Phelan v Ambridge Corporation P/L

[2005] NSWSC 875

Reported Decision: 55 ACSR 136

New South Wales

Supreme Court

CITATION:	Phelan v Ambridge Corporation P/L [2005] NSWSC 875
HEARING DATE(S):	22 August 2005
JUDGMENT DATE :	22 August 2005
JUDGMENT OF:	Brereton J
DECISION:	Provisional liquidator refused; interim receiver appointed.

CATCHWORDS:	CORPORATIONS - administration - winding up - service - provisional liquidator - standing to apply - whether beneficiary of trust is a creditor of trustee - whether beneficiary of trust may be "contingent creditor"
LEGISLATION CITED:	Supreme Court Act 1970 s 67 Corporations Act 2001 s 109, s 206, s 420, s 461, s 553 Uniform Civil Procedure Rules r 10.14
CASES CITED:	Riviana (Australia) Pty Limited v Laospac Trading Pty Limited (1986) 10 ACLR 865 Lubavitch Mazal Pty Limited v Yeshiva Properties No 1 Pty Limited (2003) 47 ACSR 197 CIC Insurance Limited (provisional liquidator appointed) v Hannan & Co Pty Limited (2001) 38 ACSR 245 Lunn v Cardiff Coal Company (No 3) (2003) 47 ACSR 79 Webb v Stenton (1883) 11 QBD 518 Re Greenwood, Sutcliffe v Gledhill [1901] 1 Ch 887 National Australia Bank Limited v Market Holdings Pty Limited (2000) 50 NSWLR 465 Alati v Wei Sheung (2000) 34 ACSR 489 Roy Morgan Research Centre Pty Ltd v Wilson Market Research Pty Limited (1996) 39 NSWLR 311, 20 ACSR 108 Stonegate Securities Ltd v Gregory [1980] Ch 576; [1980] 1 All ER 241; [1980] 3 WLR 168 Community Development Pty Limited v Engwirda Construction Company (1969) 120 CLR 455, 459 (Kitto J) Re William Hockley Limited [1962] 2 All ER 111, 113 In the matter of Simionato Holdings Pty Limited (1997) 15 ACLC 477 Thomas v Mackay Investments Pty Ltd (1996) 22 ACSR 294
PARTIES:	Timothy Phelan (plaintiff) Ambridge Corporation Pty Limited (defendant)
FILE NUMBER(S):	SC 4517 of 2005
COUNSEL:	A P Coleman (plaintiff)
SOLICITORS:	Kemp Strang (plaintiff)

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

Brereton J

Monday 22 August 2005

4517/05 Timothy Phelan v Ambridge Corporation Pty Limited

JUDGMENT (ex tempore)

1 HIS HONOUR: Pursuant to leave granted by McDougall J on 16 August 2005 the plaintiff, Timothy Phelan, filed an originating process that day seeking an order that the court wind up the defendant, Ambridge Corporation Pty Limited, under the Corporations Act, ss 461(1)(a) and 461(1)(k). By interlocutory process filed on the same day, the plaintiff seeks by way of interlocutory relief an order that David Levi, an official liquidator, be appointed liquidator of Ambridge provisionally and consequential orders.

2 Mr Coleman, who appears for the plaintiff, has foreshadowed seeking leave to file in court an amended interlocutory process claiming, in the alternative, an order appointing Mr Levi receiver and manager of Ambridge. I proceed on the basis that that amended interlocutory process will be filed shortly.

3 Also on 16 August, McDougall J abridged time for service of the originating and interlocutory processes to 5pm on 18 August 2005 and directed service on Andrew Hugh Jenner Wiley and Paul Weston by the same time and date. The interest of those persons will become apparent.

4 An ASIC extract shows Ambridge’s registered office and principal place of business to be Level 35, 140 William Street, Melbourne in the State of Victoria. By letter dated 13 May 2005 addressed to Ambridge at that address the plaintiff’s solicitors, Kemp Strang, requested certain information and required certain steps to be taken by Ambridge. That letter, which was sent by Express Post Guaranteed Next Day Delivery, was returned undelivered marked “Left address” on 15 May 2005. On 17 August 2005 Adam William Beggs, a licensed process server, attempted to serve Ambridge with the originating process and the interlocutory process at its registered office, but ascertained that Ambridge no longer operated from that address, and that the offices at which Ambridge was once located are now occupied by another unrelated entity.

