Williams & Kersten Pty Ltd v Walton Construction (Qld) Pty Ltd (in liq), in the matter of Walton Construction (Qld) Pty Ltd (in liq) [2019] FCA 1201

Williams & Kersten Pty Ltd v Walton Construction (Qld) Pty Ltd (in liq), in the matter of Walton Construction (Qld) Pty Ltd (in liq) [2019] FCA 1201

The Court held that it was appropriate to appoint a special purpose liquidator for the purposes identified in the proposed orders because the plaintiffs, as creditors, had standing under ss 90-20 and 5-30 of the Insolvency Practice Schedule (Corporations), there was a reasonable basis to investigate the matters identified in the schedule to the proposed order having regard to Derrington J's findings in Walton and the plaintiffs' reasons, it was unnecessary to rigorously determine the prospects of any prospective claim at this stage, the liquidators did not oppose the appointment, and safeguards could ensure the special purpose liquidator's costs would not be borne by property available to...

Jurisdiction
Australia
Judgment Date
02 August 2019
Procedural Posture
Corporations Application for Appointment of a Special Purpose Liquidator Under Division 90, S 90 15 of the Insolvency Practice Schedule (corporations), Schedule 2 to the Corporations Act 2001 (cth) / Application Heard on 23 July 2019; Reasons and Order Dated 2 August 2019
Outcome
Application allowed in principle; the Court stated it would make orders under s 90-15 for the appointment of a special purpose liquidator, subject to the parties submitting draft orders reflecting the reasons.
Legal Topics
['appointment of Special Purpose Liquidator' 'external Administration' "liquidators' Powers and Duties" 'creditor Standing' "investigation of Potential Claims for Breach of Directors' Duties and Related Liability" 'insolvent Trading']
['corporations' 'corporate Insolvency'] ['appointment of Special Purpose Liquidator' 'external Administration' "liquidators' Powers and Duties" 'creditor Standing' "investigation of Potential Claims for Breach of Directors' Duties and Related Liability" 'insolvent Trading']

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Procedural Posture

Corporations Application for Appointment of a Special Purpose Liquidator Under Division 90, S 90 15 of the Insolvency Practice Schedule (corporations), Schedule 2 to the Corporations Act 2001 (cth) / Application Heard on 23 July 2019; Reasons and Order Dated 2 August 2019

Legal Issues

  1. 1 ['Whether creditors of the Walton companies had standing to seek orders under s 90-15 of the Insolvency Practice Schedule (Corporations).' 'Whether it was appropriate to appoint a special purpose liquidator to investigate and, if appropriate, bring claims relating to alleged breaches of duty by directors or officers, alleged involvement by National Australia Bank Ltd, and alleged insolvent trading.' "Whether there was a reasonable basis for the plaintiffs' belief that the identified matters warranted further investigation, without the Court needing to determine the prospects of success of any prospective litigation." "Whether the appointment could be made without prejudicing the current liquidators' work or using property available to unsecured creditors generally."]

Ratio Decidendi

The Court held that it was appropriate to appoint a special purpose liquidator for the purposes identified in the proposed orders because the plaintiffs, as creditors, had standing under ss 90-20 and 5-30 of the Insolvency Practice Schedule (Corporations), there was a reasonable basis to investigate the matters identified in the schedule to the proposed order having regard to Derrington J's findings in Walton and the plaintiffs' reasons, it was unnecessary to rigorously determine the prospects of any prospective claim at this stage, the liquidators did not oppose the appointment, and safeguards could ensure the special purpose liquidator's costs would not be borne by property available to...

Court Disposition

Application allowed in principle; the Court stated it would make orders under s 90-15 for the appointment of a special purpose liquidator, subject to the parties submitting draft orders reflecting the reasons.

Orders

  • ['The parties are to consult, prepare and submit a draft set of orders to reflect these reasons.']