Tam v 5 Autumndale Holdings Pty Ltd
[2024] FCA 395
•4 April 2024
FEDERAL COURT OF AUSTRALIA
Tam v 5 Autumndale Holdings Pty Ltd [2024] FCA 395
File number(s): NSD 338 of 2024 Judgment of: HALLEY J Date of judgment: 4 April 2024 Date of publication of reasons 19 April 2024 Catchwords: CORPORATIONS – liquidator – appointment of provisional liquidator Legislation: Corporations Act 2001 (Cth) ss 462 and 472 Cases cited: Allstate Exploration v Batepro [2004] NSWSC 261
Australian Securities and Investments Commission v ActiveSuper Pty Ltd (No 2) (2013) 93 ACSR 189; [2013] FCA 234
Australian Securities and Investments Commission v Sino Australia Oil and Gas Ltd (2015) 106 ACSR 575; [2015] FCA 531
Australian Securities Commission v Solomon & Ors [1996] 19 ACSR 73
Constantinidis v JGL Trading Pty Ltd (1995) 17 ACSR 625
Grace v Grace [2007] NSWSC 6
Lubavitch Mazal v Yeshiva Properties No. 1 Pty Ltd (2003) 47 ACSR 197; [2003] NSWSC 535
Re Carapark Industries Pty Ltd (in liq) (1966) 9 FLR 297; [1967] 1 NSWR 337
Re Club Mediterranean Pty Ltd (1975) 11 SASR 481
Re J N Taylor Holdings Ltd; Zempilas v J N Taylor Holdings Ltd (1990) 3 ACSR 518
Tam v MLPG Holdings Australia Pty Ltd [2024] FCA 394
Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Number of paragraphs: 31 Date of hearing: 4 April 2024 Counsel for the Plaintiff: Mr J Baird Solicitor for the Plaintiff: Proctor Phair Lawyers ORDERS
NSD 338 of 2024 BETWEEN: JEFFREY TAM
Plaintiff
AND: 5 AUTUMNDALE HOLDINGS PTY LTD
Defendant
ORDER MADE BY:
HALLEY J
DATE OF ORDER:
4 APRIL 2024
THE COURT NOTES THAT:
A.The plaintiff, by his counsel, has given the usual undertaking as to damages.
THE COURT ORDERS THAT:
1.Pursuant to s 472(2) of the Corporations Act 2001 (Cth) (Act), Phillip Hosking of Helm Advisory is appointed provisional liquidator of 5 Autumndale Holdings Pty Ltd (ACN 653 551 458) (Company) until the making of a winding up order or otherwise until further order.
2.The provisional liquidator shall have, in respect of the Company, all the powers that a liquidator of a company would have pursuant to ss 472(3) and (4) and s 477 of the Act and, without limiting the foregoing, the following powers:
(a)to enter into possession and take control of all assets of the Company including all assets of the Company used in or relating to its operations, together with all books, records, computers, computer disks, and any other papers or records relating thereto;
(b)to deal with any monies held by or on behalf of the Company or its officers, employees or agents or any of them, being monies received in relation to or employed in the Company’s operations;
(c)to operate and inspect any account at any bank or other financial institution being an account operated by the Company or its officers, employees or agents or any of them and to withdraw any such monies and to pay any such monies into an account or accounts opened or maintained by or for the provisional liquidator;
(d)to appoint a solicitor, accountant or other professionally qualified person either within or outside Australia to assist the provisional liquidator;
(e)to delegate to his partners, directors, employees and agents whether within or outside Australia any business or matter that the provisional liquidator is unable to do himself or that can be done more conveniently by those others;
(f)to receive any monies due to the Company relating to its operations;
(g)to compromise any calls, liabilities to calls, liabilities capable of resulting in debts and any claims (present or future, certain or contingent, ascertained or sounding only in damages) subsisting or supposed to subsist between the Company and a contributory or other debtor or person apprehending liability to the Company, and all questions in any way relating to or affecting the property of the Company, on such terms as are agreed, and take any security for the discharge of, and give complete discharge in respect of, any such call, debt, liability or claim;
(h)for the purposes of maintaining and securing the assets of the Company:
(i)to pay any expense, including for the purposes of insurance;
(ii)to execute any document;
(iii)bring or defend any proceeding;
(iv)to carry on business;
(v)to obtain credit; and
(vi)do any other act or thing,
(vii)in the name of or on behalf of the Company, its officers, employees or agents or any of them;
(i)to make any application to any court or regulatory agency for the purposes of exercising the powers in (a) to (h) above;
(j)to apply for further orders, including the power to realise the assets and pay the liabilities of the Company and to seek directions as to the disposition of any remaining proceeds, and to apply for the power that a liquidator would have under s 568 of the Act to disclaim onerous property or unprofitable contracts and for leave to exercise the power; and
(k)to receive remuneration on a time basis within the scale of charges approved by the Court, such remuneration to be paid from the proceeds of the winding up.
