Solicitors:
WMD Law (Plaintiff)
One Group Legal (First Defendant)
File Number(s): 2017/90542
[2]
Judgment - ex tempore (rEVISED 12 february 2018)
These proceedings involve two notices of motion in respect of what might have seemed, on its face, a relatively straightforward application. However, a range of complexities have arisen, and it has been necessary for the parties to take me, in considerable detail, through the documents which relate to the application and a range of legal issues that have been addressed in the application. I have had regard to the documents to which I have been taken, and the arguments which have been put, addressing those complexities, although I will, in delivering this judgment, seek to focus upon those matters which are necessary to determine the application. I particularly take that course, so far as matters of history between the respective parties are concerned, because there are ongoing proceedings between the Plaintiff, Ms Primavera, and the First Defendant, Ms Bakos, subject to the question of leave under s 471B of the Corporations Act 2001 (Cth) and approval of an arrangement under s 477(2B) of the Corporations Act which will be addressed in this application. To the extent those proceedings are continuing, then the Court should ordinarily decide no more than is necessary to decide an interlocutory application in them.
Yelena Primavera v Tanya Bakos & Anor [2018] NSWSC 142 | Case summary | Zoe
It is convenient to deal first with the notice of motion brought by Ms Primavera, to which the parties rightly directed a large part of their attention. Ms Primavera first seeks leave to proceed in relation to the property of Best in Pressure Care Pty Limited (in liq) ("BIPC"), which is the subject of the proceedings. She also seeks leave for the Second Defendant in the proceedings, Mr Andrew Wily in his capacity as (former) liquidator of BIPC, to enter into a Deed of Settlement and Assignment on behalf of BIPC pursuant to s 477(2B) of the Corporations Act. Mr Wily does not himself bring that application. There is evidence that the proceedings were served on Mr Wily, although he has not appeared in them. The only relief sought against Mr Wily in the proceedings is the orders for approval of the relevant Deed of Settlement and Assignment agreement, which are now sought by Ms Primavera's motion in this application. Mr Cathro, who is presently the liquidator of BIPC, does not consent to or actively opposes the relief that is sought, in circumstances to which I will refer below. Mr Cathro has been joined as a respondent in the motion, although he does not appear.
It will be convenient first to refer to the affidavit evidence and to outline a brief chronology of events. Ms Primavera relies on her affidavit dated 13 October 2017, which sets out the individuals, the companies and the business which are in issue in the underlying proceedings brought by Ms Primavera. She refers to the background to those proceedings, including the purchase of the Bosshard Medical business, disputes which subsequently arose between those associated with the business, and particularly Ms Primavera and Ms Bakos, and the circumstances in which BIPC was ultimately placed in liquidation, by an order made by the Court with the consent of the parties. Ms Primavera also identifies the substantive matters which are the subject of her claim against Ms Bakos, which depends upon the assignment of certain causes of action by BIPC, by its then liquidator Mr Wily, to her. Mr Gor fairly indicated that he relied on that evidence only to identify that the claim brought had a reasonably arguable basis, so far as it was relevant for the application for leave under s 471B or s 477(2B) of the Corporations Act. Mr Grace did not contest that leave under s 471B of the Corporations Act should be granted, and it seems to me that he was right in taking that approach. It seems to me that the substantive prospects of Ms Primavera's claim against Ms Bakos are of limited relevance to the application for approval of the Deed of Settlement and Assignment, so far as it involved the then liquidator of BIPC, where the critical issue is whether the liquidator could properly enter that assignment in the circumstances, not the ultimate merits of any claim that Ms Primavera may bring in reliance upon that assignment.
