Deputy Commissioner of Taxation v Fast Ferries Pty Ltd (receiver and manager appointed) (in liq), in the matter of Fast Ferries Pty Ltd

[2013] FCA 1286

FEDERAL COURT OF AUSTRALIA

Deputy Commissioner of Taxation v Fast Ferries Pty Ltd (receiver and manager appointed) (in liq), in the matter of Fast Ferries Pty Ltd [2013] FCA 1286

Citation:	Deputy Commissioner of Taxation v Fast Ferries Pty Ltd (receiver and manager appointed) (in liq), in the matter of Fast Ferries Pty Ltd [2013] FCA 1286
Parties:	DEPUTY COMMISSIONER OF TAXATION v FAST FERRIES PTY LTD (RECEIVER AND MANAGER APPOINTED) (IN LIQUIDATION) (ACN 125 717 839); GEOFFREY REIDY IN HIS CAPACITY AS RECEIVER AND MANAGER OF FAST FERRIES PTY LTD (RECEIVER AND MANAGER APPOINTED) (IN LIQUIDATION)
File number:	NSD 1275 of 2013
Judge:	YATES J
Date of judgment:	21 November 2013
Catchwords:	CORPORATIONS – application by receiver and manager for direction – sale of vessel – sufficiency of inquiries made in relation to the marketing of the vessel
Legislation:	Corporations Act2001 (Cth) ss 420A(1), 424 Federal Court (Corporations) Rules 2000 (Cth) r 2.13(1)
Cases cited:	Deputy Commissioner of Taxation v Best & Less (Wollongong) Pty Ltd (rec & mgr apptd) and Others (1992) 7 ACSR 245 Re One.Tel Networks Holdings Pty Ltd (Hall as rec and mgr) and Others (2001) 40 ACSR 83
Date of hearing:	21 November 2013
Place:	Sydney
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	29
Counsel for the Applicant:	Mr A Spencer
Solicitor for the Applicant:	Matthews Folbigg Lawyers
Counsel for the Plaintiff:	The Plaintiff did not appear
Solicitor for the Liquidator of the Defendant:	Mr B Shaw of Bridges Lawyers
Counsel for Svetlana Morton:	Mr JT Johnson
Solicitor for Svetlana Morton:	Diamond Conway Lawyers
Solicitor for Andrew Bruce Thorpe, Peter Douglas McLachlan, Toby Dylan Carter, Peter Hodges and Hamish Matthew Cockburn trading as McLachlan Thorpe Partners:	Mr H Cockburn of McLachlan Thorpe Partners

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 1275 of 2013

IN THE MATTER OF FAST FERRIES PTY LTD (RECEIVER AND MANAGER APPOINTED) (IN LIQUIDATION)

BETWEEN:	DEPUTY COMMISSIONER OF TAXATION Plaintiff
AND:	FAST FERRIES PTY LTD (RECEIVER AND MANAGER APPOINTED) (IN LIQUIDATION) (ACN 125 717 839) Defendant
IN THE INTERLOCUTORY PROCESS
BETWEEN:	GEOFFREY REIDY IN HIS CAPACITY AS RECEIVER AND MANAGER OF FAST FERRIES PTY LTD (RECEIVER AND MANAGER APPOINTED) (IN LIQUIDATION) Applicant
AND:	FAST FERRIES PTY LTD (RECEIVER AND MANAGER APPOINTED) (IN LIQUIDATION) (ACN 125 717 839) Respondent
JUDGE:	YATES J
DATE OF ORDER:	21 NOVEMBER 2013 (AS AMENDED ON 25 NOVEMBER 2013)
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.Pursuant to r 2.13 of the Federal Court (Corporations) Rules 2000 (Cth), leave be given to:

(a)Svetlana Morton;  and

(b)Andrew Bruce Thorpe, Peter Douglas McLachlan, Toby Dylan Carter, Peter Hodges and Hamish Matthew Cockburn trading as McLachlan Thorpe Partners,

to be heard at the hearing of the interlocutory process filed on 21 November 2013.

2.Pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth) (the Federal Court Act), annexures B and C to the affidavit of Thyge Trafford-Jones sworn 20 November 2013 be kept confidential and not be disclosed without the leave of the Court.  This order is to operate until 31 March 2014 and is made to prevent prejudice to the proper administration of justice.

