Carter v Gartner

GREENWOOD ACJ: 1 This proceeding concerns an application by Luke Thomas ("Mr Thomas") for orders that certain persons be summoned for examination under ss 596A and 596B of the Corporations Act 2001 (Cth) ("the Act") with respect to the examinable affairs of La La Land Byron Bay Pty Ltd ("the Company" or "La La Land"). 2 Mr Thomas is a creditor and shareholder of the Company which was the operator of a bar and nightclub known as La La Land located at Level 1, 6 Lawson Street in Byron Bay, NSW. Those premises were leased from Sosiku Pty Ltd under a 20 year lease executed in July 2013. 3 Mr Thomas held 50% of the issued shares in the Company, was licensee and manager from December 2014 (mis-described in the submissions of Mr Thomas as "December 2015") to September 2015 and was a creditor of the Company due to "significant loans" he made in 2013 and 2014 to refurbish the premises of the nightclub. 4 On 25 September 2015, Mr Keri Taiaroa, the former director of the Company, signed a resolution to appoint Mr Andrew Poulter as an Administrator of La La Land. On 27 November 2015 the Company was placed into voluntary liquidation and Mr Poulter was appointed liquidator. Mr Thomas alleges that upon Mr Poulter being appointed as Administrator, Mr Poulter made a number of determinations which included "disposing of the remaining Company's asserts to LLL Nominees Pty Ltd, a company jointly owned by Taiaroa and Peter Raftopoulos." Mr Thomas also makes various other allegations that impugn the conduct of various people associated with the external administration of La La Land. 5 Mr Thomas seeks to examine the former director of the Company, Mr Taiaroa, and the liquidator (and former administrator) of the Company, Mr Poulter. Mr Thomas also seeks the issue of summonses to a range of other people, although at the Interlocutory Hearing on 12 March 2019 Mr Thomas asks this Court to issue summonses to each of the following individuals: (a) Mr Taiaroa, in his capacity described above (b) Mr Poulter, in his capacity described above (c) Mr Peter Raftopoulos, an officer of the Company (d) Mr Peter Roger, a Director of Sosiku Pty Ltd. 6 Mr Thomas has provided draft copies of the summonses he seeks. Mr Thomas sees that these four individuals produce various documents and appear at the Federal Court of Australia in Brisbane. 7 Mr Thomas deposes in his affidavit of 4 December 2018 that the purpose of the examination of Mr Taiaroa, Mr Poulter, Mr Raftopoulos and Mr Roger is to: a. Obtain information that may support an application against Taiaroa and/or Raftopoulos for: i. Breach(s) of Statutory duties owed to the Company pursuant to Sections 180-183 of the Act ii. Breach(s) of fiduciary duties owed to the Company. iii. Breach(s) of the Competition and Consumer Act 2010 pursuant to Section 18 for misleading and deceptive conduct in relation to the financial statements/status of the Company. iv. An Act(s) of fraud. v. Receipt of unreasonable director related transaction(s). vi. Compensation. b. Obtain information that may support an application against Poulter for: i. Breach of Statutory duty owed to the Company pursuant to Sections 180- 183 of the Act. ii. Breach of fiduciary duties owed to the Company. iii. Breach of the Competition and Consumer Act 2010, pursuant to Section 18, for misleading and deceptive conduct, in relation to the disposition of Company assets for nil/nominal consideration. iv. Involvement, pursuant to section 79 of the Act, and/or knowing assistance at common law, with respect to the alleged Taiaroa breach(s) of Statutory and fiduciary duties specified in sub-paragraph "a" above. v. Compensation. c. Obtain information that may support an application against LLL and other persons specified below, for involvement, pursuant to section 79 of the Act, and/or knowing assistance, knowing receipt at common law, with respect to the alleged Taiaroa and Raftopoulos breach(s) of Statutory and fiduciary duties specified in sub-paragraph "a" above. d. Obtain information that may support an application against the owner of the premises formerly leased by the Company, Sosiku Pty Ltd (the Landlord) for: i. Breach(s) of the Competition and Consumer Act 2010 for misleading and deceptive conduct, in relation to purported rental arrears owed by the Company and the validity of the Notice to Quit for failing or purportedly failing to remedy a Breach of Lease for non-payment . ii. Further and alternatively to sub-paragraph "i" above, receipt of an unfair preference payment, pursuant to Section 588F A of the Act. e. Make the application for compensation for the Company's loss and damage: i. Pursuant to Section 598 of the Act. ii. Pursuant to Division 90-20 of Schedule 2 of the Insolvency Practice Schedule (Corporations) (the Schedule), subject to leave of the Court to make the application on behalf of the Company. f. Compensate the Company's creditors. 