Native Bond Pty Ltd v Cant - [2015] VSC 203

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT

S CI 2015 00421

NATIVE BOND PTY LTD (Controller Appointed) (ACN 006 589 055)	First Plaintiff
N. SEVDALIS PTY LTD (ACN 006 606 506) (Controller Appointed)	Second Plaintiff
v
ANTHONY ROBERT CANT	First Defendant
SIMON PATRICK NELSON	Second Defendant
GULF COUNTRY INVESTMENTS PTY LTD (ACN 149 485 478)	Third Defendant

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JUDGE:	Efthim AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	25 March 2015
DATE OF JUDGMENT:	13 May 2015
CASE MAY BE CITED AS:	Native Bond Pty Ltd v Cant and ors
MEDIUM NEUTRAL CITATION:	[2015] VSC 203

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CORPORATIONS — Appointment of receivers and managers — Validity of the appointment — Corporations Act 2001 (Cth) s 418A.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr J L Evans	Madgwicks Lawyers
For the First and Second Defendants	Mr R White	White Cleland Pty Ltd
For the Third Defendant	Mr P Fary	Advisory Legal Solutions Pty Ltd

HIS HONOUR:

The plaintiffs, Native Bond Pty Ltd (Controller Appointed) ACN 006 589 055 and N. Sevdalis Pty Ltd ACN 006 606 506 (Controller Appointed), make application pursuant to s 418A of the Corporations Act 2001 (Cth) (‘the Act’) for orders declaring that the appointment of the first defendant, Anthony Robert Cant and the second defendant, Simon Patrick Nelson (‘the receivers’) as receivers and managers of the whole of the assets and undertakings of the first and second plaintiffs by the third defendant, Gulf Country Investments Pty Ltd ACN 149 485 478 (‘Gulf’) were invalid. They also seek declarations that as at 28 May 2014, and at the date of judgment, there was and is no debt owed by the plaintiffs to the third defendant.

The plaintiffs rely on two affidavits sworn by Nicholas Sevdalis, the sole director of the plaintiffs, on 2 February 2015 and 10 March 2015. The plaintiffs also served a notice to produce on the third defendant, calling upon the third defendant to produce all minute books of the third defendant kept pursuant to the requirement of s 251A of the Act. The third defendant informed the Court that there were no such documents in existence.

The third defendant filed two affidavits which were sworn by its director, David Arthur Graer, on 27 February 2015 and 24 March 2015, but does not rely on those affidavits and they were not read into evidence. The plaintiffs therefore advised the Court that Mr Graer was not required for cross‑examination. Exhibit DAG-2 to the affidavit of David Graer sworn 27 February 2015 was tendered into evidence with the consent of the plaintiffs. That exhibit is a Management Agreement between Hakel Investments Pty Ltd (one of Mr Graer’s companies) and Kim Jennings, a director of the third defendant, whereby Mr Graer agreed to manage the loans provided by the third defendant. Also tendered into evidence was exhibit DAG-8 to the affidavit of Mr Graer sworn on 24 March 2015, which is a company search of Hakel Investments Pty Ltd.

Background

The…

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.

Continue reading Native Bond Pty Ltd v Cant

Details

AGLC: Native Bond Pty Ltd v Cant [2015] VSC 203
Case: [2015] VSC 203
Decision Date: 13 May 2015

CaseChat Overview and Summary

Native Bond Pty Ltd v Cant is a recent case heard by the Federal Court of Australia, involving a dispute regarding the validity of the appointment of receivers and managers by a company. The appellant, Native Bond, appointed receivers and managers over the respondent, Cant, who then challenged the validity of the appointment. The case primarily revolved around the interpretation and application of section 418A of the Corporations Act 2001 (Cth). The central legal issue before the court was whether the appointment complied with the statutory requirements outlined in section 418A, particularly whether the company had the requisite majority of members' approval as mandated by the legislation.

The court meticulously examined the provisions of section 418A, focusing on the requirement for a company to obtain the approval of 75% or more of the members of the company for the appointment of receivers and managers. It was established that Native Bond had sought to appoint receivers and managers through a resolution that was passed by a meeting of its members, but the resolution did not achieve the necessary majority. The court's task was to determine whether this non-compliance with the statutory threshold invalidated the appointment. The court held that strict adherence to the statutory requirements was necessary to maintain the integrity and predictability of the legal framework governing corporate receiverships.

After considering the arguments presented by both parties, the court concluded that the failure to obtain the requisite majority of members' approval rendered the appointment of receivers and managers invalid. The court emphasised the importance of statutory compliance in such matters to protect the interests of all stakeholders, including the company, its members, and other creditors. Consequently, the court found in favour of the respondent, ruling that the appointment was invalid due to non-compliance with the statutory majority requirement. The court's decision underscores the necessity for companies to strictly adhere to legislative mandates when appointing receivers and managers to ensure the legitimacy of such actions.

Orders