Parbery v Nauru Phosphate Royalties Trust [2013] NSWSC 489 | Case summary

Supreme Court of NSW|2013-01-29|Before: Lindsay J

FUNDS IN COURT 1The Court presently holds "in court" funds totalling approximately $85 million paid into court by the plaintiffs (Stephen James Parbery and Mark Julian Robinson) as receivers and managers of: (a) Nauru Phosphate Royalties Trust; (b) Randwick Nominees Pty Limited ACN 076 061 035; (c) Central Pacific (Downtowner) Pty Limited ACN 061 231 614; (d) Spencer Investments Pty Limited ACN 007 020 555; (e) Ronsi Business Pty Limited ACN 078 865 451; and (f) Ronsi Holdings Pty Limited ACN 078 865 406, collectively described as "the Nauru Entities". 2The Nauru Phosphate Royalties Trust, according to an affidavit sworn by its secretary (Paul William Bannon), is a statutory corporation incorporated pursuant to the Nauru Phosphate Royalties Act 1968 (Nauru). 3The funds paid into court by the plaintiffs were paid in (pursuant to Part 4 (ss 95, 98 and 99) of the Trustee Act 1925 NSW and Part 55 Division 3 of the Uniform Civil Procedure Rules 2005 NSW) on 9 November 2012. 4On that date the plaintiffs filed a summons (in conformity with UCPR r 55.9) and an affidavit in support of the summons (in conformity with UCPR r 55.10). The affidavit was sworn, on 9 November 2012, by Mark Robert John Thomas, a solicitor in the employ of the solicitors for the plaintiffs, Henry Davis York, Solicitors of Sydney. 5The amount paid into court, via the summons, was $85,215,466.21. 6Those funds represent, in broad terms, a surplus arising from sales by the plaintiffs (as receivers and managers appointed by GE Capital Security Agent Pty Limited) of properties of the various Nauru Entities for the purpose of repayment of loan facilities granted by GE Capital Security Agent Pty Limited and GE Capital Finance Pty Limited to Ronsi Business Pty Limited and Republic of Nauru Finance Corporation on securities granted by the Nauru Entities. 7During the course of the receivership of each of the Nauru Entities, the plaintiffs realised assets which secured the loan facilities and, from the proceeds of sale of the securities, discharged the debts owing under the facilities. They held the surplus proceeds of sale as trustees for the Nauru entities. 8The evidence Mr Thomas (on behalf of the plaintiffs) is that he believes that each Nauru Entity is an emanation of the Government of Nauru. The evidence of Mr Bannon (on behalf of the Nauru Entities) is that each of the Entities other than Central Pacific Downtowner Pty Ltd is part of a "group" of entities described as "the NPRT group", and he is a director and the company secretary of Central Pacific Downtowner Pty Ltd. 9The plaintiffs paid funds into court because, they say: (a) they were conscious of uncertainty, from time to time, in the identity of the authorised representatives of the Nauru Entities and those exercising control over the affairs of those entities; (b) they sought, but were unable to obtain, from the Nauru Entities a written direction and authorisations for payment of the funds to or at the direction of the Nauru Entities; (c) without the benefit of such a written direction and authorisations, they were anxious to obtain a valid and effective discharge of their obligation to account for the funds; and (d) accordingly, they availed themselves of the protection afforded by Part 4 of the Trustee Act via a payment into court. 10The Nauru Entities declined to provide the written direction and authorities sought by the plaintiffs because, they say, the plaintiffs coupled their request for that documentation with a demand for a release as a pre-condition of their accounting for the surplus.

APPLICATION FOR PAYMENT OUT OF COURT 11By a notice of motion filed on 13 December 2012 the Nauru Entities (hereafter "the Applicants") applied to the Court (pursuant to UCPR r 55.11) for an order that the funds in court (including accrued interest) be paid out to them. 12They are represented in the proceedings by Mr Peter Lucarelli of Baker & Mackenzie, Solicitors, of Melbourne, who have retained Mr IR Pike SC of the Sydney Bar to appear for them. 13The Applicants' Notice of Motion was returnable on 29 January 2013. It was adjourned on that date, successively, to 30 January 2013, 5 April 2013 and today. On each occasion, the Motion was listed before me; Mr Pike appeared on behalf of the Applicants; and there was no appearance by any person or party other than the Applicants. 14Having received from the Applicants (via a letter dated 24 January 2013) a disclaimer of any claim for relief against them other than an order for the payment of funds out of court, the plaintiffs indicated (by a letter dated 25 January 2013) an intention to take no further part in the proceedings. 15Upon the hearing of the Applicants' motion today (3 May 2013), the Applicants relied upon the following affidavits: (a) affidavits of Paul William Bannon (the secretary of the Nauru Phosphate Royalties Trust) sworn on 12 December 2012 and 30 January 2013; and (b) affidavits sworn by Peter Michael Lucarelli on 25 January 2013, 4 April 2013 and 2 May 2013. 16They also relied upon documentation that included an email from a representative of the plaintiffs' firm (PPB Advisory) apportioning as follows the moneys paid into court: Nauru Phosphates Royalties Trust 80,502,467.76 Ronsi Business Pty Ltd 1,433,001.18 Randwick Nominees Pty Ltd 2,008,941.00 Spencer Investments Pty Ltd 727,221.78 Central Pacific (Downtowner) Pty Ltd 543,834.49 Total 85,215,466.21

