← All cases

[2016] NSWSC 755

Trans Pacific Insurance Corporation (In Liq) v Aradlay Investments Pty Ltd

Liquidator justified in settling proceedings on basis proposed

Catchwords

CORPORATIONS – application for approval by liquidator under ss 477(2A), (2B) and 479(3) Corporations Act 2001 (Cth)

Cases cited

  • Re One.Tel Limited[2014] NSWSC 457; 99 ACSR 247

Legislation cited

  • Corporations Act 2001 (Cth)
  • Insurance Act 1973 (Cth)

Judgment

  1. [1]

    The plaintiff, Trans Pacific Insurance Corporation (in liquidation) (“TPIC”) is incorporated in the Cayman Islands. It was an unauthorised foreign insurer, as that expression is defined in the Insurance Act 1973 (Cth). It carried on its business in Australia through underwriting agents as an indemnity insurer.

  2. [2]

    On 18 June 2009, Mr Brian Silvia was appointed by this Court as liquidator of TPIC. On 11 January 2011, he was appointed as joint liquidator of TPIC by the Grand Court of the Cayman Islands.

  3. [3]

    TPIC commenced these proceedings on 23 October 2012 against two former directors, and a number of companies, seeking damages for alleged breaches of duty and recovery of various debts.

  4. [4]

    The matter was set down for hearing in this Court for 12 days commencing 22 February 2016.

  5. [5]

    Shortly before that date, the matter settled in principle.

  6. [6]

    The settlement was subject to Mr Silvia obtaining this Court's approval to the settlement pursuant to ss 477(2A), (2B) and 497(3) of the Corporations Act 2001 (Cth) and to the Grand Court of the Cayman Islands giving corresponding approval.

  7. [7]

    The proposed settlement is now incorporated into two deeds of settlement, copies of which are before me as attachments to Mr Silvia’s affidavit.

  8. [8]

    The principles relevant to an application such as this are well known and were summarised in Re One.Tel Limited [2014] NSWSC 457; 99 ACSR 247 at [26] per Brereton J:

  9. [9]

    The terms of settlement are confidential but, as Mr Jones SC and Ms Gleeson (who appeared for Mr Silvia) said in their written outline, “are wholly directed at the commercial outcomes of the litigation”.

  10. [10]

    They reflect a practical assessment made by Mr Silvia, a vastly experienced liquidator, of the competing virtues of continuing with the proceedings, with all the attendant risks of following that course, compared to settling on the basis proposed.

  11. [11]

    Mr Silvia has also considered the money the plaintiff is likely to recover if it were to be successful, and the likely costs of litigation, including the costs of an external litigation funder.

  12. [12]

    I am comfortably satisfied that Mr Silvia is justified in settling the proceedings on the basis proposed.

  13. [13]

    I make the following orders:

    1. (1)

      Pursuant to s 479(3) of the Corporations Act 2001 (Cth) (“Act”), the liquidator is justified in entering into and performing the Deeds of Settlement which are at tabs 2 and 3 of Exhibit BRS-1 to the affidavit of Brian Raymond Silvia sworn on 3 June 2016 (“Deeds”), and procuring the plaintiff to do so.

    2. (2)

      Pursuant to ss 477(2A) and (2B) of the Act, the liquidator has approval of the Court to compromise debts in accordance with the Deeds, and to enter into the Deeds notwithstanding that obligations under it may be discharged by performance more than three months after it is entered into.

    3. (3)

      I stand the proceedings over to the Commercial List on 2 September 2016 for further directions.

    4. (4)

      I order that the exhibits be returned.

Unofficial copy. Source: NSW Caselaw. Refer to the official version for authoritative text.