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[2012] VSC 219
Supreme Court of Victoria
2012-05-31
JUDD J
Original judgment source is linked above.
CORPORATIONS - Winding up in insolvency - Corporate delinquency - Corporations Act 2001 (Cth) ss 459A, 461(1)(k) - Application not an abuse of process - Winding up order made
1 This is an application by Wimpole Properties Pty Ltd for an order that Beloti Pty Ltd be wound up in insolvency or on other grounds, and for the appointment of a provisional liquidator. It is part of the tortured history of litigation following the breakdown of a partnership between Wimpole and Beloti for the subdivision and sale of leaseholds at four properties. The properties are known as Nicholson River Holiday Park, Blue Gum Holiday Park, Koonwarra Holiday Park and Somers Holiday Park. The partnership agreement was dated 9 March 2005. Its terms have been the subject of consideration by the court on a number of occasions, including a determination, at a separate trial under r 47.04 of the Supreme Court (General Civil Procedure) Rules 2005 as to what constituted partnership property.[1]
2 The issues in dispute between the parties have proved difficult to resolve for a variety of reasons. It might have been thought that with the identification of partnership property and the appointment of a receiver to realise that property, the parties would have a suitable foundation for a mediated resolution. Any optimism was unrewarded.
3 The acrimonious relationship between the partners added to the difficulty caused by the nature of the partnership business, and the unusual terms of their agreement. Following termination of the partnership in 2007, Beloti dealt with partnership property, and other jointly owned property, as if its own. Beloti has also been a reluctant participant in the litigation process, particularly in relation to its discovery obligations. On the other hand, Wimpole conducted itself as if in gladiatorial battle, encouraged by the adversarial system to take whatever action was open to assert its perceived rights and more. This application is no exception.
4 It is common ground that the partnership is dissolved. A receiver has been appointed to realise partnership assets. There remain, however, continuing disputes between the partners litigated in this court in two other proceedings.
5 The first proceeding in time was issued in the County Court of Victoria on 2 April 2009. The plaintiffs were Beloti and a related company, Simms Corp Hotels & Leisure Pty Ltd. The defendants were Wimpole and Andrew Phillips. In substance, Beloti alleged that Wimpole repudiated the partnership agreement by suspending sales of leaseholds. There were other allegations. The claim by Simms Corp Hotels & Leisure was for lost commissions. It claimed an entitlement to ongoing commissions under the partnership agreement although it was not a party to the agreement. There was also a claim made by Beloti against Mr Phillips for breach of his retainer as an accountant engaged on behalf of the partnership. That proceeding was transferred to this court in early 2010 and acquired the reference 164 of 2010.
6 In about August 2009, Wimpole commenced a proceeding in this court against Beloti and 13 other defendants. That proceeding is 8333 of 2009. In that proceeding Beloti counterclaimed against Wimpole, Blue Gum Developments Pty Ltd and Nicholson River Developments Pty Ltd.
7 The issues raised in the other proceedings have been revised from time to time, and most recently by amendments made in April 2012. In proceeding 164 of 2010 Simms Corp Hotels & Leisure has abandoned its claim for damages, and Beloti's claim against Andrew Phillips has also been abandoned. In lieu, Beloti has brought a claim against Emerald Systems Australia Pty Ltd, a company controlled by Mr Phillips, on substantially the same basis as its claim against Mr Phillips.
8 Beloti has reformulated its claims against Wimpole which now fall into two broad categories. There is a claim that Wimpole appropriated for itself the proceeds of sale of leases at the Blue Gum property. That allegation also forms the substance of the claim against Emerald Systems, on the basis that it transferred all proceeds of sale to Wimpole. Beloti alleges that the amount transferred exceeded $1.3 million. The second part of Beloti's case against Wimpole involves a claim for lost profit as a result of Wimpole's repudiation of the partnership agreement. Those claims are quantified by reference to calculations of what Beloti claims it would have earned as its share of profit had the partnership agreement been performed, and all leaseholds sold at an assumed price. The claim exceeds $6 million.
9 The claims brought by Wimpole against Beloti and the other defendants in proceeding 8333 of 2009 are pleaded over 130 pages of amended statement of claim. Wimpole alleges that Beloti engaged in misleading or deceptive conduct, by misrepresenting the profitability of the proposed development of the Nicholson River property. Wimpole claims a net loss of almost $1.5 million. A similar case is alleged against Beloti in relation to the acquisition of the Koonwarra and Somers Holiday Parks. Wimpole claims a net loss of more than $3 million in relation to the acquisition of Koonwarra and almost $2 million in relation to the acquisition of Somers. Wimpole also claims an unpaid profit share after adjustments are made for the repayment of financing facility obtained from the National Australia Bank. There are further claims relating to the purchase and operation of the Koonwarra Holiday Park. Wimpole alleges that Beloti failed to account to it for advances made to the partnership and unlawfully competed with the partnership business.
