Mair v Rhodes & Beckett

For the Administrators of Rhodes & Beckett Pty Ltd (Administrators Appointed) and Herringbone Pty Ltd (Administrators Appointed)

1 There are two applications made by the plaintiffs (the Mair parties) in what are referred to in these proceedings as the Oppression Proceeding (S CI 2015 01745) and the Termination Proceeding (S CI 2015 01743). By one set of applications issued on 14 February 2017, and said to be urgent, the Mair parties seek the provision of certain information from various parties, and by another application by Summons dated 14 February 2017 they seek orders for contempt pursuant to Order 75 of the Supreme Court (General Civil Procedure) Rules 2015 (the Rules).

2 The Oppression and Termination Proceedings were heard together in April 2016.

3 Mr Nelson Mair (Mair) is the plaintiff in the Termination Proceeding and Rhodes & Beckett Pty Ltd (R&B) (now in Administration) is the defendant in that proceeding and R&B, Herringbone Pty Ltd (Herringbone), Rhodes & Beckett Group Pty Ltd (R&B Group), van Laack Australia Holdings Pty Ltd (vLAH) and van Laack GmbH (vLG) are plaintiffs by a counterclaim directed to Mair, Luxury Retail No 1 Pty Ltd, Luxury Retail Group Pty Ltd and Balnaring Holdings Pty Ltd, the defendants by counterclaim.

4 Balnaring Holdings Pty Ltd (as trustee of the Balnaring Trust) (Balnaring) is the plaintiff in the Oppression Proceeding (Mair is the sole shareholder and Director of Balnaring) and vLAH, R&B and R&B Group are the defendants in that proceeding.

5 The evidence in both proceedings concluded on 27 April 2016, and closing submissions concluded on 11 June 2016 and the parties finalised the Court Book in the proceedings on 28 June 2016 after applications and Court rulings as to the content of the Court Book. The Court's judgment was reserved.

6 In summary, the urgent applications now made by the Mair parties in these proceedings[1] are:

(a) an application made 14 February 2017 (pursuant to liberty to apply in these proceedings) for various orders for relief. These applications are made in both the Oppression Proceeding and in the Termination Proceeding. The various orders sought, in general terms are that:

(i) vLG be joined as a party to the Oppression Proceeding and that the Further Amended Points of Claim be amended to include the claim set out in schedule 1 to the Mair parties' Outline of Joinder and Injunction Submissions dated 15 February 2017;

(ii) the van Laack parties be directed to provide specified financial information to the Mair parties;

(iii) R&B be enjoined from selling the R&B Business other than on 72 hours' notice to the Mair parties;

(iv) Herringbone be enjoined from selling the Herringbone business other than on 72 hours' notice to the Mair parties;

(v) vLAH, R&B Group and R&B be restrained from taking any steps to pay, settle or otherwise compromise debts described in various notices of assignment dated 17 January 2017 and purportedly given in accordance with s 134 of the Property Law Act 1958 (Vic); and

(vi) vLAH, R&B Group, R&B and Herringbone be restrained from making payments to vLG.

(b) applications for orders against vLG, vLAH and Mr Christian von Daniels (von Daniels) for alleged contempt of Court (Contempt Application). This application is made in both the Oppression Proceeding and in the Termination Proceeding.

7 Balnaring holds 20% of the shares in R&B (but does not hold any shares in Herringbone). Balnaring also holds 20% of the shares in R&B Group. As noted above, Mair is the sole shareholder and director of Balnaring.

8 VLG is the sole shareholder of vLAH, which is the ultimate holding company of Herringbone and the owner of the remaining 80% of the shares in R&B and R&B Group. VLG is a wholly-owned subsidiary of Toga Beteiligungsgesellschaft mbH (Toga).

9 On 5 May 2016, a charge bearing PPSR registration number 201605050021438, and granted by R&B, was registered on the PPSR. The secured parties under that charge are van Laack GmBH and van Laack Singapore Pte Ltd (vLS). This charge was registered during the course of the trial of these proceedings, in the period between the giving of evidence and the hearing of final submissions.

10 On 20 June 2016 a charge bearing PPSR registration number 201606200074598, and granted by R&B, was registered on the PPSR. The secured parties are van Laack GmBH and van Laack Singapore Pte Ltd. This charge was registered during the course of these proceedings, around the time that the parties were filing closing submissions.[2]

11 On 12 January 2017, as a result of information coming to their attention about R&B failing to pay its debts when due and payable, Patron Legal (solicitors for the Mair Parties) sought copies of the books and records of the R&B companies and Herringbone.

