Londish v Sheahan - Re Valofo Pty Ltd - [2010] NSWSC 337

CITATION: Londish v Sheahan & Ors – In re Valofo Pty Ltd [2010] NSWSC 337

HEARING DATE(S): 24 February 2010

JUDGMENT DATE :
28 April 2010

JURISDICTION: Equity Division
Corporations List

JUDGMENT OF: Palmer J

DECISION: Judgment for Defendants on Statement of Claim.

CATCHWORDS: CORPORATIONS – ADMINISTRATION – LIQUIDATION – Whether company placed in administration although not insolvent – whether administration and subsequent liquidation for proper purpose – whether position of administrators and liquidators so compromised that they should be replaced.

LEGISLATION CITED: Corporations Act 2001 (Cth) – s 435A, s 436A, s 447A(4)

CATEGORY: Principal judgment

CASES CITED: - Citrix Systems Inc v Telesystems Learning Pty Ltd (in liq) (1998) 28 ACSR 529
- Kazar v Duus (1998) 29 ACSR 321
- Londish v Sheahan & Lock in Re Valofo Pty Ltd [2009] NSWSC 1175

PARTIES: Peter Londish (Plaintiff)
John Sheahan and Ian Lock (First Defendants)
David Bowman (Second Defendant)
Sidney Londish (Third Defendant)

FILE NUMBER(S): SC 09/291621

COUNSEL: S.J. Burchett (Plaintiff)
A.P. Coleman (First Defendant – Submitting Appearance)
J. Stoljar SC, Ms A Horvath (Second and Third Defendants)

SOLICITORS: Hartmann & Associates (Plaintiff)
O’Neill Partners (First Defendant – Submitting Appearance)
Philip Evans & Associates (Second and Third Defendants)

2009/291621 In re Valofo Pty Ltd: Londish v Sheahan & Ors

JUDGMENT

28 April, 2010

Introduction

1 These proceedings are part of a protracted dispute between the Plaintiff, Mr Peter Londish, and the Second and Third Defendants, Mr David Bowman and Mr Sidney Londish, who are, respectively, the Plaintiff’s brother-in-law and father. The disputants are, through a complex chain of companies and trusts, the ultimate beneficial owners in roughly equal shares of the Londish group of companies.

2 Valofo Pty Ltd (“Valofo”) is one of the companies in the Londish group. On 26 November 2009 its directors, Mr Sid Londish and Mr Bowman, resolved pursuant to s 436A Corporations Act 2001 (Cth) that in their opinion Valofo was insolvent and they appointed the First Defendants, Messrs Sheahan and Lock, as voluntary administrators.

3 On 10 December 2009, Mr P. Londish filed an Originating Process seeking the termination of the administration of Valofo or, in the alternative, an order removing Messrs Sheahan and Lock as administrators and appointing some other person in their place. The grounds for the relief sought were said to be that Valofo was not insolvent at the time of the resolution placing it in administration, that Mr Sid Londish and Mr Bowman voted to place the company in voluntary administration for an improper purpose, and that the administrators were biased in favour of Mr Sid Londish and Mr Bowman.

4 At a meeting of creditors on 5 January 2010 it was resolved to place Valofo in liquidation and Messrs Sheahan and Lock were appointed liquidators.

5 On 27 January 2010 Mr Peter Londish filed a Statement of Claim in these proceedings in which he sought the following additional relief:

– that the winding up of Valofo be terminated;

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2010] NSWSC 337
Decision Date: 28 April 2010

CaseChat Overview and Summary

Londish and Sheahan were the subject of a legal dispute concerning the administration and subsequent liquidation of Valofo Pty Ltd. The applicants sought a review of the actions taken by the company's administrators and liquidators, arguing that the company was not insolvent at the time of administration and that the administration and liquidation were not for a proper purpose. They also contended that the administrators and liquidators were compromised and should be replaced.

The legal issues before the court were whether Valofo Pty Ltd was placed in administration despite not being insolvent, whether the administration and subsequent liquidation were for a proper purpose, and whether the position of the administrators and liquidators was so compromised that they should be replaced. The applicants argued that the company was not insolvent at the time of administration, that the administration and liquidation were not for a proper purpose, and that the administrators and liquidators were compromised.

The court found that the company was not insolvent at the time of administration, but that the administration was still for a proper purpose. The court held that the administrators and liquidators were not compromised, and therefore, there was no need to replace them. The court noted that the applicants had not provided sufficient evidence to support their claims, and that the administrators and liquidators had acted in accordance with their statutory duties.

The court dismissed the application and found in favour of the respondents. The court held that the administration and subsequent liquidation of Valofo Pty Ltd were for a proper purpose, and that there was no need to replace the administrators and liquidators. The court ordered that the applicants pay the respondents' costs of the proceedings.

Orders