Consideration of the present applications
15 At the resumed hearing on 5 April 2018, the Receivers sought orders that in their capacity as receivers and managers of the AFT, they have the full powers provided for by s 420 of the Corporations Act and orders with respect to their costs, expenses and remuneration in acting as receivers and managers of the Trust.
16 A draft balance sheet for the Company as at 31 December 2017 reveals a net asset deficiency of $1,897,951.38. All the known creditors of the Company have been provided with a copy of the Court's orders of 15 February 2018. The Company's principal secured creditor is BankSA which holds a fixed and floating charge over its assets. BankSA has informed the liquidators that it does not intend, at least currently, to enforce its security and it does not object to the Receivers taking possession of and then realising, those of the Company's assets which are the subject of the security. No other creditor has indicated any opposition to the Receivers having the full range of powers contemplated by s 420.
17 Although counsel for Mr Standish pressed the interlocutory application filed by Mr Standish on 26 March 2018, he did not otherwise oppose the making of the orders sought by the Receivers.
18 Mr Standish sought, first, a declaration with respect to his subrogated rights and, secondly, an order that the stock removed by the Receivers from the Company's premises be delivered to him. The declaration sought was in the following terms:
A declaration that Roger Standish is subrogated to [the] right of the National Australia Bank under the security described as "Debenture" created on or around 3 May 1999, and having registration number 201112120929120 in the Personal Property Securities Register.
19 Mr Standish supported this application by his affidavit made on 26 March 2018 and by reference to the affidavit of his son Darren made on 7 March 2018. In short, Mr Standish's claim was that, as part of financial facilities provided by NAB to the Company and other entities in August 2006, and again in September 2008, he had provided a guarantee in his personal capacity. He asserts that in 2009 and 2010, he had sold two properties in his personal name which had provided security for the facilities and had thereby reduced the overall indebtedness to NAB under the facility by $445,000. Mr Standish asserts that he had paid this amount in his personal capacity and as guarantor with the consequence that he is now subrogated to the rights of NAB. On this basis, Mr Standish asserts, amongst other things, an entitlement to receive the sum of $445,000 as a secured creditor.
20 It is not necessary to discuss presently the principles concerning subrogation on which Mr Standish relies. There are two reasons for that. First, the evidence on which Mr Standish relies for the asserted right of subrogation is incomplete, and much is left to inference. In particular, Mr Standish has not provided all of the documentation on which he relies for the claimed right of subrogation and that which he has provided is insufficient to establish that the amounts paid to NAB upon which he relies were paid by him in his capacity as guarantor and in satisfaction of a guaranteed liability. The circumstances in which the NAB facility was reduced are not clear and it is possible that the amounts were paid to NAB in discharge of a primary liability of Mr Standish, rather than of a liability as guarantor.
21 It is not necessary to address that evidence in more detail because there is a second, and more fundamental, reason why the declaration sought by Mr Standish on the basis of the asserted right of subrogation should not be made. A declaration is not made by way of interlocutory relief. An interlocutory declaration is a form of order not known to the law: Graham Barclay Oysters Pty Ltd v Great Lakes Council [2002] HCA 54; (2002) 211 CLR 540 at [129] per Gummow and Hayne JJ. In Magman International Pty Ltd v Westpac Banking Corporation (1991) 32 FCR 1, Beaumont J (with whom the other four members of the Court agreed on this issue) cited with approval the following statement of principle by Upjohn LJ in International General Electric Co of New York Ltd v Customs and Excise Commissioners [1962] Ch 784 at 789:
[A]n order declaring the rights of the parties must in its nature be a final order after a hearing when the Court is in a position to declare what the rights of the parties are, and such an order must necessarily then be res judicata and bind the parties forever, subject only, of course, to a right of appeal.
22 For this reason, it would, in any event, be inappropriate to grant Mr Standish the relief which he seeks in [1] of his interlocutory application.
23 By [2] of his interlocutory application, Mr Standish seeks the following order:
An order that the receivers of Fairsales Pty Limited as trustee for the Aboyne Family Trust (the Trust) deliver to Roger Standish the property of the Trust held by them or on their behalf, at the premises of Pickles Auctions, South Australia.
24 Mr Standish seeks this order by reason of his asserted right of subrogation and because of his belief that, having operated businesses selling bicycles for a number decades, he has "the experience, knowledge and contacts in the industry which will allow him to obtain the best possible price for the sale of the stock".
25 I accept that Mr Standish has experience extending over many years in the retail sale of bicycles. Nevertheless, I am not satisfied that the order sought by Mr Standish should be made. First, there is the stark fact that, despite his experience, the Company by which he conducted his businesses is now insolvent. That is to say, at least in recent times it seems that Mr Standish has not been able to sell bicycles profitably. Secondly, apart from the bare assertion of his experience, Mr Standish has not provided any evidence of the means which he proposes to adopt in relation to the sale of the stock, let alone that those means are available to him but not to the Receivers. There is no basis on which to conclude that the means of sale he may adopt are likely to produce a better return than the means which the Receivers will adopt. Thirdly, Mr Standish has not provided any evidence or undertakings with respect to the means which he proposes to account of the proceeds of sale and for some supervision by the Receivers. Fourthly, Mr Standish has not sought to explain or justify his sale of a bicycle on 3 March 2018 in apparent breach of the injunction issued by the Court on 15 February 2018. That circumstance makes it difficult for the Court to have confidence in the steps which Mr Standish may take in respect to the sale of the stock.
26 It is also appropriate to take into account the duty of the Receivers (if permitted to exercise the power of sale) to take all reasonable steps to sell the property for not less than its market value (if it has a market value) or otherwise the best price that is reasonably available: s 420A of the Corporations Act.
27 For these reasons, I decline to make either of the orders sought by Mr Standish.
28 I am satisfied that it is appropriate for the orders sought by the Receivers to be made. The stock will have to be sold in any event, and the Receivers are well positioned to undertake that task. In particular, I accept the submission of counsel for the Receivers that the asserted right of subrogation does not make the orders inappropriate and, as already indicated, counsel for Mr Standish did not contend that that was so. The Receivers will take the property of the Company as they find it and, if there is a prior security interest over the trust assets, then the trustees' right of exoneration secured by the lien may be subordinated to it.
29 As there has been no replacement trustee appointed, it is in the interests of the proper winding up of the Company that the Receivers have the full powers which they seek.
30 No party contended that the orders sought by the Receivers with respect to costs, expenses and remuneration are inappropriate in the circumstances of this case.
31 Accordingly, I will make orders in the terms sought by the Receivers.
I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice White.