12 On 17 January 2017 Mills Oakley informed Patron Legal that they were not instructed to act for R&B, R&B Group, Herringbone, Boston Brothers Pty Ltd (BB), Baubridge & Kay Pty Ltd (B&K) or vLAH in relation to the matters set out in the Patron Legal letter of 12 January 2017.

13 On 17 January 2017 Toga purported to assign debts owed to it to each of vLAH, R&B, B&K, BB and Herringbone to vLG. Each debt owed to Toga was unsecured. vLG is a secured creditor of each of the debtor companies.

14 On 20 January 2017 vLG issued notices of default and demands for rectification to R&B and Herringbone. In the case of R&B, the demand was for $4,194,521.98. In the case of Herringbone, the demand was for $5,318,218.91. Neither R&B nor Herringbone remedied the default.

15 On 23 January 2017, and despite its communication of 17 January 2017, Mills Oakley wrote to Patron Legal attaching copies of the notices of demand and notices of assignment referred to in paragraphs 4 and 5 above.[3]

16 Mair resigned as a Director of the R&B Companies and Herringbone on 30 January 2017 in response to becoming aware of the demands and notices of default issued by vLG on 30 January 2017 and in circumstances where he, and his corporate alter-ego Balnaring, have, since final submissions in these proceedings, continued to be excluded from the management of the companies.

17 On 30 January 2014 Patron Legal, considering Mills Oakley's correspondence of 17 January 2017, corresponded directly with von Daniels and Dr Sebastian Potyka (Potyka) in their capacity as directors of R&B seeking information about R&B's failure to make payments on time and requesting access to the books and records of the companies: JF-5. No response has been received from von Daniels.

18 On 31 January 2017 Mills Oakley informed Patron Legal that it acted for vLG, vLS and Potyka. Mills Oakley stated, in correspondence of 14 February 2017, that they continue to act for vLG, vLAH, R&B Group and referred the Mair Parties to Hall & Wilcox as solicitors for the companies in administration.

19 A notice of change of practitioner was received from Hall & Wilcox on 15 February 2017 notifying that the Administrators have appointed new lawyers for R&B and Herringbone.

20 The Administrators are currently offering the businesses under administration for sale as going concerns. Indicative offers are to be made by prospective purchasers by 17 February 2017 and the Administrator's program for the realisation of a sale price for these businesses is as follows[4] -

Deadline for submission of indicative (non-binding) offers

Shortlisted parties invited to conduct further due diligence

21 On 6 February 2017, Bruno Anthony Robert Secatore, Luke Christopher Targett and Daniel Peter Juratowitch (the Administrators), each of Cor Cordis, Chartered Accountants, were appointed as voluntary Administrators of:

22 The appointment of the Administrators was made by vLG and vLS under section 436C of the Corporations Act 2001 (Cth) (the Act). vLG and vLS are secured creditors of both of the companies.

23 By proposed Order 4, the Mair parties seek to compel vLAH to file and serve an affidavit which provides certain specific information in relation to:

(a) the debt owed by the R&B Group and Herringbone to vLG;

(b) detail about the circumstances in which that debt increased in the period April 2015 to 15 February 2017;

(c) detail about each debt described in certain notices of assignment dated 17 January 2017 and details of any security held by Toga prior to the assignment of debt; and

(d) details of any consideration in respect of the said assignments and details of all payments made to vLG under each of the said assignments.

24 At the hearing of the Mair parties' applications on 16 February 2017, the Mair parties indicated that at present they did not press the orders proposed in his draft orders 4(c)(i) and (ii) and 4(d).

25 The van Laack parties opposed the making of orders 4(a), (b), (c)(iii), (iv) and (v). The Administrators' position is that they do not oppose such orders being made.

26 In support of the above Provision of Information orders sought from vLAH the Mair parties submit that:

(a) They require the essential information sought which is necessary for those parties to make informal decisions about whether their rights are being improperly, oppressively or otherwise unfairly prejudiced.[5]

(b) There is evidence that there has been a very substantial increase in the size of the secured debts owed by R&B and vLAH to vLG between April 2015, about the time Mr Mair's employment with R&B came to an end and the date of these applications by the Mair parties. At April 2015 the R&B Group and Herringbone were collectively indebted to vLG in the sum of approximately $33m.[6] Whereas the present value of these debts exceeds approximately $50m, with no obvious explanation of that increase.[7]

(c) The R&B Group and Herringbone have a total indebtedness to their secured creditor vLG of in excess of $50m, however those companies own assets are valued at a small fraction of that sum. Further, R&B defaulted on the demand of 20 February 2017, for the sum of only slightly more than $4 million and the holding company, vLAH has no assets other than its shares in the two trading companies R&B and Herringbone which are being administered in insolvency.[8] The debts assigned to vLG are the subject of the notices of assignment.[9]

(d) It is suspicious that the Mair parties were not informed or consulted about the charges granted by R&B in favour of vLG or vLS.

