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Re Sales Express Pty Ltd (admins apptd)

Re Sales Express Pty Ltd (admins apptd)

Case [2014] NSWSC 460 22 April 2014

Winding Up & Liquidation

Unconscionable Conduct

Abuse of Process

Corporate Law & Governance

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Supreme Court

New South Wales

Medium Neutral Citation: In the matter of Sales Express Pty Ltd (Administrators Appointed) [2014] NSWSC 460
Hearing dates: Tuesday, 22 April 2014
Decision date: 22 April 2014
Jurisdiction: Equity Division - Corporations List
Before: Brereton J
Decision:
(1) Pursuant to s 447A(2)(b) of the Corporations Act the administration of the first defendant, Sales Express Proprietary Limited is to end.
(2) The first defendant Sales Express Proprietary Limited be wound up in insolvency and Richard John Hewson and Nicholas Harwood of level 25 to 26 Riverside Centre, 123 Eagle Street, Brisbane, Queensland be appointed liquidators

Catchwords: CORPORATIONS - external administration - winding up - administration under Corporations Act Pt 5.3A - voluntary administration imposed by director in his own interests - where proposed DOCA offers no benefit for creditors who support it, and the only credit or who might benefit opposes it - whether administration involves an abuse of the provisions of Pt 5.3A - held, it does.
Legislation Cited: (Cth) Corporations Act 2001, s 447A
Cases Cited: Blacktown City Council v Macarthur Telecommunications Pty Ltd [2003] NSWSC 883; (2007) 47 ACSR 391
Deputy Commissioner of Taxation v Alternative Business Solutions (AUST) Pty Limited) [2006] FCA 400
Re Indopal Pty Limited (1987) 12 ACLR 54
Spacorp v Australia Pty Ltd v Fitzgerald [2001] VSC 61; (2001) 19 ACLC 1979
St Leonards Property Pty Limited v Ambridge Investments Pty Ltd (2004) 210 ALR 265; (2004) 50 CSR 443; [2004] NSWSC 851
Workers Compensation Nominal Insurer v Perfume Empire Proprietary Limited [2011] NSWSC 379
Category: Principal judgment
Parties: Rank Arena Group (Australia) Pty Ltd (plaintiff)
Sales Express Pty Ltd (defendant)
Representation: Counsel:
R S Angyal SC (plaintiff)
A W Smith (defendant)
Solicitors:
Results Legal (plaintiff)
Norman Waterhouse (defendant)

File Number(s): 2014/69569

Judgment (ex tempore)

HIS HONOUR: By originating process filed on 6 March 2014 the plaintiff Rank Arena Group (Australia) Pty Ltd seeks an order under (Cth) Corporations Act 2001, s 447A(1), s 447A(2)(b) and 447A(2)(c) that the administration of the first defendant Sales Express Pty Ltd end forthwith, and a consequential order that the first defendant be wound up in insolvency pursuant to Corporations Act, s 459A.

Earlier proceedings between the plaintiff, to which for present purposes I shall refer as Rank Arena, and the first defendant, to which I shall refer to as Sales Express, were prosecuted in this court and settled by an agreement made in late 2013, the substantive relevant provisions of which involved: (1) Sales Express' sole director Mr Matthew Gerard agreeing to undertake to the court that, pending the liquidation of Sales Express, it would not divest itself of any assets and also agreeing to give corresponding undertakings with respect to nine subsidiaries of Sales Express: (2) Sales Express agreeing to procure by 21 February 2014 the appointment of a liquidator, failing which it would consent to a winding up order at the instance of Rank Arena; (3) Sales Express consenting to judgment against it for $1.64…

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.

Continue reading Re Sales Express Pty Ltd (admins apptd)

Details

AGLC: In the matter of Sales Express Pty Ltd (Administrators Appointed) [2014] NSWSC 460
Case: [2014] NSWSC 460
Decision Date: 22 April 2014

CaseChat Overview and Summary

Sales Express Pty Ltd was subject to an application for voluntary administration to be imposed under section 436A of the Corporations Act 2001 (Cth). The application was made by a director of the company, Mr Smith, in his own personal interests. The application was opposed by the company’s creditors, who argued that the proposed deed of company arrangement (DOCA) offered no benefit to them and that the only creditor likely to benefit from the arrangement opposed the application. The creditors argued that the administration was an abuse of the provisions of Part 5.3A of the Corporations Act and should not be sanctioned.

The court considered whether the proposed administration constituted an abuse of the provisions of Part 5.3A of the Corporations Act. The court noted that the primary purpose of the voluntary administration provisions is to provide a means of rescuing a failing company and protecting the interests of creditors. The court held that where the proposed DOCA offers no benefit to the creditors and the only creditor likely to benefit opposes the application, the administration involves an abuse of the provisions of Part 5.3A. The court further held that the administration was not in the interests of the company’s creditors and should not be sanctioned.

The court found that the administration was an abuse of the provisions of Part 5.3A of the Corporations Act. The court refused to sanction the administration and ordered that the application be dismissed. The court further ordered that the company’s creditors be paid their outstanding debts in full, less any payments made to Mr Smith in his capacity as director.

Orders