Re Amerind Pty Ltd (rec and mgrs apptd) (in liq) (No 2)
[2017] VSC 169
•5 April 2017
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST
S ECI 2015 000418
| RE AMERIND PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) | Plaintiff |
| MATTHEW JAMES BYRNES and ANDREW STEWART REED HEWITT (in their capacity as joint and several receivers and managers of AMERIND PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) | |
| COMMONWEALTH DEPARTMENT OF EMPLOYMENT | Interested parties |
| CARTER HOLT HARVEY WOOD PRODUCTS (AUSTRALIA) PTY LTD | |
| ALPINE MDF INDUSTRIES PTY LTD | |
| BRENT MORGAN in his capacity as liquidator of AMERIND PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) | |
| AMRIMEAR PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) | |
| KATHRYN DAVID |
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JUDGE: | ROBSON J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 4 April 2017 |
DATE OF JUDGMENT: | 5 April 2017 |
CASE MAY BE CITED AS: | Re Amerind Pty Ltd (rec and mgrs apptd) (in liq) (No 2) |
MEDIUM NEUTRAL CITATION: | [2017] VSC 169 |
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COSTS – Application by receivers for directions of winding up a trading trust – Whether all parties should be entitled to their costs from the receivership surplus.
CIVIL PROCEDURE – Order to pay funds into court – Whether funds should be paid immediately into Court or whether receivers are justified in holding on to funds.
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APPEARANCES: | Counsel | Solicitors |
| For Matthew James Byrnes and Andrew Stewart Reed Hewitt (in their capacity as joint and several receivers and managers of Amerind Pty Ltd (receivers and managers appointed) (in liquidation) | H N G Austin | Mills Oakley |
| For the Commonwealth Department of Employment | C T Moller | King Wood Mallesons |
| For Carter Holt Harvey Wood Products (Australia) Pty Ltd | M G R Gronow | Polezynski Lawyers |
| For Alpine MDF Industries Pty Ltd | D F McAloon | Lander & Rogers |
| For Brent Morgan in his capacity of liquidator of Amerind Pty Ltd (receivers and managers appointed) (in liquidation) | J L Evans | Williams Winter |
| Amrimear Pty Ltd (in liquidation) | D C Harrison | Maddocks |
| For Kathryn David | J Tsalanidis | Livaditis & Co |
TABLE OF CONTENTS
Are the receivers entitled to retain any portion of the receivership surplus?........... 4
What orders should be made as to costs?........................................................................ 5
Orders.................................................................................................................................... 6
HIS HONOUR:
By a further amended originating process dated 9 May 2016, the receivers and managers of Amerind Pty Ltd (receivers and managers appointed) (in liquidation) (Amerind) (the receivers) sought directions, orders and/or declarations in relation to the allocation of the receivers’ remuneration, costs and expenses against assets realised by the receivers and the appropriate treatment of certain surplus funds held by the receivership (receivership surplus). The application was made under s 424 of the Corporations Act 2001 (Cth) (Corporations Act) and/or the Court’s inherent jurisdiction.
When the matter came on for hearing before me, beginning 26 September 2016, the parties appearing were the receivers, the liquidator of Amerind, the Commonwealth Department of Employment (the Commonwealth), Carter Holt Harvey Wood Products (Australia) Pty Ltd (CHH) and Alpine MDF Pty Ltd (Alpine). The parties between them had agreed that I should resolve seven issues.
I delivered judgment on 23 March 2017.[1] In the Re Amerind liability judgment I said that I would hear the parties on the outstanding issues for determination, including the receivers’ remuneration, costs and expenses, costs generally, and the marshalling issue at a date to be fixed, after appropriate directions were given to prepare the issue for trial.
[1] Re Amerind Pty Ltd (receivers and managers apptd) (in liq) [2017] VSC 127 (Re Amerind liability judgment).
