Matthews v Capital Choice Australia Pty Ltd - [2024] QSC 236

SUPREME COURT OF QUEENSLAND

CITATION:

Matthews v Capital Choice Australia Pty Ltd [2024] QSC 236

PARTIES:

SHAUN MATTHEWS, SAM KASO AND RAHUL GOYAL

(first applicant)
BESFARM PTY LTD (RECEIVERS AND ADMINISTRATORS APPOINTED)
(second applicant)

v
CAPITAL CHOICE AUSTRALIA PTY LTD

(first respondent)
ZHENYAO WANG

(second respondent)

FILE NO/S:

BS No 9698 of 2024

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

30 October 2024

DELIVERED AT:

Brisbane

HEARING DATE:

22 August 2024, further submissions 26 September 2024,
2 October 2024 and 14 October 2024

JUDGE:

Martin SJA

ORDERS:

1.      Part 1 of the Originating Application filed 24 July 2024 is dismissed.

2.      The balance of the Originating Application is adjourned to 5 November 2024.

3.      Each party bear its own costs.

CATCHWORDS:

CORPORATIONS – RECEIVERS, CONTROLLERS AND MANAGERS – POWERS – TO APPLY TO COURT FOR DIRECTIONS – where the first applicants were appointed as receivers to the assets of the second applicant – where the applicants seek directions under s 424 of the Corporations Act 2001 (Cth) concerning their power to sell a working farming property and associated water allocations – where all parties with an interest in the property, other than the second respondent, are indifferent or do not oppose the sale – where the second respondent asserts that he holds a charge and an equitable interest in the property – where the second respondent foreshadows a dispute concerning the priority of securities between itself and Bizcap, the entity which appointed the first applicants as receivers – where the second respondent does not dispute the validity of the appointment of the first applicants as receivers – where the second respondent argues that the first applicants do not have the power to sell the property “free from a higher interest” – whether the first applicants have power under s 420 of the Corporations Act 2001 (Cth) to cause the second applicant to take steps to market, sell, and convey the property

CORPORATIONS – RECEIVERS, CONTROLLERS AND MANAGERS – POWERS – TO SELL COMPANY’S PROPERTY – where the first applicants are receivers and managers of the property of a corporation – where the applicants seek directions concerning their power of sale – where the applicants did not make an application under s 420B of the Corporations Act 2001 (Cth) – where the second respondent argues that the presence of the power under s 420B suggests that a receiver would not otherwise have the power under s 420 to sell property of a corporation where it is subject to a security interest that has priority over the security interest that the controller is enforcing – whether the receivers have capacity to proceed with the sale under s 420 or should have proceeded under s 420B

Corporations Act 2001 (Cth), s420, s 420B, s 424

Anthony Hordern & Sons Ltd v Amalgamated Clothing & Allied Trades Union of Australia (1932) 47 CLR 1, applied
King Investment Solutions Pty Ltd v Hussain [2005] NSWSC 1076, considered

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: [2024] QSC 236
Decision Date: 30 October 2024

CaseChat Overview and Summary

The case of Matthews v Capital Choice Australia Pty Ltd involves the receivers and managers of a corporation seeking directions from the court concerning their powers to sell a farming property and associated water allocations. The receivers are appointed to the assets of the second respondent, who asserts a charge and an equitable interest in the property. The receivers wish to proceed with the sale but are uncertain about the impact of other claims on the property, including those of Ivy League Capital Pty Ltd, SXP Farming, and Mr Wang. The court was required to determine whether the receivers have the authority to sell the property free from higher interests and whether they should have sought directions under a different section of the Corporations Act. The court found that the Personal Property Securities Act does not apply to real property or water allocation rights, and therefore, the receivers' power under section 420 of the Corporations Act to sell the property is not limited by the presence of higher interests. The court also found that the receivers did not need to apply under section 420B of the Corporations Act to sell the property. The court granted the receivers the directions they sought and adjourned the balance of the application to allow further evidence to be presented. The court ordered that each party bear their own costs.

Orders

Orders of the court

1. Part 1 of the Originating Application filed 24 July 2024 is dismissed.

2. The balance of the Originating Application is adjourned to 5 November 2024.

3. Each party bear its own costs.

Background

Background to the litigation

Full text does not contain this section.