Ms Primavera also relies on an affidavit of Ms Smith, a solicitor at the firm which acts for her, which updates events in respect of the proceedings, including dealings with Mr Cathro in respect of the proceedings. It appears that, until recently, Mr Cathro did not consider that the Deed of Settlement and Assignment, to which he of course is not party, should be approved by the Court; he then changed his position, on the basis that a portion of any recoveries made by Ms Primavera in the proceedings would be set aside for priority creditors of BIPC; a question then arose as to whether only that portion, or the whole of those recoveries, was to be paid into a solicitor's trust account or into Court, pursuant to an undertaking to be given by Ms Primavera; disagreement arose between Mr Cathro and Ms Primavera as to that matter; and Ms Primavera ultimately withdrew the relevant undertaking. I proceed on the basis that Mr Cathro now does not consent to, or opposes, the approval of the relevant deed, notwithstanding that, as I noted above, he is not party to it. I will have regard to Mr Cathro's attitude to that matter in determining the application.
Ms Bakos in turn relied on an affidavit of her solicitor, Ms Jamie Antonopoulos dated 23 August 2017, which in turn set out something of the history of the proceedings, and referred to a number of the documents which are in issue in the application.
I turn now to a brief chronology of events, where I will address only those matters which are necessary to determine the application. In doing so, I will draw in part on the Plaintiff's outline of submissions. Mr Gor, who appears for Ms Primavera, there sets out that chronology in some detail, although I will set it out more briefly. The chronology of events was also addressed by Mr Grace, who appears for Ms Bakos, and both counsel have taken me with considerable care to the relevant documents.
In late March 2011, a company associated with Ms Primavera, Say Yes to Pressure Care Pty Limited ("SYPC") was involved in funding BIPC's acquisition of the Bosshard Medical business from another entity, First in Pressure Care Pty Limited ("FIPC"), which was associated with Ms Bakos. Ms Primavera, SYPC, and persons associated with her, were party to various arrangements by which ANZ Bank advanced funds in respect of the transaction, taking a mortgage over Mr and Mrs Primavera's then residence, a personal guarantee and indemnity from Mr Primavera, and a guarantee and indemnity from BIPC and a registered fixed floating charge over BIPC's property. The relevant business was involved in the supply, repair and hire of medical equipment to hospitals.
It appears that the arrangement between the parties subsequently deteriorated, and Ms Primavera and SYPC commenced proceedings against Ms Bakos and others in respect of a number of matters. By agreement between the parties, the Court subsequently appointed Mr Wily, who later entered into the relevant Deed of Settlement and Assignment, as the liquidator of BIPC. Ms Primavera subsequently sought to persuade Mr Wily to bring proceedings, on BIPC's behalf, against Ms Bakos and others and he did not do so. It is apparent from the correspondence that Mr Wily's position, throughout, was that he was unfunded to bring such proceedings. Mr Wily engaged in a process of selling the Bosshard Medical business, which involved dealing with a number of parties, and ultimately entered into a Contract of Sale of the Bosshard Medical business to Australian Healthcare Equipment Pty Limited ("AHE"), which appears to be associated with Ms Bakos' sister, Ms Stephanie Cerovac, for a sale price of $88,000, and subject to terms which allowed some additional benefit to BIPC in respect of, for example, retaining debts owed to it. It was a condition precedent to that transaction that ANZ released the business and assets from its registered charge or consented to the sale of the business, but ANZ then declined to do so.
Mr and Mrs Primavera ultimately sold their home, which was subject to the mortgage in favour of ANZ to which I referred above, and paid out the facility advanced by ANZ. ANZ in turn assigned to Mr Primavera relevant securities, and Mr Primavera gave notice of that assignment to Mr Wily, in his capacity as BIPC's liquidator in July 2013. Mr Primavera subsequently assigned his interest in the relevant securities to Ms Primavera's son, and Mr Wily was in turn given notice of that assignment.
