FEDERAL COURT OF AUSTRALIA

Van Wijk (Trustee), in the matter of Power Infrastructure Services Pty Ltd v Power Infrastructure Services Pty Ltd (No 2) [2015] FCA 216

THE COURT ORDERS THAT:

1.    Power Infrastructure Services Pty Ltd ACN 162 324 496 be wound up pursuant to Section 461 of the Corporations Act 2001.

2.    Michael Peldan, Partner, Worrells and Raj Khatri, Partner, Worrells Solvency & Forensic Accountants be appointed liquidators to wind up Power Infrastructure Services Pty Ltd ACN 162 324 496.

3.    The liquidators have the powers specified in the Corporations Act 2001 (Cth) to conduct the winding up.

4.    That the applicant’s costs of and incidental to the winding up application and the appointment of the provisional liquidator be costs in the winding up.

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

REASONS FOR JUDGMENT

1    Today is the appointed date for the return to Court of a matter first heard on 12 December last year. At that time, on the application of Mr Dean Van Wijk, I appointed a provisional liquidator to Power Infrastructure Services Pty Ltd (Power): see Van Wijk (Trustee), in the matter of Power Infrastructure Services Pty Ltd v Power Infrastructure Services Pty Ltd [2014] FCA 1430. These reasons for judgment must be read in conjunction with those earlier reasons for judgment.

2    The principal proceeding, which saw the appointment of a provisional liquidator, and which is returned today, is an application by Mr Van Wijk for the winding up of Power on one or more of the grounds specified in s 461(1)(e), (f), and (k) of the Corporations Act 2001 (Cth) (the Act).

3    The appointment of a provisional liquidator was resisted by Power. Power is again represented today, by its solicitors. It neither consents to nor opposes its winding up. The provisional liquidator has been notified of the application. He takes a neutral stance in respect of the winding up application, and does not seek to appear today.

4    Another interested party in Power, which has become interested since the time when the provisional liquidator was appointed, is the Commonwealth Bank of Australia. A few days after the provisional liquidator was appointed, the Commonwealth Bank appointed KordaMentha as receivers and managers over Power’s assets.

5    The receivers and managers have also been notified of Mr Van Wijk’s intention today to press for the winding up of Power. They have notified Mr Van Wijk’s solicitors that they intend not to take a position with respect to the winding up of Power. In other words, they too, have a neutral position. Consistently with that there has been no appearance today, by or on behalf of the receivers and managers.

6    It does not follow from the absence of active opposition that a winding up order must be made. It is still for Mr Van Wijk to prove that the company ought to be wound up on one or more of the grounds upon which he relies. Further, it remains necessary for him to show that the balance of convenience favours the winding up of Power. In this regard, s 467(4) of the Act raises considerations that are relevant. That is because the application is made by a member of Power, and the grounds of the application include that it is just and equitable that the company be wound up. If I were of the opinion that some other remedy was available to Mr Van Wijk and that he was acting unreasonably in seeking to have the company wound up instead of pursuing some that remedy, I would not make a winding up order.

7    As it happens, the evidence before me amply establishes that the contingencies that were abroad at the time when the provisional liquidator was appointed have become realities. Further, the evidence now to hand underscores the basis upon which the provisional liquidator was appointed.

8    What do I mean by this? There was, as the earlier reasons for judgment reveal, a contingency that the Commonwealth Bank would choose to appoint receivers and managers. It is no part of my function today to adjudicate upon whether the particular security agreement of 20 August 2014, cited by the receivers and managers as the basis for their appointment, is one which was truly authorised by Power. It is evident from the material read today that a controversy in relation to whether all of the directors of Power authorised that security remains afoot.

9    Also evident, in the statements of affairs which have been filed since the appointment of the provisional liquidator, is confirmation of an apprehension held by Mr Van Wijk in December that Power and more particularly its assets, including its cash flow, were being used for the wider purposes of what I termed in the earlier judgment the Viento Group. There are substantial amounts shown in the accounts annexed to the statement of affairs owed to Power by other members of the Viento Group.

10    The evidence read today also establishes that, save for the purpose of completion of some existing contracts, at the behest of the receivers and managers, Power did not trade after their appointment and is no longer trading. The existing contracts were completed in January. Those contracts were completed by casual employees. All of the full-time employees of Power were terminated by the receivers and managers with effect on and from 18 December 2014.

11    The bitter differences between shareholders in Power, upon which I remarked in the earlier judgment, continue. The evidence is that the shareholders’ relationship has broken down irreconcilably. There was in theory, a brief period between the appointment of the provisional liquidator and the appointment of the receivers and managers within which the shareholders might, notwithstanding earlier differences, have come to some commercial value judgment, as to either a minority or majority buyout. That this did not come to pass underscores just how irreconcilable the differences between them must be. It further establishes that there is no reasonable alternative to the winding up of Power.

12    I am satisfied that Mr Van Wijk is not acting unreasonably in seeking the winding up of Power. I am well satisfied, having regard to the matters to which I referred in the earlier judgment, as well as the more recent developments which I have described, that it is just and equitable for Power to be wound up. It is not necessary, in these circumstances, to consider the other grounds relied upon for its winding up.

13    There is a consent on file from the provisional liquidator to act as liquidator of Power. It by no means follows that a provisional liquidator will be appointed as the liquidator of a company. There can be circumstances arising from the conduct of a provisional liquidation that would make it inappropriate to continue that officer’s appointment by way of appointing the provisional liquidator as liquidator. Equally, there can be considerable savings of costs, by appointing a provisional liquidator as liquidator. That is a particular consideration in this case for it is evident from the account that there is a large number of third party unsecured trade creditors. It is, in my view, in their interests, to say nothing of the interests of creditors generally, for the provisional liquidator to continue as liquidator.

14    The existence of that large body of third party unsecured trade creditors also serves to underscore a basis upon which Mr Van Wijk sought the appointment of a provisional liquidator in the first place, namely, that since the takeover and assimilation of Power within the Viento Group, the timeframes within which trade creditors were being paid had expanded to the detriment of Power’s goodwill with its suppliers. That too provides a basis upon which I am satisfied that it is just and equitable to wind up the company.

Associate:    

Dated:    12 March 2015