Purina, In the matter of Aircraft Support Industries Engineering Pty Ltd (in liquidation)
[2019] FCA 898
•5 June 2019
FEDERAL COURT OF AUSTRALIA
Purina, In the matter of Aircraft Support Industries Engineering Pty Ltd (in liquidation) [2019] FCA 898
File number: NSD 721 of 2019 Judge: JAGOT J Date of judgment: 5 June 2019 Catchwords: CORPORATIONS – whether the Court thinks it is necessary or desirable to make orders under s 1323 of the Corporations Act 2001 (Cth) Legislation: Corporations Act 2001 (Cth 1232)
Family Law Act 1975 (Cth)
Cases cited: Australian Securities and Investment Commission v Krecichwost [2007] NSWSC 948; (2007) 64 ACSR 411
Australian Securities and Investments Comission v Sigalla [2010] NSWSC 1423
Date of hearing: 5 June 2019 Date of last submissions: 5 June 2019 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 14 Counsel for the First Applicant R. Notley Solicitor for the First Applicant ERA Legal Counsel for the First Respondent M. Henry SC & J. Johnson Solicitor for the First Respondent Tomaras Lawyers ORDERS
NSD 721 of 2019 IN THE MATTER OF AIRCRAFT SUPPORT INDUSTRIES ENGINEERING PTY LTD (IN LIQUIDATION) BETWEEN: VINCENT PIRINA
First Applicant
AIRCRAFT SUPPORT INDUSTRIES ENGINEERING PTY LTD (IN LIQUDATION)
Second Applicant
AND: MARK CLAVIN LANGBEIN
First Respondent
ASI GLOBAL PRIVATE LIMITED
Second Respondent
JUDGE:
JAGOT J
DATE OF ORDER:
5 JUNE 2019
THE COURT ORDERS THAT:
1.Upon the First Applicant, by his counsel, providing the usual undertaking as to damages to the Court, order that the First Respondent pay into an interest bearing controlled monies account opened in the name of the legal representatives of the Applicants and the legal representatives of the First Respondent, the monies the subject of the orders made by Jagot J on 16 May 2019, being the sum of $2,358,908.59 (presently held in the General Trust Account of the legal representative for the First Respondent), such monies not to be disbursed or withdrawn from that controlled monies account without further order of the Court or the written consent of all the parties.
2.The costs of the Interlocutory Process filed 9 May 2019 be costs in the cause.
3.The Interlocutory Process filed 24 May 2019 be dismissed with no order as to costs.
4.The proceedings proceed by way of pleadings.
5.The Applicants to file and serve a Statement of Claim by 19 June 2019.
6.The Respondents to file and serve a Defence to the Statement of Claim by 3 July 2019.
7.The Applicants to serve any further evidence in chief by 31 July 2019.
8.
The matter be listed for case management directions on 7 August 2019.
THE COURT NOTES THAT:
9.The legal representative for the First Respondent have informed the Court that they will file and serve a Notice of Appearance on behalf of the Second Respondent within 7 days.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
JAGOT J:
Having heard from both parties, I am persuaded by Mr Notley’s submissions that the requirements of s 1323 of the Corporations Act 2001 (Cth) are satisfied. In this regard, I accept Mr Notley’s submission that it is important to have regard to the cases in their actual context.
In respect of s 1323, it has been said in Australian Securities and Investment Commission v Krecichwost [2007] NSWSC 948; (2007) 64 ACSR 411 at [21]:
...if the Court is satisfied that it is necessary or desirable for the protection of agreed persons to appoint a receiver, it may, in an appropriate case, make instead a freezing order and if it decides to do so, it does not need to be satisfied of all the discretionary factors outlined in Cardile, Patterson, Frigo and the many other cases on this topic, in addition to the factors set out in s 1323(1).
His Honour continued, noting that it would be quite inconsistent with that purpose, that is, the purpose underlying section 1323, to apply to that provision without thought or adaptation principles developed in relation to the appointment of receivers in other contexts and for other purposes.
