Barnden, in the matter of Saeco South Australia Pty Ltd (in liq) [2021] FCA 1204

Federal Court of Australia|2021-10-06|Before: Cheeseman J, Eeseman J

Pursuant to section 488(2) of the Corporations Act 2001 (Cth) ("Corporations Act"), the Plaintiff have special leave to make a distribution of the surplus in the winding up of Saeco South Australia Pty Ltd (ACN 113 478 351) (in liquidation) (the "Company") by 31 January 2022 in the following proportions: (a) Ubertini Investments Pty Ltd (ACN 099 388 566) as to 10 shares out of the 130 shares that are entitled to receive a cash distribution; (b) Philips Saeco Australia Pty Limited (ACN 124 670 917) as to 120 shares out of the 130 shares that are entitled to receive a cash distribution.
The requirement under regulation 5.6.71(1) of the Corporations Regulations 2001 (Cth) for the order authorising distribution of surplus to a contributory have annexed to it a schedule in accordance with Form 551 be dispensed with.
The requirements of r 7.9(2) of the Federal Court (Corporations) Rules 2000 (Cth) be dispensed with.
The Plaintiff's costs and expenses of this application be costs in the external administration, within the meaning of section 5-15 of the Insolvency Practice Schedule (Corporations) being Schedule 2 of the Corporations Act before striking the surplus to be distributed.
Pursuant to section 480(d) of the Corporations Act, the liquidator be released as liquidator of the Company and the Australian Securities and Investments Commission ("ASIC") deregister the Company upon the ASIC form 5603 End of Administration Return lodged by the Liquidator with ASIC by 31 March 2022. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

BACKGROUND 5 The Company was registered on 21 March 2005 and conducted the business of selling Saeco branded coffee machines and relevant accessories. 6 On 6 November 2019, the liquidator was appointed liquidator of the Company pursuant to an order of the Federal Court in these proceedings. The Company was placed into liquidation on the application of its major shareholder, Philips Saeco Australia Pty Ltd, for a voluntary winding up under section 461(1)(c) of the Corporations Act 2001 (Cth). The basis of the application was that the Company suspended its business and had not traded since approximately late 2010. 7 A company search obtained by the liquidator, which is in evidence, indicated that at the time the Company was placed into liquidation, it did not have a current director. The former director, Mr Christopher Eagan ceased to be a director on 30 March 2012. The Company's sole remaining officer at the relevant time was Phillip William Roberts, the Company's secretary. 8 The company search also indicated that in addition to Philips Saeco, the Company had three other shareholders; Ubertini Investments Pty Ltd, Domencio Maione and Pierluigi Antonio Fantone.

Investigations 9 On 3 December 2019, the liquidator issued a report to creditors and shareholders of the Company as required by rules 70-30 and 70-40 of the Insolvency Practice Rules (Corporations) 2016 (Cth). The report outlined the results of the liquidator's investigations into the affairs of the Company and stated, amongst other things: (1) The liquidator had issued written demands for books and records to each of the shareholders; (2) The liquidator did not receive any response from Ubertini or Mr Fantone; (3) The Company had a balance of $387,698.49 in a Commonwealth Bank account, which was deposited into the Company's liquidation account on 13 November 2019; (4) the entry of $200.00 cash on hand on the Company's balance sheet dated 30 September 2019 was merely an accounting entry to reflect the paid up capital of the Company, and no realisation is expected in relation to any cash on hand; (5) the Company's balance sheet as at 30 September 2019 named Mr Maione and Mr Fantone as debtors in the amount of $305,757; (6) that based on information provided by Mr Roberts, the Company's secretary, and confirmed by three of the four shareholders (the other shareholder's location being unknown) there were verbal agreements between the four shareholders dating from around the time the Company ceased trading to the following effect: (a) the two minor shareholders, being Mr Fantone and Mr Maione, who each hold 17.5% of the shares, were to take possession of the Company's remaining plant and equipment with the associated value attributed to those assets on the Company's balance sheet as at 30 September 2019 and the Report on Company Activities and Property provided by Mr Roberts to the liquidator on 21 November 2019 and upon taking possession would surrender their respective shares; (b) the Company's remaining cash at bank would be distributed to Philips Saeco who holds 60% of the shares, and Ubertini who holds 5% of the shares proportionally; (7) The liquidator's investigations had revealed the only creditors of the Company to be: (c) The petitioning creditor, Philips Saeco, in respect of its costs on the winding up application; and (d) The Australian Taxation Office (ATO) as a result of outstanding lodgements. 10 As a part of his appointment, the liquidator took steps to ascertain the identities of any other potential creditors of the Company by publishing a public notice on ASIC's Public Notice website calling for formal proofs of debt. The liquidator has confirmed that he has not received any further formal proof of debts from any unknown creditors or otherwise been made aware of any further potential creditors. 11 The liquidator also engaged a tax accountant for the purpose of preparing and filing the Company's outstanding lodgements with the ATO. On 3 June 2021, the liquidator received a letter from the ATO confirming that the Company had no outstanding taxation liabilities as at that date. 12 The end result of liquidator's efforts is that the remaining liabilities of the Company are the petitioning creditor's costs of the winding up application which have been taxed and will be paid in priority in accordance with s 556 of the Act.

