Montague Estate Pty Ltd (In Liquidation) v Montague VY No1 Pty Ltd, in the matter of Montague Estate Pty Ltd
[2024] FCA 1426
•6 December 2024
FEDERAL COURT OF AUSTRALIA
Montague Estate Pty Ltd (In Liquidation) v Montague VY No1 Pty Ltd, in the matter of Montague Estate Pty Ltd [2024] FCA 1426
File number: WAD 365 of 2024 Judgment of: FEUTRILL J Date of judgment: 6 December 2024 Date of publication of reasons: 11 December 2024 Catchwords: PRACTICE AND PROCEDURE – originating process for relief setting aside share transfers under s 588FF of Corporations Act 2001 (Cth) and for compensation for breaches of directors’ duties - urgent ex parte application for interlocutory injunction to restrain dealing with assets – risk of dissipation of company assets and diminution of value of shares – serious question to be tried – balance of convenience Legislation: Corporations Act 2001 (Cth) ss 81, 182, 588FB, 588FC, 588FE, 588FF, 1317H Cases cited: Samsung Electronics Co Ltd v Apple Inc [2011] FCAFC 156; 217 FCR 238 Division: General Division Registry: Western Australia National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Number of paragraphs: 12 Date of hearing: 6 December 2024 Counsel for the Plaintiffs: Mr J Slack-Smith Solicitor for the Plaintiffs: Stacks Counsel for the Defendants: The Defendants did not appear ORDERS
WAD 365 of 2024 IN THE MATTER OF MONTAGUE ESTATE PTY LTD (IN LIQUIDATION) ACN 638 097 622
BETWEEN: MONTAGUE ESTATE PTY LTD (IN LIQUIDATION) ACN 638 097 622
First Plaintiff
JEROME HALL MOHEN, IN HIS CAPACITY AS JOINT AND SEVERAL LIQUIDATOR OF MONTAGUE ESTATE PTY LTD (IN LIQUIDATION) ACN 638 097 622
Second Plaintiff
MR GREGORY BRUCE DUDLEY, IN HIS CAPACITY AS JOINT AND SEVERAL LIQUIDATOR OF MONTAGUE ESTATE PTY LTD (IN LIQUIDATION) ACN 638 097 622
Third Plaintiff
AND: MONTAGUE VY NO1 PTY LTD ACN 639 401 746
First Defendant
GLOBAL PROPERTY GROUP LIMITED
Second Defendant
PAUL MONTAGUE WILLIAMS
Third Defendant
ORDER MADE BY:
FEUTRILL J
DATE OF ORDER:
6 DECEMBER 2024
PENAL NOTICE
TO: Montague VY No1 Pty Ltd ACN 639 401 746, Level 11, 12-14 The Esplanade Perth WA 6000;
Global Property Group Limited, 303 Aarti Chambers Victoria Seychelles; and
Paul Montague Williams, 325 Tom Cullity Drive Wilyabrup WA 6280
IF YOU (BEING THE PERSON BOUND BY THIS ORDER):
(A) REFUSE OR NEGLECT TO DO ANY ACT WITHIN THE TIME SPECIFIED IN THIS ORDER FOR THE DOING OF THE ACT; OR(B) DISOBEY THE ORDER BY DOING AN ACT WHICH THE ORDER REQUIRES YOU NOT TO DO,
YOU WILL BE LIABLE TO IMPRISONMENT, SEQUESTRATION OF PROPERTY OR OTHER PUNISHMENT.
ANY OTHER PERSON WHO KNOWS OF THIS ORDER AND DOES ANYTHING WHICH HELPS OR PERMITS YOU TO BREACH THE TERMS OF THIS ORDER MAY BE SIMILARLY PUNISHEDTO: Montague VY No1 Pty Ltd ACN 639 401 746, Level 11, 12-14 The Esplanade Perth WA 6000;
Global Property Group Limited, 303 Aarti Chambers Victoria Seychelles; and
Paul Montague Williams, 325 Tom Cullity Drive Wilyabrup WA 6280
These are orders for interlocutory injunctions made against the first and second defendant on 6 December 2024 by Justice Feutrill at a hearing without notice to the defendants after the second plaintiff gave the Court the usual undertaking as to damages and after the Court read the affidavit of Jerome Hall Mohen affirmed 6 December 2024.
