Re New Tel Ltd (in liq)

Case [2004] FCA 1154

FEDERAL COURT OF AUSTRALIA

Wainter Pty Ltd, in the matter of New Tel Limited (in liq) [2004] FCA 1154

CORPORATIONS – creditors’ voluntary winding up - subsequent Court order for winding up - examinations – written notice of examination to creditors – whether orders should be made stating what is ‘reasonably practicable’ in respect of identifying creditors – source of power for such order considered – effect of Court order considered – consideration of what is reasonably practicable in the circumstances

Corporations Act 2001 (Cth) ss 435A, 446A, 447A, 508, 596A, 596B, 596E, 1322
Federal Court of Australia Act 1976 (Cth) s 21

Ansett Australia Ltd (No 1), Re (2002) 115 FCR 376 cited
Ansett Australia Ltd (No 2), Re (2002) 115 FCR 395 cited
Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270 cited
Carter v New Tel Ltd (in liq) (2003) 44 ACSR 661 cited
Centaur Mining & Exploration Ltd (in liq) (rec and mgr appted), Re (2003) 48 ACSR 1 cited
Gibbons v LibertyOne Ltd (in liq) (2002) 41 ACSR 442 considered
Love, Re (as Liquidator of ACN 0077 368 257 Ltd) (2003) 44 ACSR 367 cited
NRMA Insurance Group Ltd v Spragg (2001) 38 ACSR 174 considered
One.Tel Ltd, Re; Walker and Sherman (as liquidators) (2002) 43 ACSR 305 cited
Selim v McGrath (2003) 47 ACSR 537 cited

IN THE MATTER OF NEW TEL LIMITED (IN LIQUIDATION)

THE APPLICATION OF WAINTER PTY LTD
W35 of 2004

RD NICHOLSON J
6 SEPTEMBER 2004
PERTH


IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

W35 OF 2004

IN THE MATTER OF NEW TEL LIMITED (IN LIQUIDATION)
ACN 009 068 955

AND:

THE APPLICATION OF WAINTER PTY LTD
ACN 008 725 586
PLAINTIFF

JUDGE:

RD NICHOLSON J

DATE OF ORDER:

6 SEPTEMBER 2004

WHERE MADE:

PERTH

THE COURT ORDERS THAT:

1.The application for an order in terms of par 4 of the originating process dated 12 February 2004 be refused.

2.There be no order as to costs.

Note:   Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.


IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

W35 OF 2004

IN THE MATTER OF NEW TEL LIMITED (IN LIQUIDATION)
ACN 009 068 955

AND:

THE APPLICATION OF WAINTER PTY LTD
ACN 008 725 586
PLAINTIFF

JUDGE:

RD NICHOLSON J

DATE:

6 SEPTEMBER 2004

PLACE:

PERTH

REASONS FOR JUDGMENT

  1. In its originating process in respect of an application under s 596A and s 596B of the Corporations Act 2001 (Cth) (‘the Corporations Act’), the plaintiff seeks an order with respect to service of notices of examination upon creditors. Section 596E of the Corporations Act provides that ‘if the Court summons a person for examination, the person who applied for the summons must give written notice of the examination to: (a) as many of the corporation’s creditors as reasonably practicable…’. The order sought is that the requirement upon the plaintiff pursuant to that paragraph be varied so as to require the plaintiff…

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Details
AGLC
Re New Tel Ltd (in liq) [2004] FCA 1154
Case
[2004] FCA 1154
Decision Date

CaseChat Overview and Summary

In the matter of Re New Tel Ltd (in liq), the plaintiff sought an order from the court to allow the examination of certain persons without the need to provide a list of creditors, as mandated by section 596E(a) of the Corporations Act. The plaintiff argued that this was necessary due to the extensive and unknown nature of the creditors, with approximately 3000 potential creditors spread across Australia. The plaintiff contended that compiling a list of creditors would incur significant costs, approximately $2000, which they believed was unreasonable given the circumstances. The court was required to determine whether it had the jurisdiction to make such an order under section 447A of the Corporations Act, which provides the court with broad discretion to make orders as it sees fit in relation to a particular company.

