Neil Raymond Cribb as liquidator of Bullion Bourse Pty Ltd (In Liq) v Lam [No 2]
[2020] WASC 340
•22 SEPTEMBER 2020
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
CITATION: NEIL RAYMOND CRIBB as liquidator of BULLION BOURSE PTY LTD (In Liq) -v- LAM [No 2] [2020] WASC 340
CORAM: MASTER SANDERSON
HEARD: ON THE PAPERS
DELIVERED : 22 SEPTEMBER 2020
PUBLISHED : 22 SEPTEMBER 2020
FILE NO/S: COR 152 of 2019
BETWEEN: NEIL RAYMOND CRIBB as liquidator of BULLION BOURSE PTY LTD (In Liq)
Plaintiff
AND
JACINTA LAM
First Named First Defendant
JAKE BASSINGTHWAIGHTE
Second Named First Defendant
JACINTA LAM AND JAKE BASSINGTHWAIGHTE as trustee for JL & JB SUPERFUND
Third Named First Defendant
BRADLEY JOHNSTON
First Named Second Defendant
LYNETTE JOHNSTON
Second Named Second Defendant
BRADLEY JOHNSTON AND LYNETTE JOHNSTON as trustees for THE BRAD JOHNSTON SUPERANNUATION FUND
Third Named Second Defendant
BENJAMIN NOEL LAMOTHE as trustee for THE LAMOTHE LIFETIME SUPER FUND
Third Defendant
HYLTON HUGH KIRK SMITH
First Named Fourth Defendant
DAVID JOHN BENTLEY
Second Named Fourth Defendant
AARON PETER JOSEPH JOHANSSEN
Fifth Defendant
SHAUN POTTER
First Named Sixth Defendant
SUSAN WILLERS
Second Named Sixth Defendant
ZENOM WILLERS
Third Named Sixth Defendant
FINLAY ALASDAIR HARRISON
Seventh Defendant
Catchwords:
Corporation law - Direction sought by liquidator - Turns on own facts
Legislation:
Corporations Act 2001 (Cth)
Insolvency Law Reform Act 2016 (Cth)
Result:
Direction given
Category: B
Representation:
Counsel:
| Plaintiff | : | No appearance |
| First Named First Defendant | : | No appearance |
| Second Named First Defendant | : | No appearance |
| Third Named First Defendant | : | No appearance |
| First Named Second Defendant | : | No appearance |
| Second Named Second Defendant | : | No appearance |
| Third Named Second Defendant | : | No appearance |
| Third Defendant | : | No appearance |
| First Named Fourth Defendant | : | No appearance |
| Second Named Fourth Defendant | : | No appearance |
| Fifth Defendant | : | No appearance |
| First Named Sixth Defendant | : | No appearance |
| Second Named Sixth Defendant | : | No appearance |
| Third Named Sixth Defendant | : | No appearance |
| Seventh Defendant | : | No appearance |
Solicitors:
| Plaintiff | : | HWL Ebsworth Lawyers |
| First Named First Defendant | : | Williams + Hughes |
| Second Named First Defendant | : | Williams + Hughes |
| Third Named First Defendant | : | Williams + Hughes |
| First Named Second Defendant | : | In person |
| Second Named Second Defendant | : | No appearance |
| Third Named Second Defendant | : | No appearance |
| Third Defendant | : | No appearance |
| First Named Fourth Defendant | : | In person |
| Second Named Fourth Defendant | : | In person |
| Fifth Defendant | : | In person |
| First Named Sixth Defendant | : | No appearance |
| Second Named Sixth Defendant | : | No appearance |
| Third Named Sixth Defendant | : | No appearance |
| Seventh Defendant | : | No appearance |
Case(s) referred to in decision(s):
Re GB Nathan & Co Pty Ltd (In liq) [1991] 24 NSWLR 674
Re Poles & Underground Pty Ltd (Administrators appointed) [2017] FCA 486
Re Sakr Bros Pty Ltd (In liq) [2019] FCA 547
MASTER SANDERSON:
The plaintiff is the court appointed liquidator of Bullion Bourse Pty Ltd (in liq) formerly trading as 'Perth Bullion Company'. Prior to the appointment of the liquidator the company traded in bullion and numismatics and provided safe custody services from premises located in Cloverdale. On 29 July 2019 the liquidator filed an originating process seeking directions pursuant to s 90‑15 of the Insolvency Practice Schedule (Corporations) (IPS) contained in sch 2 of the Corporations Act 2001 (Cth). I originally made orders on the originating process on 30 July 2019. To understand the nature of the matters presently under consideration it is necessary to set out the orders made on 30 July 2019 and orders subsequently made on 12 September 2019 and 12 December 2019. (I also made orders on 15 May 2020 but these orders were of a programming nature and are not relevant to matters presently under consideration). The three sets of orders made read as follows:
30 July 2019
Safety deposit boxes
Identified SDB Goods
1.The goods contained in the safety deposit boxes in respect of which:
(a)the plaintiff is able to identify the safety deposit box holder (Identified SDB Holder) by reference to the available records of Bullion Bourse Pty Ltd (In Liquidation) ACN 140 221 067 (Company); or
(b)a person is able to provide documentation to the reasonable satisfaction of the plaintiff which identifies them as the Identified SDB Holder,
(Identified SDB Goods) are:
(c)the property of the relevant Identified SDB Holders; and
(d) able to be collected from the plaintiff by the Identified SDB Holders or their authorised representative by the method outlined in these directions.
