Judgment
1On 3 July 2007, Brereton J made, in these proceedings, an order for the winding up of each of Adellos Pty Ltd ("Adellos") and Castlove Pty Ltd ("Castlove") on the just and equitable ground and an order appointing Mr Jones as liquidator: see Visnic v Sywak [2007] NSWSC 701.
2The proceedings were principally concerned with the identification of entitlements to shares in Adellos, Castlove and certain other companies in which Mr Sywak and Mr Visnic were interested. A finding that the two individuals were entitled in equal proportions led on to a conclusion that each company was, in the words of Brereton J (at [121]), " deadlocked, in circumstances where there has been a total breakdown of trust and confidence between the shareholders". His Honour therefore made winding up orders in response to what were, in substance, secondary claims.
3Among orders made on 3 July 2007 was an order for the rectification of the register of members of each of Adellos and Castlove. The rectification involved, in each case, registration of Mr Sywak as the holder of one-half of the issued shares and registration of Mr Visnic as the holder of one-half of the issued shares. The registers were altered accordingly. It will be convenient to refer to the equal shareholdings in each company that resulted from this rectification as the "Sywak shareholding" and the "Visnic shareholding".
4Mr Jones has now completed each winding up to a point where such debts as were proved have been paid in full, as have all other cognisable claims and expenses, so that a surplus remains. He now seeks the special leave of the court to distribute the surplus, as well as directions as to the correct method of its distribution and application. These issues are raised by Mr Jones' interlocutory process filed on 1 September 2011 which is now before the court.
5Mr Jones has formed an opinion concerning the entitlement to surplus in respect of Mr Sywak's shareholdings. The position is, in brief, that, in the case of Castlove, that entitlement is to receive one-half of the ascertained surplus while, in the case of Adellos, the fact that Mr Sywak owed substantial sums to the company and was a creditor as well as a shareholder means that the Sywak proportion is depleted and the Visnic shareholding carries an entitlement to more than one-half of the surplus.
6There is no dissent from this view regarding the division of surplus in the winding up of Adellos - in fact, as regards the adjusted entitlement involving depletion of the Sywak proportion, there is express consent by Mr Sywak to the following proposition embodied in draft orders proposed by Mr Jones:
"Pursuant to section 485(2) of the Corporations Act 2001 (Cth), the Court adjusts the rights of the contributories of the Second Defendant, Adellos Pty. Limited (in liquidation), so that, in addition to the right to receive a distribution of 50% of any surplus funds, the contributory or contributories in respect of the shares currently registered in the name Maxwell William Prentice shall be entitled to a further priority distribution in the sum of $1,246,857.99, with such distribution to rank in priority ahead of the distribution of the balance of funds."
7Mr Jones is, however, in doubt as to how the part of each surplus attributable to the Visnic shareholding should be dealt with. The doubt is a product of a number of circumstances:
- On 3 May 2010, a sequestration order under the Bankruptcy Act 1966 (Cth) was made in respect of Mr Visnic's estate by the Federal Magistrates Court of Australia. Mr Prentice is now Mr Visnic's trustee in bankruptcy and his name has been entered in the register of members of each company in place of the name of Mr Visnic.
- On 15 August 2006 and 16 July 2007, deeds were entered into between Mr Visnic and Mr Lou Tasic. Mr Visnic, it appears, thereby became subject to certain obligations in respect of his shares in the two companies. In broad terms, the deeds provided that, in certain events (which, it seems, may have happened), Mr Visnic would transfer the shares to Mr Tasic. Mr Tasic later became a bankrupt. Mr Gleeson is his trustee in bankruptcy.
- On 29 October 2009, a deed was entered into between Mr Visnic and Quickfund Capital Pty Ltd ("Quickfund"). It appears that Quickfund agreed to lend money to Mr Visnic and he, in turn, agreed to grant to Quickfund "an equitable charge by way of security" over shares including Mr Visnic's total shareholdings in Adellos and Castlove.
