Sims v SPM Business Consultants Pty Ltd
[2002] FCA 1350
•25 OCTOBER 2002
FEDERAL COURT OF AUSTRALIA
Sims v SPM Business Consultants Pty Ltd [2002] FCA 1350
CORPORATIONS – receivership – deeds of fixed and floating charge as security for monies owed – default under deed – receiver seeking delivery up of property – power of Court to order delivery – utility of Corporations Act 2001 (Cth) ss 420(1), 420(2)(a) to a receiver as against third party
Corporations Act 2001 (Cth) ss 420(1), 420(2)(a).
King v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141 at 154, followed.
Acton Engineering Proprietary Limited v Campbell (1991) 31 FCR 1 to 13, followed.ANTHONY MILTON SIMS & ORS v SPM BUSINESS CONSULTANTS PTY LTD & ORS
N3061 OF 2002
EMMETT J
25 OCTOBER 2002
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N3061 OF 2002
BETWEEN:
ANTHONY MILTON SIMS
FIRST APPLICANT
SHARPE PARTNERS (SOUTH EAST MELBOURNE) PTY LIMITED (RECEIVER & MANAGER APPOINTED)
(ACN 094 744 555)SECOND APPLICANT
SHARPE PARTNERS NATIONAL PTY LIMITED (RECEIVER & MANAGER APPOINTED) (ACN 089 056 824)
THIRD APPLICANT
SHARPE PARTNERS (MELBOURNE) PTY LIMITED (RECEIVER & MANAGER APPOINTED) (ACN 090 853 044)
FOURTH APPLICANTAND:
SPM BUSINESS CONSULTANTS PTY LIMITED
(ACN 006 805 803)FIRST RESPONDENT
IAN HARRIS
SECOND RESPONDENT
PAUL DIGGERSON
THIRD RESPONDENTJUDGE:
EMMETT J
DATE OF ORDER:
25 OCTOBER 2002
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.leave is granted to the applicants to file a notice of motion seeking interlocutory relief in support of the claims set out in the application filed in this proceeding, such motion to be returnable before Emmett J on 31 October 2002 at 9.30 am;
2. time for service of such motion to be abridged to 28 October 2002 at 5 pm.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N3061 OF 2002
BETWEEN:
ANTHONY MILTON SIMS
FIRST APPLICANT
SHARPE PARTNERS (SOUTH EAST MELBOURNE) PTY LIMITED (RECEIVER & MANAGER APPOINTED)
(ACN 094 744 555)SECOND APPLICANT
SHARPE PARTNERS NATIONAL PTY LIMITED (RECEIVER & MANAGER APPOINTED) (ACN 089 056 824)
THIRD APPLICANT
SHARPE PARTNERS (MELBOURNE) PTY LIMITED (RECEIVER & MANAGER APPOINTED) (ACN 090 853 044)
FOURTH APPLICANTAND:
SPM BUSINESS CONSULTANTS PTY LIMITED
(ACN 006 805 803)FIRST RESPONDENT
IAN HARRIS
SECOND RESPONDENT
PAUL DIGGERSON
THIRD RESPONDENTJUDGE:
EMMETT J
DATE:
25 OCTOBER 2002
PLACE:
SYDNEY
REASONS FOR DECISION
The first applicant (“the Receiver”) is the receiver and manager of the second, third and fourth applicants (“the Companies”). He was appointed pursuant to Deeds of Fixed and Floating Charge executed by the Companies on 14 March 2001 and 4 June 2001 respectively (“the Deeds). Each of the Deeds constitutes a charge by one of the Companies in favour of Macquarie Bank Limited (“the Bank”) as security for the due and payment of all money owing at any time by that Company to the Bank.
By Clause 10 of each of the Deeds the Bank is authorised to appoint a receiver of any part of the mortgaged property, which is defined in each of the Deeds as all of the property rights and undertaking of the respective Company. The right to appoint a receiver arises upon an event of default. Under Clause 12(1)(a) of the Deeds, in addition to the powers conferred by law, any such receiver may exercise the power to take possession and assume control of and manage the mortgaged property. Events of default have occurred within the meaning of the Deeds and, in consequence of those events of default, the Receiver was appointed as receiver and manager of each of the Companies.
The Companies carried on accounting practices in Victoria. Since the appointment of the Receiver, he has had difficulty in exercising the power conferred by Clause 12(1)(a) of the Deeds. The Receiver and the Companies have therefore commenced this proceeding, seeking orders that the respondents deliver up all property of the Companies in their possession, custody or power, and orders restraining the respondents from preventing, hindering or otherwise interfering with the entering into possession and taking control of the property of the Companies by the Receiver and the Companies. They assert that the second and third respondents, Messrs Ian Harris and Paul Diggerson, incorporated the first respondent and, in May 2002, purported to acquire and thereafter carry on, the practices of the Companies under the name of the first respondent and to retain the existing personnel of the Companies.
