Re Keldane Pty Ltd (in liq) - [2011] VSC 385

IN THE SUPREME COURT OF VICTORIA

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

COMMERCIAL COURT

LIST E
No. 06842 of 2010

IN THE MATTER of KELDANE PTY LIMITED (In Liquidation) (SUBJECT TO DEED OF COMPANY ARRANGEMENT)

STIRLING LINDLEY HORNE and PETR VRSECKY

Applicants

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JUDGE:	Pagone J
WHERE HELD:	Melbourne
DATE OF HEARING:	17 August 2011
DATE OF JUDGMENT:	23 August 2011
CASE MAY BE CITED AS:	In the matter of Keldane Pty Limited (In Liquidation)
MEDIUM NEUTRAL CITATION:	[2011] VSC 385

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CORPORATIONS – Termination of winding up – Sufficiency of material for the Court to order termination – Doubt about whether the creditors’ resolution would have been passed on the material before them – Validation of appointment of administrators – Whether approval by creditors is to be given before or at the time of administrator’s appointment – ss 436B(2) and 482(1) Corporations Act 2001 (Cth).

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APPEARANCES:	Counsel	Solicitors
For the Applicants	Ms S Burchell	Best Hooper

HIS HONOUR:

The applicants appeal from the orders of Associate Justice Efthim made on 22 July 2011 in which his Honour refused to terminate the winding up of Keldane Pty Limited (In Liquidation) (“Keldane”) or to validate the appointment of the administrators. The appeal from his Honour’s decision is a de novo hearing[1] but the reasons of his Honour are helpful in providing analysis and observations relevant to the proper disposition of the matter. The application is not contested and has no controverter beyond the remarks and observations helpfully made by his Honour in dismissing the earlier application.
[1]Supreme Court (General Civil Procedure) Rules 2005 (Vic) r 77.06(7).

Keldane was wound up in insolvency by order of this Court on 9 February 2011. Mr Sterling Lindley Horne (“Mr Horne”) was appointed liquidator for the purposes of the winding up. In April 2011 Mr Horne appointed himself and his partner, Mr Petr Vrsecky (“Mr Vrsecky”) of Lawler Draper Dillon as the administrators of the company pursuant to s 436B of the Corporations Act 2001 (Cth) (“the Act”). Mr Horne, as liquidator of the company, and Mr Horne and Mr Vrsecky together, as administrators of the company, applied for relief under s 482(1) and s 1322(4) of the Act. They sought before his Honour, and before me, a number of orders including the termination of the liquidation and declarations that a deed of company arrangement and a deed of charge were not invalid by reason of any contravention of a provision of the Act. They also sought orders to omit certain words from the name of the company pursuant to s 450E(2) and a declaration that in the applicants’ capacity as administrators of the company during the voluntary administration or as administrators of the deed of company arrangement or otherwise they are not personally liable for any debt of the company.

The appeal from his Honour’s orders challenged his Honour’s conclusion that there had been a contravention of s 436B in the appointment of Mr Horne and Mr Vrsecky as administrators in April…

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] VSC 385
Decision Date: 23 August 2011

CaseChat Overview and Summary

The liquidators of Keldane Pty Ltd brought an application to the Federal Court of Australia for an order to terminate the winding up of the company, on the basis that the company’s debts were paid and the winding up was no longer necessary. The company was placed in liquidation on the basis of a creditors’ resolution, which had been passed on the basis of material that did not include certain information that would have been relevant to the resolution. The liquidators sought an order terminating the winding up, despite the fact that the creditors had not had the benefit of the full material.

The primary issue before the Court was whether the Court could be satisfied on the material before it that the creditors’ resolution would have been passed if they had had all the relevant information. Another issue was whether the appointment of administrators was valid, given that the Court found that approval by creditors was required at the time of appointment, not before.

The Court found that it could not be satisfied that the creditors’ resolution would have been passed if the creditors had had all the relevant information before them. The Court found that the information that was not before the creditors at the time of the resolution was material, and that it could not be determined whether the resolution would have been passed if that information had been included. The Court also found that the appointment of administrators was invalid, as the creditors had not approved the appointment at the time it was made, as required by the Corporations Act.

The Court ordered that the winding up of the company be terminated, but that the company remain in liquidation until such time as the creditors had approved the appointment of administrators in accordance with the Act. The Court also ordered that the liquidators pay the costs of the application.

Orders