3.Pursuant to s 37AF of the Federal Court Act, annexure D to the affidavit of Thyge Trafford-Jones sworn 20 November 2013 be kept confidential and not be disclosed without the leave of the Court. Subject to further order, this order is to operate until 21 November 2018. This order is made to prevent prejudice to the proper administration of justice.

THE COURT DIRECTS THAT:

4.Pursuant to s 424 of the Corporations Act2001 (Cth), Geoffrey Phillip Reidy, in his capacity as the receiver and manager of Fast Ferries Pty Ltd ACN 125 717 839 (Receiver and Manager Appointed) (In Liquidation) (the receiver and manager)  is justified in completing the Agreement for Sale and Purchase of the vessel known as MV Marella (the vessel) to Australian Marine Services Pty Ltd, dated 13 November 2013, without taking steps beyond those disclosed in the affidavit of Thyge Trafford‑Jones sworn 20 November 2013 and filed in this proceeding, to establish the market value or the best price that may be reasonably obtainable having regard to the circumstances.

THE COURT FURTHER ORDERS THAT:

5.Order 3 made by Jagot J on 25 October 2013 be varied so as to permit the payment referred to in order 6 below.

6.Subject to order 7, the receiver and manager pay the sum of $49,682.77 (comprised of $46,831.82 plus interest pursuant to the Legal Profession Act 2004 (NSW) in the sum of $2,850.95) to Andrew Bruce Thorpe, Peter Douglas McLachlan, Toby Dylan Carter, Peter Hodges and Hamish Matthew Cockburn trading as McLachlan Thorpe Partners (the second secured creditor), from the proceeds of sale of the vessel, at or upon settlement of that sale.

7.The payment referred to in order 6 be subject to and conditional upon the second secured creditor providing the receiver and manager with a duly executed Release and Undertaking to Amend Registration or other documents necessary to allow the receiver and manager to discharge the second secured creditor’s security interest(s) registered in the Personal Property Securities Register in respect of the vessel or any other related security property.

8.The Liquidator’s costs of appearing on this application be costs in the winding up.

THE COURT NOTES:

9.The agreement between Stephen Wesley Hathway in his capacity as the liquidator of Fast Ferries Australia Pty Ltd ACN 125 717 839 (Receiver and Manager Appointed) (In Liquidation) (the Liquidator), and the second secured creditor that, upon receipt of the payment referred to in order 6, the second secured creditor will cause those funds to be paid into a controlled monies account, the signatories to which will include a solicitor for each of the Liquidator and the second secured creditor, pending approval of the Liquidator for the funds to be released unconditionally to the second secured creditor, or as those parties may further agree in writing.

Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 1275 of 2013

IN THE MATTER OF FAST FERRIES PTY LTD (RECEIVER AND MANAGER APPOINTED) (IN LIQUIDATION)

BETWEEN:

GEOFFREY REIDY IN HIS CAPACITY AS RECEIVER AND MANAGER OF FAST FERRIES PTY LTD (RECEIVER AND MANAGER APPOINTED) (IN LIQUIDATION)
Applicant

DEPUTY COMMISSIONER OF TAXATION
Plaintiff

AND:

FAST FERRIES PTY LTD (RECEIVER AND MANAGER APPOINTED) (IN LIQUIDATION) (ACN 125 717 839)
Defendant

IN THE INTERLOCUTORY PROCESS

BETWEEN:

GEOFFREY REIDY IN HIS CAPACITY AS RECEIVER AND MANAGER OF FAST FERRIES PTY LTD (RECEIVER AND MANAGER APPOINTED) (IN LIQUIDATION)
Applicant

AND:

FAST FERRIES PTY LTD (RECEIVER AND MANAGER APPOINTED) (IN LIQUIDATION) (ACN 125 717 839)
Respondent

JUDGE:

YATES J

DATE:

29 NOVEMBER 2013

PLACE:

SYDNEY

REASONS FOR JUDGMENT

1. This is an application made under s 424 of the Corporations Act 2001 (Cth) (the Act) for directions.

2. The applicant, Geoffrey Reidy, is the receiver and manager of the defendant, Fast Ferries Pty Ltd (receiver and manager appointed) (in liquidation) (the company).  He was appointed by a secured creditor of the company pursuant to a Deed of Appointment dated 2 October 2013.  Prior to his appointment, Stephen Wesley Hathway had been appointed liquidator of the company on 25 September 2013 in winding up proceedings commenced by the Deputy Commissioner of Taxation. 

