Jemmott v ENA Development Pty Ltd (in liq) (Receiver Appointed)

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FEDERAL COURT OF AUSTRALIA

Jemmott v ENA Development Pty Ltd (in liq) (Receiver Appointed) [2022] FCA 1134

File number(s): NSD 662 of 2022
Judgment of: HALLEY J
Date of judgment: 21 September 2022
Date of publication of reasons: 23 September 2022
Catchwords:  PRACTICE AND PROCEDURE – application for transfer of proceedings to the Supreme Court of New South Wales (Supreme Court) pursuant to s 1337H of the Corporations Act 2001 (Cth) and r 27.21 of the Federal Court Rules 2011 (Cth) – application for adjournment of hearing dismissed – where more appropriate for the proceeding to be determined by Supreme Court having regard to the interests of justice
Legislation:

Corporations Act 2001 (Cth) ss 1337H, 1337R

Federal Court Rules 2011 (Cth) r 27.21

Cases cited:

BHP Billiton Limited v Schultz (2004) 221 CLR 400; [2004] HCA 61

Commissioner of Taxation v Residence Riverside Proprietary Limited as Trustee for the D&J Discretionary Trust and as Trustee for the D&J Investment Trust [2013] FCA 720

Dwyer v Hindal Corporate Pty Ltd (2005) 52 ACSR 335

In the matter of ENA Development Pty Ltd [2022] NSWSC 54

In the matter of ENA Development Pty Ltd (in liq) [2022] NSWSC 919

In the matter of Peter G Ward Industries Pty Limited [2020] NSWSC 339

Yara Pilbara Fertilisers Pty Ltd (formerly known as Burrup Fertilisers Pty Ltd) v Oswal (No 8) [2015] FCA 49

Yeo, in the matter of Armstrong and Shaw Pty Ltd (in liq) v Whiteman [2020] FCA 849

Division: General Division
Registry: New South Wales
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate Insolvency
Number of paragraphs: 46
Date of hearing: 21 September 2022
Solicitor for the Plaintiff: Mr Carbone of Sydney Law Practice Pty Ltd
Counsel for the Defendants: Mr M L Rose
Solicitor for the Defendants: ERA Legal

ORDERS

NSD 662 of 2022
BETWEEN:

RONALD JEMMOTT

Plaintiff

AND:

ENA DEVELOPMENT PTY LTD (IN LIQUIDATION) (RECEIVER APPOINTED)

First Defendant

PETER IN HIS CAPACITY AS LIQUIDATOR OF ENA DEVELOPMENT PTY LTD (IN LIQUIDATION) KREJCI

Second Defendant

ORDER MADE BY:

HALLEY J

DATE OF ORDER:

21 SEPTEMBER 2022

THE COURT ORDERS THAT:

1.Pursuant to s 1337H of the Corporations Act 2001 (Cth) and r 27.21 of the Federal Court Rules 2011 (Cth), these proceedings no. NSD 662 of 2022 be transferred to the Supreme Court of New South Wales.

2.The costs of these proceedings to date and of the amended interlocutory process dated 14 September 2022 be costs in the cause.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

HALLEY J:

INTRODUCTION

  1. On 21 September 2022, I made orders transferring these proceedings to the Supreme Court of New South Wales pursuant to s 1337H of the Corporations Act 2001 (Cth) (Act) and r 27.21 of the Federal Court Rules 2011 (Cth) (Federal Court Rules).

  2. These are my reasons for making that order and refusing an application by the plaintiff’s solicitor, Mr Carbone…

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Details
Case
[2022] FCA 1134
Decision Date

CaseChat Overview and Summary

In the matter of Jemmott v ENA Development Pty Ltd (in liq) (Receiver Appointed), the applicant sought various reliefs, including the termination or stay of the winding up of the company and the termination of the liquidator's appointment. The defendants applied for the proceedings to be transferred to the Supreme Court of New South Wales, arguing that it was more appropriate for the proceeding to be determined by the Supreme Court, having regard to the interests of justice. The key legal issue the court needed to decide was whether the proceedings should be transferred to the Supreme Court of New South Wales.

The court considered the nature of the relief sought by the applicant and the overlap between the relief sought in the current proceedings and the relief sought in the proceedings in the Supreme Court of New South Wales. The court found that the relief sought in the current proceedings was substantially the same as the relief sought in the proceedings in the Supreme Court of New South Wales. Additionally, the court found that the matters raised in the current proceedings were closely connected to the matters raised in the proceedings in the Supreme Court of New South Wales. Therefore, the court concluded that it was more appropriate for the proceeding to be determined by the Supreme Court of New South Wales, having regard to the interests of justice.

