Case: Dean-Willcocks v Soluble Solution Hydroponics Pty Ltd (1997) 42 NSWLR 209
Outcome: considered
In Dean-Willcocks v Soluble Solution Hydroponics Pty Ltd (1997) 42 NSWLR 209, Young J gave effect to pooling resolutions passed by creditors of two companies at s 439A meetings by recourse to s 447A of the Corporations Law . Young J noted at 213, the rule that had grown up in the bankruptcy jurisdiction that: "where estates were so inextricably blended as to render it impracticable to keep them distinct, the court would order them to be administered in consolidation." Young J found support for this principle of consolidation in corporate insolvency in Anmi Pty Ltd v Williams [1981] 2 NSWLR 138 which involved an application by a liquidator in the course of the winding-up of three companies which carried on business in partnership. Powell J at 164 referred to the exception to the rule in bankruptcy that separate creditors could not have access to joint assets, namely that separate creditors could have access to a pool comprising joint and separate assets. Powell J relied on the following statement in Archbold on Bankruptcy , 11 th ed, p 598 as a formulation of the exception: "'Where (the joint and separate) estates are so blended together as to render it impracticable to keep them separate, they may be consolidated; but not where the accounts can be kept distinct, and a single creditor objects (In re Buliver; Ex p Sheppard (1833) Mon &amp; B 415; 3 Dea &amp; C 190); and even if the creditors at a general meeting agree to consolidate the estates, they will not be consolidated without it is ascertained that the proposed consolidation will be for the benefit of creditors generally (In re Higton and Breever; Ex p Strutt (1821) 1 G1 &amp; J29)': Archbold on Bankruptcy, 11 th ed, p 598.' Powell J continued: "To this must be added, as a gloss, that the mere fact that proofs may be difficult of investigation or that difficult questions may arise as to whether creditors are joint or separate creditors seems not to be sufficient to bring a case within the exception: Re Kriegel; Waring &amp; Co; Ex parte Trotman (1893) 68 LT 588; 10 Morr 99; Re Sydney Barker &amp; Co (1914) 21 Mans 238". 89 In Dean-Willcocks v Soluble Solution Hydroponics Pty Ltd (supra) all the creditors except the Deputy Commissioner of Taxation attended the meetings and approved of the resolution. However the order made by Young J approving of the pooling resolutions was made expressly subject to the opportunity given to the Deputy Commissioner of Taxation to apply to the Court to have the order discharged. Young J set out a number of principles which he considered applied which included the following (at 216): "It would be possible for the court to advise a liquidator in a court winding up that he should consolidate debts, but it would be unlikely that the court would do so unless every creditor agreed or a regime was put in place for creditors to object." 90 In Re Charter Travel Co Ltd (1997) 25 ACSR 337, Young J approved of the calling of a joint meeting of creditors of two companies to consider a pooling proposal for two companies in liquidation in circumstances where it was virtually impossible to define which creditor belong to which company. Young J said at 338: "As I indicated in my judgment in Dean-Willcocks v Soluble Solution Hydroponics Pty Ltd (1997) 24 ACSR 79, administration of two companies in insolvency conjointly is something that can occur only in exceptional cases. As I said at 85, this normally means a scheme of arrangement, but if no creditor objects and it is impracticable to keep the assets and liabilities of different companies separate, and the consolidation is for the benefit of creditors generally, then the court might advise the liquidators concerned that they would be justified in consolidating the administration." One of the factors which persuaded Young J that the case fell within the exceptional circumstances was that no creditor could be disadvantaged by the proposal. 100 This review of the recent authorities on pooling leads me to the conclusion that there is no authority or support for the view that a Court will approve a pooling proposal in circumstances where a number of the creditors of one or more of the companies will be significantly disadvantaged. These authorities also proceed on the basis that it is not sufficient for an order for pooling that the administration or liquidation is complex or that the identity of creditors is difficult to determine. So much was stated by Powell J in Anmi Pty Ltd v Williams (supra) at 164 (par [88] above). The observation of Powell J was cited with approval by Young J in Dean-Willcocks v Soluble Solution Hydroponics Pty Ltd (supra) at 213 and by Barrett J in Dean-Willcocks; Alpha Telecom (Aust) Pty Ltd (in liq) (supra) at 17.