Re Great Southern Ltd (in Liq) - [2016] WASC 234

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: RE GREAT SOUTHERN LTD (IN LIQ); EX PARTE MARTIN BRUCE JONES and JAMES HENRY STEWART in their capacities as the Joint and Several Liquidators of GREAT SOUTHERN LTD (IN LIQ), GREAT SOURTHERN MANAGERS AUSTRALIA LTD (IN LIQN), GREAT SOUTHERN FINANCE PTY LTD (IN LIQ), GREAT SOUTHERN OLIVE HOLDINGS PTY LTD (IN LIQ) [2016] WASC 234

CORAM: PRITCHARD J

HEARD: 27 JULY 2016

DELIVERED : 9 AUGUST 2016

FILE NO/S: COR 80 of 2016

MATTER :IN THE MATTER OF GREAT SOUTHERN LTD (IN LIQ) (ACN 052 046 536), GREAT SOURTHERN MANAGERS AUSTRALIA LTD (IN LIQ) (ACN 083 825 405), GREAT SOUTHERN FINANCE PTY LTD (IN LIQ) (ACN 009 235 143), GREAT SOUTHERN OLIVE HOLDINGS PTY LTD (IN LIQ) (ACN 111 092 374), GREAT SOUTHERN HVT HOLDINGS PTY LTD (IN LIQ) (ACN 123 433 778)

EX PARTE
MARTIN BRUCE JONES and JAMES HENRY STEWART in their capacities as the Joint and Several Liquidators of GREAT SOUTHERN LTD (IN LIQ), GREAT SOURTHERN MANAGERS AUSTRALIA LTD (IN LIQN), GREAT SOUTHERN FINANCE PTY LTD (IN LIQ), GREAT SOUTHERN OLIVE HOLDINGS PTY LTD (IN LIQ)
First Plaintiffs
MARTIN BRUCE JONES in his capacity as the Liquidator of GREAT SOUTHERN HVT HOLDINGS PTY LTD (IN LIQ)
Second Plaintiff

Catchwords:

Corporations - Where committees of inspection appointed under s 548 Corporations Act 2001 (Cth) - Where meetings of creditors held - Where no meetings of contributories - Whether orders should be made pursuant s 1322(4) declaring existence and acts of committees of inspection to be valid - Whether directions should be made pursuant to s 511

Legislation:

Corporations Act 2001 (Cth), s 511, s 548, s 1322

Result:

Application granted

Category: B

Representation:

Counsel:

First Plaintiffs : Mr I M O Matthews
Second Plaintiff : Mr I M O Matthews

Solicitors:

First Plaintiffs : Chew & Matthews
Second Plaintiff : Chew & Matthews

Cases referred to in judgment:

Chalet Nominees (1999) Pty Ltd v Murray [2012] WASC 147
CordiantCommunications (Aust) Pty Ltd v Communications Group Holdings Pty Ltd [2005] NSWSC 1005; (2005) 194 FLR 322
Dean‑Willcocks v Soluble Solution Hydrophonics Pty Ltd (1997) 42 NSWLR 209
Elderslie Finance Corp Ltd v Australian Securities Commission (1993) 11 ACSR 157
Handberg (in his capacity as liquidator of S & D International Pty Ltd) (in liq) v MIG Property Services Pty Ltd [2010] VSC 336; (2010) 79 ACSR 373
In the matter of One.Tel Ltd [2014] NSWSC 457; (2014) 99 ACSR 247
Northwest Capital Management v Westate Capital Ltd [2012] WASC 121; (2012) 264 FLR 424
Re Ansett Australia Ltd and Korda (No 3) [2002] FCA 90; (2002) 115 FCR 409
Re Aprais Pty Ltd (in liq); Twin v Deputy Commissioner of Taxation [2003] QSC 329; [2004] 1 Qd R 450
Re Great Southern Managers Australia Ltd (in liq); Ex parte Jones [2014] WASC 312
Re The Bell Group Ltd (in liq); Ex parte Woodings (as liquidator of The Bell Group Ltd (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.