2. The plaintiff is justified, and is otherwise acting reasonably, in asserting an entitlement to an indemnity secured by an equitable lien against the Identified SDB Goods, for the payment of his costs, expenses and remuneration relating to identifying, preserving and facilitating the return of (Costs) the Identified SDB Goods limited to the amount of $350 per collection (Base Levy).
3. Further and alternatively, the plaintiff is justified, and is otherwise acting reasonably, in treating his costs and expenses incurred in relation to the Identified SDB Goods as a cost of the winding up of the Company.
Unidentified SDB Goods
4. The plaintiff is justified, and is otherwise acting reasonably in undertaking the following course of action in relation to the goods (Unidentified SDB Goods) contained in safety deposit boxes in respect of which the safety deposit box holder cannot be identified by the plaintiff from the available records of the Company (Unidentified Boxes):
(a) send to all creditors and other interested parties a circular that encloses a copy these Orders (Circular);
(b) if any time until 30 September 2019 or such other date as extended by further order of this Court, a person responds to any circulars, including the Circular or any future circulars, or contacts the plaintiff or his staff and is able to produce photographic identification and documentation that enables the plaintiff, to his reasonable satisfaction, to match an Unidentified Box to that person, then the plaintiff will treat the goods in that Unidentified Box (Subsequently Identified SDB Goods) as the property of that person (Subsequently Identified SDB Holder) and will release the Subsequently Identified SDB Goods to the Subsequently Identified SDB Holder or their authorised representative by the method outlined in these directions.
(c) if, after 30 September 2019 or such other date as extended by further order of this Court, an Unidentified Box remains unclaimed by a customer, then the plaintiff will:
(i) access, and where necessary engage a locksmith to gain access to, the contents of the Unidentified Box which will be done with two of the plaintiff's staff present and recorded on video camera;
(ii) have his staff catalogue the contents of the Unidentified Box;
(iii) store the contents of the Unidentified Box at a secure premise to the plaintiff's reasonable satisfaction, but not necessarily at the Premises;
(iv) if the contents disclose any information that might enable the plaintiff to identify the owner, then the plaintiff will attempt to contact that person and/or make enquiries;
(v) if the owner can be identified to the plaintiff's reasonable satisfaction following contact or inquiries made by the plaintiff under (iv) above, then the plaintiff will treat the goods as Subsequently Identified SDB Goods; and
(vi) if by the 30 November 2019 or such other date as extended by further order of this Court (Deadline) the owner cannot be identified or, if any contact or enquiries made by the plaintiff under (iv) above do not result in any person claiming ownership of the goods, then the goods will be 'Unclaimed Goods' and the plaintiff will deal with them as set out at Order 20 below.
5. The plaintiff is justified, and is otherwise acting reasonably, in asserting an entitlement to an indemnity secured by an equitable lien against the Subsequently Identified SDB Goods, for the payment of his Costs in relation to the Identified SDB Goods calculated as the Base Levy plus any additional amount incurred for work properly done and expenses properly incurred that benefit that Subsequently Identified SDB Holder, but any amount in excess of the Base Levy is to be set by further order of this Court.
6. Further and alternatively, that the plaintiff is justified, and is otherwise acting reasonably, in treating his Costs in relation to the Subsequently Identified SDB Goods as a cost of the winding up of the Company.
