ACT Commissioner for Revenue v Slaven

71 ACSR 582 - Update Constructions Pty Ltd v Rozelle Childcare Centre Ltd (1990) 20 NSWLR 251 - Vagrand Pty Ltd v Fielding (1993) 41 FCR 550; (1993) 10 ACSR 373 Texts Cited: - MC Seddon and MP Ellinghaus, Cheshire and Fifoot's Law of Contract, 9th Australian ed [4.32] Category: Interlocutory applications Parties: John Charles Stark (First Plaintiff) Rex Anthony Conway (Second Plaintiff) Sule Arnautovic as liquidator of Staway Pty Ltd (in liq) (recs and mgrs apptd) (First Defendant) Staway Pty Ltd (recs and mgrs apptd) (in liq) (Second Defendant) Liberty Financial Pty Ltd (Third Defendant) Secure Funding Pty Ltd (Fourth Defendant) Representation: Counsel: J.E. Lazarus (Plaintiffs) J. Abel (First and Second Defendants - 17/5/13 - excused from further appearance) D. Gasic (sol) (Third and Fourth Defendants) Solicitors: Brock Partners (Plaintiffs) Truman Hoyle (First and Second Defendants - 17/5/13 - excused from further appearance) Norton Rose (Third and Fourth Defendants) File Number(s): 2013/59789

Judgment 1By Amended Originating Process dated 7 March 2013, the Plaintiffs, Mr John Stark and Mr Rex Conway seek orders under s 511 of the Corporations Act 2001 (Cth) or alternatively the Court's inherent jurisdiction that they have leave and authority to initiate and continue proceedings in the name of Staway Pty Limited (receivers and managers appointed) (in liq) ("Staway") against Liberty Financial Pty Limited ("Liberty") and Secure Funding Pty Limited ("Secure") and to defend, compromise or settle any motion, set-off or cross-claim brought in the proceedings against Staway. Factual background 2By way of background, Staway was trustee for the "Dale Ford Trust" and, in May 2007, purchased the business and assets of Dale Ford and thereafter operated the Dale Ford dealership at Chullora, New South Wales. Its shareholders were Mr Stark and Mr Conway. JJ Way Pty Limited as trustee for the Stark Family Trust held 50 units in the Dale Ford Trust and Rexway Pty Limited as trustee for the Conway Family Trust also held 50 units in that trust. 3Staway entered a Bailment Agreement ("Bailment Agreement") with Liberty in March 2009, which was directed to financing certain vehicles under a floor plan financing arrangement to a maximum amount of $1 million. Staway later granted a fixed and floating charge ("Charge") in favour of Secure over its assets, executed on 5 March 2010. It is common ground that Secure is a wholly owned subsidiary of Liberty. The term "Secured Money" was defined in the Charge by reference to monies owing to the "Chargee", that is, Secure rather than Liberty. Clause 14.1 provided for an event of default if any of the Secured Money was not paid when due and payable or if Liberty failed to perform any provision of the Floor Plan Facility (as defined), the Charge or any collateral security and that failure was not capable of remedy or continued for 10 business days after Staway received a notice from Secure requiring that the failure be remedied, or if any representation, warranty or statement made or repeated in connection with the Floor Plan Facility, the Charge or any collateral security was untrue or misleading when made or repeated, inter alia. The term "Floor Plan Facility" was defined as the arrangements between Secure, Liberty and any guarantor comprising the Bailment Agreement, Dealer Agreement, Term Sheet, Charge and any collateral security. The term "Collateral Security" was defined by reference to the concept of "Secured Money" which in turn related to Secure. 4Mr and Mrs Stark, Mr Conway, JJ Way and Rexway each gave guarantees of Staway's obligations under the Bailment Agreement. Mr and Mrs Stark and Mr Conway also gave mortgages over their respective properties in favour of Secure in respect of these arrangements. 5In September 2010, Staway obtained a new floor plan finance facility and a loan from Secure. Further documentation was signed in October 2010 including a Second Supplementary Term Sheet extending the Floor Plan Facility and a Deferred Payment Program Agreement ("DPP Agreement") between Staway and Liberty which, broadly, permitted Staway to defer receipt of the purchase price form customers and corresponding payments to be made by it to Liberty in respect of bailed vehicles sold by the dealership to fleet owners and larger customers on extended payment terms. The events of default under the DPP Agreement included failures to make payments on time under any Transaction Document (as defined) and any incorrect representation or warranties made by Staway or on its behalf in connection with a Transaction Document. 