Davis-Jacenko v Roxy's Bootcamp Pty Limited

Supreme Court of NSW|2024-05-27|Before: McGrath J, Owen JJ

INTRODUCTION

For the purposes of exposing my central considerations to the parties, I will now give brief reasons for the orders I intend to make. While I will give more detailed reasons in due course, the necessity to give a much more limited form of my reasons has arisen because of the urgency of this matter which has been pressed upon me by the parties.
The plaintiff, Roxy Davis-Jacenko, is the 50% shareholder of the defendant, Roxy's Bootcamp Pty Limited ACN 674 872 872 (Company). Ms Davis-Jacenko applies for the appointment of provisional liquidators to the Company.
Tleis Investments Group Pty Ltd as trustee for the Tleis Trust and Salameh Investments Pty Ltd as trustee for the Salameh Family Trust are each 25% shareholders of the Company. Youssef Tleis is the principal person associated with Tleis Investments. Kassim Alaouie is associated with Salameh Investments, which is owned and controlled by his wife, Amani Salameh.
The Company, Tleis Investments and Salameh Investments seek interlocutory orders that Ms Davis-Jacenko restore their access to various email and social media accounts, provide passwords to them and deliver to their solicitor the SAC Hermes Birkin 30 Bag (Veau Togo 8L Beton) (Hermes Birkin bag) and a 2024 Women's Rolex Datejust 36mm Blue Dial Fluted Bezel watch (Rolex watch).

Approach to contested questions of fact for interlocutory applications

It is not appropriate on an interlocutory application for a court to conduct a preliminary trial to resolve contested questions of fact or conflicting evidence of events and I have not done so. In adopting this approach, I have applied longstanding authorities on the issue.
In Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618; [1968] HCA 1, Kitto, Taylor, Menzies and Owen JJ at 622-633 said: The Court addresses itself in all cases, patent as well as other, to two main inquiries. The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief: Preston v. Luck (1884) 27 ChD 497 at 506; Challender v. Royle (1887) 36 ChD 425 at 436. How strong the probability needs to be depends, no doubt, upon the nature of the rights he asserts and the practical consequences likely to flow from the order he seeks. Thus, if merely pecuniary interests are involved, "some" probability of success is enough: Attorney-General v. Wigan Corporation (1854) 5 De GM & G 52 at 53, 54 [43 ER 789] and in general it is right to say, as Roper C.J. in Eq. said in Linfield Linen Pty Ltd v Nejain (1951) 51 SR (NSW) 280 at 281: There are disputes of fact as to a number of matters … but this being an application for an interlocutory injunction I look at the facts simply to ascertain whether the plaintiff has established a fair prima facie case and a fair probability of being able to succeed in that case at the hearing. Thus where the defendant goes into evidence on the interlocutory application the Court does not undertake a preliminary trial, and give or withhold interlocutory relief upon a forecast as to the ultimate result of the case…
In Shercliff v Engadine Acceptance Corporation Pty Ltd [1978] 1 NSWLR 729, the Court of Appeal of this court comprising Mahoney JA (with whom Glass and Samuels JJA agreed) at 733 said: But there are limitations upon the extent to which a judge is to take into account such evidence as the defendant may tender upon an interlocutory application. It is not his function to conduct a preliminary trial of the action, nor is it, in general, to resolve the conflict between the parties' evidence, and grant or refuse the application upon the basis of such findings. Where there is conflict of evidence, the use which may be made of the defendant's evidence in determining whether the plaintiff has made out a prima facie case is a limited one. For example, the plaintiff's evidence, considered alone, may be such a prima facie case as would be acceptable if submitted to a jury in a trial. But, when considered in the light of the defendant's evidence, it may be explained away so as no longer to be such. Or the defendant's evidence, when juxtaposed to that of the plaintiff may show that there is in reality no such case, no real question between the parties, appropriate to warrant preserving the status quo until the hearing.
This approach was referred to by the Full Court of the Federal Court of Australia in Warner-Lambert Company LLC v Apotex Pty Ltd [2014] FCAFC 59; (2014) 311 ALR 632 by Allsop CJ, Jagot and Nicholas JJ at [72].
Based on these authorities, I have adopted this approach to the conflicts in evidence.

