Creditors of Antal-Air Pty Ltd (ACN 007 213 738) v Antal-Air Pty Ltd

THE COURT 1 On 12 July 2004, an originating process was filed in the Court, which was headed "IN THE MATTER OF THE CREDITOR'S OF ANTAL-AIR PTY LTD (ACN 007 213 738), Applicants, and ANTAL-AIR PTY LTD ("ADMINISTRATOR APPOINTED") (ACN 007 213 738), Respondent, and AUSTRALIAN SECURITIES & INVESTMENT COMMISSION (as per Rule 2.8(3)), Respondent". The application was filed by or on behalf of Mr Antal Bittmann. It claimed to have been made under ss 449A, 449B(a), 473(1) and 447B of the Corporations Act 2001 (Cth) ("the Act"), and under paras 8, 139, 208, 211 and 212 of The Law Reform Commission Report No. 45. 2 In substance, the "applicants" sought to have "the Respondents' Administrator" removed from office, for having "destroyed the Respondent, Antal-Air Pty Ltd, rather than save it", as per paragraph 15 of the Corporate Law Reform Bill 1992 - Explanatory Memorandum. The applicants also sought to invoke ss 558FA(1)(b), 558FB(1)(b) and 596AB to restrain the "Administrator/Liquidator" from entering into a transaction that was to the detriment of the first Respondent's "genuine creditors" and the employees' entitlements. 3 On 12 July 2004, Mr Bittmann filed an affidavit in support of that process. To that affidavit there were exhibited a number of documents. In those documents, Mr Bittmann claimed that Antal-Air Pty Ltd ("Antal-Air") either had been, or ought to have been, in external administration. He further claimed that the liquidator had "destroyed the company". 4 There were several additional interlocutory applications filed prior to the matter being heard by Goldberg J on 10 August 2004. The first was an interlocutory application filed on behalf of Mr Bittmann on 23 July 2004 by which he sought to have the liquidator examined in relation to the winding up of Antal-Air. Next, a notice of motion was filed by or on behalf of Antal-Air and the liquidator on 30 July 2004 in which they sought an order that the proceeding be dismissed pursuant to O 20 r 2(1)(a) of the Federal Court Rules ("the Rules"). Finally, on 9 August 2004, Mr Bittmann filed a notice of motion seeking (1) an order that the notice of motion filed on 30 July 2004 itself be dismissed under O 20 r 1(1)(a) and (b) of the Rules; (2) an order that the liquidator be removed from office; (3) that the Court make such orders under s 447B(2) of the Act as it deemed necessary to protect the interests of creditors; and (4) that the Court order the liquidator to compensate the creditors for their losses. 5 On 10 August 2004, Goldberg J ordered that the interlocutory process filed on 23 July 2004 and notice of motion filed on 9 August 2004 be dismissed. His Honour also ordered that the originating application filed on 12 July 2004 be dismissed and that Mr Bittmann pay both Antal-Air's, and the liquidator's costs of and incidental to the application, the interlocutory processes and the notices of motion. In effect, Goldberg J found that the originating process did not disclose any reasonable cause of action. 6 On 30 August 2004, Mr Bittmann filed a "notice of appeal", purporting to appeal from the whole of the judgment of Goldberg J and seeking to have the Court set aside his Honour's orders. In response, Antal-Air filed an objection to competency dated 13 September 2004 seeking orders that the appeal be dismissed as incompetent pursuant to O 52 r 18(1) of the Rules. 7 The objection to competency contained two grounds. First, it contended that the judgment below was interlocutory, and that an appeal could not be brought from that judgment without leave: s 24(1A) of the Federal Court of Australia Act 1976 (Cth) ("the Federal Court Act"). Next, it argued that the "appellants" ("the Creditors of Antal-Air Pty Ltd") had no legal standing to bring an appeal given that, collectively, they were not "a legal person". 8 On 29 September 2004, Mr Bittmann filed a notice of motion seeking to have the objection to competency dismissed pursuant to O 20 r 1(1)(a)(b) or O 20 r 2(1)(c) of the Rules. The notice of motion also sought costs from the liquidator and an order that "the appeal process proceed to the Full Court to accept Chapter 5 - External Administration and all of the parts within". 9 Clearly, the first issue to be considered is whether the objection to competency should be upheld. However, before turning to that issue, it is appropriate to summarise briefly the reasoning of Goldberg J in ordering that the application be dismissed. 10 In his consideration of the matter, Goldberg J made the following pertinent findings: · the application had been filed by or on behalf of Mr Bittmann notwithstanding that the heading of the application read "In the Matter of the Creditor's [sic] of Antal-Air Pty Ltd". · Mr Bittmann believed that Antal-Air either had been, or should be, in external administration. Moreover, he believed that the liquidator had "destroyed" the company by proceeding to wind it up. · what the liquidator had in fact done was to take such steps as he considered appropriate for the winding up of the company and the termination of its commercial activities. · even though no proper applicant had been named in the originating process, that was a matter that could easily be cured by substituting the name of a proper identifiable applicant. However, because his Honour had reached a view about the nature of the cause of action sought to be raised, he was prepared to assume for the purposes of the proceeding and the notices of motion before the Court that the proceeding had been brought by an applicant competent to bring the application. · under the Act, there was a clear division between the appointment of, and the consequences of appointing, a liquidator and the provisions that relate to the appointment of an administrator under Pt 5.3A. · it was clear that, on 20 April 2004, the Court, through Registrar Connard had ordered that Antal-Air be wound up in insolvency under the provisions of the Act, and that a liquidator be appointed for the purposes of the winding up. That order had been entered, and had not been set aside. Accordingly, the liquidator had been properly appointed and the order that Antal-Air be wound up stood undisturbed. · the records maintained by the Australian Securities and Investments Commission indicated that there had been notification of the making of a winding up order on 20 April 2004 and also notification of appointment of a liquidator by the Court. To the extent that Mr Bittmann contended that one of the documents in question, a Form 505, suggested that an administrator had been appointed, he had simply misunderstood the document; and · there was no justification for the view that the liquidator either was, had been, or should have been, appointed as an administrator under Pt 5.3A of the Act. He was properly appointed as a liquidator, and the order of 20 April 2004 was authority for that appointment. 11 Furthermore, Goldberg J stated at [17]: "I am satisfied that the originating process filed on 12 July 2004 does not disclose any reasonable cause of action. I am also satisfied that there is no basis disclosed in the material for the examination sought in the interlocutory process. I am satisfied that there is no basis upon which the relief sought in Mr. Bittmann's notice of motion of 9 August 2004 that the respondent's notice of motion be dismissed should be granted. There is no basis or cause of action shown as to why the liquidator should be removed from office and, in the present circumstances, the company being in liquidation and not under external administration, there is no basis upon which the Court can make an order under s 447B(2) of the Act or, indeed, any other provision of Pt 5.3A of the Act". 12 As already indicated, as a result of those findings, Goldberg J made the orders to which we have previously referred. The reason that his Honour ordered Mr Bittmann personally to pay the costs of Antal-Air and the liquidator was that he regarded Mr Bittmann as being, in reality, the applicant in the proceeding. Moreover, Mr Bittmann had been given every opportunity to withdraw his misconceived application, without costs, but had declined to do so.