Austcorp Tiles Pty Ltd, Re; Re Global Marble Pty Ltd [1991] QSC 355

TRANSCRIPT OF PROCEEDINGS State Reporting Bureau, 4th F1oor, The Law Courts, George Street, BRJSBA.7\TE, 0. 4000 Tel. (07) 227.4360 (Copyright in this transcript is vested in the Cwwn. Copies thereof must not be made or sold without the written authority · of the Director. State Reporting Bureau.) SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION SHANAHAN AJ No 271 of 1990 I - REVISED-COPIES ISSUED Court Reporting Bureau Date: Jo I {( I ?I- . ..... . .. ·- IN THE MATTER OF the "Companies (Queensland) Code" and IN THE MATTER OF Austcorp Tiles Pty. Limited No 272 of 1990 IN THE MATTER OF the "Companies (Queensland) Code" and IN THE MATTER OF Global Marble Pty Ltd Application No 91 of 1990 IN THE MATTER OF the Companies (Queensland) Code and IN THE MATTER OF Austcorp Quarries Pty. Ltd. (in liquidation) 1 -- 1 of 7 -- BRISBANE .. DATE. 26/li/91 v.t<.DER. 10 10 20 20 30 30 40 40 50 50 60 60 : S,r-•,t. Printer_. Old 2 -- 2 of 7 -- HIS HONOUR: These are three applications which have been heard together. They are made under s 479 (3) of the Corporations Law whereby liquidators may apply to" the Court for directions in relation to any particular matter arising auring the winding up. Each application is made by 10 10 liquidators of a company in liquidation. The liquidators are the same in respect of two companies. These companies are:- (a) Austcorp Tiles Pty. Limited (in liquidation) - file No 271 of 1990 (b) Global Marble Pty Ltd (in liquidation) - file No 272 of 1990. Different liquidators apply in respect of the third company, Austcorp Quarries Pty Ltd (in liquidation)- file No 91 of 1990. These three companies carried on business with one 20 30 30 another and with another company, Austcorp Marble Pty Limited. The group of companies maintained but one bank account which was styled Austcorp Quarr~es Pty Ltd to which all of the income earned was deposited. Expenses of each company were paid out of this account. All of this was done 40 40 50 60 in an informal manner. Proofs of debt have been received. They reveal a state of confusion and uncertainty. Some creditors are not sure of the identity of the company with which they had been trading. Proofs of debt, for example, have been received in respect of Global Marble Pty Ltd (supra), Austcorp Tiles Pty Limited (supra), Austcorp Group, Austcorp Marble Group and Austcorp Operations. The liquidators of Austcorp Tiles Pty Limited (in liquidation) and Global Marble Pty Ltd (in liquidation} are uncertain as to what proportion of the funds held by them are actually Govt. Printer. Old. 3 50 60 -- 3 of 7 -- assets of what companies. The liquidators of Austcorp Quarries Pty Ltd (in liquidation) say that considerable doubt 0 ~ists as to which of the three companies in ~iquidation owned the group's L 10 10 assets. All liquidators believe: that· .to· clarify the position would be expensive and would consume a substantial amount of the funds.presently held by them. In addition, further delay would occur in making distribution.to creditors. To avoid these undesirable consequences the 20 20 30 40 50 60 liquidators of all three companies have made what is in effect a joint approach to·the Court. The liquidators of Global Marble Pty Ltd (in liquidation) are seeking a direction from the Court that they apply all of the funds presently held by them to all of the creditors of the three group companies in liqt:idation so that the creditors of each receive a dividend at the same rate. The costs of all administrations would come from funds held by them. The liquidators of·Austcorp Quarries Pty Ltd (in liquidation) support the application. All creditors have been circularised.· No~objections have been received. I have no way of knowing how many of·any of the creditors are apathetic. The major problem.for the ·liquidators is s 555 of the Corporations :Law.which is.as follows:- 30 40 50 "Except as otherwise provided for in-. this Act all: debts proved in a winding up rank equally and if the property of the company is insufficient to meet them·in full they shall be paid. ·· .. I 60 proportionately." ~ Govt. Printer, Old 4 -- 4 of 7 -- 10 30 -10 50 60 Counsel for the liquidator of Global Marble Pty Ltd (in liquidation) referred me to in re Trix Ltd (1970) 1 WLR 1421. In that case at 1424, Plowman J said:- "It is elementary that if it is 6&s1red to distribute the assets of a company otherwise than strictly in accordance with the creditor's rights the proper way is todo it is by a scheme of .arrangement under s 206 of the Companies Act 1948 • II This method,which is available under the Corporations Law, has not,. in fact, been adopted by the present applicants. Plowman J said at page 1423-: "The matter is one which the creditors should decide for themselves and on which they are entitled to express their views at a meeting or in· a Court". He went on to say:- "However convenient it may be for the liquidators to have a compromise sanction by the Court, it is in my judgment wrong in principle to allow that course to be taken for none of the persons has had any opportunity of being heard to challenge it - indeed the whole object .is to -preclude such a challenge. On the other hand if a sch~me were brought in every creditor would have an opportunity of voting for or against it and if he thought fit of challenging it before ·the Court when the petition to sanction it was heard. Furthermore, the creditors would have the protection of the Court at an earlier stage in relation to proper notice of the meetings to consider the scheme and the circular explaining it. Last and not.least the Court .would not have to be involved in the merits of the scheme unless some creditor thought fit to appear and oppose it in which case the Court would have the benefit of argument and evidence on both sides. The method which has been adopted here puts the burden on the Court of deciding whether a particular method of distribution is fair in all the circumstances and should be accepted. · .In my judgment this is an unjustifiable burden, first, because under the machinery provided by s 206 .the:.creditors alone ought to be asked to decide it, and, secondly, because I have not had the benefit of hearing any alternative point of view." It was sought to distinguish the decision on the ground that Govt. Printer, Old. 5 10 20 40 50 60 -- 5 of 7 -- 10 20 30 40 50 60 there was a dissenting creditor in that case. However, as Plowman J pointed out at p 1423, the scheme of arrangement would bind all the creditors, including apathetic creditors and diss~nt;i..ng creditors.. In this case all the creditors >~ have received a ~ircula~ setting out the situation quite clearly. None has objected to these applications. However, as a matter of logic I do not take this as meaning that everyone consents to the applications. Some creditors may be apathetic. In any event I doubt whether the provision in the Corporations Law for a distribution pari passu can be · overridden except by the provisions of the Corporations Law. Assuming this view to be correct it was suggested that this was a compromise which could be made by the liquidators under s 477 of the Corporations Law and then sanctioned by the Court. I would need evidence of the consent of the creditors, not just evidence of their failure to object before I would consider such an application. Then, of course, there is the question as to whether this application can be regarded as a compromise within the meaning of s 477. It was also suggested that I could pierce the corporat~ veil and find that these three companies were, in fact, one company at all material times. That I have the power to do so in appropriate cases is not in doubt. counsel for the applicant liquidators in respect of two of the companies conceded that the evidence of this was "thin". He frankly said that that approach had not been considered when the material before me was being compiled. The evidence before me is not such that I can pierce the corporate veil nor lift it. The applicants have not Go_vt. Printer, Clld. 6 , l , 10 20 30 40 50 60 -- 6 of 7 -- 10 30 40 50 60 persuaded me that I should·make the orders sought and consequently each application is dismissed. The order of the Court ·is each application is dis~.tssed. order that the liquidator's costs of each application be liquidator's costs in the·winding up. Govt. Printer, Qld. 7 10 30 40 50 60 -- 7 of 7 --