Cammaroto Poultry Pty Ltd v Southern Food Management Pty Ltd (No 2)
[2009] VSC 415
•4 September 2009
IN THE SUPREME COURT OF VICTORIA
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
CORPORATIONS LIST
LIST E
No. 6533 of 2009
IN THE MATTER of SOUTHERN FOOD MANAGEMENT PTY LTD (ACN 076 576 308) (In liquidation)
BETWEEN:
| CAMMAROTO POULTRY PTY LTD (ACN 054 074 118) | Plaintiff |
| and | |
| SOUTHERN FOOD MANAGEMENT PTY LTD (ACN 076 576 308) | Defendant |
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JUDGE: | DAVIES J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 4 September 2009 | |
DATE OF JUDGMENT: | 4 September 2009 | |
CASE MAY BE CITED AS: | Cammaroto Poultry Pty Ltd v Southern Food Management Pty Ltd (No 2) | |
MEDIUM NEUTRAL CITATION: | [2009] VSC 415 | |
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CORPORATIONS – Liquidators – Warrant sought pursuant to Corporations Act 2001 (Cth), s 530C – Step of last resort – Whether other reasonable steps had been taken.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr H Aizen | Varrasso & Associates |
| For the Defendant | Ms A Kouloubaitsis | Velos Lawyers |
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HER HONOUR:
This is an application made under s 530C of the Corporations Act 2001 (Cth) (“the Act”) by the liquidators of Southern Food Management Pty Ltd (“SFM”) for a warrant to search for and seize the company’s property and books. SFM was given prior notification that an application would be made, although it was intended that the application would proceed ex parte. In fact SFM was represented before me to apply for an adjournment of the application for the warrant to the date of the hearing of an application for leave to appeal from the decision of an Associate Justice winding up the company. The matter was stood down for a short period of time to enable SFM’s counsel to seek instructions and to consider the material upon which the liquidators relied for the order they sought. Following that short period, SFM’s counsel indicated that SFM was prepared to offer an undertaking to provide the liquidators access to the premises on the condition that a solicitor be there to observe what happens. Counsel for SFM indicated that there may be an issue as to whether property or records are those of SFM or of other companies or entities related, or within the same group, as SFM and the concern on SFM's part was that the liquidators do not, under the warrant, take property that does not belong to SFM. However, the substantial basis relied on by the liquidators for the issue of the warrant is that other entities have assumed ownership of, or are using, SFM’s assets. The form of the undertaking that was proffered was not considered by the liquidators as sufficient or appropriate to allay their concerns about concealment or dissipation of assets. It also seemed to me that the form of undertaking that was proffered has inherent difficulties associated with it.
There are seven affidavits in support of the application for the issue of the warrant. The material before me is that SFM was placed into liquidation on 25 August 2009, with a stay on the effect of the order until 26 August 2009. On 26 August 2009, Associate Justice Efthim declined to stay the winding up for any further period. After the orders were pronounced Mr Howell, one of the joint liquidators, attended the company’s business premises located at 2 Dunlop Road, Hoppers Crossing with Mr Rowland, who is employed in the same firm as the liquidators. Mr Howell was unable to secure access to the premises, as the front gate was locked. He telephoned one of the directors, Mr Nicholas Coutsournas, and the conversation was heated. Mr Howell was told by Mr Coutsournas that if he entered the premises, he would be sued for trespass. Mr Howell told him that he intended to secure the premises to ensure that the assets of the company were preserved and required all the books and records to be delivered to him forthwith. Mr Coutsournas replied that SFM was not trading, had no assets, and that Mr Howell was not authorised to enter the premises because they were occupied by another entity. Mr Howell departed from the premises and returned the following morning at 8.30 a.m. He was unable, again, to obtain access to the premises. Ultimately, a person who identified himself as Theo greeted him at the side door, but refused to answer any of his questions. Theo identified himself as an employee of Stork Administration Services Pty Ltd. Mr Coutsournas eventually turned up and a similar conversation to the previous evening ensued.
Mr Howell then made enquiries of the landlord of the premises, Exclusive Commercial Enterprises Pty Ltd. He spoke to a person called Lena in Exclusive Commercial Enterprises Pty Ltd, who informed him that the premises were let to SFM and that the cheque for the last month's rent had not been honoured by SFM's bank when presented. Copies of the relevant cheque and notice from Bankwest advising of the dishonour were produced in evidence before me. The cheque is on the account of Southern Food Management Pty Ltd.
