Guerin v Rose Guerin and Partners Pty Ltd

Federal Court of Australia|2023-07-19|Before: Mr P, Halley J

Counsel for the Plaintiff: Mr H Somerville

Solicitor for the Plaintiff: Uther Webster & Evans

Solicitor for the Second Defendant: Mr P Tatti of Aitken Partners

AND: ROSE GUERIN AND PARTNERS PTY LTD (ACN 158 304 584) (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) First Defendant

RICHARD TRYGVE ROHRT IN HIS CAPACITY AS LIQUIDATOR OF ROSE GUERIN AND PARTNERS PTY LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) (ACN 158 304 584) Second Defendant

RICHARD TRYGVE ROHRT AND STEPHEN DIXON IN THEIR CAPACITY AS RECEIVERS AND MANAGERS OF THE PROPERTY, ASSETS AND UNDERTAKING OF THE ROSE GUERIN AND PARNTERS TRUST Third Defendant

order made by: HALLEY J DATE OF ORDER: 19 JULY 2023

Pursuant to s 436B(2)(g) of the Corporations Act 2001 (Cth) (Act), leave be granted to the second defendant to appoint himself, by writing, as administrator of the first defendant.
Pursuant to s 447A of the Act, the operation of Pt 5.3A of the Act be modified as follows: (a) the requirement for the convening and holding of the first meeting of creditors pursuant to s 436E of the Act be dispensed with; and (b) notwithstanding s 439A(2) of the Act, the second meeting of creditors be convened at any time during the convening period or within five business days after the end of the convening period provided that the second defendant in his capacity as the administrator of the first defendant gives notice of the meeting to eligible creditors of the first defendant at least 5 business days before the meeting.
When convening the meeting of creditors to be held under s 439A of the Act, the second defendant is to draw to the attention of creditors their ability to appoint, at the meeting, a person other than the second defendant as either administrator of any deed of company arrangement or as liquidator of the first defendant, should the meeting resolve to do so.
The second defendant's costs of and incidental to the interlocutory process filed on 13 July 2023 be costs in the liquidation of the first defendant.
The matter otherwise be stood over for a case management hearing at 9.30 am on Friday, 6 October 2023.
The second defendant inform the plaintiff and the known creditors of the first defendant of the making of these orders and their contents as soon as practicable, either by email for those persons for whom a valid email address is known, or by notice sent by pre-paid ordinary mail.
Any person demonstrating sufficient interest have leave to apply to vary or discharge these orders on 2 days' notice to the second defendant and to the Court. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

A. Introduction 1 Rose Guerin and Partners Pty Ltd (in liquidation) (ACN 158 304 584) (Receivers and Managers appointed) (Company) is presently being wound up in insolvency. 2 The second defendant, Mr Richard Trygve Rohrt, is the liquidator of the Company. By an interlocutory process filed on 13 July 2023 (Interlocutory Process), Mr Rohrt applies for leave, pursuant to s 436B(2)(g) of the Corporations Act 2001 (Cth) (Act), to be appointed as administrator of the Company and for the consequential relief set out in the Interlocutory Process. 3 The Interlocutory Process is supported by an affidavit of Mr Rohrt sworn on 13 July 2023 (Rohrt Affidavit). Mr Rohrt also relies on an affidavit of Mr Joshua Luke Peters sworn on 19 July 2023 and two affidavits of the plaintiff, Ms Rosemarie Brenda Guerin, sworn on 23 May 2023 and 10 July 2023. The affidavit of Mr Peters, confirms that on 14 July 2023, (a) notice of the Interlocutory Process was given to all known creditors of the Company, (b) they were provided with copies of the Interlocutory Process, the Rohrt Affidavit, Ms Guerin's affidavit of 10 July 2023, and (c) each was notified of the time, date and place for the hearing today, as well as of contact details for Mr Rohrt's legal representatives.

