In the matter of Newheadspace Pty Ltd (in liq) [2020] NSWSC 173

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Facts

  • Ms Jhanna Culver was the director and shareholder of Newheadspace Pty Ltd (“Newheadspace“). Newheadspace had developed a program called ‘Extend the Dream’ which assisted professional athletes for life after sport.
  • The NRL used the program occasionally between 2011 and 2014 before being discontinued.
  • In 2015, the director wanted to restart the program but the NRL had by then developed their own in-house program for retiring NRL players.
  • On 4 July 2016, the director attempted to recover payment for three outstanding invoices for $7,500. The NRL made an offer to resolve the dispute but the director did not accept it.
  • In February 2017, the director engaged a litigation funder to fund a $3 million claim against the NRL for various exaggerated claims. This claim increased to $5 million.
  • The director formulated a plan for the sole purpose of publicly examining the NRL officers, which included liquidating Newheadspace.  Examination summonses were issued. The NRL contended they were issued for an improper purpose, largely to place pressure on the NRL to pay the director money.

Issues

  • Were the examination summonses issued for an improper purpose?

Held

  • The Court held that Newheadspace’s liquidator had not turned his mind to whether the elements of section 596B of the Corporations Act 2001 (Cth) were satisfied or whether the summonses had been issued for a proper purpose.
  • This impugned on the liquidator’s independence.

Quotes

The power to appoint a liquidator is not conferred to use the threat of public examinations as a way to persuade someone to pay you money. Nor it is a proper purpose for a company to be placed into external administration so that the company or a litigation funder can avail itself of the forensic advantage conferred by public examinations which are not available to a company wishing to sue in the ordinary manner. It has been consistently held that it is an abuse of process to use examinations solely for the purpose of obtaining a forensic advantage not available from ordinary pre-trial procedures: Hong Kong Bank of Australia Limited v Murphy (1992) 8 ACSR 736; (1992) 28 NSWLR 512 at 519 per Gleeson CJ; Sandhurst Trustees Limited v Harvey (2004) 49 ACSR 422; [2004] SASC 157 at [51] (per Doyle CJ with whom Perry and Bleby JJ agreed); Re Excel Finance Corporation Limited (receiver and manager appointed); Worthley v England (1994) 52 FCR 69 at 90 per Gummow, Hill and Cooper JJ; Re New Tel (in liq); Evans v Wainter Pty Ltd (2005) 145 FCR 176; [2005] FCAFC 114 at [252] per Lander J with whom Ryan and Crennan JJ agreed. In the same way, it is an abuse of process to appoint a liquidator solely for the purpose of utilising his or her standing to seek such coercive orders.

Full Text

The full text is available here: https://jade.io/article/717130


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