5 According to the ASIC extract Ambridge has but one director, one Mark Andrew Cyril Stanley, of 52 Avoca Street, South Yarra in the State of Victoria. Mr Stanley is also recorded as the secretary of Ambridge. The plaintiff’s solicitors have forwarded letters to Mr Stanley at that address on at least 6 May 2005 and 13 May 2005, each of which has been returned undelivered.

6 On 17 May 2005 a sequestration order was made in the bankruptcy jurisdiction of the Federal Magistrates’ Court of Australia against Mr Stanley, he having previously attempted to present a debtor’s petition, and Paul G Weston of Horwath was appointed trustee of his bankrupt estate. On 15 August 2005 the plaintiff’s solicitors forwarded by way of service copies of the originating process and supporting affidavits to Mr Weston and by e-mail dated 15 August 2005 Mr Weston acknowledged receipt of that material. Pursuant to the directions of McDougall J to which I have referred, Kemp Strang, on 17 August 2005, forwarded to Mr Weston copies of the originating process, interlocutory process, supporting affidavits and the orders made by McDougall J on 16 August, and by e-mail of 18 August 2005 Ms Occleshaw of Horwath acknowledged receipt of them. Mr Weston has consistently indicated that he does not wish to appear on, or to oppose, the present application.

7 The ASIC extract records that the shareholders in Ambridge are Mr Stanley (as to one ordinary share), and a corporation, FBN Investments Pty Limited (as to eleven ordinary shares). A company extract for FBN records that on 21 June 2004 Andrew Hugh Jenner Wiley was appointed receiver and manager of that company, and that its only director and secretary is Mr Stanley.

8 On 15 August 2005 the plaintiff’s solicitors forwarded copies of the originating process and supporting affidavits to Mr Wiley who, by facsimile of the same date, acknowledged receipt and confirmed that he did not wish to be a party to these proceedings. Pursuant to the directions of McDougall J, Kemp Strang forwarded a copy of the orders which His Honour had made to Armstrong Wiley on 17 August 2005, and by telephone on the same date at 9.15am, Mr Wiley’s employee, Hector West, acknowledged to Mr de Stoop of Kemp Strang receipt of the relevant documentation. By e-mail dated 18 August 2005 he confirmed that receipt.

9 It should also be noted that, as a result of his bankruptcy Mr Stanley is, pursuant to the Corporations Act s 206B, disqualified from acting as a director of a company.

10 Corporations Act, s 109X, has the effect that a document may be served on a company by leaving it at or posting it to the company’s registered office or by delivering a copy of the document personally to a director of the company who resides in Australia (the other means of service are presently immaterial). The evidence to which I have referred does not establish that the originating process or interlocutory process was left at or posted to Ambridge’s registered office, the person who attempted service there having not left the documents there. Nor does the evidence establish that a copy has been delivered personally to the only director, Mr Stanley. However, s 109X(6) provides that the section does not affect the power of the court to authorise a document to be served in a different way.

11 I am not satisfied that service has been effected strictly in accordance with the requirements of s 109X, but I am satisfied that all reasonable steps have been taken to bring the proceedings to the notice of anyone who could conceivably have an interest in them. By that I refer in particular to the only persons who could have a beneficial interest, namely, Mr Stanley’s trustee in bankruptcy and the receiver of FBN. Accordingly, I propose pursuant to UCPR 10.14(3) to direct that the originating process and interlocutory process be taken to have been served on Ambridge on 17 August 2005.

12 On an application for the appointment of a provisional liquidator, and putting to one side the circumstance where the applicant is the company itself, I take the law to be as set out by Young J (as the Chief Judge in Equity then was) in Riviana (Australia) Pty Limited v Laospac Trading Pty Limited (1986) 10 ACLR 865 (at 866), as follows:

The second situation is where a creditor seeks an ex parte appointment of a provisional liquidator. In such a case the court will proceed very cautiously. The mere fact that insolvency has been prima facie demonstrated is not sufficient to justify the appointment of a provisional liquidator: Re Hill v Plummer (Martins) Limited [1956] NZLR 979; Re McLennan Holdings Pty Limited (1983) 7 ACLR 732. What is required is that the plaintiff show that there is some useful purpose why in the public interest a provisional liquidator should be put in as a matter of urgency and although by no means is the jurisdiction limited to this, ordinarily it will only be cases where it can be shown that there will be great jeopardy to the assets of the company that such an ex parte order will be made. Such cases will include the situation where the directors can be seen to be behaving irresponsibly with respect to the proceeds generally. Very often in such cases an undertaking as to damages will be required.

