Leslie John Schirato v SCW Pty Ltd (In Liquidation)

[2012] NSWSC 541

Supreme Court

New South Wales

Medium Neutral Citation:	Leslie John Schirato -v- SCW Pty Ltd (In Liquidation) [2012] NSWSC 541
Hearing dates:	24 April 2012
Decision date:	24 April 2012
Jurisdiction:	Equity Division - Corporations List
Before:	Hammerschlag J
Decision:	Liquidator granted leave to distribute a surplus in the winding up of the first defendant. The entry into of the agreement effected by the liquidator's acceptance of Piper Alderman's engagement letter of 13 April 2011 for the provision of legal services approved by the Court.
Catchwords:	CORPORATIONS - Corporations Act 2001 (Cth) s 488(2) - application under s 488(2) for special leave to distribute surplus funds in circumstances where shareholders and contributories consent to distribution and where company has adequate funds to meet any possible further obligations - HELD - surplus funds appropriate to be distributed - operation of orders subject to receipt of notice from Commissioner of Taxation pursuant to s 260-45 of Schedule 1 of the Taxation Administration Act 1953 (Cth) CORPORATIONS - Corporations Act 2001 (Cth) - application under s 477(2B) for retrospective approval of agreement between liquidator and his solicitors - HELD - agreement approved by the Court
Legislation Cited:	Corporations Act 2001 (Cth) Taxation Administration Act 1953 (Cth)
Category:	Principal judgment
Parties:	Leslie John Schirato - Respondent/First Plaintiff Schirato Pty Ltd - Second Plaintiff SCW Pty Ltd (In Liquidation) - Applicant/First Defendant Clelia Cantarella (formerly Winton) - Second Defendant Canwin (Aust) Pty Ltd - Third Defendant
Representation:	Counsel: V.F. Kerr - Applicant/First Defendant J.R. Williams - Respondent/First Plaintiff A.S. Martin SC with J.E. Richards - Second and Third Defendants Solicitors: King & Wood Mallesons - Respondent/First Plaintiff Piper Alderman - Applicant/First Defendant Andrew Priestley & Associates - Second and Third Defendants
File Number(s):	2011/85140

EX TEMPORE Judgment

1. HIS HONOUR:Section 488(2) of the Corporations Act 2001 (Cth) ("the Act") provides that:

Despite anything in rules or regulations made for the purposes of subsection (1), a liquidator may distribute a surplus only with the Court's special leave.

1. Section 477(2B) of the Act provides that:

Except with the approval of the Court, of the committee of inspection or of a resolution of the creditors, a liquidator of a company must not enter into an agreement on the company's behalf (for example, but without limitation, a lease or a an agreement under which a security interest arises or is created) if:

(a) without limiting paragraph (b), the term of the agreement may end; or

(b) obligations of a party to the agreement may, according to the terms of the agreement, be discharged by performance;

more than 3 months after the agreement is entered into, even if the term may end, or the obligations may be discharged, within those 3 months.

1. By Second Amended Interlocutory Process, filed today with leave, the liquidator of SCW Pty Limited (in liquidation) ACN 069 964 521 ("the company") applies pursuant to s 488(2) of the Act:

(a)   for special leave to make an interim distribution to the shareholders of the company for surplus funds in the liquidation in the total sum of $14,600,000 in accordance with a schedule (which will become part of the orders which I propose to make); and

(b) for an order declaring that an agreement which the liquidator made with solicitors Piper Alderman under an engagement letter of 13 April 2011 for the provision of legal services is not invalid by reason of the failure of the liquidator to obtain prior approval under s 477(2B) of the Act; and for an order retrospectively approving, the entering into by the liquidator of that agreement.

1. Ancillary orders which are unexceptional are also sought.

1. The application is supported by four affidavits of the liquidator sworn respectively 21 December 2011, 6 March 2012, 2 April 2012 and 19 April 2012. That material establishes to my satisfaction that there are surplus funds held by the liquidator which are appropriate to be distributed. The shareholders and contributories of the company are all represented in Court and they consent to the orders. After the distribution there will still be left in the company to meet any possible further obligations a sum exceeding $5 M, which I am satisfied is more than adequate.

1. One aspect deserving of mention is that although no relevant tax liability is anticipated, statutory notices have been sent to taxation authorities calling for permission to part with the company assets.

1. Section 260-45 of Schedule 1 of the Taxation Administration Act 1953 (Cth) requires the liquidator to give written notice to the Commissioner of Taxation of any intended distribution and for the Commissioner to provide a notice in response. Subsection (4) of that section provides that the liquidator must not, without the Commissioner's permission, part with any of the company's assets before receiving the Commissioner's notice. Such a notice has been sought from the Commissioner but has not yet been received. I accordingly intend to make the operation of the orders dependent on the receipt of that notice. I also intend to provide that there is some slight delay to enable any other such authority to move the Court, if so advised, for orders varying the substantive order which I propose to make.

1. So far as the approval of the solicitor's retainer is concerned, I have perused the letter of retainer and there is nothing exceptional about it. It may be observed that one of the powers that a liquidator has, pursuant to s 477(2)(b) of the Act, is to appoint a solicitor to assist him or her in his or her duties. Clearly the orders which are sought are properly based and justified.

1. In all the circumstances, I will make orders in accordance with the Short Minutes of Order which I will sign and date today's date. They will provide that the liquidator has special leave pursuant to s 488(2) of the Act to distribute $14,600,000 of the surplus in the winding up of the company in accordance with a schedule, provided that the amount shall not be distributed until the later of fourteen days from today's date and the receipt of the Commissioner notice pursuant to s 260-45 of Schedule 1 of the Taxation Administration Act 1953 (Cth).

1. I will declare that the agreement effected by the liquidator's acceptance of Piper Alderman's engagement letter of 13 April 2011 for the provision of legal services and the entering into that agreement by the liquidator is not invalid by reason of the failure to obtain prior approval under s 477(2B) of the Act and that the entering into of that agreement by the liquidator is approved by the Court.

1. The liquidator's costs of and incidental to today's hearing will be costs in the liquidation and are to be paid on an indemnity basis.

1. I will stand the matter down until 12.00 noon for those orders to be brought in.

1. At 12.00 noon the orders were brought in and made.

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Decision last updated: 22 May 2012