- Lawyers who acted for Mr Visnic at the first stage of the proceedings (see paragraphs [1] to [3] above) have notified Mr Jones that they consider themselves entitled to a "fruits of the action" lien in respect of Mr Visnic's shares in Abellos and Castlove. I shall refer to them as "the lien claimants".
- There are ongoing proceedings between Mr Vicnic and his wife (or former wife) in the Family Court of Australia. Consent orders have been made as to division of property, including the Visnic shareholdings - in essence, 60% to Mrs Visnic and 40% to Mr Visnic (or, as it now is, his bankrupt estate). Mr Jones, as liquidator, has been made a party to the matrimonial proceedings. The Family Court made an order that Mr Jones be restrained, pending further or final orders, from distributing to any person any moneys that he has determined or determines are due to Mr Visnic as a creditor of or shareholder in certain named companies, including Adellos and Castlove. That order was later varied "to allow the Liquidator to pay to the Supreme Court of New South Wales, to the Federal Court of Australia, or to (or at the direction of) the Second Respondent, any moneys that he considers may be due to be paid in respect of the shares in any of" certain companies including Adellos and Castlove "currently held by the Second Respondent" (the "Second Respondent" is Mr Prentice as Mr Visnic's trustee in bankruptcy).
8The position is thus that the proportions of the surplus in each winding up attributable to the Sywak shareholding and the Visnic shareholding are established; and there is no impediment to distribution to Mr Sywak of the surplus related to his shareholdings; but there is uncertainty on Mr Jones' part as to the correct destination of the part of each surplus attributable to the Visnic shareholding.
9In those circumstances, Mr Jones wishes to pay into court the surplus attributable to the Visnic shareholding in each company so that the several claims and potential claims may be pursued and co-ordinated in an orderly fashion without the need for him to be involved. He makes application accordingly in the interlocutory process now before the court.
10None of the claimants I have mentioned at paragraph [7] above is a party to these proceedings, although several of them were permitted to appear by legal representatives to make their positions known when Mr Jones' interlocutory process was heard - added to which the lien claimants filed on 9 September 2011 an interlocutory process by which they sought an order joining them as defendants to these proceedings and a direction under s 479(3) of the Corporations Act (a provision allowing application by a liquidator only) that surplus in each winding up attributable to the Visnic shareholding be paid to them to the extent of their alleged debt; while Quickfund filed on 6 October 2011 an interlocutory process seeking various orders and declarations premised on the proposition that it is beneficially entitled to the Visnic shareholding and that surplus in respect of that shareholding should be paid to it. Neither of these interlocutory processes has yet been heard or determined.
11The prevailing view, if I may put it that high, is that the controversy is now one involving Mr Prentice (as the trustee in bankruptcy of Mr Visnic), Mr Gleeson (as the trustee in bankruptcy of Mr Tasic), Quickfund, the lien claimants and Mrs Visnic; that that controversy cannot be resolved except by some properly constituted proceeding in which the competing claims are fully articulated and tested; that Mr Jones, who now does no more than hold a surplus in respect of which the competing claims are made, is, in a real sense, a superfluous party; and that there is no point in his continuing to perform work attracting remuneration.
12The proposal that the part of each surplus attributable to the Visnic shareholding should be paid into court needs to be considered in the light of the nature of the respective windings up.
13Each winding up is a winding up by the court. The matter of distribution of surplus is therefore affected by certain provisions of the Corporations Act 2001 (Cth), the Corporations Regulations 2001 (Cth) and the Supreme Court (Corporations) Rules 1999. The first is s 488 of the Act:
"(1) Provision may be mad e by rules or regulations for enabling or requiring all or any of the powers and duties conferred and imposed on the Court by this Part in respect of:
(a) the holding and conducting of meetings to ascertain the wishes of creditors and contributories; and
(b) the paying, delivery, conveyance, surrender or transfer of money, property or books to the liquidator; and
(c) the adjusting of the rights of contributories among themselves and the distribution of any surplus among the persons entitled to it; and
(d) the fixing of a time within which debts and claims must be proved
to be exercised or performed by the liquidator as an officer of the Court and subject to the control of the Court.