Crucial factual matters

The crucial further factual matters are: 1. On 9 February 2024, the Company was registered with three directors - Ms Davis-Jacenko, Mr Tleis and Mr Alaouie. 2. Title to the house located at 12 Dodson Avenue, Cronulla, New South Wales (Cronulla property) is held by Mr Tleis and Mr Alaouie in equal shares as tenants in common. The Cronulla property was acquired by Mr Tleis and Mr Alaouie for $3,360,000. There is a mortgage registered on the title to the Cronulla property in favour of Commonwealth Bank of Australia. The current outstanding loan balance is $4,999,526.13. 3. On 14 February 2024, Ali Reda of AR Property Valuations valued the Cronulla property at $10 million. 4. On 5 March 2024, the Shareholders Agreement was entered into by the Company, Salameh Investments, Tleis Investments, Mr Alaouie, Ms Davis-Jacenko and Mr Tleis. 5. On 5 March 2024, the Promotions Agreement was entered into by the Company, Ms Davis-Jacenko, Salameh Investments, Tleis Investments, Mr Alaouie and Mr Tleis. 6. Although not annexed to the Promotions Agreement signed, Ms Davis-Jacenko, Mr Tleis and Mr Alaouie were all aware of the "Roxy's Brand Bootcamp Promotion Terms & Conditions ("Conditions of Entry")" which received permits in the Australian Capital Territory and New South Wales. 7. In summary, the Promotion involved the following elements: 1. People who purchased a Bootcamp course would be entitled to participate in a game through which they could potentially win the Cronulla property and other prizes. 2. Those customers who agreed to participate in the game would have their names placed in a draw and the customer whose name was drawn would be entitled to participate in the game as the player at a later date. 3. The game required the player to select two envelopes from 250 envelopes (of which only two contained "winning" symbols) and, if both envelopes contained the same "winning" symbols, the player would win the Cronulla property, being the first prize. If the first prize player did not draw the "winning" two envelopes, they would receive a guaranteed prize of $250,000.00 in cash. 4. Other minor prizes would also be drawn for: 1. The Rolex watch, being minor prize 1, valued at $20,500 and the Hermes Birkin bag, being minor prize 2, valued at $21,110. 2. A Chanel wallet on chain, being a bonus prize valued at $5,120.37. 1. On 5 March 2024, the Company took out an insurance policy with respect to the Promotion which has an indemnity limit of $7 million, commencing on 8 March 2024 (Insurance Policy). 2. On 8 March 2024, Ms Davis-Jacenko engaged in extensive media publicity on television, radio and online concerning the terms of the Promotion. 3. On 15 April 2024, Ms Davis-Jacenko ceased to engage in the Promotion and took steps to freeze the bank account of the Company. 4. On 19 April 2024, Ms Davis-Jacenko resigned as a director of the Company. 5. On 9 May 2024, Mr Alaouie resigned as a director of the Company. Since then, the only director of the Company has been Mr Tleis. 6. Ms Davis-Jacenko claims that, as at 13 May 2024, she has incurred expenses of $504,821.35 to be reimbursed by the Company, has received payments of $210,000.00 from the Company and is owed a balance of $294,821.35 by the Company. Amongst the expenses Ms Davis-Jacenko has claimed to have incurred on behalf of the Company are $20,110 for the Hermes Birkin bag and $20,500 for the Rolex watch. 7. The draw of the prizes in the Promotion is scheduled to take place on 7 June 2024 at the offices of Plexus in Melbourne, Victoria. After the draw, the Company is required to announce the winners on 8 June 2024 by phone and email, as well as by publication on the website www.roxysbootcamp.com by 11 June 2024. The first prize winner will then be invited to play the game, being the chance to win the Cronulla property, on 29 June 2024. 8. Mr Tleis and Mr Alaouie have each expressed the view that they wish to continue with the Promotion and award all of the prizes in accordance with the Terms & Conditions. 9. Since 22 May 2024, Yazbeck Law has held $250,000 in trust for the Company on terms that they are "funds to be held for first prize payout". 10. On 27 May 2024, the Company entered into the First Prize Deed with Mr Tleis and Mr Alaouie in an attempt to change the terms on which the proceeds of the Insurance Policy and the Cronulla property might be dealt with. These provisions appear to be clear variations to what had been agreed between the parties to the Promotions Agreement, yet they were not agreed by Ms Davis-Jacenko. 11. On 3 June 2024, the Company entered into a Deed of Undertaking with Mr Tleis and Mr Alaouie regarding the making of loans by each of them to the Company to enable any shortfall of funds for business activity statements or income tax to be paid, although this only operates in circumstances where a liquidator is not appointed.

