Peter Michael Melsom and George Aubrey Lopez, the Receivers and Managers of the property of Rowena Nominees Pty Ltd (Receiver and Manager Appointed) (In Liq) v Rowena Nominees Pty Ltd (Receiver and Manager..
[1999] WASC 277
PETER MICHAEL MELSOM and GEORGE AUBREY LOPEZ, the Receivers and Managers of the property of Rowena Nominees Pty Ltd (Receiver and Manager Appointed) (In Liq) -v- ROWENA NOMINEES PTY LTD (Receiver and Manager Appointed) (In Liq) [1999] WASC 277
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [1999] WASC 277 | |
| Case No: | COR:281/1999 | 18 NOVEMBER 1999 | |
| Coram: | OWEN J | 18/11/99 | |
| 7 | Judgment Part: | 1 of 1 | |
| Result: | Application granted | ||
| PDF Version |
| Parties: | PETER MICHAEL MELSOM and GEORGE AUBREY LOPEZ, the Receivers and Managers of the property of Rowena Nominees Pty Ltd (Receiver and Manager Appointed) (In Liq) ROWENA NOMINEES PTY LTD (Receiver and Manager Appointed) (In Liq) |
Catchwords: | Corporations Receivers, Managers and Controllers Application under s 420B of Corporations Law Whether receiver and manager is a "managing controller" under the Corporations Law Pre-conditions of s 420B satisfied Receiver and manager authorised to sell assets subject to charge under which receiver and manager appointed Statutes Interpretation Corporations Law, s 420B Whether term "sell or dispose of property" applies to whole process of sale from entry into contract to final transfer of title or only to entry into contract |
Legislation: | Corporations Law, s 420B |
Case References: | Slater v Global Finance Group Pty Ltd (1999) 30 ACSR 519 Godfrey Constructions Pty Ltd v Kanangra Park Pty Ltd (1972) 128 CLR 529 Humphris v Jenshol (1997) ACSR 212 Pattison v Lockwood [1998] 472 FCA (30 April 1998) Re Chilia Properties Pty Ltd (1997) 23 ACSR 548 Re Hallett's Estate [1874-80] All ER Rep 793 Re Horsham Kyosan Engineering Co Ltd (1972) VR 403 Re Oatway (1903) 2 Ch 356 Re Universal Distribution Co Ltd (1933) 48 CLR 171 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Applicant
AND
ROWENA NOMINEES PTY LTD (Receiver and Manager Appointed) (In Liq)
Respondent
Catchwords:
Corporations - Receivers, Managers and Controllers - Application under s 420B of Corporations Law - Whether receiver and manager is a "managing controller" under the Corporations Law - Pre-conditions of s 420B satisfied - Receiver and manager authorised to sell assets subject to charge under which receiver and manager appointed
(Page 2)
Statutes - Interpretation - Corporations Law, s 420B - Whether term "sell or dispose of property" applies to whole process of sale from entry into contract to final transfer of title or only to entry into contract
Legislation:
Corporations Law, s 420B
Result:
Application granted
Representation:
Counsel:
Applicant : Mr M J Hawkins
Respondent : Mr A R Beech
Objectors : Mr D H Solomon
Solicitors:
Applicant : Minister of Fair Trading
Respondent : Tottle Christensen
Objectors : Solomon Brothers
Case(s) referred to in judgment(s):
Slater v Global Finance Group Pty Ltd (1999) 30 ACSR 519
Case(s) also cited:
Godfrey Constructions Pty Ltd v Kanangra Park Pty Ltd (1972) 128 CLR 529
Humphris v Jenshol (1997) ACSR 212
Pattison v Lockwood [1998] 472 FCA (30 April 1998)
Re Chilia Properties Pty Ltd (1997) 23 ACSR 548
Re Hallett's Estate [1874-80] All ER Rep 793
Re Horsham Kyosan Engineering Co Ltd (1972) VR 403
(Page 3)
Re Oatway (1903) 2 Ch 356
Re Universal Distribution Co Ltd (1933) 48 CLR 171
(Page 4)
1 OWEN J: This is an application under s 420B of the Corporations Law ("the Law") by a receiver and manager for authorisation to sell assets which are subject to the charge under which the receiver and manager was appointed. The assets are also subject to encumbrances or charges which do or could take precedence over the claim of the charge holder who appointed the receiver and manager.
2 The first issue which is raised by the Objectors (who are some of the investors) for whom Mr Solomon acts is that the receiver and manager has no power to invoke the assistance of the court under s 420B because he is not a "managing controller" as that term is understood in the Law and used in s 420B (1). I do not accept that submission. The term "managing controller" was imported into corporations regulations upon the enactment of the Law. It was not to be found in the predecessor legislation. It is a term of very wide import.
3 As can be seen from s 9, "managing controller" includes a receiver and manager and effectively any other person who has control of the affairs of the company. The term "receiver and manager" is itself extended by s 90 of the Law to include persons who have the control of, and the power to manage, the affairs of the company. It is true that the term "management" is usually understood in the context of the continuing operation of a business, but that is not always the case.
4 I am satisfied that the term "managing controller" is wide enough to include a receiver and manager who has the very wide powers that are given both by the Law and by cl 13.2 and cl 14.4 of the deed of charge.
5 No order can be made under s 420B unless the court is satisfied that the four preconditions in s 420B(2) are satisfied. The first condition is that, apart from the existence of the prior charge, the controller would have power to sell or to so dispose of the property. It seems to me that this is a case where that power exists. I refer particularly to cl 13.2(m) and cl 14.4 of the charge.
