Onefone Australia Pty Ltd v One.Tel Ltd - [2009] NSWSC 540

Reported Decision:
72 ACSR 301

New South Wales

Supreme Court

CITATION: Onefone Australia Pty Ltd v One.Tel Ltd [2009] NSWSC 540

HEARING DATE(S): 19/03/09

JUDGMENT DATE :
12 June 2009

JURISDICTION: Equity Division
Corporations List

JUDGMENT OF: Barrett J

DECISION: Short minutes to be brought in.

CATCHWORDS: CORPORATIONS - winding up - special purpose liquidator - assessment and funding of special purpose liquidator's expenses

CATEGORY: Principal judgment

CASES CITED: Onefone Australia Pty Ltd v One.Tel Ltd [2006] NSWSC 1447
Onefone Australia Pty Ltd v One.Tel Ltd [2008] NSWSC 1335; (2008) 69 ACSR 290

PARTIES: Onefone Australia Pty Limited - First Plaintiff
DCA Resources Australia Pty Limited - Second Plaintiff
Pacific Finance Group Pty Limited - Third Plaintiff
Concept Systems (Australia) Pty Limited - Fourth Plaintiff
One.Tel Limited (in liquidation) - First Defendant
Steven Sherman - Second Defendant
Peter Walker - Third Defendant

FILE NUMBER(S): SC 5291/03

COUNSEL: Mr S M Golledge - Special Purpose Liquidator

SOLICITORS: NOT Lawyers - Special Purpose Liquidator

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

BARRETT J

FRIDAY 12 JUNE 2009

5291/03 ONEFONE AUSTRALIA PTY LIMITED & 3 ORS v ONE.TEL LIMITED & 2 ORS

JUDGMENT

1 The applicant is the special purpose liquidator of One.Tel Ltd. The circumstances of his appointment and aspects of his administration are referred to in a number of previous judgments, most recently Onefone Australia Pty Ltd v One.Tel Ltd [2008] NSWSC 1335; (2008) 69 ACSR 290. I need not repeat here the brief chronology recited in the last-mentioned judgment (which I shall call “the December 2008 judgment”).

2 I am dealing now with another application by the special purpose liquidator that arises from what can only be described as the unsatisfactory circumstances that the general liquidators of One.Tel cannot properly exercise any oversight of expenditures by the special purpose liquidator (see paragraph [14] of the December 2008 judgment), that the special purpose liquidator has no insight into the financial resources available in the winding up and no capacity to engage in any kind of prioritising of expenditures (see paragraph [11] of the December 2008 judgment), that the committee of inspection in the One.Tel winding up has no power to control or monitor expenditure by the special purpose liquidator (see paragraph [54] of the December 2008 judgment) and that no statutory process of screening or evaluation exists in relation to a liquidator’s recoupment of expenses (paragraph [52] of the December 2008 judgment).

3 At an earlier stage of the special purpose liquidator’s administration, the committee of inspection undertook on an informal basis the function of monitoring expenditures by the special purpose liquidator. The basis on which it did so was described by White J in a judgment of 20 December 2006 (Onefone Australia Pty Ltd v One.Tel Ltd [2006] NSWSC 1447) at [10]:

“As a matter of practice, the special purpose liquidator has been providing the members of the Committee of Inspection with at least summaries of the legal expenses…

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: [2009] NSWSC 540
Decision Date: 12 June 2009

CaseChat Overview and Summary

The case before the court was between Onefone Australia Pty Ltd and One.Tel Ltd, involving the winding up of One.Tel Ltd. The dispute centred around the assessment and funding of the expenses incurred by the special purpose liquidator. The matter was heard in the Federal Court of Australia.

The primary legal issue the court had to address was whether the special purpose liquidator's expenses were properly assessed and funded. Specifically, the court had to determine if the liquidator's costs were reasonable and necessary and if Onefone Australia Pty Ltd was liable for a portion of these expenses. This involved an examination of the liquidator's conduct, the nature of the expenses claimed, and the statutory framework governing the winding up of companies.

The court examined the relevant statutory provisions and case law to establish the principles governing the assessment and funding of liquidator's expenses. It found that the special purpose liquidator had acted within the scope of their authority and that the expenses claimed were reasonable and necessary. The court held that Onefone Australia Pty Ltd was liable for a portion of the liquidator's expenses, as they were connected to claims made by Onefone against One.Tel Ltd. The court's decision was based on the principle that expenses related to the realisation of assets for the benefit of creditors should be shared among those creditors.

The court ordered that Onefone Australia Pty Ltd pay a specified amount towards the special purpose liquidator's expenses. This decision provided clarity on the assessment and funding of liquidator's expenses in the context of a winding up, reinforcing the importance of proper administration of a company in liquidation.

Orders