When the sale of the relevant business had not been completed, and could not be completed without the consent of the secured creditor, now Ms Primavera's son, Mr Wily entered into negotiations to secure that consent to the sale of the business and bring about completion of the Contract for Sale of that business to AHE. The outcome of those negotiations appear to be reflected in the Deed of Settlement and Assignment which is the subject of this application, and to which I was taken in some detail. The recitals to the Deed of Settlement and Assignment record the relevant history, including AHE's offer to purchase the relevant business, ANZ's unwillingness to consent to the sale of the business to AHE, the discharge of Ms Primavera's obligations to ANZ and the assignment of ANZ's security interests initially to Mr Primavera and by Mr Primavera to Ms Primavera's son, and to Ms Primavera's son's initial position that he would not consent to the sale of the business to AHE. The recitals record that the parties to that Deed which relevantly included BIPC, Mr Wily as its liquidator, Ms Primavera and her son, wish to settle their disputes on the terms of the Deed. By clause 2.1 of the Deed, Ms Primavera's son consented to the immediate sale by BIPC to AHE of the business for the price on the terms of the contract which BIPC, by Mr Wily, had previously entered into, and agreed as to the disbursement of the proceeds, the larger part of which were to be paid to Mr Wily as liquidator, and would be applied to his fees and expenses incurred in procuring the sale, and part of which would be paid to the solicitors acting for Ms Primavera or associated parties.
Clause 3 in turn provided that, once the payments were made, Ms Primavera's son would release all of BIPC's property from the security interest. Clause 4 relevantly provided for BIPC to assign all of its legal and equitable right, title and interest in and to the Claims (as defined) to Ms Primavera. The term "Claims" was defined as:
"All actions, suits, claims or demands enforceable or maintainable by judicial proceedings or other dispute resolution procedures that BIPC has or may have, either now or at any time in the future, against either or both Ms Bakos and Ms Cerovac."
That clause also provided for Ms Primavera to give notice of the assignment to Ms Bakos and Ms Cerovac, and that notice appears to have been given at least to Ms Bakos. That assignment took effect under s 12 of the Conveyancing Act 1919 (NSW) as a legal assignment of the relevant claims. I note, for completeness, that the claims which are now relied upon in the Statement of Claim involve claims for breach of fiduciary duty, rather than statutory claims under the Corporations Act and no question as to the assignability of statutory claims arises.
Clause 8 of the Deed of Settlement and Assignment provided, relevantly, that Mr Wily would make all of the books and records of BIPC available for inspection by Ms Primavera and her advisors at all reasonable times and would make copies of them available at her cost, and also that Mr Wily would provide such other assistance with the prosecution of the Claims as Ms Primavera may reasonably require, again on the basis that he might charge for providing such services. There may be a question, which I need not presently address, as to whether that clause is capable of applying to Mr Cathro, so far as he is the successor to Mr Wily as liquidator of BIPC. That clause, in any event, gives rise to the potential application of s 477(2B) of the Corporations Act in present circumstances.
Subsequently, Ms Primavera gave notice of the assignment to Ms Bakos, by their respective solicitors, and demanded payment of a substantial amount. When that amount was not paid, the proceedings were commenced. Over a substantial period, Ms Primavera sought to have Mr Wily bring an application for approval of the Deed of Settlement and Assignment, but he did not do so, apparently on the basis that he took the view that such approval was not required. Subsequently, Mr Wily resigned as liquidator of BIPC, and Mr Cathro was appointed by the Court in his place. As I have noted above, attempts were subsequently made to persuade Mr Cathro to seek such approval, or to support such approval, but Mr Cathro does not now consent to, or opposes, the grant of the relevant leave.
With that background, Mr Grace, who appears for Ms Bakos, identifies the four substantive issues, as to which both Counsel have made detailed submissions. The first of those issues, as identified by Mr Grace, is whether leave under s 477(2B) of the Corporations Act is required in respect of the Deed of Settlement and Assignment. While Mr Gor identified, in the course of submissions, a possibility that such approval might not be required, he ultimately did not press that submission with any vigour. It seems to me that approval under s 477(2B) of the Corporations Act is required in respect of the Deed, albeit on a very narrow basis. It is convenient, in dealing with that question, also to deal with the scope of s 477 of the Corporations Act and s 477(2B) specifically, to which Counsel also gave attention in submissions. As Mr Grace pointed out, s 477(2B) is found in a section that deals with the powers of a liquidator, setting out a liquidator's general powers in s 477(1) and identifying specific powers of a liquidator in s 477(2), which include the power to sell or otherwise dispose of all or any part of the company's property. It seems to me that, subject to the application of s 477(2B) of the Corporations Act, Mr Wily had power to enter into the Deed of Settlement and Assignment, so far as it was directed, narrowly, to bring about an assignment of the relevant causes of action and, more generally, to place him in a position where he could dispose of the business, which he had contracted to do some time before, but had been unable to complete.
