In the matter of Havendew Pty Ltd (receiver

[1992] FCA 1070

IN THE FEDERAL COURT OF AUSTRALIA	) )
NEW SOUTH WALES DISTRICT REGISTRY	) No. NG 3114 of 1992

)

GENERAL DIVISION )

IN THE MATTER OF HAVENDEW PTY LIMITED

(RECEIVER AND MANAGER APPOINTED)

JOSEPH GOZZI

Applicant

HAVENDEW PTY LIMITED

First Respondent

GIUSEPPE DE DUCA

Second Respondent

JOHN STAR

Third Respondent

GIUSEPPE DEL DUCA

Cross Claimant

JOSEPH GOZZI

Cross Respondent

25 September 1992

REASONS FOR JUDGMENT

LOCKHART J.

There is more than one motion before the Court in this matter. The motion which I propose to deal with and which is the catalyst for the other motions is the motion of the receiver and manager of the first respondent, Havendew Pty Limited ("Havendew"), for orders that he be authorised to sell

Havendew's business by way of an auction sale upon certain terms and conditions.

The first respondent conducts the business of, what is called in the evidence, a Reception Lounge at 357-363 Liverpool Road, Ashfield. It would appear that the two directors and shareholders of the first respondent are the applicant, Joseph Gozzi and Giuseppe Del Duca, the second respondent. The applicant commenced this proceeding by filing an application seeking the winding-up of Havendew on the ground of alleged insolvency.

After the proceeding was commenced certain interlocutory proceedings were brought in the Court and in the result an order was made which I am informed was by consent appointing Mr John Star as the receiver and manager of Havendew. The powers of Mr Star were not directly expressed in the order of the Court appointing him which was made on 7 August 1992. However, it is common ground that the powers so far as relevant for present purposes are the powers conferred by s. 420(2)(b) of the Corporations Law. Section 420 is expressed in these terms:

"420(1) Subject to this section, a receiver of property of a corporation has power to do, in Australia and elsewhere, all things necessary or convenient to be done for or in connection with, or as incidental to, the attainment of the objectives for which the receiver was appointed.

(2) Without limiting the generality of subsection (1), but subject to any provision of the court order by which, or the instrument under which, the receiver was appointed, being a provision that limits the receiver's powers in any way, a receiver of property of a corporation has, in addition to any powers conferred by that order or instrument, as the case may be, or by any other law, power, for the purpose of attaining the objectives for which the receiver was appointed:

(a)to enter into possession and take control of

property of the corporation in

accordance with the terms of that

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order or instrument;

(b)to lease, let on hire or dispose of property of the

corporation;

..."

I have not been referred to any authorities which touch the

interpretation of that paragraph and notwithstanding some oddity

of language in s. 420(2)(b) it seems to me that the power to dispose of the property of the corporation must include the

power to sell property of the corporation and the power that was conferred upon the receiver on 7 August is a power which is sufficient to enable the receiver to sell the business of Havendew as is sought to be done by the receiver's motion today.

The receiver had no prior affiliations or connections to

the parties to these proceedings or any of them, as I understand

it, and he has clearly formed the view that it is in the best

interests of the proprietors of the enterprise that it be

solved. The dispute between the parties is unfortunate. It seems as though the applicant and the second respondent have fallen out and the sale of the business appears to be, on the

evidence inevitable, whether it be by the receiver or the provisional liquidator or a liquidator or by some other means. Because the parties have fallen out it is not surprising that they view each others actions with care. It is important that a sale of the business be done completely openly and in a recognized and acceptable manner.

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The receiver at an earlier stage in these proceedings did

indicate his intention to sell the business. This led to a

motion before the Court which was ex parte to restrain the receiver from proceeding to the disposition of Havendew, and in particular from conducting an auction sale which he proposed to hold on 17 September 1992. The motion for the injunction before another Judge of the Court was made on that very day and the receiver was restrained from disposing of any property of Havendew and in particular from conducting the auction sale on 17 September until further order of the Court. It is not suggested by the applicant that there was any impropriety on the part of the receiver.

The applicant asserts that he knew very little about the

prospective sale and it does not appear to have been the

intention of the receiver to advertise the sale once they made

the application. The receiver has plainly formed the view that to advertise the auction sale is not necessary, because as he sees it, the only two possible interested parties are the applicant or the second respondent who in effect are the joint proprietors of the business at present. Whether that view be right or wrong it is not a matter on which I should comment. It is a commercial judgment formed by the receiver no doubt in good faith. I do think it important in the present circumstances

that the usual formalities that attend a receivership sale involving either the calling of public tenders or as in this

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case the holding of an auction sale be publicly advertised in an appropriate way, and there is no dispute on the part of the receiver as to that suggestion.

The freehold of the property is not owned by Havendew. It

is owned by natural persons who include the parents of the

applicant and the applicant himself. The lease is for a ten- year term of which approximately 8 years remains unexpired. In my view, influenced as I am by the fact that a sale of the business seems to be inevitable in the interests of all relevant

parties, in particular the applicant and the second respondent, the motion of the receiver should succeed and he should be held to be at liberty to conduct the sale of the business and to sell it by way of auction. No submissions have been made to me to

suggest that the suggested terms of the sale of the business which are in evidence are other than perfectly appropriate and it does not seem to me that they are other than appropriate.