13 More recently similar views have been expressed by Austin J in Lubavitch Mazal Pty Limited v Yeshiva Properties No 1 Pty Limited (2003) 47 ACSR 197. There His Honour said:

[105] The principles to be applied in considering whether to appoint a provisional liquidator are not in dispute. In Zempilas v JN Taylor Holdings Ltd (No 2) (1990) 55 SASR 103; 3 ACSR 518, King CJ (with whom Cox and Olsson JJ agreed) observed (at SASR 104–5; ACSR 520) that “the usual, although not the only, purpose for which a provisional liquidator is appointed is to preserve the assets of the company and the status quo in relation to its affairs”. Thus, the primary duty of a provisional liquidator is to preserve the status quo so as to ensure the least possible harm to all concerned and to enable the court to decide, after a proper final hearing, whether the company should be wound up: Re Carapark Industries Pty Ltd (in liq) [1967] 1 NSWR 337 Wimborne v Brien (1997) 23 ACSR 576 at 582 per Dunford AJA. In Zempilas King CJ remarked (at SASR 107; ACSR 522) that “the appointment of a provisional liquidator pending adjudication upon the petition for winding up, is a drastic intrusion into the affairs of the company and is not to be contemplated if other measures would be adequate to preserve the status quo”. The latter observation was applied by Kirby P (with whom Meagher JA agreed) in Constantinidis v JGL Trading Pty Ltd (1995) 17 ACSR 625 at 635.
[106] Subject to these observations, which relate to the special nature of provisional liquidation, there is a broad analogy between the considerations relevant to the appointment of a provisional liquidator and to the appointment of an interim receiver, or other forms of interlocutory relief to protect assets. The court should only appoint a provisional liquidator where it is satisfied that there is a reasonable prospect that a winding-up order will be made: Australian Securities Commission v Solomon (1996) 19 ACSR 73 at 80 per Tamberlin J. Where the ground for winding up is alleged insolvency, the court must adopt “a realistic assessment”: Constantinidis , at 635–6 per Kirby P. In addition to considering whether there is an arguable case to establish a ground for winding up, the court should consider the degree of urgency, the need established by the applicant creditor, and the balance of convenience: Re Club Mediterranean Pty Ltd (1975) 11 SASR 481 at 484; 1 ACLC 36 at 39 per Bright J; Australian Securities Commission v Solomon at 80 per Tamberlin J.
[107] Reference to the balance of convenience naturally raises the question whether the plaintiff should be required to give the usual undertaking as to damages as a condition of the relief. Here the undertaking has been offered, if needed, by Lubavitch Mazal.
[108] In the Zempilas case King CJ left open the question (at SASR 107; ACSR 522) whether the predecessor of s 472(2) prevented the court from requiring that the undertaking be given.
He continued:
There appears to be no requirement of law or practice to extract such an undertaking as a condition of the appointment of a provisional liquidator. The observations of the High Court in National Australia Bank Ltd v Bond Brewing Holdings Ltd (1990) 1 ACSR 722 in relation to undertakings as to damages as a condition of the appointment of a receiver and manager pending trial, were made in very different circumstances and have no application to the present situation. On the material before the court there is a strong prima facie case that the respondents have been victims of improper and oppressive conduct by the directors and that the need to protect the company’s assets and position has been brought about by such conduct. It is difficult to envisage how the appointment of a provisional liquidator could cause damage to JN Taylor Holdings Ltd, which is not carrying on business, whatever effect it might have upon the prospects of the Bond group’s securing approval of the proposed scheme of arrangement. I do not think that an undertaking as to damages should be required.
[109] I am inclined to think that in an appropriate commercial case, an undertaking as to damages should be required, otherwise consideration of the balance of convenience might be rendered meaningless. I do not understand the argument which says that the court’s normal discretion to require such an undertaking has been taken away by s 472(2), which does no more than to confer on the court the statutory power to make the appointment.

14 Against that background I consider first whether there is a seriously arguable case for the making of a winding-up order.

15 The plaintiff puts his claim for a winding-up on two grounds. First, he invokes Corporations Act s 461(1)(a), namely, that the company has by special resolution resolved that it be wound up by the court. There are in evidence counterparts, signed on the one hand by Mr Weston as trustee of Mr Stanley’s bankrupt estate and on the other by Mr Wiley as receiver and manager of FBN, of a document entitled “Special Resolution pursuant to s 249A(2) Corporations Act 2001”, to the effect that the company be wound up pursuant to s 461(1)(a) of the Corporations Act 2001, and that David Levi be appointed provisional liquidator and/or official liquidator, or court-appointed receiver or court-appointed receiver and manager of the company. Also in evidence is the consent dated 10 August 2005 of David Levi, an official liquidator, to be appointed by the court and to act as the provisional liquidator and/or official liquidator and/or court-appointed receiver and/or receiver and manager of Ambridge.

