Re 52 The Esplanade Pty Ltd (in liquidation)
[2023] QSC 57
•24 March 2023
SUPREME COURT OF QUEENSLAND
CITATION: Re 52 The Esplanade Pty Ltd (in liquidation) [2023] QSC 57 PARTIES: DAVID JAMES HAMBLETON AND KAILY LYN
CHUA IN THEIR CAPACITY AS JOINT AND
SEVERAL LIQUIDATORS OF 52 THE ESPLANADE
PTY LTD ACN 641 819 641 (IN LIQUIDATION)(applicant) v
52 THE ESPLANADE PTY LTD ACN 641 819 641 (IN
LIQUIDATION)(respondent) FILE NO/S: BS 10826 of 2021 DIVISION: Trial Division PROCEEDING: Application ORIGINATING Supreme Court at Brisbane COURT: DELIVERED ON: 24 March 2023 DELIVERED AT: Brisbane HEARING DATE: 15 March 2023 JUDGE: Kelly J ORDERS:
1.
It is declared that, for the purposes of item 14 of s 91 of the Corporations Act 2001 (Cth), the application for the winding up order is the application filed by the provisional liquidator on 3 June 2022.
2. I will hear the parties as to costs. CATCHWORDS: CORPORATIONS – WINDING UP – LIQUIDATORS – OTHER MATTERS CORPORATIONS – WINDING UP – APPLICATIONS FOR WINDING UP BY COURT – PROCEDURE – GENERALLY – where the respondent was wound up by an order of the
Supreme Court – where the Court appointed the applicants as the respondent’s joint and several liquidators – where a dispute
has arisen between the applicants and the respondent’s creditors in relation to the relation-back day for the winding up – where the applicants contend that the relation-back day is the date that the originating application was filed – where the respondent’s creditors contend that the relation-back day is the
date that the provisional liquidator’s application was filed – whether the relation-back day is the date that the originating application was filed or the date that the provisional
liquidator’s application was filed Acts Interpretation Act 1901 (Cth), s 23
Corporations Act 2001 (Cth), s 59P, s 91, s 233, s 461, s 462,
s 472, s 513A
Uniform Civil Procedure Rules 1999 (Qld), r 2.2, r 2.13, r 26Aon Risk Services Australia Ltd v ANU (2009) 239 CLR 175
(cited)COUNSEL: S K Long for the applicant
K Metlej (sol) for the respondentSOLICITORS: HWL Ebsworth for the applicant Craddick Murray Neumann for the respondent An application for declaratory relief by liquidators
On 28 June 2022, 52 The Esplanade Pty Ltd (“the company”) was wound up by an
order of this court which also appointed David James Hambleton and Kaily Lyn Chua
(“the liquidators”) as the company’s joint and several liquidators. A dispute has arisen
between the liquidators and one of the company’s creditors, the Commissioner of
Taxation (“the ATO”), in relation to the relation-back day for the winding up. The
dispute essentially involves competing contentions as to what court document constituted the application for the winding up order. The liquidators filed an application seeking declaratory relief to resolve the dispute.
Factual background to the winding up order
On 17 September 2021, 100 Brisbane Street Proprietary Limited (“Brisbane Street”),
the holder of 50 per cent of the shares in the company, commenced a proceeding by
filing an originating application (“the originating application”) to wind up the
company pursuant to s 461 of the Corporations Act 2001 (Cth) (“the Act”).
The originating application:
(a) was in the form of Form 2 of the Rules for Proceedings under Corporations Act or ASIC Act (“the Queensland Corporations Rules’);[1]
[1] The Queensland Corporations Rules form Schedule 1A to the Uniform Civil Procedure Rules 1999 (Qld).
(b) identified the applicant as Brisbane Street; (c) identified the respondent as the company; (d) made the following claims for relief: “This application is made under section 461 of [the Act]
On the facts stated in the supporting affidavit, the applicant claims:
1.
[The company] be wound-up and that Terrence Rose of SV Partners be appointed as Liquidator.
2. Such other Order as this honourable Court deems fit.”
As required by r 2.3 of the Queensland Corporation Rules, the registrar fixed the date for the hearing of the application as 30 September 2021.
On 30 September 2021, orders were made by consent which included an order that the proceeding continue as if started by claim and an order requiring the parties to file and serve pleadings. From that point in time, the real issues in dispute in the proceeding started by the originating application fell to be raised and defined by the pleadings.[2]
[2] Aon Risk Services Australia Ltd v ANU (2009) 239 CLR 175 at 205 [71].