B. Background 4 The relevant background to the orders sought in the Interlocutory Process is set forth in the Rohrt Affidavit. 5 On or about 2 July 2012, the Company was appointed as the trustee of the Rose Guerin & Partners Trust (Trust). Ms Guerin, was the primary beneficiary and appointor of the Trust. Thereafter, the Company, as the trustee of the Trust conducted a business being an accountancy practice trading as "RBG Private" in Potts Point, New South Wales. 6 On 19 December 2019, a secured creditor appointed Mr Stephen Robert Dixon and Mr Rohrt as joint and several administrators of the Company pursuant to s 436C of the Act and a deed of variation was executed purporting to remove the Company as trustee of the Trust. 7 On 5 February 2020, at the second meeting of creditors of the Company, it was resolved that the Company should be wound up and Mr Rohrt be appointed as liquidator. 8 On 19 May 2020, Mr Rohrt commenced proceedings in this Court (VID 329 of 2020) for an ex parte warrant pursuant to s 530C of the Act for the seizure of the books, records and property of the Company which was granted by Moshinsky J on 21 May 2020. 9 Following the enforcement of the warrant applications, Mr Rohrt and Mr Dixon successfully obtained orders: (a) that by operation of the Personal Properties Securities Act 2009 (Cth) the security interest in the Ferrari, that had been seized pursuant to the exercise of the warrant, vested in the Company: Rohrt, in the matter of Rose Guerin and Partners Pty Ltd (in liq) v Princes Square W24NY Pty Ltd [2021] FCA 483 (Anderson J); and (b) appointing them jointly as the receiver and manager of the Trust: Rohrt, in the matter of Rose Guerin and Partners Pty Ltd (in liq) v Princes Square W24NY Pty Ltd (No 2) [2021] FCA 547 (Anderson J) (receiver and manager judgment). 10 Following the receiver and manager judgment being handed down on 21 May 2021, the plaintiff engaged Blac Advisory. 11 Between 27 May 2021 and 23 September 2022, there were various communications between Mr Rohrt and Blac Advisory concerning Ms Guerin's desire to place the Company into administration and propose a deed of company arrangement (DOCA). 12 On 19 December 2022, Mr Rohrt issued proceedings seeking summonses be issued pursuant to s 596A and s 596B of the Act to examine each of Ms Guerin and her brother Mr James Nahlous (Examination Summonses). 13 On 19 December 2022, Mr Rohrt commenced proceedings against Ms Guerin and two of her related entities. The relief sought in those proceedings included claims of insolvent trading, unfair preferences, other voidable transactions, together with breaches of duties under the Act and of fiduciary obligations. 14 On 12 January 2023, Mr Dixon resigned as a joint and several liquidator of the Company. 15 On 22 February 2023, Judicial Registrar Luxton issued the Examination Summonses. 16 On 23 May 2023, Ms Guerin (being the director of the Company) issued these proceedings seeking various orders, including for the appointment of an administrator to the Company. Subsequently, the matter was referred to mediation which took place on 16 June 2023 before Senior National Judicial Registrar Legge. 17 Following further discussions between Mr Rohrt and Ms Guerin, Mr Rohrt filed the Interlocutory Process. 18 Ms Guerin, as I have indicated above at [3], has filed two affidavits in support of the orders sought by Mr Rohrt in the Interlocutory Process and appears today by her counsel, Mr Somerville, to support the making of the orders sought in the Interlocutory Process, including Mr Rohrt's application for leave to appoint himself as the administrator of the Company pursuant to s 436C of the Act.

