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Re Bell Group Ltd (in liq)

Re Bell Group Ltd (in liq)

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JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: RE THE BELL GROUP LTD (in liq) ACN 008 666 993 and certain of its subsidiaries as listed in the schedule to the originating process; EX PARTE WOODINGS as liquidator of THE BELL GROUP LTD (in liq) ACN 008 666 993 and as liquidator or provisional liquidator of certain of its subsidiaries as listed in the schedule to the originating process [2009] WASC 235

CORAM: HASLUCK J

HEARD: 18 AUGUST 2009

DELIVERED : 19 AUGUST 2009

FILE NO/S: COR 97 of 2009

EX PARTE
ANTONY LESLIE JOHN WOODINGS as liquidator of THE BELL GROUP LTD (in liq) ACN 008 666 993 and as liquidator or provisional liquidator of certain of its subsidiaries as listed in the schedule to the originating process
Plaintiff

Catchwords:

Corporations - Winding up - Powers of liquidator - Exercise and control of liquidator's powers - Ex parte application by liquidator for directions arising from final orders on Bell liquidation - Judgment debtors seek to suspend payment of judgment debt pending appeal - Directions sought with regard to proposed trust, undertaking and charge arrangements and approval to provide charges for benefit of judgment debtors - Court's function is not to determine substantive matters in dispute between liquidator and third parties - Determination required as to whether applicant's proposed approach to suspension issue is lawful, reasonable and consistent with liquidator's obligations - Application by judgment debtors for suspension order to be dealt with in due course by appeal court - Directions and approval sought by liquidator granted

Legislation:

Corporations Act 2001 (Cth), s 477, s 477(2B), s 479(3), s 485(3), s 556(1)

Result:

Directions made pursuant to s 479(3) of the Corporations Act 2001(Cth)
Approval granted pursuant to s 477(2B) of the Corporations Act 2001 (Cth)

Category: B

Representation:

Counsel:

Plaintiff: Mr J C Vaughan

Solicitors:

Plaintiff: Blake Dawson

Case(s) referred to in judgment(s):

Barnes v Addy (1874) LR 9 ChApp 244
Brown v DML Resources Pty Ltd (in liq) (No 7) [2002] NSWSC 162
Re Ansett Australia Ltd & Korda (No 3) (2002) 115 FCR 409
Re Newtronics Pty Ltd; Ex parte Stewart [2007] FCA 1375
Re Spedley Securities Ltd (in liq) (1992) 10 ACLC 1742
The Bell Group Ltd (in liq) v Westpac Banking Corporation (No 10) [2009] WASC 107
The Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) [2008] WASC 239
TK, PB & LS v Australian Red Cross Society (1989) 1 WAR 335

HASLUCK J: This is an ex parte application made by the plaintiff, Antony Leslie John Woodings, in his capacity as liquidator of The Bell Group Ltd (in liquidation) ('Bell Group'), described as TBGL, and as liquidator of certain of its subsidiaries. The application is dated 13 August 2009. The plaintiff seeks directions in relation to matters arising out of the final orders made by the trial judge, Owen J, in the Bell litigation. I must begin by looking at the background to the application.
In early 1990…

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.

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Details

Case: [2009] WASC 235
Decision Date: 19 AUGUST 2009

CaseChat Overview and Summary

This case concerns the Bell Group Ltd (in liq) and its liquidator versus various banks. The dispute arises from a complex litigation process that concluded with final orders being handed down on 30 April 2009, which included monetary relief of over $1.5 billion. The defendant banks have indicated their intention to appeal these final orders and seek a stay or suspension of the monetary orders to preserve the subject matter of the appeal. The primary legal issues the court had to address were whether the liquidator could lawfully suspend the payment of the judgment debt pending the appeal, and whether the court should approve the proposed trust, undertaking, and charge arrangements to manage the judgment sums during the appeal process.

The court found that the liquidator had the authority, with court approval, to enter into arrangements not to distribute any judgment sum received pending the outcome of the appeal and to hold the sum in trust. The court reasoned that this approach was lawful, reasonable, and consistent with the liquidator's obligations. The court also concluded that the liquidator's proposed approach to managing the judgment sums during the appeal would protect the judgment creditors from insolvency risk, allow them to benefit from the application of their tax losses, and seek an appropriate rate of return. The court granted the liquidator's application for directions and approval of the proposed arrangements.

The final orders of the court included directions for the liquidator to manage the judgment sums in accordance with the approved arrangements and to seek further directions from the appeal court regarding any suspension order sought by the judgment debtors. The court emphasized that its function was not to determine substantive matters in dispute between the liquidator and third parties, but rather to determine whether the liquidator's proposed approach was lawful, reasonable, and consistent with their obligations. The court also noted that any application by the judgment debtors for a suspension order would be dealt with in due course by the appeal court.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

After a long and complicated trial running for several years Owen J delivered reasons for judgment on 28 October 2008 in which he held that the plaintiffs had successfully established their principal causes of action: The Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) [2008] WASC 239. Final orders, including monetary orders, were handed down by His Honour on 30 April 2009: The Bell Group Ltd (in liq) v Westpac Banking Corporation (No 10) [2009] WASC 107. Some of the final orders dealt with forms of declaratory relief and other matters. In relation to monetary relief, including awards of compensatory interest and provision for the defendants to pay the plaintiffs' costs - which were fixed in the sum of $82.5 million - the relief was provided by way of orders 5, 6 and 7.2 of the judgment of Owen J dated 30 April 2009 ('the monetary orders'). Consent order 8 of the judgment provided:The Court further orders that orders 5, 6 and 7.2 [the monetary orders] be dated 29 May 2009 and take effect from that date. It is important to understand that the claims and circumstances of the various plaintiff companies were similar but not entirely the same. This meant that the monetary orders provided for payments of different sizes to be made to the various claimants. The orders require payments to the plaintiff judgment creditors of an overall judgment sum in excess of $1.5 billion. The defendant banks made it clear that they intended to appeal, and would seek a stay or suspension of the monetary orders in order to preserve the subject matter of the appeal. The defendants were concerned, having regard to the size of the overall payment, that the plaintiff judgment creditors would be unable to repay the amounts in question if the appeal succeeded, for the plaintiff judgment creditors were insolvent, with their only substantial asset being the property recovered in the Bell litigation. The defendants contended that in the absence of a suspension of the effect of the monetary orders the appeal process would be rendered nugatory. I note in passing that the foreign resident plaintiff company BGUK does not oppose suspension in respect of its judgment sum, subject to finalisation of the terms upon which a suspension should be ordered. The plaintiff formed the view that it was within the power of the liquidator, with court approval, to enter into arrangements not to distribute any judgment sum received pending the outcome of the appeal and for the sum to be held in trust. This would preserve the judgment sum and meet the opposing case for a stay or suspension. As to any debate concerning the monetary orders, the plaintiff contended that the judgment creditors should be in no worse position than if they had been paid the judgment sums in accordance with their entitlement. The plaintiff's position was that:(a)The judgment creditors should not be exposed over the lifetime of the appeal to any insolvency risk on the part of the defendants ('the insolvency risk').(b)They should not be detrimentally prevented from benefitting from the application of their tax losses as against any tax payable on income earned on the judgment sums throughout the duration of the appeal ('application of deductions') and(c)The judgment sums should be managed to seek to provide an appropriate rate of return ('investment return').