Re Gympie Gold Ltd [2006] NSWSC 97

Reported Decision : 56 ACSR 690

New South Wales Supreme Court

CITATION : Re Gympie Gold Ltd [2006] NSWSC 97

HEARING DATE(S) : 27/02/06

JUDGMENT DATE : 27 February 2006

JURISDICTION : Equity Division Corporations List

JUDGMENT OF : Barrett J

EX TEMPORE JUDGMENT DATE : 02/27/2006

DECISION : Application for termination of winding up adjourned

CATCHWORDS : CORPORATIONS - winding up - application for termination of winding up - financial stability to be restored through deed of company arrangement - deed not operative until conditions satisfied - two conditions unsatisfied - application adjourned

LEGISLATION CITED : Corporations Act 2001 (Cth), s.482

Deputy Commissioner of Taxation v Lencal Excavations Pty Ltd [2004] NSWSC 783 CASES CITED : Re Data Homes Pty Ltd (1971) 1 NSWLR 338 Re Nature Springs Pty Ltd (1994) 13 ACSR

PARTIES : Murray Campbell Smith and Joseph David Hayes in their capacity as joint liquidators of Gympie Gold Limited - Plaintiffs

FILE NUMBER(S) : SC 5648/05

COUNSEL : Mr C.D. Wood - Plaintiffs

SOLICITORS : Minter Ellison - Plaintiffs

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

BARRETT J

MONDAY 27 FEBRUARY 2006

5648/05 MURRAY CAMPBELL SMITH & ANOR IN THEIR CAPACITY AS JOINT LIQUIDATORS OF GYMPIE GOLD LTD (IN LIQ)

JUDGMENT

1 I have before me an application for an order under s.482 of the Corporations Act 2001 (Cth) terminating the winding up of Gympie Gold Ltd. This follows the execution of a deed of company arrangement, the effect of which, upon full implementation, will be that the claims of all creditors are extinguished and those creditors become beneficiaries of a trust, the assets of which are effectively the shares in the company's subsidiaries, certain cash injected from external sources under the deed and the holding of between 20 million and 10 million fully paid shares in the capital of the company itself. By operation of the deed, therefore, the company will be relieved of all its liabilities. 2 At the same time, the company will be left in a position where it effectively has no assets apart from certain rights to royalties which are to be assigned to it pursuant to the deed of company arrangement – although it will also have the not insubstantial intangible advantage of having the capacity to recapture the benefit of its listing on the Australian Stock Exchange, no doubt, one imagines, subject to its complying with whatever Stock Exchange rules apply to listing of companies for the time being without active business interests. 3 The deed of company arrangement will have the effects I have mentioned only upon satisfaction of certain conditions precedent. Mr Smith, the deed administrator, has provided in his affidavit a summary of the present status of the several conditions precedent. Three of them require comment, the balance, according to the affidavit, having been satisfied. 4 The first of the remaining conditions precedent is that receivers appointed by a secured creditor should retire. In relation to that it is Mr Smith's evidence that he is informed by the solicitors for the receivers and believes that the "retirement of the receivers is pending." 5 The second of the remaining conditions is transfer of the rights to royalties to the company. Mr Smith's evidence in relation to that is that "the satisfaction of this condition precedent is pending". 6 The third condition precedent is that the winding up of the company be terminated by order of this court. 7 There is something of a conundrum here in that the court will not, according to established principle, terminate a winding up unless it can see clearly that the company that it will relaunch into the mainstream of commercial life is a company having financial stability. The relevant line of authority is probably most often associated with Re Data Homes Pty Ltd (1971) 1 NSWLR 338 and Re Nature Springs Pty Ltd (1994) 13 ACSR 50 and was the subject of recent discussion and confirmation in Deputy Commissioner of Taxation v Lencal Excavations Pty Ltd [2004] NSWSC 783. 8 In the present case, the restoration or achievement of financial stability will come from the deed of company arrangement but depends upon due implementation of the deed; and implementation of the deed of company arrangement is, of course, dependent upon satisfaction of the remaining conditions precedent. 9 As things stand today, the position presented to the court is that two of the conditions precedent are unsatisfied but satisfaction is, in the opinion of the deed administrator, "pending". In these circumstances the court will not terminate the winding up. What is pending may never eventuate. It is understandable, of course, that outside parties involved in the other conditions precedent may have some reluctance to play their part in satisfaction of the conditions while the winding up continues. That is why I say the matter presents something of a conundrum. 10 The solution, in my view, is for the court to indicate, as I now do, that subject to the adducing of evidence of the satisfaction of the two other conditions precedent (described by the deed administrator as "pending"), the court will terminate the winding up, it having been established, to its satisfaction, that when those conditions are satisfied, the company will be, by virtue of the deed of company arrangement, in a state which warrants termination of the winding up. At this stage the appropriate course is to make the indication I have outlined and to stand over the application for termination of the winding up. 11 The further hearing of the originating process is stood over to 9.30am on 2 March 2006 before me. **********