In the matter of Hilbon Transport Pty Limited

1. [1]

   The company Hilbon Transport Pty Ltd ACN 143 822 146 was wound up by order of the court made on 10 May 2016, when Michael Smith was appointed as its liquidator. By interlocutory process filed on 27 July 2017, the liquidator applied for orders that he be released as liquidator and that ASIC deregister the company, and directions under (CTH) Corporations Act 2001, s 542, permitting him to destroy the books and records of the company after the expiry of 30 days from its deregistration (that is to say, within the period of five years after the deregistration of the company, for which that section would otherwise have required that he retain them). At the hearing on 4 September 2017, all matters entitling the liquidator to a release and an order that ASIC deregister the company were established and those orders were made; however, in circumstances where the second tranche of amendments effected by the (CTH) Insolvency Law Reform Act 2016 (ILRA) had commenced on 1 September 2017, a question arose as to whether the order granting permission to destroy the books could be made.

2. [2]

   Until its repeal by ILRA, which in this respect was effective from 1 September 2017, [1] Corporations Act, s 542(3) and (4), provided that a liquidator may, in the case of a winding up by the court, apply to the court for directions that he or she may destroy the books within the period of 5 years after the dissolution of the company (for which the liquidator was otherwise required to retain them), and must give ASIC at least 14 days’ notice of such application (whereas in the case of a members' voluntary winding up, the company may by resolution direct that the books be destroyed, and in the case of a creditors' voluntary winding up, the committee of inspection, or, if there is no such committee, the creditors, may so direct, while in both the latter cases ASIC must consent to a destruction of the books):

3. [3]

   From 1 September 2017, s 542 is repealed and replaced by s 70-35 of Schedule 2 (The Insolvency Practice Schedule (Corporations)). However, s 70-35 contains no corresponding provision conferring power on the Court to abridge the time for retention of books in the case of a winding up by the Court; rather, it provides:

4. [4]

   For the liquidator, Mr Narayan submitted that resort could still be had to the power in the repealed s 542, by reason of Corporations Act s 1596, which provides:

5. [5]

   The proposition that s 542 remains applicable on that basis therefore depends on when, for the purpose of s 1596(2)(a), the external administration of a company ends. The dictionary in the Insolvency Practice Schedule provides that “end of an external administration of a company” means, relevantly, in the case of a winding up of a company, “the day on which the affairs of the company are fully wound up”.

6. [6]

   In Re London and Caledonian Marine Insurance Co, [2] it was held that the words “as soon as the affairs of the company are fully wound up” meant “when the liquidator has done all that he can to wind up the company, when he has disposed of the assets as far as he can realise them, got in the calls as far as he can enforce them, and paid the debts as far as he is aware of them, and has done all that he can do in winding up the affairs, so that he has completed his business so far as he can, and is functus officio”. That passage was cited in Bianchi v Crewe & Sons Pty Ltd, [3] by Franklyn J who said (in the context of the then Corporations Law):

7. [7]

   That indicates that the completion of the winding up of the affairs of the company may not coincide with, but may precede, the release of the liquidator and the deregistration of the company. Thus, in Arnold World Trading Pty Ltd v ACN 133 427 335 Pty Ltd, [4] Barrett J accepted that there is a distinction between completion of the process of winding-up the company’s “affairs” (as referred to in s 509(1) of the then Corporations Law), and the status of the company as one that “is being wound up”, so that the latter may endure notwithstanding that the former has been achieved. His Honour said:

8. [8]

   These authorities are reflected in the statement in Keay, [5] to the effect that a winding up is completed when all the property of the company (or so much as can be realised without needlessly protracting the liquidation) has been realised, and the liquidator has distributed a final dividend to the creditors, adjusted the rights of the contributories, and made a final return, if any, to the contributories:

9. [9]

   Accordingly, “the end of the external administration” occurs when the affairs of the company have been fully wound up, which is when the matters referred to in s 480 have been completed: that is to say when the Liquidator has completed the process entrusted to him or her by realising property, distributing a final dividend to creditors, adjusting the rights of contributories and making any final return to contributories.

10. [10]

    In this case, those matters had been completed in June 2017, prior to the filing of the interlocutory process. It follows that, by operation of s 1596(2), s 542 continues to apply, and the Court has power under that provision to make a direction for the early destruction of the books and records of the company.

11. [11]

    The same result can be reached by an alternative route under Corporations Act, s 1617, which provides that if proceedings are brought under the old provisions of the Act before the commencement day of the new provisions, which is relevantly 1 September 2017, then the old provisions continue to apply on and after the commencement day in relation to the proceedings, despite the amendments and repeals made by Schedule 2 to the Insolvency Law Reform Act 2016, and nothing in that Schedule affects the power of the Court to make orders in relation to the proceedings. As the interlocutory process was filed for relief under the old provisions (in particular, s 542) before 1 September 2017, s 542 continues to apply in relation to the present application.

Conclusion

1. [12]

   For those reasons:

   1. (1)

      an external administration ends, for the purposes of Corporations Act, s 1596(2), when the affairs of the company have been fully wound up, which is when the matters referred to in Corporations Act, s 480, have been completed: that is to say when the Liquidator has completed the process entrusted to him or her by realising property, distributing a final dividend to creditors, adjusting the rights of contributories and making any final return to contributories;

   2. (2)

      in this case, those matters had been completed in June 2017, prior to the filing of the interlocutory process, and it follows that, by operation of s 1596(2), Corporations Act, s 542, continues to apply, and the Court has power under that provision to make a direction for the early destruction of the books and records of the company; and

   3. (3)

      alternatively, as the interlocutory process was filed for relief under s 542(2) before 1 September 2017, by operation of Corporations Act s 1617, s 542 continues to apply in relation to the present application.

2. [13]

   The Court orders that:

   1. (1)

      Pursuant to Corporations Act, s 542(2), s 1596(2) and/or s 1617, the books of Hilbon Transport Pty Ltd ACN 143 822 146 in the possession of the applicant Michael John Morris Smith as liquidator may be destroyed after the expiry of 30 days from the deregistration of the company.