Re Australian Resources Ltd (In Liq) [2004] NSWSC 1073

New South Wales Supreme Court

CITATION : Re Australian Resources Ltd (In Liq) [2004] NSWSC 1073 HEARING DATE(S) : 8/11/04 JUDGMENT DATE : 8 November 2004

JURISDICTION: Equity Division Corporations List JUDGMENT OF : Young CJ in Eq DECISION : Application dismissed.

CATCHWORDS : CORPORATIONS [230]- Winding up- Application to convert creditors' voluntary winding up to winding up in insolvency- Who should be notified of application. LEGISLATION CITED : Corporations Act 2001, s 459A CASES CITED : BP Australia Ltd v Brown (2003) 58 NSWLR 332 Carter v New Tel Ltd (2003) 44 ACSR 661 PARTIES : Martin John Green as Liquidator of Australian Resources Limited (In liq) (P) FILE NUMBER(S) : SC 5995/04 COUNSEL : R G Forster SC (P) SOLICITORS : Henry Davis York (P)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST

YOUNG CJ in EQ

Monday 8 November 2004

5995/04 – RE AUSTRALIAN RESOURCES LTD (IN LIQ) JUDGMENT 1 HIS HONOUR: This is an application made by a liquidator who is a liquidator under a creditors' voluntary winding up in the liquidation of Australian Resources Limited. The liquidator seeks an order under s 459A of the Corporations Act 2001 that the company be wound up in insolvency. There is precedent for making that order, the most recent of which is Carter v New Tel Ltd (2003) 44 ACSR 661. However, the learned Austin J who decided that case made it quite clear at page 663 [5] that there must be good reasons for the Court to intervene by making a winding up order in a case where the company is already in liquidation. 2 The so-called good reasons put forward in the instant case are that the terms of an indemnity policy issued by the CGU Insurance Group may well have a different effect, an effect more beneficial to the liquidator, if the winding up is in insolvency rather than a creditors' voluntary winding up. 3 The liquidator has notified the members of the committee of inspection and others, all of whom may be thought not to have any commercial reason for opposing the application, and there has been no negative response. 4 In BP Australia Ltd v Brown (2003) 58 NSWLR 332, a case decided after Carter's case under s 588FF(3)(b) of the Corporations Act, Chief Justice Spigelman with whom Mason P and Handley JA agreed, said that courts are subject to a high level obligation to comply with procedural fairness. Thus, in these sort of matters a person likely to be adversely affected by the order of the Court should be given an opportunity of making submissions to the Court before any such order is made. The word "before" is put in italics to show its emphasis. 5 Mr Forster SC, who appears for the liquidator, says that in the present case there is no need to notify CGU because an application will in due course be made under s 6 of the Law Reform (Miscellaneous Provisions) Act 1946 and at that stage CGU can oppose and can ask that this present order be terminated or rescinded. My reading of what the learned Chief Justice said is that that is not to be the way in which this Court is to afford procedural justice. 6 The liquidator is reluctant to notify CGU. Accordingly, it follows that the present application should be dismissed and there should be no recourse to the company's assets for the liquidator's costs. If a fresh application is made to notify CGU, then of course the Court will entertain it. So at the moment I will just stand the matter over to the Registrar's list at 11 am on 15 November 2004.