Hughes v Zhenya Holdings Pty Ltd, in the matter of Malt Supper Club Pty Ltd (In liquidation)
[2017] FCA 837
•24 July 2017
FEDERAL COURT OF AUSTRALIA
Hughes v Zhenya Holdings Pty Ltd, in the matter of Malt Supper Club Pty Ltd (In liquidation) [2017] FCA 837
File number(s): WAD 192 of 2017 Judge(s): GILMOUR J Date of judgment: 24 July 2017 Catchwords: CORPORATIONS – liquidation – securities – whether an extension of time for making an application under s 477(2B) of the Corporations Act 2001 (Cth) (Act) should be granted
PRACTICE AND PROCEDURE – injunctions – whether injunctive relief should be granted to prevent a party from enforcing or taking any steps to register any further security interest on the Personal Properties Securities Register – whether time for service of the originating application should be waived
Legislation: Corporations Act 2001 (Cth) ss 51E, 477(2B), 506(1A), 1322(4)(a), 1322(4)(d)
Personal Properties Securities Act 2009 (Cth) s 207
Date of hearing: 28 June 2017 Registry: Western Australia Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 15 Counsel for the Plaintiffs: JM Healy Solicitor for the Plaintiffs: Jackson McDonald Counsel for the First Defendant: P Murray Solicitor for the First Defendant: K&L Gates ORDERS
WAD 192 of 2017 IN THE MATTER OF MALT SUPPER CLUB PTY LTD (IN LIQUIDATION) ACN 127 806 160 BETWEEN: HUGHES AND BREDENKAMP IN THEIR CAPACITY AS LIQUIDATORS OF MALT SUPPER CLUB PTY LTD (IN LIQUIDATION) ACN 127 806 160
First Plaintiffs
MALT SUPPER CLUB PTY LTD (IN LIQUIDATION) ACN 078 618 612
Second Plaintiff
AND: ZHENYA HOLDINGS PTY LTD ACN 1210173 073
First Defendant
REGISTRAR OF PERSONAL PROPERTY SECURITIES
Second Defendant
JUDGE:
GILMOUR J
DATE OF ORDER:
24 JULY 2017
THE COURT ORDERS AND DECLARES THAT:
1.The first defendant at all material times since 2 June 2016, being the date of registration number 201606020046992 on the Personal Property Securities Register, has been a secured creditor, as that term is defined in s 51E of the Corporations Act 2001 (Cth) (the Act), and for the purposes of Part 5.6 of the Act will participate in the second plaintiff’s winding up in its capacity as a secured creditor.
2.Nothing in order 6 will impact or limit the scope of the declaration in order 1.
THE COURT ORDERS THAT
3.Pursuant to s 1322(4)(d) of the Act the period for making an application under s 477(2B) of the Act for approval of the entry by the First Plaintiff’s into the Sale of Business Deed between them, the second plaintiff and Goldvale Nominees Pty Ltd (ACN 616 451 548) dated 23 December 2016 (Sale Deed) be extended nunc pro tunc to 28 April 2017.
4.Pursuant to s 477(2B) of the Act (as applied by s 506(1A) of the Act), approval is given to the first plaintiffs to enter into the Sale Deed, notwithstanding that obligations of a party to the Sale Deed may be discharged by performance more than 3 months after it was entered into.
5.Pursuant to s 1322(4)(a) of the Act, the Sale Deed is not invalid by reason of having been entered into by the first plaintiffs prior to obtaining approval under s 477(2B) of the Act.
BY CONSENT, THE COURT ORDERS THAT:
Upon the undertaking by the first plaintiffs to hold the sum of $148,500 from the proceeds of the sale contemplated by the sale deed, on trust, pending approval by the creditors or the Court of the liquidator’s fees claimed in the amount of $148,500.
6.The first defendant within 1 business day of this order file a financing change statement amending the Personal Property Securities Register to remove registration 201606020046992 and any record thereof.
7.The first defendant, its servants and agents be restrained from enforcing or taking any steps to register any further security interest on the Personal Property Securities Register.
8.Time for service of the above applications be waived.
9.The first plaintiffs’ and the first defendant’s costs of the application be paid out of the property of the second plaintiff.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
GILMOUR J:
By this originating process the plaintiffs sought various orders following upon the liquidation of Malt Supper Club Pty Limited (the company). The first defendant did not oppose the granting of relief but rather sought certain protections concerning the first plaintiffs’ claims to fees. The second defendant entered a submitting appearance.
I acceded to the plaintiff’s application upon the first plaintiffs giving certain undertakings and I delivered ex-tempore reasons for doing so. Those reasons are as follows. They have been edited to a small extent but not so as to alter their substance. Other orders were made by consent.
Background
The company went into liquidation in the middle of November last year. There is a Sale of Business Deed (sale deed) in relation to the business of the company but which is subject to certain conditions precedent. These will be satisfied prior to completion on 3 May 2017.
One condition remains outstanding which concerns the security interest which was registered by the first defendant under the Personal Properties Securities Act 2009 (Cth) (PPSA).
