Re Equiticorp Australia Ltd (in liq)

Case •

[2011] NSWSC 1368

•

11 November 2011

Supreme Court


New South Wales

Medium Neutral Citation: In the matter of Equiticorp Australia Limited (In Liquidation) [2011] NSWSC 1368
Hearing dates:21 October 2011Written submissions: 2 November 2011
Decision date: 11 November 2011
Jurisdiction:Equity Division - Corporations List
Before: Barrett J
Decision:

Refer to paragraph 21

Catchwords: CORPORATIONS - winding up - winding up by the court - resignation of liquidator - source of court's power to appoint new liquidator - where winding up application made under pre-1991 legislation
Legislation Cited: Companies Act 1981 (Cth). Ss 352, 372(1)
Companies (New South Wales) Code, ss 364(1). 365(2), 372(1)
Corporations Act 2001 (Cth), Division 2, Part 5.4B, Part 2A.2, ss 9, 58AA, 472(1), 472(4), 472(6), 473(5), 473(7), 473(8), 474(1), 474(2), 475, 1408
Corporations Law, Part 2A.1, s 601
Cases Cited: Rains v Project Technology Pty Ltd (1989) 15 ACLR 609
Re Crust 'n' Crumbs Bakers (Wholesale) Pty Ltd (1991) 5 ACSR 70
Re Kershaw (as liquidator of Equiticorp Tasman Ltd) [2005] NSWSC 313; (2005) 54 ACSR 214
Re National Safety Council if Australia (Vic Division) [1990] VR 29
Re Tahore Holdings Pty Ltd [2004] NSWSC 397; (2004) 49 ACSR 550
Category:Interlocutory applications
Parties: Joseph David Hayes and Murray Campbell Smith - Plaintiffs
Representation: Mr C Bova - Plaintiffs
Baker & McKenzie - Plaintiffs
File Number(s):2011/00270272

Judgment

  1. Mr Kershaw was, until his recent resignation, the sole liquidator of each of Equiticorp Tasman Ltd, Equiticorp Investments (Australia) Ltd, Sowani (No 2) Pty Ltd and Tahore Holdings Pty Ltd.

  1. In consequence of that resignation, Mr Hayes and Mr Smith, official liquidators who are partners in Mr Kershaw's former firm McGrath Nicol, seek an order that they be appointed liquidators in Mr Kershaw's place.

  1. A question has arisen as to the source of the court's power to make such an appointment.

  1. Each winding up order was made by this court upon an application filed in 1989. In each case, the application was made under the Companies (New South Wales) Code . By force of s 365(2) of that Code, the winding up was deemed to have commenced upon the filing of the application. When, on 1 January 1991, the Corporations Law of New South Wales came, for most purposes, to supersede the Companies (New South Wales) Code , each winding up continued to be governed by the Companies (New South Wales) Code) as if the Corporations Law had not been enacted. This was the effect of s 601 of the Corporations Law:

"The provisions of this Law with respect to winding up do not apply to any body corporate the winding up of which was started before the commencement of this Chapter and:
(a) any such company is to be wound up in the same manner, and with the same incidents, as if this Law had not been enacted; and
(b) for the purposes of the winding up, the previous law of this jurisdiction corresponding to this Chapter is taken to remain in force and to apply, with such modifications as the circumstances require, as if a reference in that previous law to the NCSC were, except in relation to a time before the commencement of section 254 of the ASIC Law, a reference to the Commission."

  1. The matter just mentioned was noticed in earlier proceedings concerning two of the companies: Re Tahore Holdings Pty Ltd [2003] NSWSC 397; (2003) 49 ACSR 550; Re Kershaw (as liquidator of Equiticorp Tasman Ltd) [2005] NSWSC 313; (2005) 54 ACSR 214. In the former case, the effect of s 601 of the Corporations Law and the subsequent operation of provisions of the Corporations Act 2001 (Cth) now in force were noted as follows (at [4]):

"This provision came into operation on 1 January 1991. Its effect was to cause the winding up of Tahore Holdings to continue to be governed by the Companies (New South Wales) Code . When the Corporations Act 2001 (Cth) came to supersede the Corporations Law of New South Wales, for most purposes, on 15 July 2001, s 601 of that Corporations Law was continued in force by s 1408 of the Corporations Act . The statutory provisions governing the winding up of Tahore Holdings therefore continue to be those of the Companies (New South Wales) Code ."

  1. The question that now arises is whether the matter of appointing new liquidators in place of a resigned liquidator falls to be dealt with under the Companies (New South Wales) Code or under the present Corporations Act .

  1. Counsel for the plaintiffs submitted that s 601 applies only to the process of winding up - consisting, in broad terms, of the collection of assets, the ascertainment of debts, the application of assets in or towards satisfaction of debts and the distribution of any surplus among contributories after adjustment of their rights: see generally Re Crust 'n' Crumbs Bakers (Wholesale) Pty Ltd (1991) 5 ACSR 70. The matter of filling a vacancy in the office of liquidator is, it is submitted, beyond the boundaries of that process.

