6139/05 BASSOAK PTY LTD (RECEIVERS AND MANAGERS APPOINTED) V RELLGROVE PTY LTD
JUDGMENT (Revised 5 April 2006)
1 HIS HONOUR: By an application filed on 24 March 2006, made by interlocutory process in the winding up file, the liquidator of the defendant Rellgrove, John Vouris, has applied for relief of three kinds:
(a) declarations that specified members of the Anstee family contravened provisions of either s 530A or s 530B of the Corporations Act;
(b) orders that specified members of the Anstee family "suffer such penalty" arising from those breaches as the court in the exercise of its discretion would determine;
(c) orders relating to the execution of a warrant under s 530C.
2 The application came before Gzell J as Equity Duty Judge on 24 March. Counsel for Mr Vouris submitted that the application for the issue of a warrant should be dealt with immediately on an ex parte basis, and the applications for other relief should abide the outcome of the execution of the warrant.
3 On the facts of this case, his Honour was not prepared to issue the warrant ex parte, although ex parte applications have succeeded on other facts. He granted leave for the interlocutory process to be filed in court, and ordered that it be returned instanter. He directed that the interlocutory process, the supporting affidavit by Mr Vouris made on 22 March 2006, the exhibit to the affidavit and his Honour's orders be served upon the four individuals against whom the interlocutory relief was directed. They are Barry Francis Anstee, Mathew Anstee, Larissa Anstee and Mavis Lynette Anstee ("the Anstee family"). He abridged the time for service of the documents to 12 noon on Saturday 26 March 2006, and stood the matter over to the Duty Judge at 10 a.m. on Monday 27 March. On 27 March the Equity Duty Judge, Nicholas J, made an order extending the time for service to 5 p.m. on 29 March, and stood the matter over to the Corporations List on Monday 3 April 2006. I heard the application on that day.
4 At the hearing of the application, counsel for Mr Vouris handed up some short minutes of orders, in which he sought some different relief, including a mandatory order that Barry and Mathew Anstee deliver up books of Rellgrove and provide specified financial information about the company within 7 days, and that they be required to file and serve affidavit evidence about their compliance with that order.
5 Affidavits were read satisfying me that the interlocutory process, Gzell J's order, the liquidator's affidavit and the exhibits to it were served on Barry, Mathew and Larissa Anstee. They were served with a covering letter from Mr Vouris' solicitors which sought an undertaking not to deal with the assets of Rellgrove and any assets purportedly held in trust by it, and any items listed in Exhibit JV31 to the liquidator's affidavit. No such undertaking has been given. Barry Anstee was served at 5:05 p.m. on 29 March. Mathew Anstee was served at 9:15 a.m. on 29 March. Larissa Anstee was served at 2:05 p.m. on 31 March. Barry Anstee was served slightly outside the revised service period, but in my view this has no material consequence, as he has had adequate time to respond to the interlocutory process. Mathew Anstee was served within the extended time. However, as counsel for Mr Vouris conceded at the hearing on 3 April, Larissa Anstee was not served soon enough to permit the court to deal with the application against her on the following business day. Mavis Lynette Anstee (called "Lynette Anstee" in the evidence) has not yet been served, and no application for relief was made against her at the hearing.
6 The matter was called outside court before the hearing began, and there was no appearance on behalf of any of the Anstee family. However counsel appeared for a company called Jamsapi Pty Ltd. The evidence reveals that Jamsapi is a company registered on 16 December 2005, the sole director and shareholder being Harold Thomas Lewis Berry. It appears that Mr Berry is the father-in-law of Barry Anstee. Jamsapi is the purchaser from Rellgrove of a property known as Hopewood Estate in Bowral, in circumstances discussed below. Mr Vouris' solicitor telephoned Stacks Taree and on 23 February 2006, and was told that Mr Berry had guaranteed the purchaser's performance under the sale contract.
7 In accordance with counsel's request, I dealt with the matter so far as it concerned Jamsapi and stood the remainder of the application down in the list, which was very busy. I granted leave to Jamsapi's counsel to be excused from further attendance at the hearing on that day. As far as Jamsapi was concerned, I merely noted its undertaking, until 18 April 2006, to refrain from disposing of any of the assets identified in Exhibit JV31 to Mr Vouris' affidavit and in a special condition in the contract for the sale of the Hopewood Estate. I stood the proceedings affecting Jamsapi over to the Corporations List on 18 April 2006. During the course of dealing with matters concerning Jamsapi, its counsel informed me that a solicitor called Kevin Rodgers was acting for Barry Anstee. But there was no appearance by that solicitor.
8 After I heard the application for relief against the Anstee family, I decided not to make the declaratory orders or orders for the imposition of a penalty, or the orders in the draft short minutes of order, but I decided it was appropriate to issue a warrant to Barry Anstee under s 530C. I delivered brief ex tempore reasons for judgment, and made orders for the issue of the warrant in terms of the interlocutory process. However, when I came to address the correct form of the warrant that evening, I was able to consider more fully the decided cases on s 530C and give the matter further thought. This has led to my preparing these fuller reasons for judgment with a view to making fresh orders, in substitution for my ex tempore reasons and Monday's orders.
Declarations and penalties
9 The interlocutory process is structured so that declarations of contravention are followed by a determination of the imposition of a penalty. It is not clear to me that the court has any inherent power to impose a penalty not specifically provided for in the Corporations Act. Section 530A lays down a series of statutory duties for officers of the company after the court has made a winding up order or has appointed a provisional liquidator: to deliver up the company's books in the officer's possession; to provide information to the liquidator and attend meetings; to do whatever the liquidator reasonably requires to help in the winding up or in the performance of the provisional liquidator's functions; to provide his or her residential and work addresses. Then s 530A(6) provides that a person must not fail to comply with any of those duties. The offence established by subsection (6) is a strict liability offence, subject to the defendant establishing a reasonable excuse. According to Schedule 3 to the Act, the maximum penalty for contravention of subsection (6) is 50 penalty units or imprisonment for one year, or both.
10 Section 530B(1) says that a person is not entitled, as against the liquidator, to retain possession of books of the company or to claim or enforce a lien on such books. According to subsection (3), a person must not engage in conduct that results in the hindering or obstruction of the liquidator in obtaining possession of books. The liquidator has the statutory right under subsection (4) to give a person written notice requiring them to deliver up specified books that are in the person's possession, and under subsection (6) the person must comply with the liquidator's notice, failure to do so being a strict liability offence. The maximum penalty for contravention of subsection (3) or (6) is 50 penalty points or imprisonment for one year, or both.
11 Given the relatively comprehensive statutory provisions addressing the penal consequences of contravention, it is far from clear to me that the court has (or if it has, would ever exercise) any inherent jurisdiction over officers of the company in liquidation, or to which a provisional liquidator has been appointed, to impose some other discretionary penalty in civil proceedings. Sections 530A and 530B are not civil penalty provisions for the purposes of Pt 9.4B, and therefore the specific statutory regime that permits the court to make disqualification orders and pecuniary penalty orders, as well as compensation orders, is inapplicable.
12 A decision as to whether the court has any relevant jurisdiction to impose civil penalties could be made only after careful and complete examination of relevant authorities, a matter for which there has been insufficient time in the interlocutory circumstances. A decision to impose a penalty, if there is power to do so, would be made only after a final hearing, and probably only on the basis of a fully pleaded case. Counsel for Mr Vouris did not ask me to make any penalty orders at the hearing on 3 April. Instead, he submitted that the court should make the declarations of contravention set out in the interlocutory process, on the basis that questions of penalty would be addressed later.