3.Within 28 days of his appointment in accordance with Order 1 above, Mr Hosking is to provide to the Court a report as to the provisional liquidation of the Company, including:
(a)the identification of assets and liabilities of the Company;
(b)an opinion as to the solvency of the Company;
(c)an opinion as to the assets and liabilities of the Company;
(d)an opinion as to whether the Company has proper financial records; and
(e)any other information that might be necessary to enable the financial position of the Company to be assessed.
4.The proceedings be referred to the National Operations Registrar for allocation to a docket judge.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
HALLEY J:
A. INTRODUCTION
On 4 April 2024, I made orders as the Commercial and Corporations Duty Judge pursuant to s 472(2) of the Corporations Act 2001 (Cth) (Act), that Phillip Hosking of Helm Advisory, be appointed as a provisional liquidator of the defendant, 5 Autumndale Holdings Pty Ltd (ACN 653 551 458) (5 Autumndale).
By an originating application filed on 26 March 2024, the plaintiff, Jeffrey Tam, seeks an order for the winding up of 5 Autumndale, both on the just and equitable ground and on the ground of insolvency.
In a related proceeding, Mr Tam also seeks an order for the winding up of MLPG Holdings Australia Pty Ltd (ACN 643 965 119) (MLPG), both on the just and equitable ground and on the ground of insolvency: Tam v MLPG Holdings Australia Pty Ltd [2024] FCA 394.
Mr Tam also seeks an order for the appointment of a liquidator provisionally to MLPG in the related proceeding.
Mr Tam relied on:
(a)his affidavit sworn on 25 March 2024 and its exhibits;
(b)the affidavit of Daniele Phair, a solicitor for the plaintiff, sworn on 3 April 2024; and
(c)the preliminary report of Mr Hosking dated 27 March 2024.
These are my reasons for making the orders on 4 April 2024.
B. BACKGROUND
Paul Jaque Giezekamp is the sole director and shareholder of 5 Autumndale.
On 30 September 2024, Mr Tam entered into a joint venture agreement with 5 Autumndale (JVA) for the construction of four townhouses on the property at 5 Autumndale Avenue, Reservoir, Victoria (5 Autumndale property).
Clause 3.1 of the JVA provided that Mr Tam had to contribute capital either by subscribing for shares in 5 Autumndale or by providing a loan advance to 5 Autumndale in an aggregate amount of $400,000. Clause 2.1(c) of the JVA provided that Mr Tam was to receive an agreed return of an additional amount of $200,000 by way of a profit share, in total an amount of $600,000.
On 30 September 2022, Mr Tam advanced $350,000 to 5 Autumndale and subsequently on 28 October 2022, Mr Tam paid the balance outstanding under cl 3.1 of the JVA of $50,000 to 5 Autumndale.
Clause 3.6 of the JVA provided that the monies advanced by Mr Tam were to be used by 5 Autumndale to reduce the loan amount advanced by Mr Giezekamp and his company, U Money Australia Pty Ltd, to 5 Autumndale.
Mr Tam gave evidence that 5 Autumndale (a) has failed to enter into a construction contract with a builder or to commence construction on the four townhouses, (b) has abandoned the project, (c) without his knowledge or consent, has sold the 5 Autumndale property on 24 August 2023 for $950,000, and (d) is not presently trading.
Mr Tam also gave evidence that he has not received any response from Mr Giezekamp, despite repeated requests, as to how the money that he has advanced to 5 Autumndale has been disbursed or received any information on the reconciliation of the monies received on the sale of the 5 Autumndale property.
C. PRINCIPLES
In the related proceeding brought by Mr Tam against MLPG, I summarised the relevant principles in relation to the appointment of a liquidator provisionally pending the final hearing of a winding up application: MLPG Holdings at [17] to [24]. For convenience, I set out those principles below.
First, the usual, although not the only, purpose for which a provisional liquidator is appointed is to preserve the assets of the company and the status quo in relation to its affairs: Re J N Taylor Holdings Ltd; Zempilas v J N Taylor Holdings Ltd (1990) 3 ACSR 518 (King CJ, Cox and Olsson JJ); Australian Securities and Investments Commission v Sino Australia Oil and Gas Ltd (2015) 106 ACSR 575; [2015] FCA 531 at [10] (Davies J).
Second, the primary duty of a provisional liquidator is to preserve the status quo so as to ensure the least possible harm to all concerned and to enable the Court to decide, after a proper final hearing, whether the company should be wound up: Australian Securities and Investments Commission v ActiveSuper Pty Ltd (No 2) (2013) 93 ACSR 189; [2013] FCA 234 at [16(c)] (Gordon J) citing Re Carapark Industries Pty Ltd (in liq) (1966) 9 FLR 297; [1967] 1 NSWR 337 (Street J).
