Warner v Global Pacific Aerospace Pty Ltd

[2012] VSC 291

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

CORPORATIONS LIST

No. SCI 2012 00124

IN THE MATTER OF GLOBAL PACIFIC AEROSPACE PTY LTD (ACN 126 250 244)

BRUCE ARTHUR WARNER	Plaintiff
v
GLOBAL PACIFIC AEROSPACE PTY LTD (ACN 126 250 244) ANTON RICKIE BECKERATH	Defendants

No. SCI 2012 01358

ANTON RICKIE BECKERATH	Plaintiff
v
GLOBAL PACIFIC AEROSPACE PTY LTD (ACN 126 250 244)	Defendant

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JUDGE:	FERGUSON J
WHERE HELD:	Melbourne
DATE OF HEARING:	19 June 2012
DATE OF JUDGMENT:	19 June 2012
CASE MAY BE CITED AS:	Warner v Global Pacific Aerospace Pty Ltd & Anor
MEDIUM NEUTRAL CITATION:	[2012] VSC 291

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CORPORATIONS – Winding up on just and equitable ground – Between shareholders –Corporations Act 2001 (Cth), s 461(1)(k).

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APPEARANCES:	Counsel	Solicitors
For Bruce Arthur Warner	Mr J.W. Kewley	Findlay Arthur Phillips Lawyers
For Anton Rickie Beckerath	Mr J. Tomlinson	Harris Carlson
For Capital Finance Australia Limited	Mr M. Koroneos (solicitor)	Koroneos Lawyers

HER HONOUR:

1. Bruce Warner and Anton Beckerath are directors of Global Pacific Aerospace Pty Ltd.[1]  Mr Warner and Mr Beckerath each hold 50 ordinary shares in Global Pacific Aerospace and there are no other shareholders.  In 2009, the company purchased a helicopter for $1.6 million plus GST.  To facilitate the purchase, it borrowed $1.12 million from Capital Finance Australia Limited.  As security, Capital Finance took a chattel mortgage over the helicopter.  In addition, Mr Warner and some of his companies provided a guarantee for the loan in favour of Capital Finance.  Global Pacific Aerospace defaulted in payment of instalments under the loan and the helicopter was repossessed by Capital Finance.  Capital Finance sold the helicopter and has brought a proceeding in the County Court of Victoria against Global Pacific Aerospace, Mr Warner and the guarantor companies, seeking to recover a shortfall on the sale of $457,460.29.  The helicopter was sold to Everlyte Limited, which is a company owned and controlled by Mr Beckerath.  Mr Beckerath had not guaranteed the loan to Capital Finance.

   [1]Mr Warner is the plaintiff in proceeding number SCI 2012 00124 and Mr Beckerath is the second defendant in that proceeding.  In addition, Mr Beckerath is the plaintiff in proceeding SCI 2012 01358.  Global Pacific Aerospace Pty Ltd is a defendant in each proceeding.

1. Mr Warner says that the helicopter was sold at an under value by Capital Finance and that Mr Beckerath used his position as a director of Global Pacific Aerospace to make contact with Capital Finance and to negotiate the price directly with it. Mr Warner alleges that Mr Beckerath acted in breach of his duties as a director. He seeks orders for leave to defend the County Court proceeding on behalf of Global Pacific Aerospace and to bring third party proceedings on behalf of the company against Mr Beckerath and Everlyte Limited in the County Court. The application is made under s 237(1) of the Corporations Act 2001 (Cth). Mr Beckerath accepts that on the material before the Court, there is a serious question to be tried in relation to the allegations against him.

1. In a separate proceeding, Mr Beckerath has applied to wind up the company.  These reasons concern that application.

1. The application to wind up is made on the grounds that Mr Warner, in his capacity as a director, has acted in his own interests, rather than in the interests of the members of the company as a whole; that he has acted in a manner that is unjust or unfair to other members of the company; that the affairs of the company are being conducted in a manner that is oppressive or unfairly prejudicial to or unfairly discriminatory against a member or in a manner that is contrary to the interests of the members as a whole; an act or omission or a proposed act or omission on behalf of the company was or would be oppressive or unfairly prejudicial to or unfairly discriminatory against a member or members or was, or would be, contrary to the interests of the members as a whole, or on the ground that it is just and equitable that the company be wound up. These grounds for winding up are found in s 461(1)(e), (f), (g) and (k) of the Corporations Act.

1. In the affidavit he filed in support of the winding up application, Mr Beckerath alleges that Mr Warner has failed to provide information to him relating to the helicopter or the company since around the end of 2009.  He says that no board meetings have been held and that Mr Warner has essentially treated the company as his own entity and has excluded Mr Beckerath from all material decisions, with the consequence, he says, that the company has suffered.  He deposes in his affidavit that Mr Warner has breached his duties as a director in relation to the original purchase of the helicopter, and in relation to payments made from the company to entities controlled by Mr Warner and a payment to Commonwealth Bank of Australia.  Mr Beckerath is also critical of Mr Warner in relation to the maintenance of the helicopter and other matters connected with the helicopter, and he alleges that Mr Warner failed to ensure that the company’s bank account maintained a balance sufficient to make payments to service the loan obtained from Capital Finance.