C. Leave under s 436B(2)(g) of the Act 19 I recently addressed the relevant statutory provisions and principles governing an application by a liquidator to appoint themselves as a voluntary administrator in Mansfield (liquidator), in the matter of NR Complex Pty Ltd (in liquidation) (receivers and managers appointed) [2023] FCA 614. I provided the following summary of those statutory provisions and principles at [12]-[17]: (a) a liquidator of a company may appoint a voluntary administrator if they think that the company is insolvent or is likely to become insolvent at some future time: s 436B(1) of the Act; (b) a liquidator cannot, however, seek or consent to their appointment as a voluntary administrator except with the leave of the Court: s 448C(1)(b)(v) of the Act; (c) the test for leave is not an onerous one: Re Cobar Mines Pty Ltd (In Liq) (1998) 30 ACSR 125 at 126 (Bryson J); see also In the matter of Equiticorp Australia Ltd (in liq) and Ors [2020] NSWSC 143 at [21] (Gleeson J). Nevertheless, the grant of leave should not be treated as a "mere formality, or mere procedural obstacle": Re Keldane Pty Ltd (in liq) [2011] VSC 385 at [13] (Pagone J); see also Australian Securities and Investments Commission v Diploma Group Limited (No 5) [2017] FCA 1147 at [40] (McKerracher J); Deputy Commissioner of Taxation (Cth) v Foodcorp Pty Ltd (1994) 13 ACSR 796 at 799 (Hodgson J); (d) a liquidator will generally be granted leave to appoint themselves as the administrator, unless there are distinct reasons why they are not a suitable person and this reflects the "desirability of continuity" of persons in charge of the management of the company: Parkes Leagues Club Co-op Limited (In Liq) [2004] NSWSC 16 at [5] (Hamilton J) citing Re Cobar at 126; (e) the primary question on an application for leave for self-appointment as a voluntary administrator is whether the liquidator is "an appropriate person to be an administrator": Foodcorp at 799; (f) a Court should generally grant leave if the person is an official liquidator with no prior association with the company and its officers and there is no distinct reason why their appointment would be inappropriate: Foodcorp at 799; (g) the appropriateness of an appointment requires consideration of whether there are any matters such as a "conflict of interest, threat to independence or anything else offensive to commercial morality": Diploma Group at [40]; and (h) relevant considerations on an application of this kind include the proposed appointee's familiarity with the business and affairs of the subject company, the likely reduction in duplication and associated costs where a liquidator is appointed as administrator including where considerable work has already been undertaken and where continuity of appointees is desirable having regard to ongoing negotiations and/or complex arrangements: see Equiticorp at [23]. 20 I am satisfied that leave should be granted to Mr Rohrt pursuant to s 436B(2)(g) of the Act to appoint himself as administrator of the Company for the following reasons. 21 First, the Company is clearly insolvent and the threshold required by s 436B(1) of the Act is enlivened. 22 Second, as a registered liquidator, Mr Rohrt is appropriately qualified for the purposes of s 448B of the Act. 23 Third, Mr Rohrt has developed familiarity with the affairs of the Company including by (a) obtaining and executing a warrant issued by this Court pursuant to s 530C of the Act, (b) being involved in contested litigation that has already been determined by the Court, (c) being appointed as the receiver and manager of the Trust, in addition to his appointment as a joint and several liquidator of the Company, (d) obtaining orders for summonses to be issued for public examinations, (e) commencing a proceeding concerning insolvent trading and other relief, and (f) investigating issues concerning creditors. 24 His appointment as administrator would avoid the inevitable duplication involved in appointing an alternative administrator, in particular, with respect to the preparation of reports to be provided to creditors. 25 Fourth, the material before me discloses no real or potential conflict of duty or interest and no other matter which could be considered offensive to commercial morality, if Mr Rohrt is appointed as a voluntary administrator of the Company. In this regard, I note that (a) he was previously appointed administrator before the creditors resolved for the Company to be placed into liquidation and the creditors did not seek the appointment of a different practitioner, (b) the Court has also appointed him as receiver and manager over the assets of the Trust of which the Company is the trustee, and (c) he has produced a Declaration of Independence, Relevant Relationships and Indemnities. 26 Fifth, Mr Rohrt's application for leave to appoint himself as administrator is supported by Ms Guerin and is sought for the purpose of facilitating Ms Guerin putting a proposed DOCA to creditors.