(e) The granting of the charges referred to[10] by R&B, was prima facie in breach of Clauses 5.6 and 6(a)(iv) of the Share and Unit Holders Agreement (SUHA) dated 1 August 2012[11] between vLAH and Mair and Balnaring and vLAH.

(f) The Mair parties do not know what debts are secured by the said Charges or what the terms of the vLG securities are, although the Mair parties soon after becoming aware of the Charges have sought such information from the van Laack parties.[12]

(g) The Mair parties seek the subject information so as to clarify the above matters, in turn so that they can make an informed decision about whether the said securities were validly granted.

(h) Mair, up to 30 January 2017 was a director of R&B and Herringbone and Balnaring is also a 20% shareholder in both the companies in administration.

(i) Until the date of his resignation as a Director of R&B and Herringbone Mair was entitled, pursuant to s 198F of the Corporations Act, to have access to the books of those companies.

(j) The said assignments occurred on the same day as vLG issued its demands and notices of default to R&B and Herringbone and only 13 days prior to vLG appointing administrators to R&B and Herringbone.

(k) The effect of the said assignments is to substantially increase the notional indebtedness of the R&B group and Herringbone to vLG, in circumstances where there has been no explanation of why the assignments of either May and June 2016 and the debt assignment on 17 January 2017 occurred or were commercially necessary.

(l) The Mair parties are, in the context of their claims in this litigation, and the above circumstances, concerned about the conduct of the R&B and Herringbone businesses prior to the administration, and are concerned about and require clarification as to whether the transactions referred to above constitute:[13]

(i) the potential destruction of the subject matter of the litigation;

(iii) voluntary conveyances made with the intention of defeating the Mair Parties as creditors (s 172 of the Property Law Act 1958 (Vic)); and

(iv) conduct calculated to avoid the consequences of a judgment in favour of the Mair Parties.

(m) The Mair parties also contends that the provision of the information which they seek will cause no prejudice to the van Laack parties, but by contrast without access to the information sought, the Mair parties may be severely prejudiced by being unable to appreciate the true position in relation to the above transactions by R&B and Herringbone and the van Laack parties and as a result will be unable to seek appropriate court intervention, if justified.

(n) Subsequent to the completion of the trial of these proceedings in about mid-2016, Mair has been excluded from the management of the companies now under administration, and despite the request for certain specific financial information, as detailed above, has not been provided with access to the books and records of the companies now under administration.

(o) The Mair parties contend that for the above reasons they should be provided with the information sought in proposed order 4 by Directors affidavit, and should also be provided with the various accounts detailed in proposed order 5 by vLAH.

27 The Mair parties submit that they have no desire to impede the administration of R&B and Herringbone. Further they emphasise in their submissions that the Mair parties' cast no doubts or aspersions as to the competence and the independence of the Administrators.[14]

28 Although the Mair parties also submit that they do not wish to stop the Administrators selling the companies in administration, they assert that they should be given notice of any proposed sale, including the terms of the proposed sale and the identity of the prospective purchaser or purchasers.[15]

29 The Mair parties however assert by their material that they have a concern that the potential sale of the business might be for less than its value.[16] Further the Mair parties' material also conveys a concern by Mair that were the business(es) to be sold, the sale proceeds might be directed to satisfaction of debts that are not in fact secured debts.[17]

30 The Mair parties' submission is that the orders it seeks for there be a 72 hour notice of a proposed sale, including the details of the terms of sale and purchaser(s), is the minimum intervention necessary to preserve the subject matter of this litigation for a short period to permit Mair, who the Mair parties hope will soon be armed with the other information sought, to make informed decisions about whether to seek court intervention in relation to such sale or sales.

31 The Mair parties assert that the Administrators' concerns about the order sought jeopardising a potential sale of the businesses are illusory and further that the prejudice to the Mair parties outweighs any speculative prejudice.

