New South Wales Supreme Court CITATION : FAI Car Owners Mutual Insurance Company Pty Ltd & Ors [2009] NSWSC 1417 HEARING DATE(S) : 15/12/09 JUDGMENT DATE : 15 December 2009 JURISDICTION : Equity Division Corporations List JUDGMENT OF : Barrett J EX TEMPORE JUDGMENT DATE : 15 December 2009 DECISION : Short minutes to be brought in. CATCHWORDS : CORPORATIONS - special resolution - company having one member - document refers to sole member (a company) being "present", to things being "noted" and to documents being "tabled" - clear nevertheless that it is a record of a special resolution by the sole member and signed by the sole member - requirements of s 249B(1) thus satisfied - observations on wording of directions given by court to liquidator under s 479(3) LEGISLATION CITED : Corporations Act 2001 (Cth), ss 249B(1), 479(3), 480 CATEGORY : Principal judgment CASES CITED : FAI Car Owners Mutual Insurance Company Pty Ltd & Ors [2009] NSWSC 1350 Anthony Gregory McGrath and Christopher John Honey as liquidators of HIH (NSW) Pty Limited - Applicants (1) FAI General Insurance Company - Plaintiff FAI Car Owners Mutual Insurance Company Pty Ltd - Defendant (2) ACN 005 312 345 Pty Ltd - Plaintiff CIC Investments Ltd - Defendant (3) HIH Casualty and General Insurance Ltd - Plaintiff FAI Finance Corporation Pty Ltd - Defendant (4) FAI General Insurance Company Ltd - Plaintiff FAI Workers Compensation (Vic) Pty Ltd - Defendant (5) Lanlex No 65 Pty Ltd - Plaintiff (6) HIH Underwriting and Agency Services Ltd - Plaintiff Berzot Pty Ltd - Defendant (7) FAI General Insurance Company Ltd - Plaintiff PARTIES : Tangleberry Pty Ltd - Defendant (8) FAI Insurance Ltd - Plaintiff Radbath Holdings Pty Ltd - Defendant (9) Radbath Holdings Pty Ltd - Plaintiff Vanhall Pty Ltd - Defendant (10) FAI Insurance Ltd - Plaintiff FAI Investments Pty Ltd - Defendant (11) Lanlex No 45 Pty Ltd - Plaintiff Rhondda Collieries (Qld) Pty Ltd - Defendant (12) HIH Casualty and General Insurance Ltd - Plaintiff HIH (NSW) Pty Ltd - Defendant (13) Murray Campbell Smith as Liquidator of FAI Sunshine Coast Pty Limited - Applicant Gleneagles Properties Pty Ltd - Plaintiff FAI Sunshine Coast Pty Ltd - Defendant FILE NUMBER(S) : SC 6367/04; 4232/03; 4237/03; 2422/03; 1803/01; 6366/04; 6389/04; 6387/04; 6390/04; 6398/04; 6374/04; 6375/04; 6368/04 COUNSEL : Mr M B Oakes SC/Mr J Scarcella - Applicants SOLICITORS : Blake Dawson - Applicants IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST BARRETT J TUESDAY 15 DECEMBER 2009 6374/04 LANLEX NO 45 PTY LTD v RHONDDA COLLIERIES (QLD) PTY LTD 6398/04 FAI INSURANCE LTD (IN LIQUIDATION) v FAI INVESTMENTS PTY LTD 6390/04 RADBATH HOLDINGS PTY LTD v VANHALL PTY LTD 6387/04 FAI INSURANCE LTD (IN LIQUIDATION) v RADBATH HOLDINGS PTY LTD 6389/04 FAI GENERAL INSURANCE COMPANY LTD (IN LIQUIDATION) v TANGLEBERRY PTY LTD 6366/04 HIH UNDERWRITING AND AGENCY SERVICES LTD (IN LIQUIDATION) v BERZOT PTY LTD 6368/04 GLENEAGLES PROPERTIES PTY LTD v FAI SUNSHINE COAST PTY LTD 2422/03 FAI GENERAL INSURANCE COMPANY LTD (LIQUIDATION) v FAI WORKERS COMPENSATION (VIC) PTY LTD 4237/03 HIH CASUALTY AND GENERAL INSURANCE LTD (IN LIQUIDATION) v FAI FINANCE CORPORATION PTY LTD 6367/04 FAI GENERAL INSURANCE COMPANY LTD (IN LIQUIDATION) v FAI CAR OWNERS MUTUAL INSURANCE COMPANY PTY LTD 1803/01 LANLEX NO 65 PTY LTD 4232/03 ACN 005 312 345 PTY LTD (IN LIQUIDATION) v CIC INVESTMENTS LTD 6375/04 HIH CASUALTY AND GENERAL INSURANCE LTD (IN LIQUIDATION) v HIH (NSW) PTY LTD JUDGMENT 1 I am dealing with the liquidators' amended or further amended interlocutory process in each of thirteen proceedings consequent upon reasons published on 4 December 2009: FAI Car Owners Mutual Insurance Company Pty Ltd & Ors [2009] NSWSC 1350. 2 Two matters require further comment. 