10 Beloti counterclaimed in proceeding 8333 of 2009, but sought only declarations to the effect that the leaseholds at Blue Gum and Nicholson River were partnership property. Those issues have been resolved in a judgment delivered on 19 April 2011, mentioned below.
11 By summons dated 20 May 2010, Mr Phillips moved for summary dismissal of the case against him. That application was referred for hearing by an Associate Justice, but was adjourned part-heard when Beloti proposed to amend its statement of claim. Beloti has now sought to discontinue against Mr Phillips.
12 On 16 December 2010, James Patrick Downey was appointed a receiver of certain of the partnership property. The scope of the receivership was later extended to all unsold leases held by Somers Developments Pty Ltd, Koonwarra Developments Pty Ltd, and Blue Gun Developments Pty Ltd. These entities held the leaseholds created as part of the projects at each holiday park respectively. As they were sold, the leases were assigned to third party purchasers.
13 Following the appointment of the receiver, and on the basis of the common position adopted by the parties that the partnership had been dissolved, all parties supported a separate trial, pursuant to r 47.04 of the Rules of Court, to determine the extent of the partnership property at Blue Gum and Nicholson River. The court decided on 19 April 2011[2] that the Nicholson River land and business were not partnership property; that the interest of Wimpole as registered proprietor of the Blue Gum property did not constitute partnership property, and that the business conducted on each of the properties was not partnership property. The partnership property was confined to the leaseholds. Consequently, the scope of the receivership was confined to the sale of the leaseholds at Somers, Koonwarra and Blue Gum and the development entities.
14 A Special Referee was appointed under r 50.01 of the Rules of Court on 17 June 2011 to answer the following questions:
15 The appointment of the Special Referee was not straightforward. Eventually Mr Jeffrey Long accepted appointment, and the orders were varied accordingly on 27 October 2011, with some further directions to facilitate his report. There was some delay in the delivery of the report. The time was eventually extended to 2 March 2012. In the intervening period, however, Wimpole brought a number of new applications and there remained some outstanding applications.
16 While the Special Referee was undertaking his investigation, Wimpole commenced this proceeding to wind up Beloti on the ground of insolvency, oppression or on the just and equitable ground. The originating process was filed on 8 December 2011. By a further summons dated 21 February 2012, in proceeding 164 of 2010, Wimpole applied for summary judgment against Beloti and Simms Corp Hotels & Leisure. As a consequence of amendments made to the statement of claim in that proceeding, Wimpole's application for summary judgment against Simms Corp Hotels & Leisure and Mr Phillip's application for summary judgment against Beloti became moot.
17 Wimpole's application for summary judgment against Beloti was brought pursuant to s 62 of the Civil Procedure Act, and rr 23.03 or 23.01 of the Rules of Court. That application is no longer pressed because of amendments made by Beloti to its statement of claim. Final orders have been made in respect of Mr Phillips' application for summary judgment, as well as the applications by Wimpole for summary judgment against Simms Corp Hotels & Leisure and against Beloti in proceeding 164 of 2010. Beloti's claim against Mr Phillips has been dismissed, as has the claim brought by Simms Corp Hotels & Leisure. Beloti was given leave to amend its statement of claim in proceeding 164 of 2010 and to add Emerald Systems as a defendant.
18 In proceeding 8333 of 2009, Wimpole brought a separate application for judgment against Beloti in relation to paragraph C for its prayer for relief in the counterclaim. By that claim, Beloti had sought declarations to the effect that the Nicholson River property was partnership property. The status of that property, as a partnership asset, having been resolved against Beloti, it should amend its counterclaim accordingly. Beloti accepts that this claim should be dismissed.
19 Wimpole made a further application by its summons dated 21 February 2012, in proceeding 8333 of 2009, for leave to amend its statement of claim. Leave was granted. Final orders, including orders for costs have now been made.[3] The remaining applications include an application by Wimpole to have a receiver appointed of the land and business at Koonwarra and Somers under s 231 of the Property Law Act 1958; for an order that Beloti's defence and counterclaim be struck out; and that Mr Szmerling, the solicitor for Beloti, be restrained from further acting on its behalf in the proceeding.
20 The application to strike out the defence and counterclaim was based upon the alleged failure by the defendants in their discovery obligations. Wimpole has advised that it does not press that application or the application to restrain Mr Szmerling from acting. It wishes to adjourn its application for the appointment of a receiver as trustee of the land and business at Koonwarra and Somers pending the resolution of this application to wind up Beloti.
