Drinkwater and Ors v Caddyrack Pty Ltd and Ors Matter No 3970/96 [1997] NSWSC 500 (23 October 1997)

Last Updated: 4 March 1998

PETER WESTGARTH DRINKWATER & ORS v CADDYRACK PTY LIMITED & ORS

3970/96

23 October 1997

Young J

The Supreme Court of New South Wales Equity Division

JUDGMENT

HIS HONOUR: I gave reasons for judgment in this matter on

25 September 1997. The companies involved are companies which appear to be trading profitably and exploiting a product for which there is a demand. I am conscious that the court should not wind up such enterprises if there is any other viable course open.

I had contemplated that the parties would be able to work out some arrangement whereby the shares could be valued and one of the parties could buy the others out. However, the two sets of short minutes that were handed up this morning show that the parties would seek to value different things, that both parties want to be the buyer and that it is extremely difficult for the parties to work out a regime for the purchase or sale of each other's interest.

It seems then that if the path of permitting one side to buy the other side out is to be followed, there will need to be a lengthy and extensive inquiry before the Master. This will take time and whilst it is happening something has to be done to ensure that the business of the company is running in the interests of the company as a whole rather than in the interests of one party. Both parties have shown in the past that they will, if they can, take any commercial advantage open to them to prefer their own interests.

There are some existing undertakings as to the running of the business and it is also agreeable to both parties at the moment that Miss Lesley Pickering continue as manager.

It seems to me that the only way out of the present deadlock is to appoint a liquidator. This is, under the Act, a course of last resort. The interim arrangement could hold together for a further twenty-one days during which the parties may be able to realise that further battles are only likely to mean that both of them will lose to the benefit of the legal or accounting professions or the person who buys the business.

Accordingly, on condition that the existing undertakings continue and that Miss Pickering is left as manager, I will order that the first defendant company is wound-up and that Mr Chant of Deloittes Touche Tohmatsu, who is next in sequence in my list, be appointed liquidator, but I will suspend that order until 11 o'clock on 13 November 1997. I will let the matter be listed before me at 9.30 on that day to give the parties one last opportunity.

I direct that the orders will be in accordance with orders 1 and 5-14 of the short minutes of order which I will hand down in a moment and then will initial and place with the papers.