Parker (Liquidator) v SSL Management Pty Limited T/As Sunrise Supported Living

FOSTER J: 1 The plaintiff is the liquidator of SSL Management Pty Limited (ACN 142 446 455) (In Liquidation) (the company). The company formerly traded as Sunrise Supported Living. By resolution of its members passed on 9 February 2015, the company was wound up and the plaintiff was appointed as its liquidator. 2 By Originating Process filed on 25 August 2016, the plaintiff seeks declarations and directions pursuant to s 479(3) and/or s 511 of the Corporations Act 2001 (Cth) (the Act) as to the appropriate way of dealing with moneys standing to the credit of two bank accounts in the name of the company with Bendigo and Adelaide Bank Limited. Included within the directions sought are directions in relation to the plaintiff's remuneration and payment of expenses. By reason of the operation of s 506(1)(b) and s 511 of the Act, the plaintiff is entitled to seek directions from the Court under s 479(3). 3 In support of his application, the plaintiff read affidavits sworn by him on 25 August 2016 and on 29 August 2016. The plaintiff has found it necessary to approach the Court because, after making all reasonable inquiries, he has been unable to ascertain whether any person or entity other than the company is entitled to the funds presently held in the two bank accounts in question. The total amount available in the two accounts is $11,550.17. 4 Before it was wound up, the company provided administration services to related entities which operated strata titled retirement villages at Safety Beach, Grovedale and Bendigo in Victoria and at Coffs Harbour in New South Wales. The company was a management company that managed the retirement villages. The company had ceased trading prior to the plaintiff's appointment. As at the date of the plaintiff's appointment as liquidator, the only directors of the company were Paul Greenup and Peter Leschke. 5 The two bank accounts in question are: (a) Account number 143 223 642, styled "SSL Management Pty Limited Estate Agency Business Statutory Trust". That account has a balance of $2,072.67; (b) Account number 145 527 552, styled "SSL Management Pty Limited Sale Statutory Trust Account". That account has a balance of $9,477.50. 6 The liquidation of the company is almost complete. The need to deal with the balances of the two bank accounts in question is the last act to be performed by the plaintiff prior to concluding the liquidation. 7 The plaintiff has conducted extensive investigations in an endeavour to ascertain whether either of the accounts in question is truly a trust account and, if so, to identify the beneficial owner of the account. At par 21 of his first affidavit, the plaintiff said: My investigations disclose that the First Account and the Second Account [referring to the accounts in question] were operated by the Company as "clearing accounts" in relation to payments due to the Company and payments due by the Company. 8 Under the plaintiff's direction, the plaintiff's staff has endeavoured to reconcile all of the payments in both accounts. Although a complete reconciliation has not been possible, most of the transactions in the accounts have now been reconciled. 9 On 9 February 2015, the plaintiff wrote to each of Mr Greenup and Mr Leschke serving, among other things, Notices under s 530B of the Act for the delivery up of specified property of the company and the books and records of the company. At the same time, he sought information in relation to the affairs of the company from those persons. The plaintiff followed up those initial requests by further correspondence of 7 April 2015, 20 August 2015 and 30 September 2015. 10 On 12 October 2015, Mr Leschke purported to respond to the plaintiff's correspondence. In his letter, Mr Leschke said (omitting formal parts): Dear Mr Parker RE: SSL Management Pty Ltd (in Liquidation) I refer to your letter of the 20 August 2015, and provide the following response: 1. To the best of my knowledge only one of the accounts is a Trust Account established under the Real Estate Agency Act. I understand Account 143223642 is the Statutory Account. This account has been inactive since Ms Donna Saggers left the company in February 2015. No one has accessed since and prior to that Directors only transacted the account when Ms Saggers set up transactions as she was the authorised officer. In regard to Account 145527552, the account has been inactive since Ms Saggers left the company. Prior to that Directors only transacted the account when Ms Saggers set up transactions as she was the authorised officer for the account. To the best of my knowledge it was just given a "Bank Account Nickname" - Sales Trust Account so it was easily identified as relating to the Statutory Account Transactions. It may not be a "Trust Account" as required under the Real Estate Agency Act. 2. The Account was operated by Ms Donna Saggers via a specific operating System called Console. The system was Trust account compliant and the only officer to operate and mange it was Ms Donna Saggers. Directors did not access it or use the the [sic] account unless transactions were prepared by Ms Saggers. 3. To the best of my knowledge, the current balances relate to excess funds in accounts collected at settlement from purchasers for the additional work completed on units eg - Construction of a Pergola for the resident. These funds should have been distributed to the builder but were not. 4. To the best of my knowledge, there has been no correspondence to Directors or other staff disputing funds in the accounts or requesting funds from the accounts. 5. We have no knowledge of any outstanding or relevant issues to the accounts. I trust the above is of assistance to you, should you require additional information please do not hesitate to contact Peter Leschke (0411 511048) or Paul Greenup (0418288061). 