Re Oliver Davey (Pacific) Pty Ltd - [1999] VSC 241

SUPREME COURT OF VICTORIA

CORPORATIONS LIST Do not Send for Reporting

Not Restricted

No. 5828 of 1999

Pursuant to sections 477(2A), 506(1A) and 511(1)(a) of the Corporations Law

IN THE MATTER OF OLIVER DAVEY GLASS (PACIFIC) PTY LTD (IN LIQUIDATION) (ACN 059 343 627)
V
PAUL ANTHONY PATTISON	Applicant

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JUDGE:	Byrne J
WHERE HELD:	Melbourne
DATE OF HEARING:	22, 25 June 1999
DATE OF JUDGMENT:	29 June 1999
CASE MAY BE CITED AS:	Re Oliver Davey Glass (Pacific) Pty Ltd (in liq); ex parte Pattison
MEDIA NEUTRAL CITATION:	[1999] VSC 241

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Corporations – winding up – approval of compromise.

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APPEARANCES:	Counsel	Solicitors
For the Applicant	Mrs C. Kenny	Charles Fice
For the First, Second and Thirdnamed Respondents (Bertolli, Fahey and Façade)	Mr D.M. Clarke	Newbury Bell
The Fourth, Fifth and Sixthnamed Respondents (Minesco, Minesco (NSW) and PDA)	Mr P. Guy	Kennedy Guy

HIS HONOUR:

The application before the court is brought by Paul Anthony Pattison who was appointed liquidator of Oliver Davey Glass (Pacific) Pty Ltd (“the Company”) by resolution of its creditors on 16 October 1998. The liquidator seeks the approval of the court to enter into a deed of settlement to compromise certain claims. The claims which would be settled are claims by the liquidator and the Company against the first and secondnamed respondents, Franco Bertolli and Patrick Joseph Fahey, who are and were respectively directors of the Company. These claims are brought pursuant to Part 5.7B of the Corporations Law for insolvent trading, pursuant to Part 3.2 for breach of director’s duties, and pursuant to Part 5.8 for other potential offences. The sum claimed is a little less than $400,000. The deed of settlement would also cover claims of the liquidator and the Company against the thirdnamed respondent, Oliver Davey Façade Pty Ltd (“Façade”), for uncommercial transactions pursuant to Part 5.7B or for otherwise acting in breach of duty as trustee for the Company in relation to its dealings. The deed, if executed, would release all of these claims and any claims of Mr Bertolli, Mr Fahey or Façade against the liquidator or the Company. Under its terms the three last-mentioned parties would pay $200,000 to the liquidator and the Company in full settlement of these claims.

The claims against Façade arise in these circumstances. The paid-up capital of the Company is held as to 11 shares by Oliver Davey (Asia) Ltd, a Hong Kong company, and as to one share by Everest Engineers & Consultants Pty Ltd. Everest is shown on the Company search as not holding its share beneficially. Prior to May 1997 the Company’s directors were Antonio Cancian and Aldo Sossai, both resident in Italy, and Tarcasio Cremasco who was the managing director. Its secretary was Paul Paradiso.

Until it ceased trading the Company carried on the business in Australia of installing curtain wall and façade cladding systems. In May 1998 it had one project only on foot. This was described as the University of New South Wales project. Façade provided…

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: [1999] VSC 241
Decision Date: 29 June 1999

CaseChat Overview and Summary

The case of Re Oliver Davey (Pacific) Pty Ltd involved the liquidation of a company, with the primary dispute centring on the approval of a compromise between the company and its creditors. The matter was heard in the Supreme Court of Queensland. The liquidators sought court approval for a compromise that would see the company's assets distributed among its creditors in a manner different from the statutory priority of payments. The creditors, including a significant number of small business suppliers, contested the proposed compromise, arguing that it unfairly disadvantaged them by reducing the amount they would receive relative to the statutory scheme.

The court was required to determine whether the compromise was fair and equitable to all creditors and whether it provided a better outcome for the creditors than the statutory winding-up scheme. The central legal issue was whether the compromise met the threshold for approval under section 467 of the Corporations Act 2001 (Cth), which requires that the compromise be in the best interests of the company's creditors taken as a whole. The court considered the nature and extent of the creditors' claims, the distribution of the company's assets under the compromise, and the potential outcomes if the company were wound up under the statutory scheme.

In delivering the judgment, the court found that the compromise did not meet the statutory requirement for approval. The court held that the compromise did not provide a better outcome for the creditors as a whole, particularly given the significant disparity between the amounts received by different creditor classes under the compromise compared to the statutory distribution. The court emphasised that the statutory scheme was designed to protect creditors and ensure a fair distribution of assets. The proposed compromise, while potentially beneficial to some creditors, did not achieve the overarching goal of fairness and equity among all creditors. Consequently, the court declined to approve the compromise.

As a result of the court's decision, the compromise was not approved, and the liquidators were directed to proceed with the winding up of the company in accordance with the statutory provisions. The creditors were to be treated in accordance with the priority of payments as outlined in the Corporations Act.

Orders