(2) Despite anything in rules or regulations made for the purposes of subsection (1), a liquidator may distribute a surplus only with the Court's special leave."
14As contemplated by s 488(1), rules of court deal with the performance by a liquidator of the functions there mentioned. Rule 7.10 of the Supreme Court (Corporations) Rules provides as follows:
"Subject to the Corporations Act, the Corporations Regulations, these Rules, and any order of the Court, the powers and duties conferred or imposed on the Court by Part 5.4B of the Corporations Act in respect of the matters mentioned in subsection 488(1) of the Corporations Act may be exercised or performed by a liquidator appointed by the Court as an officer of the Court and subject to the control of the Court."
15The next relevant provision is s 485 of the Corporations Act :
"(1) The Court may fix a day on or before which creditors are to prove their debts or claims or after which they will be excluded from the benefit of any distribution made before those debts are proved.
(2) The Court must adjust the rights of the contributories among themselves and distribute any surplus among the persons entitled to it.
(3) The Court may, in the event of the property being insufficient to satisfy the liabilities, make an order as to the payment out of the property of the costs, charges and expenses incurred in the winding up in such order of priority as the Court thinks just."
16Regulation 5.6.71 of the Corporations Regulations is in these terms:
"(1) 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.
(2) The liquidator must send to each person to whom any surplus is distributed a notice in accordance with Form 552."
17Regulation 5.6.72 is as follows:
"If a person who receives a notice of distribution of surplus in accordance with subregulation 5.6.71 (2) lodges with the liquidator an authority in accordance with Form 553, the liquidator must distribute that surplus to the person to whom payment is directed by that authority."
18A valuable summary of the purpose and effect of these provisions is found in the judgment of Austin J in Re Klaus Maertin Pty Ltd; Maertin v Klaus Maertin Pty Ltd [2009] NSWSC 618; (2009) 232 FLR 239 at [37] to [40]:
"The provisions of the Corporations Act dealing with the distribution of surplus assets in a court-ordered winding up are notably brief and less than comprehensive. A complete account of the applicable law includes non-statutory principles developed in the English Court of Chancery in the winding up of unincorporated joint stock companies up to the middle of the 19th century, and thereafter in the winding up by the court of companies formed under companies legislation. Under s 485(2) it is the court that is required to adjust the rights of the contributories amongst themselves and distribute any surplus among "the persons entitled to it"; see Re Paragon Holdings Ltd [1961] Ch 346 at 351.
No question of adjustment of the rights of contributories arises unless the proportions in which the shares have been paid up are unequal, and so in the normal case the duty of the court is simply to distribute the surplus to those who are entitled to it. Section 485(2) does not say who they are. The corresponding provision for voluntary winding up, s 501, under which it is the liquidator rather than the court who has the duty to distribute the surplus, is that the property of the company must be applied in satisfaction of its liabilities equally and "subject to that application, must, unless the company's constitution otherwise provides, be divided among the members according to their rights and interests in the company". In the celebrated case of Birch v Cropper (1889) 14 App Cas 525, it was held that in the absence of provision to the contrary in the corporate constitution, surplus assets must be distributed rateably in proportion to the nominal amounts of the shares held by the members at the commencement of the winding up, though there was some doubt as to whether that principle was derived from the maxim that equality is equity or by implication from the statutory scheme (compare 542 per Lord Fitzgerald, with 543-5 per Lord Macnaghten).
