BRUNO ANTHONY ROBERT SECATORE (IN HIS CAPACITY AS JOINT AND SEVERAL ADMINISTRATOR OF BACCHUS DISTILLERY PTY LTD (ADMINISTRATORS APPOINTED) (ACN 065 961 711)) and ORS	Plaintiffs
and
NEOBEV PTY LTD (ACN 165 795 746)	Defendant

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JUDGE:	Judd J
WHERE HELD:	Melbourne
DATE OF HEARING:	3 and 4 March 2014
DATE OF JUDGMENT:	26 March 2014
CASE MAY BE CITED AS:	Re Bacchus Distillery Pty Ltd (Administrators Appointed)
MEDIUM NEUTRAL CITATION:	[2014] VSC 111

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Corporations – Administrators’ powers of sale – Corporations Act 2001 (Cth) s 437A(1)(c) – Property held on trust by company under administration – Patent – Company one of two beneficial co‑owners – Absence of consent to sale by other co‑owner.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr N O’Bryan AM SC with Mr H Austin	Mills Oakley Lawyers
For the Defendant	Mr D Williams SC with Mr L Merrick	Piper Alderman

HIS HONOUR:

Before the Court were two applications brought by Interlocutory Process. The first in time was filed by the administrators of Bacchus Distillery Pty Ltd, Bruno Anthony Secatore and Daniel Juratowitch, on 5 February 2014. They sought a declaration pursuant to s 447D(1) of the Corporations Act 2001, and r 54 of the Supreme Court (General Civil Procedure) Rules 2005, that they were entitled to sell an invention now registered as a patent.[1] Bacchus is the sole registered patentee. The invention had been utilised by Bacchus in the manufacture of clean wine spirits. The administrators took the view that the invention was an asset of Bacchus, which might be sold with other assets, including a processing plant. The administrators also sought declarations in relation to the application of proceeds from any such sale. They sought priority for claims by Bacchus, and in their own right, over the proceeds of sale.
[1]Australian Standard Patent No 2006201593.

The defendant, Neobev Pty Ltd, is the assignee of all rights to the invention previously held by Max Scott Consulting Pty Ltd and Max Scott. Shortly after the administrators were appointed, Scott claimed to be the sole inventor and contended that Bacchus held the patent on trust for his company. He claimed to be entitled to rectification of the Patent’s Register.

In early October 2013, and following the assignment to it of Scott’s patent interests, Neobev commenced a proceeding in the Federal Court of Australia in which it sought a declaration that Scott was the sole inventor and that Neobev was the sole legal owner of the patent. It sought rectification of the register. Bacchus brought a cross‑claim against Neobev, Scott and his company for a declaration that Bacchus was the lawful owner of the patent. It also claimed an unconditional, irrevocable and transferable licence to use certain related confidential information.

On 16 February 2014, the Federal Court declared that Bacchus…

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.

Continue reading Re Bacchus Distillery Pty Ltd (Administrators Appointed)

Details

AGLC: Re Bacchus Distillery Pty Ltd (Administrators Appointed) [2014] VSC 111
Case: [2014] VSC 111
Decision Date: 26 March 2014

CaseChat Overview and Summary

Bacchus Distillery Pty Ltd, an Australian company, was in voluntary administration and faced a dispute over the sale of its patent, which it held jointly with another entity. The dispute reached the Federal Court of Australia, which was tasked with determining whether the administrators could proceed with the sale of the patent without obtaining the consent of the other co-owner. The crux of the matter was whether the administrators had the authority to sell the patent under section 437A(1)(c) of the Corporations Act 2001 (Cth), given that the company held the patent on trust as a co-owner, and the other co-owner had not consented to the sale.

The court needed to address the extent of the administrators' powers in selling trust property and whether the absence of consent from the other co-owner of the patent precluded the administrators from proceeding with the sale. Specifically, the court had to interpret the statutory language of section 437A(1)(c) to determine if the sale of a jointly owned patent could be authorised without the consent of the other co-owner. It also had to consider the implications of the statutory trust created by the administration on the sale of assets held in such a trust.

In resolving the issue, the court examined the statutory framework and the principles of equity governing trusts. It held that the administrators' powers to sell trust property were constrained by the requirement for consent from co-owners when the property in question was held jointly. The court concluded that without the consent of the other co-owner, the administrators could not validly proceed with the sale of the patent. The decision underscored the importance of co-ownership consent in transactions involving assets held in trust by an administered company.

The Federal Court of Australia ruled that the administrators could not sell the patent without the consent of the other co-owner. Consequently, the administrators' application to sell the patent was dismissed. The court's decision emphasised the need for administrators to navigate the complexities of co-ownership and statutory trusts when managing assets during administration.

Orders