Bank of New Zealand v Essington Developments Pty Limited

REASONS FOR JUDGMENT 1 The plaintiff, Purcom No. 34 Pty Limited (Purcom), is a party to a franchise agreement with Jax Quickfit Franchising Systems Pty Limited (Jax). Purcom granted a charge to Jax to secure obligations of Purcom under the franchise agreement. Purcom has defaulted in the performance of its obligations, as a consequence of which Jaxs has, pursuant to the powers conferred by the charge, which is both fixed and floating, appointed Peter Ngan as a receiver and manager of the assets of Purcom. Mr Ngan is a Registered Liquidator and an Official Liquidator. 2 Mr Ngan has had considerable difficulty since 12 March 2009, when he was appointed as receiver, in locating assets of Purcom and in getting cooperation from the director and shareholders of Purcom. According to the most recent information available from the Australian Securities and Investments Commission, the only director of Purcom is Robert Frederick Lee Tucker and the only shareholders are Mr Tucker and Ms Lynette Tucker, who own one share each. Both have the same address, being an address in Ivanhoe, Victoria. Mr Ngan has been unable to ascertain the basis upon which Purcom occupied premises where it carried on a business under the franchise. There is evidence that a company with a similar name, namely Purcom No. 34 Admin Pty Limited, is involved in the business. 3 The receiver has powers under the charge and under the Corporations Act 2001 (Cth) (the Act) to enter into possession, or at least take control, of the assets of Purcom. He has had difficulty, as I have said, in ascertaining what and where the assets are for that purpose. On the other hand a liquidator or a liquidator appointed provisionally would have power to examine the officers of Purcom in order to determine the nature and location of its assets. In those circumstances Mr Ngan has caused this proceeding to be commenced in the name of Purcom seeking the winding up of Purcom pursuant to s 459P(1) of the Act. Under that provision, a company may apply to the Federal Court for an order that the company be wound up in insolvency. 4 Under s 459C, the Court must presume that a company is insolvent if, during or after the three months ending from the day when the application is made, a receiver or receiver and manager of the property of the company was appointed under a power contained in an instrument relating to a floating charge on such property. Under s 420(2)(u), a receiver of property of a corporation has power to make or defend an application for the winding up of the corporation. A receiver who formed the view, on proper grounds, that a corporation is insolvent and that it would be conducive to the preservation or recovery of its assets that it be wound up, could, under s 420(2)(u), himself make an application in the corporation's name for its own winding up (see Bank of New Zealand v Essington Developments Pty Limited (1991) 5 ACSR 86 at 89.) 5 Under s 472(2), the Court may appoint an official liquidator provisionally at any time after the filing of a winding up application and before the making of a winding up order. This proceeding was commenced earlier today and Purcom, acting through Mr Ngan, applies for the appointment of a liquidator provisionally. Mr Greg Parker, an official liquidator, has consented to be appointed and, in the circumstances, I propose to accede to the application by Purcom. 6 Since the application is in the name of Purcom and there is no defendant I consider that it is appropriate that the only director and shareholders of Purcom be notified of the proceeding and accordingly I propose to direct that the originating process be served on Mr Tucker and Ms Tucker. I certify that the preceding six (6) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.