THE COURT ORDERS THAT:
Introduction
1.The application for this order is made returnable immediately.
2.The time for service of the application, supporting affidavit and originating process is abridged and personal service is to be effected on the first and third defendants by 4.30 pm (AWST) on 10 December 20024 and on the second defendant as soon as is reasonably practicable.
3.Subject to the next paragraph, this order has effect up to and including 8.00pm (AWST) on 11 December 2024 (‘Return Date’). On the Return Date at not before 4.30pm (AWST) there will be a further hearing in respect of this order before Justice Feutrill or another judge of this Court.
4.Anyone served or notified of this order, including the defendants, may apply to the Court at any time to vary or discharge this order or so much of it as affects the person served or notified.
5.In this order:
‘Property’ means any property of the first defendant as defined by s 9 of the Corporations Act 2001 (Cth), including any property held jointly with another or others, and any property not held beneficially, and includes:
(a)Lot 32 on Strata Plan 27518 known as Unit 32, 241 Clews Road, Cowaramup WA 6284;
(b)Lot 33 on Strata Plan 27518 known as Unit 33, 241 Clews Road, Cowaramup WA 6284;
(c)Lot 34 on Strata Plan 27518 known as Unit 34, 241 Clews Road, Cowaramup WA 6284;
(d)Lot 32 on Deposited Plan 46641 known as 325 Tom Cullity Drive, Wilyabrup WA 6280; and
(e)Lot 26 on Strata Plan 54729 known as Unit 26, 3599 Caves Road, Wilyabrup WA 6280.
‘Shares’ means all the issued shares in the first defendant.
Interlocutory injunctions
6.The first defendant whether itself or by its directors, officers, agents, employees, representatives or otherwise, be restrained from:
(a)selling, charging, mortgaging or otherwise dealing with, or disposing of or diminishing the value of all or any of the Property; and
(b)causing or permitting to be sold, charged mortgaged or otherwise dealt with, disposed of, or diminished in value, all or any of the Property; and
(c)removing all or any of the Property from Australia.
7.The second defendant whether itself or by its directors, officers, agents, employees, representatives or otherwise, be restrained from:
(a)selling, charging, mortgaging or otherwise dealing with, or disposing of or diminishing the value of all or any of the Shares; and
(b)causing or permitting to be sold, charged mortgaged or otherwise dealt with, disposed of, or diminished in value, all or any of the Shares.
Exceptions to this order
8.The injunction in paragraph 6 of this order does not prohibit the first defendant from:
(a)paying up to $25,000 on account of its reasonable legal expenses;
(b)dealing with or disposing of any of the Property in the ordinary and proper course of its business, including paying business expenses bona fide and properly incurred, provided that, if the first defendant intends dealing with or disposing of any of the real property referred to in sub-paragraphs (a) to (e) of the definition of Property in paragraph 5 of this order then, before so doing the first defendant give the plaintiffs, if possible, at least five working days written notice of the intended disposal or dealing and particulars of the grounds upon which it is contended that such disposal or dealing would be within the ordinary and proper course of the first defendant’s business; and
(c)in relation to matters not falling within (a) or (b), dealing with or disposing of any of the Property in discharging obligations bona fide and properly incurred under a contract entered into before this order was made, provided that before so doing the first defendant give the plaintiffs, if possible, at least two working days written notice of the particulars of the obligation.
9.The first defendant and the plaintiffs may agree that the exceptions in the preceding paragraph are to be varied. In that case the plaintiffs or the first defendant must as soon as practicable file with the Court and serve on the other a minute of a proposed consent order recording the variation signed by or on behalf of the plaintiffs and the first defendant, and the Court may order that the exceptions are varied accordingly.
