Marsden v DCL Developments Pty Ltd (Receivers and Managers Appointed) (No 2)
[2016] NSWSC 840
•21 July 2016
Supreme Court
New South Wales
Medium Neutral Citation: Marsden v DCL Developments Pty Ltd (Receivers and Managers Appointed) (No 2) [2016] NSWSC 840 Hearing dates: 21 July 2016 Date of orders: 21 July 2016 Decision date: 21 July 2016 Jurisdiction: Common Law Before: McCallum J Decision: Reasons for rulings given during argument as to interim orders
Catchwords: INJUNCTIONS – where interim injunction granted restraining receivers from performing their functions in accordance with their appointment on conditions calculated to provide transparency as to the ongoing conduct of the business as a going concern pending expedited final hearing – where each party alleged breaches of the interim regime – receivers seeking order requiring defendants to respond “fully and honestly to questions reasonably asked” during inspections of the property and not to engage in “intimidatory tactics such as following delegates around with a video camera” – inappropriateness of involving court in ongoing supervision of unhappy commercial relationship Cases Cited: Marsden v DCL Developments Pty Ltd (Receivers and Managers Appointed) [2016] NSWSC 823 Category: Procedural and other rulings Parties: Peter William Marsden (in his capacity as Joint & Several Receiver and Manager of DCL Developments CAN 068 138 643 (Receivers and Managers appointed) (First Plaintiff)
Richard Andrew Stone (in his capacity as as Joint & Several Receiver and Manager of DCL Developments CAN 068 138 643 (Receivers and Managers appointed) (Second Plaintiff)
Andrew Bowcher (in his capacity as Joint & Several Receiver and Manager of DCL Developments CAN 068 138 643 (Receivers and Managers appointed) (Third Plaintiff)
DCL Developments (Receivers & Managers appointed) (1st Defendant)
Stuart Howe (2nd Defendant)
Linda Howe (3rd Defendant)Representation: Counsel:
Solicitors:
B Katekar (Plaintiffs)
J Halley SC and T Boyle (Defendants)
Gadens Lawyers (Plaintiff)
Jackson & Associates (Defendants)
File Number(s): 2016/176049
Judgment
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HER HONOUR: These proceedings came before me as duty judge in late June 2016. On 20 June 2016, I granted an application by the defendants for injunctive relief, for the reasons stated in a judgment published that day: see Marsden v DCL Developments Pty Ltd(Receivers and Managers Appointed) [2016] NSWSC 823. In the concluding paragraph of the judgment I recorded my finding that, with appropriate conditions (as to which the bank was yet to be heard) the balance of convenience favoured maintaining the status quo pending the final hearing.
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The “status quo” referred to in that paragraph was that the defendants were conducting the business of egg farmers at the property in respect of which the receivers have been appointed.
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I subsequently heard argument as to the appropriate conditions and, on 21 June 2016, made orders providing for a regime under which I apprehended or at least hoped the business of the egg farm would continue to be conducted by the defendants with conditions which would allow the plaintiff receivers adequate access to the business and records of the defendants so as to be able to satisfy themselves of the ongoing integrity of the security property.
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The proceedings have been relisted on the application of both parties in circumstances where there were competing allegations as to failure of that regime and a number of alleged breaches of my orders on the part of the defendants.
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After allowing time for counsel for the parties to discuss competing proposed orders, I have this afternoon heard argument as to the issues that remain in dispute. The transcript will record the detail of the exchange concerning those disputes. I wish at this point only to record the principle by which my rulings were guided and one matter of importance for the future.
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As recorded in my earlier judgment, my objective was to maintain the status quo pending the final hearing with appropriate conditions for the protection of the interests of the receivers. As frankly acknowledged by Mr Halley SC, who appears with Mr Boyle today for the defendants, the receivers are entitled to conditions which afford transparency so that they can be assured as to the ongoing integrity of the assets they have been appointed to receive.
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As Mr Halley has submitted, the disputes which prompted the re-listing of the proceedings may well have arisen primarily from a breakdown in communication rather than a failure of the regime imposed by the orders made.
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My concern in the rulings I have given this afternoon has been to preserve the ability of the defendants to continue to conduct the business in a way that is viable without undue interruption or intrusion by requests of the receivers whilst at the same time protecting the receivers’ due performance of their functions.
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The principal disputes I have resolved in the rulings I have given this afternoon are, first, a dispute as to the extent of information concerning the conduct of an account into which income of the business was paid, contrary to the apprehension of the receivers in accordance with the previous regime. The defendants are concerned as to the disclosure of personal transactions, since the relevant account is one on which personal transactions are conducted. Conversely the receivers, whilst not interested in personal expenditure of the defendants, want transparency and that is a reasonable expectation.
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I have ruled that the defendants must provide copies only of those transactions which evidence business transactions. I do not see any need or requirement for the defendants at this stage to provide details of their personal transactions.
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Secondly, there was a contest as to the defendants' provision of MYOB records. That contest was ultimately resolved by a measure of agreement in an exchange in argument but I should record that Mr Halley foreshadowed that the financial records that will be provided in accordance with proposed order 4 may not reflect the expectation the receivers had when they sought the inclusion of order 14 of 21 June 2016.
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Thirdly, there was a contest as to whether the receivers should have access to the residence of the two personal defendants. The basis for seeking such access is that the business of the first defendant (a company) is conducted from those premises but it is also the residential home of those two people, a married couple. I considered on balance that a case was not made for affording access to the receivers to the residence at this time.
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Finally, and probably most importantly, the receivers sought an order in the following terms:
11A. The Defendants are to cooperate with the plaintiffs’ delegates at any such inspection including:
by responding fully and honestly to questions reasonably asked;
by not engaging in intimidatory tactics such as following delegates around with a video camera.
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Mr Halley submitted, with some force, that an order in those terms is inappropriate as an order of the Court, since it poses the risk of placing the Court in the position of having to supervise an unhappy relationship. As submitted by Mr Halley, the principal concern the receivers have during this interim period until the final hearing is as to the viability of the business, particularly including the good health of the chickens and the payment of creditors.
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I should record, however, that if, as contended by the receivers today, there is (on the part of the defendants) a lack of cooperation in good faith with the receivers’ endeavours to fulfil their functions in accordance with their appointment, the remedy would be not to let the matter pass (for want of any real capacity of the Court to supervise any such conduct on an ongoing basis) but to revisit the determination made on 20 June 2016 to grant the defendants' application for injunctive relief.
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To be clear, I would consider it a premise of the relief granted on that date that the defendants, having obtained the relief sought, would act in good faith in their dealings with the receivers when the receivers are attempting to fulfil their remaining functions in accordance with the orders of this Court. However, for the reasons put compellingly by Mr Halley, I do not think it is appropriate to include an order in the terms of order 11A proposed by the receivers.
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I direct the parties to use their best endeavours to agree on a form of engrossed orders reflecting my rulings by midday tomorrow.
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Decision last updated: 04 August 2016
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