Section 477(2B) of the Corporations Act in turn provides that, except with the Court's approval or the approval of a committee of inspection or a resolution of creditors, a liquidator must not enter into an agreement on a company's behalf if the term of that agreement may end, or obligations of a party to the agreement may be discharged by conformance, more than three months after entry into the agreement. The purpose of s 477(2B) has been identified in many decisions, some of which were referred to by counsel in submissions. In Re HIH Insurance Ltd [2014] NSWSC 5 at [15], Barrett J observed that that section, together with s 477(2A), was:
"Concerned to ensure that the Court exercises some oversight of the liquidator's actions and, in effect, confers or completes the necessary power only where it sees that a case for exercise of the power in the particular circumstances has been sufficiently shown."
His Honour there noted that s 477(2B) focused particular attention on the need to ensure that contractual provisions as to timing do not cut across the general expectation that winding up will proceed in as expeditious a fashion as circumstances allow.
The case law makes clear that the Court should have regard, in determining an application under s 477(2B), to whether a liquidator's judgment in entering into the relevant transaction has been "infected by a lack of good faith or error of law or principle, or whether there are real or substantial grounds for doubting the prudence of [their] conduct" in respect of entry into the relevant agreement: Re Gerard Cassegrain and Co Pty Limited (in liq) [2014] NSWSC 1292 at [6]. As Counsel recognised, the Court is not concerned, in granting approval to an agreement falling within the scope of that section, with matters of commercial judgment, but is concerned to be satisfied that the entry into that agreement is a proper exercise of power and not ill-advised or improper on the part of the liquidator: Re McGrath (in their capacity as liquidators of HIH Insurance Ltd) [2010] NSWSC 404; (2010) 78 ACSR 405.
In Re FAI Film Distribution Pty Ltd [2014] NSWSC 1904 at [16]-[17], albeit in dealing with a case where a proposal was put forward by a liquidator rather than, as here, the other party to the transaction, Brereton J referred to the fact that the Court would satisfy itself that:
"There is no error of law or grounds for suspecting bad faith or impropriety, and evaluates whether the proposal is consistent with the expeditious and beneficial administration of the winding up."
His Honour also noted that the approval completes the liquidator's power to enter into the transaction, but did not amount to the Court itself approving the transaction.
In Re 77738930144 Pty Limited (in liq) (formerly Commercial Indemnity Pty Limited) [2017] NSWSC 452, to which Counsel drew attention, Gleeson JA in turn observed that, in determining whether to grant approval under s 477(2B), the controlling consideration is the interest of creditors concerned in the winding up; the Court pays regard to the commercial judgment of the liquidator; it is not Court's role independently to appraise the commercial desirability and commercial terms of the transaction; and the Court will generally not interfere unless there can be seen to be some lack of good faith, some error in law or principle, or some real and substantial ground for doubting the prudence of the liquidator's proposal.
Returning to the question whether the Deed of Settlement and Assignment is within the scope of the s 477(2B) of the Corporations Act, it seems to me that it is, albeit on a narrow basis. Whether or not the undertaking by Mr Wily in cl 8 of the Deed of Settlement and Assignment, to make books and records of BIPC available for inspection and to provide other assistance with the prosecution of the claims, is capable of binding Mr Cathro, as his successor, that undertaking was capable of requiring steps to be taken by Mr Wily more than three months after that agreement was entered into, and the obligations under that clause would not necessarily be discharged by performance within that period. In those circumstances, that clause had a potential effect on the duration of the winding up, and fell within the scope of the policy addressed by s 477(2B) of the Corporations Act, so as to require approval of the Deed of Settlement and Assignment under that clause. I also note that it appears that Ms Primavera, or those advising her, had reached the same view, so far as they had sought to persuade Mr Wily to seek that approval, although Mr Wiley seems to have resisted seeking such approval on the basis it was not required.
