Re Tahore Holdings Pty Ltd [2004] NSWSC 397

Reported Decision : 49 ACSR 550

New South Wales Supreme Court

CITATION : Re Tahore Holdings Pty Ltd [2004] NSWSC 397 HEARING DATE(S) : 03/05/04 JUDGMENT DATE : 12 May 2004

JURISDICTION: Equity Division Corporations List JUDGMENT OF : Barrett J DECISION : Directions made as sought by liquidator

CATCHWORDS : CORPORATIONS - winding up - proof and admission of debts - interest bearing debts - surplus remaining after payment in full of admitted debts and interest thereon accrued to date of winding up - right of such creditors to interest accruing after winding up - whether interest on judgment debt by statute different from contractual interest Bankruptcy Act 1966 (Cth) s.82(3B) Companies Act 1981 (Cth) Companies (Application of Laws) Act 1981 LEGISLATION CITED : Companies (New South Wales) Code, ss.379(3), 438 Corporations (New South Wales) Act, s.1408 Corporations Law of New South Wales, s.601 Supreme Court Act 1970, s.95 Mackenzie v Rees (1941) 65 CLR 1 CASES CITED : Re Emilco Pty Ltd (2002) 43 ACSR 536 Re A Forsyth & Co Pty Ltd (1975) 1 ACLR 247 Re Spedley Securities Ltd (2000) 34 ACSR 689 PARTIES : Scott Bradley Kershaw as Liquidator of Tahore Holdings Pty Limited (In Liquidation) - Applicant FILE NUMBER(S) : SC 1378/89 COUNSEL : Ms N C Bearup, Solicitor - Applicant SOLICITORS : Dibbs Barker Gosling - Applicant

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

BARRETT J

WEDNESDAY, 12 MAY 2004

1378/89 – TAHORE HOLDINGS PTY LIMITED (IN LIQUIDATION) JUDGMENT 1 On 27 April 1989, this court ordered that Tahore Holdings Pty Limited be wound up under the Companies (New South Wales) Code and that J B Harkness be appointed liquidator. This followed an earlier order appointing Mr Harkness as provisional liquidator upon an application made by the company itself. The present applicant, Mr Kershaw, was, by order made on 3 November 2003, appointed liquidator in succession to Mr Harkness. By notice of motion filed on 22 April 2004, Mr Kershaw seeks directions under s.379(3) of the Companies (New South Wales) Code as to the appropriate manner of application and disposition of certain funds in his hands as liquidator. 2 The fact that Mr Kershaw frames his application by reference to the Companies (New South Wales) Code makes it necessary, as a first step, to confirm that it is that legislation that continues to govern the matters in respect of which the guidance of the court is sought. That question is relevant not only to the jurisdiction to be exercised but also to the substantive issues on which Mr Kershaw seeks directions. 3 The Companies (New South Wales) Code, being the provisions of the Companies Act 1981 (Cth), as amended and interpreted pursuant to the Companies (Application of Laws) Act 1981 of the State, applied as a law of the New South Wales at the time of the making of the order for winding up on 27 April 1989. The operation of that Code was, for most purposes, superseded and displaced when, on 1 January 1991, the Corporations (New South Wales) Act 1990 of the State brought into effect the Corporations Law of New South Wales, being the Corporations Law set out in s.82 of the Corporations Act 1989 (Cth) as modified by the New South Wales legislation. Section 601 of the Corporations Law of New South Wales was in the following terms: "The provisions of this Law with respect to winding up do not apply to any body corporate the winding up of which was started before the commencement of this Chapter and: (a) any such company is to be wound up in the same manner, and with the same incidents, as if this Law had not been enacted; and (b) for the purposes of the winding up, the previous law of this jurisdiction corresponding to this Chapter is taken to remain in force and to apply, with such modifications as the circumstances require, as if a reference in that previous law to the NCSC were, except in relation to a time before the commencement of section 254 of the ASIC Law, a reference to the Commission." 4 This provision came into operation on 1 January 1991. Its effect was to cause the winding up of Tahore Holdings to continue to be governed by the Companies (New South Wales) Code. When the Corporations Act 2001 (Cth) came to supersede the Corporations Law of New South Wales, for most purposes, on 15 July 2001, s.601 of that Corporations Law was continued in force by s.1408 of the Corporations Act. The statutory provisions governing the winding up of Tahore Holdings therefore continue to be those of the Companies (New South Wales) Code. 5 I turn to the matter on which Mr Kershaw seeks guidance. The winding up has reached a point where all assets have been realised and a fund of cash remains in the liquidator's hands after payment of all debts as proved and admitted. One creditor, City Training & Education Centre Pty Ltd, originally lodged a proof for $176,949.48 which it afterwards supplemented or amended by adding a claim for interest on that sum. The interest claim had two aspects to it. There was a claim for $6,743.47 "interest pre-liquidation" and a claim for $195,361.33 "interest post-liquidation". The debt itself is a judgment debt. The judgment was entered upon a verdict for $176,949.48 ordered by Rogers CJCommD in a damages action in the then Commercial Division of this court on 2 February 1989, that is, somewhat less than three months before the winding up order was made. The sum of $6,743.47 represents interest at court rates from 2 February 1989 until the making of the winding up order and the sum of $195,361.33 represents interest at court rates from the date of the winding up order to lodgment of the revised proof of debt. 6 The question arising is as to the correct treatment of the claim for "post-liquidation" interest. 7 The provisions governing debts and clams admissible to proof in this winding up are those found in s.438 of the Companies (New South Wales) Code: " 438(1) [Debts admissible to proof] In every winding up, subject in the case of insolvent companies to the application in accordance with the provisions of this Code of the Bankruptcy Act 1966, all debts payable on a contingency and all claims against the company (present or future, certain or contingent, ascertained or sounding only in damages) are admissible to proof against the company, a just estimate being made so far as possible of the value of such debts or claims as are subject to any contingency or sound only in damages or for some other reason do not bear a certain value. 438(2) [Application of Bankruptcy Act 1966] Subject to sections 204 and 441, in the winding up of an insolvent company the same rules shall prevail and be observed with regard to the respective rights of secured and unsecured creditors and debts provable and the valuation of annuities and future and contingent liabilities as are in for the time being under the Bankruptcy Act 1966, in relation to the estates of bankrupt persons, and all persons who in any such case would be entitled to prove for and receive dividends out of the property of the company may come in under the winding up and make such claims against the company as they respectively are entitled to by virtue of this section." 8 Reference should also be made to s.439(1): " 439(1) [Computation as at relevant date] The amount of a debt of a company (including a debt that is for or includes interest) is to be computed for the purposes of the winding up as at the relevant date."