8 This matter was initially listed for mention before Registrar Lynch of this Court on 8 February 2019. At that mention, Mr Thomas informed the Court of proceeding QUD41/2019, in which Mr Thomas seeks orders under s 598 of the Act against Mr Taiaroa, Mr Raftopoulos and LLL Nominees Pty Ltd (a company said to be "owned" by Mr Taiaroa and Mr Raftopoulos). 9 Mr Thomas has submitted that he initially sought to have QUD18/2019 and QUD41/2019 brought as one proceeding. However, because the Australian Securities and Investments Commission ("ASIC") had not authorised him as an "eligible applicant" for the purposes of Division 2 of Part 5.9 of the Act he elected to file an application for examination summonses separately. 10 It is relevant at this point to note that Mr Thomas was authorised as an "eligible applicant" for the purposes of Division 1 of Part 5.9 of the Act by ASIC on 26 October 2018. On 20 December 2018, ASIC wrote to Mr Thomas and revoked the contents of the letter dated 26 October 2018. ASIC went on to authorise Mr Thomas as an "eligible applicant" for the purposes of Divisions 1 and 2 of Part 5.9 of the Act. 11 On 15 January 2019, this Court ordered Mr Thomas to serve ASIC with the documents in QUD18/2019. Mr Thomas has provided the Court with a copy of ASIC's letter of 6 February 2019 confirming receipt of those documents. ASIC stated that "this is a matter properly left for the determination of the Court and confirms that it does not propose to intervene… or seek leave to appear…". 12 At the mention on 8 February 2019, Registrar Lynch made orders that Mr Thomas file a further affidavit as to the nature of the proceedings in QUD41/2019 and ordered that he serve Mr Poulter with a copy of his application and supporting affidavits. 13 Mr Thomas filed an affidavit on 15 February 2019 in accordance with the orders of 8 February 2019. Mr Thomas annexes to that affidavit a series of pleadings filed in the Supreme Court of Queensland in proceeding BS13700/17. It will be necessary to consider later in these reasons the nature of these different proceedings, but for now it suffices to say that the Supreme Court proceeding seeks declarations pursuant to s 1317E(1)(a) of the Act that Mr Poulter has breached his statutory and fiduciary duties and seeks various orders for compensation to the Company. 14 At the hearing on 12 March 2019, Mr Thomas gave oral evidence and affirmed a further Affidavit which he had lacked time to depose and file before coming to Court. That affidavit (marked as Exhibit 1) refers to (and annexes pleadings from) proceedings commenced by Mr Thomas in the Equity Division of the Supreme Court of New South Wales on 2 October 2015 seeking, among other things, injunctive relief to remove Mr Poulter as administrator of the Company. 15 On 12 October 2015, White J of the Supreme Court of New South Wales averted to their being a "serious question to be tried" as to Mr Poulter's appointment but declined to grant the relief sought because there was no evidence that Mr Thomas was a creditor of the Company for the purposes of s 447C of the Act, nor was there any evidence of Mr Poulter's alleged lack of impartiality. His Honour was equally not convinced that Mr Thomas' undertaking as to damage had value on the material before that Court. 16 In his affidavit affirmed in the witness box on 12 March 2019, Mr Thomas also deposes that he commenced further proceedings in the Supreme Court of Queensland on 17 August 2018 in proceeding BS8834/18 seeking injunctive relief against the sale by LL Nominees Pty Ltd of the Company's former nightclub business. Mr Thomas deposes that on 29 August 2018, Burns J of the Supreme Court of Queensland refused the application for relief. This Court is told that proceeding BS8834/18 is ongoing and is being managed by a Registrar of the Supreme Court of Queensland. 17 I now turn to the orders sought in this matter.

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