16 Mr Weston (as Mr Stanley’s trustee) and Mr Wiley (as receiver of FBN) are the only shareholders in Ambridge. In CIC Insurance Limited (provisional liquidator appointed) v Hannan & Co Pty Limited (2001) 38 ACSR 245, Barrett J accepted that Corporations Act s 461(1)(a) had been satisfied in circumstances where a paper resolution for the passing of a special resolution had been adopted. The evidence before me provides a strong prima facie case that s 461(1)(a) is satisfied, and accordingly it is at least seriously arguable that a winding-up order would be made on that ground.

17 The plaintiff secondly puts his case on the basis that it is just and equitable that Ambridge be wound up under Corporations Act s 461(1)(k). The only director of Ambridge was Mr Stanley, who is now a bankrupt, and therefore disqualified from acting as a director. The only shareholders are Mr Stanley, now by his trustee, and FBN, now with a receiver and manager appointed. As is apparent, Mr Stanley’s trustee and FBN’s receiver and manager wish the company to be wound up. The evidence discloses that there appears to be no one willing or able to be appointed as a director of Ambridge.

18 In CIC Insurance Limited, Barrett J considered that the circumstance that the directors of the company had resigned and that no one could be found willing to act as directors, coupled with the desire of the sole shareholder that the company be wound up, meant that it was appropriate for the company in that case to be wound up on the just and equitable ground. In Lunn v Cardiff Coal Company (No 3) (2003) 47 ACSR 79, Barrett J held that the existence of a state of affairs in which the company was in a state of constitutional and administrative vacuum, with one person only (the applicant for winding-up) recognisable as a shareholder, no directors in office and no apparent prospects of the election or appointment of directors, satisfied the requirements of the just and equitable ground. In CIC, the circumstances to which I have referred were amongst those relied upon by His Honour for the appointment of a provisional liquidator. I am satisfied that the present circumstances, involving a “constitutional and administrative vacuum” with both beneficially interested parties desiring a winding up establish a more than seriously arguable case for final relief by way of an order that Ambridge be wound up on the just and equitable ground.

19 The next question is whether the drastic step of appointing a provisional liquidator before the winding up application can be heard ought be taken. As I have said, in CIC Insurance Limited Barrett J relied in part on the administrative vacuum as one of the reasons for appointing a provisional liquidator. In the present case Mr Coleman has submitted that Ambridge has no director, that there is no one willing to fill that role, that the company is rudderless, that the case for winding up on either of the grounds advanced is a strong one, and that there is at least one asset - namely, the debt due from Subway Sauna Pty Limited - which steps ought to be taken to realise and protect.

20 I agree with those submissions, and I add that there is evidence, admittedly hearsay but to which some regard might be had on an interlocutory application, that Mr Stanley or his brother attend the premises of Subway Sauna daily to collect the cash takings of its business, which takings might otherwise be available to satisfy Subway Sauna’s debt to Ambridge.

21 Accordingly, subject to the question of standing to which I now come, I am satisfied that it would be appropriate to appoint a provisional liquidator.

22 The plaintiff makes his application in the claimed capacity of creditor of Ambridge. The plaintiff’s relationship with Ambridge which gives rise to the claimed debt is pursuant to an investment made by the plaintiff and Ambridge in another company just mentioned, Subway Sauna. That arrangement is recorded in a document entitled Loan Participation Agreement, apparently made on 17 December 2004 between Ambridge as trustee, and Ambridge and the plaintiff as contributors. It recites that the trustee (Ambridge) has advanced a loan of moneys to the borrower (Subway Sauna) and that the contributor (the plaintiff) has requested the trustee to allow him to participate in that loan by a contribution specified in the schedule. To my mind it is clear that the references in that recital to a loan are references to the loan made by the contributors collectively through the vehicle of the trustee to the borrower. I do not take those words to refer to any loan by the plaintiff to Ambridge.

23 Clause 2.1 of the Loan Participation Agreement provides that the trustee makes no warranty as to the security of the loan or the borrower’s capacity to repay the loan. Again, that is clearly a reference to the loan by the trustee to the borrower, Subway Sauna.

