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In the matter of Camelia Grove Operations Pty Ltd, Public Lifestyle Management Pty Ltd and 146 Henderson Street Pty Ltd in its personal capacity and in its capacity as the trustee for 146 Henderson Street Unit Trust (all receivers and managers appointed) (all administrators appointed) [2024] NSWSC 1342 - NSWSC 2024 case summary — Zoe
In the matter of Camelia Grove Operations Pty Ltd, Public Lifestyle Management Pty Ltd and 146 Henderson Street Pty Ltd in its personal capacity and in its capacity as the trustee for 146 Henderson Street Unit Trust (all receivers and managers appointed) (all administrators appointed) [2024] NSWSC 1342
Judgment - ex tempore - Ex parte application for interlocutory relief (Revised 24 October 2024)
By Originating Process filed on 21 October 2024, by leave, brought on an ex parte basis but on notice to the Defendants, the Plaintiffs, Messrs Clubb and Sallway as joint and several administrators of several companies ("Companies") and the Companies seek orders for short service of the application and, upon their giving the usual undertaking as to damages, orders under s 1324 of the Corporations Act 2001 (Cth) ("Act") restraining certain conduct by the Defendants and requiring them, on a mandatory basis, to take steps to remove notices of possession and wire fencing. The Defendants are Mr Albarran and Ms Vouris as the joint and several receivers and managers of 152 Henderson Street Pty Ltd ("152 Henderson") and 152 Henderson. The Companies have varying roles in respect of a hotel situated at Alexandria. 152 Henderson owns an adjoining property which has been used in the operation of the hotel by the Companies.
The application has been brought late in the day and has continued well beyond usual court hours, so I will deliver judgment briefly, particularly where the orders that I will make are made on an ex parte basis and will only provide for short service of the application, to allow the Defendants a further opportunity to be heard, in addition to that given by the notice to them of this application.
The Plaintiffs read the affidavit dated 21 October 2024 of Mr Clubb and a further affidavit dated 21 October 2024 of Mr Strawbridge. Mr Strawbridge refers to the circumstances in which an arrangement was reached by the former receivers of 152 Henderson, to allow continued access to the part of the premises used in the hotel's operation. Mr Albarran and Ms Vouris were then appointed as new receivers to 152 Henderson and they have taken steps to take possession of the property and items contained in it including a cool room used for the hotel restaurant and a bottle shop as is plainly indicated by the form of a notice that they have erected on the land and have taken further steps to obstruct the access to a bottle shop and other parts of the premises by a wire fence.
I am satisfied that the Plaintiffs have at least a seriously arguable case and likely a strong case that these steps have contravened s 440B of the Act in the circumstances where that section provides that an owner of property "used by" a company that is in administration cannot take possession of the property without the administrator's consent or leave of the Court. Importantly, that section does not require that there exist a formal contract or even a licence for use of the property as distinct from the fact that it is "used by" by the relevant company.
I am also satisfied that it is at least arguable that s 1324 of the Act may apply to a contravention of that section, used in the broader sense, and that s 441H of the Act does not confine the scope of s 1324 in that respect. That construction is available because s 441H of the Act applies where the owner is enforcing a right of the owner in property used by the relevant company and enters into possession of the property. However, the difficulty which arises here is that that is the conduct which s 440B arguably prohibits, at least without the consent of the administrator or leave of the Court which the receivers of 152 Henderson and 152 Henderson have not sought.
In exercising the powers under s 1324 of the Act, where the application is not brought by a regulator but by a private party, the ordinary principles that are applicable to interlocutory injunctions apply and I should have regard to whether a serious question to be tried is established and the balance of convenience.
Here there seems to me to be a relatively strong case for a contravention of s 440B of the Act. The balance of convenience, subject to difficulties which arguably arose from the original formulation of the order, favours interlocutory relief. I reach the latter view because here it is plain that the Plaintiffs will suffer significant loss including disruption to a sale process at the hotel and loss of trading income from the obstruction of access to the property which is being used in the operation of the hotel. On the other hand, it is difficult to see that the receivers of 152 Henderson or 152 Henderson could not obtain compensation for any inappropriate use of the property by way of a licence fee or otherwise if they have any entitlement to such a fee.
I was troubled by the original form of the orders sought by the Plaintiffs, particularly where they were sought in an ex parte application. There seems to me to be no particular difficulty, where there is a seriously arguable case and the balance of convenience favours relief, in making an interlocutory order restraining the impeding of access, compliance with which would require that access be provided and the wire fence obstructing access be removed. The consequence of non-compliance with such an order is that the persons who were the subject of it would likely pass into contempt and, so far as they are receivers of property and insolvency practitioners, might well expose themselves to an inquiry as to their conduct by the Court.
