Supreme Court New South Wales Medium Neutral Citation: In the matter of Anke Smart City (HK) Ltd (in liq) [2019] NSWSC 312 Hearing dates: 1 March 2019 Decision date: 01 March 2019 Jurisdiction: Equity - Corporations List Before: Black J Decision: Grant special leave to the liquidator to distribute the surplus in the liquidation in the specified manner and associated orders made. Catchwords: CORPORATIONS – winding up – conduct of liquidation – application for special leave to distribute surplus in liquidation – where company in liquidation has only one shareholder – where shareholder is registered in Australia as a foreign company – where shareholder has no Australian bank account – whether special leave should be granted. Legislation Cited: - Corporations Act 2001 (Cth) Pt 5B.2, ss 488, 488(2), 583, 601CL - Supreme Court (Corporations) Rules 1999 (NSW) rr 2.13, 7.9 Cases Cited: - CGU Workers Compensation (NSW) Ltd v Ascom Service Automation (Australia) Pty Ltd [2005] NSWSC 747 Re Hawden Property Group Pty Ltd (in liq) (2018) 125 ACSR 355 Category: Procedural and other rulings Parties: Quentin James Olde (First Applicant) Anke Smart City (HK) Ltd (in liq) (Second Applicant) Representation: Counsel: J Hynes (Applicants) S Godfrey (Solicitor) (for Interested Party) Solicitors: Johnson Winter & Slattery (Applicants) MinterEllison (Interested Party) File Number(s): 2015/339528 Judgment – ex tempore (revised 5 march 2019) Background and evidence 1. By Amended Interlocutory Process filed on 5 December 2018, Mr Quentin Olde in his capacity as liquidator of a Hong Kong company, which is a registered foreign corporation in Australia, Anke Smart City (HK) Ltd (in liq) ("ASCH"), seeks a direction concerning the payment of remaining funds in the liquidation to the sole shareholder of ASCH. He also seeks an order under s 488(2) of the Corporations Act 2001 (Cth), to the extent applicable, that special leave be granted to distribute the surplus in the liquidation in the specified manner and associated orders. 2. The application is supported by two affidavits of Mr Olde, as liquidator, which refer to the circumstances in which receivers were initially appointed by ASCH to another entity, Birubi Beach Resort Pty Ltd (in liq) ("Birubi"). Those receivers ultimately filed an application for the winding up ASCH, it appears, by reason of, inter alia, difficulties in its meeting the costs of the receivership and an indemnity in their favour. On 29 February 2016, the Court ordered that ASCH be wound up under s 583 of the Corporations Act and Mr Olde was appointed as its liquidator. The Court has previously determined an application by Mr Olde in respect of his remuneration in that capacity. 3. Mr Olde refers to steps which were taken by the receivers appointed to Birubi for sale of the relevant property; to the receivers' retirement; and to the distribution of a substantial amount by way of sale proceeds to ASCH. He also refers to correspondence, in May 2016, with Mr Grand Chan, who identified himself as a director of a company representing the shareholder of ASCH. I will refer to the evidence which establishes the identity of that shareholder and its investment in ASCH below. Mr Olde refers to steps which have been taken to identify creditors of ASCH, both in Australia, and also in Hong Kong, and confirms that no creditors of ASCH have been identified as a result of that process. In the ordinary course, it would follow that the shareholder of ASCH would be entitled to the distribution of any surplus, after costs and disbursements incurred in the winding up. 4. By a second affidavit dated 1 February 2019, Mr Olde refers, inter alia, to steps which have been taken to identify the shareholder of ASCH, which has involved a somewhat complex analysis, because of several changes of name of that entity, but nonetheless leads to a straightforward conclusion as to the identity of that shareholder. Mr Olde also refers to evidence as to the amount of the then surplus, and as to his then proposal for payment by way of bank cheque. 5. The shareholder in ASCH has now appeared in this application, under r 2.13 of the Supreme Court (Corporations) Rules 1999 (NSW), and has proposed the payment of the surplus be made to it in a different manner, by payment to its solicitor's trust account, for reasons to which I will refer below. Mr Olde does not oppose an order for the surplus to be distributed in that manner. Mr Olde again confirmed that his inquiries have led him to the conclusion that there are no creditors of ASCH. He also explains the reasons why no steps have been taken by him to wind up that company in Hong Kong, given the costs and delays which would be involved in that process. 