Relief sought
The nature of the originating application is to seek relief by way of an extension of time for making an application under s 477(2B) of the Corporations Act 2001 (Cth) (Act) concerning the approval of the entry by the first plaintiff’s into the sale deed, to which I referred, with Goldvale Nominees Limited dated 23 December 2016.
Further relief is sought pursuant to s 477(2B) of the Act (as applied by s 506(1A) of the Act, that approval be given to the first plaintiffs to enter into the sale deed notwithstanding that obligations to a party of the sale deed may be discharged by performance more than three months after it was entered into.
Further relief is also sought pursuant to s 1322(4) of the Act by way of a declaration that the sale deed is not invalid by reason of having been entered into by the first plaintiffs prior to obtaining approval under s 477(2B) of the Act.
Then, relief is sought by way of a declaration that at all material times since 2 June 2016, the first defendant has been a secured creditor in relation to the security interest, which was registered in respect of the sale deed, and, further that, the first defendant will participate in its capacity as a secured creditor in the second plaintiff’s winding up.
The originating application then seeks an order pursuant to s 207 of the PPSA that the first defendant is required within one business day of this order to file a financing change statement amending the Personal Property Securities Register to remove the registration of its security interest and any record thereof.
There is then injunctive relief sought to restrain the first defendant by its servants or agents from enforcing or taking any steps to register any further security interest on the Personal Properties Securities Register, and a consequential order that the time for service of the originating application be waived.
Consideration
I have had the benefit of extensive written outlines of submission from both the plaintiffs and the first defendant. There is no controversy as to the legal bases advanced for the making of the orders to which I have referred. They reflect, in my opinion, the correct legal basis underpinning the relief sought.
Rather, the controversy has centred around the concern of the first defendant to ensure that the funds which might in due course be paid to the liquidators in respect of their fees, including GST, be held in a trust, pending a meeting of creditors to prove those fees, or, alternatively, by order of this Court. This, of course, is no more than a reflection of the legislative requirements.
In the ordinary course, the liquidator could not lawfully take fees in this liquidation without either the approval of the creditors in a meeting in the case where there is neither committee of creditors nor a committee of inspection, or, alternatively, by order of the Court. Nonetheless, the first plaintiffs are prepared to give an undertaking to the effect that they will not, in their capacity as liquidators or otherwise, pay any moneys in satisfaction of their fees which, inclusive of GST, amount to $148,500. Accordingly, they undertake to maintain those funds to that extent in the liquidators’ trust account pending approval of those fees by the creditors meeting, or, alternatively, by an order of this Court.
Orders
Accordingly, I am satisfied on the basis of the written and oral submissions by both parties that the following declarations and orders including orders by consent ought be made:
Declarations
1.The first defendant at all material times since 2 June 2016, being the date of registration number 201606020046992 on the Personal Property Securities Register, has been a secured creditor, as that term is defined in s 51E of the Corporations Act 2001 (Cth) (the Act), and for the purposes of Part 5.6 of the Act will participate in the second plaintiff’s winding up in its capacity as a secured creditor.
2.Nothing in order 6 will impact or limit the scope of the declaration in order 1.
Orders
3.Pursuant to s 1322(4)(d) of the Act the period for making an application under s 477(2B) of the Act for approval of the entry by the First Plaintiff’s into the Sale of Business Deed between them, the second plaintiff and Goldvale Nominees Pty Ltd (ACN 616 451 548) dated 23 December 2016 (Sale Deed) be extended nunc pro tunc to 28 April 2017.
4.Pursuant to s 477(2B) of the Act (as applied by s 506(1A) of the Act), approval is given to the first plaintiffs to enter into the Sale Deed, notwithstanding that obligations of a party to the Sale Deed may be discharged by performance more than 3 months after it was entered into.
5.Pursuant to s 1322(4)(a) of the Act, the Sale Deed is not invalid by reason of having been entered into by the first plaintiffs prior to obtaining approval under s 477(2B) of the Act.
Orders by consent
Upon the undertaking by the first plaintiffs to hold the sum of $148,500 from the proceeds of the sale contemplated by the sale deed, on trust, pending approval by the creditors or the Court of the liquidator’s fees claimed in the amount of $148,500.
6.The first defendant within 1 business day of this order file a financing change statement amending the Personal Property Securities Register to remove registration 201606020046992 and any record thereof.
7.The first defendant, its servants and agents be restrained from enforcing or taking any steps to register any further security interest on the Personal Property Securities Register.
8.Time for service of the above applications be waived.
9.The first plaintiffs’ and the first defendant’s costs of the application be paid out of the property of the second plaintiff.
In reference to order 9 above, I would add that I am satisfied that the first defendant acted reasonably in protecting its interests and, in the circumstances, the order I will make is that the first plaintiff’s costs of the application be paid out of the property of the second plaintiff. I should add that the second defendant also acted reasonably in enter a submitting appearance in this matter.
I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour. Associate:
Dated: 24 July 2017
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