  1. That submission was reinforced by reference to the distinct and separate existence within the Companies (New South Wales) Code of s 364(1) empowering the court to "order the winding up of a company" and s 372(1) in the following terms:

"On an order being made for the winding up of a company, the Court may appoint an official liquidator to be the liquidator of the company."

  1. It is submitted and I accept that an order under s 364(1) caused a process of winding up to begin, while a separate order under s 372(1) (capable of being made only in consequence of the making of the winding up order) caused a liquidator to take office and to be fixed with statutory responsibilities with respect to that process and its completion. The separateness of the two orders was noted in Re National Safety Council if Australia (Vic Division) [1990] VR 29.

  1. The appointment and tenure of a liquidator - as distinct from the functions a liquidator for the time being in office actually performs -- were, I accept, not comprehended by the expression "winding up" in the introductory part of s 601 or part of the subject matter caught by the words "is to be wound up" in s 601(a). It follows that the matter of filling a vacancy in the office of liquidator is not to be addressed by reference to the continuing operation of provisions of the Companies (New South Wales) Code that derives from a combination of s 601 of the Corporations Law of New South Wales and s 1408 of the present Corporations Act .

  1. Each of the four companies with which I am concerned has been, since its initial creation, registered or deemed to be registered under the general companies legislation of New South Wales. At the commencement of the Corporations Act 2001 (Cth), each was registered under Part 2A.1 of the Corporations Law of New South Wales. The effect of s 1378 of the Corporations Act is accordingly that the pre-existing registration has effect as if it were a registration under Part 2A.2 of the Corporations Act itself. Each entity is therefore "a company registered under this Act" as referred to at the start of the definition of "company" in s 9 of the Corporations Act .

  1. The matter of filling a vacancy in the office of liquidator is accordingly governed by s 473(7) of the Corporations Act :

"A vacancy in the office of a liquidator appointed by the Court must be filled by the Court."

  1. This provision appears in Division 2 of Part 5.4B of the Corporations Act headed "Court-appointed Liquidators". As various provisions within that division indicate (see, for example, s 472(1), s 472(4), s 472(6), s 473(5), s 474(1), s 474(2) and s 475), the division is concerned with the appointment of a liquidator of a "company" - that is, a "company" in the sense in which that expression is used in the Corporations Act itself. It follows, in my view, that s 473(7) covers the situation where the court previously appointed a liquidator of a body that is, for the time being, a "company" as defined by the Corporations Act and the person so appointed is no longer in office as liquidator so that there is a vacancy in that office.

  1. That is the position here. Each of the four companies under consideration is a "company" within the meaning of the Corporations Act , so that there is today a vacancy of the kind with which s 473(7) is concerned.

  1. This court, as a "Court" within the s 58AA definition, is therefore not only empowered but also required to fill the vacancy; and the source of the power and the requirement is s 473(7) of the Corporations Act.

  1. The orders sought in respect of those four companies will therefore be made.

  1. There is also a fifth company: Equiticorp Investments (Australia) Ltd. The circumstances pertaining to it are the same in all respects as those just considered, save that the incorporation of the company before 1989 was under the general companies legislation applying in the Australian Capital Territory and the jurisdiction of this court to make orders in response to the winding up application made in 1989 came from the Companies Act 1981 (Cth) supplemented by the cross-vesting legislation discussed in Rains v Project Technology Pty Ltd (1989) 15 ACLR 609.

  1. The analysis already made again applies, but on the basis that:

(a) it was s 352 of the Companies Act 1981 (Cth) that deemed the winding up to commence upon the filing of the application;

(b) it was s 601 of the Corporations Law of the Australian Capital Territory (created by the Corporations Act 1989 (Cth) as amended by the Corporations Legislation Amendment Act 1990 (Cth)) that caused the process of winding up to continue to be governed by the Companies Act 1981 (Cth); and

(c) it was s 372(1) of the Companies Act 1981 (Cth), supplemented in the way already mentioned, that enabled this court to make the original order appointing a liquidator.

  1. Since the advent of the Corporations Act 2001 (Cth), the fifth company has been a "company" as defined by that Act, with the result that the provisions of the Act already discussed enable this court, as a "Court" within the meaning of s 58AA, to exercise the s 473(7) power in relation to it.

  1. The orders sought will also be made in relation to the fifth company.

  1. The orders are:

1 Order pursuant to s 473(7) of the Corporations Act 2001 (Cth) that Joseph David Hayes and Murray Campbell Smith each be appointed severally, and both of them be appointed jointly, as liquidators of each of Equiticorp Australia Limited (In Liquidation), Equiticorp Tasman Limited (In Liquidation), Equiticorp Investments (Australia) Limited (In Liquidation), Sowani (No 2) Pty Limited (In Liquidation) and Tahore Holdings Pty Limited (In Liquidation).

2 Order pursuant to s 473(8) of the Corporations Act 2001 (Cth) that anything that is required or authorised by the Corporations Act to be done by the liquidator of each of the said companies may be done by either or both of the said Joseph David Hayes and Murray Campbell Smith.

3 Order that the plaintiffs' costs of the proceedings be paid pro rata as expenses of the winding up of each of the said companies.

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Decision last updated: 11 November 2011

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