Re Bluejays Removals and Storage Pty Ltd (In Liquidation)

[2020] QSC 322

SUPREME COURT OF QUEENSLAND

CITATION:

Re Bluejays Removals and Storage Pty Ltd (In Liquidation) [2020] QSC 322

PARTIES:

TERRENCE JOHN ROSE in his capacity as Liquidator of BLUEJAYS REMOVALS & STORAGE PTY LTD ACN 164 348 485 (IN LIQUIDATION)

(First Applicant)

and

BLUEJAYS REMOVALS & STORAGE PTY LTD ACN 164 348 485 (IN LIQUIDATION)
(Second Applicant)

v

MALCOLM BARRY CHICKEN

(Respondent)

FILE NO/S:

BS No 6535 of 2020

DIVISION:

Trial Division

PROCEEDING:

Application

DELIVERED ON:

22 October 2020

DELIVERED AT:

Brisbane

HEARING DATE:

12 October 2020

JUDGE:

Bowskill J

ORDERS:

1.        Paragraphs 1 and 3 of the respondent’s application filed 27 August 2020 are dismissed.

2.        The names of the applicants in this proceeding be amended as follows:

(a)  The name of the First Applicant shall be:  TERRENCE JOHN ROSE in his capacity as liquidator of BLUEJAYS REMOVALS & STORAGE PTY LTD ACN 164 348 485 (IN LIQUIDATION); and

(b)   The name of the Second Applicant shall be:  BLUEJAYS REMOVALS & STORAGE PTY LTD ACN 164 348 485 (IN LIQUIDATION);

3. Pursuant to r 388 of the Uniform Civil Procedure Rules 1999, the order of Boddice J made on 16 July 2020 be amended such that paragraphs 1(b)(iii), 1(b)(vi) and 1(b)(xix) are deleted.

I will hear the parties as to the costs of the respondent’s application filed 27 August 2020 and the applicants’ application filed 17 September 2020, and also as to paragraph 6 of the respondent’s application.

CATCHWORDS

CORPORATIONS – WINDING UP – LIQUIDATORS – RIGHTS AND POWERS – where the liquidator of a company applied for and obtained orders under s 483 of the Corporations Act 2001 (Cth) requiring the director of the company to deliver the books and records of the company to the liquidator, and to surrender assets to the liquidator – where the director applies to set aside the order, under r 667(2)(a) of the Uniform Civil Procedure Rules 1999 (Qld), on the basis that the order was made in his absence and, on the evidence, should never have been made – whether the order should be set aside

COUNSEL:

M Martin QC for the applicants

P Hackett for the respondent

SOLICITORS:

Mills Oakley for the applicants

Londy Lawyers for the respondent

1. The first applicant was appointed as the liquidator of the second applicant, Bluejays Removals & Storage Pty Ltd (the company), on 23 March 2020.  Prior to its liquidation, the company operated a removalist, storage and transport business.  The respondent, Mr Chicken is the sole director of the company; although his wife, Ms Belinda Summers, was heavily involved in the day to day operations of the business.  After experiencing difficulties in securing the cooperation of Mr Chicken and Ms Summers in providing the books and records of the company, including documents and records about what appeared to be assets of the company (vehicles),[1] the liquidator filed an originating application seeking orders under s 483 of the Corporations Act 2001 (Cth).

   [1]See the affidavit of Ms Darlington filed 17 June 2020 (CFI 2), including at pp 91, 115-116, 117, 119-121, 122-123, 125, 126-132, 139 and 141-144; and the affidavit of Mr Rose filed 7 October 2020 (CFI 41 and 42) at [18]-[51].  See also the affidavit of Mr Smith, filed 15 July 2020 (CFI 15).

2. The application was filed on 17 June 2020. On 16 July 2020 Boddice J made orders under s 483 of the Act requiring the respondent:

   (a)to deliver to the first applicant the books and records of the company; and

   (b)to surrender to the first applicant (or his authorised nominee) 29 vehicles, described in the order and “any other asset requested by” the liquidator.

3. By application filed on 27 August 2020, the respondent seeks, among other things, an order setting aside the order made by Boddice J in its entirety.

