New South Wales Supreme Court CITATION : Re Rildean Pty Ltd; Ex parte TJF Scaffolding Maintenance & Hire Pty Ltd [2002] NSWSC 631 CURRENT JURISDICTION: Equity Division Corporations List FILE NUMBER(S) : SC 3297/02 HEARING DATE(S) : 15/07/02 JUDGMENT DATE : 15 July 2002 T J F Scaffolding Maintenance & Hire Pty Ltd (Applicant) PARTIES : Rildean Pty Ltd (Company) Big River Timbers Pty Ltd (Original plaintiff) JUDGMENT OF : Young CJ in Eq C R C Newlinds (Applicant) COUNSEL : P Fordyce (S) (Company) G Koning (S) (Original plaintiff) Robinson Legal (Applicant) SOLICITORS : Morgan Lewis Alter (Company) Gadens (Original plaintiff) CATCHWORDS : CORPORATIONS [182]- Administration- Protection of assets- Whether provisional liquidator should be appointed whilst administrator considers position. LEGISLATION CITED : Corporations Act, ss 435C, 440A, 440D, 447A, 447B, 465B DECISION : Orders made. IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIoNS LIST YOUNG CJ in EQ Monday 15 July 2002 3297/02 – RE RILDEAN PTY LIMITED; EX PARTE TJF SCAFFOLDING MAINTENANCE & HIRE PTY LTD JUDGMENT 1 HIS HONOUR: The court in the present case is faced with a rather awkward problem. The applicant, TJF Scaffolding Maintenance and Hire Pty Ltd, obtained a judgment against Rildean Pty Ltd ("the Company") for damages to be assessed by a Master as a result of reasons given by Bryson J on 8 July this year. On 12 July this year the directors appointed administrators of the company. The applicant says that it believes that the damages that were assessed will amount to many millions of dollars. The company says that Bryson J got it all wrong, and in fact the applicant owes it money, but I must proceed on the basis that the judgment of Bryson J is correct and that there will be substantial damages ordered to be paid against the company in due course. 2 When the administrators were appointed there was pending before the court an application to wind up, which had been presented by the first respondent, Big River Timbers Pty Ltd. This application was due to come on before the Registrar on 25 July. The debt was for a relatively small amount, $52,136. 3 The applicant makes two applications; first, there is an application under s 465B of the Corporations Act for substitution of itself as applicant for winding up, the applicable power being subs (2)(b), that there is some other good reason for so doing. The first respondent consents to this application. No reasons have been given, but it is clear that it only has a small debt, whereas the applicant has a large debt, and the present application may very well be a very costly one before it has finished its progress through the courts. 4 The second application is to appoint a provisional liquidator. The company trades in the scaffolding market, a market where it is notorious that there are great difficulties in identifying the assets of the company and in collecting them. Further, there is material, which to date is untested, that there have been rearrangements of the affairs within the company and the formation of a fresh operating company which has taken over the staff. The combination of the factors that the administrators were put in very shortly after Bryson J's decision and the rearrangements that have been made within the company, give rise to the court being concerned, as it must under s 447B of the Corporations Act, that there is need to protect the creditors' interests. 5 Mr Fordyce, who appears for the company, says that this application has been sprung on his clients with little notice, the administrators have not had time to consider the position or what the future of the company may be. He says he will need until Wednesday at the very earliest to be able to put before the court the appropriate material which will enable the court to make a decision under s 440A that the administration should continue, rather than have a provisional liquidator appointed. 6 I have firmly in mind that the whole purpose of administration is to see whether companies can continue to live in some form or another, rather than die under liquidation, and that due opportunity must be given for any reasonable possibility to be explored, so I must have great sympathy with that application. 7 On the other hand, (I do not know whether the present case is one) there have been many cases where administration has been used as a last ditch effort to stave off proper winding up proceedings in the court, and the court has indicated a consistent attitude to foil any such improper attempts. Furthermore, there is a statutory duty under s 447B to preserve the assets. 8 There are subsidiary questions as to whether s 440D (1) should be a barrier to the applicant proceedings, but these are really all allied questions. 9 It seems to me that the only way in which I can do justice to all the parties is to make an order that s 435C(3)(g) does not apply, so that the appointment of the provisional liquidator will not put an end to the administration, but protect the administrators and the creditors by putting in a provisional liquidator who will have the job of processing the assets up until Wednesday, and then stand the matter over to Wednesday, so that the administrators can put on their material. 10 Accordingly, I order that: 1. The applicant be substituted as plaintiff in these proceedings pursuant to s 465B of the Corporations Act. 2. Until further order Ronald John Dean-Willcocks of 32 Martin Place Sydney, be appointed provisional liquidator of Rildean Pty Ltd. 3. Pursuant to s 447A of the Corporations Act I order that the appointment of the provisional liquidator is not to bring the administration of the company to an end. 4. I direct that any affidavits to be filed by the company be served on the solicitors for the applicant, with the original to my Associate, no later than 9.30 am on 17 July 2002. 5. I stand the matter over provisionally before me to 2.00 pm on 17 July. 6. I reserve the costs. 7. I order, pursuant to s 447A of the Corporations Act that, notwithstanding s 471A(2) of that Act, the administrator may do all things necessary to prepare the evidence and argument as to why the provisional liquidator should be discharged and the administration continued. ************************ Last Modified: 07/17/2002 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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