Deputy Commissioner of Taxation v Zinc Port Melbourne Pty Ltd
[2012] FCA 358
•27 February 2012
FEDERAL COURT OF AUSTRALIA
Deputy Commissioner of Taxation v Zinc Port Melbourne Pty Ltd
[2012] FCA 358
Citation: Deputy Commissioner of Taxation v Zinc Port Melbourne Pty Ltd [2012] FCA 358 Parties: DEPUTY COMMISSIONER OF TAXATION and RICHARD O’BRYAN and JULIANNA O’BRYAN v ZINC PORT MELBOURNE PTY LTD (ACN 125 312 852) File number: VID 1247 of 2011 Judge: NORTH J Date of judgment: 27 February 2012 Date of hearing: 27 February 2012 Place: Melbourne Division: GENERAL DIVISION Category: No Catchwords Number of paragraphs: 15 Counsel for the First and Second Supporting Creditors: Mr S J Maiden Solicitor for the First and Second Supporting Creditors: Schetzer Brott & Appel Solicitor for the Plaintiff: Ms B Prasad of Hunt & Hunt Counsel for Mr Emery
(Director of the Defendant):Mr M Osborne Solicitor for Mr Emery (Director of the Defendant): B2B Lawyers Solicitor for Mr O’Bryan Junior (Director of the Defendant): Mr C Moloney trading as Davies Moloney
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 1247 of 2011
BETWEEN: DEPUTY COMMISSIONER OF TAXATION
PlaintiffAND: RICHARD O’BRYAN
First Supporting CreditorJULIANNA O’BRYAN
Second Supporting CreditorAND: ZINC PORT MELBOURNE PTY LTD (ACN 125 312 852)
Defendant
JUDGE:
NORTH J
DATE OF ORDER:
27 FEBRUARY 2012
WHERE MADE:
MELBOURNE
UPON APPLICATION BY THE SUPPORTING CREDITORS RICHARD JOHN O’BRYAN AND JULIANNA O’BRYAN BY THEIR COUNSEL UNDERTAKING TO THE COURT:
(a)To submit to such order (if any) as the Court may consider to be just for the payment of compensation, to be assessed by the Court or as it may direct, to any person, whether or not a party, adversely affected by the operation of the interlocutory order or undertaking or any continuation (with or without variation) thereof; and
(b) To pay the compensation referred to in (b) to the person there referred to.
THE COURT ORDERS THAT:
1.The supporting creditors have leave to intervene in the proceeding under r. 9.12 of the Federal Court Rules 2011 (Cth) limited to filing evidence and making submissions regarding the appointment of liquidators to act provisionally and any matters related to the provisional liquidation.
2.Paul Andrew Burness is appointed to act provisionally as the liquidator of Zinc Port Melbourne Pty Ltd CAN 125 312 852 pursuant to s. 472(2) of the Corporations Act 2001 (Cth) until further order.
3.The liquidator acting provisionally has the powers granted to him by s. 472 of the Act.
4.The plaintiff’s and the supporting creditors’ costs of the application are costs in the winding up.
Note:The entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 1247 of 2011
BETWEEN: DEPUTY COMMISSIONER OF TAXATION
PlaintiffAND: RICHARD O’BRYAN
First Supporting CreditorJULIANNA O’BRYAN
Second Supporting CreditorAND: ZINC PORT MELBOURNE PTY LTD (ACN 125 312 852)
Defendant
JUDGE:
NORTH J
DATE:
27 FEBRUARY 2012
PLACE:
MELBOURNE
REASONS FOR JUDGMENT
Before the Court is an application by Richard John O’Bryan, the first supporting creditor, and Julianna O’Bryan, the second supporting creditor, to intervene or be added as defendants in a winding-up application against the defendant, Zinc Port Melbourne Pty Ltd (Zinc). The applicants rely on r 9.12 of the Federal Court Rules 2011 (Cth) and r 2.13(3) of the Federal Court (Corporations) Rules 2003 (Cth) respectively. They also seek the appointment of a provisional liquidator under s 472(2) of the Corporations Act 2001 (Cth).
The plaintiff, the Deputy Commissioner of Taxation supports their application for the appointment of a provisional liquidator.
The winding-up application is to be heard by the Court in a few days, on 1 March 2012. The question before the Court is whether there is an imminent danger to the assets of Zinc which requires the appointment of a provisional liquidator to protect those assets in the interim period.
It is the intention of Zinc to transfer two apartments involved in a joint venture to one of the joint venturers, Mercier Rouse Pty Ltd (Mercier). The transfer is in accordance with a settlement deed between the two directors of Zinc, Mr Richard O’Bryan Junior and Mr Michael Emery. That settlement was intended to conclude the relationship between the two directors and their associated entities in the development of the apartments. The terms of the settlement deed require that Mr O’Bryan Junior execute transfers of the apartments to Mercier, a company associated with his co-director and joint venturer, Mr Emery.