4. The liquidator acknowledges that three of the vehicles specified in Boddice J’s order were included in error, but otherwise opposes Mr Chicken’s application. It is also accepted that there are some typographical errors in the description of the applicants in the proceeding (in the ACN of the company, and the use of the word “and” rather than “&” in the name of the company). By his application filed 17 September 2020, the liquidator seeks to correct the errors and, under r 388 of the Uniform Civil Procedure Rules 1999, amend the order to delete subparagraphs 1(b)(iii), 1(b)(vi) and 1(b)(xix).

5. There is no opposition to an order correcting the names of the applicants.  The respondent also accepts that, if his application does not succeed, the order sought by the liquidator, correcting Boddice J’s order, should be made. 

6. The relevant power to set aside an order is contained in r 667(2) UCPR. The respondent contends the order should never have been made and ought to be set aside under r 667(2)(a) as it was made in his absence.

7. It is true that the order was made in the respondent’s absence; but that was not for want of having been served.

8. On 3 July 2020, Bond J made an order for substituted service of the originating application on the respondent.  As the affidavit of Ms Darlington (CFI 2) reveals, there had been multiple telephone conversations between representatives of the liquidator’s firm and either the respondent or his wife, and email correspondence, prior to the originating application being filed.  However, attempts to personally serve the respondent with the application were unsuccessful.  The order for substituted service required the originating application and the affidavit of Ms Darlington to be served by post, to three addresses (the registered office and principal place of business of the company up until it was placed into liquidation; the apparent residential address of the respondent; and the address of an accountant); by email, to the respondent’s email address and his wife’s email address; by phone call to the landline number for the respondent; and by text message to the respondent’s mobile phone number.   The order provided that service on the respondent was deemed to be effected seven clear days after the last method for service provided for in the order was completed.

9. Each of the methods of service required under the order for substituted service was effected, on 3 July 2020.  There was a minor factual dispute before me as to when the last method was completed.  On one view, it was at 5.12pm on that day, when an email was sent to the respondent’s and his wife’s email addresses.[2]   On another view, it was not until 12.28 am on 7 July 2020.[3]  The evidence of Ms Warren-Kelly, of the applicants’ solicitor, is that she put the documents into three separate express post envelopes addressed to the respondent, at the three addresses nominated in the order, and then gave the three express post envelopes containing the documents to the firm’s receptionist “to be collected by Australia Post by 4.30pm on 3 July 2020 (as is Mills Oakley’s usual postage process)” (at [5]).  The respondent submits that is not sufficient evidence of the documents being posted; and points instead to the tracking information from Australia Post, which shows the last of the three mail items being “processed” at Brisbane at 12.28am on 7 July 2020. 

   [2]Affidavit of Ms Warren-Kelly, filed 15 July 2020 (CFI 14) at [7] and p 228 of the exhibits.

   [3]Affidavit of Ms Fraser, filed 10 September 2020 (CFI 35) at p 57 of the exhibits.

10. I was not referred by either party to the authorities which have considered the question of what is sufficient evidence of posting, for the purposes of disputes about the timing of service by mail.   I accept that the relevant fact is when it was actually posted – that is, put into the custody of Australia Post – as opposed to when it was “processed” in some way by Australia Post.  But there may be a question mark over whether what Ms Warren-Kelly says at [5] of her affidavit is sufficient (or whether something more was required, such as evidence from the receptionist that the mail was in fact collected by Australia Post on the day in question).  But it is not necessary for the purposes of this application to deal with this in detail.  On the respondent’s argument, seven clear days after when he says the last method of service was completed would be 14 July 2020.  Even if the last method of service was the email, the respondent says because the email was sent after 4.00 pm, it is taken to have been served at 9.00 am on 6 July 2020,[4] so under the substituted service order, service would be deemed effected on 13 July 2020. The originating application was heard on 16 August 2020. The respondent’s complaint is that, in either case, this contravened r 27 UCPR, which requires an application to be served at least 3 business days before the day of hearing.

    [4]Because the email was sent at 5.12 pm; relying on r 103 UCPR and s 38 of the Acts Interpretation Act 1954.

