Dealings with chattels
81The applicants complain that the liquidator, in dealing with property claimed by Michael Ghougassian, Nareg Bookshop and Nareg Internet, did so without their consent and with notice of their claim and without proper regard for their interests, and converted their property. As well as being one of the grounds relied upon in support of the application for removal, the conversion allegation is also the subject of the application for leave to sue the liquidator personally for damages.
82Michael Ghougassian informed members of the liquidator's staff that some of the items stored at the School belonged to him, and pointed out to them items that he said did not belong to the Association. Mr Samarasinghe said, "You'll need to substantiate ownership of items that you claim to be yours", and "If you substantiate it, arrangements can be made for you to collect them". Mr Ghougassian agrees that this was said, but complains that Mr Samarasinghe never stuck to his word; but he does not say that he ever endeavoured to collect any of the chattels.
83The liquidator's staff responded to Michael Ghougassian, from at least 2 August 2010, that he could collect personal belongings, but could not remove assets such as cabinets, computers or other equipment which were perceived to be assets of the Association, without first providing proof of ownership.
84Steps were then taken by the liquidator with a view to realisation of the chattels located on the Property. However, the claims of the applicants were not disregarded. On 3 September 2010, the liquidator's staff raised with the Ghougassians' representative that he had not received any documentation in respect of any items over which the Ghougassians were claiming personal ownership. On the same day, Michael Ghougassian threatened to seek an injunction to prevent the on-line auction of goods, and the liquidator's staff responded that the Ghougassians would not be permitted access to the premises without providing a list of items over which they were claiming ownership, together with supporting documentation. However, in what he characterised as a show of good faith, the liquidator withdrew all books from the auction - despite the lack of any proof of ownership. The liquidator's staff stated: "[p]rovided that you provide us with the proper documentation, we are more than happy to arrange for a time for you (within business hours) to collect what is rightfully yours".
85The request for proof of ownership was repeated in subsequent correspondence and conversations, on 6 September 2010. Mr Michael Ghougassian provided some receipts for computers on 7 September 2010. Mr Samarasinghe said that he crosschecked the serial number on these invoices - which were addressed to an unknown entity called "Michael's Engineering Services" - against the auction listing and could not match them. When shown the various auction lists, however, Mr Samarasinghe was unable to identify any computer equipment with serial numbers, and the liquidator was unable to produce the listing that he said he relied upon for the purposes of verification, and as I have already recorded, I think his evidence in this respect was mistaken. But this establishes no relevant default on behalf of the liquidator because, regardless, the computers were removed from the auction, and they remain available for collection by the Ghougassians, together with other items.
86On 7 September 2010, Michael Ghougassian offered to purchase all the items in the auction for $55,000. The liquidator rejected this offer, a decision that could not be criticised prospectively in that he had already obtained a valuation of the Association's non-fixed assets from Grays Online, who advised that the market value on an existing use basis was $166,899, and the estimated online auction realization $66,753; and even less so retrospectively, given that the sale realised total proceeds (less expenses and commission) of $171,566.96.
87Later that day, at 1:44pm, Michael Ghougassian advised that various items in the auction were "private". Mr Samarasinghe responded that proper proof of ownership was required, and that while as a show of good faith he had instructed the auctioneers to remove the computers from the auction, as the auction was to close within an hour he could not remove any further items. Despite another threat by Michael Ghougassian to approach the Court for injunctive relief to prevent the auction proceeding, in fact no action was taken, and the auction ultimately concluded on 7 September 2010. The liquidator's staff allowed Michael Ghougassian and his daughter to retrieve personal items from the Property on 9 September 2010.
88On 18 November 2010, Mr Samarasinghe sent Mr Ghougassian an email requesting that he collect his goods from the storage facility, without qualification. Mr Ghougassian said that he ignored the 18 November email, that he could not do anything about it, and that he did not contact anyone about it. The liquidator cannot reasonably be criticised for not thereafter repeatedly pressing Mr Ghougassian to attend and collect the goods.