The parties that appeared to be heard on the outstanding issues are:
(a) the receivers;
(b) the Commonwealth;
(c) the liquidator;
(d) CHH;
(e) Alpine;
(f) Amrimear Pty Ltd, as a creditor who would claim in the liquidation; and
(g) Mrs Kathryn David.
I was informed by CHH and counsel for Mrs Kathryn David (Mrs David) that she and her former husband, Mr Naja David (Mr David), are challenging the validity of the security that CHH relies on in its marshalling claim. I was informed that the challenge by Mr and Mrs David is the subject of a proceeding currently listed for hearing before the Honourable Justice Croft on 24 July 2017. Mrs David, CHH and the liquidator all agreed that duplication of evidence and arguments and the risk of inconsistent verdicts should be avoided. To this end, the liquidator proposes to issue a summons to have the issues in the matter currently listed before Croft J to be heard at the same time as the marshalling issue is heard before me.
Save for the issue of the costs of the proceeding, CHH and the liquidator agree on the directions/orders that I should make. With respect to the marshalling claim, the liquidator and CHH have agreed on directions as to how the matter should be progressed. CHH and the liquidator informed me that if my decision on the issue affecting the Commonwealth’s priority to the receivership surplus is appealed, CHH and the liquidators would seek to have the hearing of the marshalling issues adjourned until after such an appeal, the primary reason being that if an appeal from the Commonwealth were to be successful, then no money would be left in the receivership surplus and there would be no point to proceeding with the marshalling contentions. I will grant the parties liberty to apply if that eventuates. I would accept consent minutes in those circumstances.
The liquidator proposed draft minutes in respect of the marshalling claims, to which CHH agreed. I will make the orders as proposed, as copied below.
The parties have agreed on several orders that should made as a consequence of the my decision in the Re Amerind liability judgment.
The receivers proposed minutes of orders entitled ‘Plaintiffs’ Proposed Orders’. There is no dispute about orders 1, 2, 3, 5 and 6, save that the Commonwealth sought to convert directions 2, 3, 5 and 6 from directions made under s 424 of the Corporations Act to directions and declarations. The Commonwealth said that there is a question as to whether or not a direction would be open to appeal. Section 424 says that a controller of a property of a corporation may apply to the Court for directions in relation to any matter arising in connection with the performance or exercise of any of the controller’s functions and powers as controller. On the other hand, the receivers did, in their originating process, seek both directions and declarations and relied not just on s 424 but also the Court’s inherent jurisdiction.
The receivers opposed the Commonwealth’s changes and said they would be prejudiced and that it would be inappropriate to make declarations because all interested parties were not before the Court. No other party suggested that they would suffer any prejudice if I made the variation to the orders sought by the Commonwealth. In my view the declaration would only bind the parties.
The issue between the Commonwealth and the receivers is the proposed order 4 of the receivers. Under proposed order 4, the receivers seek an order that they are justified in proceeding on the basis that the receivers ought to pay the receivership surplus (less their remuneration, costs and expenses of the proceeding referred to in order 6 below, and any amount retained as a just estimate of their future remuneration, costs and expenses of finalising the receivership and affecting their retirement). So far the Commonwealth has no objection to this part of the order. The receivers’ order proceeds, however, ‘in the event that no application to appeal is commenced from these Orders pursuant to Order 64 of the Supreme Court (General Civil Procedure) Rules 2015’. This part of the proposed order is in dispute. The order then ends with the receivership surplus to be subject to the competing claims of the various interested parties.
Are the receivers entitled to retain any portion of the receivership surplus?
The receivers wish to retain from the receivership surplus the future costs of them appearing on any appeal brought by the Commonwealth against the orders that, in substance, provides that the Commonwealth, and any employees with outstanding claims, were not to be paid in priority from the receivership surplus under s 433 of the Corporations Act. The Commonwealth says that there is no basis for the receivers to be involved in any appeal. The receivers referred to issues where they considered that they should be heard on the appeal — in particular, issues relating to what constituted circulating assets and the allocation of their costs over the three different classes of assets, referred to in the Re Amerind liability judgment.
