Re Newtronics Pty Ltd (In Liquidation)

[2011] VSC 349

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

COMMERCIAL COURT

LIST E
No. 4680 of 2010

IN THE MATTER of NEWTRONICS PTY LTD (IN LIQUIDATION) (ACN 061 493 516)

ATCO CONTROLS PTY LTD (IN LIQUIDATION) (ACN 005 182 481)	Plaintiff
v
JAMES HENRY STEWART (IN HIS CAPACITY AS LIQUIDATOER OF NEWTRONICS PTY LTD (IN LIQUIDATION) (ACN 061 493 516))	First Defendant
NEWTRONICS PTY LTD (IN LIQUIDATION) (ACN 061 493 516)	Second Defendant

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JUDGE:	Davies J
WHERE HELD:	Melbourne
DATE OF HEARING:	29 June 2011
DATE OF JUDGMENT:	28 July 2011
CASE MAY BE CITED AS:	Re Newtronics Pty Ltd (In Liquidation)
MEDIUM NEUTRAL CITATION:	[2011] VSC 349

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PRACTICE AND PROCEDURE – s 1321 of the Corporations Act 2001 (Cth) – Extension of time to bring appeal – Applicable principles

CORPORATIONS – Liquidator claims equitable lien for remuneration, costs and expenses – Liquidator brought action against secured creditor and receiver – Action partly successful –
Sum recovered in the litigation – Sum recovered subject to the secured creditor’s charge – Liquidator asserts priority over secured creditors – Application of Re Universal Distributing Co. Ltd principle – Whether consent of secured creditor to the action required – Whether benefit must be shown –  Corporations Act 2001 (Cth) s 564

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr P.D. Crutchfield SC with Mr C. Moller	Middletons
For the Defendants	Mr J.N. Wells QC with Mr P.G. Willis	Gadens

HER HONOUR:

1. This is an appeal by the defendants from a decision of an Associate Judge and proceeds as a rehearing de novo.[1] The plaintiff’s application before the Associate Judge was an appeal under s 1321 of the Corporations Act 2001 (Cth) (“the Act”) against the decision of the first defendant, James Henry Stewart (“the liquidator”), the liquidator of the second defendant, Newtronics Pty Ltd (“Newtronics”) to pay an unsecured creditor, Seeley International Pty Ltd (“Seeley”), a sum of money ($1.25 million) that Newtronics received from the partial settlement of litigation in this Court. The plaintiff (“Atco”) claimed that the proceeds of the litigation were secured by a charge held by it over Newtronics’ assets, and that the proceeds should have been paid to it under that charge. The Associate Judge allowed Atco’s appeal and ordered the liquidator (amongst other things) to pay $1.25 million to Atco by 18 May 2011. The money was paid into a trust account pending the outcome of this appeal.

   [1]Supreme Court (General Civil Procedure) Rules 2005, r 77.06(7).

Background

1. Atco is a secured creditor of Newtronics and is owed approximately $8.75m.  Atco appointed receivers to Newtronics in January 2002, shortly after Newtronics had lost a Federal Court case brought against it by Seeley.  On 26 February 2002, Newtronics was wound up by order of the Federal Court on the petition of Seeley and the liquidator was appointed liquidator.  Seeley is the major unsecured creditor of Newtronics and is owed approximately $13.9 million arising out of its judgment against Newtronics.…