21 By a summons filed 21 February 2011, Wimpole also applied to vary orders made on 16 December 2010 and 4 February 2011 in relation to the receivers powers and obligations. Under those orders the receiver was directed to pay the net balance from the proceeds of the sale of leases in discharge of two NAB facilities, one in relation to Koonwarra and the other in relation to Somers. Wimpole now wishes to have those orders varied so that the proceeds from the sale of the leaseholds are no longer paid to the NAB, but are retained by the receiver pending the final resolution of the proceeding, including the taking of accounts. Wimpole relies on change to circumstances. That application will be dealt with separately.
22 The winding up application was initially arresting because Wimpole and Beloti are embroiled in the related litigation mentioned above, in which they each make substantial claims for damages or for restitution of misappropriated profits. Beloti contends that its impecuniosity was caused by Wimpole. It argued that its financial well-being will be restored by a successful outcome in the related proceedings. Wimpole contends that Beloti's claims are misconceived and are bound to fail, and has adduced evidence to demonstrate that, contrary to Beloti's assertions, it is indebted to Wimpole.
23 An unsatisfactory characteristic of this application is that the court has been invited to traverse issues in the main proceedings in order to resolve the winding up application. While the evidence adduced by the parties in this proceeding traversed issues in the main proceedings, it could not be said that all of the evidence in support or defence of the respective claims had been adduced. Further, issues such as breach and consequential loss were not addressed at all. Those matters were simply not in issue on this application, although they form an important part of Beloti's contentions about its financial position, the cause of its impecuniosity and the change that would take place if it were successful in its claims.
24 Another unsatisfactory aspect of this application is its timing. When this proceeding was commenced, the Special Referee had already been appointed to answer specific threshold questions that, it was thought, might assist the parties to reach a negotiated resolution, or at least provide a basis for the eventual settling of accounts between the parties. But while the parlous financial position of Beloti had been known to Wimpole for some months, it was only in late 2011 that Wimpole achieved standing as a creditor to commence this proceeding.
25 Wimpole's primary application is that Beloti be wound up in insolvency. It sought such an order pursuant to ss 459A and 459P of the Corporations Act 2001 (Cth). Section 459A provides that, on an application under s 459P, the court may order that an insolvent company be wound up in insolvency on application by the company, creditor, contributory, liquidator, ASIC or prescribed agency. The leave of the court is required if the applicant is a creditor only because of a contingent or prospective right, or a contributory.
26 Wimpole did not seek leave on the basis that it was a contributory by reason of its acquisition of Mr Downing's shares in Beloti. Beloti has refused to register the transfer. There is an unresolved dispute in that regard. Had Wimpole's acquisition of the shares been its only basis for standing to bring this application, it might have been met with a contention that the acquisition was a mere contrivance. Beloti has contended that the winding up application is not made bona fide and is an abuse of process. Wimpole, however, is a creditor of Beloti as a consequence of a judgment debt and unpaid costs orders.
27 Wimpole does not rely upon a failure to comply with a statutory demand. Thus, there is no presumption of insolvency by reason of Beloti's failure to comply with a statutory demand.
28 The court's powers on hearing an application are to be found in s 467. Relevantly, the court may dismiss the application with or without costs, even if a ground has been proved on which the court may order the company to be wound up, or adjourn the hearing conditionally or unconditionally.
29 In the alternative, Wimpole made application under ss 232, 233(1)(a) and/or s 461(1)(k) of the Act. Presumably, its claimed oppression depended on Beloti's failure to register the shares acquired from Mr Downing. That claim was not pressed. Wimpole also relied upon acts of 'commercial immorality', and sought relief under s 461(1)(k) of the Act, which authorises the court to wind up a company if the court is of opinion that it is just and equitable that the company be wound up. A creditor has standing to make such an application.
30 Wimpole submitted that it was in the public interest that Beloti be wound up to prevent unsecured creditors receiving preferential payments; to prevent further breaches of statutory obligations; to prevent insolvent trading; to protect the public revenue; and to protect future creditors who may never be paid.
31 The application to wind up Beloti first came on for hearing on 6 February 2012. On that occasion Beloti sought an adjournment on two grounds. First, that it was premature to consider the applications until the court had received the report from the Special Referee; and second, that the receiver was embarking upon a new sale process for the unsold leases 'in one line'. Beloti submitted that there was no urgency in dealing with the application, and that the outcome of the sale process may have a material impact on its financial position. Procedural orders were made, including for the verification of grounds opposing this winding up application, further affidavit material, and outlines of submissions.