On 27 October 2021, Brisbane Street filed and served a statement of claim (“the statement of claim”). In the statement of claim, Brisbane Street relevantly alleged that
the company had refused to provide it with certain financial information, and, in terms of the available information, Brisbane Street had reasonable cause for concern as to
the company’s ability to meets its debts as and when they fell due. The statement of
claim alleged that there had been oppression of Brisbane Street and conduct which engaged ss 461(1)(e), 461(1)(f), 461(1)(k) and 232(e) of the Act. Broadly stated, these provisions are concerned with the winding up of a company for oppression or on the just and equitable ground.
The statement of claim’s prayer for relief relevantly claimed the following relief
against the company:
“1. That pursuant to sections 233, 461 or 462 of [the Act], [the
company] be wound up.2.
That independent liquidators be appointed official liquidators for the purposes of winding up of [the company].
3.
In the alternative to paragraphs 1 and 2, that pursuant to section 233 of the Act:
(a) an order that within 14 days of the date of the order, [the company] refinance [a loan] … such that … security …
is released; and
(b) If subparagraph (a) is not achieved, then [the company] be wound up, with independent liquidators appointed as official liquidators for the purposes of winding up of [the company]. 4. As to costs:
(a) That [Brisbane Street’s] costs of the proceeding be taxed and reimbursed out of the property of [the company] in
accordance with section 466(2) of the Act; or
(b) [The company] pay [Brisbane Street’s] costs of the proceeding.
5. Such further or other order as the Court deems fit.”
On 10 November 2021, Brisbane Street filed an interlocutory application in the form of Form 3 of the Queensland Corporations Rules, seeking the appointment of a
provisional liquidator to the company pursuant to s 472(2) of the Act (“Brisbane Street’s interlocutory application”). The company was the respondent to Brisbane
Street’s interlocutory application.
On 23 November 2021, the company filed its defence to the statement of claim.
On 25 November 2021, this court heard Brisbane Street’s interlocutory application.
On 3 December 2021, this court made orders on Brisbane Street’s interlocutory
application including an order pursuant to s 472(2) of the Act, appointing Mr Terry John Rose of SV Partners Insolvency (Qld) Pty Ltd as provisional liquidator of the company.
On 3 June 2022, the provisional liquidator filed an interlocutory application in the
proceeding started by the originating application (“the provisional liquidator’s application”). The provisional liquidator’s application was in the form of Form 3 of
the Queensland Corporations Rules and identified the respondents as the company
and Brisbane Street.
The provisional liquidator’s application materially provided:
“A. DETAILS OF INTERLOCUTORY APPLICATION This interlocutory application is made under ss 459A, 459P, 461, 462, 477(2)(a) and 459B of [the Act] and rule 2.13 of Schedule 1A of [the UCPR].
On the facts stated in the supporting affidavit of Terrence John Rose (Provisional Liquidator) of [the company] applies for the following relief:
1. Pursuant to ss 459A and 459P, or in the alternative ss 461 and 462, of [the Act], [the company] be wound up in insolvency.
2. An order pursuant to ss 459A and 459P, or in the alternative ss 461 and 462, of the Act, that [the provisional liquidator] be appointed liquidator of [the company].
3. An order that [the provisional liquidator] of [the company]’s
costs and expenses of this application be costs and expenses in
the administration of [the company].4. Such further order that the Court deems appropriate.”
As required by r 2.3 of the Queensland Corporation Rules, the registrar fixed the date
for the hearing of the provisional liquidator’s application as 10 June 2022.
On 10 June 2022, Brisbane Street and the provisional liquidator were proposing to consent to orders that the company be wound up in insolvency and that the provisional liquidator be appointed as the liquidator. A director of the company, Mr Bell, appeared by counsel and resisted the appointment of the provisional liquidator as the liquidator. On this occasion, counsel for Mr Bell expressly conceded that the company was insolvent and that a liquidator should be appointed,[3] but sought an adjournment to enable further material to be filed.
[3] CFI 43, exhibit bundle pp 25.04-25.05.
The provisional liquidator’s application was ultimately heard on 28 June 2022. On that date, there remained no dispute that the company was insolvent. Mr Bell’s
counsel again made submissions which acknowledged that the company was
insolvent.[4] The provisional liquidator’s written submissions relevantly submitted:
“The parties to this proceeding, including the director of [the company]
… are in agreement that [the company] is insolvent and ought to be
wound up. The only controversy is whom should be appointed as
liquidator.”[5]
[4] CFI 35, [2].
[5] CFI 36, [2]. This characterisation of what remained in controversy was accepted by Boddice J: CFI 43, exhibit bundle pp 52.40-53.04 and pp 59.24-59.39.
On 28 June 2022, Boddice J made orders in the following terms:
“1. Pursuant to ss 459A and 459P, or in the alternative ss 461 and
462, of [the Act], [the company] be wound up in insolvency.2. Pursuant to ss 459A and 459P of the Act, or in the alternative ss 461 and 462 of the Act, [the liquidators] be appointed as joint and several liquidators of [the company]. 3. The applicant, [the provisional liquidator] pay the costs of Gregory William Bell for the application filed 3 June 2022 (including reserved costs) on the standard basis.”
