JUDGE:	Hetyey AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	12 May 2023, further material received 2 June 2023, 5 September 2023
DATE OF JUDGMENT:	7 September 2023
CASE MAY BE CITED AS:	Re Admiral Cove Pty Ltd
MEDIUM NEUTRAL CITATION:	[2023] VSC 537

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CORPORATIONS — Corporations Act 2001 (Cth) — Part 5.4A — Section 461(1)(k) — Winding up on just and equitable ground — Application by Court-appointed directors of ten companies forming corporate group — Where certain companies in group are corporate trustees holding real property — Irretrievable breakdown of relationship between shareholders — Long history of litigation over deceased estate — Lack of engagement by shareholders and beneficiaries with Court-appointed directors over many years — Deadlock in management of companies — Call for directors to resign — Where directors wish to resign but unable to do so without replacement directors being appointed — No alternative directors nominated — s 203AB — Where resignation of directors ineffective if company does not have at least one director — Corporate paralysis — Where solvency of some companies in corporate group not a complete barrier to winding up — Where no other remedy available — Winding up orders made — ss 467(1)(c) and 466(4) — Apportionment of costs of application across group of companies.

CORPORATIONS — Liquidation of trustee companies — Trustee right of indemnity — Bare trustee companies — Just and convenient to appoint liquidators as receivers and managers over assets of unit trust pursuant to s 37 of the Supreme Court Act 1986 (Vic).

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Ms V Bell	Thomson Geer

TABLE OF CONTENTS

Introduction........................................................................................................................................ 1

Factual background........................................................................................................................... 1

Earlier proceedings........................................................................................................................... 1
Testamentary documents................................................................................................................. 2
Companies and Trusts..................................................................................................................... 3
Appointments by the Court............................................................................................................. 4
Current financial position of the Companies................................................................................... 5
Correspondence between directors, beneficiaries and others........................................................... 6
Relationship between beneficiaries and directors............................................................................. 8

Procedural history............................................................................................................................ 11

Material relied on by the plaintiffs.............................................................................................. 14

Legislative provisions and legal principles................................................................................ 15

Just and equitable winding up of the Companies..................................................................... 19

Appointment of liquidators as receivers and managers of Trusts......................................... 23

Ancillary orders................................................................................................................................ 26

Conclusion......................................................................................................................................... 28

HIS HONOUR:

Introduction

James Patrick Downey (the eleventh plaintiff) and Mr Petr Vrsecky (the twelfth plaintiff) of PKF, Chartered Accountants (together, ‘directors’), are Court-appointed directors of the first to tenth plaintiff companies (‘Companies’). By originating process dated 6 March 2023 and amended on 15 May 2023, the plaintiffs make application under s 461(1)(k) of the Corporations Act 2001 (Cth) (‘Corporations Act’) for the just and equitable winding up of the Companies and the appointment…

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.

Continue reading Re Admiral Cove Pty Ltd

Details

AGLC: Re Admiral Cove Pty Ltd [2023] VSC 537
Case: [2023] VSC 537
Decision Date: 7 September 2023

CaseChat Overview and Summary

In this matter, the Court was asked to consider an application by court-appointed directors of ten companies that form a corporate group. The directors sought an order to wind up the companies on the ground that it was just and equitable to do so, pursuant to section 461(1)(k) of the Corporations Act 2001. The companies in question are involved in holding real property as corporate trustees. The dispute arose out of an irretrievable breakdown of the relationship between the shareholders, compounded by a long history of litigation over a deceased estate. The shareholders and beneficiaries had shown a lack of engagement with the court-appointed directors over a significant period. This led to a deadlock in the management of the companies, calls for the directors to resign, and ultimately, the directors' desire to resign without having suitable replacements nominated.

The court had to address several legal issues. The primary issue was whether the court should order the winding up of the companies on the just and equitable ground, given the circumstances of corporate paralysis and the breakdown in relationships among the shareholders. Another issue was whether the solvency of some of the companies in the group could be a complete barrier to winding up, and if there were any other remedies available. The court also had to consider the implications of section 203AB of the Corporations Act, which provides that the resignation of directors is ineffective if the company does not have at least one director.

In delivering its judgment, the Court found that the breakdown in relationships and the resulting deadlock in management justified the winding up of the companies on the just and equitable ground. The Court determined that the solvency of some of the companies was not a complete barrier to winding up, as there were no other viable remedies available. The Court also noted that the resignation of the directors was ineffective due to the absence of nominated replacements. The Court made winding up orders and directed that the costs of the application be apportioned across the group of companies, pursuant to sections 467(1)(c) and 466(4) of the Corporations Act. Additionally, the Court appointed liquidators as receivers and managers over the assets of the unit trust, pursuant to section 37 of the Supreme Court Act 1986 (Vic).

Orders