32 The Mair parties' submissions convey their concerns that the potential fruits of a judgment in the Mair parties' favour be protected against a situation where the defendants and plaintiffs by counterclaim, R&B and Herringbone, are impoverished or their cash assets are somehow sent offshore so as to defeat any judgment.

33 The Mair parties' submit that its anxiety about preserving the fruits of any potential judgment in this proceeding are heightened by the recent said assignments and Notices of Demand calling up the van Laack parent company loans.

34 The Mair parties also expressed a concern that any sale of the business under administration would include an ongoing business relationship including supply, and alike, from the van Laack parent group, including perhaps via Singapore, whereby the sale proceeds received by the Administrators will be defrayed in some way by supply contract offsets.

35 The Mair parties submit that the cycle of assignments involving van Laack Germany being assigned debts from Toga, which was an unsecured creditor, amounts to a "round-robin" of transactions which the Mair parties consider is seeking to turn unsecured debt into secured debt.

36 The Mair parties also identify what they say are significant trading losses within the R&B Group and Herringbone since Mair's departure.

37 In relation to this aspect of the Mair parties' assertions, the Mair parties' sought to obtain from the Administrators an Information Memorandum in relation to a sale of the R&B and Herringbone businesses.[18] I rejected the Mair parties' call for the production of this because in my view that document appears to be in the nature of a secondary document recently produced by the Administrators and unlikely to be as probative and material as the books and records of the companies under administration which are part of the focus of the Mair parties' application. Furthermore, I accept the Administrators' submissions that the Administrators' Information Memorandum is highly sensitive and confidential. I am also persuaded that, as was submitted by Mr Galvin QC, Senior Counsel for the Administrators, the Mair parties' attempted call for that document was in the nature of a fishing expedition.

38 For these reasons at the hearing on 16 February 2017 I rejected the Mair parties' call for the Information Memorandum.

39 The Mair parties also argued that their access to the documents sought was able to be founded on their potential to pursue claims based on unfair preferences somehow being created by the van Laack parties dealings, and or to seek to set aside tainted transactions pursuant to s 172 of the Property Law Act 1958 (Vic) as voidable transactions pursuant to s 588FA of the Act.

40 The Mair parties submit on the basis of their argument about prejudice already referred to, and on the basis of the serious impact on the Mair parties capacity to enforce any judgment in their favour that they should be granted the injunctive orders sought which they contend will give rise to "the minimum intervention necessary" and for "a short period". The Mair parties also point to the difficulty which they contend will arise if the relevant moneys are paid to overseas entities.

41 The van Laack parties position in relation to the Mair parties' proposed orders is as follows:

(ii) submit that order [3] is a matter for the Administrators;

(iii) oppose order [4] because no proper basis for this order has been identified;

(iv) oppose order [5] because no proper basis has been shown for such an order to be made. Further the van Laack parties submit that the order relates in part to a request for documents from entities which are not parties to the proceeding, namely Bainbridge & Kay Pty Ltd and Boston Brothers Pty Ltd, and entities in respect of which neither Mair nor Balnaring enjoys the relationship of director or shareholder. The van Laack parties also point out that insofar as the requested documents related to R&B, that entity is now under Administration and the provision of the requested documentation is a matter for the Administrators;

(v) oppose order [6] and [7] principally on the basis that the Mair parties have not identified a legal or equitable basis to be determined at trial in relation to these orders and therefore no interlocutory relief should be available;

(vi) oppose orders [8], [10] and [11] on the bases which are the same as those founding their opposition to orders [6] and [7]. The van Laack parties also submit that questions of whether the assigned debts are valid and payable as secured debts is a matter for the Administrators;

(vii) in relation to proposed order [9], submit that this is a matter for the Administrator; and

(viii) oppose proposed order [12] and raise the same arguments as earlier referred to in relation to proposed orders [8], [10] and 11].

42 In oral argument the van Laack parties emphasised that the proposed Balnaring undertaking as to damages is inadequate and out to stand in the way of any injunctive relief to the Mair parties.

43 The van Laack parties agreed that there was nothing suspicious per se about any ongoing supply by the German companies, which had supplied the companies under administration, very beneficially, for many years.

44 The van Laack parties refute that in this matter it is accurate for the Mair parties to submit that it is seeking to preserve the subject of litigation where the van Laack parties contend no property is being "fought over" in species and the case is about money only, and the advent of an unexpected insolvency does not give standing to obtain orders to in effect "look over the Administrators' shoulder".