Accordingly, I propose to authorise the receiver to be at

liberty to sell the business of Havendew by way of auction sale

upon the terms and conditions contained in the evidence, provided it is properly advertised in the newspapers and I will attend to that when I announce the actual orders. The Court should also hold that the receiver is at liberty to sell the property on those terms as well as conduct the anterior auction sale. The receiver does not press what he originally sought

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which was an order that he be relieved wholly from liability to the applicant, the first respondent and the second respondent and anybody else which might arise out of the sale of the business provided that sale is conducted in accordance with the

authority of the Court. That goes too far, hence I indicated that and the receiver does not through his counsel press the point.

There is one other aspect to the matter to which reference must be made. Of the lessors of the premises at Ashfield in which the business in conducted, only one is presently a party, namely the applicant. His parents, Daniele Gozzi and Theresa Gozzi, the other owners of the freehold, have indicated that they assert a breach of the terms of the lease and an intent to re-enter the premises or terminate the lease in reliance upon Havendew's non-compliance with the notice of 27 July 1992 which is in evidence. The second respondent seeks to join Daniele and Theresa Gozzi as cross-respondents and accordingly to restrain them on an interlocutory footing on the first instance at least from doing anything further pursuant to the terms of that

notice, so that the business will not be jeopardised in relation to its tenure before and during the currency of the sale and perhaps for some time thereafter.

I think they should be joined as parties and propose to

take that course. Before I grant any injunctions against them,

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I shall however, as they apparently are in court, ask them if there is anything they wish to say about the matter themselves as they do not appear to be represented.

As the injunctions granted on 17 September were to restrain

Mr Star from disposing of Havendew's property and in particular,

from conducting an auction sale on 17 September until the

further order of the Court the proper order I think today, is

that that order be discharged as from today because it is plain that in the light of intervening events and what has occurred today that the receiver proposes to proceed to sell the property in accordance with the directions given earlier today.

The injunction granted on 17 September by another Judge of

the Court is an injunction that is still operative except

insofar as it has been in essence been varied by previous orders

made today.

In my view, in the light of what has transpired today it is perfectly obvious that the receiver and manager will proceed to conduct a sale of the business of Havendew in the manner in which he had been authorised today and in no other manner, and it would be surprising if he took any other course and nor was

any suggested by him. He is always at liberty to approach the Court for any further directions in relation to the matter if he wishes to, or for some reason the prospective sale proves

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impracticable or is not forthcoming. However, it is not right

that in the circumstances he remain liable to the terms of the

general restraint imposed on 17 September.

The Court orders that:

(1) John Edward Star as receiver and manager of the first

respondent be at liberty to sell the business of the first respondent by way of auction sale upon the terms and conditions contained in the draft agreement, annexure A to the affidavit of John Edward Star sworn 23 September 1992 and filed in court today, provided that the holding of the auction is advertised twice in the Sydney Morning Herald newspaper in the classified advertisement section under the heading, Businesses for Sale or similar heading, the first advertisement to be not less than 21 days prior to the date of the auction sale.

(2) The receiver and manager be at liberty to sell the said

business subject to the terms of order (1) above to any person, including the applicant, the second respondent and any person or

company related to or associated to or with either of them,

should such person be the highest bidder.

(3) That Daniele Gozzi and Theresa Gozzi be joined as second

and third cross-respondents to the proceedings respectively.

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(4) The costs of today's proceeding be reserved.

(5) Daniele Gozzi and Theresa Gozzi and the applicant, Joseph

Gozzi be restrained until further order of the Court from re- entering the premises at 357 Liverpool Road, Ashfield or terminating of the lease in respect thereof to the first respondent in reliance upon the first respondent's alleged non- compliance with a notice dated 27 July 1992 from the cross- respondents to the first respondent.

(6) Mr Star be discharged from order 2 made on 17 September,

that discharge to be operative as from today.

(7) Any party is at liberty to restore the matter to the list

on three days notice.

(8) The matter be adjourned to 13 November 1992 including

adjourning the application to wind up.

I certify that this and the preceding eight (8) pages are a true copy of the reasons for judgment herein of the Honourable Mr. Justice Lockhart.

Associate Dated: 25 September 1992

Counsel for the Applicant : J.P. Hamilton Q.C.

H.J. Gulpers

Solicitors for the Applicant :	E. Fredericks & Co.
Counsel for the First and

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Third Respondents : R.W. Seton

Solicitors for the First and

Third Respondents : Gillis Delaney Brown

Counsel for the Second

Respondent and Cross-Claimant :F.P. Carnovale

Solicitors for the Second

Respondent and Cross-Claimant :F. Del Duca & Co.

Date of Hearing : 25 September 1992

Date of Judgment : 25 September 1992