Re William Lawrence (Globe Dyeworks) Pty Ltd (in liq)
[2004] VSC 144
•30 April 2004
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
CORPORATIONS LIST
No. 6198 of 1992
| IN THE MATTER OF s.482 of the Corporations Act 2001 (Cth) and IN THE MATTER OF William Lawrence (Globe Dyeworks) Pty Ltd (in liquidation) | |
| COLIN STANLEY WIGHT (as liquidator of William Lawrence (Globe Dyeworks) Pty Ltd (in liquidation) | Plaintiff |
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JUDGE: | Mandie J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 23 April 2004 | |
DATE OF JUDGMENT: | 30 April 2004 | |
CASE MAY BE CITED AS: | Re William Lawrence (Globe Dyeworks) Pty Ltd (in liquidation) | |
MEDIUM NEUTRAL CITATION: | [2004] VSC 144 | |
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CORPORATIONS – application to terminate winding up – whether deed of company arrangement had extinguished liabilities of the company
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr D J Williams | Cornwall Stoddart |
For Mr S J Plain | Mr J Colbran QC with Mr J Barber | S V Winter & Co |
For Mr M Shatin QC | Mr P Anastassiou SC with Mr A McClelland | Herbert Geer & Rundle |
For Mr J Nixon | Mr C M Caleo | Ebsworth & Ebsworth |
For Tress Cocks Maddox | Mr J R Dixon | Moray & Agnew |
HIS HONOUR:
By interlocutory process dated 1 September 2003, the plaintiff liquidator seeks an order terminating the winding up of William Lawrence (Globe Dyeworks) Pty Ltd (“the Company”) pursuant to s.482 of the Corporations Act 2001 (Cth).
The winding up order was made by the Court on 27 May 1992 on the application of the Deputy Commissioner of Taxation and the plaintiff was appointed liquidator. The report as to affairs lodged by the liquidator on 2 July 1992 estimated a deficiency in excess of $18M.
The reasons for the application
The application for termination of the winding up was supported by an affidavit of Sidney John Plain, a director of the Company (“Mr Plain”). Mr Plain deposed that the Company was incorporated in July 1918 and had traded as a fabric dyeworks from that time until it was placed in receivership in July 1991 by its then financier, Australian Guarantee Corporation Limited (“AGC”). Mr Plain is 61 years of age, has over 40 years of experience in the fabric dyeing and processing industry and had been a director of the Company since 1971.
Mr Plain deposed that he had devised a business plan for the Company (if the winding up were terminated) to carry on business as a consultant providing business advice and development services to the fabric dyeing and processing industry. He said that an integral part of the plan was the revival of the “William Lawrence (Globe Dyeworks)” name, which was both well respected in the industry and intimately associated with his family (as he was the third generation of the family involved with the Company). A summary of the business plan was exhibited.
Mr Plain deposed that the circumstances in which AGC appointed receivers to the Company were, according to legal advice which he later received, in breach of its obligations to the Company, ultimately leading to the winding up of the Company and his own bankruptcy (which ended on 28 February 1995).
Mr Plain deposed that, in early 1997, he approached the liquidator with a proposal that an administrator be appointed “to review and take a proposal to the creditors of the company for a deed of company arrangement under which the company would commence a proceeding against AGC.” The liquidator acceded to his proposal, and on 17 June 1997, the liquidator appointed Mr Graham Clarke as administrator of the Company.
On 24 June 1997, the Company commenced, in this Court, proceeding no. 5936 of 1997 against AGC (“the AGC proceeding”). In the AGC proceeding, the Company alleged that, from 1987 to 1991, AGC had agreed to factor debts owed by the Company by various of the Company’s customers. The Company further alleged “that in or about 1991 in breach of the factoring agreement AGC withheld money in excess of $1 million against debts it had already factored and eventually AGC ceased factoring debts for the company thus depriving the company of the capacity to carry on business.” This, so it was alleged, led to the Company’s receivership and liquidation. In the AGC proceeding, the Company claimed an amount exceeding $50M.
At a meeting of creditors of the Company on 15 July 1997, it was resolved that the Company enter into a deed of company arrangement (“the original Deed”) which provided for another company of which Mr Plain was a director, Kelinga Pty Ltd (“Kelinga”), to fund the AGC proceeding and to pay a dividend to unsecured creditors out of the proceeds of the proceeding.
