In the matter of BBY Limited (receivers and managers appointed)(in liquidation) ACN 006 707 777
[2016] NSWSC 1973
•07 March 2016
Supreme Court
New South Wales
Medium Neutral Citation: In the matter of BBY Limited (receivers and managers appointed)(in liquidation) ACN 006 707 777 [2016] NSWSC 1973 Hearing dates: Monday, 7 March 2016 Date of orders: 07 March 2016 Decision date: 07 March 2016 Jurisdiction: Equity - Corporations List Before: Brereton J Decision: Question in Schedule to be decided before the other questions, and separate question to be fixed for hearing on 22 March 2016.
Catchwords: PROCEDURE – where proceedings are already provisionally fixed for hearing – entitlement of parties to funds – whether resolving question of entitlement is inconsistent with resolving question of pooling – questions need to be decided at some stage – held, question of entitlement can be resolved on one of days of hearing Category: Procedural and other rulings Parties: Stephen Ernest Vaughan and Ian Richard Hall in their capacity as joint and several administrators of BBY Limited ACN 006 707 777 and the entities listed in schedule 1 (first plaintiff)
BBY Limited (administrators appointed) (receivers and managers appointed) ACN 006 707 777 (second plaintiff)
J Mazzetti Pty Ltd ACN 006 705 602 as trustee for J Mazzetti Pty Ltd Staff Superannuation Fund (and others)(first defendant)
Securities Exchanges Guarantee Corporation Limited (second defendant)
Clive Riseam (third defendant)
Securities Exchanges Guarantee Corporation Limited ACN 008 626 793 (fourth defendant)
David Nadin (fifth defendant)Representation: Counsel:
Solicitors:
R M Foreman (plaintiffs)
D J Williams QC w G J Parncutt (first defendant)
V Whittaker (second defendant)
G Ng (third defendant)
F Innes (fourth defendant)
M Henry SC (fifth defendant)
Ashurst Australia (plaintiffs)
Partners Legal (first defendant)
Mills Oakley lawyers (second defendant)
Corrs Chambers Westgarth (third defendant)
Clayton Utz (fourth defendant)
File Number(s): 2015/237028
Judgment (EX TEMPORE)
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HIS HONOUR: These proceedings are provisionally fixed for hearing for two days commencing on 22 March 2016. The parties have informed the Court some couple of weeks ago, that they did not anticipate that the matter would be ready to proceed on those days in respect of the so called "pooling" issue. However, the first defendant has proposed that at least one of those days be utilised for determination of issues pertaining to its claim, on the basis that those issues are essentially questions of law, which would not involve contested facts.
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This proposal has not met with the support of any other party.
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However, the first defendant has been agitating its claim proactively for some time, even before the liquidator instituted these proceedings last year. It proposes that the Court determine whether the members of the class it represents are entitled to the funds – referred to as the “returned collateral” and the “erroneous withdrawals” – regardless of whether the 541 account is unable to be reconciled, the 541 account contains funds of clients from different product groups, the 541 account was in shortfall at the date of the appointment of the administrators, and/or whether that account was in shortfall at the time when moneys were paid by BBY Limited to ASX Clear by way of lodging the funds that became the returned collateral. If the question is approached on that basis, as presently advised it seems to me to accommodate the position that other defendants might ultimately contend that the first defendant should not be entitled to the funds in question, but should share pro rata in them on a pooled basis.
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On that basis, I do not perceive a significant possibility of inconsistent findings in resolving those questions, with the ultimate resolution of the issue of pooling. In short, if I were to decide that the first plaintiffs were entitled to the returned collateral and/or erroneous deposits regardless of the four matters to which I have referred, then it would follow that there would not be pooling in respect of those funds. I do not understand there to be any other matter than those four possibilities that might result in the Court adopting a pooling approach, rather than dealing with the returned collateral and erroneous withdrawals as discrete funds. However if there are, then there is time for that to be raised and addressed between now and 22 March. I am therefore unpersuaded that there is a significant risk of inconsistent findings.
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I am more attracted by the view that these issues are going to have to be decided at some stage in any event, and that it seems to me that there is little, if anything, to be lost by doing so on a day that is already reserved for the hearing. Even if it turns out that it is not possible to give a decision after 22 March for example, because additional issues emerge, nothing will be lost, as the costs of arguing these issues are going to have to be incurred sooner or later. If it is not possible to resolve the issue in favour of the first defendant, then the matter will proceed with their involvement, albeit perhaps to a lesser extent than otherwise. If the question is resolved in its favour, that will essentially remove the first defendant from the remainder of the dispute.
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I approach this, not as an ordinary application for determination of a separate question, but in light of the matter being already provisionally fixed for hearing on 22 and 23 March, and that these are issues that are going to have to be argued sooner or later in any event, and that it is therefore desirable to use some of the time on 22 March to resolve them if possible.
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The Court orders that:
The question stated in the Schedule be decided before the other questions in the proceedings;
The separate question be fixed for hearing on 22 March 2016;
There be liberty to apply to amend the question; and for further directions, by arrangement with my Associate on three days' notice – any such notice to specify the issues to be raised and the relief to be sought; and
The first defendant lodge and serve with my Associate an outline of submissions by 9 March, and any other party wishing to do so lodge and serve its outline of submissions by 16 March 2016.
Schedule
Whether the first defendant is entitled to the return of the returned collateral and the erroneous withdrawals in priority to any other claims on those funds other than liquidator's charge and costs, regardless of whether the 541 account is unable to be reconciled, the 541 account contains funds of clients in different product groups, the 541 account was in shortfall at the date of the appointment of the first plaintiff, and/or the 541 account was in shortfall at the time when BBY paid moneys to ASX Clear by way of lodgement of what is now the returned collateral.
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Decision last updated: 22 June 2018
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