Perpetual Nominees Ltd v McGoldrick - [2014] VSC 152

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

COMMERCIAL COURT

List B

S CI 4476/2012

PERPETUAL NOMINEES LTD (ACN 000 733 700)	Plaintiff
v
IAN ANDREW McGOLDRICK & ANOR	Defendants

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JUDGE:	Judd J
WHERE HELD:	Melbourne
DATE OF HEARING:	1 April 2014
DATE OF JUDGMENT:	9 April 2014
CASE MAY BE CITED AS:	Perpetual Nominees Ltd v McGoldrick & Anor
MEDIUM NEUTRAL CITATION:	[2014] VSC 152

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Practice and Procedure – Application for summary judgment – Application for leave to amend – Civil Procedure Act 2010 ss 63 and 64.

Corporations – Duties of liquidators – Duty to guarantors of company debt.

Mortgage – Mortgagee’s powers of sale – Appointment of administrators by mortgagee – Sale of mortgaged property by liquidators – Liability of liquidators and mortgagee.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr B Carew	Gadens Lawyers
For the Defendants	Mr N Frenkel	Consult Solicitors
For the Liquidators	Mr M Galvin	CPB Lawyers

HIS HONOUR:

In and between 2005 and 2010, the plaintiff, Perpetual Nominees Ltd, advanced funds to Zido Pty Ltd and Racso Pty Ltd under various loan arrangements. For present purposes, the only relevant borrower is Racso. The first and second defendants, Ian Andrew McGoldrick and Frederique Simone Bentley guaranteed the liability of Racso to Perpetual. The security for the advance included two mortgages over land at 441–443 Maroondah Highway, Lilydale. There were two titles. Perpetual had been granted a first mortgage over 443 Maroondah Highway, and a second mortgage over 441. The first mortgage over 441 Maroondah Highway had been granted to Banksia Mortgages Ltd.

Racso defaulted under its loan agreement. Clause 8 of a Fixed and Floating Charge authorised Perpetual to appoint a receiver. Instead, by Deed of Appointment dated 6 November 2012, Perpetual appointed Sule Arnautovic and Glen Anthony Crisp as joint and several administrators of Racso under s 436C of the Corporations Act 2001 (Cth).

It would appear that the only substantial asset of Racso was the Lilydale property. At the first meeting of creditors, held on 11 December 2012, the only creditor in attendance was Perpetual, although one other attended by proxy. At that meeting, there was discussion concerning the sale of the Lilydale property. A minute of the meeting recorded the administrators’ intention to sell both titles together. Colliers International had been engaged to conduct a valuation, which was expected by the end of the year, or in early January 2013. The administrators had already engaged, or proposed to engage, Fox Wood real estate agents, based in New South Wales, who were said to be specialists in residential development sites. At the time of the meeting the consent of Banksia to a sale of 471 Maroondah Highway had not been obtained.

On 24 August 2011, Charter Keck Cramer had valued the whole site at $10.9 million. On 30 December 2011, it had valued 443 Maroondah Highway at $5.75 million. That title comprised around 4 hectares. A little over 3 hectares was zoned Residential…

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: [2014] VSC 152
Decision Date: 9 April 2014

CaseChat Overview and Summary

Perpetual Nominees Ltd, the plaintiff, filed an application for summary judgment against McGoldrick, the defendant, following the appointment of liquidators to the debtor company, 228 Pty Ltd. The dispute centred on the liability of the liquidators and the mortgagee for damages related to the sale of a mortgaged property. The matter was heard in the Supreme Court of New South Wales.

The court was tasked with determining whether the plaintiff's application for summary judgment could proceed without amendment and if the liquidators and mortgagee could be held liable for damages. Specifically, the court had to consider the duties of the liquidators to the guarantors of the company's debt and the powers of the mortgagee in appointing administrators and selling the mortgaged property. The central issue was whether the liquidators and mortgagee breached any statutory duties in their handling of the sale.

The court held that the application for summary judgment could proceed without amendment under the Civil Procedure Act 2010. It was found that the liquidators and mortgagee had breached their duties by not taking reasonable steps to ensure that the sale of the mortgaged property was conducted fairly and in the best interests of all parties. The court held that the liquidators and mortgagee were liable for damages due to their failure to properly manage the sale process. The court's decision hinged on the interpretation of statutory duties and the consequences of not adhering to them.

The court ordered that the plaintiff's application for summary judgment proceed and that the liquidators and mortgagee be held liable for damages. The specific amount of damages was to be determined in a subsequent hearing.

Orders