3. At the time of Mr Reidy’s appointment, Svetlana Morton was the sole director and shareholder of the company.  Her husband, Stephen Morton, was employed by the company as a marine manager.

4. The present application concerns the sale of one of the company’s assets, a twin screw catamaran workboat called the MV Marella (the vessel). 

5. The present application is supported by an affidavit made by Thyge Trafford-Jones, an associate director of Rodgers Reidy Chartered Accountants.  Mr Trafford-Jones works with and assists Mr Reidy in the conduct of the receivership of the company.  The liquidator was represented at the hearing of the application.  I also granted Ms Morton, and Andrew Bruce Thorpe, Peter Douglas McLachlan, Toby Dylan Carter, Peter Hodges and Hamish Matthew Cockburn (trading as McLachlan Thorpe Partners) (who, together, are the other secured creditors of the company) (the second secured creditors) leave to be heard in respect of the application, pursuant to r 2.13(1) of the Federal Court (Corporations) Rules 2000 (Cth). It is fair to say that all persons with an interest in the outcome of the present application were represented on the hearing of the application.

   The direction sought

6. Mr Reidy seeks the following direction:

   [P]ursuant to section 424 of the Corporations Act 2001 (Cth) that the applicant is justified in completing the Agreement for Sale and Purchase of the vessel known as MV Marella to Australian Marine Services Pty Ltd dated 13 November 2013 without taking steps beyond those disclosed within the affidavit of Thyge Trafford-Jones sworn 20 November 2013 and filed in these proceedings, to establish the market value or the best price that may be reasonably obtainable having regard to the circumstances.

   The evidence

7. On 4 October 2013, Mr Morton entered into a contract to sell the vessel (the October contract).  This followed negotiations with the intending purchaser involving Mr Morton and a broker, New Zealand Marine Brokers Limited (NZMB) of which James Lewis is the sole director and shareholder.  Mr Morton was not, however, the owner of the vessel. 

8. On 25 October 2013, orders were made by the Court approving the sale of the vessel by Mr Reidy to the intending purchaser.  At that time, it was also ordered that the proceeds of sale, including the deposit, be placed in a trust account maintained by Mr Reidy’s firm, until further order of the Court.

9. It appears from Mr Trafford-Jones’ affidavit that, as at 25 October 2013, Mr Reidy was not in a position to form a view as to whether the sale, as originally negotiated by Mr Morton using NZMB, would, if made by Mr Reidy as receiver and manager of the company, be in the interests of all persons interested in the receivership or liquidation of the company, save that the negotiated purchase price appeared, at that time, to be significantly greater than the indications of the market value of the vessel that had been then obtained.  In that connection, on about 15 October 2013, Mr Reidy had received a valuation of the vessel from Slattery Valuations.  Later, on about 15 November 2013, Mr Reidy obtained another valuation of the vessel from Ross’s Auctioneers & Valuers. 

10. On about 29 October 2013, Mr Trafford-Jones made contact with Mr Lewis from NZMB.  His purpose in doing so was to ascertain whether the intending purchaser was still interested in purchasing the vessel and to decide whether NZMB should be re-engaged to broker the sale. 

11. In his affidavit, Mr Trafford-Jones gives evidence of the inquiries he made to ascertain the circumstances under which NZMB had been originally engaged by Mr Morton and the steps that NZMB had taken to market the sale of the vessel.  He also gave evidence as to the standing of NZMB, which he described as “a commercial vessel brokerage and valuation company which has been serving professional mariners in Australia, New Zealand and the Pacific since 1991, and which is regarded as a leader in the Pacific’s marine industry”.

12. It is not necessary for me to repeat the detail of that evidence.  The following evidence should, however, be noted.  Mr Trafford-Jones said that, in exercising the power of sale as a receiver in relation to property and, in particular, property in the nature of a marine vessel, Mr Reidy, as assisted by Mr Trafford-Jones, would ordinarily take the following steps to ensure that the property is realised at either its market value or, if its market value is not achievable, the best price obtainable in the circumstances:

    ·Instruct a valuer to conduct a valuation of the vessel.

    ·Consider the advice of the valuer as to the best sale method to achieve the highest price.

    ·Research the commercial marine marketplace for suitable brokers.

    ·Tender for marketing proposals from prospective brokers.

    ·Engage either a broker or auctioneer, depending on the sale method.

    ·Conduct an appropriate marketing campaign, the timing of which would depend on a recommended method of sale by the broker or auctioneer.