It would obviously be impracticable to expect the court to attend to all of the tasks involved in distributing surplus assets in a winding up. Therefore s 488(1)(c) permits provision to be made by rules or regulations for enabling or requiring all or any of the powers and duties conferred or imposed on the court, in respect of (inter alia) the distribution of any surplus among the persons entitled to it, to be exercised or performed by the liquidator as an officer of the court and subject to the control of the court. The Corporations Regulations do not deal with the matter but r 7.10 of the Supreme Court (Corporations) Rules 1999 (NSW), which is in the same terms as the corresponding rules of the Federal Court and the Supreme Courts of the other States and Territories, is a simple delegation of all relevant powers of the court to the liquidator, subject (inter alia) to any order of the court.
Section 488(1) and r 7.10 are qualified by s 488(2), which says that despite anything in rules or regulations made for the purposes of subs (1), a liquidator may distribute a surplus only with the court's "special leave". In Re DS Millard & Son Pty Ltd (1997) 24 ACSR 71 Young J said that the words "special leave" merely mean that a special application must be made to the court rather than the matter being dealt with as part and parcel of some other administrative procedure. Thus, Mr Jones as liquidator has delegated power to distribute the surplus assets of the company to the persons who are entitled to it, but he may make a distribution only with the court's special leave."
19A significant point in the present context is that, in a winding up by the court, it is the court itself that adjusts the rights of the contributories and distributes surplus among the persons entitled to it. This is the effect of s 485(2). The liquidator's functions in relation to those matters are, as it were, by delegation from the court by operation of rule 7.10 (the matters being within s 488(1)(c)), with the court exercising control over the liquidator in the performance of the functions and able, at any time, to take them back and perform them itself.
20As Austin J pointed out, s 485(2) requires distribution among "the persons entitled to" surplus but makes no attempt to identify them. As he also said, however, it has long been recognised that, in the absence of some contrary provision, the relevant entitlements are those of the persons who were members at the commencement of the winding up, which entitlements are in proportion to the respective shareholdings recorded in the company's register of members at that commencement.
21A liquidator may, however, need to look beyond the register of members as it exists at the commencement of the winding up. It may be that shares have been transferred since that commencement consistently with s 468A. A second possibility is that the register has been rectified by an order made after commencement of the winding up (see, for example, Re J Earle Hermann Ltd (1914) 14 SR (NSW) 397) or, as here, that transmission in consequence of death or bankruptcy has been recorded after commencement. Third, the liquidator may have notice that fully registrable but unregistered transfers existed at the commencement of the winding up in such a way as to constitute a complete claim for rectification of the register by recognition of the transferees in place of the transferors. Fourth, if it were seen that the register had not been properly kept, there would be a duty to correct errors and to have regard to the corrected register. The third and fourth of these possibilities were recognised in Re Paragon Holdings Ltd [1961] Ch 346 at 352-353.
22A like possibility was mentioned in Re Phoenix Oil and Transport Co Ltd (No 2) [1958] Ch 565 at 472, namely, that, if a long time has passed since the winding up order, the register may no longer be a reliable indicator of the persons entitled and that "[s]omething in the nature of an inquiry as to who are the persons entitled to the surplus assets must be made by the liquidator at some stage".
23The important point is that the "entitlement" with which s 485(2) is concerned is entitlement as against the company and is either created by the constitution or, if the constitution is silent, inheres in shareholdings reflected in the register of members (as it exists at the commencement of the winding up or is later adjusted consistently with the legal requirements as to the keeping and content of the register). Where, as here, there is no particular specification in the constitution, the liquidator is in possession of the register and there is no good reason to think that it is incomplete or inaccurate, there is no responsibility to canvass for other persons who claim to be entitled to shares. But where the liquidator has notice that someone not registered claims through or under the registered holder but not in a way warranting rectification of the register, there is a question whether regard is to be had to that person and his or her claim in determining the correct destination of surplus.
24Relevant to that matter is s 1072E(10) of the Corporations Act :
"Except as provided in this section and section 169:
(a) no notice of a trust, whether express, implied or constructive, must be entered on a register kept in this jurisdiction or be receivable by ASIC; and
(b) no liabilities are affected by anything done under a preceding subsection of this section or under section 169; and
(c) nothing so done affects the body corporate concerned with notice of a trust."