Third, the appointment of a provisional liquidator pending a determination of a winding up petition, is a drastic intrusion into the affairs of a company and is not to be contemplated if other measures would be adequate to preserve the status quo: Zempilas, Constantinidis v JGL Trading Pty Ltd (1995) 17 ACSR 625 at 635 (Kirby P, Meagher and Powell JJA); ActiveSuper Pty Ltd (No 2) at [7].
Fourth, the Court should only appoint a provisional liquidator where it is satisfied that there is a reasonable prospect that a winding up order will be made at a final hearing: ActiveSuper Pty Ltd (No 2) at [15] (Gordon J) citing Australian Securities Commission v Solomon & Ors [1996] 19 ACSR 73 at [7] (Tamberlin J).
Fifth, in addition to considering whether there is an arguable case to establish a ground for winding up, the Court must consider the degree of urgency, the need established by the applicant creditor, and the balance of convenience: ActiveSuper Pty Ltd (No 2) at [16] citing Re Club Mediterranean Pty Ltd (1975) 11 SASR 481; Lubavitch Mazal v Yeshiva Properties No. 1 Pty Ltd (2003) 47 ACSR 197; [2003] NSWSC 535 at [106] (Austin J).
Sixth, a creditor has standing to seek a winding up order under s 462(2)(b) of the Act, and therefore has standing to seek the appointment of a provisional liquidator under s 472(2): Allstate Exploration v Batepro [2004] NSWSC 261 at [21].
Seventh, the appointment of a provisional liquidator may be appropriate in a case involving a dispute between parties to a joint venture but that course is not lightly to be adopted: Grace v Grace [2007] NSWSC 6 at [28] (Brereton J) citing Zempilas and Constantinidis.
D. CONSIDERATION
Mr Tam has standing to seek the appointment of a provisional liquidator to 5 Autumndale. He is a creditor of 5 Autumndale for at least the principal amount of the loan he has advanced of $400,000. It is not necessary to make any finding as to whether he was also presently entitled to the proposed return of $200,000 pursuant to cl 2.1(c) of the JVA.
I was satisfied that Mr Hosking should be appointed as a provisional liquidator of 5 Autumndale until the making of a winding up order or, otherwise until further order, in order to protect the interests of its creditors, in particular Mr Tam, for the following reasons.
First, Mr Tam advanced $400,000 to 5 Autumndale pursuant to the terms of the JVA in two tranches in September and October 2022 to fund, in substantial part, the development of townhouses on the 5 Autumndale property but no work has been commenced on the 5 Autumndale property, and the 5 Autumndale property has been sold.
Second, Mr Tam has not received any repayment of the $400,000 that he has advanced to 5 Autumndale and the sole director of the company, Mr Giezekamp, has not responded to any telephone calls or correspondence from Mr Tam, and 5 Autumndale is not currently trading.
Third, given that (a) 5 Autumndale presently owes Mr Tam an amount of at least $400,000, being the principal amount of the loans that he has advanced, (b) 5 Autumndale is not currently trading, (c) no work has been commenced on the 5 Autumndale property, and (d) the 5 Autumndale property has been sold, it is likely that 5 Autumndale is insolvent and a winding up order will be made against it at the final hearing.
Fourth, there is a particular need for an independent person to be appointed with power to investigate the affairs of each company, especially in relation to the conduct of Mr Giezekamp, the significant amounts advanced by Mr Tam to 5 Autumndale, and the whereabouts of the monies advanced by Mr Tam. These circumstances call for a proper and independent investigation. Relevantly, Mr Hosking has already commenced investigations in relation to the affairs of MHPG Holdings Australia Pty Ltd, a company of which Mr Giezekamp is also the sole director and shareholder.
Fifth, there is no apparent prejudice to 5 Autumndale should a provisional liquidator be appointed as the property has been sold and there is no suggestion that 5 Autumndale is presently trading.
Sixth, given Mr Giezekamp’s failure to respond to any communications from Mr Tam, there is no reasonable alternative to the appointment of a provisional liquidator, and there is nothing to suggest that Mr Tam is not acting reasonably and bona fide in seeking Mr Hosking’s appointment.
Seventh, the balance of convenience also favours the appointment of a provisional liquidator. The adverse consequences to Mr Tam of allowing the present position to continue significantly outweigh any possible adverse consequences to 5 Autumndale arising from the appointment of a provisional liquidator.
DISPOSITION
By reason of the above matters, I was satisfied that this was an appropriate case to make an order that Mr Hosking be appointed provisional liquidator of 5 Autumndale.
I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Halley. Associate:
Dated: 19 April 2024