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

Case [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…

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AGLC
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
Case
[2013] FCA 1286
Decision Date

CaseChat Overview and Summary

In the case of Deputy Commissioner of Taxation v Fast Ferries Pty Ltd (receiver and manager appointed) (in liq), the primary issue before the Court was whether the receiver and manager, Mr Reidy, should be directed to proceed with the sale of the vessel MV Marella to Australian Marine Services Pty Ltd under the terms of the Agreement for Sale and Purchase dated 13 November 2013. The sale was negotiated by a previous party, Mr Morton, through New Zealand Marine Brokers Limited (NZMB). The Court was tasked with determining if Mr Reidy could complete the sale without undertaking further steps to ascertain the market value of the vessel, beyond those already disclosed in the affidavit of Thyge Trafford-Jones.

The legal issues centred around whether Mr Reidy, in his role as receiver and manager, was justified in proceeding with the sale as negotiated by Mr Morton, given the significant difference between the negotiated price and the market valuations he had obtained. The Court had to consider whether Mr Reidy had acted within his powers under the Corporations Act 2001 and whether the sale would be in the best interests of the creditors and other stakeholders. The Court also needed to evaluate the evidence regarding the broker's standing and the steps taken to procure the purchaser, as well as the impact of the sale on the various parties involved.

The Court found that Mr Reidy's decision to proceed with the sale was reasonable given the circumstances. Mr Reidy had already made a commercial decision to sell the vessel at the negotiated price, which was significantly higher than the market valuations he had obtained. The broker, NZMB, was considered reputable and had been engaged by Mr Morton. The purchaser had shown a genuine interest in acquiring the vessel, and the sale was supported by the liquidator, unsecured creditors, and Ms Morton. Furthermore, the second secured creditors and Mr Reidy's appointor were also in favour of the sale. The Court was satisfied that Mr Reidy's inquiries into the original appointment of NZMB and the steps taken by the broker to find a purchaser were sufficient. Therefore, the Court granted the direction sought by Mr Reidy, allowing him to complete the sale as negotiated.

The Court also made an order to vary one of the previous orders made by Jagot J on 25 October 2013 to facilitate the disbursement of the proceeds of the sale to the liquidator and the second secured creditors, as agreed upon by the parties. This variation was not opposed by any of the interests represented before the Court.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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 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. 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. 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. 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. 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”. 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.

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

The present case falls squarely within these observations. Consideration 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. 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. 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. 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.