Lucas (liquidator of Queensland Maintenance Service Pty Ltd (in liq) (receivers and managers appointed) v Currie (receivers and managers of Queensland Maintenance Services Pty Ltd (in liq) (receivers and managers..
[2013] FCA 1404
FEDERAL COURT OF AUSTRALIA
Lucas (liquidator of Queensland Maintenance Service Pty Ltd (in liq) (receivers and managers appointed) v Currie (receivers and managers of Queensland Maintenance Services Pty Ltd (in liq) (receivers and managers appointed) [2013] FCA 1404
Citation: Lucas (liquidator of Queensland Maintenance Service Pty Ltd (in liq) (receivers and managers appointed) v Currie (receivers and managers of Queensland Maintenance Services Pty Ltd (in liq) (receivers and managers appointed) [2013] FCA 1404 Parties: PETER ANTHONY LUCAS AND GLENN MICHAEL SHANNON AS LIQUIDATORS OF QUEENSLAND MAINTENANCE SERVICE PTY LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) ACN 104 887 103 v IAN CURRIE AND DANIEL MOORE AS RECEIVERS AND MANAGERS OF QUEENSLAND MAINTENANCE SERVICES PTY LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) ACN 104 887 103 and ZULLO FAMILY HOLDINGS PTY LTD AS TRUSTEE FOR ZULLO INVESTMENTS TRUST ACN 130 093 935 File number: QUD 783 of 2012 Judge: DOWSETT J Date of judgment: 20 December 2013 Catchwords: BANKRUPTCY AND INSOLVENCY – fixed and floating charge granted within 6 months of relation-back day – where liquidators sought to avoid enforcement of the charge as against themselves – where under s 588FJ(2) Corporations Act 2001 (Cth) charges which secure an advance are enforceable against a liquidator – where liquidator invoked s 588FJ(4) and contended the charge secured an advance used to discharge a debt owed to the charge – consideration of legislative purpose of s 588FJ(4) – consideration of “indirectly discharges a debt” – whether advances applied to indirectly discharge a deb – whether charge void against the liquidators in whole or in part Legislation: Corporations Act 2001 (Cth) ss 9, 566, 588FJ
Corporate Law Reform Act 1992 (Cth)
Corporate Law Reform Bill 1992 (Cth)
Companies (Victoria) Code s 452Cases cited: In re Yeovil Glove Co Ltd [1965] Ch 148 cited
The Commissioners of the State Bank of Victoria v Judson (1985) 3 ACLC 576 cited
Clayton’s Case (Devaynes v Noble) (1816) 1 Mer 532; 35 ER 768 cited
Cutherbertson & Richards Sawmills Pty Ltd v Thomas (1999) 30 ACSR 504 cited
Re French Caledonia Travel Service Pty Ltd (in liq) (2003) 204 ALR 353Eastman AJ and Malor J, Australian Bankruptcy Law and Practice (2nd ed, Law Book Company, 1940)
Ford H and Lee WA, Principles of the Law of Trusts Corporate, (Lawbook Co., subscription service) at [17.4610] (update 113)
Australian Law Reform Commission Report No 45, 1988Date of hearing: 14 March 2013 Place: Brisbane Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 71 Counsel for the Applicant: Mr C Wilson Solicitor for the Applicant: McInnes Wilson Lawyers Counsel for the First Respondent: The First Respondent did not appear Counsel for the Second Respondent: Mr D Quayle Solicitor for the Respondents: RJ Winter & Associates
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
QUD 783 of 2012
BETWEEN: PETER ANTHONY LUCAS AND GLENN MICHAEL SHANNON AS LIQUIDATORS OF QUEENSLAND MAINTENANCE SERVICE PTY LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) ACN 104 887 103
ApplicantAND: IAN CURRIE AND DANIEL MOORE AS RECEIVERS AND MANAGERS OF QUEENSLAND MAINTENANCE SERVICES PTY LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) ACN 104 887 103
First RespondentZULLO FAMILY HOLDINGS PTY LTD AS TRUSTEE FOR ZULLO INVESTMENTS TRUST ACN 130 093 935
Second Respondent
JUDGE:
DOWSETT J
DATE:
20 DECEMBER 2013
PLACE:
BRISBANE
REASONS FOR JUDGMENT
BACKGROUND
The applicants (the “liquidators”) are the liquidators of Queensland Maintenance Service Pty Ltd (in Liquidation) (Receivers and Managers Appointed) (“QMS”). In May 2011 the Australian Taxation Office (the “ATO”) issued amended assessments to QMS. As a result QMS was liable for unpaid tax and penalties in the amount of $28,666.176.00. On 23 June 2011, the second respondent (“ZFH”) (the sole QMS shareholder) owed QMS the sum of $2,672,982.22. Between that date and 23 October 2011, ZFH:
·assigned to QMS debts owed to it by Mr Eddie Groves, totalling $8,195,637.39;
·paid to QMS the sum of $4,486,586.28; and
·received from QMS the sum of $1,611,104.97.
As a result, on 23 October 2011, QMS owed $8,398,136.47 to ZFH.
On 24 October 2011 QMS granted a fixed and floating charge (the “Charge”) over its assets in favour of ZFH as trustee of the Zullo Investments Trust (the “Zullo Trust”). The Charge secured the payment by QMS of the “Secured Moneys”, that term being defined to mean:
… all liabilities due and/or payable from or by [QMS] to [ZFH], whether incurred or arising:
(a)for the accommodation of [QMS] and/or any other person at the express or implied request of [QMS];
(b)by way of assignment by any person to [ZFH]; and/or
(c)on any account or under any circumstances,
including:
(d)under, in relation to or in connection with any Security Agreement; and
(e)by way of principal, interest, cost, indemnity, tax, damages or monetary judicial order under, in relation to, in connection with or as a result of any default under that Security Agreement …. .
