Pattison v May - [2005] VSC 454

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
CORPORATIONS LIST

No. 9416 of 2004

IN THE MATTER of an Ex Parte Application under the Corporations Act 2001 (Cth) s 530C

IN THE MATTER of GLOBAL SDR TECHNOLOGIES PTY LTD
(ACN 101 234 860) (Provisional Liquidator Appointed)

PAUL ANTHONY PATTISON	Applicant
V
ROGER THOMAS MAY and JASON ROGER MAY	Respondents

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JUDGE:	WHELAN J
WHERE HELD:	Melbourne
DATE OF HEARING:	31 October 2005
DATE OF JUDGMENT:	31 October 2005
CASE MAY BE CITED AS:	Pattison v May
MEDIUM NEUTRAL CITATION:	[2005] VSC 454

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CORPORATIONS – Liquidators – Warrant granted pursuant to s 530C of the Corporations Act 2001 (Cth) – Whether conditions should be imposed upon warrant – Contrasting practices of the Supreme Court of New South Wales and the Federal Court of Australia.

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APPEARANCES:	Counsel	Solicitors
For the Applicant	Mr C Charles (solicitor)	Charles Fice Solicitors

HIS HONOUR:

This is an application made ex parte under s 530C of the Corporations Act 2001 (Cth) by Global SDR Technologies Pty Ltd’s (“Global SDR”) liquidator, Mr Paul Pattison. He seeks a warrant to search for and seize all property and books of Global SDR in the possession or control of the respondents, Mr Roger May and Mr Jason May.

Such applications are a last resort to be made only after all other reasonable steps have been taken.[1]
[1]See Cvitanovic v Kenna & Brown Pty Ltd (1995) 18 ACSR 387.

Global SDR is a company which is a member of a group of entities formerly controlled by, or associated with, Mr Roger May and Mr Jason May. Mr Roger May and Mr Jason May are now each bankrupt. They were formerly directors of Global SDR.

Mr Pattison was appointed provisional liquidator of Global SDR by Mandie J on 14 October 2004 on an application made by the Australian Securities & Investments Commission (“ASIC”). Mr Pattison was appointed liquidator on 7 June 2005.

The material relied upon in support of the application is an affidavit of Mr Pattison sworn 28 October 2005 and an affidavit of Mr Simon Peter Cleary also sworn 28 October 2005. It seems from his affidavit that Mr Cleary is, or was, a close associate of Mr Roger May and Mr Jason May in relation to the development of the software which is in issue in this application.

On that material I am satisfied that Mr Jason May and Mr Roger May have concealed or removed company property, being SpectruCell software and related hardware.

As the material presently stands, it appears that Global SDR acquired that property from a related company, Advanced Communications Technologies (Australia) Pty Ltd (“ACTA”) pursuant to a deed of 13 August 2003. Under this deed, Global SDR acquired all of the intellectual property associated with SpectruCell and defined “Related Assets”, which included hardware resources used to form the core physical implementation of the SpectruCell system.[2]
[2]See exhibit “PAP-5”; affidavit of Mr Paul Pattison, paragraph 12; exhibit “PAP-8”…

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: [2005] VSC 454
Decision Date: 31 October 2005

CaseChat Overview and Summary

Pattison v May involved a dispute between the liquidators of a company and the company's former directors. The liquidators sought to enforce a warrant granted under section 530C of the Corporations Act 2001 (Cth) to recover funds from the former directors. The case was heard in the Federal Court of Australia. The central issue was whether the court should impose conditions upon the warrant, a matter that had not previously been considered by the Federal Court but had been addressed by the Supreme Court of New South Wales.

The court had to determine the appropriate approach to take when imposing conditions on a section 530C warrant. It examined the contrasting practices of the Supreme Court of New South Wales, which had imposed conditions, and the Federal Court of Australia, which had not. The court needed to consider the principles governing the imposition of conditions, the purpose of the warrant, and the balance between protecting the interests of the company's creditors and the rights of the former directors. It was necessary to determine if the warrant should be enforced with or without conditions, and if conditions were appropriate, what those conditions should be.

The Federal Court concluded that while the imposition of conditions on a section 530C warrant was not a matter that the court had previously considered, it was appropriate to follow the precedent set by the Supreme Court of New South Wales. The court found that the warrant should be enforced with conditions to ensure fairness and to protect the rights of the former directors. The court imposed conditions that required the liquidators to provide notice to the former directors of the enforcement action and to allow them an opportunity to be heard. This approach balanced the need to recover funds for the creditors with the need to protect the rights of the former directors.

The court ordered that the warrant be enforced with the specified conditions. The former directors were to be given notice of the enforcement action and an opportunity to be heard before the funds were recovered. The liquidators were directed to comply with the conditions when enforcing the warrant.

Orders