Mr Howell's solicitors, Varrasso & Associates, on 27 August 2009, wrote to the directors of SFM advising them that the liquidators are entitled to possession of all the assets of SFM, including plant and machinery, stock, and any other assets, including motor vehicles and debtors. The letter also informed the directors about the powers of the liquidators. The letter referred to the fact that Mr Howell had attended to the premises at 2 Dunlop Avenue, Hoppers Crossing, to perform his statutory duties and of the content of the conversations that he had with Mr Coutsournas. The letter informed the directors of the solicitor's instructions at that time that SFM continues to trade, and that the directors are obstructing the liquidators from exercising their statutory duties. The letter concluded that unless possession of the premises and all the assets of SFM were delivered to the liquidators by 3 p.m. on 27 August 2009, they would have no alternative but to seek remedies from the Court. Mr Howell deposed that he returned to the premises at approximately 3 p.m. on 27 August and again sought, but was refused access.
On 28 August 2009, Varrasso & Associates wrote to Velos Lawyers for SFM, advising that they had been instructed by the liquidators that activities had been carried on at the premises, and the assets of SFM were being wrongfully used by entities other than SFM and referred by way of example to assets listed in SFM's balance sheet, exhibited to the affidavit of David Jaffe on 24 June 2009, that were being used by the directors without the consent, permission or authority of the liquidators, including motor vehicles, plant and equipment, stock, and other assets. A demand was made for the directors forthwith to advise the firm where SFM's motor vehicles were located and to deliver them to Slatterys Auctions by 10 a.m. on Monday 31 August 2009, and a demand was made that the directors forthwith desist from using any of the assets of SFM, including occupation of the premises, other than return of the motor vehicles to Slatterys Auctions. There was no reply to that letter. On the same date, there was an appearance before Robson J who warned SFM’s officers of consequences of wrongful dissipation of the defendant’s assets.
There is evidence to support concealment dissipation of assets:
(a)The affidavit of Mr Jaffe that Mr Howells referred to in his evidence was an affidavit that had been sworn in the winding up proceedings. According to the Jaffe affidavit, SFM had total assets, as at 31 May 2009, of $350,440.07. However, a balance sheet and profit and loss statement for SFM for the financial year ending 30 June 2009, which had been provided to the liquidators, shows that SFM's total assets as at June 2009 were in the sum of $12,422.16. There is no explanation presently available to the liquidators for the difference.
(b)Mr Rowland has deposed that Southern Chicken, a business name used by SFM, is recorded as having been transferred from SFM to Stork Administration Services Pty Ltd (“Stork”) on 1 August 2009. Also, a number of transactions involving motor vehicles registered in the name of SFM took place on 26 August 2009, with five cars being transferred to Stork. Mr Rowland also deposed to having attended the premises in Hoppers Crossing on three occasions, on 26 August 2009, and twice on 27 August 2009, and was refused access. He deposed that a number of boxes had been handed to the liquidators containing records, but the most recent of them had related to a period only ending in 2006.
(c)There was also an affidavit from a Mr Beltrami, who describes himself as a further processor. He deposed to having rung a telephone number on 31 August 2009 and having spoken to a person who had answered the phone "Southern". The person who answered told him that his boss would be back from the road at about 2 p.m. and would call him back later. Mr Beltrami rang the following day and spoke to a person who identified himself as Nick, and ordered a box of 48 chicken schnitzels. That was delivered on the morning of 1 September 2009, and an invoice provided. The invoice is in the name of Southern Chicken Products. The address of Southern Chicken Products has been written over, obscured on the invoice. Mr Beltrami also deposed to observing that the delivery was from a white Toyota HiAce, Registration No. ORH 081, which is one of the vehicles that was formerly in the name of SFM, but transferred to the name of Stork on 26 August 2009.
Having considered this affidavit material, I am satisfied that the respondents, Peter Coutsournas and Nicholas Coutsournas, have concealed or removed property of the company with the result that the taking of the property into the custody or control of the liquidator has been prevented and delayed. Applications for the issue of a warrant under s 530C is a step of last resort and should only be taken after other reasonable steps have been taken.[1] I am satisfied upon the material before me that reasonable steps have been taken to obtain the books and records, which steps have been hindered. Accordingly, I propose to make the order that the court issue a warrant in the terms of the draft warrant handed to me this morning, and I will make the orders that are in the form of the proposed orders also handed up to me this morning.
[1] See for example Re Global SDR Technologies Pty Ltd (provisional liquidator appointed); Pattison v May (2005) 228 ALR 620, 621 (Whelan J).
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