FEDERAL COURT OF AUSTRALIA

City Pacific Ltd (in liquidation) v CityPac Home Loans Pty Ltd, in the matter of CityPac Home Loans Pty Ltd [2009] FCA 1365

Corporations Act 2001 (Cth) ss 459C, 532(2)

CITY PACIFIC LTD (IN LIQUIDATION) (ACN 079 453 955) V CITYPAC HOME LOANS PTY LTD (ACN 100 616 671) AND ORS, IN THE MATTER OF CITYPAC HOME LOANS PTY LTD (ACN 100 616 671) AND ORS

NSD 1068 of 2009

EMMETT J

23 OCTOBER 2009

SYDNEY

IN THE MATTER OF CITYPAC HOME LOANS PTY LTD (ACN 100 616 671) AND ORS

THE COURT:

1.         Grants leave to the first plaintiff to file in Court an Amended Originating Process in the form filed in Court on 23 October 2009.

2.         Grants leave to the first plaintiff, pursuant to s 459P(2)(b) of the Corporations Act 2001 (Cth), to proceed with the application for winding up against the first, second, third, fourth, fifth and sixth defendants.

3.         Orders that:

3.1       CityPac Home Loans Pty Ltd A.C.N. 100 616 671;

3.2       City Pacific Treasury Pty Ltd A.C.N. 093 019 553;

3.3       City Pacific Reserves Pty Ltd A.C.N. 093 019 491;

3.4       City Pacific Custodians Pty Ltd A.C.N. 093 445 740;

3.5       Treasury Home Loans Pty Ltd A.C.N. 102 694 771;

3.6       A.C.N. 092 337 230 Pty Ltd A.C.N. 092 337 230;

3.7       City Pacific Marina Management Pty Ltd A.C.N. 120 458 184;

3.8       Quay Development Corporation Pty Ltd A.C.N. 105 166 685;

3.9       Martha Cove Marina Pty Ltd A.C.N. 120 574 405;

3.10     City Pacific Project Management A.C.N. 105 563 997; and

3.11     Grande Pacific Pty Ltd A.C.N. 113 731 829;

be wound up.

4.         Grants leave, pursuant to s532 of the Corporations Act 2001 (Cth), to Andrew Hugh Jenner Wily and David Anthony Hurst to be appointed as liquidators of the sixth defendant. 

5.         Orders that Andrew Hugh Jenner Wily and David Anthony Hurst be appointed as joint  liquidators of:

5.1       CityPac Home Loans Pty Ltd A.C.N. 100 616 671;

5.2       City Pacific Treasury Pty Ltd A.C.N. 093 019 553;

5.3       City Pacific Reserves Pty Ltd A.C.N. 093 019 491;

5.4       City Pacific Custodians Pty Ltd A.C.N. 093 445 740;

5.5       Treasury Home Loans Pty Ltd A.C.N. 102 694 771;

5.6       A.C.N. 092 337 230 Pty Ltd A.C.N. 092 337 230;

5.7       City Pacific Marina Management Pty Ltd A.C.N. 120 458 184;

5.8       Quay Development Corporation Pty Ltd A.C.N. 105 166 685;

5.9       Martha Cove Marina Pty Ltd A.C.N. 120 574 405;

5.10     City Pacific Project Management A.C.N. 105 563 997; and

5.11     Grande Pacific Pty Ltd A.C.N. 113 731 829.

6.         Orders that the first plaintiff’s costs of the winding up applications be part of the costs of the winding up of each of the second to sixth plaintiffs and the defendants.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

IN THE MATTER OF CITYPAC HOME LOANS PTY LTD (ACN 100 616 671) AND ORS

REASONS FOR JUDGMENT

1                          I have before me an amended originating process for the winding up of eleven companies.  All of the eleven companies are subsidiaries of the first plaintiff, City Pacific Ltd (City Pacific).  City Pacific was ordered to be would up by the Court and Messrs Hugh Jenner Wily and David Anthony Hurst were appointed as liquidators.  Some of the eleven companies are directly owned by City Pacific.  Others, while they are wholly owned subsidiaries, are not directly owned by the City Pacific.  Having regard to the circumstances to which I shall shortly refer, I granted leave for the filing of an amended originating process whereby the name of one of the defendants was corrected and five of the subsidiaries, which were formerly defendants, were joined as plaintiffs.

2                          Mr James Finucan is either sole director, sole director and secretary or co-director and secretary of each of the eleven subsidiaries.  The originating process as first filed, together with an affidavit of Mr Wily and Messrs Wily and Hurst’s consent to act as liquidator, was served on a number of the subsidiaries on 8 October 2009 and on the balance of the subsidiaries on 9 October 2009.  Mr Finucan has, in his capacity as a director or sole director of the subsidiaries, consented to the filing of the amended originating process and has indicated that, in that capacity he supports the orders now sought.

3                          Mr Finucan has sworn an affidavit that, in his belief, each of the subsidiaries is financially dependent upon City Pacific and that because of City Pacific’s liquidation by reason of insolvency, each of the subsidiaries is unable to meet its present liabilities and is unable to obtain finance to allow it to meet present liabilities.  Accordingly Mr Finucan believes that each of the subsidiaries is either presently insolvent or is likely in the near future to become insolvent and should be wound up. 

4                          The evidence as to the financial position of the subsidiaries is not entirely satisfactory.  It consists of unverified balance sheets exhibited to Mr Finucan’s affidavit.  However, in the light of the evidence given by Mr Finucan I am satisfied that the subsidiaries are insolvent.  In relation to one of the subsidiaries, Grande Pacific Pty Limited, that conclusion is reinforced by the operation of s 459C of the Corporations Act 2001 (Cth) (the Corporations Act).  Under s 459C(2), the Court must presume that a company is insolvent if, during or after the three months ending on the day when a winding up application is made, a receiver or receiver and manager of the property of the company was appointed under a power contained in an instrument relating to a floating charge on such property.  On 30 September 2009 Messrs John Richard Park and Mark Anthony Korda were appointed jointly and severally as receivers and managers of Grande Pacific Pty Limited, pursuant to a fixed and floating charge dated 8 July 2005. 

5                          City Pacific is the chargee under the charge over the assets of Grande Pacific Pty Limited.  Its liquidators are therefore disqualified by the operation of s 532(2) of the Corporations Act from seeking appointment or acting as liquidator of Grande Pacific Pty Ltd except with the leave of the Court.  The liquidators are deemed to be officers of City Pacific and accordingly they are disqualified by the operation of s 532(2)(c)(ii) of the Corporations Act. 

6                          As I have said, the assets of Grande Pacific Pty Limited are under the control of the receivers appointed under the earlier charge.  Accordingly, I do not consider that there would be any prejudice by reason of the liquidators of City Pacific, being a body corporate that is a mortgagee of the property of Grande Pacific Pty Limited, acting as liquidators of Grande Pacific Pty Limited.  It is appropriate therefore to give leave pursuant to s 532 for Messrs Wily and Hurst to be appointed as liquidators of Grande Pacific Pty Limited.

7                          I am satisfied that all of the prerequisites for the making of a winding up order in respect of the eleven companies in question have been satisfied and that each of the companies is insolvent or, alternatively, that in all of the circumstances it is just and equitable that they be wound up.  Accordingly, I propose to make orders that each of them be wound up and that Messrs Andrew Hugh Jenner Wily and David Anthony Hurst be appointed as joint liquidators. 

8                          I also propose to order that the costs of this proceeding be part of the costs of the winding up of each of the companies.

Associate:

Dated:         23 October 2009