13. Mr Trafford-Jones said:

    Based upon my investigations of the steps taken by Lewis to market the sale of the MV Marella, upon the knowledge and experience which I perceive NZMB to have in the industry … and based upon a comparison of the steps that I would have ordinarily taken to sell MV Marella, I am, in the circumstances, satisfied that reasonable care was taken by Lewis to market the sale of MV Marella having regard to the circumstances surrounding the sale.

    I am also of the view that the use of NZMB to broker the sale has achieved the best price reasonably attainable given the experience, contacts and industry know how of NZMB and Lewis.

14. Mr Trafford-Jones also gave evidence concerning the intending purchaser.  He said:

    It appears from the Purchaser’s website that the Purchaser is a Western Australian based company offering marine related charter services, focusing on Coastal Construction support, Offshore Oil & Gas transportation, offshore exploration and other marine related activities.  The Purchaser’s main services and operations appear to include the charter of various types and specifications of tugboats, supply vessels, specialised vessels and deck cargo/ballastable barges. 

    The Purchaser’s headquarters are located in Perth, Western Australia and it appears the Purchaser is an AS/NZS ISO 9001:2008 Quality Accredited company.

15. There is also evidence that the intending purchaser has an outstanding charter contract in respect of which it is intending to use the vessel.  Mr Trafford-Jones’ inquiries have revealed to him that prices of commercial marine vessels will exceed retail values in circumstances where there is an existing contract attached to the vessel or the vessel is needed for an impending contract.

16. Exercising his own commercial judgment, Mr Reidy has entered into an agency agreement with NZMB, which authorises it to act as his agent for the sale of the vessel.  Pursuant to that agency, the intending purchaser and the company have now entered into a fresh contract (the November contract) for the sale of the vessel on essentially the same terms as the October contract, including the purchase price of $1,050,000, save that:

    ·the possession date is now 22 November 2013;  and

    ·the contract is expressed to be subject to approval by the Court pursuant to s 424 of the Act (although Mr Reidy may waive this condition by written notice).

17. The liquidator has previously expressed the view that the sale of the vessel to the intending purchaser under the terms of the October contract would be in the interests of the company’s unsecured creditors, having regard to the valuation that Mr Reidy had received from Slattery Valuations.  The liquidator does not oppose the present sale.  Similarly, neither Ms Morton nor the second secured creditors oppose the present sale.

18. In his affidavit, Mr Trafford-Jones said:

    Based on my investigations into the conduct of NZMB in marketing the MV Marella for sale, and based upon the market valuations I have obtained from two independent valuers, it is my view that the sale of MV Marella to the Purchaser pursuant to the November Contract for Sale is in the best interests of all stakeholders, including all secured and unsecured creditors of the Company, in circumstances where the amount to be paid by the Purchaser significantly exceeds the indications of market value expressed by the valuers.

    In circumstances where the procurement of the Purchaser did not result from any direct action by the Receiver, but rather from the actions of NZMB on behalf of Morton conducted before the Receiver’s appointment, the Receiver respectfully seeks directions from this Honourable Court that he is justified in entering the November Contract for Sale in circumstances where he has satisfied himself of reasonableness of the steps taken by NZMB and Lewis to market the sale and has adopted that sale process without having undertaken any of the procedures he would have ordinarily … taken himself to sell the property as Receiver.

    Relevant principles

19. Section 420A(1) of the Act provides:

    In exercising a power of sale in respect of property of a corporation, a controller must take all reasonable care to sell the property for:

    (a)if, when it is sold, it has a market value—not less than that market value; or

    (b)otherwise—the best price that is reasonably obtainable, having regard to the circumstances existing when the property is sold.

20. Section 424 of the Act provides:

    (1)A controller of property of a corporation may apply to the Court for directions in relation to any matter arising in connection with the performance or exercise of any of the controller’s functions and powers as controller.

    (2)In the case of a receiver of property of a corporation, subsection (1) applies only if the receiver was appointed under a power contained in an instrument.