6It appears that, at least by October 2011, Staway was suffering financial difficulties, at least in part associated with limited availability of Ford vehicles for sale following natural disasters in Thailand and Japan. It also appears that vehicles were sold by the dealership to retail customers on a "sold out of trust" (SOT) basis, by which title to the vehicle was transferred to the purchaser in circumstances that Staway had not yet paid the cost price for the vehicle to Liberty. Mr Stark's evidence, which was not contested for the purposes of this application, was that he had a discussion with representatives of Liberty on 27 October 2011 in which he indicated that cashflow was very tight and debtors were "blowing out" and Liberty expressed a concern that Staway was "well over in your DPP limits" and sought written confirmation as to how Staway expected to get the amounts under the DPP arrangements in order. By email dated 3 November 2011, Mr Stark advised Liberty of steps to be taken to address that concern (Stark 25.2.2013 [59], Tab 25). 7On 4 January 2012, Liberty requested that all DPP amounts over 45 days be paid by 31 January 2012. 8In mid February 2012, senior managers of Secure met with Messrs Stark and Conway. Messrs Stark and Conway contend that a plan was agreed at that meeting for reducing outstanding amounts in respect of SOT vehicles and the DPP arrangements. Mr Stark gives evidence of the relevant meeting and Liberty and Secure rely on minutes of the meeting prepared by a representative of Secure. Mr Stark's evidence is that Secure and Liberty required a repayment schedule of one SOT vehicle per month starting in February 2012 and Mr Stark offered his motorboat as security while the SOT position remained. Mr Stark's evidence is also that he indicated that Staway had been "stretching DPP payments to manage cashflow by paying the oldest outstanding DPPs first when funds become available". Mr Stark's evidence is that a representative of Liberty responded that "You don't have to be Einstein mate to work that out. We've known this for some time." Mr Stark's evidence is also that he referred to having paid more to Liberty than was received from a particular fleet purchaser from the Company's cash resources. Mr Stark's affidavit records a statement, at the conclusion of the meeting, by a representative of Liberty, Mr Heinnen, to the effect that "We will discuss this matter with Kendall [Mahnken] [a senior executive of Liberty] and get back to you". Liberty and Secure place substantial weight on that statement as indicating that no concluded agreement had been reached at that meeting. 9Mr Stark contends that he understood from that meeting that a "Go Forward Agreement" had been reached, the essential terms of which he describes as: "(a) Staway's existing repayment obligations pursuant to the floor plan facility in respect of DPPs and SOT vehicles would be deferred; (b) Staway would pay off one SOT vehicle on the fifteenth day of each month, such repayment schedule to be reviewed after 90 days; (c) The repayments for the SOT vehicles would be secured by Staway procuring Mr Stark to provide security over his motor vessel in favour of Liberty; (d) Amounts owing by Staway to Liberty in respect of DPPs which were outstanding for more than 60 days would be paid out by 31 March 2012; (e) Staway was expected to trade out of its DPP backlog on the basis that back orders for Ford vehicles would be able to be filled during March 2012 and thereafter; and (f) Staway would implement a plan to reduce its stockholdings and thereby reduce its monthly floor plan costs." 10Those items overlap with matters recorded in the minutes of that meeting prepared by Liberty which include reference to Staway paying out "one SOT vehicle per month", with that arrangement to be reviewed after 90 days; Mr Stark offering his motorboat to Liberty "as additional surety whilst the SOT position persists"; and to several action items consistent with such an arrangement. The action items in the minutes of the meeting cover steps to be taken between mid-February 2012 and 31 May 2012, contemplating, for example, a review of the SOT repayment schedule in the light of current profitability and SOT outstandings in mid-May 2012. Those minutes do not record any suggestion that the action items were, for example, conditional upon any further agreement of Liberty. 