The Court has been asked to make orders, either on a final or on an interlocutory basis, for delivery up of the property of the Companies to the Receiver. A question, however, has been raised by me as to the Court's jurisdiction in the circumstances of this case to make the orders sought. The Court has jurisdiction to deal with any matter arising under a federal statute.
The applicants rely on s 420 of the Corporations Act 2001 (Cth) (“the Corporations Act”) as giving rise to a right or power on the part of the Receiver to enter into possession and take control of the property of the Companies. Section 420(1) provides as follows:
“Subject to this section, a receiver of property of a corporation has power to do, in Australia and elsewhere, all things necessary or convenient to be done for or in connection with, or as incidental to, the attainment of the objectives for which the receiver was appointed.”
It is clear enough that entering into possession and taking control of the property of the Companies is something convenient to be done for, or in connection with, or as incidental to the attainment of the objectives for which the Receiver was appointed.
Section 420(2)(a) relevantly provides as follows:
“Without limiting the generality of s 420(1)…a receiver of property of a corporation has power… for the purpose of attaining the objectives for which the receiver was appointed:
(a)to enter into possession and take control of property of the corporation in accordance with the terms [under which the receiver was appointed];”
Thus, s 420(2) confers an express power on the Receiver to enter into possession and take control, in accordance with the terms of the three Deeds. Specifically, that would extend to the provisions of Clause 12(1)(a).
A matter may properly be said to arise under a federal law if a right or duty in question in the matter owes its existence to that federal law or depends upon federal law for its enforcement - see King v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141 at 154.
A matter arising under the Corporations Act is a justiciable controversy identifiable independently of any proceeding that is brought for its determination and encompassing all claims made within the scope of the controversy - see Acton Engineering Proprietary Limited v Campbell (1991) 31 FCR 1 to 13. If a title, right, privilege or immunity that an applicant seeks to vindicate in a proceeding is founded upon, or is given by, and depends upon a federal law, that will involve a matter arising under the federal law.
As a matter of contract, the Bank is entitled, as against the Companies, to have its Receiver take possession, assume control, and manage the property of the Companies. The Companies themselves, of course, are entitled, by reason of their ownership, to take possession and assume control of their own property. However, the Receiver does not himself, by reason of the contractual provision of the Deeds or of any right of the Companies, have power to enter into possession and take control of the property of the Companies.
The Receiver, by the terms of the Deeds, is the agent of the Companies in relation to any conduct in which he engages in pursuance of the terms of the Deeds. However, as between the Receiver and any third party who is in possession of property of the Companies, the Receiver has no right or power. He is entitled to enforce the rights of the Companies to possession, but that is the possession of the Companies. He has no contractual right as against a third party to take possession of anything. Thus, s 420, it seems to me, is designed to give to a receiver, duly appointed under any instrument, the power to do what, as a matter of contract, the corporation has agreed with a mortgagee that a receiver appointed by the mortgagee might do.
It follows, therefore, that what the Receiver seeks in this proceeding is to vindicate the power conferred upon him by s 420 of the Corporations Act. At the same time, of course, he seeks, in his capacity as the directing mind of the Companies, to enforce the rights that the Companies have, by reason of their ownership to possession of their property. A controversy as to the rights of the Companies would not, without anything more, amount to a matter arising under a federal law. However, once the Court has jurisdiction to deal with the vindication of the entitlement of the Receiver to possession as against third parties, it is clear that the Companies’ rights to possession would be part of the pendent jurisdiction of the Court.
I am satisfied that the Court has jurisdiction to deal with the matter of the Receiver’s power to enter into possession and take control of the property of the Companies in accordance with the terms of the Deeds. Accordingly, I am prepared to entertain an application on the part of the applicants for interlocutory relief and, in due course, to deal with the application on a final basis.
At this stage, it is not entirely clear what property the applicants seek to make the subject of orders, either of an interlocutory nature or otherwise. Accordingly, I propose to give the applicants leave to file a motion returnable before me next week seeking interlocutory relief for delivery up of any identifiable property of the Companies, on the basis that the property would then be retained by the Receiver pending final determination of the claims to possession by the applicants.
I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. Associate:
Dated: 31 October 2002
Counsel for the Applicants: Mr D. Pritchard Solicitor for the Applicants: Garland Hawthorn Brahe Counsel for the Respondents: There was no appearance by any of the respondents Solicitor for the Respondents: There was no appearance by any of the respondents Date of Hearing: 25 October 2002 Date of Judgment: 25 October 2002
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