24 By clause 2.3 the trustee undertakes to hold that proportion of the loan in relation to the contribution on trust for the contributor upon the same commercial terms that it, the trustee, has with the borrower. Clause 2.4 specifically provides that the contribution is not a loan from the contributor to the trustee but that the contributor agrees to share all of the risks and benefits of the loan in accordance with its proportion of the loan rateably with the trustee. Clause 2.5 provides that the trustee is to account to the contributor for its share of the loan as may be repaid by the borrower or recovered from the securities and for its share of any interest paid or recovered.

25 It is quite clear that the plaintiff as contributor and Ambridge as trustee expressly stipulated that the relationship between them was not to be one of borrower and lender. The relationship between them is that of trustee and beneficiary. Each of them is a contributory to the loan, and Ambridge as trustee holds the benefit of the loan upon trust for each of them pro rata to their contributions.

26 The relationship between a trustee and a beneficiary is not one of debt, not even of an equitable debt. In Webb v Stenton (1883) 11 QBD 518 the Court of Appeal, affirming the Queen’s Bench Divisional Court, held that in circumstances where there was no money being the proceeds of the trust property in the hands of trustees, there was no debt owing or accruing from the trustees to the beneficiary. Lindley LJ said at 526:

Now, I quite agree that the word ‘debt’ in this order includes not only what was a common law debt before the passing of the Judicature Act , but also what was a mere equitable debt, that is to say a liquidated sum of money owing in equity from one person to another. I do not doubt that the power of attachment is extended to equitable debts. But is a trustee a debtor to the cestui que trust? You cannot say he is unless he has got in his hands money which it is his duty to hand over to the cestui que trust; then of course he is a debtor and there is no difficulty in attaching such a debt under this order. But take the case of a trustee of consols for me for my life. Is he in any proper sense my debtor so long as he has no dividends which are payable to me? Clearly not, he individually may never receive those dividends; there may be a change of trustees before the next dividend day. You cannot possibly say that a trustee is a debtor to the cestui que trust before he has, or but for some fault of his might have had, the money which it is his duty to hand over.

27 Mr Coleman invokes the closing words of that passage to support the proposition that here there is a debtor/creditor relationship because, at least arguably, there is fault on the part of the trustee, but I do not take Lindley LJ to have affirmatively held that merely because there is some fault on the part of the trustee, money not yet in the trustee’s hands can nonetheless attract the character of an obligation of debtor to creditor.

28 Further support for the view that there is no debtor/ creditor relationship may be derived from InRe Greenwood, Sutcliffe v Gledhill [1901] 1 Ch 887, particularly at 890-891 per Farwell J.

29 Mr Coleman has referred me to the judgment of Young J (as the Chief Judge then was) in National Australia Bank Limited v Market Holdings Pty Limited (2000) 50 NSWLR 465, particularly at 469 and 473, in which His Honour held that any person who has a debt payable by or a claim against a company which is admissible to proof in the winding-up of the company under (then) Corporations Law s 553, is a creditor of the company, at least from the time the company commences its winding up. However, the closing words “at least from the time the company commences its winding up” limits the applicability of that case when it comes to considering standing to apply for winding up. And in that respect, the applicability of the case is further reduced by the observations recorded in para 30 of the judgment, that cases under s 459H and 459P of the (then) Corporations Law were an exception, His Honour accepting that that line of cases were to be isolated to the strict point they decided. Moreover, as the relationship between the plaintiff and Ambridge is that of beneficiary and trustee, the plaintiff would presumably contend that its interest in the debt due to Ambridge by Subway Sauna is its beneficial property and, far from vesting in the liquidator upon winding up, rather would stand outside the liquidation.

30 I have given consideration as to whether the plaintiff might nonetheless be a contingent creditor of Ambridge and have standing in that capacity, the contingency being recovery by Ambridge of the debt due from Subway Sauna. At first I thought this view might be supported by the observations of Young J in Alati v Wei Sheung (2000) 34 ACSR 489, particularly at 493, in which His Honour, declining to follow Santow J in Roy Morgan Research Centre Pty Limited v Wilson Market Research Pty Limited (1996) 39 NSWLR 311, 20 ACSR 108, held that in circumstances where there was no dispute as to the existence but only as to the quantum of a debt, the plaintiff was nonetheless a contingent creditor, even though the debt had not been quantified. However, as the authors of Butterworths Australian Corporations Law record (at [5.4.0040]), while a “contingent creditor” in the present context means a creditor in respect of a debt which will only become due in an event which may or may not occur (a “prospective creditor” being a creditor in respect of a debt which will certainly become due in the future, either on some date already determined or on some date determinable by reference to future events: Stonegate Securities Limited v Gregory [1980] 1 Ch 576, 579 (Buckley LJ)), in either case there must be an existing obligation, and out of that existing obligation a liability on the part of a company to pay a sum of money will arise in a future event, whether it be one which must happen or only one which may happen: Community Development Pty Limited v Engwirda Construction Company (1969) 120 CLR 455, 459 (Kitto J); Re William Hockley Limited [1962] 2 All ER 111, 113; In the matter of Simionato Holdings Pty Limited (1997) 15 ACLC 477.