1. Each of the directors disputes the allegations which have been made against them by the other director.  In correspondence earlier this year, Mr Warner’s solicitors stated that the allegations by Mr Beckerath are no more than bald assertions and the solicitors noted that Mr Beckerath had taken no action to pursue the allegations by way of litigation or otherwise despite having first raised them in mid August 2011.  Mr Warner has maintained that position on this hearing.  He has filed an affidavit in reply to the affidavit of Mr Beckerath.  He deposed that he kept Mr Beckerath apprised of all matters relevant to the helicopter and says that he has provided information to Mr Beckerath willingly and that Mr Beckerath has access to the company bank account and statements.  Mr Warner points to a number of documents that Mr Beckerath signed relating to the purchase of the helicopter.  He also says that Mr Beckerath agreed to delegate to him all decision making in respect of the helicopter.  In relation to the purchase of the helicopter by the company, Mr Warner says that the price was not inflated and was supported by a valuation that Capital Finance had at the time.  Mr Warner also says that the payments to him can be explained and that he has no knowledge of the payment made to the Commonwealth Bank.  Finally Mr Warner disputes that there were any deficiencies in the helicopter’s maintenance.

1. Mr Warner says that he and Mr Beckerath fell into dispute in mid 2010 over another project with which they were both involved.  There are proceedings on foot in the Federal Court of Australia in relation to that dispute.  Mr Warner says that there has now been a fundamental breakdown in their relationship.

1. Mr Warner contends that the winding up application is a stalking horse brought with the intent to preclude Global Pacific Aerospace from defending itself in the County Court proceeding and in order to defeat his attempts to bring third party proceedings on behalf of the company against Mr Beckerath and Everlyte Limited in respect of the purchase of the helicopter from Capital Finance.  He also submitted that if the company is wound up, there will be no money available to enable the liquidator to conduct any investigations and pursue any claims.  The practical effect, he submitted, is that Mr Beckerath would escape from liability because a liquidator would not undertake any investigation into the purchase of the helicopter by Mr Beckerath’s company from Capital Finance.  Whilst Mr Warner is willing to fund the company’s defence of the County Court proceeding, his counsel did not have instructions that Mr Warner would fund a liquidator.

1. The company does not operate an ongoing business.  From the evidence, it seems that the only potential assets of the company are the alleged claims against each of the directors for breach of their duties and possibly against Capital Finance if it did sell the helicopter at an undervalue.  Notice of the winding up application has been given to the known creditors of the company.  Capital Finance supports the application and no other creditor sought to appear.

1. Section 461(1)(k) of the Corporations Act provides for a company to be wound up if the Court is of opinion that it is just and equitable for that to occur.  There are many circumstances in which the Court will wind up a company on the just and equitable ground.  One such circumstance is where there is a deadlock at both board and shareholder level.[2]

   [2]See Clarke v Bridges [2004] FCA 394, Booker v You Run the Business Pty Ltd [2008] FCA 1762 and Galanopoulos v Moustafa & Ors [2010] VSC 380.

1. In my opinion, this is a case where it is just and equitable that the company be wound up.  As I have said, the company does not have an ongoing business.  It is being sued by its secured creditor (with one director supporting the defence of that action and the other opposing such defence).  The directors are at loggerheads and Mr Warner concedes that their relationship has irretrievably broken down.  Each of Mr Warner and Mr Beckerath makes allegations of breach of directors duties against the other.  Whilst Mr Beckerath has not sought to bring a derivative action on behalf of the company against Mr Warner or otherwise sought to pursue litigation against him, it is clear from the affidavit material that there are matters of which he complains.  Those matters are not frivolous and there is sufficient evidence to take them beyond mere assertions.  The response to those allegations by Mr Warner does not provide an unchallengeable answer to them.  The dispute between the directors and the allegations that they make against each other cannot be determined on the basis of the evidence as it stands.  At the very least, their affidavit evidence would need to be tested by cross examination.  Nor is it appropriate to make a determination of the allegations that have been made on applications of this kind.

1. The preferable course is for a liquidator who is independent of the disputants to investigate the allegations that each director makes against the other and to determine whether any claim should be brought against either of them.  It is also appropriate that an independent liquidator consider whether there is any merit in the allegation that Capital Finance sold the helicopter at an under value and whether, if that allegation has any merit, the company has a valid claim for funds which might otherwise have been surplus following payment of the debt due to Capital Finance.  It is true that there will be issues concerning the funding of such investigations.  However, liquidators commonly find a way to obtain funding if there is a potentially good cause of action available to the company.

1. I will order that the company be wound up on the just and equitable ground.