James, in the matter of Liquor National Pty Ltd (in liq) v Liquor National Pty Ltd

JAGOT J: 1 An application has come before me urgently today for deferral of the deregistration of various companies, pursuant to s 509(6) of the Corporations Act 2001 (Cth) (Corporations Act). Today is the last day before the deregistration of the companies will take effect. 2 I note that s 509 of the Corporations Act was repealed and substituted by operation of the Insolvency Reform Act 2016 (Cth), which commenced on 1 March 2017. However, s 1604 of the Corporations Act provides that "[t]he repeal and substitution of section 509 by Schedule 2 to the Insolvency Law Reform Act 2016 applies where external administration of the company ends during a financial year starting on or after 1 July 2017". In the present case, the external administration of the companies ended before 1 July 2017. On this basis the former s 509 continues to apply in this case. A similar approach was taken by Markovic J in Campbell-Wilson v Australian Securities and Investments Commission [2017] FCA 391, at [3] - [4]. 3 The way in which this application has proceeded, due to its urgency, is not particularly satisfactory. I do not say this to be critical of any party, but it is apparent that the dealings involving the first to fourth defendants, a group of companies of which the plaintiff was a shareholder and director and two banks, ANZ and Rabobank Australia Ltd which provided funding to the companies, have a lengthy and complex history. To understand all of the relevant dealings between the various entities in the limited time available would be impossible even if, contrary to the submissions for Rabobank and the liquidators appointed by it who oppose the application, all relevant evidence which they submit they would have adduced if there had been sufficient time available were before me. 4 The relevant group of companies was part of a wine conglomerate. Rabobank held security over some companies in the group in respect of funds advanced to those companies to the amount of about $25 million and ANZ held security over other companies in the group in respect of funding advanced to those companies in the amount of about $12 to 13 million. 5 In 2013, ANZ appointed receivers to the ANZ funded companies, which triggered events of default under the contractual arrangements with Rabobank. Accordingly, Rabobank subsequently appointed receivers to the Rabobank funded companies. 6 The plaintiff submits that in the course of the liquidation of the companies, various unlawful actions by the ANZ receivers resulted in substantial detriment to the companies including trespass to or conversion of chattels and sale of assets at an undervalue. The plaintiff, over a relatively lengthy period of time, has sought to bring derivative actions against ANZ and the receivers on behalf of the companies in the Supreme Court of New South Wales, and has been unsuccessful for various reasons including lack of funding. What is now sought is an order, the effect of which would be that the companies are not deregistered today, as they otherwise would be, under s 509(5) of the Corporations Act. Rather, they would be deregistered in four years' time, by reason of the making of an order under s 509(6). 7 Various authorities reflect that the power under s 509(6) to grant a period before deregistration may only be exercised once, and must involve the identification of a fixed and certain day on which the company is to be deregistered, which is not amenable to subsequent adjustment. 8 In particular, in Re Rosaub Pty Ltd (in liq) [2005] NSWSC 689; (2005) 54 ACSR 371 at [15] to [17] Barrett J expressed the view that an order under s 509(6) could not be made depending on an event which was contingent. He explained that, rather, there must be an actual specification of a date on which the Australian Securities and Investments Commission (ASIC) is to deregister the company. His Honour at [16] referred to the decision of Marks J in the Victorian Supreme Court, Deputy Commissioner of Taxation v Bettina House of Fashion Pty Ltd (in liq) (unreported, VSC, 18 November 1988) in relation to a similar provision, and of Young J in Stores v Austra Tanks Pty Ltd (unreported, NSWSC, 8 August 1988). In Stores, Young J fixed a date which was three and a half years after the making of the order but reserved to the court further capacity to vary that order on the application of either the plaintiff or the liquidator if the litigation should be concluded earlier. Barrett J in Rosaub said that he could not see how any subsequent order of the kind thus contemplated could be effective, given that it could not be said to meet the specification in s 509(6) that an order fixing a date other than that set by s 509(5) be made within three months after lodgement of the liquidator's return. 9 This somewhat inconvenient result has been followed in a number of other decisions, including in this Court. For example, in AJ Azzopardi Industries Pty Ltd ACN 104 653 369 (formerly known as Total Plant Services Pty Ltd) (in liquidation) (2014) FCA 710, Farrell J at [19] identified that because she was not satisfied that the power could be exercised more than once and any order must be made within the three month period, the order extending the date of deregistration should be for a period of five years. 10 This places me in the unenviable position of having to determine today whether the deregistration of these companies should be deferred for a lengthy period, effectively four years, in circumstances where on the evidence what is proposed is the appointment of a liquidator who will be funded up to the amount of only $50,000 for the purpose of enabling, if considered appropriate by the liquidator, investigation, including possible examinations of relevant persons, to determine whether the identified claims against ANZ and the ANZ receivers should be pursued. 11 The plaintiff submits that the observations of Barrett J in Rosaub at [11] - [12] establish that the relief sought under s 509(6) is of a less radical nature than reinstatement of a company under s 601AH(2), and that it is sufficient for an order to be made under s 509(6) that the deferral of deregistration be seen to be for a bona fide beneficial purpose of the company. 12 It is also submitted for the plaintiff that that onus has been discharged because there are claims against ANZ and the ANZ receivers which are bona fide and at least arguable. Those claims are for some $48 million which exceeds the debt said to be owed to Rabobank. 13 Rabobank, a creditor, and the liquidators appointed by Rabobank have appeared today pursuant to leave which I granted under rule 2.13(1)(a) of the Federal Court (Corporations) Rules 2000 (Cth). 