LEGAL PRINCIPLES

Section 472 of the Corporations Act 2001 (Cth) provides: (1) On an order being made for the winding up of a company, the Court may appoint a registered liquidator to be liquidator of the company. (2) The Court may appoint a registered liquidator provisionally at any time after the filing of a winding up application and before the making of a winding up order or, if there is an appeal against a winding up order, before a decision in the appeal is made. (3) A liquidator appointed provisionally has or may exercise such functions and powers: (a) as are conferred on him or her by this Act or by rules of the Court that appointed him or her; or (b) as the Court specifies in the order appointing him or her. (4) A liquidator of a company appointed provisionally also has: (a) power to carry on the company's business; and (b) the powers that a liquidator of the company would have under paragraph 477(1)(d), subsection 477(2) (except paragraph 477(2)(m)) and subsection 477(3) if the company were being wound up in insolvency or by the Court. (5) Subsections 477(2A) and (2B) apply in relation to a company's provisional liquidator, with such modifications (if any) as the circumstances require, as if he or she were a liquidator appointed for the purposes of a winding up in insolvency or by the Court. (6) If more than one liquidator is appointed by the Court, the Court must declare whether anything that is required or authorised by this Act to be done by the liquidator is to be done by all or any one or more of the persons appointed.
The authorities on the appointment of a provisional liquidator were summarised in Australian Securities and Investments Commission v Oceanic Asset Management Pty Ltd, In The Matter of Oceanic Asset Management Pty Ltd (2015) 108 ACSR 367; [2015] FCA 966, by Barker J at [67]-[69] saying: [67] In Australian Securities Commission v Solomon (1996) 19 ACSR 73, at 80, Tamberlin J identified six principles to be considered when exercising the power to appoint a provisional liquidator: (1) The court should only appoint a provisional liquidator where it is satisfied that there is a valid and duly authorised winding up application and that there is a reasonable prospect that a winding up order will be made. See Debelle J in Re JN Taylor Holdings Ltd; Zempilas v JN Taylor Holdings Ltd (1990) 3 ACSR 600 at 614. (2) The fact that the assets of the corporation may be at risk is a relevant consideration. (3) The provisional liquidator's primary duty is to preserve the status quo to ensure the least possible harm to all concerned and to enable the court to decide, after a further examination, whether the company should be wound up: Re Carapark Industries Pty Ltd (in liq)(1966) 9 FLR 297 at 303. (4) The court should consider the degree of urgency, the need established by the applicant creditor and the balance of convenience: Re Club Mediterranean Pty Ltd (1975) 11 SASR 481 at 484. The power is a broad one and circumstances will vary greatly. Commercial affairs are infinitely complex and various and it is inappropriate to limit the power by restricting its exercise to fixed categories or classes of circumstances or fact. (5) It may be appropriate to appoint a provisional liquidator in the public interest where there is a need for an independent examination of the state of accounts of the corporation by someone other than the directors. See Tickle v Crest Insurance Co of Australia Ltd (1984) 2 ACLC 493. (6) Where the affairs of the company have been carried on casually and without due regard to legal requirements so as to leave the court with no confidence that the company's affairs would be properly conducted with due regard for the interests of shareholders, it may be appropriate to appoint a provisional liquidator. See Montgomery Windsor (NSW) Pty Ltd v Ilopa Pty Ltd (1984) 2 ACLC 224. [68] These principles have also been considered appropriate in the recent decisions of Australian Securities and Investments Commission v ActiveSuper Pty Ltd (2013) 93 ACSR 189 at [16]; [2013] FCA 234 and Australian Securities and Investments Commission v Planet Platinum Ltd [2015] VSC 273 at [43]. [69] Consequently, it is understood that the appointment of a provisional liquidator pending the determination of a winding up application is something done rarely. In some authorities it is referred to as a "drastic measure", but one that may be required to preserve the status quo: Zempilas v JN Taylor Holdings Ltd (No 2) (1990) 55 SASR 103 at 106; Constantinidis v JGL Trading Pty Ltd (1995) 17 ACSR 625 at 635; Lubavitch Mazal Pty Ltd v Yeshiva Properties No 1 Pty Ltd (2003) 47 ACSR 197 at [105]; [2003] NSWSC 535; Australian Securities and Investments Commission, Re Bennett Street Developments Pty Ltd v Weerappah (No 2) [2009] FCA 249 at [8]; Australian Securities and Investments Commission v Tax Returns Australia Dot Com Pty Ltd [2010] FCA 715 at [86].