The court examined the plaintiff's reliance on section 447A as a source of power for making the proposed order. The plaintiff argued that this section should be interpreted broadly, as supported by previous judicial decisions. The court considered the nature of the application, which was brought ex parte, and recognised the plaintiff as an interested party under section 447A(4)(f). The plaintiff submitted that a deemed voluntary winding up under section 446A of the Corporations Act continues under Part 5.3A and that section 447A applies throughout the deemed voluntary winding up. The court also considered that section 446A(3) deems section 447 to have been complied with and, but for this deeming provision, a list of creditors would have been sent to the plaintiff.

The court concluded that the plaintiff's application should be refused. It found that there was insufficient evidence to justify dispensing with the requirement of providing a list of creditors. The court did not make any order as to costs.

Orders

Orders of the court

1. The application for an order in terms of par 4 of the originating process dated 12 February 2004 be refused.

2. There be no order as to costs.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

The evidence relevant to consideration of this application derives from facts deposed to in affidavits by solicitors for the plaintiff, Messrs Blundell and Stork. In summary they depose to the fact that the plaintiff and its solicitors know nothing of the creditors beyond the very limited information provided in the liquidator’s report to creditors and related documents; the liquidator himself does not know who all the creditors are; and the creditors are likely to be extensive and spread across Australia. There is evidence that there are approximately 3000 potential creditors of New Tel and that finalising the draft list of current creditors would cost approximately $2000. CORPORATIONS ACT SECTION 447A Written submissions for the applicant seek to rely on three sources of power for the Court to make an order that the requirements of s 596E(a) will be satisfied in the manner proposed. The first is by placing reliance on s 447A of the Corporations Act. That section reads:‘447A(1)The Court may make such order as it thinks appropriate about how this Part is to operate in relation to a particular company.(2)For example, if the Court is satisfied that the administration of a company should end:(a)because the company is solvent; or(b)because provisions of this Part are being abused; and(c)for some other reason; the Court may order under subsection (1) that the administration is to end.(3)An order may be made subject to conditions.(4)An order may be made on the application of:(a)the company; or(b)a creditor of the company; or(c)in the case of a company under administration – the administrator of the company; or(d)in the case of a company that has executed a deed of company arrangement – the deed’s administrator; or(e)ASIC; or(f)any other interested person.’ The application is brought ex parte by the plaintiff who is the entity which has obtained the order pursuant to s 596A and s 596B for examination of certain persons. I consider the plaintiff is indisputably an interested person within the compass of s 447A(4)(f). The circumstances pertaining to New Tel are as follows. A liquidator was appointed on 13 January 2003 pursuant to a deemed creditors’ voluntary winding up following a voluntary administration: s 446A of the Corporations Act. On 4 March 2003 the Supreme Court of New South Wales appointed a liquidator, pursuant to a court-ordered winding up: Carter v New Tel Ltd (in liq) (2003) 44 ACSR 661. The plaintiff submits that it has now been repeatedly recognised that a deemed voluntary winding up under s 446A continues under Pt 5.3A of the Corporations Act and that s 447A continues to apply throughout the deemed voluntary winding up: Gibbons v LibertyOne Ltd (in liq) (2002) 41 ACSR 442 at 452, at [50] (Austin J); Re One.Tel Ltd; Walker and Sherman (as liquidators) (2002) 43 ACSR 305 at 317, at [50]; at 318, at [56] (Barrett J); Re Love (as Liquidator of ACN 0077 368 257 Ltd) (2003) 44 ACSR 367 at 369 – 370, at [70] (Barrett J) and Re Centaur Mining & Exploration Ltd (in liq) (rec and mgr appted) (2003) 48 ACSR 1 at 3, at [8] (Merkel J). Those decisions all rely on and apply the High Court judgment in Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270. It is submitted that s 447A is in the broadest terms and has been interpreted broadly: Australasian Memory at 281 –282, at [24]. The plaintiff says s 447A has been applied to dispense with the requirements and notices in other circumstances: Re Ansett Australia Ltd (No 2) (2002) 115 FCR 395. Additionally it is argued there is a particular reason to apply s 447A in this case; namely, s 446A(3) deems s 447 to have been complied with and, but for this deeming provision, a list of creditors would have been sent to the plaintiff as a consequence of the application of s 497(2)(b)(ii).