Hamilton, In the Matter of BE100 Property Investment Pty Ltd (Administrator Appointed)
[2015] FCA 603
•15 June 2015
FEDERAL COURT OF AUSTRALIA
Hamilton, In the Matter of BE100 Property Investment Pty Ltd (Administrator Appointed) [2015] FCA 603
Citation: Hamilton, In the Matter of BE100 Property Investment Pty Ltd (Administrator Appointed) [2015] FCA 603 Parties: IN THE MATTER OF BE100 PROPERTY INVESTMENT PTY LTD (ADMINISTRATOR APPOINTED) (ACN 146 639 554); WILLIAM JAMES HAMILTON AS ADMINISTRATOR OF BE100 PROPERTY INVESTMENT PTY LTD (ADMINISTRATOR APPOINTED) (ACN 146 639 554) File number: NSD 367 of 2015 Judge: FOSTER J Date of judgment: 15 June 2015 Catchwords: CORPORATIONS – whether the Court should adjourn an examination ordered pursuant to s 596B of the Corporations Act 2001 (Cth) – whether the Court should set aside an examination summons and orders for production issued under s 596B of that Act Legislation: Corporations Act 2001 (Cth), s 596B and s 596C
Federal Court Rules 2011, r 40.02(b)Date of hearing:
15 June 2015
Place:
Sydney
Division:
GENERAL DIVISION
Category:
Catchwords
Number of paragraphs:
25
Counsel for the Applicant on the Interlocutory Application: Mr D Mackay Solicitor for the Applicant on the Interlocutory Application: Madison Marcus Law Firm Counsel for the Plaintiff: Mr A Spencer Solicitor for the Plaintiff: WJ Hamilton & Co
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 367 of 2015
IN THE MATTER OF BE100 PROPERTY INVESTMENT PTY LTD (ADMINISTRATOR APPOINTED) (ACN 146 639 554)
WILLIAM JAMES HAMILTON AS ADMINISTRATOR OF BE100 PROPERTY INVESTMENT PTY LTD (ADMINISTRATOR APPOINTED) (ACN 146 639 554)
PlaintiffBETWEEN: SAM FAYAD
Applicant on the Interlocutory ApplicationAND: WILLIAM JAMES HAMILTON AS ADMINISTRATOR OF BE100 PROPERTY INVESTMENT PTY LTD (ADMINISTRATOR APPOINTED) (ACN 146 639 554)
Respondent on the Interlocutory Application
JUDGE:
FOSTER J
DATE OF ORDER:
15 JUNE 2015
WHERE MADE:
SYDNEY
THE COURT NOTES THAT:
1.The administrator of BE100 Property Investment Pty Ltd (In Liquidation) (ACN 146 639 554), William James Hamilton, the plaintiff in this proceeding, is willing to produce to Counsel appearing for Mr Fayad this day and three persons employed at the firm of solicitors representing Mr Fayad, on a confidential basis, the affidavit of William James Hamilton sworn on 10 April 2015 and filed herein.
THE COURT ORDERS THAT:
2.Pursuant to s 596C(2) of the Corporations Act 2001 (Cth), the affidavit of William James Hamilton sworn on 10 April 2015 and filed herein and the annexures thereto be made available for inspection by Counsel appearing for the applicant (Mr Fayad) this day (15 June 2015) and the following persons employed at his instructing solicitors, namely, Ms Yum, Mr Qutami and Mr Low, upon terms that those persons, and each of them, will not disclose the contents thereof to any person or entity.
3.The application made by the applicant in an Interlocutory Process filed this day (15 June 2015) for an adjournment of the examination of the applicant set down for 16 June 2015 be refused.
4.The application to set aside the summons for examination issued against the applicant on 14 April 2015 and the associated orders for production issued on the same day be refused.
5.Pursuant to r 40.02(b) of the Federal Court Rules 2011, the applicant pay the plaintiff’s costs of and incidental to the Interlocutory Process filed by the applicant this day (15 June 2015) assessed at $1,000 plus GST.
