In the matter of Scott’s Refrigerated Freightways Australia Pty Limited [2020] NSWSC 62

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Scott's Refrigerated Freightways Australia Pty Limited [2020] NSWSC 62 Hearing dates: 3 February 2020 Date of orders: 03 February 2020 Decision date: 03 February 2020 Jurisdiction: Equity Before: Emmett AJA Decision: 1. Order that the plaintiff acting under the proxy in the form of exhibit 1 is not prohibited from voting in favour of the resolution set out in that form of proxy at the adjournment of the general meeting of Scott's Refrigerated Freightways Australia Pty Limited convened for Friday 22 November 2019. 2. Order that the costs of the application be costs in the winding up of Scott's Refrigerated Freightways Australia Pty Limited. 3. Order that the above orders may be entered forthwith. Catchwords: CORPORATIONS — Winding up — Conduct of liquidation — Costs, charges and expenses Legislation Cited: Corporations Act 2001 (Cth), Sch 2 – Insolvency Practice Schedule (Corporations), ss 90-15, 90-20 Insolvency Practice Rules (Corporations) 2016 (Cth) r 75-97 Category: Principal judgment Parties: Adam Shepard as Liquidator of Scott's Refrigerated Freightways Australia Pty Limited (Plaintiff) Representation: Counsel: N/A

Solicitors: Somerset Ryckmans (Plaintiff) File Number(s): 2019/400901

Schedule proxy (24.0 KB, pdf) EX TEMPORE Judgment 1. HIS HONOUR: The plaintiff, Mr Adam Shepard, is the liquidator of Scott's Refrigerated Freightways Australia Pty Limited (the Company). Mr Shepard was appointed as the liquidator of the company on 1 December 2014 pursuant to a member's voluntary winding up. The Company is a wholly owned subsidiary of Scott's Group Holdings Pty Ltd (the Holding Company). On 15 December 2014, Mr Shepard was appointed as the liquidator of the Holding Company pursuant to a member's voluntary winding up. The final meeting of the members of the Holding Company took place on 17 September 2015 and the Holding Company was deregistered on 21 December 2015. 2. However, Mr Shepard subsequently became aware of a potential additional asset consisting of fuel tax credits. Accordingly, he applied for the reinstatement of the Holding Company and, on 5 December 2016, the Holding Company was reinstated and Mr Shepard was appointed as liquidator again. The liquidations of both the Company and the Holding Company are presently ongoing and Mr Shepard is in the process of realising the fuel tax credits. 3. The shareholders of the Holding Company are BDS Holdings Pty Ltd (BDS) as to 70 percent, GJP Ventures Pty Ltd (GJP) as to 10 percent, Hurem Investments Pty Ltd (Hurem) as to 10 percent and Genesis Capital Management Pty Limited (Genesis) as to 10 percent. On 29 October 2019, Mr Shepard sent a circular to the members of the Holding Company. The purpose of the circular was to update members of the Holding Company in relation to the liquidations and to seek approval for payment of Mr Shepard's remuneration. The circular included notices convening meetings of the Holding Company and the Company to be held on 22 November 2019. The meeting of the Company was to follow the meeting of the Holding Company. 4. The following resolution was to be proposed at the meeting of the Company, which would be attended by Mr Shepard as proxy of the Holding Company: "That the retrospective remuneration of the Liquidator for the period from 1 December 2014 to 18 October 2019 of the Liquidation is determined at a sum equal to the cost of time spent by the Liquidator and their partners and staff calculated at the hourly rates as detailed in the Remuneration Approval Report provided to members, up to a capped amount of $100,575.35 exclusive of GST, and that the Liquidator can draw the remuneration from available funds immediately or as funds become available." 1. At the meeting of the Holding Company held on 22 November 2019, BDS and Genesis were present by proxy. There was no attendance by the other two members. At the meeting the following resolution was passed: "That the Liquidator of the Company's wholly owned subsidiary, Scott's Refrigerated Freightways Australia Pty Ltd (In Liquidation), is authorised to approve his remuneration in Scott's Refrigerated Freightways Australia Pty Ltd (In Liquidation)." 1. Because of the concern to which I shall refer shortly, that meeting was adjourned to enable Mr Shepard to make this application, which is prompted by r 75-97 of the Insolvency Practice Rules (Corporations) 2016 (Cth) made under the Corporations Act 2002 (Cth) [1] . Rule 75-97 provides a person acting under a general proxy must not vote in favour of any resolution that would directly or indirectly place that person, or the person's partner or the person's employer, in a position to receive any remuneration out of assets of the company except as a creditor rateably with the other creditors of the company. Mr Shepard's concern was that that prohibition would affect his voting as proxy of the Holding Company on a resolution of the Company authorising remuneration to him as liquidator of the Company. 2. Mr Shepard has therefore applied, pursuant to s 90-15 and s 90-20 of the Corporations Act 2001 (Cth), Sch 2 – Insolvency Practice Schedule (Corporations), for an order that he is not prohibited by r 75-97 from voting, as proxy of the Holding Company, in favour of the proposed resolution of the Company approving his remuneration. Section 90-15(1) provides that the Court may make such orders as it thinks fit in relation to the external administration of a company. Under s 90-15(2), the Court may exercise that power on its own initiative during proceedings before the Court or on an application under s 90-20. Section 90-20(1) relevantly provides that a person with a financial interest in the external administration of a company, or an officer of the company, may apply for an order under s 90-15. Clearly enough, Mr Shepard is authorised to make such an application. 3. As I understand the position there are no creditors of the Company and no creditors of the Holding Company. Accordingly, the only persons who have an interest in the proposed resolution of the Company authorising remuneration for Mr Shepard are the members of the Holding Company, having an interest in the Company through the Holding Company. BDS and Genesis, representing 80 per cent of the shareholding, have indicated their consent to the proposed resolution of the Company by their attendance at the meeting of the Holding Company and the members holding the balance of the shares have not opposed the resolution. 4. In the circumstances, it may have been preferable for Mr Shepard to ask the Court to approve his remuneration, which he sought in the alternative. I have no information concerning the circumstances surrounding the convening of the meeting of the members of the Holding Company save as I have indicated but there is no reason to doubt in any way the propriety of the meeting. 5. There appears to be no reason why Mr Shepard should not be permitted to act under the form of proxy, a copy of which is set out in the Schedule to these reasons. By the proxy, the Holding Company appoints Mr Shepard to be its proxy at the meeting of the Company to be held on 22 November 2019 or at any adjournment thereof to vote as he wishes on the resolution that I have set out above. 6. I am satisfied that it is appropriate that an order be made that r 75-97 does not prohibit Mr Shepard from voting in favour of the proposed resolution of the company in his capacity as proxy of the Holding Company. Accordingly, I propose to order that the plaintiff, acting under the proxy in the form set out in the Schedule to these reasons, is not prohibited from voting in favour of the resolution set out in that form at the adjournment of the general meeting of the Company convened for Friday 22 November 2019. 7. Mr Shepard asked for his costs of the application. The application seems to me to be justified in the light of the language of r 75-97. In the circumstances I will make an order that the costs of the application be costs in the winding up of the Company. 8. I make the following orders: 1. Order that the plaintiff acting under the proxy in the form of exhibit 1 is not prohibited from voting in favour of the resolution set out in that form of proxy at the adjournment of the general meeting of Scott's Refrigerated Freightways Australia Pty Limited convened for Friday 22 November 2019. 2. Order that the costs of the application be costs in the winding up of Scott's Refrigerated Freightways Australia Pty Limited. 3. Order that the above orders may be entered forthwith.