Having said that, I was more concerned with the order that was originally sought that 152 Henderson and its receiver was required to remove the notices of possession and the wire fencing between 7am and 11am or 3pm and 5pm to be completed within 24 hours. That would in practice have required the removal tomorrow and potentially before the Defendants were allowed an opportunity to be heard if these orders had been made on an ex parte basis. I am satisfied that that difficulty has been addressed by an amendment made by the Plaintiffs which would allow the removal of the fence to take place by 11am on 23 October 2024. If that order was made now, the Defendants would then have the opportunity to make such arrangements as they need to make to comply with that order. I could then have ordered that the matter be made returnable tomorrow afternoon and the Defendants would have the opportunity to seek to set aside those orders if they wish to do so, and if they did not succeed in doing so, they would be required to have removed the relevant fencing by the next morning, leaving them time to make the appropriate arrangements to do so.
It initially seemed to me that those orders could reasonably be made on an ex parte basis where the Defendants had notice of this application, and where the Defendants' conduct is on its face an aggressive approach and they would then have no basis to complain where the Court responds by interlocutory relief, a serious question for relief having been shown and the balance of convenience favouring such relief. For these reasons, in an ex parte application, I was initially inclined to think that a basis for making the orders has been made out.
However, I am conscious that the Defendants have chosen not to appear this afternoon although they were given notice of the application, because they indicated their Counsel were not available until tomorrow afternoon. I do not think that in these circumstances I should now make an interlocutory mandatory injunction that has immediate effect where the consequence would be that the Defendants immediately pass into breach of it without an opportunity to avoid that breach by removing the restraints on access.
The better course is to defer making the interlocutory injunction now and to relist the matter at 8:45am tomorrow morning when the Defendants can attend by counsel or by their solicitors or in person, as they wish, and then make an order if they choose not to attend. They will have had procedural fairness in that regard because that requires that they be given the further opportunity to attend, which does not require that they take that opportunity up. Where they will have notice of the fact that such an order is likely to be made, if they do not attend, then they can have no complaint if they have not taken appropriate steps to ensure that they are able to comply with it.
For these reasons I will amend order 5 to note that, subject to any further submissions which may be made by the Defendants if they choose to attend at 8.45am on 22 October 2024 for further hearing, including as to the time required for compliance with the orders, the Court will likely make the orders sought.
[3]
Further hearing of the application
As I noted in my judgment on the ex parte application brought by the Plaintiffs, by Originating Process filed on 21 October 2024, by leave, the Plaintiffs, Messrs Clubb and Sallway in their capacities as joint and several administrators of the Companies sought relief, by way of interlocutory and final relief, arising from a suggested contravention of s 440B of the Act by the Defendants, Messrs Albarran and Vouris in their capacities as joint and several receivers and managers of 152 Henderson and by 152 Henderson.
I heard the application on an ex parte basis, on the afternoon of Monday 21 October 2024, in circumstances that the Defendants had been given notice of the application, but had not appeared, and indicated that their counsel was not available to appear until 2pm today.
I indicated, in my ex tempore judgment delivered yesterday, that, within the limits of an ex parte hearing, it seemed to me that a seriously arguable, and potentially a strong, case of a contravention of s 440B of the Act by Messrs Albarran and Vouris and 152 Henderson had been established. So far as relevant property, both the building situated at 152 Henderson Street and physical assets contained in and associated with that property, were used by the Companies, then s 440B of the Act provided that a third party, including Messrs Albarran and Vouris and 152 Henderson could not take possession of the property or otherwise recover it, without the administrators' written consent or leave of the Court. The Defendants had plainly not obtained the former and did not seek the latter.
I deferred making an order for interim injunctive relief yesterday, because it seemed to me preferable that the Defendants have an opportunity to be heard, both as to whether that relief should be granted, and as to the form of that relief, including, for example, the time which should be permitted to disassemble the wire fence which they had put in place.
I observed, in my judgment yesterday, that procedural fairness requires that a party be allowed an opportunity to be heard, not that it take up that opportunity. The Defendants this morning have had an opportunity to be heard, but they have not chosen to take it up. Ms Payne, who appears for them, indicates that the Defendants received the relevant information late yesterday and repeats their submission that their Counsel is available from 2pm today. With the greatest respect to the Defendants, it is they who have erected a wire fence obstructing access to 152 Henderson Street, and interrupted the conduct of the Plaintiffs' business, without seeking the administrators' consent or leave of the Court as s 440B of the Act arguably requires. It seems to me that there is little force in the submission that the question whether they should be injuncted on an interlocutory basis from continuing breach of the Act should be deferred until a time convenient to their Counsel, allowing an arguable breach of the Act to continue in the meantime. There is no reason why the Defendants' solicitor could not make submissions in the application, given its urgency. That urgency was here created by the Defendants, not the Plaintiffs, and it would not exist but for the Defendants' taking possession of the relevant property and their erection of the wire fence. The convenience of the Defendants' counsel could have been accommodated without difficulty, had they chosen to bring an application for leave under s 440B of the Act before taking the conduct which is now in issue.
