Re Equiticorp Australia Ltd (in liq) - [2011] NSWSC 1368

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

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.

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.

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

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…

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: [2011] NSWSC 1368
Decision Date: 11 November 2011

CaseChat Overview and Summary

The case of Re Equiticorp Australia Ltd (in liq) involved the liquidation of a company and the subsequent resignation of its liquidator. The matter was heard by the Supreme Court of New South Wales, with the central dispute being the authority of the court to appoint a new liquidator following the resignation of the original liquidator. The case arose in the context of a winding up application made under the pre-1991 legislative framework.

The primary legal issue before the court was whether the court's power to appoint a liquidator stemmed from the inherent jurisdiction of the court or from specific statutory provisions under the Companies Act. The court was required to determine the source of its power to intervene in the liquidation process and appoint a new liquidator when the original liquidator resigned.

In addressing the issue, the court held that the power to appoint a liquidator in the context of a winding up application made under the pre-1991 legislation derived from the inherent jurisdiction of the court. The court emphasised that the inherent jurisdiction allowed it to manage the administration of justice and ensure that the winding up process proceeded fairly and efficiently. The court found that the statutory provisions under the Companies Act did not exclusively confer this power, as the inherent jurisdiction complemented the statutory framework by providing the court with the necessary flexibility to address unforeseen circumstances, such as the resignation of a liquidator.

The court's decision clarified the source of its power in appointing a new liquidator in the context of pre-1991 winding up applications. By affirming that the power derived from the inherent jurisdiction, the court underscored its ability to maintain control over the winding up process and ensure the protection of creditors' interests.

Orders