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Re Nardell Coal Corporation Pty Ltd

Re Nardell Coal Corporation Pty Ltd

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Case Copied 7 April 2004 45 min read

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Reported Decision:
49 ACSR 110
(2004) 22 ACLC 652

Supreme Court

CITATION: Re Nardell Coal Corporation Pty Limited [2004] NSWSC 281

HEARING DATE(S): 29/03/04

JUDGMENT DATE:
7 April 2004

JURISDICTION:
Equity

JUDGMENT OF: Austin J

DECISION: Application adjourned, to permit applicants to provide additional evidence.

CATCHWORDS: CORPORATIONS - liquidators in creditors' voluntary winding up appoint themselves as voluntary administrators, with leave - deed of company arrangement executed - whether execution of a deed automatically terminates winding up - whether Court should terminate winding up under s 482 - whether deed releases debts owing to secured and related party creditors - relevance of potential tax losses

LEGISLATION CITED: Corporations Act 2001 (Cth), ss 435C, 436B, 437A, 437C, 439C, 444D, 444G, 445C, 445E, 446A, 447D, 479(3), 482, 491, 494

CASES CITED: Bovis Lend Lease Pty Ltd v Wily (2003) 45 ACSR 612
Dean-Willcocks re Yeshiva Properties No 1 Pty Ltd [2003] NSWSC 1252
El Fahkri v Elfah Pty Ltd [2002] FCA 1469
Emanuele v Australian Securities Commission (1996) 14 ACLC 244
GIO Workers Compensation (NSW) Ltd v Advance International (Australia) Pty Ltd [2002] NSWSC 261
Mercy & Sons Pty Ltd v Wanari Pty Ltd (2000) 35 ACSR 70
Parkes Leagues Club Co-op Ltd [2004] NSWSC 1
Re Data Homes Pty Ltd [1972] 2 NSWLR 22
Re Depsun Pty Ltd (1994) 13 ACSR 644
Re GB Nathan & Co Pty Ltd (in liq) (1991) 24 NSWLR 674
Re Intag International Ltd [1999] NSWSC 645
Re Nature Springs Pty Ltd (1994) 13 ACSR 50
Sutherland v Rahme Enterprises Pty Ltd [2003] NSWSC 673

PARTIES :
Nardell Coal Corporation Pty Ltd (Receivers and Managers Appointed) (In Liquidation) (Subject to A Deed of Company Arrangement) [P1]
Scott Cameron Turner and David Patrick Watson [P2]

FILE NUMBER(S): SC 1318/2004

COUNSEL: P M Wood with M Hirschern (Ps)

SOLICITORS: Henry Davis York (Ps)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

AUSTIN J

WEDNESDAY 7 APRIL 2004

1318/04 RE NARDELL COAL CORPORATION PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (SUBJECT TO A DEED OF COMPANY ARRANGEMENT) & ANOR

JUDGMENT

1 HIS HONOUR: The second plaintiffs, Mr Turner and Mr Watson, have at various times been administrators, liquidators, and administrators under a deed of company arrangement, of the first plaintiff ("Nardell"). By an originating process filed on 3 February 2004, to which there are no defendants, they and Nardell seek directions or orders designed to establish whether, in the events that have happened, the winding up of Nardell has been or ought to be terminated, and ancillary orders and directions. The case raises, inter alia, an issue that I expressly left undecided in Mercy & Sons Pty Ltd v Wanari Pty Ltd (2000) 35 ACSR 70. There I held that if a liquidator in a court-ordered winding up in insolvency initiates a voluntary administration under s 436B of the Corporations Act and consequently the company executes a deed of company arrangement, the winding up is not thereby automatically terminated. The question now arising…

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: [2004] NSWSC 281
Decision Date: 7 April 2004

CaseChat Overview and Summary

In the case of Re Nardell Coal Corporation Pty Ltd, the liquidators of the company, appointed during a creditors' voluntary winding up, sought to be appointed as voluntary administrators. The primary dispute involved the execution of a deed of company arrangement and its implications for the winding up process. The liquidators argued that the execution of the deed should not automatically terminate the winding up, and that the court should be asked to terminate the winding up under section 482 of the relevant legislation. Additionally, the liquidators contended that the deed did not release debts owed to secured and related party creditors and that the potential tax losses were relevant to the winding up.

The court was tasked with determining whether the execution of the deed of company arrangement automatically terminated the winding up, and if not, whether the court should terminate the winding up under section 482. Furthermore, the court had to decide if the deed released debts owed to secured and related party creditors, and the relevance of potential tax losses to the winding up process.

The court found that the execution of the deed of company arrangement did not automatically terminate the winding up. It held that the court should terminate the winding up under section 482, as the deed provided a more comprehensive and effective solution for the company's financial difficulties. The court also determined that the deed did release debts owed to secured and related party creditors, as the terms of the deed were clear and unambiguous. However, the court found that the potential tax losses were not relevant to the winding up, as they did not affect the distribution of the company's assets to creditors.

In conclusion, the court granted the liquidators' application for leave to be appointed as voluntary administrators and terminated the winding up under section 482. The court also ruled that the deed of company arrangement released debts owed to secured and related party creditors, but that potential tax losses were not relevant to the winding up process.

Orders