On 24 February 2023, the liquidators filed an interlocutory application in the
proceeding started by originating application seeking declaratory relief (“the liquidators’ application”). The company was the respondent to the liquidators’
application. The ATO was served with a copy of the liquidators’ application. The liquidators’ application was in the form of Form 3 of the Queensland Corporation
Rules.
Relevant statutory provisions
Section 513A of the Act provides that:
“513A Winding up ordered by the Court
If the Court orders under section 233, 459A, 459B or 461 that a company be wound up, the winding up is taken to have begun or commenced:
(a)
if, when the order was made, a winding up of the company was already in progress--when the last- mentioned winding up is taken because of this Division to have begun or commenced; or
… (c) if:
(i)
when the order was made, a provisional liquidator of the company was acting; and
(ii)
immediately before the provisional liquidator was appointed, the company was under administration; on the section 513C day in relation to the administration; or
… (d) if:
(i)
when the order was made, a provisional liquidator of the company was acting; and
(ii)
immediately before the provisional liquidator was appointed, the company was under restructuring; on the section 513CA day in relation to the restructuring; or
… (e) otherwise--on the day when the order was made.”
The company was not under administration, nor under restructuring at any relevant time. It is common ground that the winding up commenced on 28 June 2022.
Section 91 of the Act then relevantly provides:
“For the purposes of this Act, the following table sets out the meaning
of relation-back day in relation to the winding up of a company or
Part 5.7 body.
Relation-back day
Item If: the relation-back day is: … 14 because of Division 1A of the day on which the Part 5.6, the winding up is application for the order was taken to have begun on the filed. day when an order that the
company or body be wound
up was made;
In the present case, it is common ground that the relation-back day is the day on which the application for the order for the winding up was filed.
Rule 2.4 of the Queensland Corporations Rules relevantly provides:
“Originating application and interlocutory application — forms 2
and 3
2.2(1)
Unless these rules otherwise provide, a person must make an application required or permitted by the Corporations Act to
be made to the court—
(a) if the application is not made in a proceeding already commenced in the court — by filing an originating
application; and
(b) in any other case, and whether interlocutory relief or final relief is claimed — by filing an interlocutory
application.
2.2(2) Unless the court otherwise directs, a person may make an application to the court in relation to a proceeding in respect of which final relief has been granted by filing an interlocutory application in that proceeding. 2.2(3) An originating application must—
(a) be in form 2; and (b) state— (i) each section of the Corporations Act or the ASIC Act, or each regulation of the Corporations Regulations, under which the proceeding is brought; and
(ii) the relief sought.
2.2(4) An interlocutory application must—
(a) be in form 3; and (b) state— (i) if appropriate, each section of the Corporations Act or the ASIC Act, or each regulation of the Corporations Regulations, or each rule of court under which the interlocutory application is made; and
(ii) the relief is sought.
Fixing of hearing
2.3 On receiving an originating application or interlocutory application, the registrar—
(a)
must fix a time, date and place for hearing and endorse those details on the originating application or interlocutory application; and
(b) may seal a sufficient number of copies for service and proof of service.”
The Queensland Corporations Rules also relevantly provide:
(a) By r 1.3(2): “The other rules of the court apply, to the extent they are relevant
and not inconsistent with these rules—
(a) to a proceeding in the court under the Corporations Act, or the ASIC Act, that is commenced on or after the commencement of these rules; and (b) to a proceeding in the court under the Cross-Border Insolvency Act 2008 (Cwlth).”
(b) By rule 1.5:
(i) Applicant means “a person claiming relief in a proceeding”. (ii) Respondent means “a person against whom relief is claimed”. (iii) The court means “the Supreme Court of Queensland”. The parties’ arguments and contentions
The liquidators contend that the relation-back day is 17 September 2021, being the date that the originating application was filed. The ATO contends that the relation-
back day is 3 June 2022, being the date that the provisional liquidator’s application
was filed.
The liquidators submit that “there were, in essence, two applications filed which led
to the final order being made to wind up the company”.[6] The liquidators further
[6] Applicant’s submissions, [25].
developed this submission as follows. Relying upon s 23 of the Acts Interpretation
Act 1901 (Cth),[7] the expression “the day on which the application for the order was filed” could sensibly be read as “the day on which the applications for the order were
filed”. The originating application was a necessary pre-requisite to the appointment
of the provisional liquidator because a court could only appoint a provisional
liquidator at any time “after the filing of a winding up application and before the
making of a winding up order”.[8] Hence, the originating application, properly
characterised, was an application for a winding up. That application was said to have
been determined on 28 June 2022.[9] The provisional liquidator’s application was an
interlocutory application brought within the proceeding started by, and applied for
relief already sought in, the originating application. The provisional liquidator’s application “merely expanded the provisions of the Act under which the company could be wound up”.[10]
[7] Ibid [30].