Allocated storage
7. The plaintiff is justified, and is otherwise acting reasonably in undertaking the following course of action in relation to goods located in the vaults on the Premises that the plaintiff has satisfied himself are not goods contained in the safety deposit boxes (Unidentified Goods):
(a) if any time until 30 September 2019 or such other date as extended by further order of this Court, a person responds to any circulars, including future circulars, or contacts the plaintiff or his staff and is able to produce photographic identification and documentation that enables the plaintiff, to his reasonable satisfaction, to match any Unidentified Good to that person, then the plaintiff will treat those goods (Identified AS Goods) as the property of that person (Identified AS Goods Owner) and will release the Subsequently Identified AS Goods to the Subsequently Identified AS Goods Owner or their authorised representative by the method outlined in these directions;
(b) if, after 30 September 2019 or such other date as extended by further order of this Court, any Unidentified Goods remain unclaimed by a customer, then the plaintiff will:
(i) if the Unidentified Goods are:
(A) a safe that is not the property of the Company, engage a locksmith to gain access to the contents of the safe; or
(B) wrapped, taped or otherwise secured in a way that conceals, binds or protects the goods, take steps to access the goods,
which will be done with two of the plaintiff's staff present and recorded on video camera;
(ii) have his staff catalogue the Unidentified Goods;
(iii) store the contents of the Unidentified Goods in at a secure premise to the plaintiff's reasonable satisfaction but not necessarily the Premises;
(iv) if anything affixed to or located with the Unidentified Goods disclose any information that might enable the plaintiff to identify the owner, then the plaintiff will attempt to contact that person or make enquiries;
(v) if the owner can be identified to the plaintiff's reasonable satisfaction following contact or inquiries made by me under 4(c)(iv) above, then the plaintiff will treat the goods as Identified AS Goods; and
(vi) if by the Deadline the owner cannot be identified or, if any contact or inquiries made by the plaintiff under 4(c)(iv) above do not result in any person claiming ownership of the goods, then the goods will be 'Unclaimed Goods' and the plaintiff will deal with them as set out at Order 20 below.
8. The plaintiff is justified, and is otherwise acting reasonably, in asserting an entitlement to an indemnity secured by an equitable lien against the Identified AS Goods, for the payment of his Costs in relation to the Identified AS Goods as the Base Levy plus any additional amount incurred for work properly done and expenses properly incurred that benefit that Identified AS Goods Owner, but any amount in excess of the Base Levy is to be set by further order of this Court.
9. Further and alternatively, the plaintiff is justified, and is otherwise acting reasonably, in treating his Costs in relation to the Identified AS Goods as a cost of the winding up of the Company.
Sales orders
Completed Orders
10. The goods the subject of sale orders which are complete save that they have not yet been dispatched to, or collected by, the customer (Completed Orders Goods) that have been paid for in full are:
(a) the property of the relevant customer (Order Owner); and
(b) able to the collected by the Order Owners or their authorised representative by the method outlined in these directions.
11. The plaintiff is justified, and is otherwise acting reasonably, in asserting an entitlement to an indemnity secured by an equitable lien against the Completed Orders Goods, for the payment of his Costs in relation to the Completed Orders Goods, for work properly done and expenses properly incurred that benefit that Order Owner, but any amount in excess of the Base Levy is to be set by further order of this Court.
12. Further and alternatively, the plaintiff is justified, and is otherwise acting reasonably, in treating his Costs in relation to the Completed Orders Goods as a cost of the winding up of the Company.
Partial Orders
13. The goods the subsequent of sales orders which are partially complete (Partial Orders) in that:
(a) multiple goods have been ordered in the same sale order; and
(b) some, but not all, goods the subject of the sale order have been picked and placed in the order box,
referred to as Picked Goods, are:
(c) the property of the relevant customer (PO Owners); and
(d) subject to payment in full of the Partial Orders by the PO Owners, able to be collected by the PO Owners or their authorised representative by the method outlined in these directions.
14. The plaintiff is justified, and is otherwise acting reasonably in undertaking the following course of action in relation to the goods the subject of a partially complete sales order (Partial Order) which have been picked and placed in the order box (Picked Goods):
(a) issue correspondence to those customers (PO Owners) by email where an email address is specified in the order or, if no email address is specified, by ordinary pre-paid post, confirming that they may contact the plaintiff's staff to arrange collection of the Picked Goods and that collection must occur on or before the Deadline;
(b) subject to payment by the PO Owners of that amount of the Partial Orders referable to the Picked Goods, release the Picked Goods to the PO Owners or their authorised representative by the method outlined in these directions;
(c) if any Picked Goods remain uncollected as at the Deadline, the plaintiff will deal with them as set out at Order 20 below.