INSOLVENCY
On 3 January 2012 QMS was placed in administration. On 8 August 2012 the creditors resolved to wind up the company. This winding up proceeded as a creditors’ voluntary winding up until 18 December 2012 when Greenwood J made a winding up order. The first respondents are the receivers and managers of QMS, appointed by ZFH on 14 August 2012, pursuant to the Charge. They have indicated that they will abide the order of the Court. The chronology is therefore as follows:
May 2011 ATO issues amended assessments;
23 June 2011 ZFH owes QMS $2,672,982.22;
23 October 2011 QMS owes ZFH $8,398,136.47;
24 October 2011 QMS grants Charge in favour of ZFH;
3 January 2012 the present liquidators are appointed to be joint and several administrators;
8 August 2012 creditors resolve to wind up QMS;
14 August 2012 ZFH appoints receivers and managers pursuant to the Charge;
18 December 2012 Greenwood J orders that QMS be wound up in insolvency.
Counsel for ZFH invited me to refer to the judgment of Greenwood J in the liquidation proceedings in order to identify the “broad material facts” of the case. The liquidators did not oppose this course. It is not entirely satisfactory. There is no way of knowing whether a particular fact is a “broad material fact”, or the extent to which matters referred to by Greenwood J may have been, or may be in dispute. However the problem is probably more apparent than real. There seems to be no real dispute about the facts.
At [30]-[33] of his Honour’s reasons Greenwood J said, concerning the background to the matter:
30QMS was incorporated on 20 May 2003. Its sole director is Mr Zullo and he is the company secretary. The shares in QMS are held by Zullo Family Holdings Pty Ltd and Gelding Pty Ltd. The company was engaged in the provision of services to the ABC Learning Centres entity (“ABC”), described as cleaning, regulatory and general maintenance services, gardening work and construction and fit out services, around Australia. The entity conducting the undertaking of ABC Learning Centres went into receivership and administration in 2008. QMS continued to provide services to Goodstart Childcare Ltd (“Goodstart”) which acquired the childcare centres from ABC.
31In the report to creditors prepared by the administrators dated 31 July 2012, the administrators describe aspects of QMS’s relationship with Goodstart. On appointment, the administrators continued the trading operations of QMS particularly with a view to fulfilling obligations under the contract with Goodstart. On 13 January 2012, the first meeting of creditors was held. On 17 January 2012, the arrangement between Goodstart and QMS for the provision of property maintenance services was terminated by Goodstart effective from 17 February 2012.
32Colliers International was appointed as the new facilities management service provider. The administrators sought to discharge the immediate role of ensuring a high level of service to the childcare centres until the transition was effected.
33Employment arrangements with the majority of the staff of QMS were terminated leading up to 17 February 2012. Several key administrative staff were retained to assist in dealing with ongoing issues.
RELATED ENTITIES
As I have said, ZFH is now the sole shareholder of QMS. At all material times Frank Gerard Zullo was a director of both QMS and ZFH. He was also a director of:
·Australian Maintenance and Electrical Services Pty Ltd;
·Australian Hardfloor Maintenance Pty Ltd;
·QMS Property Developments Pty Ltd;
·Queensland Maintenance Services (Signs) Pty Ltd;
·QMS Cleaning Pty Ltd; and
·Bright Horizons Australia Childcare Pty Ltd.
Pursuant to s 9 of the Corporations Act 2001 (Cth) (the “Act”), for the purposes of s 588FJ the six companies named above are related entities of ZFH. In all but one of these companies, Mr Zullo was the only director.
THE TRANSACTIONS
This case focusses upon transactions which occurred between 24 October 2011 and 3 January 2012. I choose the latter date as it is the relation-back day. In fact, there were no relevant transactions after 23 December 2011. The financial records appear in the affidavits of Mr Lucas filed on 11 January and 28 March 2013 and in the affidavit of Mr Gallagher. Mr Lucas demonstrates that as at 23 October 2011, QMS owed ZFH $8,398,136.47. Between 24 October 2011 and 3 January 2012, ZFH advanced to QMS the sum of $2,205,000.00 as follows:
on 31 October 2011 $850,000.00;
on 18 November 2011 $85,000.00;
on 24 November 2011 $100,000.00;
on 1 December 2011 $60,000.00;
on 2 December 2011 $860,000.00;
on 6 December 2011 $100,000.00; and
on 14 December 2011 $150,000.00
$2,205,000.00.During that period ZFH received from QMS the sum of $2,074,173.97 as follows:
on or before 11 November 2011 $33,775.78;
on 11 November 2011 $850,000.00;
on 16 December 2011 $1,170,000.00; and
on 21 December 2011 $20,398.19
$2,074,173.97.In addition, QMS paid to ZFH’s related entities the following amounts:
·to Australian Maintenance Electrical Services Pty Ltd, $136,279.00;
·to Australian Hardfloor Maintenance Pty Ltd, $404,000.00;
·to QMS Cleaning Pty Ltd, $1,578,079.00;
·to QMS Property Developments Pty Ltd, $22,556.35; and
·to various of the related entities, a further sum of $310,700.00.
The total amount paid to ZFH’s related entities was $2,451,614.35. During the same period, QMS issued the following promissory notes in favour of the Zullo Trust, of which ZFH is trustee:
·on 17 November 2011, for $3,317,243;
·on 22 November 2011, for $1,825,455;
·on 22 November 2011, for $74,545; and
·on 23 December 2011, for $498,240.
Thus, after 23 October 2011, QMS:
·paid to ZFH $2,074,173.97;
·paid to ZFH’s related entities $2,451,614.35; and
·gave to ZFH promissory notes for $5,715,483.
The total of these amounts is $10,241,271.32. As I have said, in the same period, QMS received from ZFH the sum of $2,205,000. Between 24 October 2011 and 3 January 2012, QMS’s indebtedness to ZFH was purportedly reduced from $8,398,136.47 to $2,813,479.50. As at 24 October 2011 the balance in QMS’s Westpac account was $126,413.80. As at 3 January 2012 the balance was $67,725.13
SECTION 588FJ
The case has been conducted upon the basis that having regard to events prior to the winding up order, the relation-back day, for the purposes of s 588FJ of the Act, is 3 January 2012. In these proceedings the liquidators seek to establish, pursuant to s 588FJ, that to the extent that the Charge secures repayment of the advances totalling $2,205,000, it is void as against them. Section 588FJ relevantly provides:
(1) This section applies if
(a)a company is being wound up in insolvency; and
(b)the company created a circulating security interest in property of the company at a particular time that is at or after 23 June 1993 and:
(i)during the 6 months ending on the relation-back day; or
(ii)after that day but on or before the day when the winding up began.