[8] Ibid [36].
[9] Ibid [32].
[10] Ibid [30].
The ATO submitted that the only matter before the court on 28 June 2022 was the
provisional liquidator’s application. The provisional liquidator’s application was a
separate and distinct application which sought that the company be wound up, inter alia, on the ground of insolvency. Brisbane Street had never sought or obtained the
court’s leave as a contributory to apply to have the company wound up in
insolvency.[11] The provisional liquidator’s application was not a continuation or
expansion of the originating application by Brisbane Street.
[11] Refer s 59P(2)(b) of the Act.
Consideration
Rule 2.2(1) of the Queensland Corporations Rules contemplates “a person” making
an application required or permitted by the Act. The reference to “a person” is in
contradistinction to the defined terms of applicant and respondent. Rule 2.2(1)( b) contemplates a person who is neither an applicant or a respondent filing an interlocutory application in an existing proceeding notwithstanding that the person is claiming final relief.
In the present case, the provisional liquidator was not a party to the proceeding commenced by the originating application. That the provisional liquidator was not an applicant or respondent in the proceeding commenced by originating application did not preclude him from filing an application in that proceeding. By filing the
provisional liquidator’s application, the provisional liquidator made an application
permitted by the Act for final relief, albeit in the proceeding commenced by the
originating application.
The provisional liquidator’s application applied for an order that the company “be
wound up in insolvency” and, somewhat anomalously, sought that order pursuant to
ss 459A (which provides for the insolvency ground) and s 461 (which does not provide for the insolvency ground). That mistaken reference to s 461 appears to have been perpetuated through the provision of a draft form of order.[12] The mistaken reference does not derogate from the fact that, as a matter of substance, the provisional liquidator sought to wind up the company on the ground of insolvency.
[12] CFI 43, exhibit bundle pp 52.20-52.25.
On 28 June 2022, when the provisional liquidator’s application was heard, the
proceeding started by originating application:
(a)
was apparently not being actively conducted or progressed by the applicant, Brisbane Street, or the respondent, the company;
(b)
was only concerned with the issues defined by the pleadings namely whether Brisbane Street was being oppressed, or the company should be wound up on the just and equitable ground;
(c)
did not involve any application by Brisbane Street, as a contributory, to apply to have the company wound up in insolvency;[13]
(d)
was not ready for trial as further interlocutory steps were required to be completed before there could be any final hearing of the real issues in dispute;
(e) had not been set down for a trial or final hearing. [13] Leave being required by s 459P(2)(b) of the Act.
The liquidators’ submission to the effect that the expression “the day on which the
application was filed” should be construed as contemplating more than one
application must be rejected. If more than one application were in contemplation, more than one filing date would be in contemplation. The relation-back day is an important date for the administration of a winding up and needs to be able to be ascertained with certainty. The construction suggested by the liquidators is uncommercial as it would suggest that there could be more than one relation-back day
for a winding up. The expression “the application for the order” directs attention to
the order and the application pursuant to which the order was made.
In the present case, on 28 June 2022, this court had before it the provisional
liquidator’s application which sought the winding up of the company on the grounds
of insolvency and in respect of which the only real issue in dispute concerned the identity of the proposed liquidator. The winding up order was made on the basis that the company was insolvent. The winding up order was not made in consequence of any findings made in relation to the issues raised by the pleadings. Those issues were not before the court for determination on 28 June 2022. Rather, the winding up order was made as the result of the provisional liquidator having established the insolvency
ground in the context of the provisional liquidator’s application. The winding up order
was an order made pursuant to, and on the hearing of, the provisional liquidator’s
application. It was not an order made pursuant to, and on the hearing of, the originating application. Consistent with this analysis, it may be observed that, the
orders made on 28 June 2022 only dealt with the costs of the provisional liquidator’s
application and did not deal with the costs of the originating application.
Finally, I should observe that the liquidators’ submissions placed some feint reliance
upon the slip rule as a basis for correcting the winding up order. The suggested correction was to delete the identification of the initiating document as the provisional
liquidator’s application and substitute a reference to the originating application. That
amendment cannot be supported by the slip rule. The proposed amendment would distort the true position and not reflect the reality of the procedural steps. Further, the relevant transcript makes it clear that, at the time when the winding up order was made, this court was aware that it was hearing one application, namely the provisional
liquidator’s application.[14]
[14] See by way of example, the observations of Boddice J at CFI 43, exhibit bundle pp 53.01 and 59.20.
Orders
1. It is declared that, for the purposes of item 14 of s 91 of the Act, the application for the winding up order is the provisional liquidators’ application.
2. I will hear the parties as to costs.
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