25Earlier subsections allow certain kinds of trustees to become registered as holders of shares. Section 169 makes provision for shares to be recorded in the register of members as held "non-beneficially". But, as s 1072E(10) makes clear, the making of entries under those provisions does not affect the company with notice of a trust; also, the company is otherwise not to record notice of a trust in the register of members.
26Also relevant in the present case are provisions of the constitutions of Adellos and Castlove. The constitution of Adellos includes a modified version of Table A of Schedule 3 to the Companies (New South Wales) Code . Castlove's constitution includes a modified version of Table A of Schedule 1 to the Corporations Law of New South Wales. Regulation 6 of each such Table A is as follows:
"(1) Except as required by law, the company shall not recognize a person as holding a share upon any trust.
(2) The company is not bound by or compelled in any way to recognize (whether or not it has notice of the interest or rights concerned) any equitable, contingent, future or partial interest in any share or unit of a share or (except as otherwise provided by these regulations or by law) any other right in respect of a share except an absolute right of ownership in the registered holder."
27As between the company and its members, therefore, it is acknowledged, as a matter of contract (see s 140(1)), that the company is not required to recognise any interest in a share other than the registered holder's "absolute right of ownership". The rule in regulation 6 may not, however, apply as between the company and a non-member. Such a person is not privy to the s 140(1) contract. As far as the company and a non-member are concerned, s 1072E(10) is operative but its only effect is to require that the company record notice of only certain limited classes of trusts in its register and to protect the company from notice of a trust with which it might otherwise be fixed by reason of making an entry in the register in accordance with s 169 or an earlier subsection of s 1072E. Left at large by the statutory provision is the question whether the company may be bound by notice of trusts or equitable interests in respect of shares where the notice is obtained in other ways.
28A limited operation of a provision in some ways similar to s 1072E(10) was suggested by Kindersley V-C in Binney v The Ince Hall Coal and Cannel Co (1866) 35 LJ Ch 363. The case concerned rights to a dividend on shares held by one Lancaster. It was noted that the particular provision of the constitution did not mean that the company was not affected by a trust in respect of shares standing in the name of Lancaster or that the shares could not be subjected to a trust but merely that the company was not to be affected by notice of the trust. It was only concerned with the question of a good discharge to the company:
"[A]lthough they [the company] have notice that A. is a shareholder, and B. is a cestui que trust , payment of dividend to the person standing on the books shall, notwithstanding the notice of the trust, be a good discharge. That is the whole effect of this clause."
29The Vice-Chancellor continued:
"But it [the clause] does not preclude a cestui que trust of A.'s shares from coming and saying 'Do not pay my trustee the monies as if they belonged to him, but pay them to me.' Nor does it preclude the plaintiff from coming to the company and saying, 'You are injuring these shares in respect of a right which attaches to them; you have no right to make this application of the profits against Mr. Lancaster, my trustee, and therefore you have no right as against me.' It appears to me that there is nothing in this deed to prove any such right on the part of the company; in fact, it would be enabling a company to take upon themselves to say, 'We will by our deed make a provision, that whatever injustice we choose to perpetrate there shall be no remedy against that injustice in any Court of equity.'"
30In the result, the court appointed a receiver of the dividends payable in respect of Lancaster's shares pending determination of rights as between him and the plaintiff.
31In Bluebottle UK Ltd v Deputy Commissioner of Taxation [2007] HCA 54; (2007) 232 CLR 598, members of the High Court noted (at [57]) that, in Bradford Banking Co v Briggs (1886) 12 App Cas 29 , a statutory provision forbidding entry on the register of notice of trusts relieved the company from taking notice of trusts, but not from the obligation to take notice of an equitable mortgage of the shares made by a shareholder. This would appear to be consistent with the decision of Kindersley V-C.