The court transferred the proceedings to the Supreme Court of New South Wales pursuant to s 1337H of the Corporations Act 2001 (Cth) and r 27.21 of the Federal Court Rules 2011 (Cth). The court also ordered that the costs of these proceedings to date and of the amended interlocutory process dated 14 September 2022 be costs in the cause. The dismissal of the adjournment application was a separate decision made by the court, which is not discussed in detail here.

Orders

Orders of the court

1. Pursuant to s 1337H of the Corporations Act 2001 (Cth) and r 27.21 of the Federal Court Rules 2011 (Cth), these proceedings no. NSD 662 of 2022 be transferred to the Supreme Court of New South Wales.

2. The costs of these proceedings to date and of the amended interlocutory process dated 14 September 2022 be costs in the cause.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

The defendants relied on an affidavit of their solicitor, Mr Blake O’Neill affirmed on 13 September 2022, together with exhibit BJON-1 in support of the transfer application. Mr Carbone did not seek to rely on any evidence to resist that transfer application after his application for an adjournment of the hearing of the transfer application was refused.BACKGROUND On 27 January 2022, the Liquidator was appointed as the liquidator of ENA in proceedings 2021/303982 in the Supreme Court of New South Wales: In the matter of ENA Development Pty Ltd [2022] NSWSC 54 (Black J). On 3 February 2022, the Liquidator was also appointed as the receiver of the assets of the ENA Development Trust in proceedings 2022/32115 in the Supreme Court of New South Wales (2022 Proceedings). On 11 July 2022, an order was made in the 2022 Proceedings that pursuant to s 90-15 of Sch 2 to the Act, the Liquidator would be justified in treating certain assets held in the name of ENA comprising real estate, shares and securities listed on the Australian Securities Exchange and moneys in a bank account as assets to which ENA was beneficially entitled: In the matter of ENA Development Pty Ltd (in liq) [2022] NSWSC 919. In the period between 7 August 2022 and 14 August 2022, Mr Jemmott and persons associated with him filed a series of notices of motion in the 2022 Proceedings. On 15 August 2022, Mr Jemmott and the associated persons were granted leave in the 2022 Proceedings to discontinue the latest iteration of the notices of motion, being a notice of motion that they had filed on 14 August 2022 (14 August Motion). The grant of leave was in these terms:… Grants leave to One T Development Pty Ltd )”One T Development”) and the six named applicants, Ms Ansah and others, to discontinue the interlocutory process filed on 14 August 2022, on terms that this order be treated as constituting this discontinuance such that a separate notice of discontinuance need not be filed, on the undertaking given by each of One T Development and each of the Applicants by their counsel, not to bring a further application, interlocutory process or notice of motion, in or substantially in the form of paragraphs 2-4 and 6-11 of the Interlocutory Process filed 14 August 2022. On 16 August 2022, Mr Jemmott commenced these proceedings by filing an originating process in this Court seeking relief under ss 482(1) and 480 of the Act and s 75-15 of the “Insolvency Act” (Originating Process). On 8 September 2022, Markovic J made orders providing for (a) the service of a proposed amended originating process, (b) the defendants to file and serve any application for the proceedings to be transferred to the Supreme Court of New South Wales, together with any affidavit in support by 5 pm on 13 September 2022 and (c) the listing of the proceedings for a further case management hearing at 9.30 am on 15 September 2022. On that occasion Mr Jemmott appeared by a solicitor, Mr R Ardino. On 15 September 2022, Markovic J made orders (a) granting leave to the defendants to file and serve an amended interlocutory process in the form emailed to the Court on 14 September 2022, (b) requiring Mr Jemmott to file and serve any affidavits and submissions, not exceeding five pages in length in response to the relief sought in the amended interlocutory process by midday on 20 September 2022, and (c) referring the amended interlocutory process and an oral application made by Mr Jemmott to amend an interlocutory process that he had filed (Oral Amendment Application) to the Commercial and Corporations Duty Judge for hearing at 2.15 pm on 21 September 2022. On that occasion Mr Jemmott appeared in person. In the course of the case management hearing on 15 September 2022 Markovic J stressed to Mr Jemmott that it was a matter of some urgency that the transfer application be determined. ADJOURNMENT APPLICATION