I interpolate here that it is undisputed that the creditors of the Company knew that there was no prospect of receiving any further payment in the liquidation and that there was therefore every reason for them to approve a deed of company arrangement which offered some payment or payments that otherwise they would never receive. I note that the original Deed (cl. 3.2) contained an immediate release of all debts.
In 1999, variations to the original Deed were proposed and these proposals appear to have followed an attempt by AGC to obtain an order from the Court terminating the original Deed. A Notice dated 10 June 1999, convening a creditors’ meeting, was forwarded to creditors. The Notice was accompanied by a copy of the proposed varied Deed and an explanatory memorandum.
On 23 June 1999, the Deed was varied (“the varied Deed”) by resolution at the further creditors’ meeting. The varied Deed was executed on 8 July 1999.
Mr Plain deposed that he caused Kelinga to fund the AGC proceeding in an amount in excess of $750,000, but that this was insufficient to meet the entire cost of funding the proceeding, and on 28 May 2002, the deed administrator entered into a Litigation Funding Agreement with Litigation Lending Service (“LLS”) in order to fund the trial.
The AGC proceeding was listed for trial on 22 July 2002 and was settled the next day. The basis of the settlement was that each party released the other and bore its own costs. Mr Plain deposed that this settlement “followed advice from the Company’s then legal advisors that the AGC proceeding was likely to fail and the consequent refusal of LLS to fund the trial.” Mr Plain went on to depose that he had since received legal advice, including the advice of Senior Counsel, that each of the Company, Kelinga and himself had a strong claim against the Company’s former legal advisers in connection with the advice given which resulted in the settlement of the AGC proceeding. He exhibited a letter from his present solicitors dated 16 May 2003 which stated that they had the opinion of Senior Counsel that there was a claim for professional negligence against the solicitors and barristers acting for the Company in the AGC proceeding, and that the potential damages were in the vicinity of $50M. The letter (of six short paragraphs) made very brief reference to the factual background and to the basis of the instructions received from Mr Plain, but did not purport to do more than relay the opinion of Senior Counsel “that there is a claim for professional negligence”, and as to “potential” damages.
After the settlement of the AGC proceeding, Kelinga provided funds to the deed administrator to pay a first and final dividend pursuant to the deed and on or about 20 May 2003, the deed administrator certified that the varied Deed had been terminated.
Mr Plain deposed that the Company no longer had any creditors other than Kelinga and that Kelinga had executed a Deed of Subordination in connection with all debts owed now and in the future to Kelinga.
Mr Plain’s affidavit concluded by seeking the termination of the winding up on a number of grounds. The first ground was so that the Company would have an opportunity to resume business acting as a consultant to the fabric dyeing and processing industry, utilising the well-known and respected name of the Company and Mr Plain’s experience in the industry. The second ground stated was in order to restore Mr Plain’s damaged reputation by bringing the Company out of liquidation. Mr Plain testified that he was supported by many former creditors of the Company. Finally, Mr Plain said that the Company, Kelinga and he had claims against the Company’s former legal advisers which were inextricably linked, making the Company a necessary co-plaintiff in the planned proceeding. Mr Plain said that the liquidator had neither the financial resources nor (in the circumstances where the Company had no creditors other than Kelinga) the inclination to institute such proceeding on behalf of the Company. Further, Mr Plain said, it would be more expensive and more cumbersome to conduct the proposed proceeding if the Company remained in liquidation.
The course taken by the application
The application came on for hearing on 19 September 2003, when it was adjourned to 10 October 2003. Mr Plain swore a further affidavit on 3 October 2003 containing further details in relation to the past affairs of the Company and dealing with some allegations which had been made by some creditors of the Company against himself and the Company during the time that the Company was in receivership. It is unnecessary to refer further to this affidavit.
In addition, an affidavit of John Stanley McKinstry, sworn 9 October 2003 was filed. Mr McKinstry was the former Secretary of the Company, and its Chief Financial Officer prior to the appointment of receivers. The affidavit deals with matters which are not presently relevant.
Prior to the adjourned hearing on 10 October 2003, the Court was informed by the Australian Securities and Investments Commission (“ASIC”) (which had been served with a copy of the application) that the plaintiff would be seeking a further adjournment which was not opposed by ASIC. The proceeding was adjourned to 7 November 2003.
