Re Empire Plant Hire Pty Ltd (in liq)
[2021] VSC 549
•3 August 2021
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST
S ECI 2019 05699
IN THE MATTER of EMPIRE PLANT HIRE PTY LTD (IN LIQ) (ACN 626 953 580)
| C.C INVESTMENT ENTERPRISES PTY LTD (ACN 092 386 760) | Plaintiff |
| v | |
| EMPIRE PLANT HIRE PTY LTD (IN LIQUIDATION) (ACN 626 953 580) | Defendant |
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JUDGE: | Gardiner AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 20 July and 3 August 2021 |
DATE OF JUDGMENT: | 3 August 2021 |
DATE OF REASONS: | 6 September 2021 |
CASE MAY BE CITED AS: | Re Empire Plant Hire Pty Ltd (in liq) |
MEDIUM NEUTRAL CITATION: | [2021] VSC 549 |
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CORPORATIONS – Application to vest property disclaimed by a liquidator – Appointment of a receiver – Powers of the receiver – Provision of security by receiver – Corporations Act 2001 (Cth) ss 420, 471B, 568D, 568F – Personal Properties Securities Act 2009 (Cth) s 123 – Supreme Court Act 1986 (Vic) s 37 – Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 39.05 – National Australia Bank Ltd v New South Wales (2009) 182 FCR 52 – Bank of Queensland Limited v Star Trek Pty Ltd [2019] NSWSC 1712.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr D Mence | Peter G Richards |
| For the Defendant | No appearance |
HIS HONOUR:
The originating process in this proceeding was filed on 13 December 2019 and sought the winding up of the defendant, Empire Plant Hire Pty Ltd (‘Empire Plant’) pursuant to ss 459A and 459P of the Corporations Act 2001 (Cth) (‘the Act’). On 19 August 2020, Empire Plant was wound up in insolvency and Mathew Gollant was appointed liquidator in the winding up.
By interlocutory process filed 5 February 2021, the plaintiff, C.C. Investment Enterprises Pty Ltd (‘CC Investment’), which was the applicant creditor in the winding up application, sought a range of relief relating to the liquidation of Empire Plant. An amended interlocutory process was filed with leave of the Court on 28 April 2021 after concerns were expressed by the Court as to CC Investment’s standing to obtain parts of the relief sought. What remained for determination was CC Investment’s application:
(a) for leave to proceed pursuant to s 471B of the Act;
(b) for the vesting in CC Investment of certain property disclaimed by Mr Gollant as liquidator of Empire Plant pursuant to s 568F of the Act; and
(c) that a receiver be appointed for the property once vested pursuant to s 37 of the Supreme Court Act 1986 (Vic) and such receiver be granted the powers contained in s 420 of the Act.
On 20 July 2021, I made orders relating to, inter alia, the relief described in paragraph (a) above. On 3 August 2021, I made orders substantially granting the relief in paragraphs (b) and (c) and indicated I would provide my reasons for doing so at a later date.
In support of its application CC Investment relies on the affidavits of Mr Gollant sworn 16 February 2021 and its solicitor, Peter Richards, sworn 5 February 2021, 20 July 2021 and 22 July 2021. In his affidavit of 5 February 2021, Mr Richards exhibits and refers to an affidavit of Aldo Timpanaro, the operations manager of CC Investments, sworn 6 October 2020.[1] That affidavit was filed in proceeding number S ECI 2020 01363 by a related entity of CC Investment, APO Holdings Pty Ltd in which Empire Plant was the first defendant. The relief sought in that proceeding which was similar to that sought here was the subject of orders made by Sloss J on 24 March 2021 dismissing that proceeding by consent of the parties. Mr Timpanaro has also sworn affidavits in this proceeding on 20 July 2021 and 29 July 2021.
[1]Exhibit PGR-13 to the affidavit of Peter Richards sworn 5 February 2021.
Background
On 27 February 2019, CC Investment and Empire Plant entered into a ‘Contract for sale of personal property’ (‘contract’) with CC Investment as vendor and Empire Plant as purchaser. The list of property the subject of the sale under the contract is found in the schedule to the contract which identifies various items of construction equipment and materials numbering in the many thousands of units. The list includes items such as vehicles, forklifts, office equipment and laptops.
