALES
IN EQUITY

SANTOW J

No. 4085/01
THOMAS JAVORSKY
Plaintiff
RICO PTY LIMITED (in liquidation) (ACN 000 967 331)
First Defendant

AUSTRAL BRONZE CRANE COPPER LIMITED (ACN 008 466 840)
Second Defendant

JUDGMENT — ex tempore

1 HIS HONOUR: In this matter, I am asked to make remedial orders pursuant to s1322(4) of the Corporations Act 2001 and s447A of the Corporations Act 2001. The relevant facts are conveniently set out in the Plaintiff's written submissions of 27 August 2001 and are not disputed by the Second Defendant; see paragraphs 1 to 10 inclusive. Those submissions are initialled by me for identification and retained in the Court file.

2    The orders sought are opposed by the Second Defendant. But this is only in the event that no condition were attached as the price of those orders to the effect that interest would not commence to run upon any judgment obtained by the Plaintiff in current District Court proceedings until after the date of these remedial orders.

3    I am satisfied that this is a proper case for making the orders sought. The inadvertent holding of the second meeting of creditors one day late and the assumption upon which everyone subsequently acted, namely, that the administration had ended and the liquidator validly appointed, should be supported by such remedial orders.

4    The reasons for that are adequately canvassed in my judgment in Re Ricon Constructions Pty Ltd (in liq) ex parte McDonald (1997) 43 NSWLR 174. Furthermore, there is nothing in the High Court's reasoning in Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270, which would preclude such orders being made, including their retrospective operation.

5    In that regard, I need, however, to deal with the argument put by the Second Defendant. That argument, in essence, is that a substantial injustice would flow to it were I not to attach the condition to the orders that the Second Defendant seeks, to which I have earlier made reference.

6    That condition is designed to preserve for the Second Defendant the legal consequence of an invalid appointment of a liquidator. That is, in the absence of remedial orders, the action the liquidator purported to bring would be successfully struck out, by reason of his invalid appointment. The Second Defendant has brought proceedings by Notice of Motion dated 6 August 2001, to dismiss the Plaintiff's proceedings in the District Court. That motion would, I agree, have been successful, but for the remedial orders I am now making.

7    It can be clearly seen that what the Second Defendant is seeking to do is to preserve a windfall benefit, not one it could have anticipated, from the inadvertent failure to have the second creditors' meeting held within the convening period.

8    It is therefore not a benefit based on circumstances upon which the Second Defendant relied in its relevant dealings with the company, namely those which led to the District Court proceedings for recovery of a preference brought by the liquidator. The invalidity in his appointment was only discovered by the Second Defendant in defending those proceedings.

9    The most that could be said is that the Second Defendant acted to its detriment in bringing the Notice of Motion to set aside the Plaintiff’s action, as well as in earlier pleading a defence which relied upon the invalidity of the liquidator's appointment.

10    As to both those detriments, the condition upon which I make the remedial orders ensures that the Second Defendant receives payment from the Plaintiff for the costs thrown away or otherwise attributable to that contention.

11    The approach that I am taking is consistent with the approach that I took in Super John Pty Ltd & Ors v Futuris Pty Ltd (1999) 17 ACLC 1,242, particularly at paragraphs 14 to 16 thereof.

12 In my judgment, here, as there, the "overwhelming weight of justice" is in favour of making the validating or remedial orders sought by the Plaintiff. That satisfies s1322(6) of the Corporations Act 2001. I, accordingly, have made those orders.

13    In relation to costs, I have provided that the Plaintiff is to pay the costs of the Second Defendant, though this is to be only on a party and party basis. The Second Defendant has raised the point with economy and in circumstances where the party seeking the concession should pay the costs, these being proportionate in the circumstances.

14    I have made those cost orders.

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Last Modified: 09/03/2001