The principles stated in Deputy Commissioner of Taxation v A & S Services Pty Ltd [2017] FCA 437, by Davies J at [4] are to a similar effect: The principles for the appointment of a provisional liquidator are well established and were recently summarised by this Court in Australian Securities and Investments Commission v Uglii Corporation Ltd [2016] FCA 1099; (2016) 116 ACSR 389 at [72] as follows: The Court's power is wide and the Court may appoint a provisional liquidator on any ground but as the appointment of a provisional liquidator is a drastic intrusion into the affairs of the company, a provisional liquidator will generally not be appointed unless the Court is satisfied that there is a reasonable prospect that a winding up order will be made on the application to wind up and some good reason is shown for placing the affairs of the company under the external control of a provisional liquidator prior to the hearing of the winding up application, such as public interest considerations, to preserve the status quo, or to protect the company's assets or affairs: Australian Securities and Investments Commission v Solomon (1996) 19 ACSR 73, 80 (per Tamberlin J) (Solomon); Australian Securities and Investments Commission v Weerappah (No 2) [2009] FCA 249 at [8]-[9]; Australian Securities and Investments Commission v Tax Returns Australia Dot Com Pty Ltd [2010] FCA 715 at [73]-[77]. Public interest considerations may include, for example, the need for an independent examination of the state of accounts of the corporation by someone other than the directors, or where the affairs of the company have been carried on without due regard to legal requirements so as to leave the Court with no confidence that the company's affairs are being properly conducted with due regard for the interests of shareholders: Solomon at 80. Thus, whilst the power to appoint a provisional liquidator is not circumscribed, and there is a wide discretion, an applicant for the appointment of a provisional liquidator generally needs to satisfy the Court that there is a reasonable prospect, or it is reasonably likely, that a winding up order will be made on the application (see also Allstate Explorations NL v Batepro Australia Pty Ltd [2004] NSWSC 261 (Allstate Explorations) at [27]) and the applicant can point to some good reason for intervention prior to the final hearing and show that the appointment is needed in the public interest, or to preserve the status quo in relation to the affairs of the company, or to protect the company's assets (Allstate Explorations at [30]). On an ex parte application, there should be cogent evidence that the delay involved in effecting service, or at least in giving notice of the application, or the very fact of notice itself is likely to be such as to defeat the purpose of appointing a provisional liquidator: South Downs Packers Pty Ltd v Beaver [1984] 2 Qd R 559 ; (1984) 8 ACLR 990 at 994 (McPherson J). In Carr v Darren Berry International Marine Pty Ltd (No 1) [2013] FCA 1150, Perram J ordered the appointment of provisional liquidators on an ex parte basis. His Honour considered that the potentially fraudulent nature of what was taking place combined with the inherent mobility of the company's property made it impracticable for the application to be heard on notice in the ordinary way.
As one of the relevant considerations in deciding to appoint a provisional liquidator is whether there is a reasonable prospect that a winding up order will be made, it is also relevant for me to consider the principles in relation to the making of winding up orders on the just and equitable ground. These were also summarised in A & S Services, by Davies J at [5] saying: The principles for winding up a company on the just and equitable ground under s 461(1)(k) of the Act are also well established. These principles were helpfully summarised by Gordon J in Australian Securities and Investments Commission v ActiveSuper Pty Ltd (No 2) [2013] FCA 234; (2013) 93 ACSR 189. At [20]-[24], her Honour stated: It has long been established that a company may be wound up where there is "a justifiable lack of confidence in the conduct and management of the company's affairs" and thus a risk to the public interest that warrants protection: Loch v John Blackwood Ltd [1924] AC 783 at 788. In Australian Securities and Investments Commission v ABC Fund Managers (2001) 39 ACSR 443; [2001] VSC 383 at [119] (ABC Fund Managers), Warren J (as her Honour then was) set out three "general