An affidavit of Richard Gell Mansell sworn 20 October 2003 was filed on behalf of the plaintiff on 21 October 2003. Mr Mansell was one of the two deed administrators and was left as the sole deed administrator after Mr Clarke resigned on 20 September 2000. Mr Mansell deposed that Kelinga made the payment of 0.05 cents in the dollar required by the varied Deed (“the first payment”), but that there were no funds for the payment of up to 0.5 cents in the dollar contemplated by the varied Deed (“the second payment”). Finally, Mr Mansell deposed that he had certified by notice, dated 20 May 2003 and lodged with ASIC, that the varied Deed had been wholly effectuated and the Deed terminated.
Also filed on 21 October 2003 was an affidavit of the liquidator sworn 17 October 2003. The liquidator deposed that the shareholders in the Company were SJ Plain and Company Pty Ltd (“Plain and Company”) (16,999 shares) and Mr Plain (1 share, held on behalf of Plain and Company).[1] The liquidator said that there was an unregistered transfer of all of the shares in the Company to S.J. Plain Holdings Pty Ltd (“Holdings”), the directors and shareholders of which were Mr Plain and Dulcie Plain.
[1]Evidence was later provided that Plain & Company was also in liquidation.
The liquidator further deposed that all charges registered over the Company, bar one in favour of Kelinga, had been discharged. The liquidator said that Kelinga claimed to be a creditor of the Company in relation to moneys it had provided to fund the AGC proceeding and to enable the deed administrator to make the first payment to creditors and to fund the present application. While the liquidator did not accept that Kelinga was a creditor of the Company, he deposed that he had obtained from Kelinga a document forgiving any debts and releasing any charge, conditional only on the making of an order terminating the winding up of the Company.
The liquidator next deposed that he had received a letter of advice from his solicitors, which he exhibited, to the effect that the Company had been released and discharged from all other debts pursuant to the varied deed and he was therefore satisfied that, if the winding up were terminated, the Company would be solvent.
When the application came on for hearing on 7 November 2003, ASIC informed the Court that it neither consented nor opposed the application, but wished to address the Court on some particular issues, and an outline of submissions on behalf of ASIC was provided. In addition I raised certain questions for consideration by the plaintiff. Those questions included the following: why was it necessary to revive the Company in order to carry out the business plan; why should the Court revive the Company for the joint purposes of the business plan and substantial and costly litigation; was there any written advice as to the proposed claim against the Company’s former legal advisers; were there any outstanding claims by employees against the Company; what was the significance of the transfer of the shares in the Company to Holdings; and, what was the proper interpretation of the varied Deed (a matter also raised by ASIC). Finally, I asked why the former solicitors of the Company who had acted in the AGC proceeding should not be served with a copy of the application. Counsel for the plaintiff saw no reason why they should not be so served, and suggested service on the former barristers as well. Accordingly, the Court directed that the plaintiff serve a copy of the interlocutory process and supporting affidavits and exhibits upon the firm of Tress Cocks Maddox, solicitors, and upon any other proposed defendant in the proposed proceeding. The application was further adjourned to 5 December 2003.
On 5 December 2003, counsel for Tress Cocks & Maddox appeared, but the plaintiff was not ready to proceed and the application was adjourned to 20 February 2004.
An affidavit of John Richard Hutchings, a partner in the firm of solicitors acting for the plaintiff, was filed shortly prior to the hearing on 20 February 2004. Mr Hutchings deposed that Mr Plain wanted to provide, for the purpose of the application, a draft Statement of Claim in the proposed action against the Company’s former legal advisers, but that there had been some difficulties and delays in obtaining the Statement of Claim and also in obtaining advice, and that some further time was needed for the production of the draft Statement of Claim. Mr Hutchings deposed that Mr Colbran QC was willing to settle a draft Statement of Claim and that, subject to receiving certain signed statements and certain expert evidence, Mr Colbran had advised that there was a good prima facie case against the Company’s former legal advisers.
On 20 February 2004, in addition to counsel for the plaintiff, appearances were announced by members of counsel for Mr Plain, Tress Cocks & Maddox, and Mr J Nixon (the Company’s former junior counsel) respectively and by a solicitor for Mr M Shatin QC (the Company’s former senior counsel). The plaintiff was again not ready to proceed and the Court ordered that the date for filing and serving any further affidavits and any other relevant material on those persons who had been served with the application be extended to 2 April 2004, and the proceeding was adjourned to 23 April 2004.
