Ausino International Pty Ltd v Apex Sports Pty Ltd [2007] NSWSC 360 | Case summary

1 I am dealing in the first instance with the orders that should be made in proceedings 3883/2005 in consequence of my decision of 30 March 2007: see Ausino International Pty Ltd v Apex Sports Pty Ltd [2007] NSWSC 289. 2 The position taken by Ausino, the successful plaintiff, is that the court need only make the order foreshadowed at paragraph 44 of the reasons of 30 March 2007, that is, an order under s.600C of the Corporations Act 2001 (Cth) that the resolution that the deed of company arrangement be terminated and that the company be wound up is taken to have been passed at the meeting of creditors of Apex Sports on 21 November 2006. Such an order will accordingly be made. There was ultimately no submission that any other order was needed in 3883/2005 - except in the eventuality that a winding up order was made in respect of Apex Sports. 3 It remains to deal with proceedings 2683/2005 in which Ausino seeks an order for the winding up of Apex Sports in insolvency. The effect of the order under s.600C just foreshadowed in 3883/2005, when made, will be to terminate the deed of company arrangement in relation to Apex Sports. This will happen pursuant to s.445C(b) upon the making of the s.600C order. It follows that, at that point, s.444E will no longer operate as a barrier to pursuit of the winding up application. Another effect of the order to be made in 3883/2005, however, will be transition of Apex Sports to the form of creditors voluntary winding up referred to in s.446A with Mr Shepard, the continuing deed administrator, as liquidator. 4 It is the contention of Ausino that winding up by the court upon Ausino's undetermined application based on an unsatisfied statutory demand should supersede the voluntary winding up that will come into existence when the order is made in 3883/2005, and that the court ordered winding up should be undertaken by a liquidator other than Mr Shepard. 5 On the question whether the court can and should order the winding up of a company already subject to voluntary winding up, I accept the principles referred to by Besanko J in Deputy Commissioner for Taxation v Tull Reinforcing Pty Limited (2006) 153 FCR 394 at [17] and [18]. In summary, the replacement regime of winding up by the court - and I emphasise that, for reasons given by Besanko J in his judgment, it is a replacement regime without any need to make an order terminating the voluntary winding up - may properly be installed by the court where there is some good reason to do so. 6 In the present case, I am satisfied there are three reasons why the court should make a winding up order and appoint a liquidator other than Mr Shepard. First, there are unresolved allegations of apprehended lack of independence and impartiality against Mr Shepard. Those allegations were made in 3883/2005 but the proceedings were finally determined without any need for the allegations to be dealt with beyond the observation of Campbell J in his judgment of 23 October 2006 that a prima facie case had been made out: see Ausino International Pty Ltd v Apex Sports Pty Ltd [2006] NSWSC 1119. It would be counterproductive to leave in place the potential for that dispute to be revived when there is at hand a convenient method of quelling it, particularly where Mr Shepard has indicated through his solicitor that he does not have any particular desire to be liquidator. 7 Second, dismissal of the winding up application would put an end to an undertaking given by Mr Barry in relation to preservation of the fund of $379,299 controlled by Kemp Strang which was the subject of my judgment of 2 March 2007 (Ausino International Pty Ltd v Apex Sports Pty Ltd [2007] NSWSC 182) such that any opportunity for the liquidator under the voluntary winding up to lay claim to that fund on behalf of the creditors of Apex Sports might be curtailed. It is desirable that a liquidator have the short time allowed by the undertaking to make that assessment. 8 Third, Ausino has proffered to the court an undertaking to make certain moneys available to fund the court appointed liquidator's investigations that would not be available if a liquidator under a voluntary winding up had conduct of the administration. 9 These considerations are quite sufficient, to my mind, to warrant the making of a winding up order even though voluntary winding up will eventuate from the s.600C order (see also Bidald Consulting Pty Ltd v Miles Special Builders Pty Ltd (2005) 226 ALR 510). The ground for winding up is provided by the unsatisfied statutory demand. I note that Saucony Inc., the supporting creditor, continues to support the application for a winding up order even though the s.600C order will bring about transition to creditors voluntary winding up. 10 There has been some discussion this afternoon about the identity of the person who should be appointed liquidator in the court ordered winding up. The plaintiff, Ausino, has tendered the consent of Mr Parbery. It has been put by Ryckmans on behalf of Mr Shepard (who, as has been pointed out by Mr Bell SC on behalf of Ausino, technically has no standing in the winding up proceedings), that the court should, rather, choose one of three alternative candidates whose consents have been placed before the court by Mr Shepard. 11 In winding up applications, it is the practice to appoint the qualified person nominated by the plaintiff upon that person's consent being furnished to the court. Only if some unsuitability of the person proposed by the plaintiff is shown does there arise a need to consider any departure from that practice. No such ground has been shown here. The most that has been said is that the undertaking by Ausino to provide funding to which I have already referred is predicated on an appointment of Mr Parbery. That, to my mind, does nothing to call into question the suitability of Mr Parbery who is qualified to act as liquidator in a court ordered winding up and in respect of whom no issue is raised. 12 Mr Ryckmans has also asked, on Mr Shepard's behalf, that an order be made under s.447A to eliminate any suggestion that there will have been any time, however short, during which Mr Shepard has been liquidator. There is no opposition to the making of such an order which, in my view, is a sensible precaution. 13 I make the following orders in the following sequence: 1. In proceedings 3883/2005 I order pursuant to s.600C(3)(a) of the Corporations Act that the following proposed resolution "That the deed of company arrangement be terminated and the company be wound up" is taken to have been passed at the meeting of creditors of Apex Sports Pty Limited on 21 November 2006. 2. In proceedings 2683/2005 I order that Apex Sports Pty Limited be wound up. 3. In proceedings 2683/2005 I order that Stephen James Parbery be appointed liquidator of Apex Sports Pty Limited. 4. In proceedings 3883/2005 I order pursuant to s.447A of the Corporations Act that s.446A(4) of the Act is to operate as if Stephen James Parbery, the liquidator appointed by the court in proceedings 2683/2005, had been nominated to be liquidator of Apex Sports Pty Limited for the purposes of s.499(1) of the Corporations Act . 14 The question of costs in both proceedings is reserved for argument at 9.30am on 1 May 2007.

Ausino International Pty Ltd v Apex Sports Pty Ltd

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