45 The van Laack parties further argue, specifically in relation to proposed orders [4] and [5], that for the Mair parties to be entitled to coercive orders for the provision of private material, they would need to establish a cause of action on a prima facie basis, and the van Laack parties submit this permeates the applications for injunctive relief, but it also is important in relation to proposed orders [4] and [5].

46 The van Laack parties argue that by suggesting that the Mair parties may be able to pursue any claims in relation to an unfair preference is illusory because such a transaction must be between the relevant company and a creditor. Further the van Laack parties point out that if there is a problem with the securities pursuant to which payment out of the companies under administration are sought to be made, that is a matter to be investigated and determined by the Administrators and would not justify Court intervention.

47 The van Laack parties also submit that when the rights and obligations set out in the relevant securities[19] are understood there is nothing suspicious in relation to the assignments referred to by the Mair parties.

48 The Administrators submit in relation to the injunctive relief sought, that the Mair parties do not have standing to oppose the Administrators' exercise of their powers of sale. The Administrators point to their role and powers under the provisions of Part 5.3 of the Act and in particular section 437A to D of that Act.

49 The Administrators submit that there is no basis for a suggestion that the Administrators will act otherwise than in accordance with their statutory duties.

50 The Administrators also point out in their submissions that the Mair parties make no claim to any proprietary interest in any of the assets of the subject companies including the businesses under administration.

51 Accordingly, at best, the rights of the Mair parties are limited to those of an unsecured creditor, and therefore it would be of no utility to so require the Administrators to notify of a proposed sale.

52 In summary the Administrators' submit that the Mair parties have on their applications for injunctions failed to show that there is a serious issue to be tried.

53 The Administrators submit that being required to provide information to Mair or Balnaring, who are separately in business in closely related areas of endeavour, might jeopardise any potential sale by the Administrators and that a failure of a potential sale has the potential to cause very substantial loss and damage to the creditors of the companies under administration. This is put by the Administrators as the principle argument as to why the balance of convenience is against orders [6] and [7] being granted.

54 The Administrators also question the extent of comfort provided by any undertaking as to damages proffered by Balnaring.

55 The Administrators oppose orders [9] and [12] of the Mair parties' proposed orders insofar as such orders would interfere with the Administrators' power to make or authorise payments on behalf of R&B, including payments which might be due to a secured creditor.

56 The Administrators otherwise raise no objection to the Mair parties' proposed orders [1], [2], [3] (provided that that order is revised to require further leave to enforce any order ultimately made in this proceeding), [4], [8], [10] and [11]. In relation to proposed order [5] the Administrators express concerns and point to clarification which has been sought by their lawyers as to the basis upon which the Mair parties seek access to the R&B accounts.

Conclusions - Mair parties applications for information - Orders [4] and [5]

57 In my view the broad powers of the Court, including the court's inherent powers to ensure that the potential fruits of the judgment being pursued by the Mair parties is not ultimately unsatisfied,[20] provide sound basis in the circumstances of these proceedings and the subject applications to order the provision of the information sought by the Mair parties in Orders 4(a), (b), (c)(iii), (iv) and (v) and 5(a), (b), (c), (d) and (e).

58 The above information, is in respect of R&B and Herringbone, information to which Mair, as a director of R&B and Herringbone until the end of January 2017, and indeed for a period thereafter, was entitled under s 198F of the Act.

59 Mair is also in my view entitled to the documents I shall order be provided, pursuant to the broad terms of Clause 2.2, 5.6 and 6(a)(4) and (5) of theSUHA[21] between vLAH and Mair and Balnaring and vLG. Clauses 2.2, 5.6 and 6(a)(4) and (5) of the SUHA are in the following terms -

2.2 Shareholder undertakings

Each Shareholder and Unitholder agrees that it will:

(b) be just and faithful in all activities and dealings with the Group and each other Shareholder and Unitholder; and

5.6 Associate Transactions:

Without limiting the duties imposed on Directors by law, each Director must disclose to the other Directors details of any relationships that are proposed to be entered into by any Associates of the Director (or the Shareholder that he or she represents) with any Group Member.

6 Resolution of Deadlocks:

(a) The matters set out in this clause 6(a) require a unanimous resolution of the Directors of each of the Boards. If, having regard to the terms of this Agreement, a Board is unable to pass a unanimous resolution on any of the following issues within 30 days after the date that the relevant matter is first proposed at a Board meeting by a Director appointed by van Laack (Deadlock Issue):

(4) incurring material indebtedness or providing material guarantees;

(5) any reconstruction of an R&B company.