15. The plaintiff is justified, and is otherwise acting reasonably, in asserting an entitlement to an indemnity secured by an equitable lien against the Picked Goods, for the payment of his Costs in relation to the Picked Goods, for work properly done and expenses property incurred that benefit that PO Owner, but any amount in excess of the Base Levy is to be set by further order of this Court.
16. Further and alternatively, the plaintiff is justified, and is otherwise acting reasonably, in treating his Costs in relation to the Picked Goods as a cost of the winding up of the Company.
Collection
17. For the purposes of Orders 18 to 21 the following definitions apply:
(a) Identified Goods means:
(i) the Identified SDB Goods;
(ii) any Subsequently Identified SDB Goods;
(iii) the Identified AS Goods;
(iv) the Complete Orders Goods; and
(v) the Picked Goods,
and any or each of them as the context requires.
(b) Owner means:
(i) the Identified SDB Holders;
(ii) any Subsequently Identified SDB Holders;
(iii) the Identified AS Goods Owners;
(iv) the Order Owners; and
(v) the PO Owners.
and any or each of them as the context requires.
(c) Collection Levy means, in relation to each of the Identified Goods, the amount (if any) that the plaintiff is justified in levying on the Owners in respect of his Costs of dealing with the Identified Goods, as set by these orders or any future order of this Court.
18. The Identified Goods shall be collected from the Premises at a time and date authorised by the plaintiff, by:
(a) the Owner, who shows appropriate identification to the plaintiff's staff; or
(b) the authorised representative of the Owner, who shows appropriate identification and written proof of authority (to the plaintiff's reasonable satisfaction) to the plaintiff's staff,
(the Collecting Person).
19. The plaintiff is justified in requesting at the time of delivery of, and prior to releasing, any Identified Goods under paragraph 18 of these directions that the Collecting Person is to provide:
(a) a release in the form set out at Annexure "A" to these Orders duly signed by the Owner;
(b) if applicable, payment of any outstanding rent or storage fees relating to the Identified Goods; and
(c) if applicable, payment to the plaintiff of the relevant Collection Levy.
20. The plaintiff is justified in treating any goods of third parties in his possession that remain unclaimed as at the Deadline (Unclaimed Goods) as the property of the Company provided that the plaintiff has:
(a) no later than 14 days prior to the Deadline, caused an advertisement to be published in each of The Australian (print), The West Australian (print), on the Liquidation Website and the Website advising of the intended sale of the Unclaimed Goods (without having to itemise each of the Unclaimed Goods) and have received no relevant response from any person claiming an interest in those Unclaimed Goods by the Deadline;
(b) in relation to those Unclaimed Goods that are Identified Goods, no later than 14 days prior to the Deadline, written to the relevant owner(s) by letter by registered post (at the address recorded in the Company's records or, if none is recorded, the registered office of the owner (if the owner is a body corporate) or the address recorded with the Australian Electoral Commission (if the owner is a natural person)) and have received no relevant response by the Deadline; and
(c) no later than 14 days prior to the Deadline, provided the WA Police with a list or catalogue of the Unclaimed Goods and the WA Police have not, by the Deadline, identified those Unclaimed Goods as having been reported as lost or stolen.
21. The plaintiff's costs of undertaking the processes authorised by these Orders that are not recouped by receipt of the Collection Levy, be paid out of the assets of the Company as an expense of the winding up.
22. The plaintiff's cost of this proceeding be paid out of the assets of the Company as an expense of the winding up.
23. There be liberty to apply, including by any person affected by these Orders on 48 hours' notice.
12 September 2019
Confidential affidavit in support
1.The second affidavit of Neil Raymond Cribb sworn 30 August 2019 and filed in these proceedings be sealed on the court file and kept confidential.
Timing and execution of deed of release
2.Paragraph 19 of the orders made in these proceedings on 30 July 2019 (July Orders) be vacated.