31 In the light of the authorities to which I have referred in holding that there is no debtor/creditor relationship in this case, I am not satisfied that it is sufficiently arguable that there is an existing obligation out of which a liability to pay a sum of money in the nature of debt may or will arise in the future. In Community Development, the primary obligation, albeit conditional, was a present contractual obligation to pay over a sum of money, upon the amount being determined. In Alati v Wei Sheung, the obligation was a present liability to pay unliquidated damages, upon those damages being assessed. In each case, it would theoretically have been possible to estimate the liability and include it as a liability in the company’s balance sheet. But an entitlement to receive 25% of a company’s profits from share trading, it being unknown whether there will be profits, does not make one a contingent creditor of the company: Thomas v Mackay Investments Pty Limited (1996) 22 ACSR 294. The reason for this is that, in distinction to Community Development and Alati, there is no present obligation. The obligation only arises in certain future events. The same applies here: there is no and may never be any obligation in the nature of debt; such obligation will arise if and only if Ambridge recovers some or all of the Subway Sauna loan. If Ambridge had in its possession trust moneys which in certain events it might be bound to pay over to the plaintiff, then he might well be a contingent creditor, but when it is not and may never come into possession of those moneys, even a contingent debtor/creditor relationship is not established.

32 Accordingly I am not satisfied that the plaintiff is a creditor of Ambridge, nor therefore that it has standing to apply for the appointment of a provisional liquidator pursuant to Corporations Act s 462(2)(b). So far as I can tell there is no other basis upon which the plaintiff would have standing to make that application, and I do not understand Mr Coleman to suggest that there is.

33 However, conscious of these potential difficulties, the plaintiff now applies in the alternative for the appointment of a receiver pursuant to Supreme Court Act s 67.

34 I grant leave to the plaintiff to file in court an amended originating process and an amended interlocutory process in the form initialled by me and placed with the papers.

35 It follows from what I have already said as to the nature of the relationship between the plaintiff and Ambridge that they stand in the relationship of beneficiary and trustee, at least in respect of the debt due to Ambridge from Subway Sauna. Such a relationship is ample to confer on the plaintiff standing to apply for the appointment of an interim receiver to Ambridge. The matters to which I have referred in concluding that there is a seriously arguable case for final relief by way of winding up on the just and equitable ground, and that it is appropriate to take the admittedly extreme step of appointment of a provisional liquidator, were it open to do so, are equally applicable to the application for appointment of an interim receiver. For those same reasons I am satisfied that there is a seriously arguable case for final relief by way of appointment of a receiver, and that the balance of convenience favours the appointment of an interim receiver.

36 In those circumstances, subject to anything which may be said about the form of the orders, I propose to make the following orders:

(1) That pursuant to Uniform Civil Procedure Rules 10.14(3), the originating process and interlocutory process be taken to have been served on the defendant on 17 August 2005.

(2) Upon the plaintiff by his counsel giving to the court the usual undertaking as to damages, order pursuant to Supreme Court Act 1970 s 67 that David Levi be appointed without security as court-appointed receiver of the defendant.

(3) Order that the receiver have the powers set out in Corporations Act s 420(1) and (2), including, without limiting the generality of the foregoing, the power to exercise all rights, powers and entitlements which the defendant might have as trustee of the trust referred to in the Loan Participation Agreement made on or about 17 December 2004.

(4) Grant liberty to the defendant to apply on forty-eight hours’ notice to dissolve these orders.

(5) Order that the costs of this application be the plaintiff’s costs in the proceedings.

(6) Order that the hearing of the application stand over to the Registrar’s list at 11 am on Monday 19 September 2005.

(7) Reserve liberty to the plaintiff to apply on seventy-two hours’ notice.

(8) To the extent necessary, direct that these orders may be entered forthwith.

37 The undertaking as to damages having been given, I make orders in the form I have already indicated.

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