fundamental principles": [119] First, there needs to be a lack of confidence in the conduct and management of the affairs of the company … Second, in these types of circumstances it needs to be demonstrated that there is a risk to the public interest that warrants protection. Third, there is a reluctance on the part of the courts to wind up a solvent company. [Citation omitted.] In relation to the first, a lack of confidence may arise where, "after examining the entire conduct of the affairs of the company" the Court cannot have confidence in "the propensity of the controllers to comply with obligations, including the keeping of books, records and documents, and looking after the affairs of the company": Galanopoulos v Moustafa [2010] VSC 380 at [32]; see also Australian Securities Commission v AS Nominees Ltd (1995) 62 FCR 504 at 532-3; 133 ALR 1 at 61-2; 18 ACSR 459 at 518-9 (AS Nominees); ABC Fund Managers at [117]-[118]; Australian Securities and Investments Commission v International Unity Insurance Pty Ltd (2004) 22 ACLC 1416 ; [2004] FCA 1059 at [135]-[139] (International Unity Insurance). There is thus a significant overlap between the matters relevant to the just and equitable ground and the matters which weigh in favour of the exercise of the Court's discretion to appoint a provisional liquidator. For example, matters which indicate "the propensity of the controllers to comply with obligations, including the keeping of books, records and documents, and looking after the affairs of the company" might also demonstrate that "the company's affairs have been conducted in a manner without regard to legal requirements or accepted principles of corporate management". In relation to the second, a risk to the public interest may take several forms. For example, a winding up order may be necessary to ensure investor protection or where a company has not carried on its business candidly and in a straightforward manner with the public: International Unity Insurance at [138]; see also Australian Securities and Investments Commission v Finchley Central Funds Management Ltd [2009] FCA 1110 at [3]. Alternatively, it might be justified in order to prevent and condemn repeated breaches of the law: Kingsley Brown Properties at [96]; see also AS Nominees at FCR 527; ALR 56-7; ACSR 513-4; Australian Securities and Investments Commission v Chase Capital Management Pty Ltd (2001) 36 ACSR 778 ; [2001] WASC 27 at [75]-[77]. Again, there is an overlap between matters which would pose a risk to the public interest for the purpose of s 461(1)(k) and which are relevant to the appointment of a provisional liquidator. In relation to the third, it has been said that "a stronger case might be required where the company was prosperous, or at least solvent": Kingsley Brown Properties at [96]. Solvency, however, is not a bar to the appointment of a liquidator on the just and equitable ground, particularly where there have been serious and ongoing breaches of the Act: ABC Fund Managers at [124]-[130]. As the authorities show, fraud or misconduct are significant factors relevant to the exercise of the Court's discretion to wind up on the just and equitable ground: Hipages Group Pty Ltd v Reach Aussie Pty Ltd [2017] FCA 112 at [47]; Royal v El Ali (No 2) [2016] FCA 1156 at [17]; International Hospitality Concepts Pty Ltd v National Marketing Concepts Inc (No 2) (1994) 13 ACSR 368.
Further guidance on the "just and equitable" ground for winding up a company is to be found in Australian Securities & Investments Commission v Austimber Pty Ltd [1999] FCA 566; (1999) 17 ACLC 893, where Merkel J said at [5]: Reliance on the just and equitable ground by a regulatory authority, such as ASIC, was considered by Finn J in Australian Securities Commission v AS Nominees Ltd (1995) 62 FCR 504. His Honour (at 530-533) discussed the case law in respect of a winding up order on the just and equitable ground, which has been relied upon where it is appropriate for investor protection, where there are regular or repeated threatened breaches of the Corporations Law and also where there has been mismanagement or misconduct in the conduct of the affairs of the corporation. There has been a long-standing resort to the just and equitable ground in similar circumstances, see Re Chemical Plastics Ltd [1951] VLR 136 at 142 and Re Producer's Real Estate and Finance Co Ltd [1936] VLR 235 at 246. In the latter case Mann CJ said that it was appropriate to wind up a company on the just and equitable ground where a company's business cannot be carried on consistently with candid and straightforward dealings with the public, from whom further capital must be obtained if the company's existence is to be prolonged.

