Re: Pacific Property Strategies Pty Ltd - [2010] QSC 487

[2010] QSC 487
SUPREME COURT OF QUEENSLAND

CIVIL JURISDICTION

FRYBERG J

No 12585 of 2010

RE: PACIFIC PROPERTY STRATEGIES PTY LTD

BRISBANE

..DATE 08/12/2010

ORDER

HIS HONOUR: This is an application for the winding-up of Pacific Property Strategies Pty Ltd, which I shall call the company.

The company incorporated as a joint venture vehicle to carry out a property transaction on behalf of the present applicant, Mr Comer, and the second respondent, Mr Limbach, or, more accurately, on behalf of them or their corporate creatures.

It carried out the venture and it made a profit of a considerable amount of money. That money was left in the joint venture vehicle and has since been dissipated or, at least, it would appear that that is so. It seems to have gone on loans to the two protagonists or their companies.

The ground of the application as filed was that it was just and equitable that the company should be wound up.

Shortly before the application was due to be heard, the company procured the appointment of an administrator of its affairs. That was done by the decision of the second respondent who was the sole director of the company. Mr Morton was appointed as the administrator. In the name of the company, he opposes the present application. So does the second respondent, Mr Limbach.

Mr Morton was appointed pursuant to a resolution of the company to the effect that it was insolvent or that it might in the future become insolvent.
Two days after his appointment, he wrote to the creditors. Presumably in that time he had the opportunity to get some idea of the affairs of the company. He told the creditors that the company was insolvent. He does not now suggest that that statement was not correct.

I am satisfied, on the evidence, that the company is insolvent.

Section 459B of the Corporations Act provides that on an application under section 462 if the Court is satisfied that the company is insolvent, it may order that the company be wound up in insolvency. The question before me, therefore, becomes should I order the company to be wound up in insolvency.

On behalf of the respondents, Mr Nathan submitted first that I should not do so because the proceedings against the company have been statutorily stayed pursuant to section 440D of the Act. He pointed out that there has been no application by the present applicant for leave to continue the proceedings and submitted that therefore the application cannot be proceeded with.

He relied upon the decision of Stone J in Hall v. Mercury Information South Australia Pty Ltd [2002] FCA 272. His Honour there expressed the view that the appointment of a provisional liquidator as a precursor to a winding-up order was a proceeding against the company and, accordingly, triggered the operation of section 440D.

The decision to which Mr Nathan refers is, of course, technically distinguishable on the ground that it was an application for a provisional…

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: [2010] QSC 487
Decision Date: 08/12/2010

CaseChat Overview and Summary

In the Supreme Court of Queensland, Fryberg J heard an application for the winding-up of Pacific Property Strategies Pty Ltd (the company). The applicant, Mr. Comer, sought to wind up the company on the grounds that it was just and equitable to do so. The company, a joint venture vehicle for Mr. Comer and Mr. Limbach, had made a profit from a property transaction but had subsequently dissipated those funds. Before the application was heard, Mr. Limbach, the sole director of the company, appointed an administrator, Mr. Morton, who opposed the winding-up application. The court had to decide whether to wind up the company in insolvency, considering the insolvency of the company and the applicability of statutory stay provisions in the Corporations Act.

The primary legal issue before the court was whether the winding-up application could proceed in light of the statutory stay provisions under section 440D of the Corporations Act. The court considered submissions by Mr. Nathan, representing the respondents, who argued that the application should be stayed due to the appointment of an administrator. The court also considered the competing authorities on the interpretation of section 440D and ultimately decided to follow the predominant approach that the statutory stay did not apply in this situation. The court further considered whether to adjourn the hearing to allow a creditors' meeting to take place, but determined that there was no benefit to the creditors in continuing the administration, given the potential conflicts of interest for Mr. Morton, who was both the administrator of the company and the liquidator of another company, Stevco, which was in insolvent liquidation.

In conclusion, the court found that it was not in the interests of the creditors for the administration to continue and ordered that Pacific Property Strategies Pty Ltd be wound up in insolvency. The court emphasised that the primary consideration was the financial position of the company, which was insolvent, and that there was no evidence suggesting that investigating the relationship between the company and Stevco would improve the company's financial situation. The court issued an order in accordance with the draft provided, marking the formal winding-up of the company.

Orders