32The High Court also noted, however, that companies had been held entitled to disregard notice of equities in cases involving a provision of the constitution to the effect that the company was not bound by, or compelled to recognise (even when having notice thereof), any equitable or other interest in a share. Reference was made to Re Perkins (1890) 24 QBD 613, a case in which a company asserted a lien in respect of issued shares for money owing by a person for whom the registered holder held the shares in trust. Lord Coleridge CJ said at 616:
"[I]t seems to me extremely important not to throw any doubt on the principle that companies have nothing whatever to do with the relations between trustees and their cestuis que trust in respect of the shares of the company. If a trustee is on the company's register as the holder of shares, the relations which he may have with some other person in respect of the shares are matters with which the company have nothing whatever to do; they can look only to the man whose name is upon the register. It seems to me that, if we were to throw any doubt upon that rule, we should make the carrying on of their business by joint stock companies extremely difficult, and might involve those companies in very serious questions, and the ultimate result would be anything but beneficial to the holders of shares in such companies themselves."
33In the same case, Fry LJ concentrated on the words in the lien article, "from or on the part of the registered holder or holders thereof [ie, of the shares], or other the person for the time being entitled thereto" and the question whether the cestui que trust of the registered holder was some such "other" person. Fry LJ was of the opinion that those words derived content otherwise than by construing them to include such a beneficiary. He said (at 620):
"One obvious meaning of the words would include the executors or administrators of a deceased shareholder, or the trustee in bankruptcy of a bankrupt shareholder, or any person who might have obtained a judgment from a Court of competent jurisdiction against the company, whether in an action or in a proceeding under s 35 of the Companies Act , 1862, that he was entitled as against the company to be registered as the holder of shares. All those persons would come within the meaning of clause 20. In my judgment, the words do not include cestuis que trust of shares, however clear the trust may be, however certain the right of the cestui que trust, because the company are not bound to take notice of trusts."
34These cases concerned companies operating as going concerns, as did the Bluebottle case itself, in which the central question went to the validity of a purported assignment of a dividend or a right to dividend. The position may well be different once winding up intervenes. Re Hogg Robinson & Co Pty Ltd [1933] VR 416 was a winding up case the facts of which were that Lovell, a holder of shares, deposited them with a bank as security for advances and signed a letter of hypothecation; the bank gave the company notice of this charge affecting Lovell's shares; Lovell later came to owe the company a substantial sum; the company eventually became subject to voluntary winding up; and a surplus became available for application by the liquidator after all debts and expenses of the winding up had been paid. The liquidator asserted a provision of the constitution that gave the company a lien on a member's shares for any indebtedness of the member to the company. The court held that the company's lien was precluded or defeated by a provision of the Act. That finding removed the need to consider questions of priority between the alleged lien and the security held by the bank over the shares. The court nevertheless held that the liquidator should, out of moneys repayable on the shares, satisfy the bank's claim before applying those moneys towards the member's indebtedness to the company. This decision of the Full Court of the Supreme Court of Victoria does not seem to be explicable otherwise than on the basis that the liquidator was bound to have regard to the equitable interest or claim of the bank in relation to Lovell's shares.
35There is at least room to argue that a winding up by the court should not necessarily be undertaken, as to distribution of surplus, on the basis of blind and uncritical acceptance of entitlements indicated by the content of the register of members, even allowing for adjustments to that register of the kind mentioned at paragraphs [21] and [22] above. The register establishes at least a prima facie position but the proposition that equitable interests in or claims upon the shares of contributories are cognisable by the liquidator must be regarded as arguable.
36It is, I think, significant that s 501, dealing with voluntary winding up, requires distribution of surplus "among the members according to their rights and interests in the company"; while the requirement under s 485(2) is that, after the rights of "the contributories" have been adjusted among themselves, surplus in a winding up by the court be distributed "among the persons entitled to it". The reference to "persons" as distinct from both "members" and "contributories", viewed in light of the fact that the court conducting a winding up undertakes a form of equitable administration of an estate (see Ilhan v Cvitanovic [2009] NSWSC 160; (2009) 73 NSWLR 644), lends supports the proposition I have described as arguable. The suggestion at paragraph 14.240 of M G R Gronow, "McPherson's Law of Company Liquidation", 5 th edition (looseleaf) that s 485(2) refers to "persons" because the section is intended to cater also for bodies other than companies may be questioned. Section 109 of the Companies Act 1862 (Eng) was concerned with companies only and, after referring to adjustment of "the rights of the contributories amongst themselves", directed distribution of surplus "amongst the parties entitled thereto".
