Peter Ngan re JKB Constructions Pty Ltd
[2006] NSWSC 1040
•03/10/2006
CITATION: Peter Ngan re JKB Constructions Pty Ltd [2006] NSWSC 1040 HEARING DATE(S): 03/10/06
JUDGMENT DATE :
3 October 2006JURISDICTION: Equity Division
Corporations ListJUDGMENT OF: Barrett J EX TEMPORE JUDGMENT DATE: 10/03/2006 DECISION: Leave under s.436B(2). Order under s.447A(1). Stay of winding up refused. CATCHWORDS: CORPORATIONS - winding up - application by liquidator for leave to appoint himself as administrator - concurrent application for order excusing sole director from furnishing report as to affairs in the administration - concurrent application for stay of winding up LEGISLATION CITED: Corporations Act 2001 (Cth), Part 5.3A, ss.436B(1), 436B(2), 438B(2), 447A(1), 482 CASES CITED: Hall v Arrernte Council of Central Australia Aboriginal Corporation [2004] FCA 1738
Re Cobar Mines Pty Ltd (1998) 30 ACSR 125
Re Nardell Coal Corporation Pty Ltd (2003) 47 ACSR 122
Re Parkes Leagues Club Co-operative Ltd [2004] NSWSC 16
Re Taylor; Origin Internet Solutions Pty Ltd [2004] FCA 382
Rupert Co Ltd v Chameleon Mining NL [2005] NSWSC 719
Rupert Co Ltd v Chameleon Mining NL (2006) 24 ACLC 635
Sutherland v Rahme Enterprises Pty Ltd (2003) 46 ACSR 458
Vero Workers Compensation (NSW) Ltd v Ferretti (2006) 57 ACSR 103PARTIES: Peter Ngan - Plaintiff FILE NUMBER(S): SC 5150/06 COUNSEL: Mr P.C. Silver - Plaintiff SOLICITORS: Middletons - Plaintiff
IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST
BARRETT J
TUESDAY 3 OCTOBER 2006
5150/06 PETER NGAN RE JKB CONSTRUCTIONS PTY LTD (IN LIQUIDATION)
JUDGMENT
1 Mr Ngan is the liquidator of JKB Constructions Pty Ltd, having been appointed to that office by an order made by the court when it ordered on 21 August 2006 that the company be wound up. He now applies under s.436B(2) of the Corporations Act 2001 (Cth) for the leave of the court to appoint himself as administrator of the company under s.436B(1).
2 The circumstances in which Mr Ngan makes the application are explained in his affidavit sworn today. In essence, his investigation of the company's affairs and discussions he has had with the sole director, Mr Russell, lead him to think that there are good prospects of enhanced returns for creditors through a deed of company arrangement, a draft of which is an exhibit to his affidavit.
3 If it proved possible to obtain the concurrence of creditors in a proposal to adopt such a deed of company arrangement, and also to achieve satisfaction of the conditions precedent to which the deed of company arrangement would be subject, Mr Ngan thinks that creditors might eventually receive 100 cents in the dollar in respect of their debts.
4 Having considered the matter and, in particular, having paid attention to questions surrounding the ability of Mr Russell to play the part envisaged for him under the proposed deed of company arrangement, Mr Ngan considers the proposal suitable to be placed before creditors for their consideration and decision.
5 In the case of Re Cobar Mines Pty Ltd (1998) 30 ACSR 125 and succeeding cases (eg, Re Nardell Coal Corporation Pty Ltd (2003) 47 ACSR 122; Re Parkes Leagues Club Co-operative Ltd [2004] NSWSC 16; Re Taylor; Origin Internet Solutions Pty Ltd [2004] FCA 382; Hall v Arrernte Council of Central Australia Aboriginal Corporation [2004] FCA 1738; Rupert Co Ltd v Chameleon Mining NL [2005] NSWSC 719), it is made clear that the burden to be discharged upon an application such as the present is not a particularly onerous one and that the main question is whether the liquidator is an appropriate person to be administrator. There is particular focus on any possibility of conflict of interest. Nothing is suggested in this case that would make Mr Ngan other than a suitable administrator and his application in that respect should be granted.
6 There are two subsidiary aspects. The first involves an order described as "An order that the director of the company be excused from complying with section 438B(2) of the Corporations Act 2001". That section says that within 7 days after the administration of a company begins or such longer period as the administrator allows, the directors must give to the administrator a statement about the company's business, property, affairs and financial circumstances. Mr Ngan makes it clear in his affidavit that he has received cooperation from the sole director, Mr Russell, who has furnished a report as to affairs under the provisions dealing with winding up. It is Mr Ngan's opinion that nothing further of use could be obtained from compliance with s.438B(2) in the particular circumstances, with the result that there is no need for what would be a duplication of effort to occur under that section merely for the sake of form.
7 The form of order sought contemplates, by implication, that there is a power for the court to excuse compliance with s.438B(2). There is, of course, no express excusing or dispensing power, but the result may be achieved under the wide-ranging provisions of s.447A(1). I shall make such an order.
8 Second, there is an application for an order that the winding up of the company be stayed pursuant to s.482 until further order of the court. That, I think, is contrary to the trend of the usual course of events in matters of this kind. In the Cobar Mines case (above), Bryson J deferred, for future consideration, an application for termination of the winding up. Cases such as Sutherland v Rahme Enterprises Pty Ltd (2003) 46 ACSR 458 and Vero Workers Compensation (NSW) Ltd v Ferretti (2006) 57 ACSR 103 show that the question of termination of the winding up should be addressed only when it is possible to see whether the deed of company arrangement proposal has found favour with creditors and has effectively set the company on a new path of such a kind that makes termination of winding up the appropriate outcome. Reference may also be made to Rupert Co Ltd v Chameleon Mining NL (2006) 24 ACLC 635 which was a termination application entertained after a deed of company arrangement had been adopted following grant of leave under s.436B(2) in one of the cases earlier mentioned.
9 I appreciate that in this case the application is for an order staying the winding up until further order as distinct from an order terminating the winding up, but in my opinion the same thinking holds good. The winding up should be left in place until the course of events that has now been facilitated has been pursued and it can be seen either that the deed of company arrangement has been executed and has placed the company on to a new financial footing, or that it has not. In the former event the court might well see matters in such a light that it was appropriate to terminate the winding up. The matter can be revisited if and when that point is reached.
10 I make the following orders:
- 1. Grant leave to plaintiff pursuant to s.436B(2) of the Corporations Act to appoint himself as administrator of JKB Constructions Pty Limited pursuant to s.436B(1) of that Act.
2. Order pursuant to s.447A(1) of the Corporations Act that Part 5.3A of that Act is to operate in relation to JKB Constructions Pty Limited as if, upon appointment by the plaintiff of himself as administrator of that company, s.438B(2) does not apply in relation to the resultant administration.
3. Costs of the application are costs of the winding up.
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