Clause 11 of the contract provided that, in the event of default in payment, CC Investment was granted a security interest pursuant to the Personal Property Securities Act 2009 (Cth) (‘PPSA’) in all of Empire Plant’s present and after-acquired property, including any circulating assets (‘ALL-PAP’).
Mr Richards states that not all the items identified in the schedule were ultimately supplied and the contract price was revised accordingly. Mr Timpanaro exhibits a list of the property ultimately delivered by CC Investment to Empire Plant under the contract (‘property’).[2] That list was compiled from contemporaneous documents created at the time of delivery. CC Investment registered its security interest on 29 April 2019. No other security interests have been registered over Empire Plant’s property.
[2]Exhibit CT-1 to the affidavit of Cataldo Timpanaro sworn 20 July 2021.
Empire Plant defaulted in its obligations under the contract. Empire Plant’s non‑compliance with the contract formed the basis of the statutory demand issued by CC Investment for $2,145,113.41 which was not complied with and ultimately resulted in Empire Plant being wound up in insolvency by this Court.
Disclaiming of property
The scheme of Division 7A of the Act allows liquidators of a company to disclaim onerous property. On 24 August 2020, after assessing CC Investment’s PPSA registrations, Mr Gollant exercised his power to disclaim the property the subject of the contract and corresponding security interest and lodged a Form 525 ‘Notice of Disclaimer of Onerous Property’ and ‘Notice of Intention not to Exercise Property Rights’ with the Australian Securities and Investment Commission (‘ASIC’). The notice of disclaimer makes reference to the contract and the schedule to the disclaimer identifies the property disclaimed as being that identified in the schedule of the contract. As has been mentioned, there is a disconformity in the property identified in the schedule to the contract and that ultimately supplied under the contract and the ramification of this will be discussed below.
Any application to set aside the disclaimer must be made within 14 days of the notice of disclaimer.[3] Section 568C(1) relevantly provides that:
[3]Corporations Act 2001 (Cth), s 568B.
(1) A disclaimer takes effect if, and only if:
(a) in a case where only one application under section 568B for an order setting aside the disclaimer, or each of 2 or more such applications, is made within the period that that section prescribes for making the application—the application, or each of the applications, is unsuccessful; or
(b) no such application is so made.
No application has been made to have the disclaimer set aside and I regard the disclaimer as being effective.
Leave to proceed
CC Investment seeks leave to proceed with its application by interlocutory process but it is not clear that such leave is required. Section 471B provides as follows:
471B Stay of proceedings and suspension of enforcement process
While a company is being wound up in insolvency or by the Court, or a provisional liquidator of a company is acting, a person cannot begin or proceed with:
(a) a proceeding in a court against the company or in relation to property of the company; or
(b) enforcement process in relation to such property;
except with the leave of the Court and in accordance with such terms (if any) as the Court imposes.
Section 471C provides:
471C Secured creditor’s rights not affected
Nothing in section 471B affects a secured creditor’s right to realise or otherwise deal with the security interest.
CC Investment’s application seeks an order for the vesting of property that, by operation of s 568D of the Act, has been effectively disclaimed and is no longer property of Empire Plant. Mr Gollant has been served with the application and has indicated that he did not intend to appear at the hearing, nor does Empire Plant maintain any claim as to the disclaimed property. As such, it seems that leave may not be required as the application is not in respect of ‘property of the company’ as prescribed in ss 471B(a) and (b). Further, CC Investment is making an application in relation to its security interest in the property (which I consider survives the disclaimer by operation of s 568D(1)). Nevertheless, for the avoidance of doubt and insofar as it was necessary, on 20 July 2021 I granted leave to CC Investment to proceed with its application by amended interlocutory process filed 28 April 2021.
Application under s 568F of the Act
The effect of a disclaimer made by a liquidator is found in s 568D(1) of the Act which states that the disclaimer terminates:
…the company’s rights, interests, liabilities and property in or in respect of the disclaimer property, but does not affect any other person’s rights or liabilities except so far as necessary in order to release the company and its property from liability.
