FEDERAL COURT OF AUSTRALIA The Creditors of Antal‑Air Pty Ltd (ACN 007 213 738), Antal‑Air Pty Ltd (Administrator Appointed) (ACN 007 213 738) v Australian Securities & Investments Commission [2004] FCA 1090 CORPORATIONS – liquidation – creditor claiming that liquidator has "destroyed the company" – claim that liquidator should have been appointed or should have accepted the role as administrator – clear division in the Corporations Act between the consequences of appointing a liquidator or an administrator – whether a reasonable cause of action is disclosed. Corporations Act 2001 (Cth): ss 447B(2), 536(2), 537(1) Federal Court of Australia Act 1976 (Cth): s 43 Federal Court Rules: O 20 IN THE MATTER OF THE CREDITORS OF ANTAL‑AIR PTY LTD (ACN 007 213 738) (ADMINISTRATOR APPOINTED) ANTAL‑AIR PTY LTD (ADMINISTRATOR APPOINTED) (ACN 007 213 738) v AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION V 869 of 2004 GOLDBERG J 10 AUGUST 2004 MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 869 of 2004 IN THE MATTER OF THE CREDITORS OF ANTAL‑AIR PTY LTD (ACN 007 213 738) (ADMINISTRATOR APPOINTED) BETWEEN: THE CREDITORS OF ANTAL‑AIR PTY LTD (ACN 007 213 738) (ADMINISTRATOR APPOINTED) Applicants AND: AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION Respondent JUDGE: GOLDBERG J DATE OF ORDER: 10 AUGUST 2004 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The applicants' interlocutory process filed on 23 July 2004 and notice of motion filed on 9 August 2004 be dismissed. 2. The applicants' application filed on 12 July 2004 be dismissed. 3. Mr Antal Bittmann pay the company's and the liquidator's costs of and incidental to the application, the interlocutory processes and notices of motion. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 869 of 2004 IN THE MATTER OF THE CREDITORS OF ANTAL‑AIR PTY LTD (ACN 007 213 738) (ADMINISTRATOR APPOINTED) BETWEEN: THE CREDITORS OF ANTAL‑AIR PTY LTD (ACN 007 213 738) (ADMINISTRATOR APPOINTED) Applicants AND: AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION Respondent JUDGE: GOLDBERG J DATE: 10 AUGUST 2004 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 On 12 July 2004 an originating process was filed in the Court, which was headed as follows: "IN THE MATTER OF THE CREDITOR'S OF ANTAL‑AIR PTY LTD (ACN 007 213 738), Applicants, and ANTAL‑AIR PTY LTD ("ADMINISTRATOR APPOINTED") (ACN 007 213 738), Respondent, and AUSTRALIAN SECURITIES & INVESTMENT COMMISSION (as per Rule 2.8(3)), Respondent". It appears that the application was filed by or on behalf of Mr Antal Bittmann. The originating process stated: "This application is made under Section 449A, Section 449B(a), Section 473(1), section 447B, The Law Reform Commission Report No. 45, paragraph 8, 139, 208, 211, 212 and the Corporations Act 2001." 2 The details are as follows: "The Applicants seek to have the Respondents' 'Administrator' removed from office, for having destroyed the Respondent Antal‑Air Pty Ltd, rather than save it, as per paragraph 15 of the Corporate Law Reform Bill 1992 – Explanatory Memorandum. 1. By virtue of Section 449A, the appointment of Administrator cannot be revoked. Therefore, we request the Court to remove him as per Section 448B. 2. By virtue of Section 473(1), on cause shown, be removed by the Court. 3. By virtue of Section 447B(2), on the application of a creditor of a company, the Court may make such order as it thinks necessary to protect creditor's interests as per Section 447E(1)(a). 4. By virtue of Section 558FA(1)(b), 588FB(1)(b) (2)(b) and 596AB, we ask the Court to constrain the Administrator/Liquidator from entering into a transaction which is to the detriment of the genuine creditor's and the employee's entitlements of the Respondent, Antal‑Air Pty Ltd. 5. The Court orders the Liquidator to compensate the creditors for their losses occurred." 3 On 12 July 2004, Mr Bittmann filed an affidavit in support of that process, in which he exhibited a number of documents. In those documents, Mr Bittmann said that Antal‑Air Pty Ltd either had been, was or should be in external administration. In substance, his complaint is that Mr Sutherland, in his capacity as the liquidator, had "destroyed the company". 