Prior to the hearing on 23 April 2004, a draft Statement of Claim was produced and a further affidavit of Mr Plain was filed on behalf of the plaintiff. Mr Plain dealt in his affidavit with a number of the questions which had been raised on 7 November 2003. Mr Plain said that, while it was not necessary to revive the Company in order to carry out the business plan, it was desirable from his point of view to do so, primarily because he considered that there was goodwill attached to the “William Lawrence (Globe Dyeworks)” name and that he was better placed than any other person to make the most of that goodwill. Mr Plain said that it would be impractical for the Company in liquidation to pursue the Company’s claims against its former legal advisers because that would be far more expensive and more cumbersome, and that it was only practicable for him, or entities associated with him, to fund those claims in circumstances where he had control over the decision-making process. Mr Plain said, in effect, that he was not willing at this stage to incur the expense of detailed advice from Senior Counsel, but instead had procured a draft Statement of Claim. In relation to the risk of the Company’s viability being threatened by the conduct of litigation while at the same time launching an expensive legal proceeding, Mr Plain said that he was prepared to give the Company a full indemnity with respect to any liability which might arise against the Company as a result of the proposed legal proceeding, and that Kelinga would fund any adverse costs orders which might arise. I note that no evidence was provided as to the financial position of Mr Plain or of Kelinga.
Mr Plain further stated that, depending on the result of the proposed proceeding, he was prepared to cause the Company to make the second payment to the Company’s “former creditors” which they had not received under the varied Deed.
In relation to the liability of the Company to former employees, Mr Plain deposed that severance entitlements of $651,000 had not been paid, but that this sum should have been paid by AGC or the receivers. During the course of the hearing, an undertaking by Mr Plain was foreshadowed in relation to the possible payment of this amount. Mr Plain further deposed that the reason for transferring the shares in the Company from Plain and Company, which was in liquidation, was to ensure that he, through Holdings, was in a position to control the Company.
The varied Deed of company arrangement
Mr D J Williams, of counsel for the plaintiff, submitted that the varied Deed had released and discharged the Company from all of the unsecured debts covered by the Deed. Mr Williams accepted that if this submission was incorrect, the Company would still have creditors to a value of around $18M and would thus be hopelessly insolvent. Mr Williams conceded that there was no basis to terminate the winding up if the Company was still hopelessly insolvent. Submissions on the question whether the varied Deed had released the Company from its debts were advanced by Mr Williams and by counsel representing each of the other parties before the Court. In addition, there was the outline of submissions on the same question provided by ASIC (which did not appear). It is therefore convenient to turn directly to that question.
The varied Deed contains the following relevant provisions:[2]
[2]I have reproduced the underlining and some of the deletions which are contained in the varied Deed.
“3.1 This Deed applies to debts of the company and claims against the company in existence [as at 17 June 1997] of the character referred to in cl. 19 hereof.[3]
[3]Cl. 19 of the varied Deed refers to debts or claims, the circumstances giving rise to which occurred before 17 June 1997.
3.2Upon payment being made of the amounts of .05 and .5 cents in the dollar hereinafter referred to, the company is automatically released and discharged from all debts and all claims admissible to proof under this Deed (whether or not the creditor proves the same).
3.3Kelinga promises to pay .05 cents in the dollar of the amount of each debt or claim admissible and admitted to proof by the Administrator hereunder, and to do so within 21 days of being directed by the Administrator to do so. Kelinga’s obligations to the company and to the creditors under this Deed are limited to the making of such payment of 0.05 cents in the dollar hereinbefore referred to and the recovery of that amount if, for any reason, Kelinga does not observe and perform its obligations under this Deed.
3.4The company promises, that from the proceeds of the [AGC] Proceeding to the extent that such are of a sufficient amount to enable it to do so, and subject to the Administrator’s entitlements hereunder, first to reimburse Kelinga for costs and disbursements incurred or paid…, secondly to pay Kelinga an amount sufficient to enable Kelinga to pay the NAB obligations…, thirdly on behalf of Kelinga to pay a further .5 cents in the dollar of the amount of each debt or claim admissible and admitted to proof by the Administrator hereunder, fourthly to pay Kelinga an amount equal to the amount paid by Kelinga in discharging its obligation under cl. 3.3 hereof and fifthly to retain, or to pay or apply any remaining balance as Kelinga shall direct.