Section 568F of the Act relevantly provides:
(1) The Court may order that disclaimed property vest in, or be delivered to:
(a) a person entitled to the property; or
(b) a person in or to whom it seems to the Court appropriate that the property be vested or delivered; or
(c) a person as trustee for a person of a kind referred to in paragraph (a) or (b).
(2) The Court may make an order under subsection (1):
(a)on the application of a person who claims an interest in the property, or is under a liability in respect of the property that this Act has not discharged; and
(b) after hearing such persons as it thinks appropriate.
…
The text of the provision and relevant authorities indicate that s 568F confers a broad discretion on the Court.
In National Australia Bank Ltd v New South Wales,[4] Rares J observed that where property, be it real or personal, vests once it is disclaimed is “clear as mud”.[5] The New South Wales Court of Appeal in Menzies v Paccar Financial Pty Ltd (No 4)[6] suggested in such circumstances that the property may vest in the Crown, either in right of the Commonwealth or the relevant State, subject to any security interest, but did not proceed to decide that question. The Court of Appeal approached the issue by requiring service of the proposed order on representatives of both the Commonwealth and the State. The issue arises for consideration in this application in the context of whether there is a necessity to serve both the Commonwealth and State. Until that question is settled, the authorities indicate that the Crown should be served with applications under s 568F.
[4](2009) 182 FCR 52.
[5]Ibid 61.
[6](2014) 101 ACSR 25, 44-45.
On 28 April 2021, CC Investment wrote to ASIC, as a representative of the Commonwealth, outlining its application and seeking an indication whether the Commonwealth wished to intervene in the application. In ASIC’s response of 25 May 2021, it indicates that it did not consider that the property disclaimed by Mr Gollant “vested in ASIC” and accordingly did not assert any interest in the property.[7]
[7]Exhibit PGR-2 to the affidavit of Peter Richards sworn 20 July 2021.
On 31 May 2021, CC Investment wrote to the Victorian Government Solicitors Office, as a representative of the State of Victoria, outlining its application and seeking an indication whether the State wished to intervene in the application. On 21 July 2021, the Victorian Government Solicitor’s Office responded stating that the Crown in the right of the State of Victoria did not wish to intervene or be joined as a party to the proceeding.[8]
[8]Exhibit PGR-4 to the affidavit of Peter Richards sworn 22 July 2021.
Appointment of receiver and powers under s 420
CC Investment also seeks an order that a receiver be appointed in relation to the property. That relief is ancillary to the order seeking that the disclaimed property be vested in CC Investment. The contract provided no provisions in respect of the appointment of a receiver upon default by Empire Plant and it was submitted that the appointment of a receiver by the Court was necessary to enable CC Investment to enter onto premises and to seize the property that the Court vests in it without committing trespass. As such, the relief seeks the appointment of a receiver over its own property (not that of Empire Plant) pursuant to s 37 of the Supreme Court Act 1986 (Vic). CC Investment also seeks that such receiver be granted the powers contained in s 420 of the Act, a provision found within Ch 5 of the Act concerning the appointment of a receiver over property of a company in external administration. Any such order would not be made under s 420 as such, as the relevant ‘company’ in this context, Empire Plant, no longer holds the property. The reference to s 420 in CC Investment’s application is in the context of affording the receiver appointed powers of the kind found in s 420 of the Act including dealing with the property the subject of the vesting order and seizing and selling the property.
As to the ability of the holder of an ALL-PAP to deal with secured property, s 123(1) of the PPSA provides:
A secured party may seize collateral, by any method permitted by law, if the debtor is in default under the security agreement.
When pressed why s 123 of the PPSA did not provide the necessary rights to seize the property, counsel for CC Investment, Mence, submitted that the property was located on sites owned by third parties and CC Investment or its agents could potentially commit trespass when entering those sites to seize the property if access to these sites was not granted because trespass would not be “any method permitted by law” within the meaning of s 123(1).
Section 37 of the Supreme Court Act 1986 (Vic) relevantly provides:
(1) The Court may by order, whether interlocutory or final, grant an injunction or appoint a receiver if it is just and convenient to do so.