D. Ancillary relief 27 In the event that the Court grants leave for Mr Rohrt to appoint himself administrator, he seeks further orders concerning the manner in which Pt 5.3A of the Act is to operate. 28 Section 436E of the Act requires that a first meeting of the creditors must be convened within 8 business days of the administration commencing. Section 436E(1) of the Act states that the purpose of the meeting is to determine whether or not a committee of inspection should be appointed. Although not specified in that section, creditors also have the ability at the first meeting of creditors to resolve to appoint an alternative administrator. 29 Section 447A(1) of the Act empowers the Court to make any order it thinks appropriate about how Pt 5.3A of the Act is to operate in relation to a particular company. The Court's main concern in the making of such an order, is to consider the best interests of a company's creditors as a whole: Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) (No 2) [2020] FCA 717 at [104] (Middleton J). 30 As I explained in NR Complex at [25], the powers of the Court under s 447A of the Act are wide but not entirely without limit: Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270; [2000] HCA 30 at [20] (Gleeson CJ, McHugh, Gummow, Hayne and Callinan JJ); see also In the matters of MROC Car Wholesalers Pty Ltd and ors [2017] NSWSC 287 at [30] (Gleeson JA). In Australian Memory at [20], their Honours' identified the following limitations on the Court's discretion under s 447A of the Act: [F]irst, that s 447A does not permit a court to make an order altering the times fixed by those provisions of Pt 5.3A which contain express provision for variation of the time so fixed; second, that it permits only orders having prospective effect; third, that it does not permit the making of orders affecting vested rights; and, fourth, that it does not apply unless there is a continuing administration (or, presumably, an extant deed of company arrangement). 31 Orders dispensing with a requirement to hold a first meeting of creditors where a liquidator seeks leave to be appointed as an administrator are often made: see Smith in the matter of Actively Zoned Pty Ltd (in liq) [2012] FCA 605; Schwarz, in the matter of Gordon Smith Marketing Pty Ltd (Administrator Appointed) [2016] FCA 1378; Diploma Group at [64]-[65]; Equiticorp at [32]-[40]; Hughes, in the matter of Vah Newco No. 2 Pty Ltd (in liq) [2020] FCA 1121 at [30] (Middleton J); NR Complex at [27]. 32 Such orders have been made where creditors have already had an opportunity to familiarise themselves with the affairs of the relevant companies, and where a first meeting would be a costly administrative burden: Gordon Smith at [17] (Jagot J). I am satisfied that is also the case here. 33 The creditors will also benefit by the second meeting being held, with a report pursuant to s 439A of the Act being prepared, in determining whether or not to accept the DOCA proposal that has been foreshadowed by the plaintiff. 34 Mr Rohrt also seeks an order that notwithstanding s 439A(2) of the Act, the second meeting of creditors be convened at any time during the convening period or within five business days after the end of the convening period. The addition of an order permitting the administrators to hold the second creditors' meetings at any time in the convening period may result in the meeting occurring at an earlier date: Re Daisytek Australia Pty Ltd [2003] FCA 575 at [10]-[18] (Lindgren J). I am satisfied that such an order is appropriate provided that the order is made on the basis that notice is given to eligible creditors of the Company at least five business days before the meeting. 35 Mr Rohrt also seeks orders that (a) he inform the plaintiff and known creditors of the Company of the making of these orders and their contents, as soon as practicable, and (b) when convening the second meeting of creditors, he specifically draws to the attention of creditors, their ability to appoint at that meeting, a person other than himself as either administrator of any DOCA or as liquidator of the Company, should the meeting resolve to do so. 36 I consider it is appropriate that both those orders should be made to ensure that creditors are advised of their rights and given an opportunity to exercise them. 37 I also consider it appropriate that an order be made, as sought by Mr Rohrt, that any person demonstrating sufficient interest should have leave to apply to vary or discharge these orders on two days' notice to Mr Rohrt and the Court. I note that there was no appearance today by any creditor.

E. Disposition 38 Orders are to be made substantially reflecting the relief claimed in the Interlocutory Process. I certify that the preceding thirty-eight (38) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Halley.

Personal Properties Securities Act 2009(Cth)

Corporations Act 2001(Cth)ss 436B, 436C, 436E, 439A, 447A, 448C, 530C, 596A, 596B

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