11 In a conversation between the plaintiff and Mr Leschke which took place earlier today, Mr Leschke told the plaintiff that companies associated with him were the only builders that ever did work at properties managed by the company. He also told the plaintiff that "his companies" make no claim to the funds held in the two bank accounts in question. 12 It appears that three companies associated with Mr Leschke (BK Builders Pty Limited, Strategic Planning Pty Limited and Endeca Pty Limited) have lodged proofs of debt with the plaintiff. I presume that, when Mr Leschke spoke of "his companies" in his conversation with the plaintiff of earlier today, he was referring to those three companies. 13 Despite extensive investigations carried out by the plaintiff, no person or entity has come forward to make a claim against the bank accounts in question. In particular, no claim has been made upon the basis that the moneys held in those accounts are held in trust for another person or entity. All that has happened is that the three companies to which I have referred at [12] above, all of which are associated with Mr Leschke, have lodged proofs of debt in the liquidation of the company. 14 The plaintiff is now a signatory to both accounts. He seeks orders and directions authorising him to treat the balances of both accounts as the property of the company and to deal with those amounts accordingly. 15 At paras 36 to 39 of his first affidavit, the plaintiff said: 36. I currently hold $41,794.29 in my bank account conducted in relation to the winding-up of the Company. 37. Creditors have approved further remuneration in the sum of $7,467.50 plus GST which I am yet to draw upon. I have drawn upon the sum of $86,406.20 plus GST in respect of remuneration previously approved by creditors of the Company. 38. The amount due to the Australian Government in respect of payments made to me in respect of entitlements owing to employees of the Company under the Fair Entitlements Guarantee Act 2012 is $19,443.83. Those moneys are payable to the Australian Government as a priority pursuant to section 560 of the Corporations Act. The Australian Taxation Office has lodged a Proof of Debt in the winding up of the Company claiming $60,325.49 in respect of unpaid superannuation guarantee charges. 39. I expect that the sum of $50,750 assuming trust funds applied in accordance with Orders sought in accordance with Originating Process will be available in part satisfaction of the claims referred to in the preceding paragraph. 16 In light of those facts and matters, it would appear that the balances of the two accounts in question will be used to discharge in part moneys owed to the Australian government and the Australian Taxation Office, as well as payment of remuneration to the plaintiff. In support of this application, the plaintiff referred me to the judgment of Farrell J in Warner; In the Matter of GTL Tradeup Pty Ltd (In Liq) (2015) 104 ACSR 633 at 643-644 [36], where her Honour helpfully summarised the relevant principles in the following terms: 36 The principles applicable to resolving an application under s 511 are set out in Re MF Global Australia Ltd (in liq) [2012] NSWSC 994 at [7]-[9] (Re MF Global) per Black J, in Re ICS Real Estate Pty Ltd [2014] NSWSC 479 at [23]-[25] per Brereton J and in LexisNexis, Austin & Black's Annotations to the Corporations Act (at September 2014) [5.511] and the cases and text there cited. The principles may relevantly be summarised as follows: (a) Similar principles apply whether the court exercises power under s 479(3) or s 511, save that under s 511 the court must be satisfied that the determination of a question in the winding up of the company or the exercise of the power will be "just and beneficial". That is, s 511(2) confers a discretion on the court which must be exercised by reference to whether it is advantageous to the liquidation. The term "just and beneficial" is said to involve a similar concept to that comprised by the expression "just and equitable". (b) The function served by the power of the court to give directions under s 479(3) and determine a question or exercise a power under s 511 is to give a liquidator advice as to the proper course of action to take in the liquidation. The court may give directions that provide guidance on matters of law and the reasonableness of a contemplated exercise of discretion but will typically not do so where a matter relates to making and implementing a commercial or business decision. (c) A direction can be made under s 479(3) in a voluntary liquidation by reason of ss 506(1)(b) and 511. (d) If the liquidator has given full and fair disclosure to the court concerning the application, the effect of a determination under s 511 is to sanction a course of conduct by a liquidator and thereby protect the liquidator from claims that he or she has acted unreasonably or inappropriately. (e) The power under s 511(1)(a) to "determine any question arising in the winding up" accommodates the determination of substantive rights, although the court would not do so without affording potentially affected parties the opportunity to be heard. (f) Where a question concerns the respective rights of beneficiaries of a trust or their identity it is generally considered inappropriate to give advice under s 63 of the Trustee Act. 17 I shall apply those principles in the present case. It seems to me that the plaintiff has made all reasonable enquiries as to whether the funds in the two accounts in question are held by the company in trust for another person or entity. The information which those enquiries have brought forward suggests that the company is entitled to all of those funds. In any event, no other claimant has been identified. 18 In the circumstances, I am satisfied that there is no identified claimant to the funds in question other than the company through the plaintiff. I propose to make the orders sought. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster.