SK Foods LP v SK Foods Australia Pty Ltd, in the matter of SK Foods Australia Pty Ltd

Case [2012] FCA 736

FEDERAL COURT OF AUSTRALIA

SK Foods LP v SK Foods Australia Pty Ltd, in the matter of SK Foods Australia Pty Ltd [2012] FCA 736

Citation: SK Foods LP v SK Foods Australia Pty Ltd, in the matter of SK Foods Australia Pty Ltd [2012] FCA 736
Parties: SK FOODS LP, A CALIFORNIA LIMITED PARTNERSHIP (UNDER CHAPTER 11) and BRADLEY D. SHARP AS TRUSTEE IN BANKRUPTCY OF SK FOODS LP v SK FOODS AUSTRALIA PTY LTD (IN LIQUIDATION) ACN 009 245 735, CEDENCO JV AUSTRALIA PTY LTD (IN LIQUIDATION) ACN 075 836 010, SS FARMS AUSTRALIA PTY LTD (IN LIQUIDATION) ACN 107 746 716, JOHN SHEAHAN AND IAN RUSSELL LOCK AS JOINT AND SEVERAL LIQUIDATORS OF SK FOODS AUSTRALIA PTY LTD (IN LIQUIDATION) ACN 009 245 735, SKPM CORPORATION, FREDERICK SCOTT SALYER AS TRUSTEE OF THE SCOTT SALYER REVOCABLE TRUST, MONTEREY PENINSULA FARMING LLC, FAST FALCON LLC and SS FARMS LLC
File number: NSD 262 of 2012
Judge: EMMETT J
Date of judgment: 4 June 2012
Date of hearing: 4 June 2012
Place: SYDNEY
Division: GENERAL DIVISION
Category: No catchwords
Number of paragraphs: 5
Counsel for the plaintiffs: G Lucarelli
Solicitor for the plaintiffs: Duncan Cotterill
Counsel for the first to fourth defendants: KJ Williams
Solicitor for the first to fourth defendants: DMAW Lawyers
Counsel for the fifth to ninth defendants: The fifth to ninth defendants did not appear

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 262 of 2012
BETWEEN:

SK FOODS LP, A CALIFORNIA LIMITED PARTNERSHIP (UNDER CHAPTER 11)
First Plaintiff

BRADLEY D. SHARP AS TRUSTEE IN BANKRUPTCY OF SK FOODS LP
Second Plaintiff
AND:

SK FOODS AUSTRALIA PTY LTD (IN LIQUIDATION) ACN 009 245 735
First Defendant

CEDENCO JV AUSTRALIA PTY LTD (IN LIQUIDATION) ACN 075 836 010
Second Defendant

SS FARMS AUSTRALIA PTY LTD (IN LIQUIDATION) ACN 107 746 716
Third Defendant

JOHN SHEAHAN AND IAN RUSSELL LOCK AS JOINT AND SEVERAL LIQUIDATORS OF SK FOODS AUSTRALIA PTY LTD (IN LIQUIDATION) ACN 009 245 735
Fourth Defendants

SKPM CORPORATION
Fifth Defendant

FREDERICK SCOTT SALYER AS TRUSTEE OF THE SCOTT SALYER REVOCABLE TRUST
Sixth Defendant

MONTEREY PENINSULA FARMING LLC
Seventh Defendant

FAST FALCON LLC
Eighth Defendant

SS FARMS LLC
Ninth Defendant

JUDGE:

EMMETT J

DATE OF ORDER:

4 JUNE 2012

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.The interlocutory application dated 16 March 2012 filed by the fifth, sixth, seventh, eighth and ninth defendants (Salyer Parties) seeking security for costs (Security for Costs Application) be dismissed.

2.The Salyer Parties pay the plaintiffs’ costs of the Security for Costs Application, with such costs to be payable forthwith and to be assessed on an indemnity basis.

3.The interlocutory application filed on 20 March 2012 seeking summary dismissal of the SS Farms sales proceeds claim (Summary Dismissal Application) be dismissed.

4.The Salyer Parties pay the plaintiffs’ costs of the Summary Dismissal Application, with such costs to be payable forthwith and to be assessed on an indemnity basis.

5.By 4pm on 15 June 2012, the fourth defendants (Liquidators) are to either:

5.1Pay a dividend on the plaintiffs’ proof of debt dated 17 May 2010 in an amount of $8,537,532 (such payment to be without prejudice to the plaintiffs’ claims in proceeding NSD 2334 of 2011), or

5.2Serve written notice on the plaintiffs reversing the Liquidators’ decision to partially admit the plaintiffs’ proof of debt dated 17 May 2010 in an amount of $8,537,532, which notice is to include reasons (Reversal Decision).

6.In the event that a Reversal Decision is served in accordance with order 5(2):

6.1The plaintiffs be given leave, until 4pm on 22 June 2012, to file and serve on the Liquidators a second further amended originating process, amended to include an appeal from the Liquidators’ Reversal Decision (Intercompany Debt Appeal);

6.2By 4pm on 29 June 2012, the Liquidators file and serve an affidavit complying with Corporations Regulation 14.1(5) setting out the basis upon which the Reversal Decision was made and annexing or exhibiting a copy of all relevant documents as are not already annexed to any affidavit filed in the proceeding or in proceeding NSD 2280 of 2011.

7.By 4pm on 18 July 2012, the plaintiffs file, and serve on the Liquidators, Contentions of Fact and Law in relation to all issues in the proceeding.

8.By 4pm on 15 August 2012, the Liquidators file and serve their response to the plaintiffs’ Contentions of Fact and Law.

9.The proceeding be listed for directions at 9.30am on Friday, 17 August 2012.

10.The plaintiffs and the Liquidators be granted leave, at the hearing of this proceeding, to rely on any affidavit filed in proceeding NSD 2280 of 2011.

Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 262 of 2012
BETWEEN:

SK FOODS LP, A CALIFORNIA LIMITED PARTNERSHIP (UNDER CHAPTER 11)
First Plaintiff

BRADLEY D. SHARP AS TRUSTEE IN BANKRUPTCY OF SK FOODS LP
Second Plaintiff
AND:

SK FOODS AUSTRALIA PTY LTD (IN LIQUIDATION) ACN 009 245 735
First Defendant

CEDENCO JV AUSTRALIA PTY LTD (IN LIQUIDATION) ACN 075 836 010
Second Defendant

SS FARMS AUSTRALIA PTY LTD (IN LIQUIDATION) ACN 107 746 716
Third Defendant

JOHN SHEAHAN AND IAN RUSSELL LOCK AS JOINT AND SEVERAL LIQUIDATORS OF SK FOODS AUSTRALIA PTY LTD (IN LIQUIDATION) ACN 009 245 735
Fourth Defendants

SKPM CORPORATION
Fifth Defendant

FREDERICK SCOTT SALYER AS TRUSTEE OF THE SCOTT SALYER REVOCABLE TRUST
Sixth Defendant

MONTEREY PENINSULA FARMING LLC
Seventh Defendant

FAST FALCON LLC
Eighth Defendant

SS FARMS LLC
Ninth Defendant

JUDGE:

EMMETT J

DATE:

4 JUNE 2012

PLACE:

SYDNEY

REASONS FOR JUDGMENT

  1. In this proceeding, the plaintiffs, SK Foods LP, a California limited partnership, and Bradley Sharp, as trustee in bankruptcy of SK Foods LP, seek orders against SK Foods Australia Pty Limited (in liquidation) and eight other defendants, including the liquidators of SK Foods Australia Pty Limited, who are the fourth defendants.  The proceeding is concerned with the beneficial ownership of issued shares in the capital of SK Foods Australia Pty Limited, and with a proof of debt submitted on behalf of SK Foods LP in the liquidation of SK Foods Australia Pty Limited.

  2. The proceeding was commenced on 20 February 2012.  It, and related proceedings involving the same or related parties, have been before the Court on a number of occasions for directions and for the purpose of dealing with various interlocutory applications.  The most recent originating process in the proceeding is a further amended originating process filed on 29 March 2012.  However, in the meantime, the fifth, sixth, seventh, eighth and ninth defendants (the Salyer Interests) filed two interlocutory applications.  The first was dated 16 March 2012, and sought security for costs.  The second was dated 20 March 2012, and sought summary dismissal of certain claims made in the proceeding. 

  3. On 30 April 2012, the Court directed that the Salyer Interests file and serve submissions in support of their security for costs application by 11 May 2012.  The Salyer Interests were also directed to file and serve submissions in support of the summary dismissal application by 25 May 2012.  Both interlocutory applications were listed for hearing before me on 30 May 2012 and today, 4 June 2012.

  4. The directions that I gave on 30 April 2012 were not complied with, and, and on 7 May 2012, the solicitors on the record for the Salyer Interests filed notices of ceasing to act.  The hearing on 30 May 2012 was vacated by the Court on the basis that the proceeding would come on for hearing on the second day fixed, namely 4 June 2012.  In the meantime, on 9 May 2012, the plaintiffs filed an interlocutory application, by which they seek dismissal of the two interlocutory applications to which I have referred, along with orders for costs on an indemnity basis. 

