Supreme Court New South Wales Medium Neutral Citation: In the matter of Catombal Investments Pty Limited [2014] NSWSC 313 Hearing dates: Thursday, 20 March 2014 Decision date: 20 March 2014 Jurisdiction: Equity Division - Corporations List Before: Brereton J Decision: (1) Pursuant to Corporations Act, s 488(2) the liquidator have special leave to distribute the sum of $6,447,452.00 as surplus to each of the shareholders of the company as follows: (a) Royce Munro $2,149,151. (b) Graeme Munro $2,149,151. (c) Brian Munro $2,149,151. (2) Pursuant to Corporations Act, s 479(3) and Trustee Act, s 63, the plaintiff would be justified in giving effect to Order 1 and to the respective rights and entitlements of the parties in the Munro Family Trust and the Munro Discretionary Trust by distributing the said funds to: (a) Royce Munro in the sum of $2,283,527. (b) Graeme Munro in the sum of $1,192,807. (c) Brian Munro in the sum of $1,699,953. (3) Pursuant to Corporations Regulation 5.6.71(1), a schedule need not be annexed to the order. (4) The applicant's costs and the expenses be paid out of the assets of the company. Catchwords: CORPORATIONS - winding up - liquidators - liquidators' application - special leave for distribution of a surplus Legislation Cited: (Cth) Corporations Act 2001, s 488(2), s 479(3) (NSW) Supreme Court (Corporations) Rules 1999, r 7.9 (NSW) Trustee Act 1925, s 63 Category: Principal judgment Parties: Christopher Mel Chamberlain as liquidator of Catombal Investments Pty Limited (in liquidation) (plaintiff) Graeme Munro and Brian Munro (interested party) Royce Munro (interested party) Representation: Counsel: D Sulan (plaintiff) Solicitors: TressCox Lawyers (plaintiff) Hunt & Hunt (Graeme Munro and Brian Munro) Kemp Strang (Royce Munro) File Number(s): 2013/357540 Judgment (ex tempore) 1HIS HONOUR: By originating process filed 22 November 2013, first returnable on 18 December 2013 but subsequently amended and finally heard today, the liquidator of Catombal Investments Pty Limited applies pursuant to (Cth) Corporations Act 2001, ss 488(2) and 479(3) and (NSW) Trustee Act 1925, s 63 for special leave to distribute a surplus in the liquidation and for directions and judicial advice in connection with that distribution, and with the distribution of funds in trusts of which the company in liquidation was the trustee. 2As I have explained elsewhere, the purpose of the requirement for special leave is essentially that the court be satisfied that there is surplus for distribution, and that the distribution is one that accords with the rights of the contributories. 3The liquidator has called for and adjudicated proofs of debt, and there appears to be no outstanding issues in that respect. The liquidator has realised the assets and now holds a substantial amount of money, after paying the secured creditor and most of the liabilities of the company. Only a tax liability remains outstanding. Not all of the assets have been realised, in that debts due to the company by persons related to one of the contributories remain outstanding, but they will be satisfied, by agreement, out of the proceeds of the proposed distribution of surplus to the contributory to whom those debtors are related. 4The evidence establishes that the assets available for distribution, after providing for taxation liabilities, costs to date, further costs of the liquidation and repayment of shareholder loans, amount to some $6,447,452. As I have said, that assumes the recovery out of the distribution of debts due to the company by Andrew Munro and Eve Munro, and also the recovery of a loan due to the company from Catombal Pastoral Company. It appears to make adequate provision for all likely future liabilities. 5The liquidator has settled a list of contributories and, in conformity with that list, proposes to distribute, to make an interim distribution of the $6,447,452 equally between the three shareholders Royce Munro, Graeme Munro and Brian Munro, although the amounts actually received by them will be affected by various liabilities to be adjusted out of those proceeds. 6In conformity with (NSW) Supreme Court (Corporations) Rules 1999, r 7.9, the liquidator's affidavit states how the surplus is to be distributed and in conformity with sub rule (2) notice of the application was published on 3 December 2013 in the Daily Telegraph. 7I am satisfied that there is surplus in the liquidation of at least $6.447 million, and that equal distribution amongst the three shareholders accords with the rights of the contributories. 8The company was the trustee of the Munro Family Trust and also of the Munro Unit Trust, all the units in which were held by the Munro Family Trust. The three contributories of the company were also discretionary beneficiaries of the family trust. There are other beneficiaries of that trust, to whom the trustee could conceivably exercise a discretion to make a distribution. However, it is reasonably apparent that the real interests in the family trust are represented by the three contributories of the company, and the liquidator proposes to distribute the amount to which the family trust will ultimately receive equally between the three of them. Each of the three contributories assents to that course, and it is a reasonable and proper one. 9The Court therefore orders that: (1)Pursuant to Corporations Act, s 488(2) the liquidator have special leave to distribute the sum of $6,447,452.00 as surplus to each of the shareholders of the company as follows: (a)Royce Munro $2,149,151. (b)Graeme Munro $2,149,151. (c)Brian Munro $2,149,151. (2)Pursuant to Corporations Act, s 479(3) and Trustee Act, s 63, the plaintiff would be justified in giving effect to Order 1 and to the respective rights and entitlements of the parties in the Munro Family Trust and the Munro Discretionary Trust by distributing the said funds to: (a)Royce Munro in the sum of $2,283,527. (b)Graeme Munro in the sum of $1,192,807. (c)Brian Munro in the sum of $1,699,953. (3)Pursuant to Corporations Regulation 5.6.71(1), a schedule need not be annexed to the order. (4)The applicant's costs and the expenses be paid out of the assets of the company. ********** 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. Decision last updated: 04 September 2014