Pascoe (Trustee) v Deltawiz Pty Ltd, in the matter of Deltawiz Pty Ltd
[2003] FCA 1100
•26 SEPTEMBER 2003
FEDERAL COURT OF AUSTRALIA
Pascoe (Trustee) v Deltawiz Pty Ltd, in the matter of Deltawiz Pty Ltd
[2003] FCA 1100SCOTT DARREN PASCOE (AS TRUSTEE OF THE PROPERTY OF CRAIG MURRAY BROWN, A BANKRUPT) V DELTAWIZ PTY LIMITED
N3053 OF 2003
ALLSOP J
26 SEPTEMBER 2003
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N 3053 OF 2003
BETWEEN:
SCOTT DARREN PASCOE (as Trustee of the Property of Craig Murray Brown, a Bankrupt)
APPLICANT
AND:
DELTAWIZ PTY LIMITED (ACN 057 402 534)
RESPONDENT
JUDGE:
ALLSOP J
DATE OF ORDER:
26 SEPTEMBER 2003
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.Leave be granted to the applicant to make this application returnable forthwith.
2.There be a declaration that the two ordinary “A” class shares in Deltawiz Pty Ltd registered to Eirene Dawn Simmons and Victoria Habraken are beneficially held in the name of the applicant.
3.The respondent, Deltawiz Pty Ltd ACN 057 402 534 be reinstated pursuant to Section 601AH(2) of the Corporations Act 2001 (Cth) for the purpose of winding up.
4.The respondent be wound up under Section 461 of the Corporations Act.
5.A liquidator of the respondent be appointed.
6.Leave be granted for the applicant to be appointed liquidator of the respondent pursuant to Section 532 (2) of the Corporations Act.
7.The costs of this application be paid out of the Bankrupt Estate of Craig Murray Brown.
8.The applicant notify Mrs Simmons and Ms Habraken of these orders by pre-paid express post dispatching by 12.00 noon Monday 29 September a copy of these Orders.
9.Leave be granted to Mrs Simmons and Ms Habraken to approach the Court to vary or set aside these Orders, any such application to be filed by 10 October 2003 and be supported by evidence.
10.The liquidator, as soon as he has formed a view as to the likely extent of creditors, notify ASIC of the likely extent of creditors, of the proposed conduct of this liquidation and of his view, after consultation with solicitor or counsel, as to whether it is appropriate for him to continue the dual roles as Trustee of the bankrupt estate of Craig Murray Brown and liquidator of the Company.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N 3053 OF 2003
BETWEEN:
SCOTT DARREN PASCOE (as Trustee of the Property of Craig Murray Brown, a Bankrupt)
APPLICANTAND:
DELTAWIZ PTY LIMITED (ACN 057 402 534)
RESPONDENT
JUDGE:
ALLSOP J
DATE:
26 SEPTEMBER 2003
PLACE:
SYDNEY
REASONS FOR JUDGMENT
This is an application by Scott Darren Pascoe as Trustee of the property of the bankrupt, Craig Murray Brown, for orders in relation to a company Deltawiz Pty Limited ACN 057 402 534 (the company).
The orders sought in the application in the originating process are as follows:
1.Grant leave to the applicant to make this application returnable forthwith.
2.A declaration that the two ordinary “A” class shares in Deltawiz Pty Ltd registered to Eirene Dawn Simmons and Victoria Habraken are beneficially held in the name of the applicant.
3.The respondent, Deltawiz Pty Ltd ACN 057 402 534 be reinstated pursuant to Section 601AH(2) Corporations Act for the purpose of winding up.
4.An order that the respondent be wound up under Section 461 of the Corporations Act 2001.
5.An order that a liquidator of the respondent be appointed.
6.Grant leave for the applicant to appointed [sic] Liquidator of the respondent pursuant to Section 532 (2) of the Corporations Act.
7.The costs of this application be paid out of the Bankrupt Estate of Craig Murray Brown.
8.Such further or other order as the Court deems fit.
In essence, the evidence read before me discloses the following. The bankrupt, Mr Brown, was convicted of larceny as an employee when employed by the Department of Housing. The essence of the criminal offence was the dishonest taking of secret commissions. The company has been struck off the register and the applicant, Mr Pascoe, wishes to have it returned to the register so that it may be wound up. The evidence before me indicates that the Australian Securities and Investments Commission (ASIC) consents to this course on certain conditions.
Those conditions include that an order be made to wind the company up and a liquidator be appointed. The company had, at all relevant times, two registered shareholders, they being Eirene Dawn Simmons (the bankrupt's mother) and Victoria Habraken. Ms Habraken, on the material before me, appears to have been a former partner, in the personal sense, of the bankrupt. There is evidence before me that in 1999 solicitors on her behalf wrote to Mr Brown, the bankrupt, and indicated that she wished to sever her ties with the company by way of her directorship.
In a statement of assets and liabilities created by the bankrupt before his bankruptcy in March 1999 the bankrupt indicated that he owned the company and that the company's assets were not insignificant.
During the course of the administration of the bankrupt's estate, Mr Pascoe has received unconditional signed transfers of the two shares held by the mother and the former partner. The evidence discloses that no share scrip has yet been issued. No further step is necessary by either of those two people to effect a transfer from them to Mr Pascoe and under the principles of equity in relation to the equitable assignment of property assignable at law I am satisfied that if these people had a beneficial interest in the shares then they have taken all necessary steps to transfer the same, such that equity will recognise the transfer of the equitable interest to Mr Pascoe. I refer, in particular, to the well known cases of Re Rose; Rose v IRC [1952] Ch 499, Anning v Anning (1907) 4 CLR 1049 and Corin v Patton (1990) 169 CLR 540 as discussed in the fourth edition of Meagher, Gummow and Lehane Equity Doctrines and Remedies, pp 228-239.