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Mr Jemmott did not file any written submissions nor evidence in opposition to the transfer application and beyond referring to his submissions in support of his oral application for an adjournment of the transfer application, Mr Carbone did not advance any oral submissions on behalf of Mr Jemmott in opposition to the transfer applications.CONSIDERATION It is convenient to identify first the extent of the overlap between the relief sought by Mr Jemmott in the Originating Process and the relief sought by Mr Jemmott and the other applicants in the 14 August Motion in the 2022 Proceedings. Mr Jemmott seeks the following relief in the Originating Process:1.Pursuant to section 482(1) of the Act, that the winding up of the Company be terminated or stayed indefinitely.2.Pursuant to section 482(3) of the Act, that the management and control of the Company revert back to the director; and3.In the alternative to order 1 and 2, Peter Krecji's appointment as liquidator and receiver of ENA Development Pty Ltd (in liq) be terminated under the division 90-15 of the Insolvency Practice Schedule.( Corporations) and Domenic Calabretta be appointed as liquidator [and receiver] of that company.4.Further and alternatively, that directions be given in the winding up of ENA Development Pty Limited (in liq), that the winding up be terminated upon the happening of the following events:a.Payment of the petitioner's debt in the amount of $46,164 plus costs from monies as were held in Trust from the sale of the ASX Shares Comsec Account ENA Development at the date of Mr Krecji's appointment as liquidator, and that are presently in an account maintained by the liquidator of ENA Developments Pty Limited;b.The filing of deeds of deferral of or release by the Creditors listed in Schedule 1, from the payment of their debts by the liquidator, in lieu of the repayment of their debts:Creditors as per creditor's schedule: Source: Liquidators Report to Creditors of dated 24 April 2022, refers page 25, list of creditors.c.The liquidator's reasonable fees and expenses in administering the winding up, from the fund presently maintained by the liquidator;5.The company and trust both had a substantial positive net asset position of $3,100,000 and liquid assets (cash flow) position of $120,000 as at the date of winding up6.A declaration that One T Development Pty Ltd as the Trustee of ENA Development Trust as or after 30 March 2021 to hold the assets on trust under Section 63 of the Trustee Act 1925; Property known as Lot 36, 146 Parramatta Road, Homebush NSW 2140, the Fund of $1,900,000 now sitting in the Liquidator Trust Account, realisation of Shares to the value of $115,000 now sitting the liquidator’s trust account, the value of $9700 Cash at back Account CBA ENA Development The relief that was sought by Mr Jemmott and the other applicants in the 14 August Motion relevantly included:1.To terminate the winding-up pursuant to section 482 of the Corporations Act 2001 (Cth) on the basis the company has sufficient funds to pay creditors and the liquidator.2.In the alternative to order 1, Peter Krecjrs appointment as liquidator and receiver of ENA Development Pty Ltd (in liq) be terminated and Domenic Calabretta be appointed as liquidator [and receiver] of that company.3.Further and alternatively, that directions be given in the winding up of ENA Development Pty limited (in liq), that the winding up be terminated upon the happening of the following events:a.Payment of the petitioner's debt in the amount of $46,164_from the monies as were held in Court or from the sale of the ASX Shares Comsec Account ENA Development at the date of Mr Krecji's appointment as liquidator, and that are presently in an account maintained by the liquidator of ENA Developments Pty Limited;b.The filing of deeds of deferral of or release by the Second to Seventh Defendants(as Creditors) from the payment of their debts by the liquidator, in lieu of the repayment of their debts:Creditors as per creditor's schedule: Source: Liquidators Report to Creditors of 27-04-2022 refers page 25, list of creditors.c.The liquidator's reasonable fees and expenses in administering the winding up, from the fund presently maintained by the liquidator;…8.That the court set aside, the orders of Justice Black made on 3 February 2022, in which Mr Krejci was appointed as Receiver over Lot 36, 146 Parramatta Road, Homebush NSW 2140.9.In lieu of the orders made on 3 February 2022, the Court order that One T Development Pty Ltd as the Trustee of ENA Development Trust, to hold the assets of the trust pending further order but not to deal with them otherwise than upon the giving of 14 days' notice to the parties..Particulars of the Trust Assets(a) Lot 36, 146 Parramatta Road, Homebush NSW 2140(b) Fund in Supreme Court $1,900,000 (now sitting with the liquidator)(c) ASX Share Portfolio $115,000, Comsec Account ENA Development(d) Further Cash at bank CSA ENA Development Pty Ltd $9000