3. The plaintiff is justified, and is otherwise acting reasonably, in requiring that, prior to confirming, and as a pre-requisite to, a collection appointment in respect of Identified Goods, the following is to be provided to him:
(a) a release in the form set out at Annexure 'A', 'B' and 'C' of these orders (as applicable) duly signed by the Owner;
(b) if applicable, payment of any outstanding rent or storage fees relating to the Identified Goods; and
(c) if applicable, payment to the plaintiff of the relevant Collection Levy.
Identification of 'extra large' safety deposit boxes (ELBs)
4. The plaintiff is justified, and is otherwise acting reasonably, in using as many of the keys in his possession and control that he considers reasonably necessary to open as many compartments within the six safes located at the Company premises as he considers reasonably necessary to identify the location of each of the ELBs.
5. The plaintiff is justified, and is otherwise acting reasonably, in imposing a Collection Levy of up to $3,300 (including GST) per collection appointment in respect of the SDB Holders of ELBs (ELB Collection Levy) and treating the ELB Collection Levy as the applicable Collection Levy for the ELBs for the purposes of the July Orders.
Treatment of the Loose Goods
6. In respect of the loose goods located in vaults 2 and 3 (Loose Goods), the plaintiff is justified, and is otherwise acting reasonably, in declining to make a determination as to the ownership of the Loose Goods until after 30 November 2019.
7. Where the plaintiff is able to identify, to his reasonable satisfaction, the owner of any Loose Goods that are serial numbered (Serial Numbered Loose Goods), he is justified, and is otherwise acting reasonably, in:
(a) treating the Serial Numbered Loose Goods as the property of that person (Loose Goods Owner) and as Identified Goods for the purposes of the July Orders;
(b) treating the Loose Goods Owner as an Owner for the purposes of the July Orders;
(c) asserting an entitlement to an indemnity secured by an equitable lien against the Serial Numbered Loose Goods, for the payment of his costs, expenses and remuneration relating to identifying, preserving and facilitating the return of the Serial Numbered Loose Goods limited to the ELB Collection Levy plus the plaintiff's actual costs exclusively referrable to the Serial Numbered Loose Goods of the relevant Loose Goods Owner, calculated on a time basis (Serial Numbered Loose Goods Levy); and
(d) treating the Serial Numbered Loose Goods Levy as the applicable Collection Levy for Serial Numbered Loose Goods for the purposes of the July Orders.
General
8. The plaintiff's costs of this proceeding and of undertaking the processes authorised by these Orders that are not satisfied by receipt of the Collection Levy, be paid out of the assets of the Company as an expense of the winding up.
9. There be liberty to apply, including by any person affected by these Orders on 48 hours' notice.
12 December 2019
Confidential affidavit in support
1. The third affidavit of Neil Raymond Cribb sworn 4 December 2019 and filed in these proceedings be sealed on the court file and kept confidential.
2. The affidavit of Carmen Anne Leah Boothman sworn 11 December 2019 and filed in these proceedings be sealed on the court file and kept confidential.
Definitions
3. For the purposes of these orders, the following definitions apply:
(a) 'July Orders' means the orders made by Master Sanderson in these proceedings on 30 July 2019;
(b) 'Loose Goods' has the meaning ascribed in the Supporting Affidavit;
(c) 'Owner' has the meaning ascribed in July Orders; and
(d)'Premises' means the premises occupied by the Company at 180 Wright Street, Cloverdale, Western Australia;
(e) 'Supporting Affidavit' means the confidential affidavit of Neil Raymond Cribb sworn on 4 December 2019 and filed in these proceedings; and
(f) 'Uncollected SDB Goods' has the meaning ascribed at paragraph 11(b) of the Supporting Affidavit.
Other Uncollected SDB Goods
4. The plaintiff is justified, and is otherwise acting reasonably, in treating the Uncollected SDB Goods (excluding the SDB-198 Contents) as:
(a) abandoned by Owner of those Uncollected SDB Goods and any interest that any such Owner has in those Uncollected SDB Goods as having been disclaimed; and
(b) property of the Company which the plaintiff may deal with in the ordinary course of the liquidation of the Company;
Uncollected Document Storage
5. The plaintiff is justified, and is otherwise acting reasonably, in destroying any documents stored by third parties with the Company for safe keeping which remain in his possession as at the date of these orders.