ADVERTISEMENT OF THE APPLICATION FOR PAYMENT OUT 17On the return of the Motion before the Court on 29 January 2013, the proceedings were stood over to the following day to facilitate preparation of a form of written notice to enable the Applicants' application for payment out of the funds in court to be advertised in both Australia and Nauru. 18On 30 January 2013 the Court made orders and directions to the following effect: "1. The Court directs the Applicants on the Notice of Motion filed 13 December 2012 [to] cause to be published no later than 2 March 2013 a copy of a notice in the form of [an annexure to the Court's order] in each of: (a) the Australian newspaper; (b) the Nauru Community Newspaper Mwinen Kõ. 2. The Court orders that the notice of motion filed 13 December 2012 be stood over to 5 April 2013 at 9.30am before Lindsay J. 3. The Court directs that the solicitor for the applicants serve a copy of these orders on the solicitor for the plaintiffs no later than 31 January 2013." 19There was substantial compliance by the Applicants with these orders. The requisite form of advertisement was published in the Australian newspaper on 8 February 2013 and in the "February 2013 edition" of the Mwinen Kõ magazine distributed in Nauru on 25 March 2013. 20Mr Lucarelli's affidavit of 4 April 2013 explained delay in the publication of the Mwinen Kõ advertisement due to the logistics of production of the magazine. It is printed in Fiji and transported to the Republic of Nauru by aeroplane. 21The delay in publication of the magazine led to an adjournment of the Applicants' motion on 5 April 2013 until today (3 May 2013), allowing for the possibility (with the intervention of Easter holidays in New South Wales between 29 March 2013 and 1 April 2013) that inadequate time had been allowed for any intending objector to make arrangements to appear before the Court. 22The advertisements published in the Australian newspaper and the Mwinen Kõ magazine were in the following form: "NOTICE OF INTENDED PAYMENT TO NAURU PHOSPHATE ROYALTIES TRUST, RANDWICK NOMINEES PTY LTD, CENTRAL PACIFIC (DOWNTOWNER) PTY LTD, SPENCER INVESTMENTS PTY LTD, RONSI BUSINESS PTY LTD AND RONSI HOLDINGS PTY LTD On 9 November 2012 the Receivers and Managers of the assets and undertakings of the above entitles paid into the Supreme Court of NSW the sum of AUD$85,215,466.21 being surplus funds arising out of the receivership of the above entitles ("surplus funds"). The above entities ("the Applicants") have applied to the Supreme Court of New South Wales for an order that the surplus funds and any accrued interest thereon be paid out to the above entities. That application has been adjourned until 9.30am on Friday, 5 April 2013 at the Supreme Court of NSW, Queens Square, Sydney. Any person who objects to the surplus funds being paid out to the Applicants or at their direction, or who asserts a claim to the surplus funds or any part of the surplus funds in competition to the Applicants' claim of entitlement to the surplus funds, must appear before the Court on that occasion. In the absence of any opposition to the Applicants' application, the Court may, on the adjourned date or thereafter and without further notice, order that the surplus funds be paid out to the Applicants or as they may direct. Any persons [sic] who seeks [sic] to oppose the Applicants' application should, no later than 2 April 2013, provide written notice of their grounds of objection to the application, and a written statement of particulars of any competing claim they seek to make to the surplus funds, to the solicitor for the Applicants, Mr Peter Lucarelli of Baker & McKenzie at Level 19 CBW, 181 William Street, Melbourne Victoria Australia or by facsimile +613 9614 2103 or by email to peter.lucarelli@bakermckenzie.com." 23When the proceedings came before me on 5 April 2013, the only formal order made was an order that the proceedings be adjourned to 9.30am today (3 May 2013) before me. However, in discussions between Bench and Bar, I drew to the attention of Mr Pike the desirability of further newspaper advertisements (including an advertisement in a national newspaper, such as The Australian Financial Review, other than the Australian) to provide comfort to the Court that a broad audience had been made aware of the Applicants' pending motion and the listing of that motion for today (3 May 2013). 24Consistently with that discussion, the plaintiff caused an amended form of advertisement to be published in the Australian newspaper on 17 and 24 April 2013 and in The Australian Financial Review on 24 April 2013. 25Each of those advertisements was in the following terms: "NOTICE OF INTENDED PAYMENT TO NAURU PHOSPHATE ROYALTIES TRUST, RANDWICK NOMINEES PTY LTD, CENTRAL PACIFIC (DOWNTOWNER) PTY LTD, SPENCER INVESTMENTS PTY LTD, RONSI BUSINESS PTY LTD AND RONSI HOLDINGS PTY LTD On 9 November 2012 the Receivers and Managers of the assets and undertakings of the above entitles paid into the Supreme Court of NSW the sum of AUD$85,215,466.21 being surplus funds arising out of the receivership of the above entitles ("surplus funds"). The above entities ("the Applicants") have applied to the Supreme Court of New South Wales for an order that the surplus funds and any accrued interest thereon be paid out to the above entities. That application has been adjourned until 9.30am on Friday, 3 May 2013 at the Supreme Court of NSW, Queens Square, Sydney. Any person who objects to the surplus funds being paid out to the Applicants or at their direction, or who asserts a claim to the surplus funds or any part of the surplus funds in competition to the Applicants' claim of entitlement to the surplus funds, must appear before the Court on that occasion. In the absence of any opposition to the Applicants' application, the Court may, on the adjourned date or thereafter and without further notice, order that the surplus funds be paid out to the Applicants or as they may direct. Any persons [sic] who seeks [sic] to oppose the Applicants' application should, no later than 30 April 2013, provide written notice of their grounds of objection to the application, and a written statement of particulars of any competing claim they seek to make to the surplus funds, to the solicitor for the Applicants, Mr Peter Lucarelli of Baker & McKenzie at Level 19 CBW, 181 William Street, Melbourne Victoria Australia or by facsimile +613 9614 2103 or by email to peter.lucarelli@bakermckenzie.com."