11. The respondent has sworn an affidavit[5] in which he says he was unaware of the hearing in this matter that was held on 16 July 2020 until after the hearing date because he did not receive the application and supporting affidavits and they were not brought to his attention.  He says he was away working, as a truck driver, from 3 to 17 July, in various places in Queensland.  He says his ability to use a computer is poor, and he does not send or receive emails himself.  He can use a mobile phone and communicates with text messages but says he is “not proficient” with the use of attachments to text messages.  Notably, whilst the respondent says he did not receive any of the letters, or the email, or the voice message sent or left in compliance with the order for substituted service, he does not say he did not receive the text message.  The text message, sent on 3 July 2020, said:  “Please be advised that today (3 July 2020) the Supreme Court of Queensland made orders for substituted service in proceeding 6365/2020.  A copy of the Orders will be sent by text message to this number momentarily…”.[6] 

    [5]Affidavit of Mr Chicken, filed 10 September 2020 (CFI 38).

    [6]Affidavit of Ms Warren-Kelly (CFI 14) at p 231 of the exhibits.

12. Having regard to the material in Ms Darlington’s first affidavit (CFI 2), outlining the email correspondence and phone calls which had taken place with the respondent and Ms Summers prior to the originating application being filed, it seems implausible that the respondent did not become aware of the documents which were served by the various methods contemplated by the order. But at the very least, he received a text message informing him of the order. A reasonable person in his position – namely, a director of a company in liquidation, owing the obligations under s 530A of the Corporations Act, and aware of the fact the liquidator had been chasing him to provide information so that the liquidator could do his job properly – would have inquired further about that message, even if he could not open the attachment to the text message. 

13. In any event, at the latest, he was deemed to have been served on 14 July 2020. The court has a discretion, under r 27, to proceed to hear and determine an application, even where the application is not served three business days before the hearing. It does not appear that any issue of short service was raised with Boddice J on 16 July 2020. But that is not unreasonable, because on the evidence then available, the last method of service was completed on the afternoon of 3 July 2020.[7]

    [7]The affidavit of Ms Fraser (CFI 35) which annexes the tracking information from Australia Post, as part of an exhibit annexing correspondence between the applicants’ solicitor and the respondent’s solicitor, was filed on 10 September 2020.

14. Rule 667(2)(a) confers a discretion on the court to set aside an order if the order was made in the absence of a party.  I am not persuaded to exercise that discretion, having regard to the circumstances outlined above, and the substantive arguments of the respondent in support of his application, discussed below.

15. The first argument can be dealt with swiftly.  The respondent relies on the error in the name (use of the word “and” instead of “&”) and ACN of the company as being illustrative of the lack of precision with which the applicants approached the application.  These are minor typographical errors, and provide no support whatsoever for the respondent’s present application.

16. Next, the respondent contends the order in subparagraph 1(a) should not have been made because the first applicant had the books and records of the company before the originating application was filed and therefore before the order was made.  The respondent’s submission is that, in circumstances where the liquidator had in his possession some of the books and records of the company before the originating application was filed, it was not appropriate to seek an order that the respondent provide “the” books and records of the company, as opposed to seeking an order that the respondent provide “further” books and records, identifying with particularity what was being sought.

17. The applicants submit that having regard to the obligation on the respondent, under s 530A, to deliver to the liquidator “all books in the officer’s possession that relate to the company”, and tell the liquidator where any other books relating to the company are, it was not necessary for the order of 16 July 2020 to specify what further books and records were to be delivered. The point of the order was to enforce the statutory obligation owed by the respondent. I accept that submission. As this case shows, when “pressed” by a court order, the respondent found two archive boxes containing books and records of the company which had not previously been delivered to the liquidator.[8]  Further categories of documents which had not yet been provided are articulated in [11] of Ms Darlington’s affidavit (CFI 33).[9]

    [8]Affidavit of Ms Darlington, filed 9 September 2020 (CFI 33) at [8]-[10], and pp 4-5 of the exhibits (relevant part of the letter from the respondent’s solicitor dated 19 August 2020).

    [9]Although counsel for the respondent submits those have been responded to, in the letter from the respondent’s solicitor dated 4 September 2020 (affidavit of Ms Fraser, filed 10 September 2020 (CFI 35) at p 53 of the exhibits).

18. The order requiring the respondent to deliver all the books and records of the company was appropriately made.

19. As to the order in subparagraph 1(b), the respondent’s primary submission in support of his application is that the evidence before Boddice J did not support the making of the order for surrender of the 29 assets listed in it, because:

    (a)in the case of some of the vehicles, they were already in the possession of the liquidator’s agent, Slattery, or had been sold by Slattery Auctions on the liquidator’s instructions, prior to the order being made;

    (b)the evidence relied upon by the liquidator to establish that the liquidator was prima facie entitled to the assets was largely based on evidence of registration of the vehicles, which the respondent submits is “irrelevant to ownership”; and

    (c)the evidence revealed there was a dispute about ownership of some of the vehicles, and the summary procedure under s 483 was not an appropriate manner in which to deal with that dispute.