Mercier intends to raise funds by mortgaging the apartments and to utilise those funds, in part, to pay the outstanding monies due to the plaintiff. It is therefore clear that the actions of the directors of Zinc will, if the transaction proceeds, remove the two apartments from the ownership of Zinc. Mercier, however, argues that it is entitled to the properties as beneficial owner in the joint venture.
It is not possible to ascertain on the material filed by the parties the respective ownership rights in these apartments. It is not clear that Mercier was entitled to a transfer as beneficial owner. There is also a lack of explanation about a number of the transactions between Zinc and the applicants. It is not possible, on the present state of the evidence, to know whether they indeed are creditors with rights against Zinc.
The parties have, in the course of argument, accepted that the underlying facts indicate a potential dealing with the assets of Zinc which may be disadvantageous to the company. Mr Osborne, who appeared on behalf of the Emery interests associated with Mercier, accepted that if the trust argument were not accepted or made good the proposed transaction could be seen as a threat to company assets.
In this state of uncertainty there was justification for the parties accepting that some protection was necessary. For that reason Mr Osborne proposed some undertakings on behalf of Mercier in the following form:
1.In the event that:
(a)the properties known as lots B301 and C 208 are (being the land more particularly described in certificates of Title volume 11186 folio 285 and volume 11198 folio 513)(the Properties) are transferred by Zinc Port Melbourne Pty Ltd to Mercier Rouse Pty Ltd (Mercier):
(b)Mercier obtains loan funds from Australian Securities Limited and/or Pro Tem Finance Pty Ltd secured against the Properties;
Mercier shall deposit the said loan funds into an interest bearing account in its name and shall not pay or disburse those funds from that account unless:
(x)for the purpose of satisfying the debt of the Deputy Commissioner of Taxation which is the subject of the winding up application issued by the Deputy Commissioner of Taxation in proceeding no (P) VID 1247/2011; or,
(y)it has first given 7 days written notice of its intention to pay or disburse those funds to Richard John O’Bryan and Julianna O’Bryan care of their solicitors Schetzer Brott and Appel (level 13, 607 Bourke Street, Melbourne Vic 3000; ref SB:KP120054).
2.In the event that, the Properties are transferred by Zinc Port Melbourne Pty Ltd to Mercier, Mercier shall not transfer, mortgage, charge, encumber or otherwise deal with the Properties save:
(a) in accordance with the undertaking referred to in paragraph 1 above;
(b)otherwise than after having first given 7 days written notice of its intention to deal with the Properties to Richard John O’Bryan and Julianna O’Bryan care of their solicitors Schetzer Brott and Appel (level 13, 607 Bourke Street, Melbourne Vic 3000; ref SB:KP120054).
Argument then revolved around the sufficiency of the undertakings compared with the more drastic remedy of the appointment of a provisional liquidator.
I took the unusual step of hearing from Mr O’Bryan Junior. Although he was represented by Mr Moloney, he gave a strong indication to the Court that he wished to explain some of the background to the transactions which have given rise to the application.
Mr O’Bryan Junior’s contribution was useful in highlighting the complexity, uncertainty and confusion surrounding the transactions in this case. It is unsurprising that his legal representatives might not, at present, be fully instructed as to the detailed complexities because this matter has come on at short notice.
The complexity and confusion which Mr O’Bryan Junior explained led him to suggest that there was a need for outside interests to evaluate the legal status of various transactions.
Mr Maiden, who appeared on behalf of the applicants, criticised the undertaking proffered by the Emery interests on the basis that it did not provide the type of protection that a provisional liquidator would provide to the assets of the company.
The intention of the undertaking, as emerged from discussions with Mr Osborne, was to ensure that the property of the company remained available to any determination of the legal rights in it. At the same time, the advantage to the company of the undertaking would be to allow the plaintiff to be paid out and permit Zinc to continue in operation. When pressed by the Court to include in the undertaking some express recognition of the underlying purpose, Mr Osborne was not able to provide any advance on the current wording without further instructions.
In those circumstances, it is appropriate to order the appointment of a provisional liquidator. Consequently, orders will be made giving the applicants leave to intervene under r 9.12 of the Federal Court Rules 2011 (Cth) in order to make the application today, and appointing Paul Andrew Burness to act as provisional liquidator of Zinc pursuant to s 472(2) of the Act. Until further orders he will have the powers granted by s 472 of the Act, and costs will be reserved.
I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice North. Associate:
Dated: 5 April 2012
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