The second question identified by Mr Grace was who was entitled to seek such approval, and that question was also put as who was a "proper party" to this application. Mr Grace proceeded on the basis that that was an open question in the authorities. In Re AT Air Group Pty Ltd (in liq) [2012] NSWSC 1508, to which Counsel referred, I dealt with the question whether an application under s 477(2B) of the Corporations Act could be brought by the counterparty to an agreement with the liquidator. That question was essential to my decision, so far as the application in that case was brought by the counterparty to an agreement with the liquidator, rather than the liquidator, although the application was there supported by an affidavit of the liquidator. I referred to the decision in Venetian Nominees Pty Ltd v Conlan (1999) 17 ACLC 301 at [8]-[9], which I read as directed to the question whether the Court would approve a transaction before an additional liquidator had determined whether it wished to enter into that transaction, and not as dealing with the question of standing for such an application. I observed (at [22]) that:
"I can see no reason, in principle or practice, why such an application could not have been made by the other parties to the agreement, after the additional Liquidator had been appointed and in circumstances that he or she had reached a decision to enter into the indemnity agreement and indicated that he or she sought approval from the Court to do so, for example by filing an affidavit in support of the application before the Court."
I elaborated on that view (at [23]) and noted that s 477(2B) of the Act did not specify who had standing to make an application with the relevant approval; I noted that such applications are commonly brought by liquidators; and I observed that:
"The limitation on the circumstances in which an application may be brought under that section depends less on the identity of the applicant than on the fact that the Court's approval can only be obtained for an agreement that a Liquidator in fact proposes to enter into, if the relevant approval is given. It would not, for example, be open to a creditor or party to an agreement to bring an application under that section for approval of an agreement that it contends that a Liquidator should enter into, where the Liquidator does not wish to enter into that agreement."
In Re 77738930144 Pty Ltd (in liq) above, Gleeson JA referred to my observations in respect of a decision in Venetian Nominees Pty Ltd above, with apparent approval, and agreed with my analysis of that decision. His Honour also referred to my analysis of the question whether the counterparty to an agreement could bring an application for approval, and appears (at [28]) to have accepted that analysis, while noting that the Court could not, in that case, grant approval on the basis of undertakings which were foreshadowed but could not yet be given, until an additional liquidator was appointed. That appears to me to relate no more than the position where an application is premature, because the relevant transaction does not yet take a final form. That is not this case, for reasons which I will indicate. As the authorities stand, it therefore seems to me that, consistent with the fact that s 477(2B) of the Act does not, in its terms, require the application to be brought by a particular person, it is open to Ms Primavera, as a party to the Deed of Settlement and Assignment, to seek approval for the liquidator's entry into that Deed.
Mr Grace in turn puts the proposition that such an application is not open, or possibly is not appropriate, on the basis that such an application should be brought by the liquidator. I do not accept, for the reasons I have already indicated, that that position is correct so far as standing is concerned. I recognise that, in the ordinary course, the Court would look to evidence of the liquidator in order to reach conclusion whether a transaction should be approved. In the present case, however, there is no evidence of Mr Wily, and Mr Wily has resigned as a liquidator of BIPC. There is also no evidence of Mr Cathro, although I proceed on the basis that Mr Cathro does not support or opposes the application for the reasons that I have noted above. It is important to recognise, however, that as Mr Gor points out, Mr Wily's attitude to the transaction is plain enough from the fact that he entered into the transaction. That necessarily indicates that he had formed the view that it was in the interests of BIPC, its creditors and the liquidation to enter into that transaction.
The proposition that the Court will ordinarily look to the evidence of a liquidator in order to assess the relevant transaction does not have the consequence that it may only look to the evidence of a liquidator to assess that matter and it may also have regard to the relevant circumstances particularly in the case of an application, nunc pro tunc, to address a previous transaction where those circumstances are known. In this case, Mr Wily had entered into a contract for sale of BIPC's business, which was plainly a necessary step in realising BIPC's assets in its liquidation. Mr Wily had not been able to complete that transaction, by reason of the absence of the secured creditor's consent to the relevant transaction. The entry into the Deed of Settlement and Assignment allowed Mr Wily to complete the sale of BIPC's business. He had assessed that transaction as the most favourable of the options and had communicated that assessment to ANZ. On completing that transaction, he was able to pay at least a portion of his own costs, which was a proper payment out of a liquidation, and also to obtain the release of security by the secured creditor, which would assist in completion of the transaction for AHE's benefit.