89Very shortly prior to the hearing, arrangements were made for an inspection of the goods in the storage facility on behalf of Michael Ghougassian, on 25 June 2012. A request to do so was initiated on 20 June, and these exchanges led to advice to contact the liquidator's employee Chris Brereton. This was done by email after 6 pm on Friday 22 June, and was renewed on Monday 25 June. Arrangements were made on the Monday morning, and two members of the liquidator's staff attended at the storage facility at Castle Hill. The Ghougassians' solicitor, Mr Norrie, attended; he was particularly interested in three specific boxes, one of which could not be found. In the context of the time frame in which this inspection was arranged, this cannot be seen as obstruction on the part of the liquidator. It is unrealistic to suggest that the Ghougassians were prevented on this occasion from removing their goods: their solicitor, who attended unaccompanied, was never going to collect 600 boxes. It was not put to Mr Brereton that collection, if sought, would have been refused. Affidavits sworn and served in March 2012 confirmed that the goods remained available for collection, without any requirement for substantiation.
90The liquidator's duty was, as soon as practical, to cause the Association's property to be collected and applied in discharging the Association's liabilities [Corporations Act, s 478; see also Associations Incorporation Act 1984 (NSW), s 53]. He was not entitled to treat property of others as property of the Association. However, in respect of property that was in the custody and on the premises occupied by the Association, he was entitled to insist on some proof of ownership before relinquishing any claim to it. If he sold it with notice of a competing claim, he did so at his own risk.
91There is no basis for the contention that the liquidator dealt with the chattels without proper regard to the applicants' claims. To the contrary, the liquidator and his staff gave due consideration to the applicants' position, and made substantial efforts to accommodate them. Indeed, in an effort to cooperate and as a show of good faith, where possible the liquidator removed disputed items (including computers, books and liturgical vestments) from the auction, and placed them in storage, ultimately for collection by the applicants. Although attention was given in cross-examination to the failure to verify ownership of various computers, or to establish the identity of the purchaser named on the invoices supplied by Mr Ghougassian, this was immaterial in circumstances where all computers were withdrawn from the auction and the liquidator decided to allow Mr Ghougassian to retrieve them - although he has not yet availed himself of that opportunity. Moreover, there was objective evidence that told against the claim that the majority of the disputed chattels were property of Nareg Bookshop: its accounts for the year ended June 2010 disclose "stock on hand" at cost NIL, and furnishings and fittings at depreciated value $1100.
92Complaint was also made that the liquidator failed to make an adequate inventory, or to maintain an adequate document trail, of the chattels to which the applicants made claim - in particular, the Armenian books, liturgical vestments and computers that had been located on the Property, and were removed from the auction - such that there was no evidence of what happened to any equipment that was removed from the auction. However, the items in question were removed from the auction on the basis that substantiation was no longer required, and that Mr Ghougassian could collect them; they were then stored separately, and later removed to a secure storage facility, where they remain available for collection. Further itemisation or documentation would have involved further cost. These items were of a kind that, by their nature, were likely to have been property of the School; in those circumstances it was not unreasonable for the liquidator initially to insist on substantiation of any claim that they were personal property of one of the applicants. Equally, it was not unreasonable for the liquidator later to withdraw those items from the auction and abandon his claim to them, on the basis of a commercial judgment that it was not worth pursuing. It is difficult to appreciate what the real substance of this complaint is.
93The evidence reveals no instance of the liquidator having converted any item of property of any of the applicants. Mr Ghougassian concedes that for all he knows, the books and the CDs about which he makes complaint are in the Castle Hill storage facility. If there has (inadvertently) been a conversion, in the context of the correspondence and discussions that took place prior to the on-line auction or disposal of the relevant chattels - in particular the repeated request for substantiation of the applicants' claims - and the nature of the chattels (such as books, computers and classroom furniture) being such that objectively it was likely to be property of the Association for use in its school, the liquidator has not been shown to have acted other than honestly, reasonably, and with objectivity, for the benefit of the administration and the body of persons (including creditors) interested in it.