New South Wales Supreme Court CITATION : Brealey v Shields [2009] NSWSC 1148 HEARING DATE(S) : 26/10/09 JUDGMENT DATE : 26 October 2009 JURISDICTION : Equity Division Corporations List JUDGMENT OF : Barrett J EX TEMPORE JUDGMENT DATE : 26 October 2009 DECISION : Distribution ordered CATCHWORDS : CORPORATIONS - winding up - winding up by the court - surplus after payment of debts and liabilities - liquidator seeks special leave to distribute surplus - requirement that schedule of quantified entitlements be annexed to court's order granting leave - power of court to dispense with that requirement - where only two contributories - no distinction between them - dispensation granted Corporations Act 2001 (Cth), s 488(2) LEGISLATION CITED : Corporations Regulations 2001, rule 5.6.71 Supreme Court (Corporations) Rules 1999, rule 7.9 CATEGORY : Principal judgment CASES CITED : Re D S Millard & Sons Pty Ltd (1997) 27 ACSR 71 David Anthony Brealey - Plaintiff PARTIES : Edward John Shields - First Defendant ACN 103 089 416 Pty Ltd - Second Defendant FILE NUMBER(S) : SC 1796/09 COUNSEL : Mr P Bard, Solicitor - Plaintiff SOLICITORS : Paul Bard Lawyers - Plaintiff IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST BARRETT J MONDAY 26 OCTOBER 2009 1796/09 DAVID ANTHONY BREALEY v EDWARD JOHN SHIELS & ANOR JUDGMENT 1 The applicant is the liquidator in the court-ordered winding up of ACN 103 089 416 Pty Ltd, formerly Access Hoists and Scaffolding Pty Ltd. 2 The applicant has given evidence that he has ascertained all debts and liabilities by adjudicating proofs of debt. Those debts and liabilities have been paid in full. 3 Subject only to expenses associated with this application, the applicant has in his hands, as liquidator, a surplus of $143,559.81. He has applied to the court for "special leave" under s 488(2) of the Corporation Act 2001 (Cth) to distribute that surplus. 4 The requirement for "special leave" means no more than that the court's permission be sought by an application specially made by the liquidator: Re D S Millard & Sons Pty Ltd (1997) 27 ACSR 71. 5 The matter is straightforward. There are two members of the company. Each holds one share. There are, accordingly, two contributories. 6 The applicant's solicitor, Mr Bard, has referred to rule 7.9 of the Supreme Court (Corporations) Rules 1999 which requires prior publication of an application of this kind, the publication being by means of a notice in Form 15 as prescribed by those rules. 7 The evidence establishes that that requirement has been met. 8 Mr Bard has also directed my attention to regulation 5.6.71 of the Corporations Regulations 2001: "(1) An order in a winding up by the Court authorising the liquidator to distribute any surplus to a person entitled to it must, unless the Court otherwise directs, have annexed to it a schedule in accordance with Form 551. (2) The liquidator must send to each person to whom any surplus is distributed a notice in accordance with Form 552." 9 The regulation refers to Form 551, a copy of which appears at the foot of this judgment. 10 Form 551 contemplates that there should be set out in respect of each contributory to whom surplus is to be distributed the amount of the distribution payable per share and the net distribution payable. It is thus made plain that compliance with the form entails the specification of a specific and quantified amount of money in relation to each contributory. 11 There are, no doubt, good reasons of policy why that approach should be followed in many cases, particularly cases where there are numerous contributories and there may be matters for adjustment between them, such as differing amounts paid up on shares and arrears of calls. 12 The present case, as I have said, is straightforward. It is simply a matter of dividing the ultimately quantified sum by two and paying one half of it to each contributory. There is no indication that shares are partly paid or that other disparities exist as between the two contributories. 13 It was suggested that the court might at this point grant special leave in respect of a particular sum and leave a buffer to cover the last remaining expenses of the winding up, being the costs associated with this application. That would be done on the basis that there would then be a subsequent application for special leave in respect of the balance. 14 In a simple case such as this, I see no reason to require the adoption of that rather cumbersome approach. The case is one in which it is appropriate for the court to make a direction in accordance with Regulation 5.6.71(1) displacing the requirement for a schedule in accordance with Form 551 to be annexed to the court's order granting leave. 15 The orders of the court are as follows: (1) Pursuant to regulation 5.6.71(1) of the Corporations Regulations 2001, direct that the order authorising distribution of surplus to a person entitled to it need not have annexed to it a schedule in accordance with Form 551. (2) Order pursuant to section 488(2) of the Corporations Act 2001 that the liquidator have special leave to distribute the surplus in the winding up of ACN 103 089 416 Pty Ltd to David Anthony Brealey and Edward John Shiels in equal shares. (3) Order that the liquidator may recoup his costs and expenses of this application on the indemnity basis out of the assets of the company before striking the surplus to be distributed. Form 551 (subregulation 5.6.71 (1)) Corporations Act 2001 (Note: Before completing this schedule please read carefully the Direction for completing Form 551 at the end of this form) SCHEDULE OF CONTRIBUTORIES OR OTHER PERSONS TO WHOM A DISTRIBUTION OF SURPLUS IS TO BE PAID Limited Serial No. in settled list Name of contributory as in settled list Address Number of shares held as set out in settled list Total amount called up Total amount paid up SCHEDULE OF CONTRIBUTORIES OR OTHER PERSONS, TO WHOM A DISTRIBUTION OF SURPLUS IS TO BE PAID Arrears of calls at date of return Previous distributions of capital appropriated by liquidator for arrears of calls Amount of distribution payable per share Net distribution payable Date and particulars of transfer of interest or other variation in list Signature of liquidator Date DIRECTION FOR COMPLETING FORM 551 If the Articles: (a) provide that the amount divisible among members or any class of members must be dividable in proportion to the amount paid up or that ought to have been paid up at the date of winding up; or (b) contain any other provision that requires further information before a distribution can be made; columns should be added showing the amount called up and the amount paid up a that date in respect of shares then held by those members or that class of members, or any other facts that may be required. ********** 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.