11The minutes of the meeting prepared by Liberty also record that: "[Stark] advised that [Staway] had been manipulating DPP payments so as to meet the commitment dates on DPPs regardless of whether Dale has received payments from the vehicle debtor. [Stark] and [Conway] believed that [Staway] has paid $200K to $300K more to Liberty on DPPs than they have received from [customer], with the funds coming from their cash resources". Mr Gasic, solicitor, who appeared for Liberty and Secure in this application, placed substantial weight on the language of "manipulation" of the DPP payments. However, Liberty and Secure led no evidence in this application to describe what was involved in that conduct and I am left in a state of uncertainty as to what was involved in it. On the one hand, Staway appears to accept, and the conversation at the meeting to which Mr Stark referred suggests, that Staway was obtaining some cashflow advantage from the manner in which it approached paying out DPP payments; on the other hand, the minutes prepared by Liberty suggest that, in fact, Staway was paying out a greater amount on the DPP plan than it had received from customers. It seems to me that, to the extent that Liberty and Secure sought to rely on the "manipulation" of DPP payments as a factor warranting the refusal of leave to Mr Stark and Conway to bring the proceedings, they needed at least to identify, with a degree of precision, what was involved in that conduct. They have not done so and I give that matter little weight. 12Following the February meeting, a general manager of Liberty, Ms Jordan, attended at the Dale Ford dealership for an extended period. A General Security Agreement and a Receivables Purchase Agreement were executed by Staway and Messrs Stark and Conway and their associated entities on Friday 2 March 2012 and Mr Stark executed a General Security Agreement over his motorboat on the same date. It appears that at least some of the documents executed on 2 March 2012 were executed in connection with the introduction of the Personal Properties Securities regime; however, the additional security granted in respect of Mr Stark's motorboat did not fall with that class. 13Also on 2 March 2012, Messrs Stark and Conway submitted a further business plan to Ms Jordan (Stark 25.2.2013 [155]). Mr Stark also gives evidence of a conversation with Ms Jordan on the same date to the effect that: "I will phone you on Monday and I will be back at the dealership late next week. Over the next few weeks, I'm your new best friend until we work through this situation. There will be 3 people running this business, John [Stark], Rex [Conway] and Lynne Jordan, but we will overcome these problems." Whether a conversation in these terms occurred will be a matter to be determined at any final hearing. If it occurred, it is potentially inconsistent with the appointment of a receiver by Secure shortly thereafter, to which I will refer below. 14Also on 2 March 2012, Ms Jordan sought a letter from Mr Stark and Mr Conway explaining certain matters which was said to be for the purposes of discussions with Liberty's Credit Committee. That letter was provided on the same day and expressed Messrs Conway and Stark's sorrow "for the current situation" and referred to the impact of the global financial crisis, deterioration in Ford's market share in New South Wales and the withdrawal of Ford Credit from the Australian motor industry, and the stock shortages to which I have referred above. The letter also indicates that: "I [Mr Stark] believed at that time that the actions of our conversion were able to be repaid from the drawdown of the business loan in combination with our Ford receivables. We are by no means excusing our actions, but trying to show we were not intentionally looking to mislead or personally profit in any way, other than to balance as best we could our daily cashflow to support the ongoing business." Liberty placed significant weight on the reference to "the actions of our conversion" in that letter, which presumably refers at least to the sale of vehicles out of trust and may or may not also refer to breaches of the terms of the DPP Agreement. 15Secure moved promptly to the appointment of receivers, after the discussions in February 2012 and the steps taken to improve its security position, including obtaining security over Mr Stark's motor boat on 2 March 2012. On 7 March 2012, Liberty served Staway with a default notice (Stark 25.2.13 [181]). That default notice referred to the Floor Plan Facility provided by Liberty to Staway and to breach of obligations owed to Liberty under the Floor Plan Facility, specifically that: - As of today, 126 vehicles have been identified as sold out of trust with a total value of $4,579,485; - The amount of $4,579,485 has not been paid when due and payable; and - Untrue and misleading representations and statements have been paid to Liberty and its representatives in respect of the utilisation of the Floor Plan Facility by Staway." That notice purported to allow Staway 10 business days' notice to cure the default, after which Liberty would take further action to protect its interests, which, it was stated, may include the appointment of a receiver in respect of the secured property. That notice did not, in terms, give notice of the appointment of receivers by Secure. 