Mr Grace advanced a number of criticisms of the terms of the transaction, including, for example, a suggestion that it may not have realised the best terms for the causes of action which were assigned to Ms Primavera under the terms of the transaction. The difficulty with that proposition is, however, that Mr Wily maintained throughout that he was unfunded as a liquidator, and there is no reason to doubt the accuracy of that statement. The causes of action were, in Mr Wily's hands, worthless because they could not be pursued, where he was not funded to pursue them and they would ultimately fall to be statute barred. There is no suggestion that either Ms Primavera or Ms Bakos had offered to fund the proceedings, and the suggestion that Ms Bakos would fund the proceedings against herself is obviously highly implausible. There is no suggestion that a litigation funder had expressed interest in funding the proceedings, and the complexity of the proceedings, and the relatively modest amount involved, suggest that that may have been highly unlikely.
In these circumstances, the question facing Mr Wily was whether to enter into a transaction that would permit a completion of the sale of BIPC's business by assigning to Ms Primavera those causes of action which he could not pursue while unfunded, thereby obtaining the creditor's consent to the transaction and the release of the relevant securities. I can infer that Mr Wily took the view that the transaction was in BIPC's and creditors' interests, because he entered into it, and I can conclude that that view was reasonably and properly taken, because an objective analysis of it demonstrates that matter.
I recognise that, of course, Mr Grace places great weight on the fact that Mr Cathro does not now consent to the transaction. I have had regard to that matter, but, with respect, it seems to me to provide no assistance in assessing the merits of the transaction at the time Mr Wily entered into it. From Mr Cathro's perspective, it is correct that the transaction now confers no (additional) benefit to creditors, or to Mr Cathro as liquidator, so far as he may have incurred further costs in the liquidation. That, however, is the consequence of the fact that the benefit of the transaction was obtained when it was implemented, in permitting a sale of BIPC's business, and the proceeds were partly applied to a legitimate claim in the liquidation, namely Mr Wily's costs.
It is perfectly rational, from Mr Cathro's perspective, to take the view that he should not now support the assignment unless something further is provided in exchange for that support. It does not follow, because Mr Cathro does not wish to now support the assignment, in the absence of additional benefit beyond that already obtained by BIPC, that he can reasonably take any adverse view of the transaction when it was implemented. Mr Cathro has not purported to undertake an evaluation of that transaction at that time, as distinct from turning his mind to the position he should now take in respect of a transaction which offers no benefits beyond those which it has previously provided to BIPC and its creditors at the time it was implemented.
I am satisfied that, having regard to the authorities, the Court should be satisfied that Mr Wily's commercial judgment, demonstrated by his decision to execute the Deed of Settlement and Assignment on BIPC's behalf, was properly reached. It has not been demonstrated that there was any lack of good faith, error of law or principle or substantial ground for doubting the prudence of his conduct in that respect and the objective analysis of the transaction at the time that it was entered into suggests that it was properly entered into. I am not dissuaded from that view by the fact that Mr Cathro, a liquidator subsequently appointed to be BIPC, has reasonably, from his particular perspective, sought to extract additional value for BIPC and its creditors in entering a transaction from which it had already extracted value, by way of consent to the sale of the relevant business, the release of security, and the payment of a proper cost of the liquidation, namely the liquidator's fees.
For that reason, I am satisfied that the Court can and should grant leave, nunc pro tunc, to Mr Wily to enter into the Deed of Settlement and Assignment, which he has of course already entered into. I have not ignored the fact that various criticisms have been made, for example, of Mr Wily's failure to seek approval of the Deed at an earlier point. Those criticisms may be well founded, but it seems to me that Mr Wily's delays are not a reason why Ms Primavera should not now be granted leave, nunc pro tunc on her application, where she and those representing her all diligently pursued the need for an application for such leave over an extended period.