6. Mr Olde also relies on an affidavit of Ms Chan, an accountant employed with his firm, which refers to the translation of various documents which establish the identity of the shareholder of ASCH. Ms Chan has the advantage, in that regard, of being a Hong Kong certified public accountant, and of being of Chinese heritage, so that she can read Chinese fluently, and seeks out the relevant documents, which are in Chinese and English in her affidavit. Further affidavits of the solicitor acting for Mr Olde, Ms Thomson, refer to correspondence in respect of the application, particularly with the legal representatives of the shareholder of ASCH. 7. In order to address a concern raised by the Court, when the matter was first listed before it, as to confirming the identity of the shareholder in ASCH, and the manner in which an investment was made in ASCH, a further affidavit has now been filed of Mr Chan, who is the legal counsel of China Security and Surveillance Technology Inc, which is the ultimate holding company of ASCH, and the sole shareholder of Anke Robotics Company Limited ("Anke Robotics"), which is the shareholder of ASCH. As I noted above, there have been several changes of name which are identified in the evidence, and in Mr Chan's affidavit, but I have referred there to the present names of each of the entities. Mr Chan refers to, and there is evidence of, the authority given to him by Anke Robotics to handle all matters relating to ASCH. He also refers to communications with Mr Olde, in particular following the listing of the matter before the Court, and leads evidence both of the history of Anke Robotics and of ASCH, and of the manner in which Anke Robotics had funded its investment in ASCH, addressing a step in establishing its claim to the surplus. Mr Chan also explains why it is preferred that money be paid to the trust account of the solicitor acting for Anke Robotics, in circumstances that, understandably, Anke Robotics does not maintain a bank account in Australia, and has concerns about a relatively substantial cheque being sent by mail to China. The liquidator's submissions and determination 1. I have been assisted by detailed submissions of Mr Hynes which address the applicable legislative provisions. Mr Hynes points out that ASCH is registered in Australia as a foreign company under Part 5B.2 of the Corporations Act and has been wound up in Australia on that basis. He points to the scope of a liquidator's duties in the winding up of a registered foreign company in Australia, and to the legislative provisions which would provide for payment of the net amount realised to the liquidator of a company in its place of origin or, if there no such liquidator, as directed by the Court. Here there is no such liquidator, where ASCH has not been wound up in Hong Kong. Mr Hynes also points to the requirement, under s 601CL of the Corporations Act, for publication of advertisements in Australia to identify claims of creditors, which has here occurred. 2. Mr Hynes also refers to s 488(2) of the Corporations Act, appearing in Ch 5 of the Corporations Act, which applies to the distribution of a surplus in liquidation. He refers to authorities as to the content of the requirement for special leave under that section, and its purpose in ensuring that there is in reality a surplus, after creditors' claims have been recognised and met in full: CGU Workers Compensation (NSW) Ltd v Ascom Service Automation (Australia) Pty Ltd [2005] NSWSC 747; Re Hawden Property Group Pty Ltd (in liq) (2018) 125 ACSR 355. The application has proceeded in compliance with the requirements for a special leave application under s 488 of the Corporations Act. Mr Hynes in turn refers to the manner in which the steps taken, as set out in the evidence to which I have referred above, complies with each of the requirements of s 601CL of the Corporations Act in respect of the identification of creditors and their claims, and the requirements of s 488 of the Corporations Act and r 7.9 of the Corporations Rules in respect of the distribution of a surplus. I am satisfied that the requirements of each of those sections and the rules have been satisfied, and I am satisfied that the evidence establishes that there is a surplus in ASCH and that Anke Robotics is the sole shareholder of ASCH and is entitled to receipt of that surplus, after payment of remuneration and disbursements due to the liquidator. 3. The liquidator also seeks an order dispensing with the requirement to annex Form 551 to the Court's orders permitting the distribution of the surplus amount. Such an order is commonly made, particularly where, as here, there is only a single contributory and there are no complexities involved in the distribution. I will make such an order. I am satisfied that, in the relevant circumstances, a distribution by transfer to the solicitor's trust account is appropriate, given the evidence that, for legitimate commercial reasons, Anke Robotics does not hold an Australian bank account to which such payment could be made. Orders 1. For these reasons, I make orders in accordance with the amended short minutes of order initialled by me and placed in the file. I make an additional order that the exhibits be returned. ********** 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: 24 March 2019