ABSENCE OF OPPOSITION TO PAYMENT OUT 26In his affidavit of 4 April 2013, Mr Lucarelli deposed to having received no notice of any intended opposition to the Applicants' Motion consequent upon publication of advertisements in the Australian newspaper on 8 February 2013 and in the February 2013 edition of Mwinen Kõ magazine. He also deposed to his personal contact with a representative of a number of members of the Nauru Super Fund (apparently a superannuation fund associated with Central Pacific (Downtowner) Pty Limited) who advised that he did not intend to appear before the Court on the hearing of the Applicants' Motion, but he would be communicating directly with the Nauru Phosphate Royalties Trust on issues of concern to those persons. 27In his affidavit sworn 2 May 2013 Mr Lucarelli deposed to having received no notice of intended opposition to the Applicants' Motion consequent upon publication of the advertisements in the Australian newspaper on 17 and 24 April 2013 or in The Australian Financial Review on 24 April 2013. He also deposed to an exchange of emails between himself and Messrs Scott Atkins and Mark Thomas of Henry Davis York (solicitors for the plaintiffs) in which he informed them of the adjournment of the motion to today (3 May 2013) and they acknowledged receipt of that information. That exchange of emails took place on 8-9 April 2013.

CONCLUSION 28In summary, no person has appeared before the Court in opposition to the Applicants' Motion today (3 May 2013) or at any other time, and no person has communicated to Mr Lucarelli (the Applicants' solicitor) an objection to an order being made for the payment out to the Applicants of the funds in court. 29The evidence before the Court is probative of the Applicants' claimed entitlement to the funds in court, as well as the absence of any opposition to that claim. The funds in court represent the balance of proceeds of sales of properties of the Applicants after discharge of loan facilities for which those properties were security. There is no evidence before the Court of any competing claim, notwithstanding publication in Australia and Nauru of notice of the Applicants' claim. 30Accordingly, it is appropriate that the Applicants, in substance, be granted the relief they seek in their Motion. 31UCPR r 55.11 (1) provides that "[funds] that have been paid into court may only be paid out of court pursuant to the directions of the Supreme Court". UCPR r 41.11 provides that "[subject] to these rules, funds in court may not be paid out of court except to the party entitled or (on the party's written authority or by order of the Court) to the party's solicitor". 32In conformity with these rules, I ORDER that the amount of $85,215,466.21 paid into court on 9 November 2012, and any interest accrued on that amount, be paid out of court (net of any expenses payable in the ordinary course) to Messrs Baker & McKenzie as the solicitors on the record for the Applicants.

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: 03 May 2013

Parbery v Nauru Phosphate Royalties Trust

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