Costs
10.The costs of this application are reserved to the Court hearing the application on the Return Date.
Other persons affected by this order
11.This order does not prevent any bank from exercising any right of set off it has in respect of any facility which it gave to the first defendant before it was notified of this order.
12.No bank need inquire as to the application or proposed application of any money withdrawn by the first defendant if the withdrawal appears permitted by this order.
13.As to persons outside Australia:
(a)except as provided in subparagraph (b) below, the terms of this order do not affect or concern anyone outside Australia;
(b)the terms of this order will affect the following persons outside Australia:
(i)the second defendant and its directors, officers, employees and agents (except banks and financial institutions);
(ii)any person (including a bank or financial institution) who (which):
A.is subject to the jurisdiction of this Court; and
B.has been given written notice of this order, or has actual knowledge of the substance of the order and of its requirements; and
C.is able to prevent or impede acts or omissions outside Australia which constitute or assist in a disobedience of the terms of this order; and
(iii)any other person (including a bank or financial institution), only to the extent that this order is declared enforceable by or is enforced by a court in a country or state that has jurisdiction over that person or over that person’s assets.
Other matters
14.Paragraphs 5, 6, 7, 8 and 11 of the application be stood over until the Return Date.
15.The parties have liberty to apply on 48 hours’ written notice.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
(REVISED FROM THE TRANSCRIPT)FEUTRILL J:
This matter came before me as an urgent ex parte duty matter on 6 December 2024. After hearing the plaintiffs ex parte, I made asset preservation orders with respect to the defendants. These are my reasons for those orders.
The parties to the proceeding are the first plaintiff, Montague Estate Pty Ltd (in liquidation) (ACN 638 097 622). The second plaintiff is one of the joint and several liquidators of that company, Mr Jerome Hall Mohen, and the third plaintiff is Mr Gregory Bruce Dudley, the other. The first defendant is Montague VY No1 Pty Ltd (ACN 639 401 746), a company that is incorporated in Western Australia and has, as its sole director, the third defendant, Mr Paul Montague Williams. The second defendant, Global Property Group Limited, is a company that appears to be incorporated in the Seychelles. It appears to have an address at 303 Aarti Chambers, Victoria, Seychelles, and an email address (referred to in a loan agreement between Global Property Group and Montague Estate) that appears to be that of Mr Williams.
By way of brief background, an application to wind up Montague Estate was made on 7 October 2024. At that time, Montague Estate was the holder of all of the issued shares in Montague VY No1, being two shares and a total paid up capital of $4.
There is evidence of a transfer of the shares in Montague VY No1 from Montague Estate to Global Property Group on 18 November 2024. That is, after the application to wind up had been made. A winding up order was then made by a Registrar of this Court on 26 November 2024. The Form 484 that was filed with the Australian Securities and Investments Commission recording the change in the company structure of Montague VY No1 records that it was signed by Mr Williams as director. On the evidence before the Court at this stage, there is no evidence of any consideration having been paid for the transfer of the shares.
On the affidavit material before the Court, Montague VY No1 is the registered proprietor of a number of parcels of land in Western Australia. The properties are located at Unit 32/241 Clews Road, Cowaramup; Unit 33/241 Clews Road, Cowaramup; Unit 34/241 Clews Road, Cowaramup; Lot 32/325 Tom Cullity Drive, Wilyabrup; and Lot 26, also known as Unit 26/3599 Caves Road, Wilyabrup. There is evidence that at least four of the properties are being advertised for sale on realestate.com. The affidavit filed in support of the application is an affidavit of Mr Mohen, affirmed 6 December 2024, and he deposes that while his investigations are ongoing, it appears, from the information available, that the properties are the main assets of Montague VY No1. And, for reasons I will come to, he opines that an interlocutory injunction is necessary or desirable to protect the interests of the creditors in Montague Estate.