20. As to (a) above, in the case of three of the vehicles – those mentioned in subparagraphs 1(b)(iii), (vi) and (xix) of the order – this is acknowledged by the liquidator.  In fact, the evidence before Boddice J at the time the orders were made explained why orders were not sought in respect of the vehicles referred to in some sub-paragraphs of the originating application, for example, because the vehicle had already been seized by or on behalf of the liquidator, and in some cases sold on the instructions of the liquidator.[10]  It seems that as a result of inadvertent error, the draft order provided to Boddice J mistakenly included reference to some of those vehicles (those mentioned in subparagraphs (iii), (vi) and (xix)).[11]  I am not persuaded that any of the other vehicles were inappropriately included in the orders of 16 July 2020, because they had already been surrendered to the liquidator.[12]

    [10]Affidavit of Ms Darlington, filed 15 July 2020 (CFI 13) at [10]-[11].

    [11]Affidavit of Ms Fraser, filed 8 October 2020 (CFI 43).

    [12]There were two additional vehicles the respondent submitted were in the liquidator’s possession before the order of 16 July 2020:  the vehicles mentioned in subparagraphs 1(b)(xx) and 1(b)(xxviii) (see paragraph 8(b) of the respondent’s submissions).  I have had regard to the references to the evidence about these two vehicles cited by counsel for the respondent in the schedule forming part of his submissions (looking in particular for the registration number), and do not accept that the evidence showed these vehicles were already in the possession of the liquidator.  I accept the evidence of Mr Rose in relation to these two vehicles: affidavit of Mr Rose (CFI 41), at [133]-[137] and [166]-[170].

21. As to (b) above, I do not accept the respondent’s submission that evidence of registration was “irrelevant to ownership”.  Although it may be accepted that registration is not conclusive proof of ownership, it is a relevant indicia of ownership, and a matter the liquidator was entitled to rely upon as giving the appearance that vehicles registered (either currently, or previously, where there was no other evidence of transfer of ownership) in the name of the company were the property of the company.  Other indicia relied upon by the liquidator included the use of vehicles by the company as security for a loan to the company; and that the company had insured vehicles.[13]  As to the latter, the respondent submits a mere bailee can insure a vehicle.  But that is not the point.  On the evidence, the liquidator had a sound and rational basis for forming the view that a considerable number of vehicles, not disclosed to him by the respondent, were, or at least appeared to be, the property of the company.  The respondent was asked to provide information in relation to those vehicles, prior to the originating application being filed.  He did not do so.  It seems the first time the respondent properly engaged with the liquidator’s request in that regard was after the orders of 16 July 2020 had been made; which supports the appropriateness of seeking them.

    [13]See, for example, the affidavit of Ms Darlington, filed 15 July 2020 (CFI 13) at [4]-[9].

22. I do not accept the respondent’s submission that, in so far as the liquidator asked the respondent to provide documentation in support of his assertions of ownership of various vehicles, that involved an impermissible reversal of the onus of proof. On the contrary, the respondent was obliged, under s 530A of the Act, to assist the liquidator with his inquiries, and in the face of facts from which it was reasonable for the liquidator to form the view the vehicles may be the property of the company, there was reasonably a requirement, consistent with the obligation under s 530A, for the company’s officer to produce documentation in support of his assertions, rather than expecting the liquidator to simply take his word. It was reasonable for the liquidator, in the circumstances of this case (including the nature of the interactions with the respondent and his wife, which were obstructive and offensive), not to accept on face value the assertions made by the respondent and his wife about ownership of various assets.