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Details

Case: [2016] WASC 234
Decision Date: 9 AUGUST 2016

CaseChat Overview and Summary

The case of Re Great Southern Ltd (in Liq) involved the liquidators of several companies within the Great Southern Group, led by Mr Martin Bruce Jones, who sought declarations and directions under the Corporations Act 2001 (Cth) to validate the actions of committees of inspection appointed during the winding up of the companies. The liquidators were concerned that the committees of inspection had been appointed without holding a separate meeting of contributories, which is a requirement under section 548 of the Corporations Act. This concern arose after Mr Jones became aware of a previous decision in Re The Bell Group Ltd (in liq); Ex parte Woodings. The central legal issue was whether the acts of the committees of inspection should be declared valid under section 1322(4)(a) of the Corporations Act, despite the procedural irregularity of not convening a meeting of contributories. Additionally, the court had to consider whether any directions should be made under section 511 of the Act to ensure the proper administration of the companies in liquidation.

The court found that despite the procedural irregularity in the appointment of the committees of inspection, the acts of these committees were essentially of a procedural nature and did not result in substantial injustice. The liquidators had acted honestly, and it was just and equitable to declare the acts of the committees valid. The court emphasised that the primary purpose of section 548 is to protect the interests of contributories by ensuring they have a say in the appointment of committees of inspection. However, the court noted that the contributories in this case had already had ample opportunity to participate in the liquidation process through the committees of inspection. Given the complexity and scale of the Great Southern Group's liquidation, the court concluded that the procedural irregularity did not cause or was likely to cause substantial injustice. Therefore, the court made declarations under section 1322(4)(a) to validate the existence and acts of the committees of inspection.

In conclusion, the court granted the declarations sought by the liquidators, validating the existence and acts of the committees of inspection. The court found that the procedural irregularity did not result in substantial injustice and that it was just and equitable to declare the committees' actions valid. The liquidators were thus able to proceed with the winding up of the companies without the risk of their actions being invalidated due to the procedural error in the appointment of the committees of inspection.

Orders

Orders of the court

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Background

Background to the litigation

Factual background In support of the application, the plaintiffs relied on affidavits sworn by Mr Martin Bruce Jones on 21 April 2016 and 19 July 2016. Except where I indicate otherwise, the facts set out below are drawn from the affidavit of Mr Jones sworn on 21 April 2016. Mr Jones and Mr Stewart are the joint and several liquidators of GSL, GSMAL, GSF and GSOH. Mr Jones is the liquidator of GSHVT. GSL is the parent company of each of GSMAL, GSF, GSOH and GSHVT. Each of those companies is a member of the Great Southern Group of Companies (Great Southern Group). On 16 May 2009, the directors of the Companies placed each of the Companies into voluntary administration. On 18 May 2009, receivers and managers were appointed over all of the assets and undertakings of GSL, GSMAL and certain other wholly owned subsidiaries of GSL. The receivers retired on 18 December 2013. On 19 November 2009, the creditors of the Companies resolved to wind up, and appoint liquidators to each of, the Companies. On the same date, the creditors of the Companies resolved to appoint the Committees of Inspection to represent the creditors in the winding up of each of the Companies. The Great Southern Group comprised GSL and a total of 34 subsidiaries, employed over 480 staff and 2,500 contractors across Australia, had raised over $2.2 billion in managed investment scheme sales, had developed and operated managed investment scheme assets for over 52,000 investors, owned and leased significant areas of land, managed forestry plantations, horticultural estates and cattle properties, and had estimated total consolidated liabilities, both secured and unsecured, of in excess of $1 billion. Mr Jones deposed that because of the size and complexity of the Great Southern Group, the administration and winding up has been a particularly long and complex process. In addition to the ordinary tasks in a winding up such as identifying liabilities and creditors, selling assets and so on, the liquidators of the companies in the Great Southern Group have had to deal with litigation in the Victorian Supreme Court and this Court, brought against, and by, some of the companies in the Group. That litigation has all been resolved and deeds of settlement have been approved in the actions. Since the appointment of the Committees of Inspection, the liquidators of the Companies have convened numerous meetings of those Committees for the purpose of reporting on the liquidators' investigations into the affairs of the Companies, consulting with the Committees with respect to certain aspects of the liquidations of the Companies, and seeking various approvals required by the liquidators pursuant to the Act. Mr Jones deposed that there had been approximately 18 resolutions made by the Committees of Inspection in respect of, or pursuant to, s 477(2B) of the Act and that approximately 38 resolutions have been passed by the Committees with respect to the remuneration of the liquidators. Mr Jones deposed that in about June 2015, he became aware of my decision in Re The Bell Group Ltd (in liq); Ex parte Woodings (as liquidator of The Bell Group Ltd (in liq))[1]. Mr Jones' evidence was that prior to reading that decision, it was not his understanding that it was necessary to convene a meeting of contributories in order validly to appoint a committee of inspection, in circumstances where no request for a separate meeting of contributories had been made to the liquidator. After reading that decision, Mr Jones became concerned that the manner in which the Committees of Inspection were appointed may have involved an inadvertent contravention of s 548 of the Act, by virtue of the fact that no meeting of the contributories of any of the Companies had been held for the purpose of determining the matters set out in s 548(1)(a) and (b) of the Act.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