Uncollected allocated storage goods
6. The plaintiff is justified, and is otherwise acting reasonably, in treating the allocated storage goods referred to in paragraphs 178 and 179 of the Supporting Affidavit as:
(a) abandoned by Owner of those goods and any interest that any such Owner has in those Uncollected Allocated Storage Goods as having been disclaimed; and
(b) property of the Company which the plaintiff may deal with in the ordinary course of the liquidation of the Company.
Sales orders
7. The plaintiff is justified, and is otherwise acting reasonably, in treating the Uncollected Sales Order Goods referred to in paragraphs 180 and 181 of the Supporting Affidavit as:
(a) abandoned by the Owner of those Uncollected Sales Order Goods and any interest that any such Owner has in those Uncollected Sales Order Goods as having been disclaimed; and
(b) property of the Company which the plaintiff may deal with in the ordinary course of the liquidation of the Company.
General
8. The plaintiff's costs of this proceeding and of undertaking the processes authorised by these Orders that are not satisfied by receipt of the Collection Levy, be paid out of the assets of the Company as an expense of the winding up.
9. There be liberty to apply, including by any person affected by these Orders on 48 hours' notice.
Against that background by amended application filed 18 May 2020 the plaintiff seeks the following orders (marking up omitted):
Relief in respect of 1kg Perth Mint silver bars
1. A declaration that the First Defendants are entitled to possession of the following goods identified in the 'White Tub' as defined in the Affidavits and which remain in the Plaintiff's possession:
(a) 10 x 1kg Perth Mint silver bars; and
(b) 131 x 100oz Perth Mint silver bars.
2. A declaration that the Second Defendants are entitled to possession of 182 of the 1kg Perth Mint silver bars in the Plaintiff's possession.
3. A declaration that the Third Defendant is entitled to possession of 74 of the 1kg Perth Mint silver bars in the Plaintiff's possession.
4. For the purposes of paragraphs 5 to 7, the following definitions apply:
(a) Residual Bars means that quantity of the 531 x 1kg Perth Mint silver bars in the Plaintiff's possession in respect of which declaratory relief in terms of paragraphs 1 to 3 above is not made.
(b) Residual Possession Claims means the claims to possession of the Residual Bars by:
(i) each of the Third Defendant, the Fourth Defendants, the Fifth Defendant and the Plaintiff; and
(ii) such other of the Defendants (if any) whose claims to possession are not fully resolved by the declaratory relief sought at paragraphs 1 to 3 above.
5. Such orders and directions as the Court thinks fit for the determination of the Residual Possession Claims in respect of the Residual Bars.
6. To the extent that any Party is unable to demonstrate an entitlement to the Residual Bars:
(a) a declaration that those Residual Bars are property of Bullion Bourse Pty Ltd (In Liquidation) (Company); and
(b) such orders and declarations as the Court thinks fit (if any) for the realisation of those Residual Bars in the course of the liquidation of the Company.
7. Alternatively to paragraphs 5 to 6:
(a) pursuant to Order 17 of the Rules of the Supreme Court of Western Australia 1971 (WA) an order that the Plaintiff pay into the Court the Residual Bars claimed against him by the Defendants asserting the Residual Ownership Claims;
(b) an order that no action be brought against the Plaintiff by any of the Defendants in respect of the Residual Bars; and
(c) such orders and directions as the Court thinks fit for the determination of all matters in dispute between the Defendants in respect of the Residual Bars.
Relief in respect of 10oz Perth Mint silver bars
8. Such orders and directions as the Court thinks fit for the determination of the Sixth Defendants' claim to the 39 x 10oz Perth Mint silver bars (10oz Bars) which remain in the Plaintiff's possession.
9. To the extent that the Sixth Defendants are unable to demonstrate an entitlement to the 10oz Bars:
(a) a declaration that those 10oz Bars are property of the Company; and
(b) such orders and declarations as the Court thinks fit (if any) for the realisation of those 10oz Bars in the course of the liquidation of the Company.
Relief in respect of 5kg ABC silver bars
10.A direction that the Plaintiff is justified in treating the Seventh Defendant as entitled to possession of the 42 x 5kg ABS silver bars (ABC Bars) which remain in the Plaintiff's possession.
11. Alternatively to paragraph 10 above, such other orders and directions as the Court thinks fit in relation to the ABC Bars.
Costs levy
12. A direction that the liquidator is justified in asserting an entitlement to an indemnity secured by an equitable lien against the goods the subject of this amended originating process, for the payment of his costs, expenses and remuneration relating to identifying, preserving and returning the goods (which are not the subject of any orders made in terms of paragraphs 13 and 14 below), to be set at an amount that the court thinks fit.
