Baskerville v Tow.com.au Pty Ltd

1. Leave be granted to the applicant nunc pro tunc pursuant to s 490(1)(a) of the Corporations Act 2001 (Cth) (the "Act") for the respondent, Tow.com.au Pty Ltd ACN 168 470 639, to resolve that it be wound up voluntarily on 23 June 2018 and that the applicant, Christopher John Baskerville, be appointed liquidator of the company on and from that date.
2. The applicant's costs associated with this application be costs in the liquidation of the respondent.
3. The costs incurred by the petitioning creditor, Harvey's Towing (Qld) Pty Ltd, in the winding-up proceeding filed on 22 June 2018 in the Supreme Court of Queensland be fixed in the sum of $7,921.25 and payable in accordance with s 556(1)(b) of the Act as if the respondent were wound up by an order of the Supreme Court of Queensland.
4. Pursuant to s 90-15 of the Insolvency Practice Schedule (Corporations) of the Act in relation to the external administration of the respondent, that s 91 of the Act operate such that the relation-back day be fixed at the date on which the winding-up proceedings were filed, namely, 22 June 2018. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

GREENWOOD ACJ: 1 This is an application under s 490(1) of the Corporations Act 2001 (Cth) (the "Act"). That section provides that, except with the leave of the Court, a company cannot resolve that it be wound up voluntarily if an application for the company to be wound up in insolvency has been filed. The applicant in these proceedings is Christopher John Baskerville as liquidator of the respondent company. I will return to that matter in a moment. 2 The applicant for the orders also places reliance upon Sch 2 to the Act which contains provisions under the general topic of the Insolvency Practice Schedule (Corporations). In particular, the object of the Schedule is given emphasis in the sense that the Schedule recites that the object is to regulate the external administration of companies consistently unless there is a clear reason to treat a matter that arises in relation to a particular kind of external administration differently and to regulate the external administration of companies to give greater control to creditors. 3 Emphasis is also placed upon cl 90-15 of that Schedule, which provides that the Court may make such orders as it thinks fit in relation to the external administration of a company. Of course, s 490(1) contemplates that leave of the Court may be given and that confers upon the Court a broad discretion as to the factors to be taken into account in determining whether such leave should be given. 4 Some of the background material facts are these. On Friday, 22 June 2018, a winding-up application was filed in the Supreme Court of Queensland, No. 6635 of 2018, by Harvey's Towing (QLD) Pty Ltd, by which that company claims an amount of $232,133.43 is payable to it by the respondent in these proceedings, which I will call the winding-up proceeding. 5 On Saturday, 23 June 2018, at a general meeting of members of the respondent, a resolution was passed that the respondent, that is, the company, be wound up voluntarily and that Christopher Baskerville be appointed as liquidator of the company. The applicant and the respondent's director, however, first became aware of the winding-up proceeding on the morning of Monday, 25 June 2018, by email and letter from the solicitors for the applicant creditor in the winding-up proceeding. 6 Another particularly relevant matter is this. On 14 June 2018, the State of Queensland sought and obtained a mandatory injunction in the Supreme Court of Queensland directing the respondent and its director to take certain steps in relation to confidential information. The time for compliance with the mandatory orders was 4.00 pm on 21 June 2018. The State consented to an extension of the time for compliance with the orders until 4.00 pm on 28 June 2018. The applicant and the State of Queensland agreed on 28 June 2018 to a further extension until 4.00 pm on 19 July 2018. 7 The liquidator, in the interests of creditors generally, is required to take steps to ensure that the company complies with the orders of the Supreme Court. The applicant creditor, which is the petitioning creditor in the winding-up proceeding, consents to the relief sought in this application by the present applicant before this Court. Moreover, it does not oppose the order addressing the question of the quantification of its costs in the winding-up proceeding and that those costs be payable in accordance with s 556(1)(b) of the Act. 8 This morning, the Court was presented with an email from the solicitors for the petitioning creditor in which they confirm that the petitioning creditor consents to the proposed draft orders attached to Mr Fitzgerald's email below, and those draft orders are the draft orders which are before the Court now and are orders which the Court proposes to make in the exercise of the discretion to grant leave. 9 It is not necessary to recount the facts in any further detail. It is clear that the mandatory injunction orders require the company to be administered by Mr Baskerville in a way that enables the company to discharge its obligations under those orders. However, let me simply reflect on the propositions which are put by the applicant as to why it is that leave ought to be granted in the terms of the orders proposed. 