Conrock Ltd & Ors, Re [1990] QSC 191

C 1 /11c vl., IN THE SUPREME COURT OF QUEENSLAND ' 1 ( )40 I / u 50 ; CIVIL JURISDICTION IREVIScD COPJ.ES ISSUED 'j 1 Court Reporting Bureau ! I ! !, BEFORE MR. JUSTICE WILLIAMS BRISBANE, 16 FEBRUARY 1990 Date, I[/ al I ~0 (Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Chief Court Reporter,Court Reporting Bureau.) O.S. No. 778 of 1989 IN THE MATTER OF Section 5 of The Judicature Act1876 -and- IN THE MATTER OF Conrock Limited, Conrock (Qld.) Pty. Ltd., Pamplona Pty. Ltd., Bandilla Pty. Ltd., Conrock Computers Pty. Ltd., Conrock , Finance Corporation Pty. Ltd., Plant Finder Pty. ! Ltd., Statewide Computer Services Pty. Ltd., · Conrock (N.T.) Pty. Ltd., Conrock Mining N.L., Conrock Mining Services Pty. Ltd. andMount Kidston Mining & Exploration Pty. Ltd. App. No. 35 of 1990 IN THE MATTER OF the Companies (Queensland) Code -and- IN THE MATTER OF Conrock (Qld.) Pty. Ltd. App. No. 36 of 1990 IN THE MATTER OF the Companies (Queensland) Code -and- IN THE MATTER OF Plant Finder Pty. Ltd. ORDER HIS HONOUR: I have heard submissions on three separate ! applications brought today before the Chamber judge. First is I I ! an application by R. & H. Transport Services Pty. Ltd. for an i I j order that Conrock (Qld.) Pty. Ltd. be wound up pursuant to i I the provisions of the Companies (Queensland) Code. The second Gcvt Printer, Old. -1- '. ,._, ,,, -<.. 3,) 40 50 -- 1 of 7 -- · is an application by R. & H. Transport Services Pty. Ltd. that Plant Finder Pty. Ltd. be wound up under the provisions of the Companies (Queensland) Code. The third application is brought in O.S. 778 of 1988 a proceeding in which, by order of Master Horton on 28 August 1989, Desmond William Knight was appointed receiver, not only of Conrock (Qld.) Pty. Ltd. and Plant Finder Pty. Ltd. , but also of a number of other companies in the group, of which a iisted public company, Conrock Limited, is the head. There is no doubt that Conrock is indebted to the () applicant in the sum of $3,706.15 and that Conrock failed to ·· · () CJ comply with the provisions of a notice served on it complying . with the provisions of s. 364 of the Code. The company is therefore deemed to be insolvent; but also other affidavit material, particularly from the receiver, clearly establishes the insolvency. ( ) Pty. Ltd. There the indebtedness of the company to the (_j applicant is in the sum of $4,545.15. ( J u The companies are indebted to other creditors in much larger sums. Mr. Dutney, who appeared for the applicant in each matter, also appeared for Citicorp Australia Limited who ; was owed some $2 million. Mr. Byrne, solicitor, appeared for . N.Z.I. Capital Corporation and N.Z.I. Leasing which were owed approximately $2 million by Plant Finder and $250,000 by I ' : Conrock. I mention those merely to indicate that the : indebtedness is quite extensive. Other material placed before • me suggests there were other creditors owed in total well in excess of a million dollars ranged on either side of the I argument. ·---~·- --t I! i -2- ., ~ 5J -- 2 of 7 -- There is no doubt that each of the companies is insolvent and each will, in due course, have to be wound up. The making of a winding-up order in each case was opposed by the receiver and by substantial creditors who supported his stance. Mr. Dutney met that opposition in two ways: firstly, by submitting that in any event the proper course was to wind the company up and, secondly, by submitting that the Master had no jurisdiction to make the order appointing the receiver and that I should set it aside. That was the third application before me, namely an application to extend the time for appealing (")-: against the Master's order and to have it set aside. (() CJ It seems to me that central to the determination of the issues before me is a consideration of the validity of the appointment of the receiver by the Master on 28 August 1989. That application was brought by the company ex parte. The ~ •, - . Master ordered that Knight be appointed receiver. The order 3j () \ __ ) lim.ited the recei•. 0 0:cs:,:.p tc: the assets and liabilities situated within the jurisdiction, and further ordered that "The receiver shall have those powers set forth in s. 324A of the Companies (Queensland) Code. " I merely mention that pursuant to that section the receiver was granted power to dispose of property. Since his appointment as receiver, Knight has taken steps towards selling certain of the operations of the companies as a going concern and certain assets. He has formally lodged reports with the Court and has, by order of the Court, been ., - granted remuneration for work which he has done. At no stage prior to the application brought before me has his authority to so act been called into question. It is clear from the material that he has reached the stage where there are negotiations in train for the sale of a number of relevant ___ c•: __ f -------------- --- ---·- -·· ··- .. ------------------ ----- I -3- J • • ,J :;,J -- 3 of 7 -- -·--·-··•-· .... ---.-~-· .. --•--·---------------------11111\m-:::-i.;...=~-=-·~---,;;;,-::--------:- assets. He sa¥s that some of those negotiations have reached a delicate stage, and that could well be so. He has also, with \the approval of the Court, made financial arrangements for one 1 of the companies in the group to prosecute litigation in this , Court which could re::ml t i.11 significant additional assets , 0 : becoming available. n () Mr. Dutney submits that the jurisdiction of this Court to make an order appointing a receiver comes from The . Judicature Act, and that is so. Section 5 ( 8) of that Act enables the Court to appoint a receiver by an interlocutory ; order in all cases in which it shall appear to the Court to be just or convenient to do so. The authorities indicate that that particular provision of The Judicature Act did not enlarge ,the previous jurisdiction of the Court of Chancery to appoint a ;receiver. Receivers were traditionally appointed to preserve and protect property which was the subject matter of a dispute within th~J :.~-:-1:..