1 I have before me applications in two distinct proceedings, being 290642 of 2009 commenced by originating process filed on 21 September 2009 and 91637 of 2010 in which the originating process was filed on 14 April 2010.
2 The parties to the 2009 proceedings are participants in and persons otherwise involved in a partnership or joint venture concerned with the farming of mushrooms.
3 The final relief sought in the 2009 proceedings relates to dissolution of the partnership or joint venture and disposal of its assets. At least four companies were originally involved: Rossmore Mushrooms Pty Limited, Rossmore Mushroom Farms Pty Limited, Branalex Debstina Pty Limited and Phil's Champignon's Pty Ltd. The first, third and fourth of these were the partners or joint venturers; the second was a trading entity for the project.
4 When the matter was before the court on 5 March 2010 at an interlocutory hearing, there was reference to the formation of a new company to engage in trading activities in succession, as it were, to the existing parties, as it were, being superseded. This was referred to openly and without any sinister or untoward connotation. The new company used for this purpose is R M Rossmore Mushrooms Pty Limited, which was in fact formed by certain of the parties on 3 March 2010. It now carries on a mushroom business. Certain assurances were given on 5 March 2010 in relation to its activities. I shall return to these.
5 On 17 March 2010, the court made certain interlocutory orders by consent and without admissions. The new company was added as a party to the proceedings. Mr Vouris was appointed by the court to be the interim receiver of Rossmore Mushrooms Pty Limited, Rossmore Mushroom Farms Pty Limited, R M Rossmore Mushrooms Pty Limited (that is, the new company) and the so-called "present business", being the partnership or joint venture business. It is perhaps more accurate to say Mr Vouris became the interim receiver of the property and undertakings of the companies and the business.
6 In the case of R M Rossmore Mushrooms Pty Limited and the so-called "present business", Mr Vouris' appointment was subject to a restriction. It was restricted so that the sole function was to provide a report to the court on the assets and liabilities and financial position of all the companies and businesses concerned, but there was also a power to collect debts and trace debtor payments to Rossmore Mushrooms Pty Limited, Rossmore Mushroom Farms Pty Limited and the joint venture, and an express prohibition on involvement in the business of R M Rossmore Mushrooms Pty Limited.
7 The first application now before me is made by Phil's Champignon's, one of the partners or joint venturers. It seeks an interlocutory order removing the restriction to which I have referred and giving Mr Vouris full powers as receiver of R M Rossmore Mushrooms Pty Limited.
8 The second matter which arose in the separate and much later 2010 proceeding, and was dealt with today, is ANZ Bank's claim for final relief by way of the winding up of both Rossmore Mushrooms Pty Limited and Rossmore Mushroom Farms Pty Limited. ANZ relies on the insolvency ground.
9 I said I would return to assurances given when the matter was before the court on 5 March 2010. These were given by Branalex Debstina Pty Ltd, Eang Pao and Leap Khou, and were to the effect that the new company (which became R M Rossmore Mushrooms Pty Limited) would conduct purchases and sales as a fiduciary bound to account. Implicit in that was a high degree of stewardship consistent with attentiveness to someone's interests; and as Mr Dawson of counsel, on behalf of Phil's Champignon's, pointed out, a joint venture party (or, as here, a corporate vehicle of several joint venturers) who retains possession of assets of the venture after termination of the venture does so as a quasi receiver and continues to owe duties to the other parties. Mr Dawson referred in that respect to Morkaya v Parkinson [2008] NSWSC 1050.
10 It is the contention of Phil's Champignon's that the three joint venturers, who were instrumental in setting up and operating R M Rossmore Mushrooms Pty Limited, have not lived up to the assurances. Mr Dawson, on behalf of Phil's Champignon's, refers, in that respect, to Mr Vouris' interim report dated 31 March 2010. Several points are made there concerning R M Rossmore Mushrooms Pty Ltd - most significantly that, according to its office staff, that company is not maintaining any management accounts. This has meant that Mr Vouris has been unable to report on the financial position of that company. Mr Vouris adds that the books and records of R M Rossmore Mushrooms Pty Ltd provided to him appear to be insufficient to meet statutory requirements.
11 These apprehensions are not set at rest - indeed, they are intensified - by an affidavit of Bo Ung, the director of the plaintiff Branalex Debstina, one of the three relevant joint venture parties. It will be recalled that the assurances about fiduciary accounting were given on 5 March 2010. Yet by 14 April 2010, no real steps had been taken to put an accounting system into place. There were meetings with an external accountant on 10 March, 23 March and 13 April. But nothing has come of those meetings except the preparation of or plans to prepare an advertisement with a view to hiring a bookkeeper and some move to appoint a temporary bookkeeper to assist in data processing until some permanent arrangement is made.
12 Mr Vouris' report and Bo Ung's affidavit make it clear that R M Rossmore Mushrooms Pty Ltd is not keeping records and accounts and has not armed itself with the ability to do so; and this is so despite its assurances that it would act in a fiduciary capacity. Those assurances cannot be seen to have be carried out nor, on Bo Ung's affidavit, does there appear to have been any real move to carry them out in the period of more than five weeks since they were given.