A similar theme can be seen in the judgment of Barrett J in Australian Securities and Investments Comission v Sigalla [2010] NSWSC 1423 at [15] - [20], in particular, his Honour’s observation at [16]:
...there was discussion in the course of submissions about the fact that a receivership order is characterised in some of the cases as more ‘drastic’ with the result, perhaps, that in order the characterise the ‘alternative or lesser’ freezing order as ‘necessary’ or ‘desirable’, the Court must first be satisfied that the drastic remedy of receivership be awarded.
His Honour continued at [17] and [18]:
While that may be, in theory, the correct approach, the central inquiry remains the same for both the ‘drastic’ and the ‘alternative or lesser’ orders: is it necessary or desirable that the Court impinge upon the freedom of disposition that the person concerned enjoys in relation to his, her or its property and impose a regime that denies that freedom? The Court’s ordinary jurisdiction to appoint a receiver aims to protect assets that may turn out to belong to someone else. That purpose is protective. The same protective purpose is served, for the same reason, by a freezing order.
In addressing the ‘necessary or desirable’ question in relation to the ‘alternative or lesser’ freezing order, the Court is dealing with an explicit statutory criterion. The approach is not the same as that adopted in relation to an application in equity for a freezing order of a Mareva kind. But factors typically taken into account in the exercise of equitable jurisdiction may well be relevant to questions of what is ‘necessary’ or ‘desirable’ in the interests of aggrieved persons.
In the present case, as Mr Notley has put, this is not an ex parte application. Mr Langbein has had every opportunity to respond to the evidence which was filed in support of the application and has chosen not to do so. In terms of that evidence, it seems that the position is the company in liquidation is a part of a larger group of companies, all controlled by Mr Langbein, based overseas and in Australia, and known as the ASI Group.
There is evidence from a former accountant for the company and the ASI Group, Mr Ross Mottershead, which does disclose what has been described correctly by the applicant’s submissions as “significant irregularities in the accounting of ASI Group, which identify examples of monies being transferred from the bank accounts of certain entities in the ASI group, including the bank account of the company, to other entities in the ASI group, and the company subsequently being placed into liquidation.”
Further, the liquidator has also identified various payments to related parties, totalling over
$1 million, in the bank account statements of the company. There has been no explanation by Mr Langbein of any of these transactions.
There is also evidence that since the appointment of the liquidator on 25 June 2018, the three properties which Mr Langbein owns in Australia have either been sold or transferred to his wife, the latter pursuant to orders made under the Family Law Act 1975 (Cth). While it was submitted on behalf of Mr Langbein that the obvious inference to draw is that the properties have been sold in the context of a marital breakdown, I do not necessarily draw that inference in circumstances where all three properties have been sold or transferred and Mr Langbein has chosen not to give any evidence explaining the circumstances of the sale. Nor has he given evidence about the net proceeds of the sale of one of the properties and where those net sale proceeds have been deposited. I infer from the evidence and given Mr Langbein’s lack of evidence, that he has no other assets in Australia available to meet the claims presently made by the liquidator of the company in these proceedings. As submitted for the applicant, “in the absence of any evidence from Mr Langbein that he has other assets in Australia available to meet the claims, the Court would infer that he does not.”
There is further evidence that a sum of $500,000 was paid by the company into a solicitor’s trust account and subsequently withdrawn by Mr Langbein to fund the purchase of a property and a rice paddy in the Philippines and the construction of a house on the property.
The evidence referred to above is sufficient to arise above the assertion of a risk of dissipation of assets.
It is apparent that, since the appointment of the liquidator, there is a real risk of dissipation of the assets by Mr Langbein, having regard to the fact that the is the sole controller of the companies in question and that the irregularities in the financial records and dealings of the companies have reached a particular level of materiality which satisfies me that it is necessary or desirable, within the meaning of s 1323(1), that there be an appointment of a receiver, as sought by the applicant. However, I am also satisfied that, as a result, what has been described as the lesser remedy, as a matter of discretion, would be a more appropriate order in this case, as sought in the interlocutory application at [7].
In relation to the submission about the possibility of double counting in the sum which is referred to in the evidence and orders proposed by the applicant, I accept the submissions of Mr Notley, that it appears most likely that there are two separate debts, the one in the Federal Circuit Court and the one the subject of proof in these proceedings. Accordingly, I do not see that there is or has been double counting in that sum.
Therefore I make orders on the usual undertaking as to damages being given.
I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot. Associate:
Dated: 5 June 2019
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