  5. The plaintiffs’ interlocutory application was filed in the expectation that there would be no appearance for the Salyer Interests.  When the matter was called on for hearing this morning, there was indeed no appearance for the Salyer Interests.  In the circumstances, having regard both to the Salyer Interests’ failure to comply with the directions and to their non-appearance, it is appropriate to accede to the plaintiffs’ interlocutory application, and I propose to make orders accordingly. 

I certify that the preceding five (5) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.

Associate:

Dated: 9 July 2012

Details
AGLC
SK Foods LP v SK Foods Australia Pty Ltd, in the matter of SK Foods Australia Pty Ltd [2012] FCA 736
Case
[2012] FCA 736
Decision Date

CaseChat Overview and Summary

In the Federal Court of Australia, SK Foods LP brought an action against SK Foods Australia Pty Ltd, with the liquidators of the latter party being the fourth defendants. The dispute revolves around claims for security of costs, summary dismissal of certain claims, and the handling of a proof of debt. Several other parties, referred to as the Salyer Parties, were also involved in the proceedings.

The court had to determine two primary legal issues. The first was whether the Salyer Parties were entitled to security for costs, and the second was whether the claim regarding the proceeds of sales by SS Farms should be summarily dismissed. The court also had to address the liquidators' handling of a proof of debt submitted by the plaintiffs.

The court dismissed both the application for security of costs and the application for summary dismissal of the sales proceeds claim. It held that the Salyer Parties were not entitled to security for costs and that the sales proceeds claim should not be summarily dismissed. Regarding the liquidators' handling of the proof of debt, the court ordered that the liquidators either pay a dividend on the debt or serve written notice reversing their decision, along with reasons. If the latter option was chosen, the plaintiffs would be allowed to appeal the decision, and the liquidators would be required to provide a detailed affidavit in support of their decision.

The court further imposed several procedural orders, including deadlines for the filing and serving of various documents and setting a date for directions. The orders also permitted the parties to rely on affidavits filed in a related proceeding. The court's decision provided a clear path forward for the litigation, setting specific timelines and requirements for the parties involved.

Orders

Orders of the court

1. The interlocutory application dated 16 March 2012 filed by the fifth, sixth, seventh, eighth and ninth defendants (Salyer Parties) seeking security for costs (Security for Costs Application) be dismissed.

2. The Salyer Parties pay the plaintiffs’ costs of the Security for Costs Application, with such costs to be payable forthwith and to be assessed on an indemnity basis.

3. The interlocutory application filed on 20 March 2012 seeking summary dismissal of the SS Farms sales proceeds claim (Summary Dismissal Application) be dismissed.

4. The Salyer Parties pay the plaintiffs’ costs of the Summary Dismissal Application, with such costs to be payable forthwith and to be assessed on an indemnity basis.

5. By 4pm on 15 June 2012, the fourth defendants (Liquidators) are to either:

5.1 Pay a dividend on the plaintiffs’ proof of debt dated 17 May 2010 in an amount of $8,537,532 (such payment to be without prejudice to the plaintiffs’ claims in proceeding NSD 2334 of 2011), or

5.2 Serve written notice on the plaintiffs reversing the Liquidators’ decision to partially admit the plaintiffs’ proof of debt dated 17 May 2010 in an amount of $8,537,532, which notice is to include reasons (Reversal Decision).

6. In the event that a Reversal Decision is served in accordance with order 5(2):

6.1 The plaintiffs be given leave, until 4pm on 22 June 2012, to file and serve on the Liquidators a second further amended originating process, amended to include an appeal from the Liquidators’ Reversal Decision (Intercompany Debt Appeal);

6.2 By 4pm on 29 June 2012, the Liquidators file and serve an affidavit complying with Corporations Regulation 14.1(5) setting out the basis upon which the Reversal Decision was made and annexing or exhibiting a copy of all relevant documents as are not already annexed to any affidavit filed in the proceeding or in proceeding NSD 2280 of 2011.

7. By 4pm on 18 July 2012, the plaintiffs file, and serve on the Liquidators, Contentions of Fact and Law in relation to all issues in the proceeding.

8. By 4pm on 15 August 2012, the Liquidators file and serve their response to the plaintiffs’ Contentions of Fact and Law.

9. The proceeding be listed for directions at 9.30am on Friday, 17 August 2012.

10. The plaintiffs and the Liquidators be granted leave, at the hearing of this proceeding, to rely on any affidavit filed in proceeding NSD 2280 of 2011.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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