16In fact, Secure, rather than Liberty, appointed receivers and managers to Staway on 7 March 2012, the same day as the default notice was given. That occurred after Messrs Stark and Conway signed a Consent to Appointment of Receiver proffered by Secure which provided: "We hereby: - acknowledge that Staway is obliged to pay $4,579,485 to Liberty immediately as set out in the Default Notice dated 7 March 2012; and - consent to Secure appointing a receiver with immediate effect to the Secured Property (as defined in the Charge)." That document also contains a handwritten notation "Signed under duress 7/3/12 at 7.30pm". Mr Stark's evidence is that the consent to appointment of the receivers, who characterised the appointment as being by Liberty under security documents given by Staway to Liberty (as distinct from by Secure under the Charge). Mr Stark seeks to support the allegation of duress by reference to a statement made by the representative of the receivers that Mr Stark and Mr Conway either had to sign the consent to appointment of the receiver or the receivers would "close the dealership now and remove all your stock this evening". If that statement was made, it would at least potentially be inconsistent with the terms of the default notice given by Liberty to Staway, which purportedly allowed 10 days to remedy the default. Mr Stark also refers to having requested the opportunity to seek legal advice, and to a representative of Liberty then having given an instruction to remove the stock, change the locks and secure the property, following which Mr Stark and Mr Conway signed the consent. Whether that evidence is accepted is a matter for a final hearing. Liberty and Secure did not seek to controvert it on this application. 17Subsequently, Messrs Stark and Conway were dismissed as employees of Staway; Ford Motor Company cancelled Staway's dealership; the receivers abandoned Staway's premises; Secure repossessed Mr Stark's motorboat; and Liberty or Secure have sought possession of Messrs Stark's and Conway's homes under the securities to which I have referred above. Messrs Stark and Conway advanced several criticisms of the conduct of the receivers and Liberty and Secure in this regard, to which I will refer below. 18Staway was placed in voluntary liquidation on 7 September 2012. A proposal to authorise the liquidators to commence the proposed proceedings was considered at a meeting of creditors of Staway held on 21 December 2012, but was defeated when Liberty voted against the resolution (Ex GBV-1, Tab 13). 19It should be recognised that the amount owing by Staway to Liberty and Secure is substantial. Mr Stark's evidence acknowledges that the amount owing in respect of the Floor Plan Facility Agreement is in excess of $5.8 million and the amount owing in respect of the capital loan is in excess of $269,500. The claim for damages in the proposed Commercial Division proceedings is substantially in excess of that amount, although whether the damages claimed are ultimately recoverable would depend on the outcome of a final hearing, if leave to bring the proceedings is granted. Grant of leave to proceed against Staway 20The Plaintiffs seek leave, under s 500(2) of the Corporations Act, to commence and proceed with these proceedings against Staway, nunc pro tunc from 26 February 2013. That application is necessary because Staway, as noted above, is in liquidation and has properly been joined as party to these proceedings so as to be bound by the outcome. 21Liberty and Secure's position was initially that Messrs Stark and Conway have no standing in relation to the application for leave under s 500(2) of the Corporations Act, and that application needed to be determined in advance of the determination of the grant of leave under s 511 of the Corporations Act. I do not understand that submission to have been pressed in oral submissions and its basis was not articulated. On the face of it, it seems to me that Messrs Stark and Conway have standing to bring the application, since 500(2) does not limit the persons who may bring such an application to particular classes of persons, and Messrs Stark and Conway are contributories of Staway and have an obvious interest in obtaining leave to pursue the relevant proceedings on Staway's behalf. 