…
4.1The creditors grant to the company a moratorium on the payment of its debts for the moratorium period.[4]
[4]“Moratorium period” is defined by cl. 25 of the varied Deed to mean the period between 15 July 1997 and the date upon which the varied Deed terminates pursuant to cl. 17 or pursuant to s.445C of the Corporations Law.
…
16Subject to s.444D of the Law this Deed may be pleaded by the company against any creditor…in bar of any debt or claim admissible under this Deed, and a creditor…must not, before the termination of this Deed…
16.2institute or prosecute any legal proceedings in relation to any debt incurred…by the company;
16.3take any further step (including any step by way of legal or equitable execution) in any proceedings…
17This Deed is terminated upon the occurrence of any of the following:
17.1any Court making an Order terminating this Deed…;
17.2the creditors at a meeting…passing a resolution terminating this Deed;
17.3in the event that the company does not proceed to prosecute the [AGC] Proceeding or hereafter Kelinga or the company does not make the payment of 0.05 and 0.5 cents in the dollar hereinbefore referred to (as the case may be)
to the creditors a payment of the total of .55 cents of 1 cent in the dollar, the company shall, as soon as is practicable be placed into liquidation;17.4the Administrator certifying by a notice lodged in accordance with the Law that all proceeds of the realisation of assets available for payment of creditors pursuant to this Deed have been applied and that this Deed has been wholly effectuated
…
21If this Deed is terminated prior to payment of a creditor’s full entitlement:
21.1that creditor’s claim in respect of a debt which is admissible to proof under this Deed is extinguished only to the extent of payment actually made.”
Mr Williams pointed at the outset of his submissions to cl. 3.4 of the varied Deed which did not impose an absolute obligation on the Company to make the second payment of 0.5 cents in the dollar. He emphasised that the Company was only bound to make the second payment if the proceeds of the AGC proceeding were of a sufficient amount to do so, that is, there had to be proceeds from the proceeding and those proceeds had to be sufficient to cover the prior amounts referred to in cl. 3.4. Even if the prior amounts were paid, there was no obligation on the Company to make the full payment of 0.5 cents in the dollar unless the remaining proceeds were sufficient. The obligation was only to pay so much of the second payment as could be paid from the remaining proceeds, if any. Mr Williams submitted that, because the Company’s obligation under cl. 3.4 was conditional only, cl. 3.2 should be interpreted in that light. The reference in cl. 3.2 to payment of “the amounts of .05 and .5 cents in the dollar hereinafter referred to” should be taken as a reference (in the case of the second payment) to the payment of such amount up to 0.5 cents in the dollar as was available from the proceeds of the AGC proceeding. On this interpretation, if there were no available proceeds and therefore no payment, or insufficient proceeds and therefore only a partial payment, cl. 3.2 would still operate as an automatic release and discharge of the debts.
Turning to cl. 21, Mr Williams submitted that the words “payment of a creditor’s full entitlement” did not convey that anything less than a second payment of 0.5 cents in the dollar was not payment of a creditor’s “full entitlement” because all a creditor was entitled to under cl. 3.4 was the payment of such amount up to 0.5 cents in the dollar as was available. So, where cl. 21.1 provided for the extinguishment of a debt “only to the extent of payment actually made”, this meant that once the first payment was made (in respect of which there was an absolute obligation to pay) the clause had no further operation unless the Company did not properly prosecute the AGC proceeding or had money available but did not pay it. The failure to pay the full second payment because the proceeds were non-existent or insufficient did not bring cl. 21.1 into operation, on this argument.
Mr Williams also referred to cl. 17.3. It was noted that the clause was clumsily drawn and, in addition, provided for the Company to be placed into liquidation when in fact it had been in liquidation and still was in liquidation at the time of the varied Deed. Mr Williams repeated his submission that the reference to payment of “0.5 cents in the dollar hereinbefore referred to” should be read as a reference to the conditional obligation contained in cl. 3.4. On this reading, the Deed would not terminate under cl. 17.3 if the available proceeds were insufficient for the full second payment to be made, but rather it would probably terminate under cl. 17.4 because the administrator would be able to certify “that all proceeds of the realisation of assets available for payment of creditors pursuant to this Deed have been applied and that this Deed has been wholly effectuated”. I note that the deed administrator (Mr Mansell) did in fact so certify.
