Pieman Australia Pty Ltd v MAS Food Industries (Australia) Pty Ltd
[1999] WASC 220
PIEMAN AUSTRALIA PTY LTD -v- MAS FOOD INDUSTRIES (AUSTRALIA) PTY LTD [1999] WASC 220
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [1999] WASC 220 | |
| Case No: | COR:300/1999 | 1 NOVEMBER 1999 | |
| Coram: | MASTER SANDERSON | 1/11/99 | |
| 5 | Judgment Part: | 1 of 1 | |
| Result: | Appointment to stand | ||
| PDF Version |
| Parties: | PIEMAN AUSTRALIA PTY LTD MAS FOOD INDUSTRIES (AUSTRALIA) PTY LTD |
Catchwords: | Corporations Law Application to set aside appointment of provisional liquidator Turns on its own facts |
Legislation: | Corporations Law, s 471A(2) and s 472(2) |
Case References: | Nil Nil |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
and
MAS Food Industries (Australia) Pty Ltd (Controller Acting)
BETWEEN : PIEMAN AUSTRALIA PTY LTD
- Applicant
AND
MAS FOOD INDUSTRIES (AUSTRALIA) PTY LTD
Respondent
Catchwords:
Corporations Law - Application to set aside appointment of provisional liquidator - Turns on its own facts
Legislation:
Corporations Law, s 471A(2) and s 472(2)
(Page 2)
Result:
Appointment to stand
Representation:
Counsel:
Applicant : Mr G K Paull
Respondent : Ms A M Heseltine
Provisional Liquidator : Mr J C Vaughan
Solicitors:
Applicant : Butcher Paull & Calder
Respondent : Pullinger Stewart
Provisional Liquidator : Deacons Graham & James
Case(s) referred to in judgment(s):
Nil
Case(s) also cited:
Nil
(Page 3)
1 MASTER SANDERSON: This is an application to set aside the appointment of a provisional liquidator. That appointment was made on 29 October on the ex parte application of Pieman Australia Pty Ltd.
2 As a preliminary point, counsel for the Provisional Liquidator noted that for this application to be made court approval is required under s 471A(2) of the Corporations Law. Without that approval it is not open to anyone but the provisional liquidator to act on behalf of the respondent. I think then it is appropriate that leave be given to Abdul Karim Masagoes (a director of the respondent) to bring this application to set aside the appointment of the Provisional Liquidator.
3 The application itself is made, broadly speaking, on two grounds; first, that there was material non-disclosure by the applicant when the appointment was sought and, secondly, that there is no real need in the circumstances of the case for the appointment of a provisional liquidator. The material non-disclosure point has to do with the question of whether or not the assets of the company are being dissipated.
4 An affidavit of Peter Terrance Piggott sworn 20 October 1999 was relied upon in support of the application for the appointment of a Provisional Liquidator. It was alleged by Piggott in par 21 of his affidavit that parts of the business of the company had been disposed of resulting in a drop off in the turnover of the business. In support of this application to set aside the appointment the respondent relies upon an affidavit of Dean John Robson sworn 1 November 1999 in which Mr Robson explains the circumstances of the sale of a part of the respondent's business which, it is said, was making a loss. It is therefore said that the disposal of that aspect of the business will in fact improve the financial position of the respondent.
5 It would seem to me that the applicant properly raised the question of disposal of part of the business of the company, albeit in a rather limited fashion. The evidence of the respondent explains just what has occurred and suggests that the disposal of the business may not in the overall adversely affect the financial position of the company.
6 However, it does appear that the present financial position of the company is somewhat problematical. The respondent owes the applicant the sum of $375,000. That is not in dispute. It is the balance of the purchase price owing by the respondent to the applicant. Although that money was due and payable almost a month ago, it is clear from the
(Page 4)
- accounts of the company that the company simply does not at present have the wherewithal to make payment.
7 The evidence shows that the respondent is making strenuous efforts to obtain the necessary finance and the evidence also suggests that the finance will be available, but the earliest time when the finance might be available is 25 November and the approval for finance which has been obtained is subject to a number of conditions. The indications are that those conditions will be met but until they are met, there is no certainty that the finance will be available. The brief accounts which have been provided contained in an affidavit of Craig Phillip Coleman show that there are current liabilities owing to trade creditors in the sum of $479,000. There are also trade debtors shown as current assets of $414,000 and an inventory shown as being $420,000.
8 I am not in a position on an application such as this to draw any conclusions as to the solvency of the respondent but what can be said, I think, is that there is a presently due and owing debt which cannot be paid. There are also trade creditors who, along with the applicant, have an interest in ensuring that the respondent's business is handled in the best interests of all the creditors.
9 On balance then I am satisfied that the proper course is to leave the Provisional Liquidator in control of the business. In reaching that conclusion I am mindful of the significant impact that the appointment of a Provisional Liquidator can have on any business. It must always be a balancing exercise to determine whether the damage done by the appointment itself is outweighed by the benefit likely to be gained by the creditors as a consequence of having the Provisional Liquidator control the affairs of the company.
10 As difficult as the balancing exercise is, I am satisfied in this case that it is appropriate to maintain the Provisional Liquidator in control of the affairs of the company. I would make the further point in respect of the Provisional Liquidator that it is not his function to wind up the affairs of the company. He is there to preserve the status quo and in a business such as this, which is a trading enterprise, it will be necessary for him in all probability to continue the business.
11 If it were to come to pass that the debt owing by the respondent to the applicant was paid and was paid promptly, then there is no reason to believe that any significant damage will be sustained by the respondent in respect of its business.
(Page 5)
12 In any event, in all the circumstances I am satisfied that the appointment of the Provisional Liquidator should stand. I should in closing say something of the circumstances in which the appointment came to be made. Under O 81G r 85(2) the summons should be served on the company unless the matter is urgent. Having read the papers, when the application came before me I was satisfied that there was sufficient urgency to require the matter to be dealt with in the absence of the company.
13 Having had the opportunity to review the matter again today, it would appear that service of the application on the company may have been more appropriate. Nonetheless, in all the circumstances I think that given the opportunity to review the appointment and taking into account the nature of the debt claimed by the applicant and the position of the respondent's business generally that the appointment of the Provisional Liquidator ought stand. Therefore, what I would propose is that I dismiss the application to remove the Provisional Liquidator.
0
0