Stay application dismissed despite five year delay

Stay application dismissed

Pitcher Partners’ Paul Weston.

Now that a bid for permanent stay has been dismissed and the appointment of a suitable expert to determine the date of insolvency or otherwise is imminent, INO thought it appropriate to revisit the Starcom saga.

Readers may recall that we first delved into this ageing administration in June this year in Lost Records An Obstacle For Pitchers’ Partner.

That was when Starcom’s chief executive officer (CEO) Jega Muttucumaru Rajan and non-executive director Mariapillai Pathmanaban initiated their application for a permanent stay of insolvent trading proceedings first brought against them in 2017 by Pitcher Partners’ partner (we love writing that) Paul Weston.

The directors’ beef is that Weston has delayed launching the proceedings too long since being appointed liquidator by order of the NSW Supreme Court in August 2011.

During the five years that elapsed without action records have gone missing or have been destroyed, or lie locked behind an account in the Cloud, the password for which is yet to be obtained.

Weston has also settled claims against two of what was originally four defendants.

Those remaining argue that they have no way of obtaining the books and records they need to defend themselves and that Weston should’ve commenced the proceedings in 2012 given the 2017 proceedings are based on the same books and records he had available to him then.

Unsurprisingly, the liquidator contends that the defendants are at least partly responsible for the absence of records, something the defendants deny.

Last month Federal Court judge Michael Lee dismissed the stay application, though in his judgment he alluded early on to the case’s glacial progress.

“This proceeding, initially commenced against four defendants against the tick-tock of a pending limitation tolling, has not been notable for the vigour and efficiency of its progression,” the judge said in opening.

Nevertheless he was insufficiently moved by complaints that Weston had “tarried” in progressing the claim; or that delays caused by Weston taking leave or by his independent expert travelling overseas supported the defendants’ contention that it amounted to an abuses of process.

On December 6, 2018 Justice Lee made orders requiring the parties to nominate their preferred independent expert for the determination of the insolvency question by December 13, 2018 and ordered them to come back for case management in April 2019.

See: Weston in his capacity as liquidator of Starcom Group Pty Ltd (in liq) v Rajan [2018] FCA 1737

About the Author

Peter Gosnell
Peter Gosnell
Insolvency News Online illuminates the practice of insolvency Australia-wide, highlighting the triumphs and travails of the nation’s registered practitioners and the accounting and legal professionals who work with them. INO is produced by Peter Gosnell, former business editor and senior business reporter at The Daily Telegraph newspaper. During a decade-long career, your correspondent reported on such notable corporate collapses as HIH, One.Tel, Westpoint and Fincorp as well as some of the nation's highest profile bankruptcies and the investigations and prosecutions arising from Australia's most notorious instances of white-collar crime.

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