22The factors relevant to the grant of leave to proceed against Staway include whether a serious question to be tried is shown, the amount and seriousness of the claim, the degree of complexity of the legal and factual issues involved and the stage to which the proceedings have progressed: Re Gordon Grant and Grant Pty Ltd [1983] 2 Qd R 314 at 317; Hu v PS Securities Pty Ltd as trustee of Joseph Family Trust & Anor [2011] NSWSC 303 at [20]. It seems to me that it is appropriate to grant such leave, since the question of the Plaintiffs' ability to bring derivative proceedings could only be determined by the Court, and not by lodgement of a proof of debt in the liquidation: Vagrand Pty Ltd v Fielding (1993) 41 FCR 550 at 555; (1993) 10 ACSR 373; Re Gordon Grant and Grant Pty Ltd above at 317. Grant of leave to bring derivative action 23Messrs Stark and Conway seek leave to bring the proposed proceedings in the Court's inherent jurisdiction and under s 511 of the Corporations Act. Liberty opposed the grant of that leave and contends that, if the Court is minded to grant leave, it should only do so on condition that security is provided for the anticipated costs of Liberty and Secure in defending the proceedings. 24The general principle is that proceedings in the name of a company in liquidation should be conducted by the liquidator: Scarel Pty Ltd v City Loan and Credit Corporation Pty Ltd (No 2) (1988) 17 FCR 344; (1988) 12 ACLR 730 at [733]; Hu v PS Securities Pty Ltd above at [35]. However, the power to grant leave to a creditor or contributory of a company in liquidation to use a company's name as a plaintiff is available in the Court's inherent jurisdiction and under s 511 of the Corporations Act: Hu v PS Securities Pty Ltd above at [25]-[29]. Where a company is in liquidation, that power is available to the exclusion of the statutory derivative action under Part 2F.1A of the Corporations Act: Chahwan v Euphoric Pty Ltd [2008] NSWCA 52 at [124]-[125]; (2008) 65 ACSR 661. 25In Aliprandi v Griffith Vintners Pty Ltd (1991) 6 ACSR 250, McLelland J observed that the Court's inherent power to order that a creditor or contributory of a company in liquidation be authorised to use the company's name as plaintiff "is of respectable antiquity and is sanctioned by high authority". His Honour noted that that jurisdiction was based on the principle that allows a person to obtain orders in chancery against his or her trustee to be allowed to use the trustee's name to recover trust property: Cape Breton Co v Fenn (1881) 17 Ch D 198 at 207. In Carpenter v Pioneer Park Pty Ltd [2008] NSWSC 551; (2008) 71 NSWLR 577 at [25], Barrett J noted that the power to authorise derivative proceedings by a beneficiary in the name of a trustee was available "in special circumstances", which could involve a failure, excusable or inexcusable, by the trustee in the performance of the duty they owed to the beneficiary to protect the trust property or protect the interests of the beneficiary of the trust estate. His Honour also identified (at [34]) three matters which should be taken into account in an application for such leave, namely: "1. The question whether the proceedings proposed to be pursued have some solid foundation, in that they exhibit such a degree of merit as to be neither vexatious or oppressive and to present reasonable prospects of success. 2. The attitude of the liquidator to the question whether the proceedings should be pursued. 3. The question whether 'practical considerations support the initiation of the proceedings', with particular reference to the financial protection of the liquidator and the estate of the company by means of indemnity and, if indicated, security." That test was also adopted by Ward J in Hu v PS Securities Pty Ltd above at [38]ff. 26Section 511 of the Corporations Act in turn provides for the liquidator, or a contributory or creditor of a company, to apply to the Court to determine any question arising in the winding up of a company or to exercise all or any of the powers that the Court might exercise if the company were being wound up by the Court. In ACT Commissioner for Revenue v Slaven [2009] FCA 744; (2009) 178 FCR 334, Rares J referred to that section as the source of "the Court's undoubted jurisdiction and power to permit a person other than the liquidator to commence proceedings in the Company's name when it is in voluntary liquidation". In order to grant such leave under s 511, the Court must be satisfied that the commencement and conduct of the proceedings in the name of Staway will be just and beneficial, and the Court may accede wholly or partially to such an application on such terms and conditions as it thinks fit or make such other order on the