(The Honourable Chief Justice Kourakis, the Honourable Justice S Doyle and the Honourable Justice David)
28 March 2025
APPEAL AND NEW TRIAL - PROCEDURE - SOUTH AUSTRALIA - WHEN APPEAL LIES - FROM SUPREME COURT - BY LEAVE OF COURT
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - JOINDER OF CAUSES OF ACTION AND OF PARTIES - NON-PARTY INTERVENTION
CORPORATIONS - WINDING UP - CONDUCT AND INCIDENTS OF WINDING UP - RANKING OF CLAIMS - PRIORITIES
This is an appeal from a decision of a single judge of this Court, refusing Mr Viscariello’s application to be joined or heard.
The proceedings concern the winding up of two companies, Bernsteen Pty Ltd and Newmore Pty Ltd (together, ‘the Companies’).
The applicant, Mr Viscariello, is a director, shareholder and creditor of the Companies. He claims to be a secured creditor of Newmore and an unsecured creditor of Bernsteen.
The respondent, as liquidator of both the Companies, sought orders pursuant to s 90-15 of Schedule 2 of the Corporations Act 2001 (Cth), to the effect that he was justified in paying the funds left in the liquidations of the Companies to himself and two former liquidators (Mr Macks and Mr Sheahan) for their fees incurred in those liquidations. The respondent also sought orders under s 480(d) of the Corporations Act that he be released as liquidator of the Companies and that the Companies be deregistered.
Orders to this effect were made by Judge Dart (as to the payment of fees), and by Auxiliary Judge Flourentzou (as to the release of Mr Basedow and the deregistration of the Companies). The fees have since been paid, and Mr Basedow has been released. But the Companies have not yet been deregistered.
Mr Viscariello became aware of the proceedings and filed an application to be joined or heard, with a view to reopening Mr Basedow’s applications and challenging the orders made by Judge Dart and Auxiliary Judge Flourentzou. McIntyre J dismissed Mr Viscariello’s application.
Mr Viscariello now seeks leave to appeal on three broad grounds, namely that McIntyre J erred in: (i) finding that he did not have a direct interest in the orders made in these proceedings; (ii) failing to provide adequate reasons for her conclusions of fact and law; and (iii) failing to recognise that the earlier orders were affected by an apprehension of bias on the part of Judge Dart.
The applicant also raises a number of subsidiary complaints relating to alleged procedural irregularities in the proceedings; Mr Basedow’s conduct of the liquidations more generally; and inadequacies in the reasoning of Judge Dart and Auxiliary Judge Flourentzou.
Held, refusing the application for leave to appeal:
(per S Doyle and David JJA):
1.The applicant’s status as a secured creditor did not give him any realistic prospect of a recovery from the funds remaining on hand in Newmore Pty Ltd;
2.In…
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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AGLC
Viscariello v Basedow [2025] SASCA 34
Case
[2025] SASCA 34
Decision Date
CaseChat Overview and Summary
This case concerned an application for leave to appeal and a stay pending appeal, brought by Mr Viscariello against Mr Basedow, who was the liquidator of Bernsteen and Newmore. Mr Viscariello, the former director and shareholder of these companies, had been involved in extensive litigation with the liquidator concerning the conduct of the liquidations and alleged procedural irregularities. The Supreme Court of South Australia, comprising Kourakis CJ, S Doyle and David JJ, was required to determine whether to grant Mr Viscariello leave to appeal against orders made by a single judge.
The central legal issues before the Full Court were whether the proposed appeal had sufficient merit to warrant leave being granted, and whether a stay of proceedings pending any appeal was appropriate. Mr Viscariello sought to challenge various orders made in the context of complex liquidations, including issues relating to his involvement as a secured creditor, complaints about the conduct of the liquidations, and alleged procedural irregularities in the proceedings before the Supreme Court. The Court also considered the adequacy of the reasons provided by the primary judge.
