McKern v Pacific Edge Corporation Pty Ltd (In Liq) [2004] NSWSC 1150

Reported Decision : 51 ACSR 602

New South Wales Supreme Court

CITATION : McKern v Pacific Edge Corporation Pty Ltd (In Liq) [2004] NSWSC 1150 HEARING DATE(S) : 29/11/04 JUDGMENT DATE : 29 November 2004

JURISDICTION: Equity Division Corporations List JUDGMENT OF : Barrett J DECISION : Winding up terminated

CATCHWORDS : CORPORATIONS - winding up - members voluntary winding up - application to terminate winding up after discovery of asset previously overlooked - asset of long term nature LEGISLATION CITED : Corporations Act 2001 (Cth) - ss.482(1), 494 and 511(1)(b) CASES CITED : Dean-Willcocks v Payce (Builders) Pty Ltd (unreported, NSWSC, Young J 1 September 1994) Robyn Beverley McKern (as liquidator of Pacific Edge Corporation Pty Ltd (in liq)) - Plaintiff PARTIES : Pacific Edge Corporation Pty Ltd (in liq) - Defendant

FILE NUMBER(S) : SC 5658/04 COUNSEL : Mr A.D. Mace, Solicitor - Plaintiff SOLICITORS : Arnold Bloch Leibler - Plaintiff

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

BARRETT J

MONDAY 29 NOVEMBER 2004

5658/04 - ROBYN BEVERLEY McKERN (AS LIQUIDATOR OF PACIFIC EDGE CORPORATION PTY LTD) (IN LIQUIDATION) V PACIFIC EDGE CORPORATION PTY LTD (IN LIQUIDATION)

JUDGMENT

1 The plaintiff is the liquidator of Pacific Edge Corporation Pty Ltd (which I shall call "the company") and, in that capacity, makes application for an order for the termination of the winding up. 2 The winding up is a members voluntary winding up initiated by resolution of the company's sole shareholder, Pacific Edge Holdings Pty Ltd. A declaration of solvency in accordance with s.494 of the Corporations Act 2001 (Cth) was made and filed in association with the special resolution to wind up. It is that circumstance that caused the winding up to be a members voluntary winding up rather than a creditors voluntary winding up: see the s.9 definition of "members voluntary winding up". 3 The jurisdiction to order termination of such a winding up comes from a combination of ss.511(1)(b) and s.482(1): see Dean-Willcocks v Payce (Builders) Pty Ltd (unreported, NSWSC, Young J 1 September 1994). By virtue of s.482(1A)(a), the liquidator is a competent applicant for a termination order. 4 The application is made following the discovery of an asset of the company that had been forgotten or overlooked. The asset is an interest to the extent of 0.75 percent in a California limited partnership known as FWH Associates. There is in evidence a copy of the fifth amendment to the amended and re-stated limited partnership agreement relating to that limited partnership which shows in the schedule the interest of the company. 5 The liquidator deposes that the interest in the partnership is not a readily realisable or resaleable asset and will produce profits to the company only on the realisation of investments held by the limited partnership. I infer from this that it will be some time before the interest in the limited partnership yields tangible benefits, with the result that continuation of the process of winding up and its progress towards dissolution in the ordinary course ought reasonably to be halted. 6 The liquidator's affidavit shows that there is no question of insolvency. Nor does the liquidator refer to any matter requiring investigation. The evidence shows no reason why, as a matter of public policy, the company should not be re-launched into the mainstream of commercial life. In this respect, this application for termination of winding up is distinguished from many others that come before the court. 7 The two persons who are the directors of the company and who, as corporate functionaries, have been effectively supplanted by the liquidator are Sir Roderick Carnegie and Mr Mark Carnegie. Each has sworn an affidavit in which he says that he is content to resume his obligations as a director of the company should the court be minded to grant the application. It is thus clear that the future stewardship of the company will be secure if the tenure of the liquidator comes to an end. 8 The liquidator has made out a case for the termination of the winding up. I make order 2 in the originating process filed on 18 October 2004. I order that the costs of the application be costs in the winding up. The order may be taken out forthwith. **********