3 Action has now been taken in each relevant case to procure the passing of a special resolution of each company under what was referred to at paragraphs [36] and [37] of the earlier reasons as the "in specie article" forming part of its constitution. The need for that action was foreshadowed at paragraphs [57] and [71] of the earlier judgment. 4 Each of the relevant companies has one member only. Yet the document put into evidence to prove the passing of the special resolution has very much the flavour of minutes of a meeting. It refers to the sole member as "present". Certain things are then said to have been "noted" and certain documents are said to have been "tabled". Then follows the text of the resolution introduced by the words "Resolved as a special resolution of the Company that ... ". 5 On closer inspection, however, it can be seen that the document is headed: "RECORD OF A RESOLUTION OF THE SOLE MEMBER OF THE COMPANY UNDER SECTION 249B OF THE CORPORATIONS ACT AT THE OFFICES OF ITS ULTIMATE HOLDING COMPANY HIH INSURANCE LTD (IN LIQUIDATION) (ACN 008 636 575) AT 117 CLARENCE STREET SYDNEY AT 3.00PM 9 DECEMBER 2009." 6 Also, at the end there appear the words, "Recorded on 9 December 2009 at 3.00 pm", followed by the signature of one of the liquidators of the sole member, and words making it clear that the company in liquidation signs by him. 7 The heading, coupled with the material at the end to which I have just referred, is, I am satisfied, sufficient to bring the matter within s 249B(1) of the Corporations Act 2001 (Cth) which is in the following terms: "A company that has only 1 member may pass a resolution by the member recording it and signing the record." 8 Despite its reference to a person – indeed, a company - being "present", to things being "noted" and to documents being "tabled", the document is one in which the sole member "records" the special resolution set out in it; and, because of the execution at the end by the sole member by one of its liquidators, the record can be seen to have been "signed by" the sole member. 9 It is thus shown in each case that, pursuant to s 249B, a special resolution was passed as contemplated by the in specie article in the constitution, being a special resolution authorising the liquidators to distribute a specified chose in action in kind. 10 That leads me to the second matter. The order now sought in relation to this aspect is as follows: "A direction pursuant to Section 479(3) of the Act that the liquidators of the company on behalf of the company are entitled to make an in specie distribution of any surplus assets of the company ." 11 This does not reflect the authority that is the product of the in specie article and the special resolution passed pursuant to it. The resolution allows distribution in kind of the particular chose in action, not assets generally. The order needs to be framed accordingly by reference to the particular item of property. 12 In addition, it is preferable that a direction under s 479(3) use words to the effect that a liquidator is "justified" in taking certain steps, rather than "entitled" or, as in some of the others of the proposed orders, "authorised". A s 479(3) direction cannot confer on a liquidator any entitlement or authority. All entitlements and authorities must be found elsewhere. All that directions under s 479(3) can and should do is to give the liquidator reassurance that he or she is justified in taking particular steps in accordance with some separately existing entitlement or authority. 13 I will make orders in chambers when the short minutes are delivered. 14 The s 480 application embodied in the several interlocutory processes is stood over to 9.30am on 22 December 2009 in chambers before me. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.