The Full Court ultimately refused the applications for leave to appeal and a stay. Their reasoning focused on the lack of apparent merit in the proposed appeal, coupled with concerns about futility and the need for finality in the protracted liquidation proceedings. The Court concluded that, in these circumstances, the interests of justice did not favour granting leave to appeal. Consequently, Mr Basedow’s notice of alternative contention did not require consideration.
Orders
Orders of the court
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Background
Background to the litigation
The reasons which follow are structured as follows:BackgroundThe present proceedingsMr Viscariello’s involvementThe relevant rulesThe reasons of McIntyre JThe proposed appealLeave to appealJoinder and the right to be heardThe nature of the proceedingsMr Viscarello’s interest as a secured creditorComplaints about the conduct of the liquidationsComplaints about procedural irregularities in these proceedingsOther challenges to the orders madeAdequacy of McIntyre J’s reasonsLeave to appealAddendumConclusionBackground Bernsteen was incorporated in June 1988, and Newmore was incorporated in June 1992. From their incorporation through to their liquidation in December 2001, they carried on business as retailers of manchester. They traded through 33 retail outlets, located primarily in the Adelaide metropolitan area. Mr Viscariello was the sole director, principal shareholder and effective controller of the Companies. He also claimed to be a creditor of the Companies. By late 2001, the Companies were experiencing significant financial difficulties. On 5 December 2001, Mr Viscariello determined that the Companies were insolvent or likely to become insolvent in the near future, and Mr Macks (of PPB Advisory) was appointed as their voluntary administrator. Mr Viscariello anticipated that the Companies would each enter into a deed of company arrangement or DOCA. However, when agreement was not able to be reached, and Mr Macks informed the creditors that there was no proposal to rescue the Companies, the creditors resolved to wind them up. On 21 December 2001, Mr Macks was appointed the liquidator of both Bernsteen and Newmore. The liquidations of Bernsteen and Newmore were complex. Issues that needed to be addressed included: issues arising in relation to the numerous tenancies and distraints by landlords; disputed claims as to the ownership of stock; creditors having security over assets of the Companies, including certain stock and plant and equipment; the need to sell stock and plant and equipment for the various stores; employee entitlement claims; numerous unfair preference claims which resulted in significant recoveries for Bernsteen and Newmore; and the pursuit of litigation for the recovery of contractual debts. During the course of the liquidations, Mr Macks became embroiled in a number of disputes with Mr Viscariello. Mr Viscariello disagreed strongly with the decision to place the Companies into liquidation. He took issue with several aspects of Mr Macks’ conduct as voluntary administrator and then liquidator. Mr Viscariello came to litigate many of his grievances in proceedings issued against Mr Macks in the Supreme Court in February 2006. Mr Viscariello was also involved in various other pieces of litigation involving Mr Macks and Bernsteen. In July 2006, Mr Macks filed proceedings in the Federal Court seeking orders for the appointment of Mr Sheahan and Mr Lock (of Sheahan Lock) as special purpose liquidators of the Companies, under ss 473(8) and 511 of the Corporations Act 2001 (Cth), for the purpose of investigating a potential insolvent trading claim against Mr Viscariello. In August 2006, Registrar Christie made orders to this effect. The special purpose liquidators brought an application to examine Mr Viscariello, and after significant opposition and consequential delay, this examination occurred. Whilst the special purpose liquidators commenced insolvent trading proceedings against Mr Viscariello in December 2007, the proceedings were ultimately abandoned in 2009 on the basis that they had become uncommercial by reason of what the special purpose liquidators regarded as the obstructive approach taken by Mr Viscariello. Significant fees were incurred by the special purpose liquidators, and although not paid, were ultimately approved by the Companies’ committees of inspection. In July 2014, Mr Sheahan and Mr Lock retired as special purpose liquidators.
Evidence
Evidence Before The Court
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Decision
Reasons for decision
It is for these reasons (essentially, the lack of apparent merit in the proposed appeal, combined with the concerns with futility and finality), that we have concluded that the interests of justice do not favour a grant of leave to appeal. Conclusion We would refuse the applications for leave to appeal and a stay pending appeal. Mr Basedow’s notice of alternative contention does not arise for consideration.