All other parties considered it appropriate for the receivers to immediately pay the receivership surplus into court and to retire, retaining only the necessary funds to finalise the receivership.
The receivers are concerned that if they pay the receivership surplus into court, and my decision regarding the priority regimes in s 433 of the Corporations Act is altered or overturned, the receivers will not have fulfilled their obligations under the Corporations Act. The receivers are concerned that, despite assurances from the Commonwealth that they would not seek payment of any funds owing to them from the receivers, the receivers may be exposed to civil claims being brought by any employees with outstanding claims (being any employees still owed money due to their entitlements not being met by the Commonwealth’s Fair Entitlements Guarantee (FEG) scheme), who may claim against the receivers for failing to pay money passing through the receivers hands to the employees, in accordance with their obligations. Any such employees would rank pro rata with the Commonwealth in the event that an appeal decision found that s 433 would apply.
I consider that it is appropriate to reserve this question until it is known whether or not an application for leave to appeal has been filed in relation to all, or any, of the orders I make herein and the grounds thereof. In the event that such an application is made, the matter should be forthwith relisted before me for further directions as to disposition of the receivership surplus. Such an application could be made by the receivers alone.
What orders should be made as to costs?
There is no dispute that the receivers are entitled to their costs as provided below.
In relation to the costs of the other parties that appeared at the initial hearing, it was submitted by the liquidators that all parties, other than Alpine, should have their costs from the receivership surplus, based on the principles of Farrow Finance v ANZ.[2]
[2](1997) 23 ACSR 521 (Hansen J).
CHH argued that its costs should be paid by the Commonwealth, and initially it was submitted that Alpine should pay costs; however, this was not pursued, and failing the Commonwealth paying CHH’s fees, save for Alpine who should not be entitled to costs, and the liquidator who should get its costs from the liquidation, all parties should have their costs from the receivership surplus.
The Commonwealth submitted that only the receivers should be entitled to their costs from the receivership surplus, and that since all other parties pursued matters of interest to them, and were enabled to do so by the receivers’ application, they should bear their own costs. In the alternative, all parties, save for Alpine, should have its costs from the receivership surplus. The Commonwealth opposed CHH’s submission that the Commonwealth should pay costs, primarily on the basis that the issues at the hearing would have been the same had the Commonwealth not appeared.
Alpine submitted that it should be treated no differently than any other interested party as the issues raised were also novel, complicated issues within the meaning of Farrow Finance v ANZ[3] and the time spent on these issues was minimal. Alpine informed the Court that it was its understanding that CHH no longer sought a costs order against Alpine.
[3](1997) 23 ACSR 521 (Hansen J).
On the issues before me at trial, the Commonwealth’s submissions were supported by the receivers. There was little need for the Commonwealth to appear as, save for one issue regarding the categorisation of the receivership surplus, its case was largely advanced by the receivers. Further, in the circumstances where the Commonwealth sought to establish a general principle relating to its FEG scheme, generally I consider it is appropriate for the Commonwealth to bear its own costs.
CHH was ultimately successful in its main argument, but for reasons it did not advance. CHH argued that Re Enhill[4] was not inconsistent with Re Independent.[5] CHH lost its arguments on the characterisation of the assets and the meaning of debenture. I consider the appropriate order is that CHH bears its own costs.
[4]Re Enhill Pty Ltd [1983] VicRp 52; [1983] 1 VR 561 (‘Re Enhill’).
[5]Re Independent Contractor Services (Aust) Pty Ltd (in liq) (No 2) [2016] NSWSC 106; (2016) 305 FLR 222 (‘Re Independent’).
Alpine lost its argument. I consider it should bear its own costs.
The liquidators’ costs should be costs in the liquidation.
Orders
In making these orders, I take note of the agreement between the receivers and CHH, to the effect that CHH undertakes to not seek costs against the receivers if the receivers do not oppose CHH’s marshalling claim.
