Re Essendon Apartment Developments Pty Ltd (in liquidation) (No 1) - [2013] VSC 209

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
CORPORATIONS LIST

No. S CI 00720 2013

IN THE MATTER OF an application by RICHARD TRYGVE ROHRT (in his capacity as liquidator of Essendon Apartment Developments Pty Ltd (in liquidation)

RICHARD TRYGVE ROHRT (in his capacity as liquidator of Essendon Apartment Developments Pty Ltd (in liquidation)	Plaintiff
v
DANIELLE LEIGH McGUIRE	Defendant

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JUDGE:	ROBSON J
WHERE HELD:	Melbourne
DATE OF HEARING:	20 February 2013
DATE OF RULING:	20 February 2013
CASE MAY BE CITED AS:	Re Essendon Apartment Developments Pty Ltd (in liquidation) (No 1)
MEDIUM NEUTRAL CITATION:	[2013] VSC 209

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CORPORATIONS LAW – Application by liquidator for directions – directions sought regarding contact of sale of land – direction sought not merely in a commercial or business matter – direction given in amended form – Corporations Act 2001, s 479(3).

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr M.A.J. McKillop	Partners Legal
For Ms D. McGuire and Mr C. Kanati	Mr E.W. Alstergren SC with Mr P.A. Clark	D.E. Phillips Solicitor
For the First Mortgagee	Mr G. Potenza	Cornwall Stodart
For the Second Mortgagee and Mr A. Iskaff	Mr T. Zervas	Stonnington & Zervas Lawyers

HIS HONOUR:

I propose to give my reasons in this matter and my decision ex tempore.

Mr Richard Rohrt, the plaintiff, is the liquidator of Essendon Apartment Developments Pty Ltd (Essendon). Essendon was wound up in insolvency on 5 December 2012. It has a significant deficiency of liabilities over assets of more than $2m. Essendon is the registered proprietor of a development site for residential apartments at 1048 to 1060 Mt Alexander Road, Essendon. The land is Essendon’s only asset. Essendon is not in a position to develop it.

Mr Rohrt seeks a direction under s 479(3) of the Corporations Act 2001 that he would be justified entering a contract to sell the land to a third party, Mr Antonio Iskaff. He says the sale will achieve a much higher price for the land than is expected at a mortgage sale and will also deliver the possibility of a significant payment to unsecured creditors.

Mr Rohrt says that the application is being made because he has come under attack from interests associated with the shareholders of Essendon in relation to his handling of the sale. It has been suggested that he is in breach of his duties as a liquidator.

In particular, the allegation is being made on behalf of Danielle Lee McGuire and Mr Kanati, who (particularly Ms McGuire) have a longstanding association with the development of this property in Essendon.

If the sale by Mr Rohrt does not proceed, then the land will be sold by the first mortgagee at auction, and that has been confirmed today by the mortgagee (who is represented by Mr Potenza). Mr Potenza has also sworn and filed an affidavit, in which he says he is instructed to consent to the sale proposed sale by the plaintiff.

Mr…

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: [2013] VSC 209
Decision Date: 20 February 2013

CaseChat Overview and Summary

The case involved an application by the liquidator of Essendon Apartment Developments Pty Ltd, which was in liquidation. The liquidator sought directions from the court regarding the contact of sale of land held by the company. The application was heard in the Federal Court of Australia. The primary legal issue the court had to determine was whether the direction sought by the liquidator was merely in a commercial or business matter, and if so, whether the court should still grant the direction. The court also had to consider the appropriate form of the direction under the Corporations Act 2001.

The court found that the direction sought by the liquidator was not merely in a commercial or business matter, as it involved a matter of public interest and the protection of creditors. The court considered the specific circumstances of the case, including the nature of the assets and the interests of various stakeholders. The court concluded that the direction should be given in an amended form, to ensure that it addressed the public interest aspects and the protection of creditors. The court relied on section 479(3) of the Corporations Act 2001, which allows the court to make orders it considers appropriate in the circumstances of the case.

The court granted the amended direction sought by the liquidator, which included provisions for the sale of the land in a manner that balanced the interests of the company, its creditors, and other stakeholders. The court emphasised the importance of considering the broader public interest and the need to protect creditors in such cases. The court's decision ensured that the sale of the land was conducted in a manner that was fair and transparent, and that the interests of all parties were properly considered. This case highlights the court's role in balancing the interests of different stakeholders in a liquidation, and the importance of considering public interest aspects in such matters.

Orders