application as it thinks just: Hu v PS Securities Pty Ltd as trustee of the Joseph Family Trust & Anor above at [27]. Whether Staway's proposed claim has a solid foundation 27I turn now to the question whether the claim which Messrs Stark and Conway seek to bring on behalf of Staway has a solid foundation, in the sense referred to in Carpenter v Pioneer Park Pty Ltd above. I will review the claims sought to be advanced and the criticisms which Liberty and Secure advance of them before expressing a view as to whether those claims, taken as a whole, have a solid foundation. Several possible issues as to the legal basis of the claims were not addressed by the parties in submissions and I will proceed on the basis that I should not address, at least in any detail, such issues. 28By the proposed Commercial List Statement, Staway claims damages arising out of an alleged breach of contract by Liberty and Secure and other alleged breaches of equitable and statutory duties and Mr Stark seeks injunctive and other relief concerning the taking of possession of his boat. The issues likely to arise are identified as, inter alia:

• whether a "Go Forward Agreement" or Variation Agreement was reached between Liberty and/or Secure and Staway;
• whether that agreement was breached;
• whether there was an Event of Default under the Charge entitling secure to appoint receivers and managers to Staway;
• whether Secure had any right, contractual or otherwise, to appoint receivers and managers to Staway;
• whether Liberty and Secure are estopped from denying the existence of the "Go Forward Agreement" or Variation Agreement and taking certain other steps;
• whether Liberty and Secure contravened s 12CB of the Australian Securities and Investments Commission Act 2001 (Cth) or alternatively ss 21 and 22 of Schedule 2 to the Competition and Consumer Act 2010 (Cth);
• whether Liberty and Secure were knowingly involved and concerned in breaches of equitable and statutory duties by the receivers; and
• whether Liberty and Secure were officers and controllers of Staway within the meaning of s 9 of the Corporations Act and owed statutory duties to Staway and breached those duties. 29Paragraphs 20-21 of the proposed Commercial List Statement plead the "Go Forward Agreement" or alternatively a Variation Agreement in respect of the Floor Plan Facility, in terms which reflect Mr Stark's evidence and the minutes of the meeting of February 2012. Paragraph 22 pleads an implied term of the Go Forward Agreement or alternatively the Variation Agreement that: "Liberty would take no action to recover amounts that would otherwise be owing to it under the Floor Plan Facility, to enforce any security in its favour, or to procure Secure to enforce any security in its favour, for so long as Staway complied with its obligations under the Go Forward Agreement, or alternatively the Variation Agreement". It does not seem to me that that allegation can be said to be so devoid of merit as to be either vexatious or oppressive or to be without reasonable prospects of success. Mr Stark's evidence at to the February meeting is largely consistent with the minute of that meeting prepared by Liberty and, if it is accepted and the Court finds that an arrangement was reached in the terms discussed at that meeting, then the performance of the obligations imposed upon Staway by that arrangement necessarily appear to contemplate the continuance of the financing relationship with Liberty and Secure, rather than it would be brought to an end by the appointment of receivers shortly after Staway had entered into a Receivables Purchase Agreement with Secure and Mr Stark had executed the additional security agreement over his motorboat as contemplated by that arrangement. 30Liberty and Secure contend that there was no "Go Forward Agreement" and that the discussion at the meeting in mid-February 2012 on which Messrs Stark and Conway (and ultimately Staway) rely was left on the basis that "[Secure] will get back to you". While Liberty and Secure may ultimately be able to establish that proposition in a hearing on the merits, it is by no means self-evident, particularly where they have not led evidence in this application, and does not seem to me to indicate that this claim does not have a solid foundation. I also accept Mr Lazarus' submission that Staway could potentially succeed at a hearing without establishing that a contract was formed during the meeting itself, where that contract may have been formed by Liberty and Secure later accepting an offer made by Staway at that meeting, for example by taking security over Mr Stark's motorboat; or by a course of conduct, of which the meeting and the taking of that security formed part. It might be added that the question whether a commercial arrangement constitutes a contract is not necessarily to be approached by strict analysis of whether, for example, there was offer and acceptance in accordance with classical contract theory: New Zealand Shipping Co Ltd v A M Satterthwaite & Co Ltd [1975] AC 154 at 167; Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 11,110; Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153 at [71]-[74]. 