50 The MYOB records also referred to a payment of $241,865.12 to Leveraged Equities by cheque no 164.
51 There was no evidence before me as to the circumstances in which either of the payments made to Sheila Meares had been made. There was no evidence as to the involvement of Leveraged Equities with the company, the MFT, RC Meares or Sheila Meares.
52 At the hearing before me, Counsel for the liquidators abandoned the potential claims against Mr Strang which they had earlier identified.
53 Mr Gumbleton filed two further affidavits sworn on 9 April 2013 and 29 May 2013 respectively. In the first of these additional affidavits, Mr Gumbleton commented upon the contents of a letter dated 7 February 2013 from Mr Guy in which Mr Guy proffered on behalf of his clients explanations of the transactions the subject of the letters of demand sent to those clients on 16 January 2013. I will deal with Mr Gumbleton's observations when addressing the explanations proffered by Mr Guy on behalf of Robarch and RA Meares. In addition, Mr Gumbleton gave evidence of a teleconference which took place on 1 July 2011. The substance of the discussion which took place during that teleconference is recorded in a file note prepared by Mr Thorsness, an employee of the liquidators. That file note is in the following terms:
Meares Nominees Pty Ltd (In Liquidation)
File Note: Conducting Investigation I1
Date: 1/7/2011
Time: 11.05am
Teleconference meeting held in office of Tim Gumbleton (TG), with John Thorsness (JT) attending, and on the phone the Mears' family members, being Robert Mears (snr), Robert Mears (jnr), and Michelle Meares (nee Herrick).
Primary purpose of meeting: to confirm status of missing or sold assets, outstanding finance liability, and to confirm assets sold to related parties.
TG greeted other parties and introduced JT. All exchanged pleasantries and TG commenced meeting.
TG raised questions related to sale of Air Seeder (which was, supposedly, sold previously by Mears Nominees to Robarch for $110K), and the relevant amount owed on this piece of equipment. TG confirmed approximate payout figure is $54K. TG pointed out that technically there was no sale because, arguably, liability for Bank of QLD (BOQ) finance was not transferred to the purchaser, Robarch. Because liability was not transferred to Robarch, liability still sits with Meares Nominees. This particular technically needs to be addressed and resolved.
TG raised questions surrounding sale of plant & equipment. Some plant & equipment appears to be missing when comparing the list (from accounting records) as compared to those, supposedly, sold by Landmark. MH made point Landmark removed equipment from the property, when they took possession, without any reference to them.
TG read out (some of) the items listed on accounting report and MH claimed it is likely some of them had not existed (in a physical sense) for a long time, & certainly not at time of repossession. TG asked if any equipment not sold was left on the property and later removed by Landmark. MH seemed to think this was the case. TG asked if his equipment list can be reviewed by MH with a view to noting which items were sole by Landmark and which were not physically exist at time of vacating property. MH agreed to this suggestion and will be happy to review list once received.
TG asked if there was a possibility Landmark sold equipment of which they did not hold security against. MH seemed to think this was quite possible. Once the equipment list is reviewed by MH and returned to RSM, TG will raise any queries and questions with Landmark.
MH claimed their many attempts to make communicate with the Landmark legal team were met with difficulty. She reiterated their overall impression, of being 'mistreated' by the legal representatives of Landmark. MH questions the basis upon which interest was charged (on money owned to Landmark) after the sale of property by Landmark. MH claims they should not be penalized because of a delayed settlement arrangement, which was negotiated by Landmark.
TG raised query regarding the transfer of assets, and their value, to Robarch, in light of prima-facie impression approximately $121K of equipment is missing. He asked for clarity on this point by way of obtaining confirmation of the amount and value of any transfer (by way of purchase or otherwise) from the Meares Nominees accountant, Scott Turner. This confirmation should be supported by a statutory declaration. The purpose of the request is to establish whether or not any preference or uncommercial transactions have occurred. TG reiterated need to assure creditors that approximately $121K of assets has not been transferred to family members of Meares Nominees.
Conversation moved on to the presentation of balance sheet / P&L and the creditors list as per RATA. TG focused specifically on the Crime Commission liability. Rob (jnr) confirmed this relates to a personal case, with him, regarding possible proceeds from illegal activity. TG raised various questions regarding specific asset lines on the balance sheet, including loans ICW and Intangibles. MH & Rob (jrn) seemed to think Loans ICW did not operate any more and the value of Intangibles is a mystery. They referred these entries to their accountant, and suggestions there might be a need to refer back to their previous accountant.
Conversation moved on to possible value obtainable from the sale of the Air Seeder. TG said estimated value for this piece of equipment is approximately $70K, with a payout figure of approximately $54K. These amounts would leave a shortfall of only $16K. MH raised doubts of ability to sell this piece of specialized equipment, at this time.
MH asked about the status of superannuation owned to ex-employee, David Charmers. TG confirmed his status as a creditor, being listed after BOQ and RSM.
As meeting concluded, MH reiterated claim Landmark have not been transparent regarding interest charges (to them), deposits, etc. Rob (jnr) raised concerns about receipts and hinted Landmark have not been fair, having gained benefit from receipt of $1M which they should have not received. He conveyed a rough calculation of money paid and claims it does not add up. MH claimed Landmark is avoiding the issue. In light of these claims, TG asked to see all loan documents related to Landmark, in order to work thru the funds.
TG summarized immediate issues to be addressed as follows:
1. BOQ,
2. Review of depreciation schedule (ie equipment listing),
3. Scott Turner to confirm sale of equipment to related parties.
Meeting closed at 12noon.