60 Furthermore, I consider the Mair parties' above concerns to be reasonably founded as a result of the assignment transactions earlier referred to and what appears to be the burgeoning debt of the companies under administration and the apparently declining trading position of those same companies coupled with the apparent attempts during trial (undisclosed to the Mair parties) and very recently to rearrange the securitisation of the debts of the companies under administration.

61 Given these circumstances and given also that the corporate parties effected by the orders I propose to make are all parties to the counterclaim proceedings in the Termination proceeding and in the case of vLAH, R&B and R&B Group are parties to the Oppression Proceeding, I consider that it is appropriate and just and not materially inconvenient to the respondent parties to these applications to require the provision of the information sought in the Mair parties' proposed orders referred to in paragraph [57] above.

62 In my view it is also clearly convenient to make such orders, given that the consequences to the Mair parties of depriving them of the information sought which may have the effect of disabling them in relation to their capacity to adequately assess their position and legal options and lead to any ultimate judgment remaining unsatisfied,[22] whereas to so order, in my view, gives rise to no material inconvenience or prejudice to the van Laack parties.[23] Accordingly, it is just and convenient to make these orders in relation to the provision of financial information and to do so in an endeavour to ensure that the Court's processes are not frustrated.

63 On the injunction applications the plaintiffs have failed to satisfy me that the injunctions sought, both restrictive and mandatory, are based on any prima facie legal or equitable rights which entitle the Mair parties to obtain orders in respect of the 72 hours' notice sought or orders to restrain the payments and assignments sought to be circumscribed.

64 The Mair parties do not seek to contradict or limit the statutory powers of the Administrators in respect of the assets and undertaking of the businesses under administration. In argument it was not disputed that the Administrators' have very broad powers, including a clear power to dispose of the assets of the businesses under administration, as and when they see fit.[24]

65 Neither, in my view, have the Mair parties established any prima facie legal or equitable basis for final or interlocutory relief against, or in relation to vLAH or R&B or the R&B Group in the nature of any entitlement to interdict, restrain or set aside any steps in relation to the various assignments the target of the relief sought in orders [8]-[12] of the Mair parties' proposed orders.

66 Furthermore, I weigh the Mair parties' reference to its concerns about the conduct of any sale of the assets under administration and its concerns in respect of the proper application of any proceeds of sale to the satisfaction of unsecured debts very lightly in the balance because there is no evidence or cogent submission which in my view provides any appreciable weight to such suggestions. Indeed the Mair parties own oral submissions eschewed any suggestion of impropriety or incompetence on the part of the Administrators. In the result, I consider that I should evaluate the Mair parties' application in this regard, confidently accepting that the Administrators will in all respects fulfil their statutory duties, including in respect of any sale process and including in relation to their evaluation of any secured and unsecured debts and in so doing will also ensure that any disbursement of the realisation of the assets of the companies under administration is lawful and appropriate.

67 It is a necessary concomitant of the restraints and mandatory injunctions sought by the Mair parties that they proffer an appropriate undertaking as to damages to protect the defendants in the event that any injunction granted was ultimately found to be unjustified.

68 On these applications the Mair parties' primary materials and submissions failed to identify Balnaring's capacity to meet the undertaking proffered in the Mair parties' proposed orders. Neither the Mair parties' written submissions dated 15 February 2017, nor the Mair parties' affidavit material in support of these applications sought to address the issue of capacity to meet any undertaking notwithstanding that the van Laack parties had earlier in correspondence, and latterly in their written submissions dated 15 February 2017, challenged Balnaring's capacity to support any undertaking.[25]

69 Furthermore, by its oral submission on these applications, Senior Counsel for the van Laack parties again challenged the unsubstantiated capacity of Balnaring to provide an adequate undertaking as to damages. Those submissions were not responded to by the Mair parties at the hearing of their applications.

70 Here, were the Mair parties' injunctive relief to be acceded to, in particular the mandatory injunction to provide 72 hours' notice of sale and related details concerning the disposal of the business or businesses under administration, there is, in my view, a cogent and real risk, supported by the evidence filed by the van Laack parties and the Administrators, that the Administrators' sale process may be compromised including by potential purchasers being discouraged or put off the purchase of the businesses under administration with potential consequential loss to the van Laack parties and indeed other creditors including the Mair parties.[26]

71 I consider that the Mair parties' failure to satisfy me that Balnaring is able to provide an adequate form of undertaking is in itself fatal to the injunctive relief sought by the Mair parties on these applications.