37I return, therefore, to the question whether the surplus held by Mr Jones in respect of the Visnic shareholdings should be paid by him into court.
38The notion of payment into court is, it seems to me, anomalous in the particular context, since it is the court itself that is carrying out each winding up, with Mr Jones, as liquidator, performing pursuant to rule 7.10 of the Supreme Court (Corporations) Rules the court's functions relating to matters listed in s 488(1) of the Corporations Act . The proposal is therefore, in reality, that the court should take the relevant fund into its own hands; assume, to the exclusion of Mr Jones, the task of determining entitlements to surplus; and then act in accordance with s 485(2) to distribute the surplus in accordance with the entitlements so determined by it.
39Old cases may be found in which liquidators in voluntary windings up have been given leave to pay unclaimed surplus into court: see, for example, Re The Australian Gold Mining Co [1877] WN 37 and Re The Mount Dundas and Zeehan Railway Co Ltd (1900) 26 VLR 197. But, as the report of the latter case shows, the need for that course arose in times before there were statutory provisions regarding the ultimate destination of unclaimed moneys in a liquidator's hands and the alternative was to leave the liquidator in office and holding the moneys indefinitely.
40The current provision concerning unclaimed moneys in the hands of a liquidator is s 544 of the Corporations Act . It directs that unclaimed money be paid by a liquidator to Australian Securities and Investments Commission to be dealt with under Part 9.7 of the Act. The ultimate destination provided for by Part 9.7 is the Companies and Unclaimed Moneys Special Account established under s 133 of the Australian Securities and Investments Commission Act 2001 (Cth). If, as is proposed, the moneys were paid into court so as to become "funds in court" within the meaning of Part 41 of the Uniform Civil Procedure Rules 2005, the ultimate destination, if any part were ultimately unclaimed (a remote possibility in the present circumstances, I suppose) would be the Consolidated Fund of New South Wales under rule 41.9(b) or rule 41.10.
41This tells against any arrangement for payment into court by a liquidator, even assuming that some basis for ordering payment into court exists (as to which I merely note rule 25.3(3) of the Uniform Civil Procedure Rules and its reference to "proceedings concerning the right of any party to a fund"). It would be inappropriate to subject the moneys to even the possibility of ultimate disposal in a manner differing from that ordained by s 544 of the Commonwealth Act. Added to that is the practical point that the court has no established machinery for receiving and retaining money except that created by Part 41 of the Uniform Civil Procedure Rules . Appointment of a receiver of the money might be considered but would be inappropriate unless there were some good reason to discharge the liquidator. Such an appointment would not, in any event, solve the practical problems that are said to stem from the liquidator's continuing to hold the money.
42It is necessary, at this point, to introduce another matter. Counsel for Mr Prentice takes the view (which is, I think, shared by others) that, having regard to the fact that two estates under administration in bankruptcy are involved (those of Mr Visnic and Mr Tasic), ultimate resolution of the question of entitlements to surplus as among the various claimants may entail the determination of issues falling within "jurisdiction in bankruptcy" as referred to in s 27(1) of the Bankruptcy Act 1966, so that the Federal Court of Australia or the Federal Magistrates Court of Australia is the only competent court and, in particular, this court is not a competent court. For that reason, an application for transfer of the winding up proceedings to the Federal Court has been foreshadowed.