54 The substance of the discussion held on 1 July 2011 was not really in dispute. MD Meares suggested that Mr Thorsness' file note was not accurate in a couple of minor respects. RC Meares did not give evidence before me. RA Meares did not dispute the accuracy of the file note.
55 Mr Gumbleton testified that he did not subsequently receive any correspondence from Scott Turner concerning the impugned transactions.
56 On 5 July 2011, Mr Gumbleton sent an email to MD Meares with six or seven queries arising out of the teleconference held on 1 July 2011. MD Meares did not respond immediately to Mr Thorsness' email. He followed up his requests on 26 August 2011. On 7 September 2011, MD Meares answered Mr Gumbleton's queries as best as she could at that time. She said that she was unable to provide any real assistance in relation to some of them. In her response, she indicated that RC Meares was soon to visit her and RA Meares in Queensland and that she would discuss the impugned transactions with him then and "fax/scan back to" the liquidators her comments in respect of the depreciation schedule which had been forwarded to her on 5 July 2011. She also promised to send relevant bank statements.
57 The liquidators had no contact with any member of the Meares family in the period between 7 September 2011 and 14 November 2012.
58 On 14 November 2012, an employee of the liquidators telephoned MD Meares and requested her to provide the bank statements which she had promised in September 2011. Later that same day, MD Meares forwarded to the liquidators bank statements for an account held by RA Meares at Westpac for the period from September 2008 to July 2009. She highlighted on those statements the relevant MFT transactions. She also sent reconciliations for that bank account. She also returned the MFT depreciation schedule sent to her in July 2011 annotated with her comments. She emphasised that a lot of the items on the schedule "… did not exist any more". She offered to provide Robarch's bank account details for the air seeder payment.
59 The liquidators tendered evidence that, as at 28 May 2013, RA Meares and MD Meares owned real property in Queensland which they had purchased in September 2011 for $595,000. The property appears to be unencumbered and is their family home.
60 Exhibited to the third affidavit of Mr Gumbleton was a bundle of documents relating to the impugned transactions. Those documents proved the following relevant matters:
(a) The company in its capacity as trustee of the MFT retained S & G in May 2008 to represent them in respect of the claims for possession of Bultarra then being pressed by Landmark and a related corporation of Landmark.
(b) Pursuant to the MFT retainer of S & G, S & G rendered invoices to the company for fees and disbursements due to it. As at late August 2009, the MFT owed S & G $110,111.04. Almost all of that amount had been rendered in July and August 2009. On 19 August 2009, the company authorised S & G to transfer $110,111.04 from moneys held in its Trust Account to its general account in payment of the total amount of fees and disbursements then due to it.
(c) On 19 August 2009, S & G paid to the company the amount of $542,000. That sum may have been held by S & G in trust for RA Meares or for the company. On the same day, the company paid $40,000 to Robarch. As at 17 August 2009, S & G held $760,030 in trust for the company or for various members of the Meares family or for both. Five amounts totalling $755,030 had been received by S & G and deposited into its Trust Account on 8 July 2009. One of those five deposits was for an amount of $542,000. S &G recorded that the payer of that deposit was RA Meares. It also recorded that the repayment of $542,000 made by it on 19 August 2009 was a "return of trust monies to depositor (RA Meares)". A separate MYOB record showed that the payer of the amount of $542,000 to S & G was the company and that the payment had been made on 22 June 2009.
Approximately one week earlier, the same record showed a deposit of $491,175 made by Sheila Meares with the company.
(d) On 25 August 2009, the company drew two cheques as follows:
Cheque no 164 for $241,865.12 in favour of Leveraged Equities.
Cheque no 165 for $244,339.88 in favour of Sheila Meares. This cheque is described in one MYOB record as "Sheila Meares loan".
61 The liquidators did not attempt to analyse the records available to them in order to assess whether breaches of the Corporations Act had or might have occurred.
62 The liquidators rested with the following statements of position made by Mr Gumbleton:
… I was advised by [my solicitor] that there were a considerable number of potential claims, but that on the basis of the existing available material such claims may be speculative and hopeful rather than based on sound foundation.
…
For the reasons set out below [in paragraphs 6 to 32 of Mr Gumbleton's second affidavit], I do not consider that the explanation of the Relevant Transactions provided by Mr Guy's letter [referring to Mr Guy's letter dated 7 February 2013] is sufficient or persuasive and I remain of the view that the Relevant Transactions require further investigation and are potentially void under Part 5.7B of the [Corporations Act].
63 The solicitor for the liquidators, who is experienced in conducting public examinations in this Court under s 596A and s 596B of the Corporations Act, estimated the time that would be required for the liquidators to organise and conduct examinations of all relevant persons in relation to the impugned transactions and to be in a position to decide whether to commence proceedings and, if so, against whom. He expressed the following opinion:
I therefore believe that if the Court is prepared to adjourn the present application for a period of six months, then the plaintiffs can reasonably expect to be in a position to provide the Court at the expiration of that period with sufficient evidence, if any exists, to enable the Court to determine the application.
64 Obviously the solicitor's opinion which I have extracted at [63] above is directed to the question of whether the present application should be adjourned in order to enable public examinations to take place so that the present application can be determined in light of the outcome of those examinations. This was the approach taken by Emmett J in Kugel, In the Matter of Charben Haulage Pty Ltd (in Liquidation) [2009] FCA 1039. Nonetheless, the evidence of the liquidators' solicitor is of assistance to the Court in determining the application which is presently before the Court.