Crisp, in the matter of Buchanan Group Holdings Pty Ltd v Iliopoulos

EX TEMPORE REASONS FOR JUDGMENT 1 The matter before the Court is an ex parte application made on behalf of the liquidator of some twenty-three companies (referred to hereafter as the "Viking Group") that the Court order that a warrant issue pursuant to s 530C of the Corporations Act 2001 (Cth). The liquidator has deposed that he fears that, if the application is not heard ex parte, there will be further concealment and/or removal of the companies' assets, as well as books and records. 2 On the affidavits that have been filed (see below), I am satisfied that, for this reason, the application is appropriately heard ex parte. 3 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 a 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. 4 The evidence which gives rise to the application is found in an affidavit of Glenn Anthony Crisp sworn on 11 December 2011. A further supporting affidavit of Elizabeth Clare Batchelor sworn on 13 December 2011 was filed in court today. 5 The material before me shows that the liquidator seeks a warrant for various properties, being properties owned or controlled by the respondents. 6 I do not propose to consider in any detail the contents of these affidavits in these published reasons. Broadly speaking, it appears from Mr Crisp's affidavit that before about April 2011, the Viking Group conducted a number of transport businesses. The Viking Group operated a fleet of in excess of 500 vehicles. The Group's assets comprise in large part vehicles, including cars, utilities, prime movers, light trucks, fork-lifts, earth-moving equipment and trailers. 7 Mr Crisp deposed to various attempts to locate the assets and books and records of the companies in the Viking Group. When appointed as liquidator to companies in the Viking Group, Mr Crisp set out to locate and take possession of the books and records of the company. After meeting with the current and former directors, he received some 200 archive boxes of books and records. A review of this material indicates that documents were missing in categories that Mr Crisp expected to find in a business of the kind run by the Viking Group, such as debtors and creditors ledgers, general ledgers, fixed asset registers, cash books and the like. Whilst some further records were recovered as a result of his endeavours, many would appear to remain unfound. 8 Mr Crisp has also sought to recover the assets of the companies in the Viking Group. Historically, the principal director, and apparent guiding mind, of the Viking Group was Steven Iliopoulos. As it happens, however, Steven Iliopoulos was declared bankrupt on 13 April 2011 and apparently considers that there in no longer any incentive for him to assist the liquidator. Prior to Mr Crisp's appointment as liquidator, his son, Peter Iliopoulos, had in most instances replaced him as director. In another instance, he was replaced by another son, Jimmy, and another person, Darryl MacDonald-Johnson. Repeated requests of Mr Steven Iliopoulos to deliver up the companies' books and records, and for assistance in locating and securing the companies' assets have been unsuccessful. 9 Mr Crisp has: (a) attended properties from which the companies in the Viking Group formerly operated in order to secure any assets of the companies, and their books and records remaining at those sites; (b) made various inquiries of the receivers as to the status of the companies' operations at various locations; (c) conducted surveillance at a site from which the companies formerly operated in order to secure the assets of the companies and their books and records; and (d) commenced proceedings in the Victorian Supreme Court to recover certain assets of the companies in the Viking Group. 10 Whilst there has been some recovery in the above-mentioned proceedings and some return of limited assets and certain books and records, the liquidator's efforts have failed to result in him securing the assets of the companies in the Viking Group or their books and records. The liquidator's investigations have led the liquidator to conclude that the assets and the books and records are likely to have been moved from one location to another. 11 Mr Crisp's interviews with Peter Iliopoulos and Darryl MacDonald-Johnson, together with the liquidator's other investigations, indicate that, whilst Steven Iliopoulos is an undischarged bankrupt, he is in effective control of the assets of the companies in the Viking Group and their books and records. Further, there is some evidence that certain assets of the companies in the Viking Group may have been transferred to another entity, VTL Transport & Logistics Pty Ltd ("VTL"), without proper accounting. The liquidator's investigations strongly indicate that VTL has used and is continuing to use the companies' assets, notwithstanding the liquidator's demands for their return. 12 The liquidator's investigations and other evidence indicate that the assets of the companies in the Viking Group may well also be located at various other nominated sites in Victoria and Tasmania. Persons in control of these sites - apparently associated with Mr Steven Iliopoulos - have failed to assist the liquidator despite repeated requests or demands. 13 It is accepted that an order under s 530C is ordinarily "a remedy of last resort": see Cvitanovic v Kenna & Brown Pty Ltd (1995) 18 ACSR 387. In this case, however, the evidence shows that the liquidator has received no genuine cooperation from the current or former directors of Viking Group Holdings Pty Ltd ("VGH") - Peter and Steven Iliopoulos. Nor has the liquidator received any assistance from Mr MacDonald-Johnson, a former director of VGH and VTL. The evidence indicated that a number of persons or entities have assets and/or the books and records of the companies in the Viking Group in their possession, power, custody and control. The evidence indicates that some of these assets and/or books and records have been moved from one place to another and concealed from the liquidator. 14 In conformity with s 530C, the Court is satisfied that persons have concealed or removed property of the companies in the Viking Group 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; and have concealed, destroyed or removed books of the companies or are about to do so. The liquidator is concerned that parties are taking steps to prevent the collection of the Viking fleet assets, particularly when put on notice of his intention to take possession of them. There is ample evidence to justify this concern. On all the evidence, the Court is satisfied that the requirements of s 530C have been established and a warrant should be issued. 15 I would follow the procedure as to the form of the warrant adopted in this Court: see Australian Securities Commission v Samson (1997) 24 ACSR 555 at 557. I would order that: 1. The District Registrar issue, pursuant to s 530C of the Corporations Act 2001 (Cth), a warrant in the form of the warrant which is annexed to this order. 2. Any requirement that the originating process in this proceeding be served on the defendant is dispensed with, and leave is granted to the plaintiff to make the application ex parte. 16 The affidavits that have been filed, together with their exhibits, are to be kept confidential and in a sealed envelope on the Court file, such envelope is not to be opened, nor the affidavits inspected by any person except with the leave of the Court or a Judge. Until further order or 23 December 2011 (whichever is earliest), the file in each proceeding is to be kept confidential and not disclosed to anyone other than the Court or the Court staff except with leave of the Court or a Judge. 17 I note that the liquidator has undertaken that he is prepared to quarantine, for a reasonable time, any assets that are recovered pursuant to the warrant. The liquidator has also stated that he will provide a letter to each respondent when the relevant warrant is executed, advising the respondent of the ability to apply to the Court urgently if desired. The liquidator has further undertaken that, in respect of any residential property, no warrant will be executed earlier than 7 am and that no one acting under the warrant will remain on the property after 10 pm in the evening. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny.