By Amended Originating Process filed on 13 March 2024, the Plaintiffs, Messrs Johnstone and Hutson in their capacity as liquidators ("Liquidators") of Roadstar Trucking Pty Ltd (in liq) ("Company") and the Company seek, at this point, interlocutory relief, largely in the nature of freezing orders, or alternatively injunctive relief, in respect of several parties, and specific relief against the operator of a website, GoDaddy.com, Inc. ("GoDaddy"). The application is brought on an ex parte basis, other than in respect of GoDaddy which was given notice of the application. I am satisfied that the matter can properly be dealt with on an ex parte basis, given the risk that notice of the application given to the Defendants other than GoDaddy would defeat the efficacy of the relief that is sought.
Australian Securities and Investments Commissions v Krecichwost [2024] NSWSC 283 | Case summary | Zoe
Broadly, the Liquidators and the Company seek the applicable relief under s 1323 of the Corporations Act 2001 (Cth), The scope of that section, in this context, is well established, and I summarised its elements in Re Courtenay House Capital Trading Group Pty Ltd (in liq) (2019] 133 ACSR 451; [2018] NSWSC 1918 at [10]ff. That section, relevantly, provides that the Court may make specified orders where a civil proceeding has been begun against a person under the Corporations Act, and the Court considers it necessary or desirable to do so for the purpose of protecting the interests of a person ("aggrieved person") to whom the person who is the subject of the proceeding is liable, or may be or become liable, to pay money, whether in respect of a debt, by way of damages or compensation or otherwise, including on the application of the aggrieved person. The requirement that a civil proceeding has begun against the relevant Defendants is here satisfied, because this application is brought in proceedings which seek final relief against the Defendants, including, importantly, an account of profits and orders for the seizure and delivery up of vehicles and other assets of the Company which it is alleged are now held by the Defendants and orders for the repayment of specific amounts which are challenged as unreasonable director related transactions or otherwise as voidable transactions.
I outlined the scope of the orders which may be made under s 1323 at Courtenay House at [11], referring to the relevant authorities, and I do not repeat that outline here. I also there observed (at [12]) that the purposes of orders under the section include preserving the status quo pending the outcome of civil proceedings that have been commenced against the relevant person under the Corporations Act, for the benefit of those who may have a claim against those persons. I there noted that, although a power to make freezing orders is not expressly mentioned in s 1323, it is well established that the Court may make such orders where it could appoint a receiver or trustee to property of a person and the making of a freezing order is an alternative or lesser order than the appointment of a receiver: Australian Securities and Investments Commissions v Krecichwost [2007] 64 ASCR 411; [2007] NSWSC 498; Courtenay House at [12]. To the extent that the Court's ability to appoint a receiver is a prerequisite to a freezing order, the matters to which I refer below have the consequence that the Court would here have the power to appoint receivers to the property of the relevant Defendants, excluding GoDaddy against which narrower relief is sought. The case law establishes that, in determining whether or not to make a freezing order under s 1323, the Court is not bound to consider all the discretionary matters required to be considered under the general law for the making of an interlocutory injunction. However, I will have regard to those matters, so far as they arise in this application.
I bear in mind that s 1323(3) of the Act provides that, where an application is made, as here, for an order under s 1323(1) of the Act, the Court may, before considering the application, grant an interim order, pending the determination of the application, and that is the nature of the order sought here. Section 1323(4) provides that, on such an application, the Court must not require the applicant, as a condition of granting an interim order under s 1323(3), to give an undertaking as to damaged. I proceed on the basis, however, that the presence or absence of such an undertaking, while it may not be required of the applicant, is relevant to whether relief should be granted. The Liquidators do not offer an undertaking as to damages here, and the Court may not require such an undertaking, but I have regard to its absence in considering whether the relief sought should be granted.
[3]
Affidavit evidence
With that background, I now turn to the relief sought against the several parties, which falls in three categories, and to the affidavit evidence on which the Liquidators rely.
The Liquidators read the affidavit dated 12 March 2024 of Mr Johnstone, who is one of the Liquidators, who refers to his appointment as liquidator of the Company following a winding up application brought by the Deputy Commissioner of Taxation, in reliance on an unsatisfied creditor's statutory demand for the payment of a substantial amount, in excess of $830,000. Mr Johnstone leads evidence as to the role of several persons and companies who are the Defendants in the application, and I will refer below to a helpful aide memoire which was provided by the Liquidators and the Company in respect of the evidence as against those persons and companies. Mr Johnstone in turn outlines the circumstances of his investigations into the affairs of the Company and persons associated with it, which have disclosed that the Company had substantial assets, including heavy vehicles used in a trucking business, none of which have come into the Liquidators' possession following the winding up.
Mr Johnstone also refers to his contact with several of the Defendants, and notes that he has received limited assistance in obtaining relevant information and, to the extent that at least one Defendant has been in contact with him, Mr Johnstone has formed the view that the information that he has been provided is not correct. It is not necessary for me to reach a conclusion as to that matter in this application, and it is not appropriate to do so where the application is brought on an ex parte basis and the defendants have not had an opportunity to response to this evidence.
Mr Johnstone in turn refers to evidence that suggests that the First Defendant, Mr Jamrodh Singh, has been, and may presently be, overseas, and it appears that he may be seeking to establish a similar trucking operation in the United Kingdom to that which had been operated by the Company in Australia, and that funds of the Company have been used in respect of Mr Jamrodh Singh's activities in the United Kingdom.
Mr Johnstone also refers to the steps which have been taken by the Liquidators, without success, to obtain the motor vehicles owned by the Company, including motor vehicles which have been purchased by the Company in the recent past, and to the evidence which suggests that those motor vehicles may now be used in a business operated by another entity, following a purported sale of the Company's business to that other entity. Mr Johnstone also refers, and I have been taken to evidence recording, steps which appear to have been taken by the Defendants, or some of them, to divert payment of amounts which were due to the Company, in respect of work done prior to the liquidation, to other entities, including the Second Defendant, Roadstar Truck Training Pty Ltd ("Training") and the Third Defendant, Roadstar Haulage Pty Ltd ("Haulage"). There is also evidence of payments made to several individual Defendants from the company, although Mr Duggan, who appears for the Liquidators and the Company, fairly recognises the possibility that some payments to some of the individual Defendants, although plainly not payments to all of the Defendants, may have the character of proper salary payments.
By a second affidavit dated 12 March 2014, Mr Johnstone provided further information as to the individual Defendants, and as to the position in respect of GoDaddy, as to which the Liquidators seek orders that GoDaddy make available administrator access to the Company's website, which GoDaddy has indicated will only be provided pursuant to an order of the Court.
By a third affidavit dated 13 March 2024, Mr Johnstone provided further evidence relating to the position in respect of Training and Haulage, and, in particular, quantified the amounts that the Liquidators contend had been diverted to Haulage in excess of $745,000 and to Training in a lesser amount in excess of $11,600. Mr Johnstone also there refers to correspondence with customers of the Company, and other documents, which establishes a prima facie case that steps have been taken to divert amounts due to the Company to those other entities, and to conduct the business which was previously conducted by the Company within those other entities, using assets which were or are owned by the Company. The evidence exhibited to that third affidavit of Mr Johnstone include, importantly, a certificate of currency of insurance in favour of Training which appears to indicate that Training has now insured motor vehicles which were owned by the Company, and are, so far as the evidence goes, remain the Company's property. With that evidentiary background, I now turn to the relief that is sought against the several Defendants.
[4]
Relief sought against Mr Jamrodh Singh, Training and Haulage
The Liquidators seek orders under s 1323(3) of the Act, in the nature of freezing orders, against each of Mr Jamrodh Singh, Training and Haulage. The aide memoire provides a helpful summary of the evidence in respect of Mr Jamrodh Singh, which indicates that he was a director of the Company until 7 September 2023, and purportedly resigned from that position shortly after the creditor's statutory demand was served on the Company by the Australian Taxation Office, which ultimately led to the winding up of the Company. The evidence indicates that the Company was purportedly sold, after that statutory demand was served, for the amount of $30. Mr Singh provided information to the Liquidators, which is plainly not consistent with the other evidence before the Court, that at the time of the sale the Company had only two trucks and one trailer. That aide memoire also refers to other evidence indicating that, in the period after the appointment of the Liquidators, Mr Singh has collected trailers or trucks which are the property of the Company from auction providers, and has been involved in dealings with customers which have led to the diversion of payments made by those customers from the Company to other Defendants. That aide memoire also refers to the evidence on which the Liquidators of the Company rely to value the assets of the Company, which they contend to have been diverted from it to Mr Jamrodh Singh and other Defendants, in an amount which is in turn included in the freezing order.
So far as Training is concerned, Mr Jamrodh Singh is the sole director and sole shareholder of Training, and there is evidence of payments made to Training from the Company, and in respect of at least one debt that appears to have been owed to the Company for the services provided to a client by the Company. I have referred above to an insurance certificate which indicates that several trucks which were or arguably are the property of the Company are now in the possession of Training.
So far as Haulage is concerned, the Fifth Defendant, Ms Amandeep Kaur (also known as Ms Amandeep Singh) is the director and shareholder of that company and it appears that she has the same residential address as Mr Jamrodh Singh. It appears that significant amounts that were due by clients of the Company to it have since been paid to Haulage, apparently after customers were advised of a change of bank account to which payments should be made, and there is at least some evidence that Haulage is providing services which were previously provided by the Company and that it is using assets of the Company to do so. There is also evidence that, in the period since the liquidation, Mr Jamrodh Singh has issued invoices generated through the Company's accounting system, to which he has retained access, in the name of the Company, but that those funds have then been paid by customers, by direction, to a bank account of Haulage. The Liquidators express the view, and it seems to me that there is a seriously arguable case that aspects of these dealings may properly be characterised as phoenix transactions.
As I have noted above, it is not necessary or appropriate for me to reach findings, on any final basis, in respect of these matters, and I recognise that explanations may be available to the Defendants in respect of these matters which are not presently before the Court where this application has been brought on an ex parte basis. The question here is whether the Liquidators can establish a sufficient claim against Mr Jamrodh Singh, Training and Haulage to establish a basis for the relief that is presently sought, on an interim basis, under s 1323 of the Act. It seems to me that the matters to which I have referred provide a sufficient basis for a claim against Mr Jamrodh Singh, by way of breach of directors duties under s 180 182 of the Corporations Act, or alternatively under the voidable transaction provisions, which is sufficiently strong and sufficiently substantial to support the relief sought, at least on an interim basis.
Mr Duggan in turn submits that the relief which is available against Mr Jamrodh Singh is also available against Training and against Haulage, either on the basis that they are knowingly involved in Mr Singh's breach of duty, or are knowing recipients of amounts connected with that breach of duty, or are Mr Singh's alter ego. The last of those matters is the widest basis for a claim against those entities, and I have reviewed the circumstances in which alter ego liability may be established at some length in Re A S P Aluminium Holdings Pty Ltd [2024] NSWSC 183. I am satisfied that, here, a sufficient case is available against Haulage and Training on that basis to support the relief that is sought against them under s 1323 of the Act on an interim basis, recognising that the amount of any liability that is established against Training and Haulage may be, but will not necessarily be, of the same quantum as is ultimately established against Mr Jamrodh Singh.
[5]
Relief sought against other Defendants
The relief sought by the Liquidators against Rohinderpal Singh, Amandeep Kaur, and Jaspreet Singh, is of a narrower character. Mr Rohinderpal Singh is a current director and shareholder of the Company, purportedly having been appointed as director following Mr Jamrodh Singh's resignation, and purportedly having purchased the shares in the Company for $30 from Mr Singh, after the creditor's statutory demand had been served by the Australian Taxation Office as I noted above. The Liquidators draw attention to Mr Singh's failure to respond to communications from the Liquidators and to his receipt of payments from the Company, albeit in a much lesser amount than is in issue in respect of Mr Jamrodh Singh, in the order of $54,000. The relief that the Liquidators seek against Mr Rohinderpal Singh is narrower, so far as it is limited to relief that is directed to assets of the Company that are in his possession. It seems to me that, here, a sufficient basis has been established for a case in knowing involvement against Mr Rohinderpal Singh to support such relief, limited to such assets, and an inference that such assets are in the possession of Mr Singh, or the other individual Defendants against whom relief is sought, is available where it is plain that those assets have now been diverted from the Company, whether to the corporate defendants or to those individuals. That seems to me to be sufficient basis to support the narrower relief sought against Mr Rohinderpal Singh.
Similar relief is sought against Ms Amandeep Kaur, to which I have referred above, who is the sole director and shareholder of Haulage, as I noted above, and also of a company that has now been incorporated in the United Kingdom also using the "Roadstar Trucking" name, and who has also received payments from the Company, and against Mr Jaspreet Singh, who was one of the signatories to the Company's account and has also received payments from the Company. I am satisfied that the narrower relief sought against them, which will apply to them only so far as they have the Company's assets in their possession, can also properly be granted on the same basis.
[6]
The relief sought against GoDaddy
Turning now to the relief sought against GoDaddy, it has indicated that it will only allow administrator access in respect of the Company's website to the Liquidators if a specific Court order is made that it do so. It is not apparent that GoDaddy has any proper basis on which to maintain that position, where there can be no doubt that the Liquidators now control the Company, by the orders already made by the Court, which appoint them as liquidators of the Company; that the website is under the Company's control; and the Liquidators are properly entitled to have control of that website. Having said that, it seems to me that the order that GoDaddy seeks, in order to persuade it to provide administrator access to that website to the Liquidators, can properly be made, as ancillary to the Liquidators' appointment, and I will make that order.
[7]
Other orders
I am also satisfied that orders should also be made, as contemplated by the Liquidators' proposed short minutes of order, requiring the relevant Defendants to each file an affidavit identifying the location of the assets identified in Annexure A to the relevant orders, where those assets are Company assets, and there is a basis in the evidence to which I have referred for an inference that the Defendants either have control of or at least know where those assets are to be found. I am also satisfied that orders may properly be made for substituted service in the form contemplated by the orders. For these reasons, I make orders in accordance with the short minutes of order initialled by me and placed in the file.
[8]
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Decision last updated: 22 March 2024