In the matter of Opel Networks Pty Limited [2013] NSWSC 1245

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Opel Networks Pty Limited [2013] NSWSC 1245 Hearing dates: 2 September 2013 Decision date: 02 September 2013 Jurisdiction: Equity Division - Corporations List Before: Brereton J Decision: Approve first plaintiffs as liquidators of the second plaintiff entering into the agreements referred to in the schedule. Catchwords: CORPORATIONS - insolvency and winding up - where plaintiff company proposes to institute proceedings for breach of contract - where approval of litigation funding agreement and retainer sought - approval granted Legislation Cited: (Cth) Corporations Act 2001, s 477(2B) Category: Principal judgment Parties: Steven John Sherman & Bruce James Carter as Liquidators of Opel Networks Pty Ltd (in Liq) (first plaintiffs) Opel Networks Pty Limited (second plaintiff) Representation: Counsel: S Balafoutis (plaintiffs) Solicitors: Kemp Strang (plaintiffs) File Number(s): 13/ 265508

Judgment - EX TEMPORE 1HIS HONOUR: By originating process filed in court today the plaintiffs, who are the liquidators of Opel Networks Proprietary Limited, seek orders pursuant to (Cth) Corporations Act 2001, s 477(2B) approving a litigation funding agreement and a retainer. 2The second plaintiff, which is the company in liquidation, is owned equally by Optus Networks Proprietary Limited and Elders Telecommunications Infrastructure Proprietary Limited. It alleges that when it entered into a funding agreement with the Commonwealth to provide a wireless broadband service to regional Australia, it was a term of the agreement that the Commonwealth would pay fifty per cent of Opel's costs of producing the implementation plan, and that while the Commonwealth had a discretion to approve the implementation plan, it was precluded from exercising that discretion in bad faith or unreasonably. Under the funding agreement, the Commonwealth was not obliged to provide funding unless and until it approved the implementation plan. The Commonwealth did not approve the implementation plan, and the company contends that it did so in bad faith or unreasonably. It wishes to commence proceedings for breach of contract and alternatively breach of the agreement to pay fifty per cent of the costs of the implementation plan. 3One of the shareholders, Optus, has agreed to provide funding for the proposed proceedings on the terms of a litigation funding agreement. Baker and McKenzie Solicitors have agreed to act on behalf of Opel in the proposed proceedings on the terms of the proposed retainer. The other shareholder, Elders Telecommunications Infrastructure Proprietary Limited, has agreed to the terms of the litigation funding agreement. 4In the context of litigation funding agreements, there is nothing exceptional about the terms of this agreement. Nor in the context of retainers for commercial litigation is there anything exceptional about the retainer. 5The company never commenced trading. So far as the liquidators are able to ascertain, it has no creditors. The only contributories wish it to commence the proposed proceedings. 6While the liquidator considers that the proceedings have reasonable prospects of success, in the context where the only contributories wish the proceedings to be brought, and agree to the terms of the litigation funding agreement, and the retainer, and the liquidator supports the application, there is little cause to examine the matter more closely. 7Moreover, as I have from time to time pointed out, the focus of s 477(2B) is not the merits of the litigation nor even the merits of the liquidator's judgment to enter into the relevant agreements, but the impact of the agreement on the duration of the liquidation. The essential focus of s 477(2B) is the potential for an agreement to protract the liquidation. 8No doubt this proposed litigation may protract the liquidation, but it is only through that course that anything is likely will be realised for the contributories. 9Pursuant to Corporations Act, s 477(2B), I approve the first plaintiffs as liquidators of the second plaintiff entering into the agreements referred to in the schedule on behalf of the second plaintiff, notwithstanding that the terms of the agreement may end and/or obligations of parties to the agreement may, according to the terms of the agreements, be discharged by performance more than three months after the agreement is entered into. 10I order that the liquidators' costs and expenses of this application be costs and expenses in the liquidation. 11I direct these orders be entered forthwith. 12Schedule: (1)An agreement in or substantially to the effect of the funding agreement between the first plaintiff and Optus Networks Proprietary Limited set out in tab six of PX01. (2)An agreement retaining Baker and McKenzie to act and continuing acting as the legal representatives for the second plaintiff in or substantially to the effect of the document behind tab eight of PX01.