13 This is enough to establish that the assets that ought to be preserved pending the final determination of these proceedings are not in safe hands and that the expectation that the interim arrangements might see them in safe hands has not been realised. The assets are in the kind of jeopardy that represents the classic basis for the appointment of a receiver.
14 Mr Vouris' appointment in respect of R M Rossmore Mushrooms Pty Ltd and the assets and business of the partnership or joint venture, which is currently on a restricted basis, should become a fully fledged receivership appointment with the restriction initially imposed removed.
15 In saying this, I do not overlook the point emphasised by Mr Reid of counsel that Mr Vouris' report makes it clear that fully formed views have not been possible on all matters in the time available. I am satisfied, nevertheless, that what Mr Vouris has said relevant to the matters of stewardship and accounting by R M Rossmore Mushrooms Pty Ltd is sufficiently formulated to crystallise concerns about jeopardy warranting a fully fledged receivership.
16 I turn now to the ANZ Bank's application.
17 Steps recently taken by ANZ to call up facilities following default have produced the result that each of Rossmore Mushrooms Pty Limited and Rossmore Mushroom Farms Pty Limited is now subject to an immediately enforceable debt to the ANZ, presently due and payable, to the extent of some $5.1 million. ANZ maintains that each of those companies is insolvent.
18 In one case, that of Rossmore Mushroom Farms Pty Limited, a presumption of insolvency has arisen under s 459C(2)(a) of the Corporations Act 2001 (Cth) because of non-compliance with a statutory demand. The demand was served by a non-party to these proceedings in respect of a debt of $131,878.82. Service was effected on 15 March 2010. The company's sole director has confirmed to the court through his counsel that the demand was received and has not been complied with. The insolvency ground is therefore made out in the case of Rossmore Mushroom Farms Pty Limited on this narrow basis alone.
19 In the case of Rossmore Mushrooms Pty Limited, where there is no statutory presumption available, ANZ contends that, in light of Mr Vouris' report, it has been proved that the company is insolvent. On the figures in that report, adjusted to recognise that $5.1 million of debt is immediately due and payable to ANZ, current assets of $831,000 stand against current liabilities of some $6.5 million. The current assets of $831,000 consist, as to $810,000, of receivables from related entities involved in the business in the wider sense. The remaining assets, which are non-current, consist almost exclusively of property and buildings and plant and equipment together representing some $9.4 million in book value terms, but of course without any indication of market value. Mr Vouris, I might say, adds that most of the plant and equipment could be regarded as fixtures with realisability accordingly compromised and tied to the land. There is no suggestion at all of the availability of sources of capital or other long term financial assistance to this company, nor has any challenge to Mr Vouris' figures been made or foreshadowed by anyone involved in the company
20 I am satisfied, on this evidence and in the absence of any submission to the contrary, Rossmore Mushrooms Pty Limited is insolvent.
21 There is no reason why a winding up order should not be made in respect of each company. In saying that, I am conscious of the fact that ANZ has not complied with various notice and advertising requirements and seeks dispensation in that respect. Given that its debt dwarfs all other claims, and that the proprietors and other commercially interested parties are before the court in any event, I am prepared to take the step of granting that dispensation in this particular case.
22 There is a question as to who should be appointed liquidator. ANZ has filed the consent of Mr Taylor and Mr Needham. Phil's Champignon's Pty Ltd submits that Mr Vouris should be appointed and has produced his consent.
23 While Mr Vouris' familiarity with matters might ordinarily work in favour of his appointment, there are two factors which I am satisfied tip the balance the other way. First, Mr Christey of ANZ says in his affidavit that the bank is willing to commit sufficient funds to complete investigations by a liquidator, but only if its nominees are appointed. Given that ANZ is by far the major creditor and there is no reason to think that its funding will not benefit all creditors, this factor works in favour of the appointment of the ANZ nominees. The second matter is a perception that if, as I have now decided, Mr Vouris is to be the receiver of R M Rossmore Mushrooms Pty Limited and the business assets on an unrestricted basis, the winding up of each of the other two companies will be more beneficially in the hands of someone else who can, as the occasion requires, deal with Mr Vouris at arm's length on matters in which the respective interests do not coincide. That is the other factor in favour of the appointment of the ANZ nominees. For both the reasons stated, it is preferable that Mr Taylor and Mr Needham be the liquidators.
24 To give effect to what I have said I intend to make orders as follows. I will invite final comment from counsel before I pronounce the orders.
25 In 290642 of 2009 I propose to make orders 2, 4 and 5 in the interlocutory process dated 9 April 2010 filed in court on 12 April 2010. I propose not to make an order for Mr Vouris to continue with the preparation of any report nor any order as to his remuneration as it seems to me that both of those matters can be more appropriately dealt with at a later time.