Commercial Union Insurance Australia v Fercon
[2011] NSWSC 322
At a glance
Source factsCourt
Supreme Court of NSW
Decision date
2011-03-09
Before
Ward J, Hugh J
Source
Original judgment source is linked above.
Judgment (8 paragraphs)
y Weatherley (Fifteenth Plaintiff) John Sheahan (First Defendant) Ian Russell Lock (Second Defendant) Fulham Partners LLC (Third Defendant) Portsmouth Partners LLC (Fourth Defendant) Idoport Pty Ltd (in liq)(recs apptd) (Fifth Defendant) Representation: Counsel: J Gleeson SC with JR Williams (Plaintiffs) CR Newlinds SC with D Sulan (First and Second Defendants) T Jucovic QC with Miss T Wong (Third and Fourth Defendants) Solicitors: Freehills (Plaintiffs) Atanaskovic Lawyers (First & Second Defendants) DMAW Lawyers (Third and Fourth Defendants) File Number(s): 07/254047
Judgment 1HER HONOUR : Before me for hearing on 9 March 2011 was an application brought by Second Further Amended Interlocutory Process by 15 individuals (all current or former officers, executives or board members of companies in the NAB Group) (the NAB Executives) seeking relief in relation to the issue of examination summonses against each of them Executives (namely an order for access to the confidential affidavits filed pursuant to s 596C(1) of the Corporations Act 2001 (Cth) in support of the application for the issue of examination summonses against each of them and an order for the discharge of the summonses) and declaratory relief as to the invalidity of the appointment of Messrs Sheahan and Lock as the Receivers of the property of Idoport Pty Ltd (in liq) insofar as that property extends to the rights of Idoport under a Consulting Agreement entered into by Idoport with NAB and two other companies (the NAB Parties). 2Joined as parties to the Second Further Amended Interlocutory Process are the secured creditors of Idoport (Fulham LLC and Portsmouth LLC) who had appointed Messrs Sheahan and Lock as receivers in August 2008 pursuant to the terms of two fixed and floating charges dated 30 March 2005 held by Fulham and Portsmouth respectively. 3The Secured Creditors were represented on this application by Mr Jucovic SC and Miss Wong of Counsel, in relation to a prospective notice of motion under Part 12 rule 11 of the Uniform Civil Procedures Rules 2005 (NSW) , to argue that the court should decline to exercise its jurisdiction over Fulham and Portsmouth as companies outside the jurisdiction. As it transpired, that motion was not vigorously pressed (and the companies, through their legal representatives, accepted service of the fresh proceedings commenced by the NAB Parties in relation to the appointment of the Receivers (to which the Secured Creditors were clearly appropriate parties). (For the reasons outlined in the NAB Parties' submissions, I am satisfied that it is appropriate for this Court to exercise jurisdiction over the Secured Creditors). 4In their respective Counsel's submissions (Mr Newlinds SC and Mr Jucovic), served in advance of the present application, both the Receivers and the Secured Creditors maintained that the proceedings then on foot (insofar as they concerned the application for declaratory relief in relation to the appointment of the Receivers) were incompetent, or improperly constituted, as the NAB Parties had not been joined as parties to the Second Further Amended Interlocutory Process and would not be bound by any determination of the court (para [6] of Mr Newlinds' submissions and para [3(b)] of Mr Jucovic's submissions). (Indeed, Mr Newlinds submitted that his clients were bound to succeed on the second part of the interlocutory application relating to the claim for declaratory relief, for want of proper parties.) 5The complaint as to the absence of the NAB Parties as parties to the present application was put not only on procedural grounds but also on the basis that if the NAB Parties had been joined as parties to the proceedings then the Receivers and the Secured Creditors would have been entitled to invoke the processes of the court (such as for discovery) in advance of a final hearing on the issues raised in relation to the Receivers' appointment. 6Mr Gleeson SC, appearing for the NAB Executives, responded to this complaint (apart from noting that the NAB Parties were plaintiffs in the originating process for the winding up of Idoport, though he accepted they were not parties to the present application) by seeking to file in court a separate originating process by the NAB Parties as plaintiffs against the Receivers and joining the Secured Creditors thereto (a course of action which had been foreshadowed in his submissions). That originating process seeks the declarations contained in the Second Further Amended Interlocutory Process in relation to the alleged invalidity of the appointment of the Receivers to the rights of Idoport under the Consulting Agreement (and joins the Receivers, the Secured Creditors and Idoport as defendants). 7When the application was made for the filing in court of the originating process, objection was raised by each of the Receivers and the Secured Creditors. The nub of their objection to the filing in court of the application, as I understood it, went not to the institution of the proceedings as such (they having been adamant that the proceedings for declaratory relief were incompetently constituted in the absence of the NAB Parties) but rather as to any suggestion that the application be heard instanter. (The NAB Parties and Executives, through Mr Gleeson, submitted that the application for declaratory relief could be determined on the present hearing purely on the basis of the material before this hearing, because no discovery or other process would be necessary. Mr Newlinds and Mr Jucovic both took issue with that proposition; Mr Jucovic maintaining that this was tantamount to a summary judgment application without notice). 8I gave leave for the filing of the originating process on the basis that it did not seem to me consistent with the just, quick and cheap resolution of the real issues in dispute between the respective parties to refuse leave for the originating process to be filed in court (when it could then simply be filed in the Registry, albeit perhaps with some delay) and particularly where it seemed to me that that it raised issues intricately bound up with parts of the interlocutory process then before me. I indicated, however, that I would then address the question of any adjournment necessary to allow the Receivers and the Secured Creditors a proper opportunity to prepare for the application. 9On that question, I did not accept the NAB Parties' submission that the matter could be dealt with solely on the basis of the material already before the Court. 10The ability of Idoport to charge its rights under the relevant Consulting Agreement without NAB's consent, and the question whether (if such consent were necessary) it had unreasonably been refused, are matters lying at the heart of the application for declaratory relief in relation to the Receivers' appointment. Mr Gleeson's contention was that, in the absence of a valid consent to assignment of the rights under the consulting agreement, that property is not within the Secured Creditors' charge and the Receivers have not been properly appointed as Receivers of that property. 11The issue as to the validity of the assignment involves questions not only as to whether there was a constructive refusal on the part of the NAB Parties its part to give consent to a request for the extension of the Secured Creditors' charge to cover those rights but also as to whether there were reasonable grounds for it to refuse consent (and as to the legal effect of a 9 January 2007 notice by the Secured Creditors purporting to extend the charge to those rights, assuming it had in fact been issued, in the absence of an unreasonable withholding of consent by the NAB Parties). 12I was not satisfied that it would not be open to the Receivers and the Secured Creditors to put in issue (on the hearing of an application as to the validity of the Receivers' appointment) the real reason for the refusal or withholding of consent (as opposed to the matter being determined by reference solely to the reasons that had been proffered by the NAB Parties when refusing consent). In that regard, I was referred to what was said by Young CJ in Eq in Tamsco Ltd v Franklins Ltd (unreported, 14 December 2001) to the effect that the task of the court (where the reasonableness of a withholding of consent is in issue) is to find the real reason for refusal (at [56]). I read this as consistent with the proposition that it is open to the Receivers to seek to go behind the reasons asserted by the NAB Parties for their refusal of consent in order to determine what was the real reason for their refusal and whether that was reasonable or unreasonable. 13Accordingly, I was of the view that an adjournment of the then new proceedings seeking declaratory relief would be required and I proceeded to hear only the applications in relation to access to the confidential affidavits and the discharge of the examination summonses.