Re Application of Hall

[1999] NSWSC 984

CITATION:	Application of Hall - In the Matter of ACN 063 865 083 Pty Ltd (In Liquidation) (formerly Digicall Direct Pty Ltd) [1999] NSWSC 984
CURRENT JURISDICTION:	Equity Division
FILE NUMBER(S):	3863/99
HEARING DATE(S):	7 September 1999
JUDGMENT DATE:	7 September 1999
PARTIES :	Gregory Winfield Hall and Philip Patrick Carter (Plaintiffs)
JUDGMENT OF:	Hamilton J

COUNSEL :	Mr DJ Hammerschlag (Plaintiffs) (ex parte)
SOLICITORS:	Blake Dawson Waldron (Plaintiffs)
CATCHWORDS:	CORPORATIONS [253] - Winding Up - Conduct and Incidents of Liquidation - Effect of Winding Up on Other Transactions - Preferences - Limitation of action to bring preference claim - Extension of time under Corporations Law, s 588FF - Relevant condsiderations.
ACTS CITED:	The Corporations Law, s 588FF
CASES CITED:	Woden Constructions Pty Ltd [1998] 1228 FCA Green v Chiswell Furniture [1999] NSWSC 608
DECISION:	Extension of time granted.

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

HAMILTON J

TUESDAY, 7 SEPTEMBER 1999

3863/99 GREGORY WINFIELD HALL & ANOR
IN THE MATTER OF ACN 063 865 083 PTY LTD (In Liq) (formerly Digicall Direct Pty Ltd) & Ors

JUDGMENT

His Honour:

1 These proceedings are brought by Gregory Winfield Hall and Phillip Patrick Carter who are both the liquidators of four companies being ACN 063 865 083 Pty Ltd (In liquidation) (formerly Digicall Direct Pty Ltd) and three associated companies (“the companies”). The plaintiffs seek leave pursuant to s 588FF(3)(b) of the Corporations Law ("the Law") for an extension to 13 September 2000 of the time within which application may be made to the Court in respect of any voidable transaction of any of the companies. Without such an order the time within which such application could be made would expire on 13 September 1999.

2    The application is supported by the affidavit of Mr Hall and extensive documentary material. This seeks to explain the delay in investigating and bringing to the Court any claim in respect of any such voidable transaction. That explanation, in short, proceeds by reference to extensive activities of the liquidators in pursuing claims and investigating the companies' affairs. The affidavit reveals that the liquidators’ time has essentially been taken up with those other activities and that it is only of comparatively recent times that all the materials necessary for an investigation and, if appropriate, pursuit of the relevant claims has come into the liquidators’ hands by reason of the complication of the winding up of the companies. Because the investigations are not complete, specific proceedings proposed to be brought by the liquidators, if they deem it appropriate, cannot be identified and the orders for extension are sought in global terms.

3 The matters relevant to be considered by the Court upon the determination of such an application as the present, have previously been considered by at least two Judges, namely, Finn J of the Federal Court of Australia in Taylor v Woden Constructions Pty Ltd [1998] 1228 FCA and Austin J of this Division of this Court in Green v Chiswell Furniture [1999] NSWSC 608. The considerations which the Court ought ordinarily take into account are set out as follows in the judgment of Austin J:

"15. Considerations relevant to the exercise of the Court's discretion under s 588FF(3) were stated by Finn J in Taylor v Woden Constructions Pty Ltd (Federal Court, 23/8/98, unreported). The following propositions, with which I respectfully agree, emerge from that case:

(a) ordinarily, the issues raised on an extension application are threefold:
(i) the explanation for the delay in bringing proceedings;
(ii) a preliminary review of merits of the foreshadowed proceedings - that is, an investigation as to whether such proceedings should be so devoid of prospects that it would be unfair, by granting an extension, to expose the other party to the continuing prospect of suit;
(iii) whether the likely actual prejudice resulting from the grant of an extension is sufficiently substantial to outweigh the case for granting an extension;


(b) where the liquidator's purpose in seeking the extension of time is simply to put himself into a position where he can properly decide whether or not to bring proceedings, a preliminary inquiry into the merits of any consequent proceedings may not always be necessary.

In the present case there is no evidence of any prejudice which would flow from granting an extension and so that is not an issue.

16. In my opinion, there is a risk that in some cases a preliminary inquiry into the merits may impose an unnecessary burden on both the liquidator and the Court, especially in a case where the circumstances appear to give rise to complex or disputed questions of fact and law and the evidence before the Court is manifestly incomplete."

I respectfully agree that that passage from his Honour’s judgment accurately states the material considerations in the present case.

4    In my view, the evidence of Mr Hall, which I have briefly outlined, provides a satisfactory and proper explanation for the delay in bringing the proceedings. It is obviously impossible to form a view of the merits of the foreshadowed proceedings but, no doubt, a review by the liquidators will take place before any such proceedings are brought and, in my view, they are unlikely to bring proceedings which are simply a waste of time and money. This state of affairs obviously precludes any realistic assessment of the prejudice that may arise from the granting of the extension. However, there is nothing in the evidence before me that establishes or suggests that there would be actual prejudice arising from an extension limited in time in the fashion sought. It is only proper that the liquidators apply, if they propose to do so, at this stage, before the existing time limit actually expires. Unless an order is made, it seems to me that they may be inhibited in pursuing proper enquiry into the possible existence of potential proceedings; in the absence of an order they will have no assurance that the proceedings, if determined to be worth pursuing, will not be precluded by the expiry of the time limit. I note that Austin J appears in Green v Chiswell Furniture supra to have granted an order in the terms that are now sought.

5    In the circumstances I have come to the conclusion that it is appropriate to grant leave as asked and I propose to do so. The substantive order sought in the form of orders placed before me is as follows, in respect of each of the four companies:

"Pursuant to s 588FF(3)(b) of the Corporation Law the period prescribed by s 588FF(3)(b) of the Corporation Law within which any application in respect to any voidable transaction of Digicall Group Pty Ltd ACN 063 865 083 (In liquidation) under s 588FF may be extended to 13 December 2000."


The orders I make are as follows:

(1) I grant leave to the plaintiff to file the summons initialled by me.
(2) I dispense with service of the summons.
(3) I make orders in accordance with orders 1 to 4 in the form of orders initialled by me and placed with the papers.
(4) The exhibits may be returned.

…oOo…

Last Modified: 09/27/1999