Re Ezyclad Pty Ltd (in liq) - [2014] VSC 66

Do Not Send for Reporting
IN THE SUPREME COURT OF VICTORIA		Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

COMMERCIAL COURT
CORPORATIONS LIST

No. S CI 2013 05889

IN THE MATTER of Re EZYCLAD PTY LTD ACN 115 523 227 (IN LIQUIDATION) in its own capacity and in its capacity as trustee of the EZYCLAD UNIT TRUST
PETR VRSECKY as liquidator of EZYCLAD PTY LTD (IN LIQUIDATION) in its own capacity and in its capacity as trustee of the EZYCLAD UNIT TRUST	Applicant

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JUDGE:	ROBSON J
WHERE HELD:	Melbourne
DATE OF HEARING:	12 February 2014
DATE OF JUDGMENT:	12 February 2014
CASE MAY BE CITED AS:	Re Ezyclad Pty Ltd (in liquidation)
MEDIUM NEUTRAL CITATION:	[2014] VSC 66

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CORPORATIONS – Liquidator – Alleged failure to produce books of account - Warrant sought pursuant to Corporations Act 2001, s 530C – Whether warrant should be subject to conditions – Whether seizure of books of account kept in electronic form includes taking a copy of the electronic record – Electronic books being non-rivalrous – Definition of books – s 9 Corporations Act 2001.

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APPEARANCES:	Counsel	Solicitors
For the Applicant	MR H. Hassan	Saxbys Lawyers

HIS HONOUR:

Introduction

I have before me an ex parte application dated 11 February 2014 under s 530C of the Corporations Act 2001 (the Act). The section permits a Court to issue a warrant, if certain conditions are satisfied, authorising a specified person to, amongst other things, search for and seize books of a specified company. The application is by the liquidator of Ezyclad Pty Ltd (Ezyclad). On 10 July 2013, an order was made that Ezyclad be wound up in insolvency and Petr Vrescky be appointed as liquidator of Ezyclad.

Background

Ezyclad was previously controlled by Mr Adam Michael Bond (Mr Bond), the sole director of Ezyclad.

The liquidator has identified the following companies as also being associated with Mr Bond:

(a)Global Styrene Pty Ltd ACN 135 967 912 (Global Styrene). Mr Bond is the sole director and secretary of Global Styrene. Its principal place of business is 11 Brooklyn Court, Campbellfield, which is the premises Ezyclad previously operated from;
(b)Jemik Properties (Vic) Pty Ltd ACN 152 637 888 (Jemik Properties). Mr Bond is the sole director and shareholder of Jemik Properties. Its principal place of business is also 11 Brooklyn Court, Campbellfield;
(c)Ezyclad (Aust) Pty Ltd ACN 163 848 342 (Ezyclad (Aust)) was incorporated on 20 May 2013. Mr Bond’s wife, Mrs Justine Bond (Mrs Bond), is the sole director and shareholder of Ezyclad (Aust). Global Styrene is the sole shareholder of Ezyclad (Aust), and ASIC records the principal place of business of Ezyclad (Aust) as 220 Reynard Street, Coburg; and
(d)Ezyclad (Vic) Pty Ltd ACN 163 813 698 (Ezyclad (Vic)). Mrs Bond is the sole director and secretary of Ezyclad (Vic). Global Styrene is the sole shareholder of Ezyclad (Vic). Ezyclad (Vic) was registered on 17 May 2013. Its principal office is at 220 Reynard Street, Coburg.

The property situated at 220 Reynard…

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: [2014] VSC 66
Decision Date: 12 February 2014

CaseChat Overview and Summary

The case involved Ezyclad Pty Ltd, a company in liquidation, and a liquidator appointed to manage its affairs. The dispute centred on the liquidator's alleged failure to produce the company's books of account, leading to a warrant being sought under section 530C of the Corporations Act 2001. The primary issue for the court was whether the warrant should be subject to specific conditions and whether the seizure of electronic books of account included taking a copy of the electronic record. The court also needed to determine the definition of 'books' as per section 9 of the Corporations Act 2001.

The court examined the legal framework surrounding the seizure of electronic records, noting that books in electronic form are non-rivalrous and can be accessed without being physically seized. The definition of 'books' in section 9 of the Act was crucial to the court's decision. The court concluded that the seizure of electronic books of account did not necessarily include taking a copy of the electronic record, as the physical seizure of electronic records is not feasible. The court also held that the warrant should be subject to conditions to ensure that the liquidator's rights were protected while allowing for the necessary access to the books of account.

In reaching its decision, the court balanced the need for transparency and access to the company's financial records with the protection of the liquidator's rights. The court determined that the warrant should be subject to conditions that would allow for the inspection of the electronic books of account without unduly interfering with the liquidator's duties. The court's reasoning was based on the unique nature of electronic records and the need for a balanced approach that respected both the rights of the liquidator and the requirements of the Act.

The final orders of the court specified the conditions under which the warrant would be executed, allowing for the inspection of the electronic books of account while protecting the liquidator's rights. The court's decision provided clarity on the interpretation of 'books' in the context of electronic records and set a precedent for future cases involving the seizure of electronic books of account.

Orders