(2)The circulating security interest is void, as against the company’s liquidator, except so far as it secures:
(a)an advance paid to the company, or at its direction, at or after that time and as consideration for the circulating security interest; or
(b)interest on such an advance; or
(c)the amount of a liability under a guarantee or other obligation undertaken at or after that time on behalf of, or for the benefit of, the company; or
(d)an amount payable for property or services applied to the company at or after that time; or
(e)interest on an amount so payable.
(3)Subsection (2) does not apply if it is proved that the company was solvent immediately after that time.
(4)Paragraphs 2(a) and (b) do not apply in relation to an advance so far as it was applied to discharge, directly or indirectly, an unsecured debt, whether contingent or otherwise, that the company owed to:
(a)the secured party; or
(b)if the secured party was a body corporate – a related entity of the body.
(5)Paragraphs 2(d) and (e) do not apply in relation to an amount payable as mentioned in paragraph 2(d) in so far as the amount exceeds the market value of the property or services when supplied to the company.
(6)…
Prior to 30 January 2012 s 588FJ expressly applied to floating charges. On that date its application was extended to include PPSA security interests. It is not necessary that I explain that term. The extension was effected by use of the term “circulating security interest” which term includes both PPSA security interests and floating charges. The definition of “floating charge” was unchanged. Section 9 of the Act provides that the term “… includes a charge that conferred a floating security at the time of its creation but has since become a fixed or specific charge”. The liquidators rely upon the fact that the Charge was, at its creation, a floating charge. The word “includes” suggests that the term “floating charge” has its ordinary meaning, save that it includes floating charges which have crystallized.
THE CHARGE
Clause 2.1 of the Charge provides:
The Chargor charges by way of equitable mortgage the Charged Property to the Chargee as a continuing security for payment by the Chargor of the Secured Moneys:
(a) (specific charge): by way of specific or fixed charge, in any:
(i)real property;
(ii)contractual consent or governmental consent relating to any asset, to the extent transferable;
(iii)insurance;
(iv)fixed or moveable plant, machinery and equipment;
(v)intellectual property;
(vi)intangible asset; and
(vii)marketable security; and
(b)(floating charge): by way of floating charge, in any other Charged Property, including any:
(i) stock-in-trade;
(ii) work-in-progress;
(iii) book debts; and
(iv) cash in hand and at the bank.
Clause 7.1 provides:
The floating charge created by this Charge shall automatically crystallise and subsequently operate as a specific Charge instantly and immediately:
(a)(notice): upon receipt by the Chargor of written notice given by the Chargee at any time prior or subsequent to a Default Event that this Charge shall crystallise, in relation to all or any part of the Charged Property as specified in the notice; and
(b)(event): upon the occurrence of a Crystallisation Event, in relation to all the Charged Property.
In cl 1.2, “Crystallisation Event” is defined to mean:
(a)any default under any paragraph captioned security interests, transfers, leases or book debts in the negative covenants provision by or in relation to the Chargor,
(b)any Default Event specified in any paragraph captioned attachment, security enforcement, receivership, insolvency, administration, liquidation, insolvency scheme or business cessation in the default events provision; or
(c)any preparation of or attempt to issue or effect any notice by or on behalf of the Commissioner of Taxation under section 218 or 255 of the Income Tax Assessment Act 1936, section 74 of the Sales Tax Assessment Act 1992 or any similar legislation [sic];
THE LIQUIDATORS’ CASE
The liquidators submit that as the floating charge was created during the six months ending on the relation-back day it is void as against them pursuant to s 588FJ. Section 588FJ was enacted pursuant to the Corporate Law Reform Act 1992 (Cth) (the “Law Reform Act”). The liquidators submit that the section was adopted in order to replace s 566 and so remedy a deficiency in the law demonstrated by the decision of the Court of Appeal in In re Yeovil Glove Co Ltd [1965] Ch 148. The decision in Yeovil was followed by Fullagar J in The Commissioners of the State Bank of Victoria v Judson (1985) 3 ACLC 576. Prior to the Law Reform Act s 566 provided:
A floating charge on the undertaking or property of the company created within 6 months before the commencement of the winding up is, unless it is proved that the company immediately after the creation of the charge was solvent, invalid except to the amount of any moneys paid to the company at the time of or subsequently to the creation of and in consideration for the charge together with interest on that amount at the rate of 8% per annum or at such other rate as is prescribed.
The liquidators submit that s 588FJ was designed to prevent unsecured debt being “recycled into secured debt” as allegedly happened in Yeovil and Judson. They further submit that this proposition is supported by the relevant explanatory memorandum and the second reading speech. Yeovil and Judson both concerned sections in similar terms to those of s 566. In Yeovil, a company was indebted to its bank, which indebtedness was partially secured by guarantees from the directors, and a legal charge in favour of the bank over certain property. The bank threatened to call in the overdraft. As a result the company executed a floating charge in favour of the bank over all of its undertaking, goodwill and other property. It was accepted that the pre-charge debt remained unsecured, probably because of the operation of the relevant analogue of s 566. The charge imposed no obligation on the bank to make any further advances. The company continued to operate, with the overdraft remaining at about the same level.
Subsequently, a receiver was appointed and eventually, there was a winding up order. The liquidator found insufficient assets to pay the secured and unsecured creditors. He asserted that the bank’s floating charge was invalid as against him pursuant to a provision similar in effect to s 566. This submission was based upon two propositions, the first being that there had been no consideration given, in a legal sense, for the charge, other than the bank’s immediate forbearance to call in the overdraft. The second proposition was that the rule in Clayton’s Case (Devaynes v Noble) (1816) 1 Mer 532; 35 ER 768 did not apply, so that the bank was bound to treat all payments received after the creation of the charge as devoted to post-charge indebtedness. Thus it was submitted that since the payments received after the creation of the charge were more or less equal to payments out by the bank, no “new money” had been provided by the bank, and so no moneys were secured by the charge.