6 Again Mr Solomon referred to the potential claims of parties who are described as "trust account claimants". I do not need to go into that issue in any depth. It is a complex one. It arises from and relates to the affairs of the persons who were in control of the respondent, Rowena Nominees Pty Ltd, when it was involved in the conduct of a finance broking business.
7 The allegation is that there was a mixing of trust moneys and the operation of trust accounts in a way which was a breach of trust. That is a
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- live issue but it is one that it is not necessary for me to resolve today. I am not, in the terms of this order, indicating that the funds are to be taken away or moved away from those trust account claimants. That can be dealt with at a later time.
8 It seems to me that the term "property", as it is defined in the Law, is wide enough to incorporate property which is not beneficially owned by the corporation concerned. For that you need only look at the definition of property in s 9 and the decision of this Court in Slater v Global Finance Group Pty Ltd (1999) 30 ACSR 519 at 523.
9 There is another issue that is of some interest, namely, whether or not the term "sell or dispose of", as it is used in s 420B, applies only at the stage of entering into a contract or whether it applies also to the process of sale leading to conveyance and transfer.
10 It is a question of statutory construction. Looked at in the terms of the mischief which the section was designed to overcome and applying the natural and ordinary meaning of the words, it seems to me that they carry their full import. They apply to the whole process of sale from the entering into the contract to the eventual and final transfer of title.
11 I find support for this in the definition of the word "sell" in the Concise Oxford Dictionary which includes these words: "Make over or dispose of in exchange for money". The words "in exchange for money" seem to me to take the matter through to what, in conveyancing parlance, would be referred to as settlement of a transaction of that nature. The fact that in relation to the Cheyne Beach property, a contract has already been entered into, does not in my view prohibit the managing controller from invoking the assistance of the court under the section. For those reasons I think that the first of those preconditions is satisfied.
12 The second precondition is that the controller has taken all reasonable steps to obtain the consent of the holder of the prior charge to the sale or disposal, but has not obtained that consent. As I understand it, in broad terms (and there may be the odd exception to this), the holders of the various prior charges or encumbrances have been advised and all or most of them, other than the charge holders or encumbrance holders for whom Mr Solomon acts, have consented.
13 I was taken to the exchanges of correspondence between the solicitors for the managing controller and the solicitors for those parties who have not consented. Given what I have heard during the course of today, and having read the papers, I am not surprised that there is mutual
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- suspicion. However, I am satisfied that mutual suspicion does not go to the extent that would be necessary for me to find that there had been no bona fide attempt by the managing controller to obtain the requisite consents.
14 The third of the preconditions is that the sale or disposal of the property under the order is in the best interests of the corporation's creditors and of the corporation. At the moment I can see no argument to the contrary. In fact, it seems to me that the interests of everyone connected with this unfortunate disaster would best be served by having the assets sold.
15 The last of the preconditions is that the sale or disposal of the property under the order will not unreasonably prejudice the rights or interests of the holder of the prior charge. Some prior charge holders have consented and, in relation to them, the condition is obviously satisfied. In relation to investors who hold registered mortgages over that part of the property that constitutes land but who have not consented, protective conditions can be attached to the order. I am satisfied that there will be no unreasonable prejudice to the rights or interests of the holders of the prior charges.
16 I am therefore satisfied that the preconditions have been fulfilled. I see no other reason why the discretion should not be exercised in favour of the making of the orders. For the those reasons I will accede to the application.
17 So far as the terminology or the content of the orders is concerned, paragraph 1 will be in accordance with a document which is headed "Minute of Proposed Order". This is an attachment to the applicant's outline of submissions.
18 Paragraph 2 will read as follows:
"The proceeds from selling or disposing of the properties referred to in paragraph 1 shall be dealt with as follows:
2.1: in and towards payment of the applicant's reasonable remuneration costs and expenses relating to or arising from the disposal or sale of the property referred to in paragraph 1;
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- 2.2: insofar as the property sold or disposed of is land in payment of the claim of any registered mortgagee upon the land;
2.3: the balance of the proceeds shall be held by the applicant and shall not be disposed of other than in accordance with an order of the court and there shall be liberty to apply in relation thereto."
19 Paragraph 3 and par 4 are as per the application. Paragraph 6 will be as per paragraph 6 in the application. I need to come back then to par 5. The word "claim", being the fourth word, probably is meant to be "deliver".
20 I should now say why I have come to the view that it would be proper for the order to include that this applicant get its costs related to the sale or disposal of the assets. I could not have made the order unless I were satisfied that the sale was in the best interests of those associated with this unfortunate situation and that it is not unreasonably prejudicial. Someone has to effect the sale. The other person who could effect the sale is Mr Conlan in his capacity as the liquidator or as supervisor of the business. Mr Conlan has indicated that due to a shortage of funds in the administration he would prefer not to do so.
21 I repeat that I am satisfied that the conditions that apply to this order adequately protect people with interests in these assets. These assets would have to be sold in any event. It follows that costs would be incurred by someone in effecting the sales. The receivers and managers are persons with statutory and common law responsibilities to those who are interested in the affairs of the company. There is sufficient protection to ensure that the costs will be limited to those that are properly incurred.
22 In any event, a person aggrieved can always seek the assistance of the court should any person that comes within the definition of a managing controller be said to have or be seen to have incurred costs improperly or inappropriately. For those reasons they will be the orders.
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