4 It appears from Mr Bittmann's submissions and from what I have gleaned from the documents filed in this proceeding that what Mr Sutherland did as liquidator was to take such steps as he considered appropriate for the winding up of the company and the termination of its commercial activities. It is for that reason in the originating process that Mr Bittmann sought an order that the liquidator compensate creditors for their losses. 5 A number of interlocutory applications have been filed in this proceeding. The first was an interlocutory application filed by or on behalf of Mr Bittmann, in which he seeks the examination of the liquidator in relation to the winding up of the company: see s 536(3). 6 On 30 July 2004 a notice of motion was filed by or on behalf of the company and the liquidator, in which they seek an order that the proceeding be dismissed pursuant to O 20 r 2 of the Federal Court Rules. Reliance is placed on r 2(1)(a) of that order on the ground that no reasonable cause of action has been disclosed. 7 On 9 August 2004 Mr Bittmann filed a notice of motion seeking: (1) an order that the respondents' notice of motion be dismissed under O 20 r 1(1)(a) and (b) of the Federal Court Rules; (2) an order that Mr Sutherland be removed from office; (3) that the Court make such orders under s 447B(2) of the Corporations Act 2001 (Cth) ("the Act") as it deems necessary to protect the interests of creditors; and (4) a request that the Court order the liquidator to compensate the creditors for their losses. 8 There is a threshold question as to who the applicant is. The applicant nominated in the Court documents is "in the matter of the creditor's (sic) of Antal‑Air Pty Ltd". That does not identify for the Court who the applicant is as a person or as an entity. If it is the total body of creditors of the applicants, then they are misdescribed. They should be nominated by name or, if they have sought to bring a class action, there is the procedure that should be followed under Pt IVA of the Federal Court of Australia Act 1976 (Cth). 9 This is probably a matter that could be corrected by substituting the name of a proper identifiable applicant. However, because I have reached a view on the nature of the cause of action sought to be raised, I am prepared to assume for the purposes of the proceeding and the notices of motion before me this morning, that the proceeding has been brought by an applicant competent to bring the application. 10 In substance, the complaint is that the liquidator has destroyed the company by liquidating the company and its assets. Mr Bittmann, who appeared in person this morning, submitted that the liquidator should have appointed an administrator under Pt 5.3A of the Act to continue to manage the affairs of the company. In the alternative, it appears that Mr Bittmann was submitting that the liquidator was, in fact, appointed as an administrator or should have accepted the role of administrator. 11 There is no doubt that there is a clear division in the Act between the appointment, and the consequences of appointing, a liquidator and the provisions that relate to the appointment of an administrator under Pt 5.3A of the Act. It is clear to me on the material that on 20 April 2004 the Court, through Registrar Connard, ordered that Antal‑Air Pty Ltd (ACN 007 213 738) be wound up in insolvency under the provisions of the Corporations Act and that Mr Sutherland be appointed liquidator for the purposes of the winding up. 12 Mr Bittmann has quite properly exhibited that Court order to his affidavit. It bears the seal of the Court. The order was entered on 21 April 2004 and has not been set aside. While that order is extant, Mr Sutherland has properly been appointed liquidator and the order that the company be wound up in insolvency stands unassailed. 13 There is also exhibited to Mr Bittmann's affidavit of 12 July 2004 an extract of the records maintained by the Australian Securities and Investments Commission. Mr Bittmann submitted that these records disclosed that there had been an appointment of an administrator under external administration, or that there should have been such an appointment, because the records disclosed that that either had happened or that it should have happened. However, Mr Bittmann's submission has misconstrued what, in fact, had occurred. 