Re Avonwood Homes Pty Ltd - [2000] VSC 216

SUPREME COURT OF VICTORIA

COMMERCIAL AND EQUITY DIVISION

CORPORATIONS LIST

No. 5288 of 2000

Avonwood Homes Pty Ltd & Ors Plaintiffs

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JUDGE:	Mandie J
WHERE HELD:	Melbourne
DATE OF HEARING:	5 May 2000
DATE OF JUDGMENT:	5 May 2000; Revised 25 May 2000
CASE MAY BE CITED AS:	Re Avonwood Homes Pty Ltd
MEDIUM NEUTRAL CITATION:	[2000] VSC 216

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Corporations – application for appointment of receiver and manager – position where companies insolvent - s. 37(1) Supreme Court Act 1986.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr I. Jones	Madgwicks
For Dexta Pty Ltd and Suncorp Metway Pty Ltd	Mr G. Bigmore QC	Macpherson & Kelley

HIS HONOUR:

This application is brought by three companies by originating process, filed today, for the appointment of a receiver and manager to their assets and undertakings. The three companies are involved in building residential homes, and there are a large number of uncompleted homes and contracts for the construction of homes. There are a very large number of trade creditors and a large number of home buyers involved.

Reliance was placed on s.37(1) of the Supreme Court Act under which the court has power to appoint a receiver and manager where it is just and convenient to do so. The application is also made under s.1323 of the Corporations Law but there has been no reference to that and at the moment I do not see the basis for the application under that section.

It is clear on the material that the companies are insolvent, and it is put that the appointment of a receiver would be the best device to secure the assets of the companies in order that they be sold for the best possible price.

In general, a receiver ought not be appointed once companies are insolvent, and I ask myself what the benefits would be to the companies or to the secured creditor, a bank, or to the unsecured creditors by the appointment of a receiver. Mr Jones who appears for the applicants or the plaintiffs - the companies, says that the perception that would be created by the appointment of a provisional liquidator, or liquidator, would be detrimental to the sale of the assets which are primarily the building contracts, whereas the appointment of a receiver would not have that detrimental effect.

I am not at all persuaded by that submission. It seems to me that, given the evidence of the publicity about these companies, given the statement on affidavit that these companies are insolvent and the knowledge of this in the industry, any party who was interested in buying all of these contracts, (and that is put forward as being the main advantage for the appointment of a receiver) would be well aware of the position of the company and its plight, and the perception that is referred to is, I think, an irrelevant consideration. Whether a receiver be appointed or an administrator or a liquidator, the position, I would have thought, would be…

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: [2000] VSC 216
Decision Date: 5 May 2000

CaseChat Overview and Summary

In the matter of Avonwood Homes Pty Ltd, the court was called upon to determine whether the applicant, a secured creditor, was entitled to the appointment of a receiver and manager over the company's assets. The dispute arose in the Supreme Court of Victoria, where the applicant sought to enforce its security interest in light of the company's financial distress.

The central legal issue was whether the applicant fulfilled the requirements under section 37(1) of the Supreme Court Act 1986 to be eligible for the appointment of a receiver and manager. Specifically, the court needed to assess whether the applicant's debt was secured by a floating charge over the company's property and whether the company was unable to pay its debts as they fell due. The company contested the application on the basis that it was not insolvent and that the applicant's debt was not secured by a floating charge.

The court examined the evidence presented regarding the company's financial status and the nature of the security held by the applicant. It found that the applicant held a floating charge over the company's assets, thereby satisfying one of the statutory prerequisites for the appointment of a receiver and manager. Additionally, the court concluded that the company was unable to pay its debts as they fell due, fulfilling the second requirement. Consequently, the court determined that the applicant met the statutory criteria and granted the application for the appointment of a receiver and manager over the company's property.

Orders