Solicitors:
Connor & Co Lawyers (Plaintiffs)
Gavin Parsons & Associates (First, Second, Third and Fifth defendants)
File Number(s): 2017/12576
[2]
Judgment
(Ex tempore - revised 28 March 2017)
GLEESON JA: Before the court is an application by the remaining parties to these proceedings that the court make orders in accordance with Short Minutes of Order which are entitled "Without Admissions and By Consent". It is only necessary to give brief reasons explaining why I am satisfied that it is appropriate to make the proposed consent orders subject to a number of amendments which have been the subject of discussion between the bench and the legal representatives for the parties and are agreed by the parties.
The dispute the subject of these proceedings concerns the validity of the appointment of the second defendant, Brendan Fitzallen, and the third defendant, Peter Tran, as joint managing controllers of the first and second plaintiffs, PSI-Kinetix Pty Ltd and PSI Pacific Managed Services Pty Ltd. That purported appointment was made on 14 December 2016 by the first defendant, Steel-Con Holdings Pty Ltd (Steel-Con), purportedly pursuant to security interests granted by the plaintiffs to Steel-Con on 4 December 2016. The plaintiffs denied ever having agreed or given security interests to Steel-Con and commenced these proceedings on 13 January 2016.
The relief sought in the Amended Originating Process filed 31 January 2017 included removal of the purported security interests registered in the Personal Property Securities Register (PPS Register) in relation to property of both plaintiffs. Relief was also sought on a final basis restraining the first, second, third and fifth defendants from registering or causing to be registered on the PPS Register any further financing statement in respect of any security interest or purported security interest in personal property of the plaintiffs. In addition, final relief was sought restraining those same defendants from enforcing or taking any further steps to enforce the purported security interests registered on the PPS Register with registration number 2016/12040006322.
The parties have agreed to resolve the dispute on the terms contained in a letter dated 25 January 2017 from Connor & Co to Geoffrey McDonald (Ex A). Among other things the first, second, third and fifth defendants agreed to register a financing change statement removing the registration of purported security interests with registration number 2016/12040006322 from the PPS Register within one business day of that agreement. I have been informed from the Bar table by counsel for the plaintiffs, without dissent from the legal representative of the remaining defendants, that this term of the agreement has been complied with.
The remaining defendants also agreed to take a number of other steps including filing with the Australian Securities and Investments Commission a document evidencing that the second and third defendants resign as controlling managers of the plaintiffs. It is common ground that this has occurred.
It is necessary to say something briefly about the fifth defendant, Mr Garrett, who is an undischarged bankrupt. Reference was made to similar orders to the proposed consent orders here, which were made against Mr Garrett by Beach J in Treasury Wine Estates Vintners Ltd v Garrett [2016] FCA 715. In that case, the Federal Court found that Mr Garrett, among others, had engaged in similar conduct to that which was challenged in the present case, namely, causing financing statements to be registered over the property of two companies, including Treasury Wine Estates, and purporting to appoint Mr Garrett as "managing controller" of those companies.
The Federal Court made declarations that the purported appointment of Mr Garrett as managing controller of the property of the plaintiffs in the Treasury Wine Estates case was invalid and made final injunctive orders against, among others, Mr Garrett restraining him from registering or causing to be registered on the PPS Register any further financing statement in respect of any security interest or purported security interests in personal property of the plaintiffs. In addition, an order was made that if that injunctive order was breached, Mr Garrett is to remove the registration forthwith. A further order was made that Mr Garrett, among others, be restrained from enforcing or taking any further steps to enforce the purported security interests registered on the PPS Register against the plaintiff companies. Each of those injunctive orders was expressed to be "[s]ubject to further order". The consent orders agreed here are in similar terms to the orders made in Treasury Wine Estates.
The court has power under s 66 of the Supreme Court Act 1970 (NSW) at any stage of the proceedings by interlocutory or other injunction to restrain any threatened or apprehended breach of contract or other injury. The plaintiffs point to this source of power in the present case as a basis upon which the court may grant final injunctive relief against the remaining defendants, emphasising that the defendants have agreed to the relief set out in the proposed Short Minutes of Order.
Having regard to the history of this matter including, the circumstances in which the second and third defendants were purportedly appointed joint managing controllers of the property of the plaintiffs pursuant to purported security interests given by the plaintiffs as outlined in the affidavit of Mr Silva sworn 13 January 2017, the acknowledgement by the remaining defendants that such appointment was invalid, and the agreement of the remaining defendants to register a financing change statement on the PPS Register and to take the other steps set out in the letter of 25 January 2017 referred to above, I am satisfied that it is appropriate to make the orders sought including the final injunctive relief, subject to two amendments.
The first amendment is that proposed order 1, as drafted, sought injunctive relief against any related body corporate (within the meaning of s 50 of the Corporations Act 2001 (Cth)) of the first, second, third and fifth defendants. There are two difficulties with that order. One is that the "related party" entities the subject of that proposed order are not parties to the proceedings. The other is that only the first defendant is a corporation. The second, third and fifth defendants are individuals and accordingly the definition of "related bodies corporate" in s 50 of the Corporations Act cannot apply to them. Ultimately the parties agreed not to seek that part of the injunctive relief.
Proposed orders 3 and 4 also contain reference to "any related body corporate". The parties are in agreement that those references should also be deleted from the proposed orders.
The second matter is that proposed order 2, as drafted, would require each of the remaining defendants to take steps to remove forthwith any registration made on the PPS Register in breach of order 1. The parties were in agreement that what is intended by order 2 is that the second defendant, Mr Fitzallen, being the only defendant who is a director of the first defendant, Steel-Con Holdings Pty Ltd, be the relevant person on whom an obligation is imposed by court order to rectify any breach of order 1.
For the above reasons, I make the following orders, without admissions, by consent:
1. Subject to further order, the first, second, third and fifth defendants by themselves, their servants and agents each be restrained from registering or causing to be registered on the Personal Property Securities Register any further financing statement in respect of any security interest or purported security interest in personal property of the plaintiffs.
2. If a registration is made on the Personal Property Securities Register in breach of order 1, the second defendant is to remove it forthwith.
3. The first, second, third and fifth defendants by themselves, their servants and agents each be restrained from enforcing or taking any further steps to enforce the purported security interests registered on the Personal Property Securities Register with registration number 2016/12040006322.
4. Subject to further order, the first, second, third and fifth defendants by themselves, their servants and agents each be restrained from:
1. lodging with the Australian Securities and Investment Commission any notice of the purported appointment of any of the second, third and fifth defendants as "managing controller" of the plaintiffs;
2. seeking to act as a "managing controller" of the plaintiffs or any of them, or procuring further appointment as such.
1. The plaintiffs and the first, second, third and fifth defendants pay their own costs of and associated with these proceedings.
[3]
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: 30 March 2017