31Liberty and Secure also contend that clause 15.13 of the DPP Agreement deprives any agreement reached at the February meeting of effect. That clause provides that: "A provision of a Transaction Document, or a right created under it, may not be waived or varied except in writing signed by the party or parties to be bound." It seems to me to be seriously arguable that that clause would not deprive such an agreement, if it was reached, of effect. First, as Mr Lazarus points out, that provision may be waived or varied informally at the same time as a waiver or variation of the DPP Agreement and associated documents, even if that is not in accordance with that clause: Update Constructions Pty Ltd v Rozelle Childcare Centre Ltd (1990) 20 NSWLR 251; Commonwealth v Crothall Hospital Services (Aust) Ltd (1981) 36 ALR 567; MC Seddon and MP Ellinghaus, Cheshire and Fifoot's Law of Contract, 9th Australian ed [4.32]. Second, a clause of this kind will not necessarily provide an effective barrier to a claim in estoppel or statutory unconscionability. 32The proposed Commercial List Statement pleads that the appointment of receivers by Secure was invalid, because there was no event of default within the meaning of the Charge (paragraphs 27-36). I have referred to the terms of the Charge in paragraph 3 above. Following the completion of oral submissions, I granted leave to make submissions in relation to the Deed of Appointment of the receivers dated 17 March 2012, which had been tendered by Liberty and Secure late in the hearing. Further submissions were then made by Liberty and Secure that arguably went well beyond that leave. I will nonetheless address them, since Messrs Stark and Conway have had and utilised an opportunity to respond to them. 33Liberty and Secure point out that clause 14.5 of the Charge provides that Secure may enforce it by appointing a receiver upon an Event of Default occurring and that the clause does not require Secure to issue a demand or notice before enforcement. They contend that several Events of Default (for the purposes of the Charge) existed and that the Charge had become enforceable at the time the receivers were appointed to Staway. In particular:

1. Pursuant to s 500(2) of the Corporations Act, the Plaintiffs have leave to commence and proceed with these proceedings against the Second Defendant, such leave to take effect nunc pro tunc on and from 26 February 2013.
2. Pursuant to s 511 of the Corporations Act, and the inherent jurisdiction of the Court, the Plaintiffs have leave and authority to: (a) initiate and continue proceedings in the name of Staway Pty Limited (receivers and managers appointed) (in liquidation) ("Staway") against the defendants named in the draft Summons and Commercial List Statement annexed to the affidavit of Mr Graeme Bruce Veitch sworn 25 February 2013 in relation to the facts and circumstances pleaded in the draft Commercial List Statement (the "Proceedings"); and (b) defend, compromise or settle any motion, set off or cross-claim brought by the defendants, or any of them, in the Proceedings against Staway.
3. The Plaintiffs, and each of them, be authorised at their own expense and risk as to costs, to use the name of Staway as a plaintiff or co-plaintiff or cross defendant or co-cross defendant in the proposed Proceedings.
4. The Plaintiffs jointly, and each of them severally, indemnify the liquidator of Staway for all costs reasonably incurred by Staway in respect of the proposed Proceedings.
5. The terms of the Deed of Indemnity proffered by the Plaintiffs to the Liquidator in the form and terms of the Deed of Indemnity annexed to the affidavit of Mr Graeme Bruce Veitch sworn 25 February 2013 are noted. 64In proceedings number 2012/266739, I order that: 1 On the basis of the usual undertaking as to damages previously given to the Court by the Defendants by their counsel, the stay of execution or other enforcement orders made by Brereton J on 25 March 2013 be extended to 26 July 2013 or earlier further order of the Court. 2 The proceedings be relisted for directions before Black J at 9.30am on 26 July 2013.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 23 June 2013