In the matter of ZCM Asia Holdings Pty Limited (in liquidation) [2013] NSWSC 1301

Supreme Court New South Wales

Medium Neutral Citation: In the matter of ZCM Asia Holdings Pty Limited (in liquidation) [2013] NSWSC 1301 Hearing dates: 27 May 2013 Decision date: 27 May 2013 Jurisdiction: Equity Division - Corporations List Before: Black J Decision: Orders made for termination of voluntary winding up and for release of liquidators. Catchwords: CORPORATIONS - winding up - winding up voluntarily - orders sought terminating voluntary winding up under s 482(1) and 511(1)(a) Corporations Act 2001 (Cth) - whether the company would be solvent if the winding up is terminated - whether any public interest reason why the winding up should not be terminated. Legislation Cited: - Corporations Act 2001 (Cth) ss 480, 482(1), 511(1), 511(1)(a) - Supreme Court (Corporations) Rules 1999 (NSW) r 7.5 Cases Cited: - Vero Workers Compensation (NSW) Ltd v Ferretti Pty Limited [2006] NSWSC 292; [2006] 57 ACSR 103 Category: Interlocutory applications Parties: Zurich Financial Services Australia Limited (First Plaintiff) Simon John Cathro (Second Plaintiff) Philip Campbell-Wilson (Third Plaintiff) ZCM Asia Holdings Pty Limited (in liquidation) (Defendant) Representation: Counsel: J. Burnett (sol) (Plaintiff) Solicitors: King & Wood Mallesons (Plaintiffs) File Number(s): 2013/108980

Judgment - EX TEMPORE 1By application filed on 10 April 2013, Zurich Financial Services Limited ("Zurich") and Messrs Cathro and Campbell-Wilson as the liquidators of ZCM Asia Holdings Pty Limited (in liquidation) ("Company") seek orders under ss 482(1) and 511(1)(a) of the Corporations Act 2001 (Cth) terminating the voluntary winding up of the Company. The plaintiffs also seek an order that Messrs Cathro and Campbell-Wilson be released as liquidators of the Company forthwith. 2Section 482 of the Corporations Act confers on the Court the power to terminate a winding up in respect of a Company which is being wound up by the Court. Section 511(1) allows the Court to make a similar order in respect of a Company which is in voluntary winding up, as an incident of its power to exercise all of the powers that the Court might exercise if the Company were being wound up by the Court. The circumstances in which the Court may make such an order are well established by the authorities and were summarised by Austin J in Vero Workers Compensation (NSW) Ltd v Ferretti Pty Limited [2006] NSWSC 292; (2006) 57 ACSR 103 at [17] where his Honour noted that relevant matters included the interests of the Company's creditors, the interests of contributories and the public interest, and noted that the Court would generally not terminate a winding up so as to restore control of a Company to its shareholders and its directors unless the Court could be satisfied that there was no appreciable risk that the Company would return to liquidation. 3The plaintiffs are respectively the sole member of the Company and its liquidators. Zurich, as the Company's sole member, has standing to bring the application. The background to the Company being placed in voluntary winding up was that its business was sold in December 2003; it then thereafter acted as the provisional head company of a tax consolidated group within the Zurich group of companies; in October 2011, its directors passed a declaration of solvency; and, in November 2011, its sole member passed a special resolution that it be wound up and that liquidators be appointed. The winding up thereafter proceeded as a members voluntary winding up, in circumstances where there was no question but that the Company was plainly solvent. 4The application to terminate the winding up is supported by an affidavit of Mr Edmund Yang, who holds the position of Head of Tax for Australia and New Zealand at Zurich, and by an affidavit of Mr Cathro, who is one of the Company's liquidators. In brief, Mr Yang's affidavit indicates that the Company had previously prepared and filed consolidated tax returns for the whole of the relevant tax consolidated group. Mr Yang points out that he has become conscious, since the winding up, of practical issues which may arise in respect of the process for amendment of those consolidated tax returns, if the Company's winding up continues or the Company is ultimately deregistered, in circumstances that the Company may need to continue in existence for several years in order to file ordinary course amendments to the tax returns for the tax consolidated group as additional information becomes available. Mr Yang refers to the fact that the Company is responsible for making such amendments, and refers to discussions with the Australian Tax Office indicating that such amendments can only be made by the Company and any tax refund payable would be paid to the Company. Mr Yang also gives evidence, that if the winding up is terminated, Zurich proposes to appoint new directors to the Company and each of those directors have consented to that appointment. He expresses the view that Zurich would not have formed the view that winding up and deregistration was in the best interests of the Company, had it been aware at the relevant time of the practical difficulties which that may cause in respect of the process of amending consolidated tax returns. 5Mr Cathro in turn gives evidence as to the asset position of the Company, which at the time of the winding up involved a very substantial excess of assets over liabilities; the process of realisation of assets and establishment of liabilities; and the fact that a distribution to members has since been made from the surplus of assets over liabilities. Mr Cathro expresses the view, supported by a statement of assets and liabilities, that the Company is solvent. That view, on the face of it, seems to be correct. Although the Company's assets are not now substantial, there is little likelihood that it will incur liabilities in the ordinary course given the limited role in which it now plays. The liquidator, Mr Cathro, indicates that he supports the termination of the winding up, and notes that Zurich has undertaken to pay his fees in respect of the liquidation. It has frequently been recognised in the case law that a liquidator's evidence in respect of an application to terminate a winding up has considerable weight. 6Notice of the application to terminate the winding up has been given to the Australian Securities and Investments Commission, which has responded that the matter is properly left for the determination of the Court and it does not propose to intervene in the proceedings. 7I am satisfied that, in the present circumstances, an order terminating the winding up may properly be made. The winding up was initiated for administrative convenience of the Company's shareholder; it is plain that the Company would be solvent if the winding up is terminated and that the application to terminate it is supported by the liquidator, whose position has been protected. There is no suggestion that there is any public interest reason why the winding up should not be terminated. 8An application has also been made that Messrs Cathro and Campbell-Wilson, be released as liquidators of the Company. Section 480 of the Corporations Act provides for the release of a liquidator, where he or she has realised all of the Company's property, or as much of the property as can be practically be realised, and where he or she has, relevantly, been removed from office. In the ordinary course, rule 7.5 of the Supreme Court (Corporations) Rules requires an affidavit from the liquidator in support of an application for his or her release, which needs to deal with matters such as the distribution of the Company's property, calls made on contributories and dividends paid, and the liquidator's remuneration. In the ordinary course, that affidavit is an important aspect of the Court being satisfied that an order for release should be made. In this case, the affairs of the Company appear to have been straightforward; it had one shareholder and a significant surplus of assets over liabilities, and the affidavit of Mr Cathro in support of the application to terminate the winding up, appears to cover the substance of the matters which will be required in order to satisfy rule 7.5 of the Corporations Rules. For that reason, I consider that it is appropriate to make an order dispensing with compliance with rule 7.5 of the Corporations Rules, to the extent necessary, on the basis that the Court already has before it in Mr Cathro's evidence the material necessary to be satisfied to support the order for release which is sought. 9Accordingly make the following orders: 1. The voluntary winding up of ZCM Asia Holdings Pty Limited (in liq) be terminated. 2. Mr Simon John Cathro and Mr Philip Campbell-Wilson be released as liquidators of ZCM Asia Holdings Pty Limited (in liq) forthwith.