Beach Petroleum Nl v Johnson, M.K

[1993] FCA 420

POA C,X &U Lf i f iad 4 a 0 1993

JUDGMENT No. ........ ........ .. l ...,..,.,..,

IN THE FEDERAJL COURT OF AUSTRALIA ) SOUTH AUSTRALIAN DISTRICT REGISTRY )

GENERAL DIVISION ) NO. G53 of 1991

BETWEEN:

BEACH PETROLEUM NL and

Another

Applicants

.. .nnZ	- and -
MALCOLM KEITH JOHNSON and Others

Respondents

, v -

- EXTEMPORE REASONS FOR JUDGMENT

Coram: von Doussa J.

Date : 18 June 1993

Place: Adelaide

This is an application to appoint a receiver and manager of Southern Goldfields that has been argued over the last three days. The catalyst for the application was the ascertainment of information by Beach about a deed of settlement dated 10 June 1993, which sought to settle what has been called the CGMA proceedings in the Supreme Court of South Australia.

venture to Jingellic. That transfer was to occur under a	40% interest held by Southern Goldfields in the Nevoria joint
in trying to pursue its recovery because it needs information from Mr Fuller. If that amount is not recoverable, there is a significant excess of liabilities over assets in the company.
Some information was received in the principal proceedings which suggests that the deposit of Southern Goldfields may have been a vehicle for supporting a loan to IRL, but it is by no means clear that that was the case.

This document was negotiated, in its final stages in great haste in the hour or so before judgment was handed down in the principal Beach proceedings on 10 June 1993. Part of the transaction involves the transfer of the previous shareholding of CGMA in Southern Goldfields, and anticipates, although it is not spelt out in the deed, the transfer of a

I

There is difficulty on the evidence received in the principal

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proceedings to identify precisely this $2 million in relation to the IRL loans. If a receiver and manager is appointed

i	I	there will be additional powers available to him which are not available to the board of directors of Southern Goldfields to
I	obtain information from Mr Fuller to pursue that recovery
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action.
The principal asset of Southern Goldfields is its interest in the Nevoria joint project. As I have said, it seems to me that the future of that interest would be best
resolved by someone completely independent, and seen to be independent, of Mr Fuller. In all the circumstances I think
that the applicants have made out their entitlement to have a receiver and manager in aid of execution appointed to Southern Goldfields and I so order.

I certify that this and the

+ preceding pages are a

true copy of the Reasons for Judgment of Mr Justice von Doussa

Associate*

Dated:  1

and it is for that reason that the application is being made
to appoint a receiver and manager to protect the assets.

The continuing involvement of Mr Fuller, and the uncertainties as to the validity of many aspects of the transaction (and again I am putting aside the Enterprise position at the moment) lead me to think that there is a need for the intenrention of a Court appointed officer to regulate the affairs of Southern Goldfields, and to help preserve the position, until the true situation can be sorted out. It may well be that at the end of the day some aspects of the proposed settlement are particularly beneficial to some of these companies, including Southern Goldfields, and maybe also to Enterprise, and it may be that Jingellic's receiver is prepared to go ahead with the proposed settlement as between Jingellic and Southern Goldfields, but I think in the interests of the shareholders of Southern Goldfields, it would be desirable that the merits of that transaction be assessed by someone who is seen to be quite independent of M r Fuller.

There is another reason which I think lends weight to the view that there should be a receiver and manager. It has become apparent today that there is in the accounts of Southern Goldfields a receivable of approximately $2 million being a deposit of Southern Goldfields' money with the Landerbank in Austria. The Landerbank apparently refuses to repay this money and as Mr Griffin has just indicated in his submissions, Southern Goldfields is encountering difficulties prominent role in the negotiation of the settlement and in the negotiations which led to the apparent transfer and adjustment of assets between these parties, which may well be to the detriment of Beach.

There is reason to believe that at least some aspects of the deed of settlement could be set aside. There is reason to suspect that money at one point held by Rostight has been transferred to a company, Copper Producers and used to pay for the purchase by Copper Producers of the Cortaus shares in Rostight. There is also reason to believe that there may be conflicts of fiduciary duty which could lead to the setting aside of certain of the other transactions contemplated by the deed of settlement.

Southern Goldfields opposes the appointment of a receiver and manager because it says it was not a pro-active party in the settlement negotiations, it is not a party to the Beach proceedings, and it presently has an intact board which can

but it is a board that has been put in place by M r Fuller	continue to manage it. There certainly is a board in place,
immediately before his bankruptcy and the nature of the settlement deed itself indicates that he is still playing some role in sorting out the affairs of Southern Goldfields and other companies.
It is true that Southern Goldfields has not played a pro- active part, but it is unfortunately the meat in the sandwich, separate deed referred to in the condition precedent to the deed of settlement of 10 June 1993. At the last minute it became clear that 1-k Mount, as the receiver of Jingellic, would not go ahead with that separate deed pending the delivery of judgment.
That then led to a flurry of activity between the parties to the deed of settlement, and the execution of a waiver of the condition precedent shortly before the delivery of judgment.
There are aspects of this transaction which concern Southern Goldfields, and there are other aspects which give rise to considerable concern whether there has been a movement of assets between various IRL companies to the disadvantage of Beach. I leave aside for the moment the position of Enterprise. For example, clause 3.3 of the deed provides that IRL agrees with Rostight, both of whom are parties to this deed, that for a consideration of $10 IRL discharges Cortaus
advance, known as the Tiramu or Garaweh transaction, which is from a debt of some $10 million which includes a $5 million
dealt with in the principal judgment.
The evidence has disclosed that before the bankruptcy of Mr Fuller on about 19 May, he was instrumental to appointing
Mr Webb as a new director to a number of these companies, and
that Mr Webb in turn then appointed Mr Griffin and Mr van der Laan as additional directors. Thereafter Mr Fuller took a