10 First, it is said that the respondent is currently subject to the mandatory injunction orders I have mentioned and, to date, two extensions have been granted to the respondent by Atkinson J in the Supreme Court. 11 Second, those orders require the delivery up and destruction of various documents and records. The applicant is concerned that such delivery and destruction may impact the future administration of the respondent's liquidation. The applicant is also cognisant of his obligations to preserve company records. It is therefore imperative, it is said, that the applicant's appointment be ratified as soon as possible so as to enable him to commence the process of assessing what records are captured by the terms of the mandatory injunction and whether or not those records ought to be destroyed, consistent with the orders. 12 Third, the applicant has taken steps to comply with those orders, namely, by securing the respondent's electronic records. The applicant, as an officer of the Court, is best placed, it is said, to ensure the respondent's compliance with the orders. 13 Fourth, it is said that the genesis to the injunction filed was the State's concern as to the dissemination of what is said to be confidential information. The applicant says that the information/data received by the applicant to date has been secured and access to that information has been restricted. 14 Fifth, it is said that if leave is not granted, the applicant would have no basis or authority to retain the information. The subsequent transfer of that data, either to an alternative liquidator should the winding-up proceed on 18 July 2018 or to the respondent's director, would increase the risk of the information being compromised or disseminated. It is also said that in the short time since the applicant has been appointed as liquidator he has performed a large number of tasks. He has adopted a proactive approach to the appointment. 15 There appears to be little doubt, it is said, that the respondent's future will be an external administration. That seems plainly so. Should leave not be granted for the respondent to be wound up voluntarily and the applicant to continue as liquidator, the replacement liquidator will necessarily be required, it is said, to duplicate the tasks undertaken by the applicant to date. It is also observed that the winding-up application is not listed for hearing until 18 July 2018. There will thus be a considerable period of time between now and then when things need to be done and the prudential administration of the company needs to take place in the interests of creditors generally. So it follows that in the light of those submissions and against the background of the facts I have mentioned, I accept that there is a good basis for leave to be granted as sought by the applicant. 16 I should also note that the circumstances which I have identified are entirely consistent with those factors identified by McKerracher J of this Court in a matter called In the Matter of Gogo's Food Service Pty Ltd [2018] FCA 936, and the factors I have identified are also consistent with factors informing the exercise of the discretion in the matter of In the Matter of B & V Lynch Pty Ltd [2015] FCA 908. I also note that these matters are consistent with factors discussed by Black J in the Supreme Court of New South Wales in the matter of In the Matter of Halal Meats Australia Pty Limited [2016] NSWSC 1946. 17 Having regard to all of these factors under the principles of law identified in those authorities, I am satisfied that the orders as sought ought to be made. I should mention that one of the orders, namely, Order 3, contemplates the fixing of the costs of the petitioning creditor in the proceedings in the Supreme Court of Queensland. Ordinarily, of course, the question of quantification of costs would be a matter falling entirely to the Supreme Court of Queensland in the exercise of its jurisdiction. However, having regard to the orders that are made today nunc pro tunc under s 490(1)(a) of the Act, effectively validating the liquidation as from the appointment date, it seems to me entirely consistent with principle that the Court can fix the amount of a creditor's claim. 18 As it turns out, the particular nature of the creditor's claim is a claim for costs, but, nevertheless, the Court in the context of the present proceedings can fix the quantum of the creditor's claim, albeit that the subject matter is one of costs. In any event, I note, of course, that the petitioning creditor consents to the quantification order in those terms reflected in Order 3. For the purpose of the orders to date, although I have expressed some ex tempore reasons explaining why the order is made, I have taken the opportunity to recite in the order the critical factors which then give explanation to the four formal orders that follow. Accordingly, I make the orders as sought and reflect in the form of the orders the recital matters which give content to the orders. And they will be the reasons and the orders. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Acting Chief Justice Greenwood.