14 The liquidator was appointed because the company was ordered to be wound up on 20 April 2004. The Commission's extract shows the status of the company as "UNDER EXTERNAL ADMINISTRATION AND/OR CONTROLLER APPOINTED. For information about this status, refer to the documents listed under the heading, 'External administration and/or appointment of controller below.'" 15 When I turn to that part of the extract that is headed, "Documents Relating to External Administration and/or Appointment of Controller", I note that the following documents appear: · 22 April 2004 – notification of making of winding up order on 20 April 2004; · 23 April 2004 – Form 505 effective 20 April 2004, notification of appointment of liquidator by the Court. Mr Bittmann submitted that the Form 505, in fact, was the form on which notification of the appointment of an administrator was made. That is not correct. Section 537(1) of the Act provides: "A liquidator must within 14 days after his or her appointment, lodge notice in the prescribed form of his or her appointment and of the address of his or her office and, in the event of any change in the situation of his or her office, must, within 14 days after the change, lodge notice in the prescribed form of the change." The prescribed form is Form 505. What the search of the Commission provided for was that the status of the company was under one of external administration or controller appointed. When one looks in the search for which it is, one finds it is the appointment of a liquidator. 16 There is a misconception and a misunderstanding in the initiating process. There is no justification for the view that the liquidator either was, has or should have been appointed as an administrator under Pt 5.3A of the Act. He was properly appointed as a liquidator; the order of 20 April 2004 is the authority for that appointment. 17 I am satisfied that the originating process filed on 12 July 2004 does not disclose any reasonable cause of action. I am also satisfied that there is no basis disclosed in the material for the examination sought in the interlocutory process. I am satisfied that there is no basis upon which the relief sought in Mr Bittmann's notice of motion of 9 August 2004 that the respondents' notice of motion be dismissed should be granted. There is no basis or cause of action shown as to why the liquidator should be removed from office and, in the present circumstances, the company being in liquidation and not under external administration, there is no basis upon which the Court can make an order under s 447B(2) of the Act or, indeed, any other provision of Pt 5.3A of the act. 18 I am satisfied that an order should be made upon the respondent's notice of motion filed on 30 July 2004 that the proceeding be dismissed pursuant to O 20 r 2 of the Federal Court Rules. I therefore propose to order, as no reasonable cause of action has been disclosed, that the interlocutory process filed on 23 July 2004 and the notice of motion filed on 9 August 2004 be dismissed. I will also order, pursuant to the notice of motion filed on 30 July 2004, that the originating process filed on 12 July 2004 be dismissed. 19 In the circumstances of the application before me, Mr Antal Bittmann was given the opportunity to avoid any order for costs. He wished to proceed with the matter. The respondent liquidator and the company in liquidation have been successful in relation to the merits of the application that they brought to have the proceeding dismissed. In all those circumstances, it seems to me that the usual order as to costs should apply. It is apparent that, notwithstanding the name of the applicant in the proceeding, Mr Antal Bittmann has been the person behind the proceeding and the motivating force of it. 20 Pursuant to the provisions of section 43 of the Federal Court Act, I have a wide discretion on the question of costs. In all those circumstances, I order that Mr Antal Bittmann pay the costs of Antal‑Air Pty Ltd in liquidation and the costs of the liquidator of and incidental to the proceeding and the interlocutory processes and notices of motion to which I have already referred. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg. Associate: Dated: 27 August 2004 Counsel for the Applicant: Mr A Bittmann appeared in person Counsel for the Respondent: Mr N Wallace Solicitor for the Respondent: Abbott Stillman & Wilson No appearance by the Australian Securities & Investment Commission Date of Hearing: 10 August 2004 Date of Judgment: 10 August 2004