Richard Walter Pty Limited (in liquidation): ex parte Gregory Winfield Hall [1999] NSWSC 1179 (18 November 1999)

Last Updated: 2 December 1999

NEW SOUTH WALES SUPREME COURT

CITATION: Richard Walter Pty Limited (in liquidation): ex parte Gregory Winfield Hall [1999] NSWSC 1179

CURRENT JURISDICTION: Equity

FILE NUMBER(S): 4718/99

HEARING DATE{S): 18/11/1999

JUDGMENT DATE: 18/11/1999

PARTIES:

Gregory Winfield Hall (Plaintiff)

JUDGMENT OF: Santow J

LOWER COURT JURISDICTION: Not Applicable

LOWER COURT FILE NUMBER(S): Not Applicable

LOWER COURT JUDICIAL OFFICER: Not Applicable

COUNSEL:

P L Dodson (Plaintiff)

ex parte

SOLICITORS:

Blake Dawson Waldron (Plaintiff)

ex parte

CATCHWORDS:

CORPORATIONS -- Liquidator seeking extension of time to apply to the Court in respect of a voidable transaction of the Company -- in some circumstances for good reason liquidator may have formed no view as to whether or not a preference and extension therefore may therefore still be justified -- Appropriate orders in such a case.

ACTS CITED:

Corporations Law s588FF(3)(b) Pt 5.7B

DECISION:

Extension of time granted to the applicant liquidator to commence proceedings

JUDGMENT:

REVISED -- 2 December, 1999

IN THE SUPREME COURT

OF NEW SOUTH WALES

IN EQUITY

SANTOW J

No. 4718/99

RICHARD WALTER PTY LIMITED ACN 000 777 088 (in liquidation) and the Corporations Law

GREGORY WINFIELD HALL

Plaintiff

JUDGMENT -- ex tempore

18 November 1999

1 This is an application by the Liquidator of Richard Walter Pty Limited, pursuant to s588FF(3)(b) of the Corporations Law for an extension of time within which application may be made to the court in respect of a voidable transaction of that Company. Without such an order the time within which such an application could be made will expire on 20 November 1999.

2 The guidelines applicable to such an exercise of discretion are collected by Hamilton J in Hall & Another: In the matter of ACN 063 865 083 (formerly Digicall Direct Pty Ltd) and Others ([1999] NSWSC 984, 7 September 1999, unreported); see also Taylor v Woden Constructions Pty Ltd [1998] 1228 FCA per Finn J; Green v Chiswell Furniture Pty Ltd in Liq. ([1999] NSWSC 608 Austin J, 23 June 1999, unreported). I set these out in summary form, noting, as I explain, that (ii) need not always apply, having regard to the circumstances impeding a preliminary review:

(i) Is there a satisfactory explanation for delay?

(ii) Is there a sufficiently arguable case of a preference, on a preliminary review of the facts, to justify the continued exposure of the possible defendants to action?

(iii) Is there some likely actual prejudice to the possible defendants which arises from the delay which outweighs the case in justification of an extension of time?

(iv) Is a preliminary review of the case inappropriate because the Liquidator has not completed investigations into the preferences?

3 The present case is one where an extension of time is sought to be justified for the following reasons, drawn from the evidence collected in the affidavit of Mr Hall the Liquidator dated 16 November 1999 (taken from the written submissions of counsel dated 18 November 1999):

(i) The Liquidator is currently awaiting the judgment of the Full Federal Court in Richard Walter Pty Ltd (in liq) v Commissioner of Taxation and Others. The outcome of this appeal will have a direct bearing upon whether it is possible or appropriate for the Liquidator to pursue remedies under Part 5.7B Corporations Law. Furthermore, the appeal will determine whether or not the assets currently under the control of the Liquidator are subject to a charge in favour of certain claimants. The outcome of this appeal will have a direct bearing upon whether there are sufficient funds available for the prosecution of actions under Part 5.7B Corporations Law or, indeed, for the remuneration of the Liquidator.

