In the matter of Courtenay House Trading Group Pty Ltd

[2017] NSWSC 1076

Supreme Court

New South Wales

Medium Neutral Citation:	In the matter of Courtenay House Trading Group Pty Ltd [2017] NSWSC 1076
Hearing dates:	26 July 2017
Date of orders:	26 July 2017
Decision date:	26 July 2017
Jurisdiction:	Equity - Corporations List
Before:	Brereton J
Decision:	Notice of motion seeking freezing order and return of funds dismissed
Catchwords:	EQUITY – interlocutory relief – whether freezing order should be granted – whether funds deposited with companies in liquidation should be returned – held, interlocutory relief declined.
Legislation Cited:	(CTH) Corporations Act 2001, s 500
Category:	Procedural and other rulings
Parties:	Kyle Lester Sheridan (plaintiff) Courtenay House Capital Trading Group Pty Ltd (in liquidation) (first defendant) Courtenay House Pty Ltd (in liquidation) (second defendant) Grant Thornton Australia Ltd (third defendant) John McInerney (fourth defendant) Said Jahani (fifth defendant) National Australia Bank (sixth defendant) Westpac Banking Corporation (seventh defendant)
Representation:	Counsel: Kyle Lester Sheridan (in person) (plaintiff)
File Number(s):	2017/151478

Judgment (EX TEMPORE)

1. The plaintiff approaches the Court with a draft notice of motion seeking ex parte (without notice to the defendant) interlocutory relief which falls into two broad categories.  The first is in the nature of a freezing order, and the second is for the partial or entire return of the funds which the plaintiff deposited with the companies now in liquidation.

2. The companies went into liquidation on 16 May 2017.  The plaintiff says that funds up to in excess of $14 million, but, more specifically, $10,600,000, were deposited by him in circumstances in which they remain in equity, his, and that he has priority over the claims of other creditors of the companies.  That claim, at least in respect of $7.8 million, appears arguable, but it is a claim which the liquidators must be permitted to investigate and rule on.

3. In this liquidation, there will be many other depositors and creditors who will be equally frustrated as the plaintiff by what has happened to their investment, and some of them may well be in similar circumstances to the plaintiff and have similar claims. Ultimately, either the liquidator or the Court will have to rule on whether the plaintiff and other creditors are entitled to the return of their deposits or any of them in specie, or whether they are in the general body of unsecured creditors, and what priorities are to apply and whether or not accounts are to be “pooled”.

4. It is quite impossible in a liquidation of this kind and scale to decide on a piecemeal basis the claim of one creditor against the company.

5. The plaintiff has already brought an application for leave to proceed against the company in liquidation.  That application is almost certainly premature since the liquidator has not yet had an opportunity to rule on the plaintiff’s claim; but because I have endeavoured to encourage the liquidator to give some priority attention to the plaintiff's claim I have, rather than dismissing it, left it on foot to return before the Court at a relatively early date. However, it is entirely impossible to rule at this stage that all or any of the funds must be returned to the plaintiff, let alone without notice of the application having been given to the defendant or to the liquidators.

6. So far as the application for a freezing order is concerned, the short answer is that the liquidators have reported to the Court that they hold in excess of $50 million of funds received from the company, including the $7.8 million deposited by the plaintiff on 24 April 2017.

7. A freezing order is granted if there is reason to suppose that there is a serious risk that the defendant will deal with funds in a manner which will defeat the plaintiff's claim or, in other words, dissipate the funds improperly so as to defeat a potential judgment.  The liquidators are officers of the Court. There is no prospect of these liquidators, being on notice of the plaintiff's claim, dealing with the company's assets in a way which would frustrate any potential judgment.  For that to happen would be most improper on the part of the liquidators, and would expose them to personal liability, and there is just no hint let alone evidence that they would do so.  Even if the funds received by the liquidators have been "pooled" in a single account, that does not mean that the plaintiff's funds cannot be traced into them and returned from them, in the event that the plaintiff's claim succeeds.

8. Accordingly, the plaintiff's application at this stage must fail.

9. Upon the undertaking of the plaintiff Lord Kyle Lester, Sheridan to pay the appropriate filing fees, I grant leave to the plaintiff to file a notice of motion in the form initialled by me, dated this day, and placed with the papers. I direct that the motion for interim relief be returnable instanter.  The Court orders that the notice of motion be dismissed.

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Decision last updated: 02 February 2018