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 367 of 2015
IN THE MATTER OF BE100 PROPERTY INVESTMENT PTY LTD (ADMINISTRATOR APPOINTED) (ACN 146 639 554)
WILLIAM JAMES HAMILTON AS ADMINISTRATOR OF BE100 PROPERTY INVESTMENT PTY LTD (ADMINISTRATOR APPOINTED) (ACN 146 639 554)
PlaintiffBETWEEN: SAM FAYAD
Applicant on the Interlocutory ApplicationAND: WILLIAM JAMES HAMILTON AS ADMINISTRATOR OF BE100 PROPERTY INVESTMENT PTY LTD (ADMINISTRATOR APPOINTED) (ACN 146 639 554)
Respondent on the Interlocutory Application
JUDGE:
FOSTER J
DATE:
15 JUNE 2015
PLACE:
SYDNEY
REASONS FOR JUDGMENT
(REVISED FROM TRANSCRIPT)
At 11.30 am this morning, Mr Sam Fayad made an application to me, as the Commercial and Corporations Duty Judge, for an abridgement of the time for the service of an Interlocutory Process in which he sought the following relief:
1. Leave be granted to the Applicant to view and inspect the affidavit or affidavits filed by or on behalf of the Respondent in support of the Summons for Examination dated 16 April 2015 pursuant to section 596C(2) of the Corporations Act 2001 (Cth).
2. An order that the examination of the Applicant be stayed until further order of the Court.
3. An order that the Examination of the Applicant be otherwise adjourned until further order of the Court.
3[sic]. Such further or other order as this Honourable Court deems fit.
4. Costs.
The examination which is the subject of the claim by Mr Fayad is fixed for tomorrow before a Registrar of the Court. I have been told that that fixture was put in place in mid-April this year.
I decided to list the matter this afternoon at 3.30 pm in order to ensure that, if at all possible, Mr Fayad’s application was dealt with before tomorrow morning.
The plaintiff, William James Hamilton, is the administrator of BE100 Property Investment Pty Ltd (Administrator Appointed) (ACN 146 639 554) (the company). He was appointed administrator of the company on 18 March 2015 pursuant to an Instrument of Appointment of that date.
On 10 April 2015, the administrator commenced this proceeding. By his Originating Process filed on that day, the administrator sought orders for the issue of an Examination Summons pursuant to s 596B of the Corporations Act 2001 (Cth) addressed to each of Mr Fayad and his accountant, Nicholas Karam. The administrator also sought orders for production against Mr Fayad, Mr Karam and Commonwealth Bank of Australia. The administrator’s application was supported by an affidavit sworn by him on 10 April 2015.
A summons for examination and order for production were issued against Mr Fayad on 14 April 2015. The summons stipulated tomorrow, 16 June 2015, at 10.15 am as the date for the examination.
The application made by Mr Fayad is supported by an affidavit sworn by a solicitor director of the incorporated law firm representing him, Madison Marcus Law Firm Pty Ltd. The deponent of that affidavit (Mr Fayad’s solicitor) set out some of the history of Mr Fayad’s legal representatives’ interactions with the administrator over the past month and a half. It is not necessary to traverse that material in detail. All that I need note is that, at some stage, the parties were looking to conduct the examination of Mr Fayad in private by means of an informal process. Ultimately, that idea fell to the ground.
Of particular interest to the administrator, according to his affidavit, are transactions concerning:
(a)An alleged partnership or joint venture established to construct 38 residential home units at a site at 9 Verley Drive, Homebush, NSW (the Homebush project). That venture was undertaken in 2011 and 2012 by the company, GSP Group Pty Ltd (Voluntary Administrators Appointed) (ACN 142 854 144) (GSP) and Guangyu International Holding Pty Ltd (In Liquidation) (ACN 147 016 902) (Guangyu);
(b)A tax debt owed by the venture of $4,358,304.35;
(c)Payments made to the builder, Dyldam Developments Pty Ltd (Dyldam) for carrying out the construction works for the Homebush project; and
(d)The relationship between the venture and a corporation called NR Wolli Creek Pty Ltd (Wolli Creek), a debtor to the venture, its debt representing the largest asset of the venture. Receivers and Managers were appointed to Wolli Creek on 4 June 2015.
Mr Fayad is not and never has been a director of or shareholder in the company. He says that he has never had any direct involvement in the management of the company. Mr Fayad is a shareholder in GSP, one of two directors of Wolli Creek and a director of and a shareholder in Dyldam.
Shumiao Zhu owns all of the issued capital of the company. Until the appointment of the administrator, he was the sole director of the company. Mr Zhu is the other director of Wolli Creek. Mr Zhu also controls Guangyu.
Mr Zhu and Mr Fayad have been the principal protagonists in a number of disputes involving them and their associated entities, some of which are ongoing.