The liquidator failed at first instance and on appeal. Concerning the consideration point, the Court concluded that the word “consideration” was not used in its strict sense, but as including subsequent payments made in reliance upon, and because of the existence of the charge. I do not understand the liquidators to challenge that proposition or its applicability in these proceedings. The second point was discussed by Harman LJ at 172-173. His Lordship said:
There arises at this point the consideration which has given me most trouble in this case, namely, that as the No. 1 account was carried on after as well as before the charge in precisely the same way, the bank would be entitled in accordance with the rule in Clayton’s Case … to treat payments in as being in satisfaction of the earliest advances made. The result is startling, for thus the bank pays itself out of moneys received subsequent to the charge for the whole of the company’s indebtedness to it prior to the charge, and which was admittedly not covered by it. The result is that the whole of the pre-charge indebtedness is treated as paid off, and the bank is left bound to set off against its post-charge advances only the excess received after satisfying the company’s pre-charge indebtedness. This would seem largely to nullify the effect of the section in the case of a company having at the date of the charge a largely overdrawn account with its bank, and which continues to trade subsequently. … It was, however, held by Romer J. in In re Thomas Mortimer, Ltd. … that Clayton’s Case … applied with the result stated, and I can see no escape from it, nor in spite of frequent pressing by the court did the appellant’s counsel put forward any alternative. …
At 174-5 his Lordship continued:
The fallacy in the appellant’s argument lies, in my opinion, in the theory that, because the company’s payments in to the bank after the date of the charge were more or less equal to the payments out by the bank during the same period, no “new “money” was provided by the bank. This is not the fact. Every such payment was in fact new money having regard to the state of the company’s accounts, and it was in fact used to pay the company’s creditors. That the indebtedness remained approximately at the same level was due to the fact that this was the limit set by the bank to the company’s overdraft. I can find no reason to compel the bank to treat all payments in after the charge as devoted to post-charge indebtedness. The law is in fact the other way. To cite again from the judgment of Romer J., with which I agree, he said: “Now I come to the last point of all; that is, as to whether this cash which was paid to the company by the bank to the amount of £51,000 has ever been repaid by the company to the bank. It is said that it has to the extent of £41,311, because admittedly the company has paid to the bank by way of cheques, and perhaps of cash, and so forth, that sum of money after the date of the debenture.
Now if it nothing else had been owing by the company but the sums from time to time advanced and paid by the bank on behalf of the company in cash after the date of the debenture then, of course, this £41,000 would have been applied in reduction of that amount and as repayment of that amount, but this seems to me a case of payment by a debtor to his creditor to whom either two debts are owing or to whom one debt is owing, part of which is secured and part of which is unsecured. Now that being so, as I understand the general law, it is open to the creditor to appropriate the payment made by his debtor to any part of the debt he likes, or to whichever of two debts, if there were two debts, that he prefers if the debtor himself in making the payment has not directed an appropriation; furthermore, as I understand the law, in cases between bankers and customers, or where there is a current account between parties into which moneys are from time to time paid, and from which moneys are from time to time withdrawn, in the absence of any express appropriation the creditor is presumed to appropriate payments into the accounts made by his customer in discharge of the earliest entries on the other side of the account.
As I have said the decision in Yeovil was applied by Fullagar J in Judson. His Honour was concerned with s 452 of the Companies (Victoria) Code which was in substantially the same form as s 566 prior to its amendment by the Law Reform Act.
The so-called rule in Clayton’s Case has been subject to stringent criticism. See for example Ford and Lee, Principles of the Law of Trusts, at 17.4610. However I do not understand the parties to submit that Yeovil was incorrectly decided. The liquidators now submit that the moneys advanced following creation of the Charge were indirectly applied in the discharge of unsecured debts owed to ZFH and related entities. Such indirect discharge is said to have involved the use of a fund “swollen” by the advances, in order to discharge unsecured debt. See ts 49 ll 32-33. The relevant unsecured debt owed to ZFH by QMS was that owing prior to the creation of the Charge. The unsecured debts owed to ZFH’s related entities appear generally to have been debts arising from dealings between QMS and those related entities. There appear to have been some loans by QMS to ZFH’s related entities, and some repayments by such entities to QMS. However neither party suggests that anything turns on these transactions.
ZFH’S CASE
ZFH submits that s 588FJ(2)(a) and s 588FJ(2)(b) apply unless s 588FJ(4) operates to “except” that “exception” and that:
… on the proper construction of s 588FJ(4) the section calls for an inquiry into each advance to ascertain the extent to which (if to any extent) the amount secured by the Charge is reduced – that is, by way of example, if an advance under the charge is made in the sum of $100,000 and before that advance is fully disbursed, a payment in discharge of an unsecured debt owed to [ZFH] or a related entity, in the sum of say, $10,000 is made, the result of the subsection is that the charge secures $90,000.
It then submits, apparently in anticipation of the liquidators’ case, that:
It may be that [the liquidators] point to the matters set out in paragraph 4 above and by reference to those summaries of activities ask the Court to infer the engagement of s 588FJ(4) (en mass) [sic] (that is, in respect of all of the eight advances made under the charge) with the result that the charge secures nothing.
In para 4 of its submissions ZFH refers to the total amount lent by ZFH to QMS, and the total amount paid to ZFH and its related entities by QMS. ZFH submits that it would be “harsh” if ZFH were left with no security for money which it unarguably advanced, and facing a preference claim in respect of payments received. This submission is little more than an attack upon the policy of the Act. ZFH then submits that if that is the liquidators’ approach:
… it impermissibly imports notions from the law concerning unfair preferences and uncommercial transactions that are inapposite in the present circumstances and contrary to the terms of the section.
This submission has not been developed in any detail.
ZFH also submits that:
The section is in terms, only directed to floating charges whereas the charge in question was both fixed and floating. It is submitted that whatever else is declared or ordered, the charge cannot be void so far as it was fixed on identifiable property.
ZFH then identifies “principles” said to emerge from a consideration of the cases dealing with provisions such as s 588FJ. However all but one of the cases relate to s 566 or similar sections. That provision now relates only to charges created prior to 23 June 1993. The propositions which ZFH identifies are as follows:
·such provisions were designed to prevent companies from creating floating charges to secure past debts or for moneys which do not go to swell their assets and become available for creditors;
·the exception in s 588FJ(2)(a) purports to provide an exception where funds are lent in order to revitalise a failing company;
·transactions must be looked at from a business point of view;
·the words of the section are not to be strained in order to invalidate bona fide honest transactions carried out in the usual course of business;
·the purpose of the section is to separate bona fide honest transactions carried out in the normal course of business from charges and guarantees designed to withdraw funds from the control of a liquidator and the winding up, and to provide money or security for the benefit of certain creditors or shareholders;
·each case is to be judged on its own facts;
·it is necessary to look at the substance, not merely the form, of the transactions and to identify the purpose of the Charge; and
·the question is whether there has been a “ ‘transparent subterfuge’ whereby a hopeless [sic] insolvent company secured the advance of money provided to procure the payment to certain directors (and a guarantor) of sums due to them in preference to other creditors of the company”.