13 I think it would be inappropriate to proceed in this way. A declaration of contravention of a provision of the Corporations Act is a serious step, which may have consequences for the affected party that are difficult to predict. It is in the nature of final relief. Although, technically, rule 2.2 of the Supreme Court (Corporations) Rules permits final relief to be sought by interlocutory process, one would normally expect and require that a claim for such declaratory relief be pleaded. There may also be a question as to whether such a declaration may or should be made in a civil proceeding, given that the contravention gives rise to a criminal offence and there is no express statutory authorisation to make a declaration of contravention such as is found in Pt 9.4B. It would be unwise, in the present interlocutory circumstances, to divorce the declarations from the penalty orders with which they are associated in the interlocutory process.
Mandatory compliance orders
14 Counsel for Mr Vouris submitted that the court should make a mandatory order directing Barry and Mathew Anstee to deliver to Mr Vouris as liquidator of Rellgrove the company's books in their possession, and give him information about the location of the books, and give him information about Rellgrove's affairs as requested in Mr Vouris' letters of 5 and 12 December 2005. Those orders would track the statutory obligations in ss 530A(1)(a), 530A(1)(b) and 530A(2)(b). He also asked for an order that Barry and Mathew Anstee file and serve affidavit evidence of their compliance with the first order.
15 Orders of that kind are similar to Mareva orders, although Mareva orders are issued on a different jurisdictional basis. The court's general reluctance to make a mandatory civil order requiring compliance with a statutory provision, contravention of which is a criminal offence, seems to be overcome by s 1324(2), although that section was not invoked at the hearing on 3 April. Where a person has refused or failed to do an act or thing that the person is required by the Corporations Act to do, s 1324(2) permits the court on the application, inter alia, of a person whose interests have been, are or would be affected by the refusal of failure, to grant an injunction requiring the first-mentioned person to do that act or thing. It is at least arguable that the company in liquidation, and perhaps the liquidator, are persons whose interests are affected. An important issue is whether the company in liquidation or the liquidator should be required to give an undertaking as to damages, and if so, whether an adequate undertaking can be given.
16 Although such orders may well provide an appropriate response to problems of the kind disclosed in Mr Vouris' affidavit, in my view it would be inappropriate to make mandatory orders in circumstances where the respondents have received no notice that the orders would be sought, the interlocutory process did not seek that relief and the draft short minutes of the proposed orders have not been served on them.
Warrant under s 530C
17 Section 530C provides:
" (1) The Court may issue a warrant under subsection (2) if:
(a) a company is being wound up or a provisional liquidator of the company is acting; and
(b) on application by the liquidator or provisional liquidator, as the case may be, or by ASIC, the Court is satisfied that a person:
(i) has concealed or removed property of the company with the result that the taking of the property into the custody or control of the liquidator or provisional liquidator will be prevented or delayed; or
(ii) has concealed, destroyed or removed books of the company or is about to do so.
(2) The warrant may authorise a specified person, with such help as is reasonably necessary:
(a) to search for and seize property or books of the company in the possession of the person referred to in subsection (1); and
(b) to deliver, as specified in the warrant, property or books seized under it.
(3) In order to seize property or books under the warrant, the specified person may break open a building, room or receptacle where the property is or the books are, or where the person reasonably believes the property or books to be.
(4) a person who has custody of property or a book because of the execution of the warrant must retain it until the Court makes an order for its disposal."
18 I have decided that it is appropriate to issue a warrant under s 530C directed to Barry Anstee, but not to any other member of the Anstee family, on the ground set out in s 530C(1)(b)(ii). To explain the basis of this decision, I must review the facts presented on the application.
Facts
19 Mr Vouris was appointed provisional liquidator of Rellgrove by orders of Palmer J on 5 December 2005. Barrett J made an order for the winding up of Rellgrove and the appointment of Mr Vouris as its liquidator, on 12 December 2005.
20 Barry Anstee is the director of Rellgrove according to ASIC records. He was declared bankrupt on 28 July 2005, and his trustee in bankruptcy is Max Prentice. He is therefore disqualified from managing corporations: Corporations Act, s 206B(3). Mr Prentice gave notice of this ASIC on 6 December 2005. Mr Vouris' investigations have established that Mr Anstee was involved in the affairs of a number of related entities of Rellgrove, including Bassoak Pty Ltd (Receiver and Manager Appointed).