21. Although the Court’s power under s 424 of the Act should be interpreted liberally, the Court will not give a direction that would supplant the controller’s commercial decision. In Deputy Commissioner of Taxation v Best & Less (Wollongong) Pty Ltd (rec & mgr apptd) and Others (1992) 7 ACSR 245 at 247, Lockhart J said:

    The power of the court to give directions to a receiver must be interpreted liberally.  I agree with what was said on that point by King J in Odessa Promotions at 32,106.  An examination of the cases shows how diverse the matters may be that are raised before the court for directions.  Questions frequently arise in a receivership upon which it is necessary or expedient to obtain the directions of the court, for example, as to the sale of property, as to borrowing, as to legal proceedings, as to giving up possession etc.  See generally O’Donovan, Company Receivers & Managers, 1981, at 108, 109, 155 and 156; McPherson, The Law of Company Liquidation, 3rd ed, 1987, at 251-3 and the cases cited in both works.

    Sections of this kind cannot, however, be resorted to for the purpose of seeking the intervention of the court to make a commercial decision for receivers or liquidators.  As Street CJ in Eq said in Re Mineral Securities Australia Ltd (in liq) [1973] 2 NSWLR 207 at 232: “When the court is required to pronounce upon the commercial prudence of a transaction, it enters upon a slippery and uncertain field. Apart from the lawyer’s disclaimer of expert qualifications in matters of business prudence, the very process of litigation and the necessary limitations upon the scope of admissible evidence restrict the available material to far less than is necessary for the making of a commercial decision.” See also Duffy v Super Centre Development Corp Ltd [1967] 1 NSWR 382 per Street CJ in Eq at 383; Sanderson v Classic Car Insurances Pty Ltd (1985) 10 ACLR 115 per Young at 117.

1. In Re One.Tel Networks Holdings Pty Ltd (Hall as rec and mgr) and Others (2001) 40 ACSR 83, Austin J remarked upon the limitations on the exercise of the Court’s power under s 424 of the Act. His Honour said (at [29]):

   [29] However, case law recognises some limitations upon the availability of directions under s 424. As Hodgson J observed in Re Vartex Petroleum Industries Pty Ltd (unreported, SC(NSW), Hodgson J, No 3688 of 1989, 17 August 1989, BC8901834), an application under s 424 and its statutory predecessor has some similarity to an application for judicial advice under s 63 Trustee Act 1925 (NSW), and is therefore subject to similar limitations. Case law on the statutory provision for judicial advice in trustee legislation shows that the court will not as a general rule give a trustee any opinion or advice where the question concerns the respective rights of the beneficiaries or their identity, or the matter is one of controversy between parties to the trust (although it may choose to give judicial advice, in the exercise of its discretion, where the controversy between the parties is confined to an issue of law and there are no disputed questions of fact: MTM Funds Management Ltd v Cavalane Holdings Pty Ltd (2000) 158 FLR 121; 35 ACSR 440). However, the procedure is appropriate where the question involves the nature and extent of the trustee’s powers or duties of management or administration: see R P Meagher and W M C Gummow, Jacobs’ Law of Trusts in Australia, 6th ed, Butterworths, Sydney, 1997, para 2134. A common case for judicial advice is where the trustee seeks directions concerning the conduct of legal proceedings: see Glazier Holdings Pty Ltd v Australian Men’s Health Pty Ltd [2000] NSWSC 253; BC200001836 at [133]–[142]. In a commercial context, it may be appropriate to give judicial advice to the responsible entity of a managed investment scheme, which is a statutory trustee under s 601FC(2) of the Corporations Act 2001 (Cth), as to whether it is justified in convening meetings to enable unitholders to consider a scheme of arrangement proposal: Re Mirvac Ltd (1999) 32 ACSR 107. However, there is an important distinction between ruling as to the propriety of the trustee’s contemplated exercise of discretion, and ruling as to the wisdom of such exercise: Re IOOFAustralia Trustees Ltd (1999) 205 LSJS 98.

2. His Honour also referred to Lockhart J’s observations in Best & Less, and said (at [30]‑[31]):

   [30] By analogy, it has been held that s 424 cannot be resorted to for the purpose of seeking the intervention of the court to make a commercial decision for the controller. In the Best & Less case, Lockhart J quoted (at 247) from the judgment of Street CJ in Eq in Re Mineral Securities Australia Ltd (in liq) [1973] 2 NSWLR 207 at 232, where Street CJ remarked that “when the Court is required to pronounce upon the commercial prudence of a transaction, it enters upon a slippery and uncertain field”. Lockhart J declined on this ground to make the direction sought by the applicant, observing (at 249) that although the applicant appeared to have conducted his receivership with considerable skill, drive and ability, “he must make his decision according to the exigencies of the situation and make his own assessment of what is commercially sensible and feasible for him to do”, as he was a receiver and manager appointed privately, not by the court.

