Case: Re Geneva Finance Ltd [1992] 7 WAR 496
Outcome: cited
On 30 August 2006 I made the orders earlier referred to declaring that the sole director of Lanepoint and Bowesco, Karen Carey-Hazell, was entitled to defend the winding up proceedings in the name of the companies. The practical concern relevant to whether Ms Carey-Hazell could defend the winding up applications was whether her exercise of powers in their names would interfere with the legitimate exercise by the receivers of their powers. As Owen J said in Re Geneva Finance Ltd [1992] 7 WAR 496: 'The real question is whether the directors, wishing to exercise a power which they would otherwise have, can do so without prejudicing the legitimate interests of the receiver and the secured creditor in the realisation of the asset.' The receivers do not oppose the ASIC winding up applications. There was no actual or apparent conflict between their position and Ms Carey-Hazell's proposed opposition. I said (at [24]): 'Absent Ms Carey-Hazell's participation as proposed, there is no contradictor to the winding up application. She asserts that there is a case to be made against the orders sought by ASIC. Quite apart from the question of her entitlement to bring that contention before the Court, it is in the interests of justice that as a director of the company she has an opportunity to make that case if she does so in accordance with the duties imposed upon her by the Act and not, for example, for some collateral purpose. In so doing, it should not be assumed that Ms Carey-Hazell will have any a priori entitlement to resort to the assets of the company for the purpose of funding legal representation in the winding up proceeding. I will, however, allow liberty to apply at the termination of the proceedings in that respect.' 13 The orders sought by Bowesco and Lanepoint in these applications are in identical terms: '2. The Receivers and Managers of the Respondent be directed to make provision for the funding of legal costs for the purposes of legal advice and representation relating to solicitor/client costs and expenses for: a. $50,000 for the defence of action WAD 177 of 2006 (" the Bowesco Proceedings ") pursuant to Liberty to Apply; b. $50,000 for the defence of action WAD 152 of 2006 (" the Lanepoint Proceedings ") pursuant to Liberty to Apply; c. $80,000 for an appeal against the decision of Justice French made 14 September 2006 in the Bowesco Option Dispute proceedings in WAD 83 of 2006 (" the Bowesco Option Dispute "); d. $50,000 for advice in relation to the asset preservation proceedings in WAD 83 of 2006 in relation to Bowesco (" the Asset Preservation Proceedings ")' and e. $15,000 for tax advice in relation to Lanepoint; f. $10,000 for advice in relation to the costs and conduct of the Receivers and Managers of the Respondent; and g. $7,500 for the bringing and prosecution of this application. 3. The Receivers and Managers of the Respondent be directed to provide the Respondent with a statement of the current financial position of the Company. 4. The costs of this application, including any reserved costs, be paid by the Receivers and Managers of the Respondent.' 14 Ms Carey-Hazell and the companies' solicitor, Mr John Hammond, have sworn affidavits in the winding up proceedings in support of the directions sought against the receivers. Mr Hammond deposed that the companies have been unable to provide funding for the purpose of legal advice in the winding up proceedings as any requests for funding have been refused by the receivers and managers.