Australian Securities and Investments Commission v Orehek

[2003] NSWSC 1067

CITATION:	ASIC v Orehek & Ors [2003] NSWSC 1067
HEARING DATE(S):	14 November 2003
JUDGMENT DATE:	14 November 2003
JURISDICTION:	Equity
JUDGMENT OF:	Campbell J
DECISION:	Liquidator and Administrator of other companies appointed as Liquidator of subject companies, upon receipt of an undertaking to resign or seek advice of the Court whether he should resign if he perceives a conflict. Winding up orders made in several proceedings.
CATCHWORDS:	CORPORATIONS - winding up - subject companies possibly have affairs intermingled with affairs of other companies already in liquidation or under administration - whether liquidator and administrator of those other companies should be appointed as liquidator of subject companies - CORPORATIONS - winding up - several applications concerning winding up - payment of costs of parties to the various application
LEGISLATION CITED:	Corporations Act 2001 (Cth)
PARTIES :	Australian Securities & Investment Commission - Plaintiff Robert John Orehek - First Defendant Marriott Properties Pty Ltd - Second Defendant Platinum Finance Group Pty Ltd - Third Defendant
FILE NUMBER(S):	SC 5644/03
COUNSEL:	D R Stack - Plaintiff M Foley, solicitor - Defendants P Day, solicitor - Liquidator of Grace Abounds P J Harkin, solicitor - Liquidator of Orehek Group
SOLICITORS:	Australian Securities & Investment Commission - Plaintiff Foleys - Defendants

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

CAMPBELL J

FRIDAY 14 NOVEMBER 2003

5644/03 AUSTRALIAN SECURITIES AND INVESTMENT COMMISSION v ROBERT JOHN OREHEK & ORS

JUDGMENT – Ex Tempore

1 HIS HONOUR: This matter came before me today upon an application by ASIC for some interlocutory orders. The interlocutory orders were for appointment of a receiver to two corporations. Those corporations are Marriott Properties Pty Ltd and Platinum Finance Group Pty Ltd. ASIC had started proceedings against those companies, and against Mr Robert Orehek, seeking orders for the winding up of the two companies, and for the disqualification of Mr Orehek.

2 When the matter was called on, I was informed that, subject to one matter, agreement had been reached on orders which would settle the entire proceedings. The agreement included orders for the winding up of each of the two companies. The one matter concerning which there is not agreement concerns the identity of the Liquidator.

3 The two companies in question are companies which were under the effective control of Mr Orehek. There were various other companies also under his effective control. Of those other companies, Mr Martin Green has already been appointed as either the Administrator or the Liquidator. On the limited evidence which there is before me, it appears that there is a real prospect that there has been some intermingling of the affairs of the various companies.

4 A creditor of Marriott Properties Pty Ltd and Platinum Finance Group Pty Ltd, Grace Abounds Pty Limited (In liquidation) (“Grace Abounds”) has served a statutory demand on each of those companies. That has led to proceedings being started in the Federal Court. Those proceedings came on before Emmett J today and were transferred to this Court, with a view to them being heard with ASIC’s proceedings. In connection with those applications, Mr Day has appeared for the Liquidator of Grace Abounds. It is not one of the companies of which Mr Green is Liquidator. Mr Day also appears before me today, and submits that the intermingling of the affairs of the two companies whose affairs are before me today, and the other companies of which Mr Green is Liquidator or Administrator, is such that it is desirable to have someone other than Mr Green appointed as Liquidator.

5 In my view it is preferable for Mr Green to be appointed as the Liquidator. He already has some knowledge of the affairs of the two companies which are today in question. It is inevitable there will be some duplication of work if a second person were to be appointed as Liquidator of those two companies. The fact that the affairs of the various companies have been intermingled does not mean that Mr Green, if he were to be appointed as Liquidator of the two companies in question, would be faced with an inevitable conflict of duties. The affairs of the various companies will, of course, need to be administered so that the assets of each company are used in paying the liabilities of each respective company. It may be that the intermingling of the affairs of the companies turns out to be such that there will be difficulty in working out whether some particular asset really is an asset of one company rather than another. If that were to happen, then the situation might arise where there is a conflict between his duties as Liquidator of the various companies, if the facts were such that he was obliged to claim the asset about which that difficulty arose for more than one of the companies. However, it is not possible at this stage to say that a conflict is inevitable. The preferable course is to appoint Mr Green as Liquidator, and to accept an undertaking, of a kind which a solicitor appearing for him has already proffered, to the effect that he would resign in the event that a conflict emerged.

6 Upon Mr Green undertaking to either resign, or seek advice of the Court whether he should resign, in the event that he perceives a conflict between his duties as Liquidator of either of Marriott Properties Pty Ltd and Platinum Finance Group Pty Ltd, and his duties as Liquidator or Administrator of Glencorp Investments Pty Ltd, Palladian Properties Pty Ltd, New Vision Training and Research Pty Ltd, Vogue Properties Group Pty Ltd, Viscorp Investments Pty Ltd, Lane Properties Pty Ltd, Meridian Property Group Pty Ltd or Norton Investments Pty Ltd, I will make orders in accordance with a form of consent order which has been agreed between ASIC and the defendants in the proceeding it began. I note that that undertaking is given.

7 A somewhat unusual situation has arisen concerning costs orders. The winding up order which I have decided to make is a winding up order in Supreme Court proceedings which were commenced by ASIC. There are also on foot the proceedings begun in the Federal Court which I have mentioned. Grace Abounds seeks orders for its costs to be paid as petitioning creditor’s costs out of the assets of the corporations. That order is not opposed by ASIC.

8 The unusual situation has arisen as a result of ASIC having started its proceedings at a time when the Federal Court proceedings were already on foot. The motivation for ASIC starting its own proceedings was so it could obtain interlocutory asset protection orders. The way in which the proceedings have today settled in their entirety has had the effect that the ASIC proceedings have achieved a speedy result, and a result which is significantly cheaper than it might have been. Yet ASIC’s starting its own proceeding could, if the only orders which were made were ones which were made in ASIC’s proceedings, result in Grace Abounds being deprived of a costs order, and consequent priority to which it otherwise would have been entitled, if a winding up order had been made in the Federal Court. In these circumstances it seems to me appropriate that Grace Abounds should have its costs paid on the basis that they were petitioning creditors costs.

9 However section 556 Corporations Act 2001 sets out an order of application of assets which a Court has power to order a departure from only in limited circumstances (eg section 564). The result which seems to me appropriate concerning costs will be achieved if a winding up order is made in not only the Supreme Court proceedings which ASIC began, but also in the former Federal Court proceedings.

10 I make orders in accordance with the consent orders which I initial date today’s date and shall place with the papers. I also order, in each of the former Federal Court proceedings, that the company be wound up, that Martin Green be appointed as liquidator, and that the costs of Grace Abounds be paid from the assets of the company.

11 These orders may be entered forthwith.

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Last Modified: 12/18/2003