(ii) The Liquidator has diligently carried out his duties in a large and complex winding up. He has not been able to finally determine whether grounds exist for the prosecution of applications pursuant to Part 5.7B, whether such applications are in the best interests of creditors, the prospects of success and recoverability of the potential preferential transactions or the likely outcome of such proceedings. The identity of the proper defendants has not yet been established.

(iii) There is no prejudice likely to be suffered by the related party entities in the circumstances described by the affidavit.

(iv) The proposed period of extension is not inappropriate in the circumstances.

4 This is not a case where the very preliminary review of the merits of any proceedings to recover in respect of any voidable transaction of the Company yields any conclusion one way or the other. The Liquidator has yet to form a view as to whether there is a sufficiently arguable case of a preference and needs further time to do so. In saying that, I do not doubt that the Liquidator will have formed some initial impressions but reasonably enough does not feel yet in a position to elevate those views to any sort of conclusion.

5 For the reasons given by Austin J in Green v Chiswell Furniture. I am satisfied that provided the orders are framed appropriately, that circumstance should not preclude the extension sought. I quote from the relevant parts of that judgment as follows:

"15. Considerations relevant to the exercise of the Court's discretion under s588FF(3) were stated by Finn J in Taylor v Woden Constructions Pty Ltd (Federal Court, 23/8/98, unreported). The following propositions, with which I respectively agree, emerge from that case:

(a) ordinarily, the issues raised on an extension application are threefold:

(i) the explanation for the delay in bringing proceedings;

(ii) a preliminary review of merits of the foreshadowed proceedings -- that is, an investigation as to whether such proceedings should be so devoid of prospects that it would be unfair, by granting an extension, to expose the other party to the continuing prospect of suit;

(iii) whether the likely actual prejudice resulting from the grant of an extension is sufficiently substantial to outweigh the case for granting an extension;

(b) where the liquidator's purpose in seeking the extension of time is simply to put himself into a position where he can properly decide whether or not to bring proceedings, a preliminary inquiry into the merits of any consequent proceedings may not always be necessary.

In the present case there is no evidence of any prejudice which would flow from granting an extension and so that is not an issue.

16. In my opinion, there is a risk that in some cases a preliminary inquiry into the merits may impose an unnecessary burden on both the liquidator and the Court, especially in a case where the circumstances appear to give rise to complex or disputed questions of fact and law and the evidence before the Court is manifestly incomplete."

6 It will be seen from the form of the orders that follow, that what is contemplated is an extension of time first to accommodate the handing down of a decision on the appeal by the Full Federal Court and then a further three months for further investigation. The latter three months can also accommodate any application for leave to appeal to the High Court. My orders contemplate a requirement to notify the other potential parties to any application in respect of any alleged voidable transaction, as and when they are ascertained. Notification would be both of the orders made and of this judgment. That, coupled with the leave to appear for either party, will allow any submissions to be made. This may bear upon either the continuance of the extension or upon any further extension as may be required by the Liquidator. The latter is not unlikely, given the complexity of the corporate and private trust circumstances with their associated transactions.

ORDERS

1. Order pursuant to section 588FF(3)(b) of the Corporations Law that the time for the applicant liquidator to commence proceedings pursuant to the provisions of Part 5.7B of the Corporations Law be extended to the date which is the earlier of:

(a) 20 November 2000 and

(b) the date three calendar months after the determination by the Full Court of the Federal Court of Australia of the appeals in the proceedings numbered NG 344 of 1999 and NG 339 of 1999 in the Federal Court of Australia.

2. Grant liberty to apply in respect of Order 1 to the applicant and any person affected by Order 1.

3. Direct that the applicant notify in writing any person against whom he determines he shall seek relief pursuant to Part 5.7B of the Corporations Law, at the time of making of that determination, of the terms of the above order and grant of liberty to apply and this direction.

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LAST UPDATED: 02/12/1999