CONSIDERATION

I consider this to be a paradigm case in which the court should intervene to preserve the status quo by exercising the discretion to order the appointment of provisional liquidators to the Company. The extraordinary state the Company has reached necessitates the serious and drastic intrusion of external controllers into its affairs.
In my view, this is an appropriate case in which I should appoint provisional liquidators to the Company for the following reasons: 1. It is highly likely that an order would be made to wind up the Company on the basis that it is just and equitable to do so. Based on my examination of the conduct and management of the affairs of the Company since it was registered, I am satisfied that there is a basis on which the conclusion would be reached that there is a justifiable lack of confidence in that conduct and management. Those matters are demonstrated by each of the following: 1. The Company is in the nature of a quasi-partnership, dependent on each party fulfilling their respective statutory obligations. 2. There is an irretrievable breakdown in the relationship between Ms Davis-Jacenko (the 50% shareholder) on the one hand and Mr Tleis and Mr Alaouie (who between them comprise the other 50% shareholders) on the other hand on fundamental matters to the point where they only communicate with each other via lawyers. 3. There have been multiple occasions in April and May 2024 on which Ms Davis-Jacenko, Mr Tleis and Mr Alaouie have unsuccessfully sought to bring their relationship to an end by way of consensual settlement through negotiations held over long periods of time. 4. No decision of the shareholders of the Company can be made without their unanimous agreement under the terms of the Shareholders Agreement, which is highly unlikely to ever be reached. 5. Ms Davis-Jacenko considers that the Company owes her approximately $295,000, yet the sole director of the Company (Mr Tleis) attests that the Company has no outstanding payables. 6. Ms Davis-Jacenko claims that she has not been paid for the Hermes Birkin bag and the Rolex watch by the Company, yet Mr Tleis claims that she has and Ms Davis-Jacenko refuses to deliver those items to the Company, so there is a fundamental disagreement over a central obligation in the Promotions Agreement. 7. The marketing and promotional services of Ms Davis-Jacenko were central to the Promotion and the business of the Company as stated in the Shareholder Agreement, but she has failed to provide any of those services to the Company since about 15 April 2024, in apparent breach of the Promotions Agreement. 8. Ms Davis-Jacenko, Mr Tleis and Mr Alaouie have all ceased to perform the most fundamental reason for the Company's existence as stated in the Shareholders Agreement and the Promotions Agreement, which is to conduct its business of the Promotion. 9. On any measure, it could not be considered that there has been a "successful completion" of the Promotion and, therefore, the agreement on the part of the shareholders of the Company in the Promotions Agreement to conduct at least two further trade promotions is almost certain to never come to fruition. 10. There is fundamental disagreement between Ms Davis-Jacenko (on the one hand) and Mr Tleis and Mr Alaouie (on the other hand) over whether the Company owns and is therefore entitled to access, various email and social media accounts by which it conducts its business of the Promotion, including Shopify, Klavio, Instagram and Facebook. 11. Ms Davis-Jacenko unilaterally prevented access to the Company's bank account on 15 April 2024. 12. Ms Davis-Jacenko and Mr Alaouie have resigned as directors of the Company, leaving Mr Tleis as the sole director of the Company but without the means by which he can continue to conduct its affairs in an orderly way. 13. There are allegations of misconduct and mismanagement made against Ms Davis-Jacenko, Mr Tleis and Mr Alaouie in equal measure. 1. On 7 May 2024, Mr Tleis and Mr Alaouie resolved that in their opinion the Company was likely to become insolvent at some future time and resolved to appoint administrators to the Company. 2. On 11 May 2024, Mr Tleis agreed to the halting of all sales of the Roxy's Bootcamp courses on the website. 3. It appears to me that Ms Davis-Jacenko, Mr Tleis and Mr Alaouie have each ceased to act in the interests of the Company as opposed to their own personal interests. 4. It is the stated intention of Ms Davis-Jacenko, Mr Tleis and Mr Alaouie for the Company to cease operations within the near future. 5. There are significant doubts over the solvency of the Company due to the fact that there are no books and records of the Company which contain a reliable basis upon which its financial position, including its assets and liabilities, can be established. The Company only has approximately $3,000 in its bank account at the present time, with a prospective liability for Goods and Services Tax of $18,000. 