On the other hand, ASIC, in its written outline, submitted that because the second payment had not been made, cl. 3.2 did not provide a release and discharge from the debts. ASIC did not dispute that the second payment was only required to be made if there were sufficient funds available, but contended that “the fact that such payment was contingent would not appear to affect the operation of clause 3.2, which on its face provides that the release and discharge only comes into effect in circumstances in which both payments are made”. ASIC submitted that the language of cls. 17.3 and 21 also supported this interpretation.
Counsel for Mr Plain adopted Mr Williams’ submissions and, not unexpectedly, counsel for each of the other parties advanced arguments to the contrary, which arguments I have found to be of considerable assistance in what follows.
I do not accept Mr Williams’ submissions and I prefer the interpretation advanced to the contrary. In my opinion, an interpretation of cl. 3.2 based upon the natural and ordinary meaning of the words used and the structure of the clauses set out above leads to the conclusion that there is no release and discharge of debts unless both payments are made in the amounts stipulated. The release and discharge in cl. 3.2 literally takes effect “upon payment” of the two stated amounts and is not subject to any express qualification. It should be so construed. That it was intended that there should be a release and discharge of debts only if those two amounts were paid in full is also supported by the language of cls. 17.3 and 21. Clause 21 provides that a debt will not be extinguished except to the extent that it is paid, unless a creditor receives payment of his “full entitlement” under the varied Deed. In my opinion to treat “full entitlement” in that context as referring to whatever payment might emerge under cl. 3.4 (if any at all) is an unreasonable interpretation, even if analytically open. Further, the general scheme of the varied Deed, with its provisions for a moratorium in cls. 4.1 and 16, and for part extinguishment of the debt in cl. 21, sits uneasily with the interpretation of cl. 3.2 advanced on behalf of the plaintiff.
The varied Deed was forwarded to all creditors for their consideration and was approved by resolution at a creditors’ meeting. Even if the interpretation advanced on behalf of the plaintiff is open, it should not be adopted if a reasonable person reading the document, upon receipt of the Notice of meeting, would have been unlikely to understand it in this way. I consider that such a person, who read cl. 3.2 of the varied Deed, would not have been reasonably likely to think, and would have been justifiably surprised to be told, that the reference to a “payment being made of the amounts of .05 and .5 cents in the dollar hereinafter referred to” could mean something less than full payment of the second amount (and could possibly mean no payment at all). That is particularly so when regard is had to cl. 21 and to the expression “payment of a creditor’s full entitlement”.[5] Language effecting the release and discharge of debts or other rights should be clear and unambiguous and particularly so when put forward in a deed of company arrangement for approval at a creditors’ meeting.[6]
[5]I note in this regard that the explanatory memorandum forwarded to creditors prior to the approval of the varied Deed contained the following comment on cl. 21 of the varied Deed:
“Clause 21 limits the rights of the creditors if the Varied Deed is terminated prior to payment in full, to be the balance of the amount of the debt or claim owed by the company.”
This explanation would have been misleading if the interpretation now advanced by the plaintiff were correct.
[6]Section 444A(4) of the Corporations Law required that the instrument setting out the terms of the deed of company arrangement should, inter alia, specify “to what extent the company is to be released from its debts”.
I therefore conclude that the Company has not been released from its debts under clause 3.2 of the varied Deed. It follows that this application must be dismissed.
Other matters
In those circumstances, it is unnecessary to canvass the various submissions advanced upon the hypothesis that the debts had been released and discharged. Nevertheless, I will say this. In my opinion, it would have been wrong in any event to terminate the liquidation in circumstances where this would permit the Company to embark upon expensive and risky litigation at the same time as recommencing in business. I accept, as Mr Williams argues, that companies frequently conduct business and litigation at the same time, but this company is in liquidation. It has no capital and there is no evidence of sufficient or any financial support being available to it such as would make it reasonable to conduct both the litigation and the proposed business. Furthermore, there is no particularly strong reason why the proposed business could not be conducted by another company, nor why that other company could not purchase the Company’s name from the liquidator. As far as the litigation is concerned, the Company is not prevented from embarking upon it if this application is refused. I accept that funding the litigation through the liquidator would be less convenient and more expensive, but in the overall cost of such litigation, that factor does not, in my opinion, loom large. However, given my conclusion that the Company remains hopelessly insolvent, it is unnecessary to consider these and other aspects further.
The interlocutory process is dismissed. I will hear submissions as to costs.
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