Distribution of surplus 13 As noted above, all shareholders bar one, Mr Fantone, who has not been located, have confirmed their respective understanding as to the arrangement set out in paragraph 9(6) above. In the absence of a response from Mr Fantone, and for the sake of completeness, the liquidator seeks approval to distribute the surplus funds of the liquidation in accordance with arrangement between the shareholders and subject to the priority of costs of the liquidation. 14 On 13 September 2021 the liquidator caused an updated report to be sent to the creditors and shareholders of the Company giving notice of the present application. In the updated report, the liquidator estimated the surplus funds to be approximately $190,000 taking into account the priority of costs in a liquidation. If approved, the liquidator estimated the surplus funds would be distributed to Philips Saeco and Ubertini in the amounts of $175,385 and $14,615 proportionately. The liquidator's understanding, based on his evidence, was that Mr Fantone and Mr Maoine would not participate in any potential dividend distribution in accordance with the terms of the arrangement summarised above and that any debt owing to them would be written off from the Company's balance sheet. 15 As at the date of hearing, the liquidator had not received any response from Mr Fantone to any communications sent by his office including the December 2019 and September 2021 reports to creditors and shareholders. Neither the creditors nor shareholders have raised any objections to the proposed distributions the subject of the present application.

Remuneration 16 The liquidator's remuneration of $55,393 excluding GST, was approved by creditors on 17 January 2020, comprising remuneration of $20,393 for the period from 6 November 2019 to 2 December 2019 and up to a maximum of $35,000 for the period from 2 December 2019 to the conclusion of the liquidation. 17 As a part of the application, the liquidator has also sought approval for fees arising from additional work including fees in the amount of $22,045 incurred between 25 March 2021 to 10 September 2021 in addition to fees up to $25,000 for work anticipated to be required to the completion of the liquidation. In his updated report to creditors the liquidator informed creditors that additional fees were incurred as a result of investigations required to be conducted to identify potential creditors, to resolve the Company's ATO liabilities and in respect of the present application seeking approval for the distribution of surplus funds.

