Re Harris Scarfe Ltd (in liq)

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SUPREME COURT OF SOUTH AUSTRALIA

(Civil: Application)

Re: HARRIS SCARFE LTD (IN LIQ) & HARRIS SCARFE WHOLESALE P/L (IN LIQ)

[2006] SASC 277

Judgment of The Honourable Justice Debelle

8 September 2006

CORPORATIONS - WINDING UP - LIQUIDATORS

Voidable transactions – application by liquidators to extend limitation period in s 588FF(3) of Corporations Act – application not served and order extending time made ex parte - original liquidators resign and new liquidators appointed – whether new liquidators entitled to rely on order made in favour of original liquidators extending the limitation period – whether creditor whose interests are affected by the order ex parte extending the limitation period is entitled as of right to an order setting aside that order.

Corporations Act 2001 (Cth) s 9, s 477(2), s 503, s 536, s 588FF(1), s 588FF(3), referred to.
BP Australia Ltd v Brown (2003) 58 NSWLR 322; Cameron v Cole (1944) 68 CLR 571; Grieg v Stramit Corporation Pty Ltd (2004) 2 Qd R 17; Kioa v West (1985) 159 CLR 550; New Cap Reinsurance Corp Ltd (in liq) v Faraday Underwriting Ltd (2003) 47 ACSR 306, applied.
Ainsworth v Criminal Justice Commission (1992) 175 CLR 564; Annetts v McCann (1990) 170 CLR 596; Bibra Lake Holdings Pty Ltd (in liq) v Firmadoor Australia Pty Ltd (1992) 7 WAR 1; Butterell v Docker Smith Pty Ltd (1997) 41 NSWLR 129; Commissioner for Corporate Affairs v Harvey [1980] VR 669; Commissioner of Police v Tanos (1958) 98 CLR 383; DJL v Central Authority (2000) 201 CLR 226; Forstaff Adelaide Pty Ltd v Hills Industries Ltd [2006] SASC 88; Gracechurch Holdings Pty Ltd v Breeze (1992) 7 WAR 518; Grassby v The Queen (1989) 168 CLR 1; Lennard’s Carrying Company Ltd v Asiatic Petroleum Company Ltd [1915] AC 705; Logwon Pty Ltd v Warringah Shire Council (1993) 33 NSWLR 13; McGrath v National Indemnity Co (2004) 182 FLR 309; Oates v Williams (1998) 84 FCR 348; O’Brien v Komesaroff (1982) 150 CLR 310; Outboard Marine Australia Pty Ltd v Byrnes [1973] 2 NSWLR 102; Owners of the SS Kalibia v Wilson (1910) 11 CLR 689; Re Gooch’s Case (1872) 2 Ch App 207; Re Vouris (2004) 49 ACSR 543; R v Forbes; ex parte Bevan (1972) 127 CLR 1; Shoard v Palmer (1989) 98 FLR 402; Sydlow Pty Ltd (in liq) v TG Kotselas Pty Ltd (1996) 65 FCR 234; Taylor v Taylor (1979) 143 CLR 1 ; Thomas Franklin & Son Ltd v Cameron (1935) 36 SR(NSW) 286, considered.

RE: HARRIS SCARFE LTD (IN LIQ) & HARRIS SCARFE WHOLESALE P/L (IN LIQ)
[2006] SASC 277

Civil

  1. DEBELLE J. Before the court are a number of applications in respect of proceedings in which the liquidators of two companies have applied pursuant to s 588FF(1) of the Corporations Act2001 (Cth) to set aside payments made by those…

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Details
Case
[2006] SASC 277
Decision Date

CaseChat Overview and Summary

The matter before the court involved the liquidators of Harris Scarfe Ltd, a company in liquidation, and various creditors and other interested parties. The liquidators sought to extend the limitation period for voidable transactions under section 588FF(3) of the Corporations Act. The initial application was made by the original liquidators, who had the order extending the limitation period made ex parte. Subsequently, the original liquidators resigned, and new liquidators were appointed. The court was required to determine whether the new liquidators could rely on the order made in favour of the original liquidators and whether a creditor whose interests were affected by the ex parte order had the right to have the order set aside.

The court considered the nature of the orders made and the implications for the parties involved. It noted that the orders were made in favour of the original liquidators, but the interests of the creditors and other parties were affected. The court examined the effect of the resignation of the original liquidators and the appointment of new liquidators on the validity of the ex parte order. The court concluded that the new liquidators could rely on the order made in favour of the original liquidators, as the orders were not personal to the original liquidators but rather binding on the company in liquidation. The court also found that a creditor whose interests were affected by the ex parte order did not have an automatic right to have the order set aside but would need to make an application to the court to challenge the order.

The court's decision resolved the issues before it by confirming that the new liquidators could rely on the order made in favour of the original liquidators and that a creditor affected by the ex parte order would need to apply to the court to challenge the order. The court did not consider it necessary to rule on the applications of the current liquidators to amend the orders made on 14 April 2004, as the questions posed had been answered. The court noted that each application would need to be considered separately to make the appropriate orders.

The court's decision provides clarity on the position of liquidators in relation to ex parte orders and the rights of creditors affected by such orders. It ensures that liquidators can continue to act in the best interests of the company in liquidation while also providing a process for creditors to challenge orders that affect their interests. The decision will be of practical importance to liquidators and creditors in similar situations.

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

DEBELLE J
Given these reasons it is unnecessary to rule on the applications of the current liquidators to amend the orders made on 14 April 2004. There is no occasion either to amend the orders in the terms sought or to substitute the current liquidators for the original liquidators in the orders.Conclusion For these reasons the answer to each of the questions is, Yes. It will be necessary to consider each application separately to make the appropriate orders in the light of these reasons.

Ratio Decidendi

Legal Principle Established

Established by: DEBELLE J

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