(2) An order made under subsection (1) may be made either unconditionally or on such terms and conditions as the Court thinks just.
…
The consent of the proposed receiver is required[9] and security is required to be provided by the receiver unless otherwise ordered.[10]
[9]Supreme Court (General Civil Procedure) Rules 2015 (Vic), r 39.04.
[10]Ibid r 39.05
In the context of the appointment of a receiver over trust property, Anderson J of the Federal Court of Australia recently collected the authorities relating to the appointment of receivers and managers in Rohrt, in the matter of Rose Guerin and Partners Pty Ltd (in liq) in the context where a liquidator held property on bare trust by operation of an ipso facto clause after winding up orders had been made against the corporate trustee.[11] Justice Anderson referred to the decision of Farrell J in QBE Insurance (Australia) Ltd v WA Metal Recycling Pty Ltd[12] where her Honour stated that:
Ultimately, the general ground upon which the Court appoints a receiver is the protection or preservation of property for the benefit of persons who have an interest in it…[13]
[11][2021] FCA 547, [59]-[69].
[12][2016] FCA 238.
[13]QBE Insurance (Australia) Ltd v WA Metal Recycling Pty Ltd, in the matter of WA Metal Recycling Pty Ltd (in Liq) [2016] FCA 238, [13]. Her Honour’s remarks were made in the context of s 57(1) of the Federal Court of Australia Act 1976 (Cth), a provision which is very similar in its terms to s 37 of the Supreme Court Act 1986 (Vic).
Warren J (as her Honour then was) made reference to Kerr on Receivers in Martyniuk v King where it was observed:
The object sought by such appointment is therefore the safeguarding of property for the benefit of those entitled to it.[14]
[14]Martyniuk v King [2000] VSC 319, [14] (bold in original, emphasis in italics added).
Submissions
CC Investments submits that the application should be granted as:
(a) it has a registered security interest over the property;
(b) the property has been disclaimed and no other claims have been made against it;
(c) Mr Gollant has found that Empire Plant did not trade, have a bank account or keep books or accounts, nor has he been provided with details as to where the property is located;[15]
[15]Affidavit of Mathew Gollant sworn 16 February 2021, [6].
(d) CC Investment has been unable to seize the property under s 123 of the PPSA because it cannot trespass on private property;
(e) CC Investment has been unable to appoint a private receiver because as the result of a drafting oversight, the contract did not include such a clause and this is the only reason it does not have the power to appoint a receiver; and
(f) the Crown, at Commonwealth and State level, has confirmed they do not seek to assert any right in the property.
CC Investments submits that its case is stronger than that commonly seen in applications for the appointment of a receiver, such as where receivers are sought to be appointed in respect of trust property for an insolvent corporate trustee. Rather, CC Investment comes before the Court asking for a receiver to be appointed in circumstances where it has a registered security interest (and a claim to have the property vested in it under s 568F of the Act). It says the only reason CC Investment has not been able to appoint a private receiver as a secured creditor is due to deficient drafting in the contract. But for that oversight, it is submitted, CC Investment would have seized the property some time ago, invoking s 123 of the PPSA. I pause here to observe that if the Court vests the property the subject of the disclaimer in CC Investment, it becomes CC Investment’s property with all the attendant rights to possession of it.
It is further submitted that a receiver should be appointed as the evidence indicates that the property is dispersed across several sites throughout metropolitan Melbourne, including construction sites owned or operated by third parties who refuse to recognise CC Investment’s rights and entitlements under Part 4.3 of the PPSA. Mr Timpanaro’s affidavit of 29 July 2021 deposes to the property being located at 13 locations across Victoria. CC Investment submits that this circumstance requires the powers of a receiver to enter on land and take possession of the property. This was couched in terms of providing the receiver with the powers under s 420(2)(a) of the Act but I think that that submission is misconceived. As I have said, any receiver appointed over the property in the circumstances of this case would not attract the operation of Part 5.2 of the Act of which s 420 forms part.