6. There is no evidence before me as to the respective financial positions of Mr Tleis and Mr Alaouie to establish whether they are each in a position to provide the Company with funds to meet the estimated taxation liabilities of the Company, as promised in the Deed of Undertaking made between them and the Company. 7. There is an urgent need to protect the public interest in advance of the draw of the prizes in the Promotion on 7 June 2024, by placing independent liquidators in control of the Company in circumstances where the Promotion has been publicised on multiple occasions using highly questionable statements as to the truth of what was being offered (such as "giving away a $10 million house"), the public has acquired Roxy's Bootcamp training courses in reliance on those statements and there are significant doubts over whether the draw can be conducted without access to customer information, which has been withheld by Ms Davis-Jacenko until the present time, and whether those prizes will in fact be awarded by the Company. 8. The proposal made by Mr Tleis and Mr Alaouie in the First Prize Deed to deal with the Cronulla property, appears to be in clear breach of the Promotions Agreement and is also fully dependent on the Insurance Policy responding to a claim made on it. It is unclear whether the Insurance Policy will respond to any claim made on it in circumstances where it is a condition precedent in it that the prize for drawing two winning symbols in the game must not exceed $7 million and the Cronulla property has been valued at $10 million. If any claim on the Insurance Policy by the Company is denied, there is no evidence before me to suggest how any unencumbered title to the Cronulla property could be given if the first prize in the Promotion was won.
It was put to me by the defendants that the $250,000 presently held in the trust account of Yazbeck Law to be paid to the winner of the first prize under the Promotion may be at risk if provisional liquidators were appointed to the Company, but I do not consider that to be of any serious risk when officers of the court hold that amount in trust for the Company on express terms that it is "funds to be held for first prize payout". It appears to me that it will be available to the provisional liquidators only for that purpose as well.
It was also submitted to me by the defendants that I should take into account the reputational damage that will be suffered by Mr Tleis and Mr Alaouie if provisional liquidators are appointed. I do not consider that matter to be of any real weight in my discretion in circumstances where there has already been significant reputational damage suffered by Ms Davis-Jacenko, Mr Tleis and Mr Alaouie simply by reason of their involvement in the Promotion. On any view, the Promotion has attracted significant adverse publicity for all those involved in it, particularly surrounding the terms in which it was announced and described as a "giveaway of a $10 million house". This has led to online commentary which has been extremely derogatory about the Promotion itself and those involved in it. It has been frequently described as a "scam".
Ms Davis-Jacenko submitted that Mr Tleis, as the sole director of the Company, is acting in clear conflict of interest. I do not place much weight on that consideration in light of the fact that the obligations contained in the Shareholders Agreement need to be read alongside the obligations contained in the Promotions Agreement, having been entered on the same day. It was clear from the Promotions Agreement that all the parties had agreed that there would be transactions between the Company and its directors. In the case of Ms Davis-Jacenko, she was selling the Hermes Birkin bag and a Rolex watch to the Company at agreed prices. In the case of Mr Tleis and Mr Alaouie, they were selling the Cronulla property to the Company at an agreed price. It was clearly disclosed to each of the shareholders and directors of the Company that these transactions were occurring on the terms as set out in the Promotions Agreement. I do not consider that Mr Tleis is prevented from acting as a director of the Company simply because he is one of the owners of the Cronulla property and has dealings with the Company in relation to it.
In light of the conclusions I have reached, it is not necessary for me to make any of the interlocutory orders sought by the Company, Salameh Investments and Tleis Investments or deal with the other parts of the interlocutory process filed by Ms Jacenko.
I note that Andrew Blundell and Simon Cathro of Cathro & Partners Pty Ltd consent to their appointment as joint and several provisional liquidators of the Company.

