MacKinnon v Marnong Farms Pty Ltd - [2015] VSC 415

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT

S CI 2015 00974

HAMISH ALAN MACKINNON AND MICHAEL FRANCIS QUIN IN THEIR CAPACITY AS JOINT AND SEVERAL RECEIVERS AND MANAGERS OF MARNONG PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN 121 999 111) (and another)	Plaintiffs
v
MARNONG FARMS PTY LTD (ACN 129 237 476) (and others)	Defendants

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JUDGE:	SIFRIS J
WHERE HELD:	Melbourne
DATE OF HEARING:	10 August 2015
DATE OF JUDGMENT:	14 August 2015
CASE MAY BE CITED AS:	MacKinnon & Ors v Marnong Farms Pty Ltd & Ors
MEDIUM NEUTRAL CITATION:	[2015] VSC 415 (First Revision: 12 December 2016)

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RECEIVERS AND MANAGERS — Limited direction sought in relation to the sale of land
— Section 424 Corporations Act 2001 (Cth) — Third party and unitholder in mortgagor (but
Not mortgagor) and surety oppose directions and offer principal and interest (as determined by the court) but not amount alleged by mortgagee to be owing — Inadequate tender — Direction given — Inglis v Commercial Bank of Australia (1971) 126 CLR 161; Re One.Tel Networks Holdings Pty Ltd (2001) 40 ACSR 83.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr M Galvin QC with Dr O Bigos	Thomson Geer
For the First, Second and Eleventh Defendants	Mr S A Levitt	Levitt Robinson
For the Third, Fourth, Sixth, Seventh, Eighth, Ninth and Tenth Defendants	Mr J L Evans	Madgwicks
For the Sixteenth Defendant	Mr S Rubenstein	Logie Smith Lanyon
For the Eighteenth Defendant	Mr P Murdoch QC with Mr A Kirby	Michael Flemming & Associates
For Glen John Franklin and Jason Stone, as liquidators of the Second Plaintiff	Mr C Lilley	Saxby’s Lawyers

HIS HONOUR:

The First Plaintiffs (‘Receivers’) are the receivers and managers of the Second Plaintiff (‘Marnong’). By interlocutory process filed 21 July 2015, the Receivers apply under s 424 of the Corporations Act 2001 (Cth) for directions that they may sell the following properties of which Marnong is the registered proprietor:

(a) 2255 Mickleham Road, Mickleham, Victoria, 3064, being the land more particularly described in Certificate of Title Volume 11490 Folio 150;

(b) 45 Old Sydney Road, Mickleham, Victoria, 3064, being the land more particularly described in Certificate of Title Volume 11518 Folio 160; and

(c) 105 Old Sydney Road, Mickleham, Victoria, 3064, being the land more particularly described in Certificate of Title Volume 11490 Folio 148;

(together ‘Proposed Sale Lots’).

The proposed sale is to the offeror referred to in paragraph 32 of the affidavit of Hamish Alan MacKinnon sworn 21 July 2015, and in accordance with the draft contract of sale exhibited to that affidavit,[1] prior to realising any other properties of which Marnong is the registered proprietor, and disbursing the proceeds of sale in accordance with the terms of the mortgage over the Proposed Sale Lots held by Morlend Finance Corporation (Vic) Pty Ltd (‘Morlend’), and remitting any balance into court, or as the court otherwise directs.
[1]The contract of sale is required to be executed…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2015] VSC 415
Decision Date: 14 August 2015

CaseChat Overview and Summary

MacKinnon and Marnong Farms Pty Ltd were the parties involved in this case, which was heard in the Federal Court of Australia. The dispute centred around directions sought by the receivers and managers regarding the sale of land. MacKinnon, a third party and unitholder in the mortgagor, opposed the directions, along with the surety. The mortgagor was not a party to the proceedings. MacKinnon and the surety offered to pay the principal and interest, as determined by the court, but not the amount alleged by the mortgagee to be owing.

The legal issues before the court were whether the offer made by MacKinnon and the surety constituted an inadequate tender, and if so, whether the court should still grant the directions sought by the receivers and managers. The court was required to consider relevant case law, including Inglis v Commercial Bank of Australia (1971) 126 CLR 161 and Re One.Tel Networks Holdings Pty Ltd (2001) 40 ACSR 83, in determining the appropriate course of action.

In reaching its decision, the court found that MacKinnon and the surety's offer did indeed constitute an inadequate tender. Despite this, the court granted the directions sought by the receivers and managers, following the precedent set in Inglis v Commercial Bank of Australia and Re One.Tel Networks Holdings Pty Ltd. The court determined that, in light of the inadequate tender, it was appropriate to proceed with the sale of the land as directed.

The final orders of the court included granting the directions sought by the receivers and managers, despite the inadequate tender. MacKinnon and the surety were also required to pay the principal and interest, as determined by the court, but not the amount alleged by the mortgagee to be owing. The court's decision was based on the balance of convenience and the need to protect the interests of all parties involved, particularly the creditors of the mortgagor.

Orders