Wells v Wily & Anor [2004] NSWSC 145

New South Wales Supreme Court

CITATION : Wells v Wily & Anor [2004] NSWSC 145 HEARING DATE(S) : 20 and 27 February, 2004 JUDGMENT DATE : 27 February 2004 JURISDICTION: Equity Division JUDGMENT OF : Palmer J DECISION : Originating Process dismissed; Applicant to pay Respondents' costs on indemnity basis.

CATCHWORDS : CORPORATIONS - DEED OF COMPANY ARRANGEMENT - PROOF OF DEBT - INDEMNITY COSTS - Whether Proofs of Debt had been rightly admitted or rejected for the purpose of voting at a creditors meeting - whether the court should set aside the resolution of creditors not to adjourn the meeting further to consider a proposed Deed of Company Arrangement - whether the Applicant should be ordered to pay the Respondents' costs on indemnity basis. LEGISLATION CITED : Corporations Act 2001 (Cth) - s.131(1), s.131(9), s.439A, s.447A, s.600A, s.600B, s.600C Jonathan Wells - Plaintiff PARTIES : Hugh Wily - First Defendant Galimore Holdings Pty Ltd (In liq) - Second Defendant FILE NUMBER(S) : SC 5556/03 COUNSEL : C.J. Hockey (Sol) - Plaintiff J. Chippindall - Defendants SOLICITORS : Hagan & Co - Plaintiff Andrew R. Ford - Defendants

EX TEMPORE

Introduction

1 This application arises out of the liquidation of a company, Galimore Holdings Pty Limited ("Galimore"), which by one means or another undertook management of the financial affairs of the Wells family. The members of the family who feature in the case are the Plaintiff, Jonathan Wells, his brother Peter Wells, and Jonathan Wells' wife, Charlotte Wells. For ease of identification and without intending any disrespect I will refer to the family members as Jonathan, Peter and Charlotte. The First Defendant, Mr Wily, is the liquidator of Galimore and was formerly its administrator. 2 I have said that Galimore undertook the management of the Wells family affairs by one means or another because the controversy in this case concerns what the company did and in what capacity. Although the company was registered in November 1996, became trustee of the Wells Family Trust by a deed dated 15 March 1997, and engaged in substantial real estate transactions and other financial dealings until it was placed in voluntary administration in September 2003, its financial records and the records of the Wells Family Trust did not exist in any meaningful sense until they were brought into existence by its accountant, Mr A. Alexandrou, after the appointment of the voluntary administrators and at their insistence. It is the lack of any properly maintained financial records of the company and of the Trust and the lack of any sufficient primary source material which should have been available to support those financial records which have given rise to this litigation. 3 Galimore was placed in liquidation at an adjourned meeting of creditors held in accordance with s.439A of the Corporations Act 2001 (Cth) on 29 October 2003 in circumstances to which I will come. Jonathan alleges that Galimore should not have been placed in liquidation. He says that the meeting should have been adjourned to allow creditors further time to consider a proposal for a Deed of Company Arrangement which he had put forward. 4 By his Originating Process filed on 31 October 2003 Jonathan seeks the following relief pursuant to s.447A, s.600A, s.600B, s.600C, s.131(9) and s.131(1) of the Corporations Act : "1. An order reversing or modifying the acceptance and rejections of the proofs of debts of creditors made by the First Respondent pursuant to Section 1321 Corporations Act 2001.