The originating process filed today seeks relief under, amongst other provisions, s 588FF of the Corporations Act 2001 (Cth) which is a provision dealing with transactions that are voidable when a company is in liquidation. Section 588FF provides that where, on the application of a company's liquidator, a Court is satisfied the transaction of the company is voidable because of s 588FE, the Court may make a number of orders, one of which is to direct a person to transfer to the company property that the company has transferred under the transaction. Voidable transactions under s 588FE include insolvent transactions and uncommercial transactions. These are defined in s 588FC and s 588FB. I am satisfied that it is reasonably arguable that a transaction involving the transfer of shares in Montague VY No1 from Montague Estate to Global Property Group for no consideration falls within the description of a voidable transaction, and therefore, it is reasonably arguable that the transaction is liable to be set aside by order of the Court.
The originating process also claims that Mr Williams, in bringing about the transfer of those shares breached his director’s duties, at least the statutory duties under s 181 and s 182 of the Corporations Act and those claims sound in damages, pursuant to s 1317H of the Corporations Act. Additionally, equitable compensation is claimed for breach of equivalent duties owed in equity as fiduciary duties.
It follows that I am satisfied there is a serious question to be tried as to whether or not Global Property Group is entitled to remain the legal and beneficial owner of the shares in Montague VY No1.
This is an application brought for an urgent interlocutory injunction ex parte and the applicable principles on applications of this nature are well established and do not need to be restated at any length. In short, the ‘correct’ approach, as described by the Full Court of this Court in Samsung Electronics Co Ltd v Apple Inc [2011] FCAFC 156; 217 FCR 238 at [52]-[74], is that the plaintiffs must first show they have a prima facie case in the sense of a sufficient likelihood of success to justify, in the circumstances, the preservation of the status quo, pending trial. That is commonly referred to as a serious question to be tried. What is sufficient depends on the nature of the rights the plaintiff asserts and the practical consequences likely to flow from the orders sought. As I have already said, I am satisfied that criterion has been satisfied in this case. The second matter is that a plaintiff must demonstrate that the balance of convenience and justice favours the grant of injunction. In this case, the usual undertaking as to damages has been given by one of the liquidators and an indication has been given that the other liquidator is in a position to provide that undertaking as well. As matters stand, given the urgent ex parte nature of the application, I am prepared to accept one undertaking at this time but when the matter returns in due course, I expect there to be an undertaking given by both liquidators as a condition of any continuation of the injunction.
The reason for granting an interim interlocutory injunction in respect of Global Property Group, which is a foreign company, is to preserve the value of the alleged entitlement of the company in liquidation to those shares and what is sought is an injunction to restrain the foreign company from essentially dealing with those shares or encumbering the shares in a way that may lead to the disposal of them or the diminishment of value in them. Having regard to the circumstances in which the shares were transferred to which I have already referred, I am satisfied that it is appropriate to make an interim order of that nature at this time.
Regarding Montague VY No1, the nature of the plaintiffs’ interest in that company is that if the company in liquidation ought to be the correct legal and beneficial owner of the shares in Montague VY No1, it has the right to determine who the directors of that company are and, in effect, control the management of that company. As matters stand, it is deprived from giving effect to those rights. In the absence of any evidence from the defendants, again, in the circumstances that I have described, I am satisfied there is a risk that if not restrained, the current director of the company may conduct its affairs in such a way as to diminish the value of the shares or dissipate the assets of that company, which will undermine the value of the shares in that company. There is a risk that, if the plaintiffs are ultimately successful, the affairs of Montague VY No1 will be conducted in such a manner that the value of the property available for distribution amongst the creditors of the company in liquidation will be diminished. Again, for that reason, on an urgent interlocutory and ex parte basis, I am prepared to grant an interim injunction to restrain Montague VY No1, in effect, from dealing with its property that is surplus to its bona fide business activities.
All the orders sought will be made, subject to the usual conditions that are attached to asset preservation or freezing-style orders, so as to permit variations to be made and for persons who are affected by the orders to come before the Court and seek a variation or discharge of them.
I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Feutrill. Associate:
Dated: 11 December 2024
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