Karellas Investments Pty Ltd v FW Projects Pty Limited (in liq)

• Jurisdiction: Australia Federal only
• Judgment Date: 29 July 2021
• Neutral Citation: [2021] FCA 870
• Court: Federal Court
• Date: 29 July 2021

Federal Court of Australia

Karellas Investments Pty Ltd v FW Projects Pty Limited (in liq) [2021] FCA 870

File number(s):	NSD 328 of 2021
Judgment of:	CHEESEMAN J
Date of judgment:	29 July 2021
Catchwords:	CORPORATIONS – Insolvency - Orders in relation to external administration – the plaintiff creditor seeks the appointment of a special purpose liquidator to conduct investigations into the examinable affairs of the defendant company – applicant / interested person seeks to be joined to the proceedings as a defendant under r 2.13(3) of the Federal Court (Corporations) Rules 2000 (Cth) – Alternatively, applicant / interested person seeks leave to be heard in the proceedings under r 2.13(1) of the Corporations Rules – whether leave ought to be granted – whether the joinder of the applicant / interested person is “necessary” – relationship between the power to join a party to a proceedings under r 2.13(3) and the power available to the Court under r 9.05 of the Federal Court Rules 2011 (Cth) – Held: successful in part – application for leave to be joined refused – interested person granted leave to be heard – reserve costs, leave to cross-examine and other procedural matters to the docket judge
Legislation:	Federal Court Act 1976 (Cth), ss 4, 37M, 37N Federal Court Rules 2011 (Cth), rr 1.32, 1.33, 9.05, Sch 1 Federal Court (Corporations) Rules 2000 (Cth), rr 1.3, 2.13
Cases cited:	Australia and New Zealand Banking Group Ltd v Carpenter (unreported, NSWCA, 20 May 2005) Carpenter v Pioneer Park Pty Ltd [2004] NSWSC 973; (2004) 186 FLR 104 Deputy Commissioner of Taxation, in the matter of Italian Prestige Jewellery Pty Limited (in liq) ACN 116 031 022 v Italian Prestige Jewellery Pty Limited [2018] FCA 983; (2018) 129 ACSR 115 ECAP Finance Pty Ltd v Ottoway Engineering Pty Ltd [2017] FCA 237 Freehills, in the matter of New Tel Limited (in liq) ACN 009 068 955 [2008] FCA 762 Grant v BHP Coal Pty Ltd [2015] FCA 329 Kadam v MiiResorts Group 1 Pty Ltd [2016] FCA 1205 Onefone Australia Pty Ltd v One.Tel Limited; Weston v Publishing and Broadcasting Limited [2007] NSWSC 1320 Re FW Projects Pty Limited (in liq) [2019] NSWSC 892 Sensis Pty Ltd v Bivami Pty Ltd [2012] FCA 1365 Shakespeares Pie Co Australia Pty Ltd v Multipye Pty Ltd [2005] NSWSC 1338
Division	General
Registry	New South Wales
National Practice Area	Commercial and Corporations
Sub-area:	Corporations and Corporate Insolvency
Number of paragraphs:	51
Date of hearing:	19 July 2021
Counsel for the Applicant / Interested Person:	Mr A Shearer
Solicitor for the Applicant / Interested Person:	Dentons
Counsel for the Plaintiff:	Mr A J McInerney SC with Ms A L Reid (written submissions only)
Solicitor for the Plaintiff:	BAL Lawyers
Counsel for the Defendant:	Mr E Young with Ms F McNeil
Solicitor for the Defendant:	Nelson McKinnon Lawyers

ORDERS

		NSD 328 of 2021
BETWEEN:	KARELLAS INVESTMENTS PTY LTD ACN 008 547 911 Plaintiff
AND:	FW PROJECTS PTY LIMITED (IN LIQUIDATION) ACN 160 553 515 Defendant
	MANASSEN HOLDINGS PTY LIMITED ACN 003 456 004 Interested Person

order made by:	CHEESEMAN J
DATE OF ORDER:	29 July 2021

THE COURT ORDERS THAT:

1. Manassen Holdings Pty Ltd is granted leave to be heard pursuant to Rule 2.13(1) of the Federal Court (Corporations) Rules 2000 (Cth) at the hearing of the plaintiff’s application filed on 19 April 2021.

2. Costs of the Interlocutory Application be costs in the cause.

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

REASONS FOR JUDGMENT

CHEESEMAN J:

OVERVIEW The Corporations List

1. By originating process, the plaintiff, Karellas Investments Pty Ltd, an unsecured creditor, applies for the appointment of a special purpose liquidator (SPL) to the defendant, FW Projects Pty Ltd (in liquidation), (the Company). The proceedings were listed for hearing before me in the Corporations List with a listing estimate of 2 hours.

2. I required the Company’s liquidators to give notice of the application to the Company’s creditors. That resulted in the present interlocutory application being brought by Manassen Holdings Pty Limited, a substantial creditor. Manassen applies to be joined as a party to the proceedings, or alternatively, be given leave to be heard under Rule 2.13 of the Federal Court (Corporations) Rules 2000 (Cth).

3. After hearing argument, I was satisfied that Manassen should be granted leave to participate in the proceedings, but reserved judgment in order to consider the form that Manassen’s participation should take.

4. In the interim, and to keep the proceedings progressing, I made orders timetabling the preparation of the matter for hearing with a view to the matter being referred by the Registry for hearing before a docket judge at an appropriate time, the listing estimate having been updated to two days.

5. In the result, I am not satisfied that Manassen should be joined as a party under r 2.13(3) but should be given leave to be heard under r 2.13(1) of the Corporations Rules. These are my reasons for reaching that conclusion.

BACKGROUND

6. Manassen is a major creditor and the sole secured creditor of the Company. Manassen’s application is borne of a desire to oppose the appointment of a SPL in circumstances where the Company consents to the appointment. The originating process, in particular the proposed SPL’s scope of work, demonstrates that the proposed work is directed to investigating finance agreements between Manassen and the Company (the Manassen Security Agreements) and will likely entail examinations of persons associated with Manassen. Manassen’s application is made in the context of, and following, a dispute in relation to the liquidators’ appointment and the appointment of a SPL in proceedings in the Supreme Court of New South Wales: Re FW Projects Pty Limited (in liq) [2019] NSWSC 892 (Black J).

7. Manassen maintains that the appropriate order to be made is that it be joined as a defendant under r 2.13(3) of the Corporations Rules, accepting all of the burdens and obligations, as well as the rights and privileges, of a party to the proceedings. Obtaining leave to be heard on the SPL application as a non-party pursuant to r 2.13(1) of the Corporations Rules is Manassen’s fallback position.

8. The plaintiff lodged short written submissions on the interlocutory application. The plaintiff neither consented nor opposed the application insofar as the relief was directed to leave to be heard. The plaintiff did,...