72 On the injunction applications, in addition to my conclusions concerning the unsubstantiated Balnaring undertaking which I consider in itself to be fatal to this body of relief sought by the Mair parties, I am far from satisfied, even on the Mair parties' submissions, that there is any apparent risk that the Administrators will do otherwise than their statutory duty. Accordingly, debts of the companies under administration will be treated as their status requires and the Administrators will appropriately scrutinise all relevant transactions, including in respect of securities.

73 As an ordinary unsecured creditor I am also unpersuaded that the Mair parties have standing to obtain orders of the type sought in proposed orders [6]-[12] which would be likely to constrain and interfere with the Administrators' statutory duties and power.

74 Furthermore, I also consider that there is, on the balance of convenience, a real and unacceptable risk that by acceding to orders [6] and [7] concerning the prospective sale of the subject businesses, the sale of those businesses could be jeopardised and the creditors thereby disadvantaged.

75 These are in my view sufficient reasons, in the urgent circumstances of these applications, to reject the Mair parties' proposed injunctive relief.

76 For the reasons, I shall make the following orders in relation to the application by way of liberty to apply.

1. Pursuant to rule 9.06(b) of the Supreme Court (General Civil Procedure) Rule 2015 van Laack GmbH be joined as the fourth defendant in proceeding S CI 2015 1745.
2. The plaintiff has leave to amend its points of claim to include a claim against van Laack GmbH as guarantor of the first defendant's payment obligations under the Share and Unit Holders Agreement dated 1 August 2012 by filing and serving amended points of claim together with the Originating Process amended to reflect the joinder in paragraph [1] above on or before 4.00pm on 22 February 2017, substantially in the form annexed to the plaintiff's submissions on the application for joinder dated 15 February 2017.
3. By 4.00pm on 1 March 2017 van Laack GmbH file and serve its Defence to the plaintiff's amended points of claim.
4. The hearing and determination of the matters the subject matter of the amended and responsive pleadings referred to above be deferred until a date to be fixed by the Court after the delivery of judgment in the Oppression Proceeding.

Proceedings S CI 2015 1743 and S CI 2015 1745 [Injunctive relief]

1. Pursuant to s 440D of the Corporations Act 2001 (Cth) the plaintiffs in each proceeding have leave to proceed against Rhodes and Beckett Pty Ltd (Administrators Appointed).
2. Save subject to further specific leave of the Court, the plaintiff shall not enforce any order made against Rhodes & Beckett Pty Ltd (Administrators Appointed)

1. By 4.00pm on 2 March 2017 van Laack Australia Holding Pty Ltd by its directors serve on the plaintiff an affidavit as to the following matters:

(a) the current value of the debt owed by the Rhodes & Beckett Group and Herringbone Pty Ltd (Administrators Appointed) to van Laack GmbH;

(b) the circumstances in which the debt described in (a) above has increased in the period April 2015 to 14 February 2017;

(c) details of each debt described in the said notices of assignment dated 17 January 2017 to van Laack Australia Holdings Pty Ltd and Rhodes & Beckett Pty Ltd (Administrators Appointed) including:

(i) the security, if any, held by Toga Beteiligungsegesellschaft mbH prior to the assignment of the debt; and

(ii) whether the debts were assigned for consideration, and, if so, details of that consideration; and

(iii) details of all payments made to van Laack GmbH under each of the assignments.

Provision of accounts

1. By 4.00pm on 27 February 2017 van Laack Australia Holdings Pty Ltd give the plaintiff copy of:

(a) the end of year accounts for the 2016 financial year, whether audited or not; and

(b) the management accounts as at 6 February 2017

for each of:

(c) van Laack Australia Holding Pty Ltd

(d) Rhodes and Beckett Group Pty Ltd;

(e) Rhodes and Beckett Pty Ltd.

1. The plaintiff pay the Administrators' costs of and associated with the plaintiff's applications, made by way of liberty to apply, on a standard basis such costs to be taxed and paid forthwith.
2. The costs of the plaintiff and the third, fourth and fifth plaintiffs by counterclaim (in proceeding S CI 2015 1743) and the plaintiff and the first, third and fourth defendants (in proceeding S CI 2015 1745) be reserved.
3. The application for the orders in paragraph 8 to 12 of the plaintiffs' proposed orders is adjourned sine die.
4. The parties have liberty to apply.