Costs of this application
13. In respect of paragraphs 1 to 3 and 8 costs in the cause.
14.In respect of paragraphs 4 to 7, 9, 10, 11 and 12 no order as to costs.
The plaintiff relies on five affidavits he has sworn in relation to this matter – the first filed on 29 July 2019, the last on 10 July 2020. The first defendants have filed two affidavits, an affidavit of Benjamin Didier Welsh sworn 5 February 2020 and an affidavit of Cameron Joseph Sutton sworn 29 June 2020. The second defendants filed affidavits sworn 30 June 2020. None of the third to seventh defendants have filed any affidavit material. Additional material provided to the liquidator by the defendants during the course of conferring with each of them in relation to the amended originating process is found annexed to the liquidator's fourth affidavit.
As I have indicated above, prior to the filing of the amended originating process these proceedings were the liquidator's application for directions made pursuant to s 90‑15 of the IPS. By enactment of the Insolvency Law Reform Act 2016 (Cth) s 90‑15 of the IPS replaced the former s 479(3) and s 511 of the Corporations Act. The liquidator submits, and I accept, that s 90‑15 of the IPS serves the same purpose as the repealed provisions. That approach is consistent with the decision of Gleeson J in Re Poles & Underground Pty Ltd (Administrators appointed) [2017] FCA 486 and Griffiths J in Re Sakr Bros Pty Ltd (In liq) [2019] FCA 547. In his written submissions (pars 14 – 20), counsel for the plaintiff set out the principles underlying an application for judicial advice. Nothing in those submissions is controversial. Importantly, for the purposes of this application, I accept that an application for directions does not enable a court to make binding orders in the nature of judgments. The court is to give advice as to the liquidator's proper course of action in the liquidation. It is not intended to determine the rights and liabilities arising from the company's transations before the liquidation: see Re GB Nathan & Co Pty Ltd (In liq) [1991] 24 NSWLR 674, 679.
Prior to the filing of the amended originating process, the guidance sought by the liquidator in these proceedings has been as to whether he is justified in implementing various courses of action proposed by him in order to identify and facilitate the return of third party property to the relevant owners. However, in implementing these court sanctioned courses of action, the liquidator has been unable to resolve the third party property claims of each of the defendants and the question of who is entitled to the Loose Goods. Further, the defendants' claims have the potential to compete with one another or with the liquidator's claim made on behalf of the company that certain of the Loose Goods is company stock.
The liquidator is concerned that without directions he will effectively become the arbiter of the defendants' substantive rights in circumstances where such determination would not be binding on the defendants. Accordingly, he has sought the court's determination of these claims in a manner that affords each of the defendants the opportunity to be heard on the application. As the orders set out above indicate, each of the defendants were joined as parties to these proceedings and the proceedings were 'converted' into inter party proceedings for the determination of the parties' substantial rights. The procedures of the court are sufficiently flexible to enable such a change. It is a convenient course in order to avoid the need to commence further proceedings involving additional cost and delay.
The amended originating process seeks, among other things, declarations as to certain of the defendants' entitlement to possession of certain of the Loose Goods. The term 'Loose Goods' is defined as follows in the plaintiff's fourth affidavit sworn 27 March 2020. Paragraph 13 of that affidavit reads as follows:
13.The Loose Goods that are the subject of the Amended Originating Process are:
(a)131 x 100oz Perth Mint silver bars;
(b)39 x 10z Perth Mint silver bars;
(c)42 x 5kg ABC silver bars; and
(d)531 x 1kg Perth Mint silver bars.
The parties are agreed that the relevant standard of proof in deciding whether to grant declaratory relief is that the relevant defendant is entitled to possession of the relevant Loose Goods on the balance of probabilities. While the liquidator was prepared to leave the court to determine the matter based upon the evidence and the submissions of the various defendants, he framed the declaratory relief sought in the amended originating process in a manner which reflected his assessment of the claims having regard to the material facts.
Submissions were filed on behalf of the first defendants, the fourth defendants and the seventh defendant. The first defendants and the seventh defendant were represented by solicitors. The first defendants' submissions support Order 1 which it is said 'sees the return of their property'. The seventh defendant supports Order 10 in preference to Order 11. In these two cases it is not necessary for me to go through the evidence in detail. It is sufficient if I say the liquidator has undertaken a thorough examination of the books and records of the company (such as they are) and made all necessary investigations to establish the ownership of the goods. In the circumstances, I am satisfied the orders proposed by the plaintiff ought be made in relation to these defendants. So there will be an order in terms of par 1 and par 10 of the amended originating process with par 11 eliminated.