43The thinking I have just outlined proceeds on the basis that, where the court has, in a particular proceeding, made a winding up order and an order for the appointment of a liquidator, the fact that that relief has been granted does not put and end to the proceeding which, rather, remains on foot until the liquidator has completed his or her assignment. I referred to that view of matters in Re Weston; Employers Mutual Indemnity (Workers Compensation) Ltd v Omni Corporation Pty Ltd [2009] NSWSC 264; (2009) 255 ALR 362 at [20]:
"It is commonplace for subsequent applications of various kinds to be brought in winding up proceedings in which final relief has already been granted. Frequently encountered examples are a liquidator's application for directions under s 479(3) of the Corporations Act or for leave under provisions such as ss 477(2A) and (2B), an application by a creditor or contributory under s 482 for an order terminating the winding up and an appeal against a liquidator's rejection of a proof of debt. As a matter of practice, applications such as those mentioned are typically brought under the "umbrella", as it were, of the winding up proceedings, and this is so even though such an application may not involve the parties to the original proceeding. In some other cases, an interlocutory process is made by the rules the appropriate vehicle. I refer, by way of example, to an application by a liquidator for release (r 7.5), a complaint to the court in relation to a liquidator under s 536 (r 7.11) and an application for the determination of a liquidator's remuneration (r 9.4)."
44The judgment continues (at [21]):
"Under the current Commonwealth legislation, the court by which the winding up order was made is not the only court with jurisdiction to deal with the various post-liquidation applications of the kinds mentioned. A particular applicant is free to approach any other 'Court' (in the s 58AA capital "C" sense) exercising Corporations Act jurisdiction. Thus, for example, a liquidator appointed by one 'Court' may apply to another 'Court' for his or her release. Having regard to r 7.5, it appears that an interlocutory process would be the appropriate means of bringing that application before the other 'Court'; and that this would be so even though no other relevant proceeding was, or had been, pending in the other 'Court'."
45Section 1337H allows this court to transfer to any one of several other courts, including the Federal Court, "a proceeding with respect to a civil matter arising under the Corporations legislation": see s 1337H(1)(a)(i). Although the Corporations Act does not define "proceeding" (and, in s 9, defines "civil matter" only by way of contradistinction from criminal matter), I am not persuaded that the proceeding in which the winding up orders were made and Mr Jones was appointed liquidator of the two companies (among others) is, at this point, "a proceeding with respect to a civil matter arising under the Corporations legislation".
46I do, however, consider that each of the interlocutory processes that have recently been filed - Mr Jones' of 1 September 2011, the lien claimants' of 9 September 2011 and Quickfund's of 6 October 2011 - either is or forms part of such a "proceeding". I say this because of the broad meaning generally attracted by the word "proceeding" or "proceedings": see, for example, Re Doran Constructions Pty Ltd [2002] NSWSC 215; (2002) 194 ALR 101.
47It has not been necessary for me to express a concluded view on the question whether, in a winding up by the court, the liquidator is either entitled or bound to recognise equitable interests in and claims on shares. The conclusion that the matter is arguable is sufficient at this stage. It paves the way for further progress towards determination of the correct manner of dealing with the surplus in each winding up attributable to the Visnic shareholding. A final determination by a court is needed. The interlocutory processes already filed provide a partial platform. Mr Prentice, being on the register, has a strong incentive to argue for the supremacy of the position of the registered holder; and Mrs Visnic's position seems to be aligned with that of Mr Prentice, in that they apparently maintain an entitlement in the proportions 60% to 40%. Each of Mr Gleeson (as Mr Tasic's trustee in bankruptcy), Quickfund and the lien claimants has a like incentive to argue against sole recognition of the registered holder and to seek to establish the supremacy of its own particular equitable interest or claim.
48Mr Jones has no interest of his own in the resolution of the controversy; nor would it be appropriate for the court to require him to come to any concluded view (such as might be expected in relation to a proof of debt, at least in the first instance) where the particular and unusual circumstances raise difficult legal questions. He should be allowed to adopt a minimal and essentially passive role.
49Having regard to the whole of the matters I have canvassed, my inclination is as follows: