Shepard v HP Industrial Pty Ltd - [2018] QSC 10

SUPREME COURT OF QUEENSLAND

CITATION:

Shepard v HP Industrial Pty Ltd [2018] QSC 10

PARTIES:

ADAM SHEPARD (IN HIS CAPACITY AS LIQUIDATOR OF HP INDUSTRIAL PTY LTD
ACN 117 409 300 (IN LIQUIDATION)

(applicant)

v
HP INDUSTRIAL PTY LTD ACN 117 409 300 (IN LIQUIDATION

(respondent)

FILE NO:

BS 10240 of 2016

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court of Queensland at Brisbane

DELIVERED ON:

31 January 2018

DELIVERED AT:

Brisbane

HEARING DATE:

1 September 2017

JUDGE:

Douglas J

ORDER:

1. An extension of time of six months be granted for the applicant to bring proceedings pursuant to s 588FF(1) of the Act.

2. Further submissions about the form of the order and costs shall be heard

CATCHWORDS:

CORPORATIONS – WINDING UP – CONDUCT AND INCIDENTS OF WINDING UP – EFFECT OF WINDING UP ON OTHER TRANSACTIONS – PREFERENCES AND VOIDABLE TRANSACTIONS – GENERALLY – where delay in identifying voidable transactions – where extension of time sought to bring applications under s 588FF(1) – where extension of time unlikely to cause prejudice

Corporations Act 2001 (Cth), ss 588FF(1), 588FF(3)

BP Australia Ltd v Brown (2003) 58 NSWLR 322; [2003] NSWCA 216, cited
Clout v Andi-Co Australia Pty Ltd (2013) 96 ACSR 512; [2013] QSC 278, cited
Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher (2015) 254 CLR 489; [2015] HCA 10, cited
Francis v Bratovich [2008] WASC 242, distinguished
Green v Chiswell Furniture Pty Ltd [1999] NSWSC 608, cited
Taylor v Woden Constructions Pty Ltd [1998] FCA 1228, followed
Williams v KIM Management Pty Ltd [2013] 1 Qd R 387; [2012] QSC 143, cited

COUNSEL:

Mr P Somers for the applicant

Ms K E Downes QC with Ms S Forder for Mr Roberts, Mr Barrett and Mr McCart in their capacity as directors of the respondent

SOLICITORS:

Bennet & Philp for the applicant

Holding Redlich for Mr Roberts, Mr Barrett and Mr McCart in their capacity as directors of the respondent

Background

This is an application pursuant to s 588FF(3)(b) of the Corporations Act 2001 (Cth) to extend the time in which the applicant may commence proceedings pursuant to s 588FF(1) of the Act for orders about potential voidable transactions relating to the company respondent now in liquidation. What he seeks is commonly referred to as a “shelf order”.[1] A shelf order is used to extend the time in which an application may be brought to make orders under the section if a court is satisfied that a company has entered into a transaction that is voidable. The shelf order permits an extension of time pursuant to s 588FF(3)(b). Such an order is sought here because the applicant is not presently in a position to identify all potential transactions and parties pursuant to such an application.
[1] See Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher (2015) 254 CLR 489; [2015] HCA 10.
The company was voluntarily wound up by a resolution passed on…

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 Shepard v HP Industrial Pty Ltd

Details

AGLC: Shepard v HP Industrial Pty Ltd [2018] QSC 10
Case: [2018] QSC 10
Decision Date: 31 January 2018

CaseChat Overview and Summary

In the Federal Court of Australia, Shepard, as the liquidator of HP Industrial Pty Ltd, sought an extension of time to bring proceedings under section 588FF(1) of the Corporations Act 2001 (Cth). The application was made against HP Industrial Pty Ltd, which was under liquidation. The primary issue was whether the court should grant an extension of time for the liquidator to bring proceedings that were meant to be initiated within the specified timeframe of section 588FF(3)(a) of the Act. This section mandates that certain actions be taken within a limited period post-appointment of the liquidator.

The court had to determine if the liquidator's delay in identifying voidable transactions and initiating proceedings was justifiable. The liquidator argued that the delay was due to the complexity of the records and the time required to engage with potential funding sources, particularly the Department of Employment. The court considered whether the liquidator had adequately explained the delay and whether granting the extension would likely cause prejudice to the respondents or any other party involved. The court examined the willingness of the directors to assist and the lack of significant prejudice to the respondents due to the delay.

The court concluded that the delay in bringing the proceedings was adequately explained and that there was no significant prejudice to the respondents from granting the extension. The liquidator's conduct in reviewing the records and seeking funding did not warrant a denial of the extension request. The court was satisfied that the delay was due to the complexity of the case and the need to secure funding, rather than any negligence or bad faith on the part of the liquidator. The court further noted that the directors had been cooperative and that the delay would not likely prejudice them. Consequently, the court granted the extension for six months, allowing the liquidator to bring the necessary proceedings. The court also noted that the form of the order and the associated costs would be addressed in subsequent submissions.

Orders

Orders of the court

1. An extension of time of six months be granted for the applicant to bring proceedings pursuant to s 588FF(1) of the Act.

2. Further submissions about the form of the order and costs shall be heard

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

In this case, Ms Downes characterised the applicant’s conduct as involving merely the reading of a few lever arch volumes of records and discussing funding on no more than three occasions during a period extending over nearly a year. I infer, however, that there has been delay in obtaining a proposal from the Department of Employment which seems to be one of the main likely sources of funding and am satisfied that the delay has been adequately explained. The circumstance that the directors were previously, and quite recently, willing to provide assistance also persuades me that they are unlikely to suffer any prejudice from the delay in the application being brought.Conclusion In the circumstances, it seems to me that the extension of time sought should be granted. It is only for six months in circumstances where the applicant has adequately explained his delay in not being in a position to commence proceedings in the time allowed under s 588FF(3)(a). I also agree that, given the lack of information presently available, there is no need for the Court to consider fully the merits of any proceedings that may be brought. Nor is there any significant actual prejudice shown as a result of the grant of the extension.Order Accordingly, I shall grant an extension of time for six months for the applicant to bring proceedings pursuant to s 588FF(1) of the Act. I shall hear further submissions about the form of the order and costs.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

CITATION:	Shepard v HP Industrial Pty Ltd [2018] QSC 10
PARTIES:	ADAM SHEPARD (IN HIS CAPACITY AS LIQUIDATOR OF HP INDUSTRIAL PTY LTD ACN 117 409 300 (IN LIQUIDATION) (applicant) v HP INDUSTRIAL PTY LTD ACN 117 409 300 (IN LIQUIDATION (respondent)
FILE NO:	BS 10240 of 2016
DIVISION:	Trial Division
PROCEEDING:	Application
ORIGINATING COURT:	Supreme Court of Queensland at Brisbane
DELIVERED ON:	31 January 2018
DELIVERED AT:	Brisbane
HEARING DATE:	1 September 2017
JUDGE:	Douglas J
ORDER:	1. An extension of time of six months be granted for the applicant to bring proceedings pursuant to s 588FF(1) of the Act. 2. Further submissions about the form of the order and costs shall be heard
CATCHWORDS:	CORPORATIONS – WINDING UP – CONDUCT AND INCIDENTS OF WINDING UP – EFFECT OF WINDING UP ON OTHER TRANSACTIONS – PREFERENCES AND VOIDABLE TRANSACTIONS – GENERALLY – where delay in identifying voidable transactions – where extension of time sought to bring applications under s 588FF(1) – where extension of time unlikely to cause prejudice Corporations Act 2001 (Cth), ss 588FF(1), 588FF(3) BP Australia Ltd v Brown (2003) 58 NSWLR 322; [2003] NSWCA 216, cited Clout v Andi-Co Australia Pty Ltd (2013) 96 ACSR 512; [2013] QSC 278, cited Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher (2015) 254 CLR 489; [2015] HCA 10, cited Francis v Bratovich [2008] WASC 242, distinguished Green v Chiswell Furniture Pty Ltd [1999] NSWSC 608, cited Taylor v Woden Constructions Pty Ltd [1998] FCA 1228, followed Williams v KIM Management Pty Ltd [2013] 1 Qd R 387; [2012] QSC 143, cited
COUNSEL:	Mr P Somers for the applicant Ms K E Downes QC with Ms S Forder for Mr Roberts, Mr Barrett and Mr McCart in their capacity as directors of the respondent
SOLICITORS:	Bennet & Philp for the applicant Holding Redlich for Mr Roberts, Mr Barrett and Mr McCart in their capacity as directors of the respondent