Hughes, in the matter of Substar Holdings Pty Ltd (in liquidation) (No 2)

• Jurisdiction: Australia Federal only
• Judgment Date: 16 June 2021
• Neutral Citation: [2021] FCA 658
• Court: Federal Court
• Date: 16 June 2021

Federal Court of Australia

Hughes, in the matter of Substar Holdings Pty Ltd (in liquidation) (No 2) [2021] FCA 658

File number:	WAD 243 of 2020
Judgment of:	MCKERRACHER J
Date of judgment:	16 June 2021
Catchwords:	CORPORATIONS – application to terminate winding up of company pursuant to s 482(1) of the Corporations Act 2001 (Cth) – where termination is to be contingent on receipt by the liquidators of funds sufficient to pay the company’s creditors in full and the remuneration and costs of the liquidators
Legislation:	Corporations Act 2001 (Cth) ss 482(1),
Cases cited:	Benedict v Olde; in the matter of ATS (Asia Pacific) Pty Ltd [2011] FCA 1008 Doolan, in the matter of MIH Company Pty Ltd (in liq) v MIH Company Pty Ltd (in liq) [2015] FCA 1130 Re Glass Recycling Pty Ltd (in liq) [2014] NSWSC 439 Hughes, in the matter of Substar Holdings Pty Ltd (in liquidation) [2020] FCA 1863 Judson, in the matter of Maneroo Pty Ltd (in liq) [2015] FCA 783 Mercy & Sons Pty Ltd v Wanari Pty Ltd [2000] NSWSC 756; (2000) 35 ACSR 70 Re MWM Sydney Pty Ltd (in liq) [2016] NSWSC 688 Perera v Australian Securities and Investments Commission, in the matter of Hodder Rook & Associates Pty Limited [2019] FCA 2015 Re Warbler Pty Ltd (1982) 6 ACLR 526
Division:	General Division
Registry:	Western Australia
National Practice Area:	Commercial and Corporations
Sub-area:	Corporations and Corporate Insolvency
Number of paragraphs:	38
Date of last submission:	14 June 2021
Date of hearing:	Determined on the papers
Counsel for the Applicants:	Mr A McDonald
Solicitor for the Applicants:	Pragma Lawyers

ORDERS

		WAD 243 of 2020
IN THE MATTER OF SUBSTAR HOLDINGS PTY LTD (IN LIQUIDATION) ACN 154 916 711
	BRIAN HUGHES AND DANIEL JOHANNES BREDENKAMP IN THEIR CAPACITY AS JOINT AND SEVERAL LIQUIDATORS OF SUBSTAR HOLDINGS PTY LTD ACN 154 916 711 First Applicant ; SUBSTAR HOLDINGS PTY LTD (IN LIQUIDATION) ACN 154 916 711 Second Applicant

order made by:	MCKERRACHER J
DATE OF ORDER:	16 JUNE 2021

THE COURT ORDERS THAT:

1. Upon receipt by the First Applicants (Liquidators) in the following bank account:

Bank: Macquarie Bank

Account Name: Substar Holdings Pty Ltd (In Liquidation)

BSB: 186-300

Account Number: 204 202 584

of an amount of $530,000 paid by or on behalf of the Second Applicant (the Company) to the Liquidators, provided that such funds are received by the Liquidators within 60 days of the date of these orders:

1. The winding up of the Company is terminated;

2. The receivership of the property of the Taurus Investment Trust is terminated.

1. Within 14 days of the date of these orders, and again within 14 days of receipt of the payment in satisfaction of order 1 above, the Company shall lodge a copy of these orders with the Australian Securities and Investments Commission.

2. The Liquidators be allowed remuneration and their costs incurred in relation to the work undertaken in relation to the receivership and liquidation of the Company in the amount of $65,921.65 (inclusive of GST) over the period from 25 November 2020 to 10 May 2021, and such costs and remuneration to be paid from the funds received in satisfaction of order 1 above.

3. The legal costs and disbursements in respect of the receivership and liquidation for the period from the date of the Liquidators’ appointment to 10 May 2021 be fixed in the sum of $103,917.52 (inclusive of GST), and such costs to be paid from the funds received in satisfaction of order 1 above.

4. The Liquidators be allowed further remuneration and costs including holding costs, legal fees, and settlement agent fees in relation to the receivership and liquidation in an amount no greater than $28,710.79 for the period from 11 May 2021 to settlement, and such costs to be paid from the funds received in satisfaction of order 1 above.

5. The requirement in r 14.25 of the Federal Court Rules 2011 (Cth) to file accounts and pass accounts is dispensed with.

6. There be liberty to apply.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

MCKERRACHER J:

INTRODUCTION

1. In August last year, Mr Bryan Kevin Hughes and Mr Daniel Johannes Bredenkamp were appointed as joint and several Liquidators of Substar Holdings Pty Ltd (or the Company). In Hughes, in the matter of Substar Holdings Pty Ltd (in liquidation) [2020] FCA 1863(Substar (No 1)), I made orders for the appointment of the Liquidators as receivers and managers of the property of the Taurus Investments Trust, of which Substar is the trustee. Those orders were necessary to enable the Liquidators to realise the property of the Trust to satisfy the liabilities incurred by Substar in its capacity as trustee, in circumstances where Substar conducted no business, and only held assets in its capacity as trustee. Where the Liquidators are referred to in these reasons, this term encompasses their role as receivers and managers of the Trust property.

2. By a further re-amended interlocutory application filed on 14 June 2021, the Liquidators seek orders for the termination of the liquidation of Substar on the basis that its sole director, Mr Andrew Scala (or the Director) has put forward a proposal to the Liquidators which they consider will allow each of the Company’s creditors to be repaid in full as well as the costs and remuneration of the Liquidators to be met. Orders are accordingly also sought for the fixing of the Liquidators’ costs and remuneration in certain amounts. After some conferral with the Liquidators’ solicitors, resulting in the filing of various amended iterations of the interlocutory application, the most current of which seeks a narrower form of relief than that originally pressed, I am satisfied, for the reasons that follow, that orders should be made in the terms sought in the further re-amended interlocutory application dated 14 June 2021.

3. The Liquidators’ application is supported by an affidavit of Mr Bredenkamp of 21 April 2021 and an affidavit of Mr Michael Stulic, solicitor, of 12 May 2021. In addition, Andrew Scala has filed an affidavit of 28 April 2021 in which he deposes, amongst other things, to his support for the termination of the liquidation and the consequential orders sought. The Liquidators also rely on portions of affidavits previously filed by Messrs Bredenkamp and Stulic in support of the application the subject of Substar (No 1).

THE FINANCIAL POSITION OF SUBSTAR

4. Andrew Scala has now confirmed in his affidavit the Liquidators’ initial understanding that Substar carried on no business of its own and holds all of its assets in its capacity as trustee of the Trust. As detailed in Substar (No 1) (at [9]), the Liquidators encountered difficulties engaging with Andrew Scala and his father (the sole shareholder of Substar), Mr Leopold Scala to ascertain Substar’s position in the early months of the litigation. Leopold...