Thai v Du
[2002] NSWSC 867
•16 September 2002
CITATION: Thai v Du [2002] NSWSC 867 CURRENT JURISDICTION: Equity FILE NUMBER(S): SC 5189/00 HEARING DATE(S): 16 September 2002 JUDGMENT DATE: 16 September 2002 PARTIES :
Trong Tan Thai (P)
Hung Manh Du (D1)
Hollywood Link Communication Pty Limited (D2)JUDGMENT OF: Hamilton J
COUNSEL : No appearance (P)
H Ekes, Solicitor (D1 & 2)
R I Bellamy (Receiver)SOLICITORS: Kemp Strang (P)
Pembroke Solicitors (D1 & 2)
Kemp Strang (Receiver)CATCHWORDS: CORPORATIONS [196] - Receivers, managers and controllers - Other matters - Application by receiver for directions - Receiver and manager appointed by Court - Whether Court should give approval to settlement of contract. CASES CITED: Glazier Holdings Pty Ltd v Australian Mens Health Pty Ltd [1998] NSWSC 144
Mariconti v Batiste [2000] NSWSC 288DECISION: Settlement of contract by receiver approved.
IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
HAMILTON J
MONDAY, 16 SEPTEMBER 2002
5189/00 TRONG TAN THAI v HUNG MANH DU & ANOR
JUDGMENT
1 HIS HONOUR: The Court is asked by Nicholas Craig Malanos, the receiver and manager of a partnership formerly conducted between the plaintiff and the first defendant, to approve the completion of the sale of the business known as Hollywood Communications on the terms contained in a sale agreement which is Exhibit NCM7 before me. The business is a business of selling mobile telephones and accessories from premises at Marrickville and Cabramatta. The partnership operated the stores as exclusive dealer for Cellular One Communications Pty Ltd (“Cellular One”). Under the agreement with Cellular One, which is in evidence before me, it was provided that the dealer might transfer the dealership rights if it obtained Cellular One's prior consent "which consent must not be unreasonably withheld."
2 The receiver and manager was appointed by the Court on 25 September 2001 and his powers were defined by further order of the Court made on 24 October 2001. Those powers included both a power to convert property of the partnership into money and power to sell each and every business of the partnership in such manner as the receiver and manager determines. The receiver and manager, the evidence shows, carried out a process to identify possible purchasers. A number of potential purchasers were identified and five expressions of interest received. These were submitted by the receiver and manager to Cellular One, which indicated only one of the five prospective purchasers as a person in respect of whom it was prepared to give its approval to the transfer of the dealership rights. It is with that proposed purchaser that an agreement has been entered into and that agreement has been made subject to the approval of the Court.
3 At one stage the plaintiff opposed the proposed sale but he has lost interest in doing so and, despite being informed that this motion is before the Court and will proceed in his absence if he does not appear, he has not appeared. Indeed, a letter from his solicitor has indicated no opposition, provided no order as to costs is made. However, he has been further warned that it is proposed to ask for an order for costs of the motion out of the partnership assets and he still does not appear. The first and second defendants have appeared by Mr Ekes, solicitor, and indicated that they neither consent to nor oppose the application.
4 The power of the Court to grant approval to transactions of receivers appointed by the Court has been recently discussed in at least two unreported decisions of Judges of this Division: Glazier Holdings Pty Ltd v Australian Mens Health Pty Ltd [1998] NSWSC 144; Mariconti v Batiste [2000] NSWSC 288. In the first of those decisions Young J, as his Honour then was, said:
I stand by what I there said, but I think it should be appreciated that there is a difference between a liquidator, who is doing the work that last century the court did itself in the Master's Office, or even with a trustee, in that those people have unlimited functions, whereas a receiver has a very limited and usually relatively mechanical function. Instead of making a broad statement that receivers may always seek the opinion of the court, it would be better to put the proposition more narrowly, that if a receiver within his own limitations requires the guidance of the court, then normally he should have it.”“The receiver seeks directions of the court as an officer of the court. However, his status as an officer of the court is not quite the same as other officers. I said in Moclair v Moclair , 18 December 1986, unreported, following Re St George (1887) 19 LR Ir 566, that receivers are officers of the court and they should resort to the court for guidance when they think it is desirable to do so.
In the second of the decisions Austin J said at [75]:
- “The position of a court-appointed receiver was explored by Young J in Glazier Holdings Pty Ltd v Australian Men's Health Pty Ltd (Supreme Court of New South Wales, 30 April 1998, unreported). His Honour referred to English authority to the effect that receivers are like officers of the Court, and he cited with approval some observations in Davis v Gray (1872) 83 US 203, 217-8 which described a receiver as 'virtually a representative of the Court, and of all the parties in interest in the litigation wherein he is appointed'. That being so, in my opinion the Court's power to make an interlocutory order for the appointment of a receiver under the Supreme Court Act, 1970 (NSW) must carry with it the implied power to give directions with respect to the discharge of the functions for which the appointment is made - at any rate, where (as here) such directions are necessary in a practical sense to enable the receiver to carry out those functions without exposing himself to a real risk of litigation. The power to do so is reinforced by section 23 of the Supreme Court Act. ”
5 This does seem to me to be a case where it can be said that the direction of the Court is necessary in a practical sense. Although the sale is squarely within the powers conferred on the receiver and manager, it was at one stage opposed by the plaintiff, one of the former partners, and this no doubt led to the insertion in the contract of the clause requiring the Court's approval before completion. The receiver and manager's action in entering into a contract containing such a clause appears to be entirely appropriate in the circumstances and it seems appropriate to invoke the Court's authorisation of the transaction. The other ground which invites the Court's direction is that it is conceivable, and also a matter which requires consideration in determining whether or not the approval ought be granted, that it may be said that the receiver, who no doubt has a duty to realise the best possible price for the parties, may have been able to obtain a higher price from a person whom it considered to be a proper purchaser but who did not receive Cellular One's prior consent. It might be said that he could then, to obtain the higher price, have insisted, with the help of the Court if need be, on Cellular One giving its consent on the basis that it could not reasonably be withheld. However, that would be a course fraught with some difficulty, expense and uncertainty. It can equally be argued that in the course of attempting to make the higher price that way the receiver and manager might in fact lose out in the end in the endeavour and perhaps lose in the meantime a certain sale at a lower price because the certain purchaser might well lose interest in the meantime. I bear also squarely in mind that when the time has come for the parties to express to the Court any objection they may have to the present course being pursued, none has been forthcoming.
6 I am of the view that the course that the receiver and manager has followed and the transaction that it now proposes to complete are appropriate and that in all the circumstances the Court's approval ought be given as requested. There will, therefore, be orders in accordance with prayers 1 and 2 in the notice of motion filed on 21 May 2002.
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