If, of course, as the balance of the evidence would make more overwhelmingly likely, Mr Brown was the party interested in this company and the shares beneficially then these transferors were trustees and in the absence of an apparent breach of trust, consented to the transfer of the shares to the person who now represents the estate of the beneficiary. Thus, on either basis, I am satisfied that Mr Pascoe, in his capacity of trustee of the property of Craig Murray Brown, is the equitable owner of these shares in question.
As the equitable owner of the shares in question, Mr Pascoe has a clear interest in the reinstatement of a company which, it appears, is likely to be solvent and I am satisfied that for the purposes of s 601AH(2)(a) of the Corporations Act 2001 (Cth) he is a person aggrieved by the deregistration.
The winding up of the company is sought on the just and equitable ground. The evidence before me satisfies me that those who have participated previously in the conduct of the affairs of the company prior to its deregistration have displayed significant conduct which would throw their honesty in to more than question.
Mr Brown has been convicted of a serious criminal offence and there is material before me which would indicate that his mother was, to a degree, complicit in dishonest behaviour in and about the investigation by the trustee of the matters. I state those matters provisionally, neither of those parties being before me to defend themselves. However, I am satisfied that there is sufficient evidence for counsel responsibly to have made those assertions. It should be noted in this context that ASIC only consented to the reregistration of the company conditional upon it being placed in to liquidation.
Under s 129 of the Bankruptcy Act 1966 (Cth) Mr Pascoe is under a duty to realise the assets of the bankrupt's estate. If, as the current material identifies, there is real value to be obtained in the solvent estate of the company then as a contributory or shareholder in the company Mr Pascoe has a real interest in seeing the company wound up and it is not inappropriate that the company be wound up. Mr Pascoe also deposes to the difficulty he foresees in anyone consenting to be a director of this company.
In all these circumstances I think it appropriate that the company be wound up on the just and equitable ground and in so concluding I rely also on what fell from Barrett J in CIC Insurance Ltd v Hannan Co Pty Ltd (2001) 19 ACLC 1217, 1219-20. One consideration which may perhaps militate against the appointment of Mr Pascoe is the fact that he, as the trustee of the bankrupt estate, has an interest as a residuary contributory or shareholder in the assets of a company which might be seen to conflict with the interests of creditors of the company.
From his investigations, Mr Pascoe does not propose to rely upon the representations of Mr Brown and his mother that there are no creditors. From material gained from search warrants executed during the course of the bankruptcy it would appear that there are likely to be creditors of the company. Depending on whether or not those debts are disputed and depending upon the asserted nature of the debts lying behind any future proofs, there may or may not arise particular problems which cannot as yet be foreseen.
For instance if some claim was made by a putative creditor which Mr Pascoe was of a view was doubtful, there may come a time at which the clear financial interest of the estate was such that someone else should be making a decision as to admission of proofs and the like. In expressing these matters I am not to be taken as indicating the slightest criticism of Mr Pascoe and I fully appreciate that he only takes his interest in his representative capacity dealing with the property of the bankrupt. Nevertheless, weighing against these considerations is the fact that Mr Pascoe has expended a great deal of energy and time in understanding the affairs of the bankrupt in circumstances where he has apparently received little, if any, cooperation from the bankrupt and those associated with the bankrupt.
In these circumstances, given that the bankrupt appears to be carrying on a business at the present time which may have some relationship with the affairs of the company, it is probably in the interests of everyone, creditors of the bankrupt estate and creditors of the company alike to have Mr Pascoe in charge of the estate of the bankrupt and the company. For these reasons I propose to exercise my discretion under subs 532(2) of the Corporations Act 2001 (Cth) and permit Mr Pascoe to be the liquidator.
However, I do propose to attach certain conditions to the orders. Those conditions will be as follows. First, the applicant is to notify Ms Simmons and Ms Habraken of these orders by sending by prepaid express post no later than midday on Monday 29 September, a copy of these orders. Secondly, by reserving leave for these two people to move to discharge or vary any orders made by me today, any such application is to be filed and served and supported by evidence on or before 10 October 2003. The third condition is that I direct the liquidator, after he has ascertained the likely extent of the creditors, to notify the Australian Securities and Investment Commission of the likely extent of the creditors and the proposed conduct of the liquidation and, after consultation with solicitor or counsel, to notify ASIC of his views as to whether or not it is appropriate for him to continue the dual roles of trustee in bankruptcy of Mr Brown's estate and liquidator of the company.
I will make the following orders:
1. I grant leave in terms of paragraph 1 of the short minutes of order.
2. I make a declaration in terms of paragraph 2 of the short minutes of order.
3.I make orders in accordance with paragraphs 3, 4, 5 and 6 of the short minutes of order.
4.That leave, that declaration and those orders are made subject to the three conditions which I have just identified.
I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop. Associate:
Dated: 13 October 2003
Counsel for the Applicant: Mr D J Durston Solicitor for the Applicant: Sally Nash & Co No appearance by or on behalf of the respondent. Date of Hearing: 26 September 2003 Date of Judgment: 26 September 2003
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