~. ~:.s .;.nd for· other sufficient reason where t:he.,:E-' ·was some issue pending in the Court. The word "interlocutory" : meant that the order was ancillary to the resolution by the , 1 • :court of some other dispute. \ ) i -~ ( }=l Mr. Dutney submits that the position' in Queensland is .:;:., =·'""" •. '.I ,::O istill limited by such considerations. Section 37 of the ,Supreme Court Act 1986 Victoria and s.37 of the Supreme Court Act 1981 United Kingdom confer, it would appear, a much wider power. The recent decision in Parker v. Camden London Borough Council ( 1986) Ch. 162 illustrates the extent to which the English Courts now have jurisdiction with respect to the appointment of a receiver. Here it would appear that the Master's attention was drawn to possible conflict between the holders of securities ·-·-·-·- ----- -------···--·-·--- -4- -- 4 of 7 -- 1111!1:' •. •. j n () ( ) CJ Iover \have assets of the company as to the assets to which each could recourse. There was also the question of the litigation in the Supreme Court to which I have already referred. Mr. Hampson submitted that one of the relevant considerations for the Master was that that litigation had to be funded and 1o that did involve a question of the preservation of assets of ; ; o one or more of the companies within the group. It seems to me that it is arguable that the appointment \of the receiver was beyond jurisdiction but I am by no means 1satisfied that such was the case. There is much merit, it I ! ! seems to me, in the· arguments of Mr. Hampson to the effect 20 I I that the Master found that he had jurisdiction on the evidence I !before him; the question therefore was as to the sufficiency of [ I the evidence before the Master. But over and above those ' I ; I considerations, in my view, there is the fact that this· order,· I 30 i· appointing the receiver was an order of the Supreme Court and ; 30 i it has been acted upon by the receiver in good faith since ! August 1989. He has expended a deal of time and effort and has: I ! , been allowed remuneration by the Court for some of the work 1 I I ! : 1 which he has done.· It has not been suggested that in any way! he has acted outside the scope of the authority conferred upon him. In my view, the fact that there is a superior court order 1 appointing the receiver cannot be ignored when present: i arguments are being evaluated. The receiver concedes that in ' idue course, perhaps even within a matter of some six weeks, all: 50 I of the companies in the group will have to be wound up so that ' ),J I , I there can be an orderly distribution of assets by a court- i I appointed liquidator. But he says that to appoint a liquidator' ' j of these two companies at this stage would be premature and· i I that it would interfere with the orderly realisation of the -- co ·--1 Goo/t. Pm.tor. Old. ______ ·--. ·-- I (,:_:,· -5- -- 5 of 7 -- i, ' t 'I asse s which he has embarked upon pursuant to his receivership., I I' The case is an unusual one, and it has caused me some i I i • ,anxiety. The applicant has proved strictly all that need be II iproved to entitle it to a winding-up order and the Court does! I ! not lightly refuse to make a winding-up order in those \ : 10 circumstances. But, for the reasons which I have given, I am\ 1: ! I of the view that it is in the long-term interests of the 1 unsecured credi tars of the two companies with which I am now , concerned that the receiver conclude his orderly realisation of: the assets pursuant to the order appointing him. ' That is not II I (cJ:to say that the receiver should, in my view, i time within which to complete his task. I be given unlimited ; 2-:. I . i Counsel for the: ni receiver at this stage has referred to a six to eight week () period and, in my view, it is not unreasonable to adjourn the ' \ applicat_ions for winding _up for that period of time. I l There was an appearance before me for the Deputy i 30 ! Commissioner of Taxation who was owed approximately $250,000 i 30 i i j by Conrock. Ultimately that creditor adopted the view that ; r )! he would leave the matter to the discretion of the Court, ""_)J bearing in mind that an expedient liquidation was desirable. I f )i The creditors represented by Mr. Byrne supported the, .:;.::: \ ' ' I G; stand taken by the receivers. I have also had regard, I I as I: i have already indicated, to the fact that there are other j ;creditors of substantial value who support the stand taken by; the receiver. For all of those reasons, I have come to the conclusion that the applications should be adjourned for a period of six weeks. I am of the view that the order of Master Horton should 1 stand. The time limited by the rules for appealing against his'. ,order expired many months ago and the receiver has acted G,,vt Pointer. Qlr1. -6- C._·. I ! ' -- 6 of 7 -- , 1 pursuant to that order, entering into contracts, and receiving remuneration as approved by the Court. For those reasons I am of the view that there ought to be no extension of time to appeal against his order and I would refuse the application brought by the notice of motion in O.S. 778 of 1989 to that 1o extent. That notice of motion also seeks an order that the 1 J -,r, ni ) "' . 50 ; receiver be discharged. That part of the notice of motion was predicated upon the making of a winding-up order; therefore it is not necessary for me to come to any conclusion with' respect to that claim for relief. It seems to me that that part of the notice of motion should be adjourned to the same 2c date as the petition. The orders that I would therefore make are that each of the applications for winding up will be adjourned to 30 March, [.with costs reserved. . On the notice of motion in O. S. 778 of 1989: the relief claimed in paras. 1 and 2 will be dismissed. 30 1 The balance of the notice of motion will be adjourned to 30 March. HIS HONOUR: I think I should reserve the costs. I can see some possible argument as to the ultimate outcome so I will, ~0 reserve the costs on the notice of motion as well as on the applications. 50 Gvv•. Printe•. Q!d. -7- -- 7 of 7 --