The Defendants have here had an opportunity to be heard although they have not taken it up. It seems to me that, as I observed in dealing with the ex parte application yesterday, there is a seriously arguable, or strong, case of a contravention of s 440B of the Act, and the balance of convenience favours the Defendants removing the wire fence which they have erected, and permitting access to the property which was previously used in the Companies' business, as s 440B of the Act arguably requires, unless and until they bring any application under s 440B of the Act for the Court's leave to take the steps that they had previously taken without leave, or any application that may be available to them under s 441H of the Act. For these reasons, I will now make the orders that I foreshadowed in my orders made yesterday.
I have considered whether the constraint from directly or indirectly impeding access, to be granted on an interlocutory basis, should take effect immediately, or should be deferred for a short time, to accommodate the physical removal of the wire fencing, which is contemplated by a further order that will be made. I have concluded that the order prohibiting restraint should be made immediately, although it will be read in the context of the fact that the removal of the wire fencing will plainly take some time, but is required to be completed no later than 11am on 23 October 2024. I should emphasise that this is an interlocutory mandatory injunction, and I am conscious of its character in making it. A failure to comply with it will, in the circumstances, likely amount to contempt and may well give rise to an inquiry into the conduct of the Defendant receivers.
For these reasons, I make the following orders, which include orders for an expedited final hearing of the matter. I have included, in those orders, a timetable for the Defendants to bring the applications that they could previously have brought, but had not brought, before taking the steps which have given rise to this application, so that all issues can be determined at the same time. I have ordered an expedited hearing, in circumstances that the issues in dispute are likely to be in narrow scope.
[4]
Orders
Accordingly, I make the following orders:
1 Upon the First Plaintiff giving the usual undertaking as to damages the Court orders that the Defendants:
a. be restrained until the date of the final hearing, from directly or indirectly impeding the access of the Plaintiffs to the terrace (including the outdoor eating area, food storage and the ground floor bottle shop) located adjacent to the Camelia Grove Hotel (Hotel) at 152 Henderson Street, Alexandria (Terrace);
b. be restrained until the date of the final hearing from taking possession of or otherwise recovering the Terrace;
c. provide keys to the First Plaintiff for the locks to the Terrace; and
d. remove the notices of possession and the wire fencing which has been erected between the bottle shop and the Hotel with such removal to occur between the hours of 7am to 11am with such removal to be completed no later than 11am on 23 October 2024.
2 Note that the Plaintiffs have filed and served all substantive affidavit evidence on which they rely for the final hearing, no further evidence to be led by them without leave, other than in respect of subsequent developments.
3 The Plaintiffs to file and serve their submissions in chief in respect of a final hearing by 6pm on 23 October 2024.
4 By noon on 25 October 2024, the Defendants file and serve their affidavit evidence in response to the Plaintiffs' application, no evidence in response to be relied on if not filed and served by that time without leave and their submissions in response.
5 By 4pm on 28 October 2024, the Plaintiffs file and serve any evidence in reply to the Defendants' evidence as to the Plaintiffs' application, no evidence in reply to be relied on if not filed and served by that time without leave.
6 By 4pm on 24 October 2024, the Defendants file and serve any interlocutory process seeking leave under s 440B of the Act, or any order under s 441H of the Act, and all evidence on which they rely in respect of such an order and their submissions, no evidence in respect of such an order to be relied on if not filed and served by that time without leave.
7 By 4pm on 28 October 2024, the Plaintiffs file and serve any evidence in response to any such application by the Defendants and their submissions in response, no evidence to be relied on in response to that application if not filed and served by that time.
8 The Plaintiffs' application, and any application by the Defendants under s 440B or 441H of the Act to be listed for final hearing before Nixon J at 10am on 29 October 2024.
9 The Plaintiffs deliver a Court Book containing all pleadings, affidavits, exhibits, documents relied on, submissions and any objections to evidence to the Associate to Nixon J by 4pm on 28 October 2024.
10 Liberty to apply on 2 business hours' notice, specifying the relief sought.
11 These orders be entered forthwith.
12 Confidential Exhibit VS2 to be returned to the Plaintiffs, to be retained by them subject to any renewal of the tender at the final hearing.
[5]
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Decision last updated: 24 October 2024