Onefone Australia Pty Limited v One.Tel Limited (In Liquidation) [2003] NSWSC 1228

Onefone Australia Pty Limited v One.Tel Limited (In Liquidation) [2003] NSWSC 1228

There was a reasonable apprehension of conflict in the liquidators' position concerning matters arising from cancellation of the rights issue, but a broad appointment was not justified because the key solvency issue would be determined in ASIC proceedings and unnecessary expense should be avoided. However, because cancellation might arguably support a claim concerning an uncommercial transaction with a limitation period shorter than six years, a special purpose liquidator should be appointed on a limited basis to investigate such short-limitation rights of action, assuming the company became insolvent as a result of the cancellation.

Jurisdiction
Australia
Judgment Date
19 December 2003
Procedural Posture
Corporations Winding Up Application for Appointment of a Special Purpose Liquidator / Judgment on Originating Process
Outcome
Special purpose liquidator appointed for a limited investigative purpose; submissions were required as to who should be appointed.
Legal Topics
['appointment of Special Purpose Liquidator' 'liquidator Conflict of Interest' 'renounceable Rights Issue' 'uncommercial Transaction' 'voidable Transaction' 'limitation Period']
['corporations Law' 'insolvency' 'equity'] ['appointment of Special Purpose Liquidator' 'liquidator Conflict of Interest' 'renounceable Rights Issue' 'uncommercial Transaction' 'voidable Transaction' 'limitation Period']

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Procedural Posture

Corporations Winding Up Application for Appointment of a Special Purpose Liquidator / Judgment on Originating Process

Legal Issues

  1. 1 ["Whether a special purpose liquidator should be appointed to investigate the cancellation of One.Tel Limited's renounceable rights issue." 'Whether the existing liquidators, particularly Mr Sherman, were in a position of conflict in considering claims arising from cancellation of the rights issue.' "Whether the liquidators' decision to await the outcome of ASIC proceedings concerning solvency was reasonable." 'Whether the possible expiry of a limitation period for a claim based on an alleged uncommercial transaction justified appointment of a special purpose liquidator.' 'Whether the appointment should be restricted to avoid unnecessary expense on solvency issues to be determined in other proceedings.']

Ratio Decidendi

There was a reasonable apprehension of conflict in the liquidators' position concerning matters arising from cancellation of the rights issue, but a broad appointment was not justified because the key solvency issue would be determined in ASIC proceedings and unnecessary expense should be avoided. However, because cancellation might arguably support a claim concerning an uncommercial transaction with a limitation period shorter than six years, a special purpose liquidator should be appointed on a limited basis to investigate such short-limitation rights of action, assuming the company became insolvent as a result of the cancellation.

Court Disposition

Special purpose liquidator appointed for a limited investigative purpose; submissions were required as to who should be appointed.

Orders

  • ['Order that a special purpose liquidator be appointed to One.Tel Limited (in liquidation) to investigate the cancellation of the Renounceable Rights Issue and to make recommendations to the creditors as to whether any rights of action exist in respect of which there is a limitation period for commencement of less...