Distribution of surplus 18 Section 488(2) of the Act requires that a liquidator seek special leave of the Court to make a distribution of surplus funds. 19 In the matter of Hawden Property Group Pty Ltd (in liq) (ACN 003 528 345) [2018] NSWSC 481; (2018) 125 ACSR 355 at [57], Gleeson J stated: [57] The phrase "special leave" only requires that an application be made to the Court, rather than the matter being dealt with as part of some other administrative process: Maertin v Klaus Maertin Pty Ltd (in liq) (2009) 232 FLR 239; [2009] NSWSC 618 at [40]-[41] (Austin J) citing Re DS Millard & Son Pty Ltd (1997) 24 ACSR 71 (Young J); Re RH Trevan at [6]. The purpose of the provision is to ensure that there is, in reality, a surplus, in that creditors' claims have been recognised and met in full, and that the correct relativities among the contributories have been observed: CGU Workers Compensation (NSW) Ltd v Ascom Service Automation (Australia) Pty Ltd [2005] NSWSC 747 at [4] (Barrett J). 20 Rule 7.9 (1) of the Federal Court (Corporations) Rules 2000 sets out the requirements in connection with an application for special leave pursuant to section 488 of the Act, namely that the liquidator must outline how they intend to distribute any surplus. I am satisfied that the liquidator's affidavits of 7 September 2021 and 6 October 2021 meet these requirements. 21 The liquidator seeks an order dispensing the requirement of publication set out in r 7.9(2) of the Corporations Rules. I am satisfied that it is appropriate to dispense with this requirement in circumstances where: (1) the liquidator has already called for formal proofs of debt to be submitted in the liquidation by sending out notification letters and publishing an advertisement via the ASIC Public Notice website and no creditors have come forward; (2) all unsecured creditors have been discharged and there are no outstanding creditors, aside from the petitioning creditor who is to be paid from the Company's assets; (3) notice of this application has been given to ASIC and all contributories, save for Mr Fantone; (4) each of the contributories, save for Mr Fantone, have confirmed that they do not wish to be heard on the application; (5) whilst Mr Fantone has not responded to any communications sent by the liquidator, I am satisfied, based on the affidavits of service relied upon by the liquidator during the hearing, that reasonable steps have been taken to bring the matters the subject of this application to Mr Fantone's attention; and (6) the company ceased trading more than 10 years ago. 22 The basis upon which a liquidator is required to seek special leave under s 488 is to ensure that there is, in reality, a surplus and that all creditors' claims have been recognised and met in full: Walley (Liquidator), in the matter of Icicek Holdings Limited (in liquidation) [2020] FCA 701 at [36] (Gleeson J) citing In the matter of Global Alliance Corporation Pty Ltd [2020] NSWSC 119 at [11] (Emmett AJA). 23 It is apparent from the liquidator's evidence that the only outstanding liabilities of the Company are the petitioning creditor's costs of the winding up application which have been fixed in the amount of $27,300. In the absence of any further potential creditors and given that no shareholders or creditors have raised any objections to the distribution sought to be made, I grant special leave to the liquidator to distribute any surplus of the liquidation. 24 Regulation 5.6.71(1) of the Corporations Regulations 2001 (Cth) requires that an order in a winding up by the Court authorising the liquidator to distribute any surplus to a person entitled to it must, unless the Court otherwise directs, have annexed to it a schedule in accordance with Form 551. The relevant form contains a table entitled "Schedule of contributories or other persons to whom a distribution of surplus is to be paid". Given the identities of the contributories are clear in present case and noting that there are only two distributions sought to be made, the liquidator submits, and I accept, that no useful purpose would be served by requiring a Form 551 be completed in this case: Icicek Holdings, [38]; Re Anne Lewis Pty Ltd [2016] NSWSC 1860, [18] (Black J). Accordingly, I will also dispense with this requirement.

Release of liquidator 25 Section 480 of the Act relevantly provides: When the liquidator: (a) has realised all the property of the company or so much of that property as can in his or her opinion be realised without needlessly protracting the winding up, and has distributed a final dividend (if any) to the creditors and adjusted the rights of the contributories among themselves and made a final return (if any) to the contributories; … he or she may apply to the Court: … (d) for an order that he or she be released and that ASIC deregister the company. 26 Rule 7.5 of the Corporations Rules sets out requirements in connection with an application pursuant to section 480 of the Act. 27 I am satisfied that all assets of the Company have been realised and that all outstanding liabilities have been met or are capable of being met from the balance of the funds of the liquidation. The liquidator has given evidence that all contributories (save for Mr Fantone whose position is addressed above) have been put on notice of the application and have not posed any opposition. ASIC was also notified of the application on 30 September 2021 and has informed the liquidator that in accordance with its policy regarding applications made under Chapter 5 and Schedule 2 of the Act, it only seeks to be heard on a limited range of applications. The liquidator submits, and I accept, that as the present application does not fall within the limited scope of the applications outlined in the policy to which the liquidator's attention was directed, that ASIC does not wish to be heard on the application. 28 For these reasons, pursuant to s 480(d) of the Act, I will order that the liquidator be released as liquidator of the Company and that ASIC deregister the Company. The time frame for these steps to be taken will provide for the liquidator to file a final business activity statement and tax return.

Remuneration, costs and expenses 29 On the basis of the liquidator's evidence, I approve the additional remuneration in the amount of $22,045 and a further amount of $25,000 for future remuneration to the conclusion of the liquidation. I note that the only remaining creditor, Philips Saeco, has also confirmed that it approves the liquidator's additional and future remuneration. I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Cheeseman.

Corporations Act 2000(Cth)

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