23. As to (c) above, counsel for the respondent cited two authorities which he submitted supported the proposition that the procedure under s 483 is not available where there is any dispute as to ownership of property: Home v Walsh [1978] VR 688 at 704 and Blackjack Executive Car Services Pty Ltd (in liq) v Koulax [2002] VSC 380 at [17]. That is not the effect of those authorities. The point made in Home v Walsh [1978] VR 688 at 704, and affirmed in Blackjack at [17], is that the summary procedure under (the equivalent of) s 483 is not the procedure by which to finally determine ownership of property, where that is disputed.  That does not mean the procedure is not properly available to a liquidator, in order to get into the liquidator’s custody, or under their control, property which “is, or which appears to be”[14] property of the company, or, using the words in s 483(1), “to which the company is prima facie entitled”[15] – leaving open the opportunity, where there is a legitimate basis to do so, for the person who contends they are in fact the owner of the property to demonstrate that at a later stage.  That was articulated as a matter of principle by Ambrose J in Re Kenross Homes Pty Ltd (in liq) [1994] 2 Qd R 137 at 141-142, by reference to, inter alia, Home v Walsh.  There is no inconsistency between the authorities cited by the respondent in his submissions, and the decision of Ambrose J in Re Kenross.

    [14]See s 474(1) of the Corporations Act, which requires the liquidator of a company, following their appointment to take into their custody or under their control “all the property which is, or which appears to be, property of the company”.

    [15]Section 483(1).

1. In short, I am not persuaded, other than in respect of the three vehicles acknowledged by the liquidator to have been included in the order in error, that in respect of any of remaining vehicles specified, the order of 16 July 2020 should not have been made. 

2. What is more, after the order was made, the respondent took considerable steps to endeavour to comply with the order.  What he did in this regard is articulated in the letter from his solicitor dated 19 August 2020.[16]  In a subsequent email from the respondent’s solicitor, dated 26 August 2020, it is said that “one of the purposes of that letter was to put beyond doubt that our client had complied in all respects with the Order of Boddice J made on 16 July 2020”; that “[o]ur client has done everything in his power to deliver up the books and records of the company, and to surrender the vehicles”; and “[i]f you think there is anything else to be done to achieve perfect compliance with the order, please advise us immediately, because it is our client’s desire to completely and utterly comply with the order”.[17]   As I have already observed, this supports the conclusion that the order was appropriately sought, and made.  That the letter was sent in response to an application by the first applicant for the respondent to be punished for contempt does not diminish the relevance of his compliance.

   [16]Affidavit of Ms Darlington, filed 9 September 2020 (CFI 33) at pp 1-17 of the exhibits.

   [17]Affidavit of Mr Londy, filed 27 August 2020 (CFI 28) at p 59 of the exhibits.

3. The respondent also submitted that the meaning of the word “surrender” in order 1(b), in relation to the vehicle assets, is unclear because it does not explain what the respondent was required to do. The word “surrender” is used in s 483, and the respondent seems to have been sufficiently capable of understanding what was meant, in order to comply with the order to the extent that he did, as outlined in the correspondence just referred to. In my view, there is nothing legitimately confusing about this.

4. Separately, the respondent submits the form of order 1(b)(xxx) is “entirely inappropriate”.  Order 1(b)(xxx) requires the respondent to surrender to the first applicant “any other assets requested by the First Applicant”.  Counsel for the respondent submitted this would enable the first applicant to request the respondent to surrender property belonging to him (counsel), and put the respondent in peril of contempt proceedings if he failed or refused to do so.  I reject that submission.  Plainly, properly construed in the context of the order as a whole, paragraph 1(b)(xxx) can only refer to any other asset of the Company.   

5. As to the order for indemnity costs made by Boddice J, I am not persuaded to set that aside, under r 667(2)(a) UCPR. For the reasons already discussed, I do not accept that the fact the orders were made in the respondent’s absence provides a basis to set them aside. That extends to the costs order made on that occasion. In my respectful view, the costs order made by Boddice J was justified having regard to the material before his Honour. But in any event, this is not an appeal from that decision.

6. For those reasons, paragraphs 1 and 3 of the respondent’s application filed 27 August 2020 are dismissed.

7. There is no dispute that the order should be varied so as to delete subparagraphs 1(b)(iii), (vi) and (xix), and that the description of the applicants should also be amended, in the manner outlined in the applicants’ application.  That reflects the relief sought in paragraph 2 of the respondent’s application filed 27 August 2020 and paragraphs 1 and 2 of the applicants’ application filed 17 September 2020.

8. I will hear the parties as to the costs of the respondent’s application filed 27 August 2020 and the applicants’ application filed 17 September 2020, as well as the alternative relief sought in paragraph 6 of the respondent’s application.