78 At the hearing of the Mair parties' applications on 16 February 2017 the Mair parties and the van Laack parties and von Daniels agreed on the form of orders set out in sub-paragraph A below and, after short argument I ruled on the interlocutory timetable in the Contempt Proceedings set out in B below. I shall therefore make the following orders in the Contempt applications -

1. Until further order, or unless required by law, Christian von Daniels, van Laack GmbH and van Laack Australia Holdings Pty Ltd, each undertake to the Court not to make or to permit any of their servants or agents to make, any further public statement that, to the effect or carrying the imputation, that Mr Nelson Mair,

(a) engaged in criminal behaviour;

(b) falsified accounts, in particular balance sheets; and

(c) has engaged in tax evasion.

1. Timetable
   1. By 4.00pm on 17 March 2017, the respondents file and serve any affidavit material upon which they wish to rely.
   2. By 4.00pm on 24 March 2017, the plaintiffs file and serve any affidavit material in reply and an outline of submissions.
   3. By 4.00pm on 31 March 2017, the respondents file and serve an outline of submissions.
   4. The matter be listed for further directions on Friday, 7 April 2017 at 10.00am.
   5. Costs reserved.

SCHEDULE OF PARTIES TO THE TERMINATION PROCEEDING

VAN LAACK AUSTRALIA HOLDINGS PTY LTD (ACN 159 334 460)

SCHEDULE OF PARTIES TO THE OPPRESSION PROCEEDING

VAN LAACK AUSTRALIA HOLDINGS PTY LTD (ACN 159 334 460)

[1] Urgency arises because amongst other very pressing circumstances relevant assets of R&B and Herringbone, now under administration and the subject of injunctions sought by the Mair parties, are being realised by the Administrators with indicative offers from prospective purchasers due to be submitted on 17 February 2017; see paragraph [20] below.

[2] The Mair parties' initial proposed Orders in 4(d) relating to the 5 May 2016 and 20 June 2016 assignments were not pressed at the hearing on 16 February 2017 (T19.20-24).

[3] Affidavit of James Francis, 9 February 2017, Exhibit JF-3.

[4] Affidavit of Luke Christopher Targett, 15 February 2017, [15].

[5] The Mair parties in substance contend that they may ultimately be entitled, in relation to purported transactions which amount to unfair preferences or which fall within s 172 of the Property Law Act 1958 (Vic) [paragraph 26(l) of these Reasons], to oblige a Receiver or Administrator or Liquidator to disgorge van Laack assets which were wrongly alienated to related corporate parties.

[7] The Aide Memoir provided by the Mair parties during argument on 16 February 2017 entitled "van Laack Australia Debts owed by vLG Companies" records debt levels at 20 January 2017 as follows: Herringbone $24,416,996 and R&B $17,754,974, Exhibit "JF-3", a total debt for those companies of about $42m.

[9] Affidavit of James Francis, 9 February 2017, and the charges granted by R&B to vLG and vLS in 2016.

[10] Charges PPSR registration number 201605050021438 dated 5 May 2016 and PPSR registration number 201606200074598 dated 20 June 2016, "JF-8" and "JF-9" to the affidavit of James Francis, 9 February 2017.

[12] Affidavit of James Francis, 9 February 2017, [3]-[4], Exhibits "JF-1" (pp 10-12), "JF-2" and "JF-5".

[16] Affidavit of James Francis, 9 February 2017, [24].

[18] Affidavit of Luke Targett, 15 February 2017, [6(d)].

[19] Affidavit of Arial Borland, 15 February 2017, Exhibit "ACB-8".

1. [20] Rule 37A.01.15; Cardile & ors v Led Builders Pty Ltd [1999] HCA 18; 198 CLR 380 at [40]- [43]; JSC Mezhdunarodniy Promyshlenniy Bank & Anor v Pugachev & Ors [2015] EWCA (Civ) 139; 2015 WL 685554 at [10]-[15]; the Mair parties' claims including those referred to at [26(a)] and [26(l)] of these Reasons.

[22] Consideration of minimising the risk of injustice, Bradto Pty Ltd v State of Victoria [2006] VSCA 89; (2006) 15 VR 65 at [35].

[23] It was not submitted that provision of the financial information sought by the Mair parties would give rise to any detriment or possible loss and damage to the van Laack parties.

[24] Corporations Act 2001 (Cth) , s 437A-D.

[25] van Laack parties' written submissions dated 15 February 2017, [33] and Affidavit of Arial Borland, 15 February 2017, [20] and [22]-[26] and Exhibit "ACB-13".

[26] Affidavit of Arial Borland, 15 February 2017, [25]; Affidavit of Luke Targett, 15 February 2017 [19]-[21].