CC Investment seeks and has obtained the consent of Peter Goodin, a registered liquidator, to act as receiver. It is submitted that in the circumstances, Mr Goodin should not be required to provide security. In support of this submission, CC Investment relied on a range of authorities[16] including the decision of Besanko J in Sapphire (SA) Pty Ltd v Ewens Glen Pty Ltd (No 2)[17] where his Honour dispensed with the requirement to provide security as the receiver appointed was a registered liquidator and he did not envisage the potential of the type of risk which called for an undertaking arising. Mr Mence submitted that factors where Courts decided security was not required included:
[16]Re Waratah Group Pty Ltd (in liq) [2020] VSC 523, Re Pires Consulting Holding Pty Ltd (in liq) [2019] VSC 384.
[17][2011] FCA 714.
(a) where the proposed receiver is a registered liquidator under the Act and so is subject to statutory obligations (including to maintain insurance);
(b) any undertaking that the plaintiff may give to damages; and
(c) the orders providing liberty to apply such any that affected persons, giving reasonable notice, can seek their amendment or discharge.
CC Investment submits that those circumstances applied here and that CC Investment will provide such an undertaking as to damages. Further, it was submitted that the circumstances here are unique in that the receiver is sought by CC Investments to be appointed to its own property, as opposed to that of a company under insolvency administration and therefore any loss or damage caused by the receiver would not impact Empire Plant, being the company in liquidation, but rather CC Investment.
Consideration
Vesting of property pursuant to s 568F
The evidence is uncontroversial that CC Investment has an interest in the property and falls within the definition of an interested person in s 568F(2)(a) of the Act, giving it standing to make this application. Section 568F(1) grants a discretion to the Court to vest property in a person entitled to it, or a person to whom it seems appropriate. Here, CC Investment has an ALL-PAP security under the PPSA over the property the subject of the application. There are no other claims on the property and no application has been made to set aside the disclaimer.
Whilst the Notice of Disclaimer of the liquidator dated 24 August 2020 disclaimed the property by reference to that identified in the contract, the evidence is that not all of the items specified in the schedule to the contract were delivered to Empire Plant. I do not consider that this impacts the application other than to limit the property that the Court is able to make vesting orders pursuant to s 568F of the Act; clearly, if the items were not sold and delivered to Empire Plant then they could not be disclaimed and attract the power and discretion of the Court under s 568F.
The discretion of the Court under s 568F to vest disclaimed property is broad and I consider that it is just that the property, as described in the list exhibited to the affidavit of Mr Timpanaro sworn 20 July 2021, be vested in CC Investment pursuant to s 568F of the Act.
Appointment of a receiver
The application for the appointment of a receiver arises here in an unusual context. The property in question has been disclaimed, rather than being trust property which is sought to be protected on behalf of beneficiaries of a trust. The authorities dealing with the appointment of receivers to which reference has been made are all in the context of an appointment of a receiver to trust property.[18] It would seem that the vesting of the property pursuant to s 568F would be sufficient for CC Investment without the appointment of a receiver save for the apparent location of the property on sites owned or controlled by third parties. As has been submitted, the presence of a registered security interest over the property would have otherwise allowed CC Investment to seize the property under s 123(1) of the PPSA, which allows a secured party to seize collateral by any method permitted by law, if access was granted.
[18]See Martyniuk (n 14), Yunghanns v Candoora No. 19 Pty Ltd (No 2) (2000) 35 ACSR 34, Re Waratah Group Pty Ltd (in liq) [2020] VSC 523.
The position is therefore similar to that the subject of consideration by Adamson J of the New South Wales Supreme Court in Bank of Queensland Limited v Star Trek Pty Ltd[19] where the Court made orders entitling the applicant to seize property the subject of its security pursuant to s 123 of the PPSA and to enter onto an identified premises for the purpose of doing so and have the protection of a court order so as to avoid an action for trespass or breach of the peace. CC Investment stated that the property is located on third party sites and previous approaches to the relevant parties had been met with indications that CC Investment would not be granted access. As such, CC Investment wishes to engage an insolvency practitioner who has experience undertaking the exercise of reclaiming property to act as receiver to perform this duty with the backing of a court order and I think that this is an appropriate course.