When the matter came before me at 3.30 pm today, the administrator appeared by Counsel who indicated to the Court that his client was prepared to make the administrator’s affidavit available to Mr Fayad’s legal representatives on a confidential basis in order to enable them to be informed of the material relied upon by the administrator when he procured the issue of the examination summons against Mr Fayad.
The affidavit of the administrator was then made available to Counsel and solicitors representing Mr Fayad upon the basis which I have described.
In his affidavit, the administrator described the relationships between the relevant parties and referred to a Report as to the Affairs (Statement of Assets and Liabilities) of the company and the venture involving the Homebush project as at 18 March 2015. In particular, he referred to the tax debt of $4.358 million. He said that an objection had been lodged to the assessment pursuant to which that debt had arisen and submitted that Mr Fayad’s examination would provide some assistance to the company in dealing with that objection.
In addition, the administrator focussed on a number of drawdowns made in favour of Dyldam and a law firm called Paramonte Legal Law Practice totalling approximately $9.2 million and three other substantial drawdowns which did not have the payee identified in respect of them, as additional matters of interest.
At paragraphs 33 to 36 of his affidavit, the administrator set out in summary form his reasons for seeking the issue of the examination summons and ancillary orders for production against Mr Fayad, Mr Karam and Commonwealth Bank of Australia.
Those reasons appeared to me to be both rational and supportable. The subject matter of the examination of Mr Fayad appeared to me to relate to the examinable affairs of the company.
Counsel who appeared for Mr Fayad pressed his application to have tomorrow’s examination adjourned. In addition, after reading and considering the administrator’s affidavit, Counsel also applied to have the examination summons and ancillary orders for production set aside upon the basis that the examination summons had been issued for a purpose unconnected with the examinable affairs of the company.
I do not think that Mr Fayad has made good his contention that the examination summons and ancillary orders for production were issued for a purpose unconnected with the examinable affairs of the company. For that reason, Mr Fayad must also fail in his attempt to have his examination stayed or adjourned. In my judgment, the examinable affairs of the company include the various matters of interest covered by the administrator in his affidavit. In particular, it seems to me, it is legitimate for the administrator to investigate facts and matters which will assist the company in dealing with its objection to the tax assessment which it has received and to investigate drawdowns and payments made to Dyldam and associated entities all of which are, after all, in the camp of Mr Fayad.
For the above reasons, I decline to adjourn tomorrow’s examination and also decline to set aside the examination summons and associated orders for production.
Given that Mr Fayad has failed in his Application before me today, I think that costs should follow the event. While it is true that the administrator had refused to agree to make his affidavit available until this afternoon, both his original stance and his change of position were reasonable. In my judgment, the administrator was not obliged to make his affidavit available to Mr Fayad or his legal representatives. The fact that he chose to do so this afternoon simply reflected a practical and sensible approach to the dispute between him and Mr Fayad which was by then beginning to take shape. That action by the administrator limited the scope of that dispute and directly led to its swift resolution by the Court. In effect, the administrator chose to produce the affidavit as a means of shortcutting what might otherwise have been a much longer application.
In addition, I was somewhat troubled to discover this afternoon that, on 11 June 2015, the administrator had sent a letter to the solicitors for Mr Fayad in which he reinstated his previous offer to conduct Mr Fayad’s examination on an informal basis and not in public as a way of avoiding what seemed to be the underlying concern on the part of Mr Fayad. Apparently, Mr Fayad does not wish the examination to take place in public. In that letter, the administrator also promised that the questions asked at the examination would not traverse matters concerning the deadlock between Mr Zhu and Mr Fayad in Wolli Creek. That letter was not part of the evidence tendered before me earlier today and was not drawn to my attention by those representing Mr Fayad.
In the circumstances, I think the appropriate order is that the administrator’s costs of today’s Application be paid by Mr Fayad. I propose to make an order to that effect.
Counsel for the administrator has requested that I make an order that those costs be paid on a lump sum basis pursuant to r 40.02(b) of the Federal Court Rules 2011 (FCR) in the amount of $1,000 instead of being taxed. He argued that $1,000 is a reasonable assessment of the costs incurred on behalf of the administrator in respect of today’s Application. Counsel for Mr Fayad does not really oppose that course and it does seem to me that the amount sought is reasonable.
Accordingly, pursuant to r 40.02(b) FCR, I will order the applicant, Mr Fayad, to pay the administrator’s costs of and incidental to Mr Fayad’s Application, assessed at $1,000 plus GST.
I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster. Associate:
Dated: 17 June 2015
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