Case: Australian Securities &amp; Investments Commission, In the Matter of Richstar Enterprises Pty Ltd v Carey (No 9) [2006] FCA 1242
Outcome: cited
Pursuant to that liberty, Bowesco and Lanepoint, by their common director, Karen Carey-Hazell, have each applied to the Court for orders directing the receiver to make provisions to enable them to meet various legal expenses including the costs of resisting the winding up applications in proceedings WAD 177 of 2006 ( ASIC v Bowesco ) and WAD 152 of 2006 ( ASIC v Lanepoint ). They also apply for funding for legal services in relation to the prosecution of an application by Bowesco for leave to appeal against my decision, made on 14 September 2006, relating to Bowesco's entitlement to an option to purchase certain property, which option had been assigned to it by Westpoint Corporation Pty Ltd: Australian Securities &amp; Investments Commission, In the Matter of Richstar Enterprises Pty Ltd v Carey (No 9) [2006] FCA 1242. Pursuant to an order made by Siopis J on 17 October 2006 a motion for leave to appeal out of time and for leave to appeal that decision was referred to the Full Court in the November sittings. The applications also seek orders for the provision of funding for legal services in relation to certain other matters. 4 The applications, insofar as they relate to the winding up proceedings, are made pursuant to the liberty to apply given on 30 August 2006 in those proceedings. The other directions sought, although brought in these winding up proceedings, should properly be the subject of separate substantive applications. I am prepared, however, because of the urgency of the matters and particularly the pending application by Bowesco for leave to appeal in relation to the option dispute, to deal with the merits of those applications in this judgment on the basis that any substantive application should be filed before the orders sought take effect. 5 The Court is asked to make all of the orders sought as an exercise of the power conferred upon it by s 423(1)(b) of the Corporations Act 2001 (Cth) (the Act). That provision allows for a person to complain to the Court about an act or omission of a controller of property of a corporation in connection with performing or exercising any of the controller's functions and powers. In such a case the Court may inquire into the matter and, where the Court so inquires, it may take such action as it thinks fit. For reasons given below, I do not consider that s 423(1)(b) is an appropriate basis for the orders sought as an incident of the winding up application. Indeed, it seems to have been put forward by Lanepoint and Bowesco as opening a doorway to a broader inquiry into the conduct of the receiverships. 6 The alternative basis upon which the applications rest is s 1321 of the Act. Lanepoint and Bowesco in effect appeal to this Court against the refusal by their receivers and managers to make available, out of the funds under their control, funding for legal representation in the winding up proceedings and for the other purposes to which reference has been made. 7 For the reasons that follow, in my opinion, provision should be made by the receivers and managers of Lanepoint for Bowesco's reasonable legal costs in defending the winding up application brought against it, in meeting the legal costs of this application and in prosecuting its application for leave to appeal. The orders sought by Lanepoint are not acceded to nor the remaining orders sought by Bowesco.