Mier & Anor v. Craven & Ors - [2007] QSC 259

SUPREME COURT OF QUEENSLAND

CITATION:

Mier & Anor v Craven & Ors [2007] QSC 259

PARTIES:

GERARD JOHN MIER and ANTHONY JAMES JONSSON
(Applicant)
v
DAPHNE CRAVEN
(First Respondent)
BRUCE CRAVEN
(Second Respondent)
FRANCIS DALY
(Third Respondent)
JOHN RAYMOND DEUBLE
(Fourth Respondent)
CATHERINE MARGARET DUNCAN
(Fifth Respondent)
KERRY JOHN ECKERSLEY
(Sixth respondent)
ERROL FRANCIS GLYNN
(Seventh Respondent)
DENNIS AMBROSE GOW
(Eighth Respondent)
DONALD MacDOUGAL
(Ninth Respondent)
RODNEY MILLER
(Tenth Respondent)
ERIC O’KELL
(Eleventh Respondent)

FILE NO/S:

262 of 2007

DIVISION:

Trial

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court Cairns

DELIVERED ON:

27 July 2007

DELIVERED AT:

Cairns

HEARING DATE:

9 July 2007

JUDGE:

Jones J

ORDER:

1. I declare that the lawful and proper manner of distribution of the residual property of the company, Port Douglas Fishermen’s Enterprises Ltd (In Liquidation), after satisfaction of the costs of winding up and of the company’s admitted debts and liabilities, is to the respondents in equal shares.
2. I direct that after 15 days from the date hereof and after satisfaction of the costs of winding up, and of the company’s admitted debts and liabilities, the residual property of the said company be distributed by the applicants to the respondents in equal shares in satisfaction of each of the respondents’ respective rights, claims and interests as a member of the company;
3. The applicant’s costs of and incidental to this application be paid out of the assets of the said company on the indemnity basis as agreed or assessed.
4. I give liberty to the parties to apply within 14 days from the date hereof.

CATCHWORDS:

CORPORATIONS- CORPORATIONS LEGISLATION – WINDING UP VOLUNTARILY– APPLICATION BY LIQUIDATORS FOR COURT ORDER – distribution of surplus capital – prohibition under Corporations Act of reduction of capital unless pursuant to a provision of the company articles.

COUNSEL:

Michael Jonsson

SOLICITORS:

Farrellys Lawyers for the applicants
Mellick, Smith & Associates for the respondents

The applicants are the liquidators of Port Douglas Fishermen’s Enterprises Ltd (In Liquidation) hereinafter referred to as “the company”. They were appointed to that role on 28 June 2006 by resolution upon a members’ voluntary winding up. This application is made pursuant to s 51 of the Corporations Act 2001 (“the Act”) for determination of a question which has arisen about the distribution of surplus assets of the company.

The evidence discloses that after satisfaction of the costs of the winding up and all debts and liabilities of the company, the residue of those proceeds available for distribution to members is likely to exceed $1.5m. There are 11 members entitled to share in that residue, each of whom has been made a respondent to the application. The issue confronting the liquidators is whether this residue should be distributed equally between the 11 members or whether, as two members assert, the distribution should be in accordance with “mooring rights” which were held unequally between the members.

The two members so contending are the sixth and tenth respondents who did not appear when the application was called on…

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: [2007] QSC 259
Decision Date: 27 July 2007

CaseChat Overview and Summary

The case of Mier & Anor v. Craven & Ors involved the liquidators of Port Douglas Fishermen’s Enterprises Ltd (In Liquidation) as the applicants and the respondents, who were the company’s members, as the defendants. The primary dispute centred on the appropriate distribution of the company's residual property following the satisfaction of winding-up costs and admitted debts and liabilities. The matter was heard in the Supreme Court of Queensland.

The central legal issues before the court were the interpretation of the relevant provisions of the Corporations Act 2001 (Cth) concerning the distribution of surplus capital and the prohibition on reducing the company’s capital unless authorised by the company’s constitution. The court needed to determine whether the liquidators could lawfully distribute the residual property to the respondents in equal shares and whether such a distribution complied with the statutory prohibition on reducing capital.

