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Re Crafted Capitol Pty Ltd (In Liquidation)

Re Crafted Capitol Pty Ltd (In Liquidation)

Case [2021] ACTSC 190 20 August 2021

Corporate Liquidation

Winding Up & Liquidation

Interlocutory Orders

Stay of Proceedings

Costs

Corporate Law & Governance

Insolvency Law

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SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title:

Re Crafted Capitol Pty Ltd (In Liquidation)

Citation:

[2021] ACTSC 190

Hearing Dates:

16 and 17 August 2021

DecisionDate:

20 August 2021

Before:

Mossop J

Decision:

See [86]

Catchwords:

CORPORATIONS – WINDING UP – Interlocutory process – application to terminate the winding up of the first respondent – where the applicants made out a positive case for the exercise of the court’s discretion in their favour – statute allows consideration of stage of liquidation and resolution of underlying dispute – not appropriate to terminate the winding up – application dismissed

Legislation Cited:

Building and Construction Industry (Security of Payment) Act 2009 (ACT)

Corporations Act 2001 (Cth), ss 286(1), 482, sch 2 (Insolvency Practice Schedule (Corporations)) s 90-15
Corporations Regulations 2001 (Cth), rr 5.6.53, 5.6.54
Court Procedure Rules 2006 (ACT), sch 6, r 14.1(2)

Insolvency Practice Rules (Corporations) 2016 (Cth), s 70-40

Cases Cited:

Bloc (ACT) Pty Ltd v Crafted Capitol Pty Ltd [2021] ACTSC 81

Bloc (ACT) Pty Ltd v Crafted Capitol Pty Ltd (No 2) [2021] ACTSC 85
Capocchiano v Young [2013] NSWSC 879
In the matter of Azmac Pty Limited (in liquidation) [2020] NSWSC 204; 146 ACSR 113
In the matter of MWM Sydney Pty Limited (in liquidation) [2016] NSWSC 688

Re Warbler Pty Ltd (1982) 6 ACLR 526

Parties:

Crafted Holdings Pty Ltd (ACN 168 210 624) (First Applicant)

Crafted Central Pty Ltd (ACN 605 053 709) (Second Applicant)

Crafted Capitol Pty Ltd (In Liquidation) (ACN 605 053 763) (First Respondent)

Henry Joseph Kazar in his capacity as joint and several liquidator of Crafted Capitol Pty Ltd (In Liquidation) (Second Respondent)

Lachlan MacArthur Abbot in his capacity as joint and several liquidator of Crafted Capitol Pty Ltd (In Liquidation) (Third Respondent)

Bloc (ACT) Pty Ltd (ACN 149 091 592) (Fourth Respondent)

Representation:

Counsel

B Katekar SC with K Petch (Applicants)

N Oram (First to Third Respondents)

A Greinke (Fourth Respondent)

Solicitors

Terracon Legal ( Applicants)

ERA Legal (First to Third Respondents)

Mills Oakley (Fourth Respondent)

File Number:

SC 79 of 2021

MOSSOP J:
Introduction
1. This is an application made by Crafted Holdings Pty Ltd (Holdings) and Crafted Central Pty Ltd (Central) to terminate the winding up of Crafted Capitol Pty Ltd (in liquidation) (Capitol). Holdings is a contributory and hence entitled to make an application under s 482 of the Corporations Act 2001 (Cth) for the winding up to be terminated: s‑482(1A)(a). The liquidators of Capitol are the second and third respondents. Bloc (ACT) Pty Ltd (Bloc), the company upon whose application Capitol was wound up, is the fourth respondent. The circumstances in which Capitol was ordered to be wound up are described in Bloc (ACT) Pty Ltd v Crafted Capitol Pty Ltd [2021] ACTSC 81 (Bloc (No 1)) and Bloc (ACT) Pty Ltd v Crafted Capitol Pty Ltd (No 2) [2021] ACTSC 85 (Bloc (No 2)). The factual circumstances leading to the winding up of Capitol are set out in

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 Crafted Capitol Pty Ltd (In Liquidation)

Details

AGLC: Re Crafted Capitol Pty Ltd (In Liquidation) [2021] ACTSC 190
Case: [2021] ACTSC 190
Decision Date

CaseChat Overview and Summary

Crafted Holdings Pty Ltd and Crafted Central Pty Ltd made an application to terminate the winding up of Crafted Capitol Pty Ltd under s 482 of the Corporations Act 2001 (Cth). The application sought orders terminating the winding up, vacating two interlocutory orders, and for the applicants to pay the respondents' costs of the application. The winding up of Capitol was ordered by the Court on 29 April 2021. The liquidators of Capitol, Henry Kazar and Lachlan MacArthur Abbot, and Bloc (ACT) Pty Ltd, the company upon whose application Capitol was wound up, were the respondents to the application. The Court was required to decide whether it was appropriate to exercise its discretion in favour of the applicants and terminate the winding up of Capitol. The Court found that the applicants had made out a positive case for the exercise of the court's discretion in their favour. However, the Court concluded that it was not appropriate to terminate the winding up. The principal factors leading to that conclusion were that the termination of the winding up would not be for any trading purpose or any ongoing business but only for the purpose of dispute resolution between the company and Bloc; there were no employees or customers who would benefit from termination of the winding up; in so far as the directors of Capitol may be exposed to criticism by the liquidators if the liquidation continues, that was not a factor favouring termination of the winding up; no clear benefit of the expert determination process as a means for resolving claims as between Bloc and Capitol had been demonstrated over the processes provided for if the liquidation was allowed to continue; Bloc, the directors of Capitol, and the liquidators had invested time and resources in the processes of the liquidation including the adjudication of Bloc's proof of debt; and the liquidation process was likely to bring the disputes between the parties to an end more quickly with fewer proceedings than would be the case if the winding up was terminated. The Court dismissed the application for an order terminating the winding up of Capitol. The Court invited the parties to be further heard as to any other orders necessary to dispose of the interlocutory process.

Orders