ZFH concedes that:
… the charge is void as against the [liquidators] except, relevantly, so far as it secures advances paid to QMS (or at its direction) at or after the time the charge was granted and as consideration for the charge and interest thereon … .
ZFH submits that the relevant advances were made “as consideration for” the Charge. As I have said the decision in Yeovil demonstrates that in this context, the notion of consideration has a special meaning. ZFH accepts that:
… an advance in consideration of the creation of a charge is not saved to the extent it was applied to discharge an unsecured debt owed to the chargee or to a related entity of the chargee.
ZFH cites an article by Mr Zolly Singer, entitled “Invalidation of Antecedent Transactions under the Corporate Law Reform Act 1992”. It appears at (1994) 2 Insolv LJ 36. The passage is as follows:
Subsection (4) aims to prevent a “preference” being given to an unsecured creditor where the unsecured creditor agrees to make an advance or to further extend credit on condition that the debtor give security for the further advance or continued credit, the advance then being used to pay off or reduce the unsecured debt thereby converting the unsecured creditor to a secured creditor.
ZFH submits that whilst the section generally focusses on the validity of a charge, s 588FJ(4) focusses upon advances made under such charge. However I note that ss 588FJ(2)(a) and 588FJ(b) are also concerned with advances. ZFH submits that an advance is only exposed to the avoiding effect of s 588FJ(2), “so far as it was applied to discharge relevant unsecured debt”. It submits that an approach:
… which determines the application of subs (4) by considering in an overarching way, the total quantum of post charge advances against a total quantum of post-charge payments against relevant unsecured indebtedness, is contrary both to the plain meaning of the words in the section and to its intended operation.
ZFH submits that s 588FJ was designed to encourage those who want to capitalize failing companies, and those who are willing to commit funds to avoid insolvency. I doubt the correctness of that proposition. The section aims to limit the circumstances in which some charges are enforceable in the liquidation of insolvent companies. ZFH submits that “the inquiry needs to fix on each advance”. Finally it is said that so far as payments made after the Charge are concerned, s 588FJ(4) can have no operation:
… because the charge rendered all debts between it and QMS secured once it was granted. Thus all payments to [ZFH] after the Charge were in reduction of secured indebtedness.
This submission simply dismisses the liquidators’ submission that s 588FJ was enacted to avoid the consequences of the approach taken in Yeovil and Judson, and that a payment made after the creation of a charge may indirectly discharge an earlier unsecured debt.
ZFH then seeks effectively to reconstruct the QMS accounts with a view to demonstrating the way in which the moneys advanced to QMS by ZFH were applied, having regard to indebtedness prior to the Charge and amounts coming to QMS other than from ZFH. With some justification, the liquidators submit that this matching exercise involves the arbitrary re-ordering of transactions. In any event that exercise has no relevance to the proper construction of s 588FJ. Such construction may dictate the correct approach to matching the application of funds to the discharge of debts. To the extent that the matching exercise identifies payments, or parts of payments derived from the ZFH advances and applied in discharge of an unsecured debt owed to ZFH or a related entity, such applications will have been in direct discharge of unsecured debts. The matching exercise will say nothing about any indirect discharge of unsecured debt.
THE ENACTMENT OF S 588FJ
Prior to the Law Reform Act, s 566 and earlier similar provisions had regulated the validity of floating charges as against liquidators. The decision in Yeovil demonstrated perceived problems in the operation of that section. In the explanatory memorandum which accompanied the Corporate Law Reform Bill 1992 (Cth) it was said that:
1068Proposed section 588FJ is intended to have the same effect as existing section 566, but with improvements to the drafting as recommended in the Harmer Report.
1069Section 566 of the Corporations Law presently provides that a floating charge on the undertaking or property of the company, created within six months before the commencement of the winding up is, unless it is proved that the company, immediately after the creation of the charge, was solvent, invalid. An exception relates to any moneys paid to the company at the time of or subsequently to the creation of the charge and in consideration for the charge (together with interest on that amount at the rate of 8% or such other amount is prescribed).
The “Harmer Report” is Australian Law Reform Commission Report No 45, 1988. Paragraph 1070 of the explanatory memorandum deals with s 588FJ(2)(d) and (e). Paragraph 1075 deals with s 588FJ(6). The Second Reading Speech also makes it clear that the insolvency reforms in the Bill resulted from the Harmer Report. At para 689 of that report there is a reference to s 452 of the companies legislation as it then was (subsequently s 566), pointing out that it had the effect of avoiding a floating charge created within six months before the relation-back day, unless the company was solvent immediately after the creation of the charge, or except to the extent that the charge secured money paid to the company at the time of, or subsequent to the creation of the charge. The report proposed that the section be amended in order to bring about the following changes:
•A charge should be exempt from invalidity if it secures not only money paid to the company but also money paid at the direction of the company. This preserves commercial flexibility without disturbing the intention of the section.
•In two additional situations, commercial considerations suggest that a charge should not be invalidated:
-where the charge secures payment of the amount of any liability under a guarantee or other obligation undertaken by the company at the time of or after the creation of the charge; and
-where the charge secures payment of the amount of the market value of goods or services supplied to the company at the time of or after the creation of the charge together with interest.
The report continued:
As stated in the DP 32 there is a very strong case for the exemption to apply to a charge which is security for the amount of the market value of goods or services sold or provided to the company at or subsequent to the time of the creation of the charge.
At para 694 the report stated, concerning draft section AT9(3) which appears to have been the genesis of s 588FJ:
Section AT9(3) is designed to prevent the most obvious of “preferences”, namely where an unsecured creditor agrees to make an advance or continue to extend credit but only on the condition that the debtor give security for the further advance or continued credit and the advances then used to satisfy or reduce the existing unsecured debt thus converting the creditor from being unsecured to secured. The section should enable transactions of the type resorted to in the Commissioners of the State Bank of Victoria v Judson to be properly avoided.
Section AT9 was in the following form:
(1) This section applies where –
(a) a company is being wound up in insolvency; and
(b) within 6 months immediately before the relevant day, the company created a floating charge on property of the company.