Why I was satisfied that declarations pursuant to s 1322(4)(a) of the Act should be made Section 1322 of the Act relevantly provides:(1)In this section, unless the contrary intention appears: (a)a reference to a proceeding under this Act is a reference to any proceeding whether a legal proceeding or not; and (b)a reference to a procedural irregularity includes a reference to: (i)the absence of a quorum at a meeting of a corporation, at a meeting of directors or creditors of a corporation, at a joint meeting of creditors and members of a corporation or at a meeting of members of a registered scheme; and (ii)a defect, irregularity or deficiency of notice or time. (2)A proceeding under this Act is not invalidated because of any procedural irregularity unless the Court is of the opinion that the irregularity has caused or may cause substantial injustice that cannot be remedied by any order of the Court and by order declares the proceeding to be invalid. (3)A meeting held for the purposes of this Act, or a meeting notice of which is required to be given in accordance with the provisions of this Act, or any proceeding at such a meeting, is not invalidated only because of the accidental omission to give notice of the meeting or the non-receipt by any person of notice of the meeting, unless the Court, on the application of the person concerned, a person entitled to attend the meeting or ASIC, declares proceedings at the meeting to be void....(4)Subject to the following provisions of this section but without limiting the generality of any other provision of this Act, the Court may, on application by any interested person, make all or any of the following orders, either unconditionally or subject to such conditions as the Court imposes: (a)an order declaring that any act, matter or thing purporting to have been done, or any proceeding purporting to have been instituted or taken, under this Act or in relation to a corporation is not invalid by reason of any contravention of a provision of this Act or a provision of the constitution of a corporation; (b)an order directing the rectification of any register kept by ASIC under this Act; (c)an order relieving a person in whole or in part from any civil liability in respect of a contravention or failure of a kind referred to in paragraph (a); (d)an order extending the period for doing any act, matter or thing or instituting or taking any proceeding under this Act or in relation to a corporation (including an order extending a period where the period concerned ended before the application for the order was made) or abridging the period for doing such an act, matter or thing or instituting or taking such a proceeding; and may make such consequential or ancillary orders as the Court thinks fit. (5)An order may be made under paragraph (4)(a) or (c) notwithstanding that the contravention or failure referred to in the paragraph concerned resulted in the commission of an offence. (6)The Court must not make an order under this section unless it is satisfied: (a)in the case of an order referred to in paragraph (4)(a): (i)that the act, matter or thing, or the proceeding, referred to in that paragraph is essentially of a procedural nature; (ii)that the person or persons concerned in or party to the contravention or failure acted honestly; or (iii)that it is just and equitable that the order be made; and (b)in the case of an order referred to in paragraph (4)(c) ‑ that the person subject to the civil liability concerned acted honestly; and (c)in every case ‑ that no substantial injustice has been or is likely to be caused to any person.