UNDERTAKINGS

I note the respective undertakings of Ms Davis-Jacenko and Mr Tleis to the court in the following form: 1. The undertaking of Ms Davis-Jacenko: 1. To send an email to Youssef Tleis by 12 noon, 6 June 2024 attaching an excel spreadsheet containing the draw data, being an excel file extract from the Shopify Account containing customer identification information including email addresses and phone numbers for all customer purchases of the Brand Bootcamp courses between 8 March 2024 and 11 May 2024 so that information can be provided to Plexus. 2. That she has access to the website www.roxysbootcamp.com (Website) and that within 12 hours of being notified in writing by Youssef Tleis acting in his capacity as a director of Roxy's Bootcamp Pty Limited ACN 674 872 872 (Company) or provisional liquidators appointed by the Supreme Court of New South Wales to the Company, of the names of all winners of prizes in the Roxy's Brand Bootcamp Promotion, she will: 1. publish the winners of the Roxy's Brand Bootcamp Promotion on the Website for no less than 30 days; and 2. send an email on behalf of the Company from info@roxysbootcamp.com to the winners of prizes in the Roxy's Brand Bootcamp Promotion with youssef.tleis@outlook.com copied in. 1. The undertaking of Mr Youssef Tleis that until further order of the court, he will not use any data or information provided by Ms Davis-Jacenko to him pursuant to her undertaking noted in (1)(a) other than for the purpose of collating, preparing and providing the relevant data in a form to Plexus as necessary to conduct a draw of the Roxy's Brand Bootcamp Promotion (collectively Undertakings).

ORDERS

For these reasons, and noting the Undertakings, I make the following orders: 1. Order pursuant to s 472(2) of the Corporations Act 2001 (Cth) that Andrew Blundell and Simon John Cathro of Cathro & Partners Pty Ltd be appointed jointly and severally as provisional liquidators of Roxy's Bootcamp Pty Ltd ACN 674 872 872 until the making of a winding up order or otherwise until further order. 2. Order that the interlocutory process filed 24 May 2024 otherwise be dismissed. 3. Order that the interlocutory process filed 27 May 2024 be dismissed. 4. The costs of the proceedings be costs in the cause. 5. These orders are to be entered forthwith. 6. The originating process filed 24 May 2024 and the interlocutory process filed 29 May 2024 be adjourned to 24 June 2024 in the Corporations Directions List. 7. Liberty to apply on two business days' notice specifying the relief sought.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 07 June 2024

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (8 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (26)

Cited By (1)