(2)The charge may be avoided by the liquidator except to the extent that the charge is security for –
(a)an advance of money paid to or at the direction of the company at the time of or after the creation of the charge and interest on that advance;
(b)payment of the amount of a liability under a guarantee or other obligation undertaken on behalf of or for the benefit of the company at the time of or after the creation of the charge; or
(c)payment of the amount of the market value of property or services, or both, sold or supplied to the company at the time of or after the creation of the charge and interest on that amount.
(3)A charge as mentioned in paragraph (2)(a) may be avoided by the liquidator to the extent that the advance was applied to satisfy or discharge directly or indirectly an unsecured debt or liability, whether contingent or otherwise, for which the company was liable to –
(a)the person in whose favour the charge was created; or
(b)if, the charge was created in favour of a company – a related person of the company.
(4)Subsections (2) and (3) do not apply if it is proved that the company, immediately after the creation of the charge, was able to pay its debts.
(5)If –
(a)a debt or liability for which the charge was security is satisfied or discharged in full or in part from property of the company within 6 months immediately before the relevant day or on or after that day; and
(b)but for the satisfaction or discharge, the charge would have been avoidable under subsection (2),
the company may, at the suit of the liquidator, recover from the person who is entitled to the benefit of the charge an amount equal to the amount received or recovered by the person in or toward satisfaction or discharge of the debt or liability in relation to which the charge, if it had subsisted at the relevant day, would have been avoidable, less any costs and expenses incurred by the charge in enforcement of the charge.
The parties referred me to the decision of this Court in Cutherbertson & Richards Sawmills Pty Ltd v Thomas (1999) 30 ACSR 504. In that case the Full Court considered s 588FJ, primarily s 588FJ(2)(c). However, at p 512 their Honours said:
… there is considerable merit in the appellant’s submission, which we accept, that s 588FJ(4) enacts a rule of convenience in relation to an advance and interest on such an advance, referred to respectively in s 588FJ(2)(a) and (b), regardless of whether the advance was for the benefit of the company.
I shall return to that observation at a later stage. I note also that in Re French Caledonia Travel Service Pty Ltd (in liq) (2003) 204 ALR 353, Campbell J of the New South Wales Supreme Court (as his Honour then was) considered the operation of the rule in Clayton’s Case. In particular at [33]-[34] his Honour said:
33Clayton’s Case continues to be part of the law in Australia: Australia and New Zealand Banking Group Ltd v Westpac Banking Corp (1988) 164 CLR 662 at 676 … . It operates by providing a presumption concerning the debtor’s intention in making a payment on a current account, which operates only in the absence of some other agreement or direction or reason for not applying the presumption … . Appropriation of payments within a current account is a task which needs to be performed, even if the current account is no longer seen as constituting a series of debts which can be sued on.
34…
If a section such a 588FJ of the Corporations Act 2001 (Cth), invalidates a floating charge given by a company within six months of the commencement of its winding up, except to the extent of any cash paid to the company at the time or subsequently to the creation of the charge, the amount of “cash paid to the company” by a financier with whom the company already has a current account in overdraft is decided, in accordance with Clayton’s Case, by treating payments made by the company as appropriated to the earliest advances, and each withdrawal from the account as a fresh advance, regardless of whether the net balance of the account increases … .
As Harman LJ pointed out in Yeovil, a debtor may appropriate repayments to particular debts owed to the creditor. If the debtor does not do so, the creditor may. In the case of a current account, if neither has appropriated a payment, then the rule in Clayton’s Case will generally apply. There may, in the present case, be reason to doubt whether the account as between QMS and ZFH was a current account in the relevant sense. The speed with which QMS went from being a substantial creditor of ZFH to being a substantial debtor might suggest to the contrary. However that point has not been argued.
Before returning to the facts of this case, I should make some observations concerning the construction of s 588FJ. First, the section does not expressly invite consideration of the motive or intention of the chargee or chargor. Rather, the section contemplates a retrospective consideration of the relevant transactions. Thus, in applying s 588FJ(2)(a), one looks to see if there was, in fact, an advance to the company or at its discretion, whether the advance occurred at a relevant time, and whether it was made as consideration for the Charge. In applying s 588FJ(4), one looks to see whether the chargor applied the advance, or any part of it in discharging, directly or indirectly, an unsecured debt owed to the chargee or a related entity. If there has been a relevant advance and a relevant discharge of debt, the question is as to the relationship between them.
Obviously enough, the words “directly or indirectly” should not be given an unduly narrow meaning. On the other hand, too liberal an interpretation might discourage genuine attempts to rescue companies in financial distress. Whilst any direct discharge of debt will generally be easy to recognize, an indirect discharge of debt may be more difficult to identify. The mechanical aspects of a transaction may indicate that an advance has been so applied. I have in mind considerations such as timing, the amount of the advance as compared to the discharged debt, the availability of other funds, the existence of other debts, perhaps the intentions and interests of the person appropriating the advance (and/or associated persons including, possibly, the chargee) and any alternative ways in which the advance might have been appropriated.
THE DEALINGS BETWEEN QMS AND ZFH
As Campbell J pointed out in French Caledonia Travel, in a current account, appropriation must occur. In the present case QMS’s appropriations of the ZFH advances and its appropriations of the payments made to ZFH are both potentially relevant. A potential problem arises from the fact that when QMS deposited the advances in its Westpac account, they became mixed with other amounts paid into that account, presumably derived by QMS in carrying on its business. In particular, two very large amounts were received from “Goodstart Ltd”. I infer that this was the company referred to by Greenwood J in his reasons set out above, or an associated company. His Honour observed that Goodstart had acquired child care centres previously conducted by the “ABC Learning Centres entity”. QMS had provided services to that entity and continued to supply such services to Goodstart until 17 February 2012. On 11 November 2011, Goodstart paid QMS the sum of $2,199,499.36 and, on 16 December 2011, the sum of $2,678,235.22. On 11 November 2011, QMS paid ZFH the sum of $850,000 and, on 16 December 2011, the sum of $1,170,000. These two payments made up all but about $54,000 of the amounts paid to ZFH after the creation of the Charge. Absent the payment by Goodstart on 11 November 2011 and given the other payments made at about the same time, there would have been virtually no available funds from which to pay ZFH. Similarly, on 16 December 2011, there would have been virtually no funds from which to pay ZFH, had Goodstart not made its payment. It is difficult to avoid the conclusion that the availability of the Goodstart funds and the payments to ZFH were related in some way.