[19][2019] NSWSC 1712.
On 3 August 2021, I made orders which are set out at the conclusion of these reasons giving Mr Goodin the powers necessary to enter onto third party premises specifically identified by Mr Timpanaro in his affidavit sworn 20 July 2021 for the purpose of obtaining possession of the property. Mr Mence submitted that the receiver should have all the powers of the kind mentioned in s 420 of the Act, but on examination many of those powers have no application to the circumstances of this case.
Provision of security by the receiver
CC Investment seeks that Mr Goodin not be required to provide security for his appointment as a receiver. CC Investment submitted that as the property is owned by CC Investment, the risk which requires protection by provision of security is not present here as any loss or damage caused by the receiver will be a matter between CC Investment as owner of the property and the receiver and not Empire Plant, the company in liquidation and the former owner of the property.
I note that the Form 39A of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) provides a deed of guarantee (which r 39.05(c) provides should be given by a bank or insurer) upon the appointment by a receiver by the Court. It seems clear that the guarantee in that context is designed for the circumstances where there is a dispute between parties and loss could be suffered by any or all sides. This does not arise in these circumstance and I do not consider it is necessary for security to be provided by a receiver appointed to a company’s own property.
Orders
I made the following orders on 3 August 2021 (with the appropriate redactions as to the precise addresses identified as the locations for the property):
1.Pursuant to s 568F of Corporations Act 2001 (Cth) (‘the Act’), the personal property:
(a)the subject of the Plaintiff’s registered security interest Registration No. 201904290031102 under the Personal Property Securities Act 2009 (Cth);
(b)the subject of the Notice of Disclaimer of Onerous Property dated 24 August 2020 given by Mathew Gollant the liquidator of Empire Plant Pty Ltd (in liquidation) (‘the Company’) and found at Exhibit PGR-11 to the affidavit of Peter Richards sworn 5 February 2021; and
(c)individually itemised in the ‘List of Property’ which forms Exhibit “CT-1” to the Affidavit of Cataldo Timpanaro sworn 20 July 2021 and filed in this proceeding
(collectively, ‘the Property’)
be vested in the plaintiff.
2.Upon the plaintiff, by its counsel, giving the usual undertaking as to damages, Peter Goodin be appointed receiver of the Property (‘Receiver’) under s 37(1) of the Supreme Court Act 1986 (Vic).
3.If the circumstances require it, the Court shall determine the remuneration of the Receiver as if r 9.1 of the Supreme Court (Corporations) Rules 2013 (Vic) applies.
4.The reasonable remuneration, costs and expenses of the Receiver incurred in relation to the receivership be paid in priority out of the Property.
5.The Receiver is given the following powers in respect of the Property:
(a)the power to enter any land or do any other thing for the purpose of obtaining access to, and taking possession of, the Property;
(b)to sell and convert into cash any of the Property;
(c)the power, specifically, to enter on to the following properties for the purpose of obtaining access to, and taking possession of, the Property:
(i) [address], Tullamarine, in the State of Victoria;
(ii) [address], Campbellfield, in the State of Victoria;
(iii) [address], Coburg, in the State of Victoria;
(iv) [address], Moonee Ponds, in the State of Victoria;
(v) [address], Campbellfield, in the State of Victoria;
(vi) [address], Tullamarine, in the State of Victoria;
(vii) [address], Altona, in the State of Victoria;
(viii) [address], Essendon, in the State of Victoria;
(ix) [address], Moorabbin, in the State of Victoria;
(x) [address], McKinnon, in the State of Victoria;
(xi) [address], Sorrento, in the State of Victoria;
(xii) [address], Footscray, in the State of Victoria; and
(xiii) [address], Spotswood, in the State of Victoria.
6.The requirements of r 39.05 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) in respect of provision of security by the Receiver are dispensed with.
7.The Receiver is to provide a report to the Court on the progress of the receivership by filing an affidavit in this proceeding by 3 February 2022.
8.There be liberty to apply to any person who can demonstrate sufficient interest to modify or discharge these orders on not less than five (5) business days’ written notice to the plaintiff.
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