The court examined the provisions of the Corporations Act, particularly section 556, which mandates the distribution of surplus capital among the members in proportion to their shareholdings. The court also considered the constitutional restrictions on reducing capital, as stipulated in section 256A. After weighing the legal arguments and statutory provisions, the court found that the distribution of the residual property to the respondents in equal shares was lawful. This conclusion was reached because the distribution was not a reduction of capital but rather the lawful distribution of surplus capital as permitted by the Act. Consequently, the court granted the liquidators' application for an order directing the distribution of the residual property to the respondents in equal shares, subject to the conditions set out in the order.

The final orders of the court directed the liquidators to distribute the residual property of Port Douglas Fishermen’s Enterprises Ltd (In Liquidation) to the respondents in equal shares after the satisfaction of winding-up costs and admitted debts and liabilities. The orders also provided for the payment of the applicants' costs out of the company's assets and allowed for applications to be made by the parties within 14 days of the date of the order.

Orders

Orders of the court

1. I declare that the lawful and proper manner of distribution of the residual property of the company, Port Douglas Fishermen’s Enterprises Ltd (In Liquidation), after satisfaction of the costs of winding up and of the company’s admitted debts and liabilities, is to the respondents in equal shares.

2. I direct that after 15 days from the date hereof and after satisfaction of the costs of winding up, and of the company’s admitted debts and liabilities, the residual property of the said company be distributed by the applicants to the respondents in equal shares in satisfaction of each of the respondents’ respective rights, claims and interests as a member of the company;

3. The applicant’s costs of and incidental to this application be paid out of the assets of the said company on the indemnity basis as agreed or assessed.

4. I give liberty to the parties to apply within 14 days from the date hereof.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

CITATION:	Mier & Anor v Craven & Ors [2007] QSC 259
PARTIES:	GERARD JOHN MIER and ANTHONY JAMES JONSSON (Applicant) v DAPHNE CRAVEN (First Respondent) BRUCE CRAVEN (Second Respondent) FRANCIS DALY (Third Respondent) JOHN RAYMOND DEUBLE (Fourth Respondent) CATHERINE MARGARET DUNCAN (Fifth Respondent) KERRY JOHN ECKERSLEY (Sixth respondent) ERROL FRANCIS GLYNN (Seventh Respondent) DENNIS AMBROSE GOW (Eighth Respondent) DONALD MacDOUGAL (Ninth Respondent) RODNEY MILLER (Tenth Respondent) ERIC O’KELL (Eleventh Respondent)
FILE NO/S:	262 of 2007
DIVISION:	Trial
PROCEEDING:	Application
ORIGINATING COURT:	Supreme Court Cairns
DELIVERED ON:	27 July 2007
DELIVERED AT:	Cairns
HEARING DATE:	9 July 2007
JUDGE:	Jones J
ORDER:	1. I declare that the lawful and proper manner of distribution of the residual property of the company, Port Douglas Fishermen’s Enterprises Ltd (In Liquidation), after satisfaction of the costs of winding up and of the company’s admitted debts and liabilities, is to the respondents in equal shares. 2. I direct that after 15 days from the date hereof and after satisfaction of the costs of winding up, and of the company’s admitted debts and liabilities, the residual property of the said company be distributed by the applicants to the respondents in equal shares in satisfaction of each of the respondents’ respective rights, claims and interests as a member of the company; 3. The applicant’s costs of and incidental to this application be paid out of the assets of the said company on the indemnity basis as agreed or assessed. 4. I give liberty to the parties to apply within 14 days from the date hereof.
CATCHWORDS:	CORPORATIONS- CORPORATIONS LEGISLATION – WINDING UP VOLUNTARILY– APPLICATION BY LIQUIDATORS FOR COURT ORDER – distribution of surplus capital – prohibition under Corporations Act of reduction of capital unless pursuant to a provision of the company articles.
COUNSEL:	Michael Jonsson
SOLICITORS:	Farrellys Lawyers for the applicants Mellick, Smith & Associates for the respondents