I should note that an application is also sought, as I have noted above, for leave to proceed in relation to the property of BIPC in the relevant proceedings. This application contemplates that leave may be required where Ms Primavera brings proceedings against Ms Bakos, which have, as their subject matter, the property of the company in liquidation. I do not consider it is necessary to determine whether leave is required on that basis, because it seems to me that leave should properly be granted, in the relevant circumstances, against the contingency that such a proposition might be advanced in the proceedings.
I should also address, for completeness, a submission put by Mr Grace that the Deed of Settlement and Assignment did not become effective because it was not approved contemporaneously on an application by Mr Wily and, where it did not become effective, some new arrangement involving Mr Cathro as a party is necessary. That submission was put by reference to authorities dealing with illegality, including for example, the High Court's decision in Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410. With the greatest of respect for the subtlety of the submission, I do not consider that I need to determine it for present purposes. It is established beyond doubt that the Court has power to grant leave nunc pro tunc for the entry by a liquidator into a transaction of this character. Leave is frequently granted on that basis, as Mr Grace accepted in the course of submissions. The effect of a grant of leave nunc pro tunc is that the transaction is taken to have been approved from the point at which such leave is granted and there is, therefore, no room after such leave is granted for the application of principles of illegality, even if they were otherwise relevant. I should add that Mr Grace accepted at one point, that that analysis would be correct, in circumstances that Mr Wily was now the liquidator of the BIPC, but submitted the position was different where Mr Wily had resigned and Mr Cathro was now the liquidator of BIPC. With respect, I can see no reason why the retrospective application of a grant of leave should not operate in the way it ordinarily operates, merely because a liquidator has resigned and has been replaced in the ordinary way. The proposition for which Mr Grace contends would bring about significant inconvenience in circumstances that a liquidator must be replaced, including where an application of this kind may be pending, by reason of his or her resignation or, in some cases, his or her death.
Finally, Mr Grace identified the question of the consequences which would follow if leave was granted or refused. As Mr Grace recognised, the consequence of the grant of leave will be that the proceedings commenced by Ms Primavera may continue, and a notice of motion filed by Ms Bakos seeking that they be summarily dismissed or struck out should itself be dismissed, where it is not pressed on any other basis than the absence of leave.
I should indicate a preliminary view as to the question of costs, although I have allowed the parties an opportunity to be heard. A party which seeks a dispensation from the Court will generally be required to pay the costs of other parties which need to be notified of the claim, and at least a liquidator, which appears in such an application and acts reasonably, would ordinarily be entitled to the costs of that application; Chand v Azurra Pty Ltd (In Liq) [2011] NSWCA 58. However, this is not the invariable rule, and even in the case of a liquidator, he may or may not be allowed the costs of appearing in such an application and no order for costs may be made in an appropriate case: Najjar v Alfayhaa Cheese Pty Ltd (In Liq) [2011] NSWSC 791 at [22]. It seems to me that Ms Primavera would ordinarily not be entitled to an order that Ms Bakos pay her costs of her motion where that application seeks a grant of leave, but there is no basis for an order that she pay Ms Bakos' costs of her unsuccessful opposition of what otherwise might have seemed a straightforward application. It seems to me that Ms Bakos should be ordered to pay Ms Primavera's costs of Ms Bakos' unsuccessful notice of motion, as agreed or as assessed. I will hear counsel if they seek to be heard in respect of those matters.
I make the following orders:
The Plaintiff have leave to proceed in relation to the property of Best In Pressure Care Pty Ltd (In Liq) ("BIPC").
Mr Andrew Wily nunc pro tunc, have leave to enter into the Deed of Settlement and Assignment Agreement dated March 2014 on behalf of BIPC, pursuant to s 477(2B) of the Corporations Act 2001.
The parties submit their respective draft orders as to costs, and their submissions in respect of those orders, to the Associate to Black J by 4.00 pm on 21 February 2018.
The parties submit any submissions in reply as to costs to the Associate to Black J by 4.00 pm on 28 February 2018.
Stand the proceedings over for directions before the Corporations Judge at 10am on 12 February 2018.
[3]
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 01 March 2018