In connection with QMS’s application of ZFH’s advances, a similar problem arises. The advances were mixed with other funds and then applied in discharge of debts owed to ZFH’s related entities, to unrelated entities and to ZFH. The advance of $850,000 on 31 October 2011 seems to have coincided with a large outgoing of $737,044.92, apparently paid to a supplier and not to a related entity. At about the same time $160,000 was paid to related entities and another $54,000 was advanced to QMS by one of ZFH’s related entities. The other very large advance by ZFH to QMS was made on 2 December 2011 in the amount of $860,000. On the same day, a payment of $921,872.38 was made to a supplier. Thus it seems that the larger advances were made at times when major outgoings were anticipated whilst the major payments to ZFH seem to have reflected high points in QMS’s cash position. All of this must be considered in light of the fact that Mr Zullo was a director of QMS, ZFH and the related entities, in most cases the sole director.
The difficulty caused by the mixing of funds is that QMS’s payments to the related entities, ZFH and the unrelated creditors were probably derived partially from ZFH advances and partially from other funds. A rough calculation suggests that of total deposits of about $9.7m, ZFH contributed $2,205,000, or about 23%. Section 588FJ requires identification of the ways in which the ZFH advances were applied by QMS.
YEOVIL, JUDSON AND THE PRESENT CASE
The liquidators submit that the dealings between QMS and ZFH are essentially the same as those between banker and customer as considered in Yeovil and in Judson, and that the purpose underlying the enactment of s 588FJ was to avoid the conversion of an unsecured debt into a secured debt. This submission suggests a very broad approach to the construction of s 588FJ. For that reason alone, it invites careful, if not sceptical consideration. The submission seems to be that the correct identification of the unsatisfactory aspects of the decisions in Yeovil and Judson will assist in construing s 588FJ. In Yeovil and Judson the effect of the floating charge was that future advances were secured, but the overdraft debt, incurred prior to the grant of the charge, remained unsecured because of the effect of a section similar to s 566 in its pre-Law Reform Act guise. Moneys received from sources other than the bank were received in discharge of relevant debts owed to the customer but were then deposited into the overdraft account and so appropriated to the reduction of the pre-charge overdraft. At the same time, the bank continued to honour cheques up to the overdraft limit. Honouring a cheque might increase the overdrawn amount but could not reduce it. Thus only funds other than the bank’s funds went in reduction of the pre-charge overdraft. Pursuant to the rule in Clayton’s Case, that was the effect of a deposit of funds into the account.
In the present case there is, as in Yeovil and Judson, a pre-charge debt. Prior to the Charge, the debt was unsecured. ZFH faintly submits that repayment of that debt is now secured by the Charge. That submission is incorrect. The Charge is void as against the liquidators, save to the extent that s 588FJ(2)(a) applies to it, and s 588FJ(4) does not apply. ZFH’s pre-charge debt was not advanced at or after the creation of the Charge, nor was it advanced as consideration for the Charge, in the broader sense adopted in Yeovil.
ZFH also submits that the Charge was originally both fixed and floating and so was not a floating charge for the purposes of s 588FJ. In my view to the extent that it was floating, it was a floating charge and to that extent, s 588FJ applies. The Charge was a floating charge as concerns book debts, cash in hand and cash at bank. ZFH also submits that the Charge has now crystallized, and that s 588FJ can no longer apply. This submission overlooks the fact that the definition of the term “floating charge” includes a charge which was a floating charge at the time of its creation but has crystallized. In the present case, as in Yeovil and Judson, there are post-charge advances which, absent s 588FJ, would be secured pursuant to the Charge.
The present case differs from Yeovil and Judson in that in this case, QMS’s incoming receipts (from sources other than ZFH) were not immediately appropriated to the reduction of debts owed to ZFH. They were deposited into the Westpac account. Funds in that account included funds advanced by ZFH and funds derived from other sources. QMS appropriated them to the discharge or reduction of debts by cheque or other form of transfer. In Yeovil and Judson, the post-charge advances were made and appropriated when the customer drew cheques and the bank honoured them.
Finally, as I have previously observed, in Yeovil and Judson only the customer’s receipts from sources other than the bank were used to discharge the bank’s unsecured pre-charge debt. For as long as any part of that amount remained owing, all cheques and other transfers honoured by the bank were paid using the bank’s money. In the present case, it seems probable, or at least possible that in paying ZFH, related entities and other creditors QMS used mixed funds. I shall return to this matter.
In this case the liquidators’ reliance on Yeovil and Judson seems to depend upon an overall assessment of the transactions. After the creation of the Charge ZFH advanced $2,205,000 to QMS. QMS subsequently paid to ZFH the amount of $2,074,173.97. Meanwhile, ZFH’s related entities had received from QMS the sum of $2,451,614.35. ZFH also derived the benefit of the promissory notes to the extent of $5,715,483. The liquidators submit that ZFH and its related entities have derived a substantial benefit from the transactions involving the advances made after the creation of the Charge.
CONSTRUCTION OF S 588FJ
I accept that s 588FJ is, broadly speaking, designed to avoid the “conversion” of unsecured debt into secured debt in certain circumstances. The section attacks the secured status of a debt, not the debt itself. Of course, the consequences of losing security may be very serious. The section is primarily concerned with the validity of a floating charge which is created at a time when the company may be approaching insolvency. The notion of “relation-back” is derived from the law of bankruptcy. A sequestration order was taken to “relate back” to the earliest available act of bankruptcy within the six months preceding the presentation of the petition in bankruptcy. See Eastman AJ and Malor J, Australian Bankruptcy Law and Practice (2nd ed, Law Book Company, 1940) at 255. Broadly speaking, s 588FJ seeks to ensure that a floating charge created in the six months before the relation-back day secures against the liquidator, only advances made on or after the date of the creation of the charge and from which the company derives a tangible benefit. However the section does not invite an overall comparison of the company’s position with and without the purportedly secured advance. That is the point which the Full Court made in Cuthbertson concerning s 588FJ. Rather, the section directs attention to the way in which any advance has been applied. Such a charge will not secure an advance which has been applied in discharge, directly or indirectly, of an unsecured debt owed to the chargee or to a related entity of the chargee.