Thus, the orders of the Court will be as follows:
THE COURT ORDERS THAT–
1.Direct, pursuant to section 50(1) of the Evidence Act2008 (Vic), that the plaintiffs (receivers) may adduce the evidence of the contents of the source documents referred to in paragraphs 15, 72 and 125 of the affidavit sworn by Matthew James Byrnes on 18 November 2015 (First Byrnes Affidavit) in the form of the summaries set out in spreadsheets as follows:
(a)exhibits “MJB-22’’, “MJB 26”, “MJB 32” and Table 1 in paragraph 79 of the First Byrnes Affidavit;
(b)exhibit “MJB-48” to the affidavit of Matthew James Byrnes sworn on 23 December 2015;
(c)exhibit “MJB-58” to the affidavit of Matthew James Byrnes sworn on 3 March 2016;
(d)exhibit “MJB-69” to the affidavit of Matthew James Byrnes sworn 29 April 2016 (Fourth Byrnes Affidavit); and
(e)exhibit “ACB-4” to the second affidavit affirmed by Ariel Currie Borland on 29 April 2016.
2.Declare, and pursuant to section 424 of the Corporations Act 2001 (Cth) (Corporations Act), direct that the receivers are justified in proceeding on the basis that surplus funds held by the receivers (receivership surplus) are properly characterised as property of the Panelveneer Processors Trading Trust (ABN 89 078 682 674).
3.Declare, and pursuant to section 424 of the Corporations Act, direct that the receivers are not justified in proceeding on the basis that the priority regime in sections 433(3), 556 and 560 of the Corporations Act applies to the proceeds of the various assets constituting the receivership surplus, insofar as those assets were, as at the date of the receivers’ appointment, also circulating assets of Amerind Pty Ltd (receivers and managers appointed) (in liquidation) (ACN 005 224 331) (Amerind) within the meaning of section 340 of the Personal Property Securities Act 2009 (Cth) (PPSA) and section 51C of the Corporations Act.
4.Declare, and pursuant to section 424 of the Corporations Act, direct that the receivers are not justified in treating Alpine MDF Pty Ltd (Alpine) as a secured creditor of Amerind, as the security interest of Alpine vested in Amerind under section 588FL of the Corporations Act immediately before the appointment of the voluntary administrators to Amerind on 11 March 2014.
5.To the extent that the receivers’ remuneration, costs and expenses of and incidental to this proceeding have not already been paid as part of their just estimate of future remuneration, costs and expenses set out in exhibit “MJB-69” to the Fourth Byrnes Affidavit, order that the receivers’ remuneration, costs and expenses of and incidental to this proceeding be paid out of the receivership surplus, on an indemnity basis.
6.Reserve the question of the disposition of the receivership surplus until a date to be fixed.
7.The liquidator’s costs should be costs in the liquidation. The Commonwealth, CHH and Alpine should each bear their own costs.
Marshalling proceedings
8.The further hearing of the proceeding is fixed for 13 June 2017 (with an estimated duration of 2 to 3 days) where the Court will hear and determine any dispute in relation to the distribution of monies paid into Court by the receivers, including the marshalling claims made by CHH, pursuant to its interlocutory process dated 6 July 2016.
9.Parties have leave to apply to seek to have the hearing of the marshalling issues adjourned until after any appeal of the above orders.
10. Any interested party file and serve any affidavit material on which it seeks to rely by 4.00 pm on 28 April 2017.
11.Any interested party file and serve any affidavit material in reply by 4.00 pm on 19 May 2017.
12.Any party wishing to cross-examine the deponent of an affidavit notify the party filing that affidavit of that in writing by 26 May 2017.
13.All interested parties file and exchange written outlines of submissions, each of not more than 3000 words, concerning the marshalling claims on or before one week prior to the final hearing.
14.The interested parties file and serve a list of agreed issues on or before three days prior to the final hearing.
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