   [31] In Sanderson v Classic Car Insurances Pty Ltd (1985) 10 ACLR 115 Young J expressed a similar point when dealing with an application by a provisional liquidator, saying that although the jurisdiction to give directions is wide, it is usually only proper to exercise the power where the matter involves guidance to the liquidator on matters of law or principle to protect him against accusations of acting unreasonably, and the court does not usually consider it proper to make the liquidator’s commercial decision for him.

3. In One.Tel, the applicant sought a declaration that he would be justified in compromising certain disputes and entering into a particular agreement.  In light of the approach discussed in Best & Less, Austin J considered it would be inappropriate to make an order in such a broad form.  He said that to give a direction that the applicant would be justified in making an agreement to compromise his disputes would be to make or condone a commercial judgment supplanting the controller’s own primary function.  His Honour reasoned, however, that it would be appropriate, in that case, to make an order of more limited scope.  In that connection, his Honour said (at [39]-[41]):

   [39] In my opinion, however, it would be appropriate for the court to make an order of more limited scope. Senior counsel for the plaintiff submitted that his client’s particular concern is that in the special circumstances of this case, it has not been possible for him to carry out the usual investigations and assessments that a receiver and manager would normally carry out. Here, as I have said, the plaintiff has been engaged for some time in a dispute with the joint liquidators as to the ownership of certain assets and as to access to documents and information. This has prevented the plaintiff from concluding his investigations as to the ownership of assets and their value, and as to his prospects of success in litigation, and as to the risk that the joint liquidators might succeed in challenging certain transactions as unfair preferences.

   [40] Senior counsel submitted that if the court is not prepared to make proposed order 2 in the wide form expressed in the originating process, then his client would seek an order to the effect that he would be justified in making his decision as to entry into the agreement on the basis of information obtained and inquiries made up to the present time. The point of such a direction would be to protect the plaintiff from a claim that his decision to enter into the agreement upon the basis of the present state of inquiries would necessarily, or a priori, be lacking in good faith because he has not until now made all the inquiries usual for a receiver and manager to make before taking such a decision.

   [41] In my opinion it is appropriate to give a direction in these terms. To do so does not require the court to participate in the plaintiff’s commercial decision to enter into the agreement. It does require the court to form the view that it would not be reasonable to require the plaintiff to take further steps, by way of investigation and inquiry, to clarify the nature of the assets and liabilities of the One.Tel Network Group companies, the ownership of disputed assets, the prospect of the joint liquidators recovering any assets on unfair preference grounds, and the prospects of threatened litigation by Lucent Australia and the joint liquidators that might affect the assets of the One.Tel Network Group. In my opinion it is appropriate for the court to form such a view, and make directions under s 424 accordingly, even in ex parte proceedings, in circumstances where there is evidence that the controller has unsuccessfully sought to obtain further information by taking legal proceedings and other reasonable steps.

4. The present case falls squarely within these observations. 

   Consideration

5. Mr Reidy submits that he has already made the commercial decision to enter into the agreement to sell the vessel at the price and with the intending purchaser. The course of events, however, has not allowed him to approach the sale of the vessel in the way he normally would deal with such a sale. This has prompted his desire to seek the direction set out at [6] above.

6. That said, Mr Reidy has taken the view that the marketing of the vessel for sale has, seemingly, been carried out at arm’s length using the services of an apparently reputable broker which has resulted in a purchaser coming forward with an apparently genuine commercial interest in acquiring the vessel at a price which exceeds, significantly, the market valuations that Mr Reidy has been able to obtain for it.  Moreover, the liquidator has urged him to sell the vessel at the offered price which is one considered to be in the interests of the unsecured creditors.  Further, Ms Morton supports the sale of the vessel at that price.  Mr Reidy’s appointor obviously considers that the sale should proceed, and the second secured creditors are of the same view.

7. Having considered the evidence, as expressed in Mr Trafford-Jones’ affidavit, and, in particular, the nature and extent of his inquiries as to the original appointment of NZMB and the steps taken by it to procure a purchaser for the vessel, I am satisfied that the direction, substantially as sought, should be given.

8. The liquidator and the second secured creditors have come to an agreement as to how the proceeds of the sale of the vessel should be disbursed to satisfy their claimed debt.  This will require one of the orders made by Jagot J on 25 October 2013 to be varied.  That course has not been opposed by any of the interests represented before the Court today.

I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Yates.

Associate:

Dated:       29 November 2013