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

That is misconceived. The PPSA applies to personal property, not real property or water allocation rights. Section 8 of the PPSA excludes (among other things): the creation or transfer of an interest in land, payments in connection with interests in land, and rights in connection with the control, use or flow of water. Directions under s 424 Corporations Act Section 424 provides:(1)[Controller may apply to Court for direction] A controller of property of a corporation may apply to the Court for directions in relation to any matter arising in connection with the performance or exercise of any of the controller's functions and powers as controller.(2)[Receiver appointment under instrument may apply] In the case of a receiver of property of a corporation, subsection (1) applies only if the receiver was appointed under a power contained in an instrument. A “controller”, in relation to property of a corporation, includes a receiver – s 9 Corporations Act. Directions given under s 424 are in the form of personal guidance or advice for a receiver. They do not involve adjudications of claims, rights or entitlements of third parties – see Re Sandalwood Properties Ltd; ex parte Preston.[5][5][2018] FCA 547. The power to make directions under s 424 is a broad one, intended to facilitate the work of receivers[6] and should be interpreted as widely as possible to give effect to that intention.[7] The power is not to be used supplant a receiver’s commercial judgement.[8][6]Korda v Silkchime Pty Ltd (2010) 243 FLR 269 at [30].[7]Re Mirabela Nickel Ltd (recs and mgrs apptd) (in liq); ex parte Madden[2018] WASC 335 at [86].[8]White v Huxtable (2006) ACSR 435; [2006] FCA 559. The circumstances in which the power might be used was described as “well-established” by Hill J in Woodhouse v Francis[No 2][9] when she adopted the words of Goldberg J in Re Ansett Australia Ltd(No 3):[10] “There must be something more than the making of a business or commercial decision before a court will give directions in relation to, or approving of, the decision. It may be a legal issue of substance or procedure, it may be an issue of power, propriety or reasonableness, but some issue of this nature is required to be raised.”[9][2022] WASC 318.[10](2002) 115 FCR 409; [2002] FCA 90 at [65]. The receivers wish to sell the Mutchilba property and the water allocations and then pay out the secured creditors in order of priority. They are aware of the position of the secured creditors. The basis upon which they seek directions arises out of uncertainty about the position of putative creditors:(a)Ivy League Capital Pty Ltd asserts an interest in the Mutchilba property but has not provided reliable support for that proposition.(b)SXP Farming asserts the existence of an unregistered lease over the Mutchilba property but there is uncertainty as to whether or not it remains in existence or the circumstances of its termination.(c)Mr Wang asserts an equitable interest in the Mutchilba property but has only recently provided documentation and has, in earlier correspondence, challenged the appointment of the receivers. That challenge was not pursued.

CITATION:	Matthews v Capital Choice Australia Pty Ltd [2024] QSC 236
PARTIES:	SHAUN MATTHEWS, SAM KASO AND RAHUL GOYAL (first applicant) BESFARM PTY LTD (RECEIVERS AND ADMINISTRATORS APPOINTED) (second applicant) v CAPITAL CHOICE AUSTRALIA PTY LTD (first respondent) ZHENYAO WANG (second respondent)
FILE NO/S:	BS No 9698 of 2024
DIVISION:	Trial Division
PROCEEDING:	Application
ORIGINATING COURT:	Supreme Court at Brisbane
DELIVERED ON:	30 October 2024
DELIVERED AT:	Brisbane
HEARING DATE:	22 August 2024, further submissions 26 September 2024, 2 October 2024 and 14 October 2024
JUDGE:	Martin SJA
ORDERS:	1. Part 1 of the Originating Application filed 24 July 2024 is dismissed. 2. The balance of the Originating Application is adjourned to 5 November 2024. 3. Each party bear its own costs.
CATCHWORDS:	CORPORATIONS – RECEIVERS, CONTROLLERS AND MANAGERS – POWERS – TO APPLY TO COURT FOR DIRECTIONS – where the first applicants were appointed as receivers to the assets of the second applicant – where the applicants seek directions under s 424 of the Corporations Act 2001 (Cth) concerning their power to sell a working farming property and associated water allocations – where all parties with an interest in the property, other than the second respondent, are indifferent or do not oppose the sale – where the second respondent asserts that he holds a charge and an equitable interest in the property – where the second respondent foreshadows a dispute concerning the priority of securities between itself and Bizcap, the entity which appointed the first applicants as receivers – where the second respondent does not dispute the validity of the appointment of the first applicants as receivers – where the second respondent argues that the first applicants do not have the power to sell the property “free from a higher interest” – whether the first applicants have power under s 420 of the Corporations Act 2001 (Cth) to cause the second applicant to take steps to market, sell, and convey the property CORPORATIONS – RECEIVERS, CONTROLLERS AND MANAGERS – POWERS – TO SELL COMPANY’S PROPERTY – where the first applicants are receivers and managers of the property of a corporation – where the applicants seek directions concerning their power of sale – where the applicants did not make an application under s 420B of the Corporations Act 2001 (Cth) – where the second respondent argues that the presence of the power under s 420B suggests that a receiver would not otherwise have the power under s 420 to sell property of a corporation where it is subject to a security interest that has priority over the security interest that the controller is enforcing – whether the receivers have capacity to proceed with the sale under s 420 or should have proceeded under s 420B Corporations Act 2001 (Cth), s420, s 420B, s 424 Anthony Hordern & Sons Ltd v Amalgamated Clothing & Allied Trades Union of Australia (1932) 47 CLR 1, applied King Investment Solutions Pty Ltd v Hussain [2005] NSWSC 1076, considered