Sofar as the second defendants are concerned, I am satisfied that not only are they entitled to 182 of the 1 kg silver bars in the plaintiff's possession but they are entitled to another 114 1 kg bars. In support of their claim for the extra bars, the first‑named and second‑named second defendants relied on affidavits they swore on 30 June 2020. These affidavits set out the basis upon which the second defendants collectively claim the extra bars. On the balance of probabilities, I am satisfied they have made out their entitlement. Thus, the second defendants are entitled to 296 of the 1 kg Perth Mint silver bars. That represents the full extent of their claim to the Loose Goods.
Based upon the evidence available I am satisfied the third defendant is entitled to 74 of the 1 kg Perth Mint bars. That reflects a part of his claim to the Loose Goods.
On the evidence available it is not presently possible to determine the 'residual possession claims' in respect of the 'residual bars'. The best course is for there to be a declaration the residual bars are the property of the company and can be realised in the course of the liquidation.
On balance, I am satisfied that the orders with respect to the costs levy and the costs of the application ought be in terms of pars 12, 13 and 14 of the amended originating process. Those parties who filed submissions objected to the proposed costs orders. In reasons published on 19 August 2019, I considered the competing authorities regarding who ought bare the liquidator's costs of implementing the course of action sanctioned by the July orders in relation to each class of third party goods. In effect, I concluded the costs ought be borne, if not wholly, at least in part, by the owners of the third party goods. Accordingly, the July orders directed that the liquidator was justified in asserting an entitlement to an indemnity secured by an equitable lien against the third party property in his possession for the payment of his costs, expenses and remuneration relating to identifying, preserving and facilitating the return of the third party property. In effect, that has enabled the liquidator to impose a levy on the third party property owners for the return of their property.
Implicit in the July orders is recognition that the liquidator's costs would differ according to various categories of third party goods reflecting the varying degrees of difficulty that the liquidator faced in ascertaining the owners of the third party goods. However, the liquidator's ability to impose a levy was constrained to a 'base levy' with any amount in excess to be set by further costs order.
The 'base levy' set out in par 2 of the July orders was arrived at having regard to the costs which the liquidator, at that time, anticipated he would have to incur in order to implement the course of action proposed by him. This was ultimately sanctioned by the court in relation to the identified SDB goods holders. That category of third party property owner was the easiest for the liquidator to identify. It is important to note the base levy represented a contribution to, rather than recoupment of the full extent of those costs. The July orders anticipated the liquidator could seek to impose a levy that was greater than the base levy.
By the September orders I directed that the liquidator was justified in imposing a costs levy in an amount of $3,000 on the holders of ELBs, and asserting a lien over the ELB goods. All the defendants, save for the sixth defendants, are ELB holders and have paid the ELB costs levy. The basis upon which the liquidator sought a direction that he was justified in imposing the ELB costs levy was the additional costs that he was put to in dealing with the ELBs, including the liquidator's professional costs associated with gathering evidence and preparing the application for further directions and attending each collection appointment in order to facilitate the return of the goods to the relevant ELB holder. I did not provide any written reasons for the decision in relation to the September orders. However, in my view there is no doubt that the analysis of the authorities provided in the earlier reasons applies equally to the ELB costs levy and continues to apply to the present application.
In this case, the liquidator faced considerable difficulty in establishing ownership of the goods. It is the fact the books and records of the company were in a deplorable condition and it required significant work for the liquidator to ascertain the entitlement to goods, particular when there were competing claims. The fact is the costs incurred by the liquidator are exclusively referable to facilitating the identification and return of third party goods to their owners or persons entitled to possess them. The owners of the third party goods have received the benefit of the work undertaken by the liquidator. In those circumstances, it is entirely proper the third parties should bear the costs associated with identification, preservation and repatriation of the third party goods. In short, I have not changed my views since August 2019. That makes proposed Order 12 proper and appropriate.
On publication of these reasons the parties ought confer as to the proper form of orders. If no agreement can be reached, parties ought file competing minute of orders within seven (7) days.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
CB
Associate to Master Sanderson22 SEPTEMBER 2020
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