14 Rabobank and the Rabobank liquidators, who are commonly represented, submit that they have had insufficient time to address various factual matters upon which the application depends and that there can be no prejudice to the plaintiff by refusal of this application because the plaintiff would be able to seek orders for reinstatement under s 601AH. Any hearing in relation to an application for reinstatement could then proceed in an orderly manner on the basis of all relevant facts. 15 It is true that the application has been brought on urgently. Nevertheless, Rabobank has appeared today and made submissions. It is also true that a number of those submissions involved factual contentions which are in dispute. For example, it is put that the plaintiff failed to provide the liquidators with books and records of the companies, as required. On the other hand, however, there is evidence that the plaintiff has not had available to him any of the books and records of the companies since the ANZ receivers took possession of what was, effectively, the head office of the companies at Broadmeadow for a period before they were evicted, those premises not being part of the secured property. The plaintiff's position is that all of the records of the companies disappeared or otherwise went missing after or as a result of this unlawful entry to premises over which ANZ did not hold security. 16 It is put for Rabobank that the plaintiff has been pursuing the claims against ANZ on a derivative basis since February 2016 and that, as a result, I should not readily accept that the proposed examinations are necessary and that, rather, I should infer that the plaintiff is seeking to maintain potential claims against ANZ as part of his resistance to ANZ's attempts to bankrupt him. There is no doubt that the plaintiff has been attempting to pursue these claims, but it is also apparent that the claims have never been subject to any judicial determination on their merits. 17 It is put for Rabobank that that these are hardly hitherto unknown claims. The claims were well-known to the Rabobank liquidators, and the liquidators decided not to take any action in relation to the claims. Again, however, part of the dispute relates to dealings between the Rabobank liquidators and ANZ which culminated in a deed of release relating to at least part of but, as I understand it, not all of the claims. Moreover, the effect of the terms of that deed of release, apparently, is also in dispute. 18 It is put for Rabobank that the plaintiff did not attend any meetings of creditors when he had the opportunity to do so. Again, however, there is a factual dispute about this, which I am not presently able to resolve. I am informed by counsel for the plaintiff that no notices of the meetings were received, and it was only on 16 May 2017 that the plaintiff, through conducting separate searches, became aware that the period of three months for deregistration to occur under s 509(5) would terminate today. 19 It is put for Rabobank that, during the course of the liquidations, the plaintiff could have moved to replace the liquidators or have a special purpose liquidator appointed but, instead, has come to the Court on an urgent basis seeking the order under s 509(6), in circumstances where Rabobank has not had a sufficient opportunity to obtain evidence of all relevant circumstances. 20 The plaintiff submits, however, that between 16 May and 9 June 2017, the date on which the proceedings were commenced, the plaintiff has obtained $50,000 funding and the consent of the proposed liquidator. It could not be said that there has been any unreasonable delay on the plaintiff's part in the bringing of the proceedings. 21 I do not find it easy to resolve where the interests of justice lie in relation to the part of the application which is sought to be prosecuted today. This is largely because of the disputed issues of fact, and the truncated time which is available. 22 Ultimately, I give substantial weight to a letter dated 20 June 2017 from the solicitors for ANZ and the ANZ receivers. It is apparent from the submissions put for the plaintiff that the primary focus of the foreshadowed investigations involve claims against ANZ and the ANZ receivers. According to that letter, ANZ and the ANZ receivers do not wish to be heard in respect of orders 1, 3, 5, 7 and 10 sought in the application, which are the orders for deferral of the deregistration and reinstatement of another already deregistered company, James Estate Wines Pty Ltd. However, according to that letter, if the Court is minded to make these orders, they would wish to be heard in respect of the balance of the orders sought, in particular, relating to the potential appointment of Mr Hurst, as liquidator of the relevant companies. 23 I have ultimately decided that the application has been brought properly, not with undue delay and that Rabobank and the Rabobank liquidators otherwise have had an opportunity to be heard. While they may have adduced more evidence if more time had been available, the application must be determined today. Further, the threshold for the making of the orders, namely an apparent beneficial purpose that the companies not be deregistered, has been satisfied. In the circumstances, I do not consider that any speculative prejudice to Rabobank or the liquidators from the deferral of deregistration of the companies is a sufficient reason not to make the orders sought. 24 I accept that all persons who have a right to do so - there being a dispute about who those persons are - must be heard in relation to the appointment of a liquidator to the companies, but it has been common ground before me today that this argument can happen in an orderly fashion on another day. Accordingly, I propose to make orders 1, 3, 5, 7 and 10 in the originating process dated 9 June 2017. I will otherwise make orders listing the balance of the application before me to be determined. 25 I have otherwise expressed the view that, notwithstanding the position the plaintiff takes, that ANZ has no right to be heard, ANZ should be served with the relevant documents and given an opportunity to liaise with the other parties, to determine what orders should be made to ensure that all relevant matters about the appointment of a liquidator can be heard in a far more orderly way than the present part of the application with which I have dealt today. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot.

SCHEDULE OF PARTIES NSD 907 of 2017 Defendants Fourth Defendant: PRINT NATIONAL AUSTRALIA PTY LTD (IN LIQUIDATION) ACN 107 512 649 Fifth Defendant: AUSTRALIAN SERVICES AND INVESTMENTS COMMISSION