RELEVANT APPLICATIONS OF FUNDS
In effect the liquidators submit that, in this case, QMS has:
·applied possibly mixed funds in discharge of unsecured debts owed by QMS to ZFH’s related entities;
·applied possibly mixed funds in discharge of debts owed by QMS to unrelated entities; and
·applied possibly mixed funds in discharge of debts owed by QMS to ZFH.
In this context, I use the term “mixed funds” to describe amounts in the Westpac account into which the ZFH advances were deposited, as were moneys derived by QMS from other sources.
In the case of payments in discharge of debts owed to ZFH, Mr Gallagher said that he intended that they be applied against the oldest debts owed by QMS to ZFH, meaning that such repayments were to be applied against the unsecured pre-charge debt. Mr Gallagher said that, in so doing, he was following his understanding of standard accounting practice. In the limited context of the present case, that course of action may appear to have been unfavourable to ZFH in that it exposed that company to the possible effects of s 588FJ. However, as was pointed out in argument by ZFH, the Charge was fixed as to certain assets and to that extent, it is not affected by s 588FJ. Thus, ZFH may have access to other assets in order to satisfy any post-charge debts.
Apart from the above applications, I am also presently concerned with a further amount of $55,000 paid by ZFH to QMS but not deposited in the Westpac account. It was paid to one of ZFH’s related entities. Clearly, the sum is caught by s 588FJ. ZFH does not submit to the contrary. I am also concerned with the effect of the promissory notes. To this point, I have not considered the relevance of s 588FJ(2)(b). The operation of that provision must also be addressed.
As to the amounts paid to ZFH’s related entities, to the extent that such amounts were derived from the ZFH advances, they were directly applied in discharge of the unsecured debts of those entities. The amount secured by the Charge must be reduced accordingly. However I cannot presently identify the extent to which such payments were derived from funds advanced by ZFH, as opposed to funds derived by QMS from other sources. ZFH made some attempt to perform this exercise, but those attempts were, as I have previously observed, unconvincing. The liquidators seem not to have considered the matter. However, for reasons which follow, it does not matter.
I turn to the payments made to ZFH. Such payments may also have been from mixed funds. Mr Gallagher swore that he intended that the payments be applied against the unsecured pre-charge debt. He does not say that he so appropriated the amounts, but ZFH’s conduct in relying on his affidavit indicates that it has proceeded on that basis. I have explained why such a course may be understandable, notwithstanding its apparent effect in this case. To the extent that such payments were derived from the ZFH advances, the charge is void as against the liquidators.
The remaining question is, in effect, whether those parts of the ZFH advances not paid directly to ZFH or its related entities, were nonetheless applied in the indirect discharge of unsecured debts owed to ZFH or its related entities. Although the liquidators have not expressly articulated the indirect way in which such discharge may have occurred, they at least imply that it was in a way similar to that addressed in Yeovil and Judson. In those cases, pre-charge unsecured debt was discharged from funds derived from sources other than the bank, whilst the bank funded post-charge payments. In the present case, it seems that funds advanced by ZFH have been applied, when QMS was otherwise short of funds, in discharging debts owed by QMS to both ZFH’s related entities and unrelated creditors. When QMS had, or was expecting a substantial influx of funds, moneys were paid to ZFH and applied against the unsecured pre-charge debt. There is nothing surprising about such an approach. However, to the extent that QMS funds derived from the ZFH advances were so applied, such application relieved QMS from applying funds from other sources to such payments. That relief eventually allowed QMS to make payments to ZFH from funds other than those advanced by ZFH, possibly mixed with funds derived from the advances. In other words, to the extent that QMS’s payments to ZFH were derived from ZFH’s advances, the payments were applied in direct discharge of ZFH’s unsecured pre-charge debt. To the extent that the payments came from sources other than ZFH’s advances, they were made available as the result of such advances being used in the reduction of other QMS debt owed to ZFH’s related entities or unrelated creditors. Thus the advances were applied in the indirect discharge of ZFH’s unsecured pre-charge debt.
My conclusions are supported by the temporal proximity of the large advances and repayments to large outgoings and receipts. Further, the relevant transactions occurred over a period of little more than seven weeks. It seems probable that the smaller advances and repayments were similarly related to QMS’s cash position.
The nett reduction in the credit balance of the Westpac account as between 24 October 2011 ($126,413.80) and 3 January 2012 ($67,725.13) demonstrates that virtually all moneys advanced by ZFH, and paid into that account were paid out prior to 31 December 2011. As at 12 December 2011, the account balance was $52,699.24. That balance, plus two deposits, each of $150,000, on 14 December 2011 seem to have covered amounts paid between 12 and 14 December, leaving a credit of about $17,000. One of those deposits was the last ZFH advance. The amount of $17,000 was more than exhausted before the large deposit on 16 December to which I have referred. It follows that whilst parts of the ZFH advances were applied in direct payment of unsecured debts owed to ZFH and to its related entities, the amount so paid to the related entities and amounts paid to the unrelated creditors of QMS were also applied in the indirect discharge of the unsecured pre-charge debt owed to ZFH, as was the further amount of $55,000 to which I have referred.
To the extent of the ZFH advances, the Charge is void as against the liquidators. The Charge is similarly void to the extent that it secures interest on such advances.
I assume that ZFH asserts that performance of the promises to pay in the promissory notes is secured by the Charge. The circumstances in which they were created are not known. However there is no suggestion that any additional moneys were advanced to QMS in connection with such creation. The promissory notes may simply acknowledge and promise to repay part of the pre-charge debt. Alternatively, they may evidence the release of some part of that debt, followed by a fresh promise to pay. In the former case, there would have been no new advance to attract the operation of s 588FJ(2)(a). Thus the Charge would be void to the extent that it relates to the amounts in question. If the notes reflect some sort of “roll over” of the unsecured pre-charge debt, then any such new “advance” must have been applied in discharge of the unsecured debt which it replaced, in which case it would be caught by s 588FJ(4). It is also possible that the promissory notes “rolled over” post-charge advances rather than pre-charge advances. That proposition seems unlikely, given that the amounts paid by QMS were applied against the unsecured pre-charge debt. Further, ZFH’s case was that the post-charge advances were, in any event, secured. Thus no point would have been served by “retiring” any part of those advances in order notionally to re-advance the same sum pursuant to the promissory notes. There is, in any case, no evidence to support such proposition.
ORDERS
I shall hear submissions as to forms of order and costs.
I certify that the preceding seventy-one (71) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett. Associate:
Dated: 20 December 2013
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