32 The application was adjourned to 27 February 2012 by which time it was hoped that a report by the Special Referee would be available. On that day Beloti was represented by new counsel, briefed only to oppose the application for the winding up order. The Special Referee was in attendance and explained the status of his report, his requirement for additional material and a timeline for completion. When the hearing resumed on 28 February 2012, Mr Troedel, Mr Phillips and Mr Simitzis gave evidence and were cross-examined. Their evidence extended over the following two days. The hearing was then adjourned to 26 March for submissions. The report of the Special Referee was imminent.
33 When the hearing resumed on 26 March, the Special Referee's report had been delivered and considered, and submissions were made as to its effect. Wimpole submitted that the report should be rejected because of deficiencies and the absence of reasoning. The parties were directed to formulate a joint statement of questions and issues for consideration by the Special Referee. There was a direction that he respond to the questions and clarify his report on or before Monday 2 April 2012.
34 Additional material was received from the Special Referee as directed and the hearing resumed on 3 April 2012. On that occasion the Special Referee was again in attendance and the parties were permitted, within strict limits, to ask him questions by way of clarification. It became apparent that the Special Referee was able to provide further information to the parties by way of explanation. Contrary to Wimpole's expectation, the Special Referee's report did not, and was not intended to go beyond the questions posed for his consideration. Thus, while the Special Referee had calculated profit entitlements, and could calculate some corresponding adjustments between the parties based on what had in fact been banked, he did not, and did not purport to, make adjustments as if determining for whose benefit particular funds had been applied.
35 By way of example, the Special Referee did not dissect items of expenditure, whether loan repayments, interest or capital expenditure to ascertain to whose account such expenditure should be applied. Such an assessment would have involved a more protracted analysis of contentious material, with allegation and counter-allegation, about how money had been spent and recorded over a seven year period in respect of three complex projects.
36 The initial and supplementary reports of the Special Referee reached conclusions on the assumption that the respective profit shares gave rise to an entitlement to a dividend from each development company. That in turn assumed a tax burden that was contested by the parties. Those assumptions were, however, capable of reversal, and re-calculations could be made on different assumptions about tax liability. Importantly, the Special Referee refused to recognise the distribution of 'profit' by way of management fees, intended to eradicate a tax liability in each development entity, with the transfer any liability for tax to the entity receiving the management fees.
37 Beloti seized on the calculation of gross entitlements calculated by the Special Referee, rejecting the profit distribution mechanism, through the allocation of management fees, as unauthorised. Beloti contended that it was entitled to its gross amount of profit calculated by the Special Referee, because it had not received any benefit from the sale of leaseholds. Beloti maintained that according to the Special Referee's report, it was entitled to an unpaid profit distribution of $2,989,888. That claim ignores, however, the result of a more detailed analysis of how the funds had been applied and the consequence to the parties had the profit been distributed as the Special Referee considered appropriate. Presumably, there would have accrued very substantial tax liabilities in each development company, and the creation of large loan accounts to fund the projects. In any event, the limitations on the scope of the Special Referee's report meant that Beloti was not justified in asserting a simplistic claim based on its gross entitlement to a dividend as calculated by the Special Referee.
38 The report of the Special Referee was unpalatable for Wimpole, primarily because of his approach to profit calculations and the limited scope of his work. Wimpole also complained of some errors. It complained that the report was devoid of reasoning, and was incomplete because the referee failed to respond to some questions. It is true that there were some anomalies in the report. Some were remedied by supplementary material provided by the Special Referee. But the Special Referee did not set out to ascertain how money received by a party had been spent, or to enquire on whose behalf it had been spent. That was the kind of inquiry that Mr Phillips had purported to make for the purpose of his evidence.
39 Wimpole also criticised the report because it ignored much of the detail presented by Mr Phillips, who had performed accounting functions for the partnership prior to its termination. A number of affidavits were filed by Mr Phillips in which he gave evidence of Beloti's debts and financial position in support of Wimpole's contention that Beloti was insolvent; and as evidence of conduct that Wimpole argued demonstrated a lack of corporate morality.
40 In Southern Cross Interiors Pty Ltd (in liq) v Deputy Commissioner of Taxation, Palmer J identified the following propositions as a guide to determining whether a company is or was insolvent at a particular time.[4] His Honour said,
(i) whether or not a company is insolvent for the purposes of CA ss 95A, 459B, 588FC or 588G(1)(b) is a question of fact to be ascertained from a consideration of the company's financial position taken as a whole: Sandell v Porter; Pegulan Floor Coverings Pty Ltd v Carter (1997) 24 ACSR 651 and Powell v Fryer;
(ii) in considering the company's financial position as a whole, the court must have regard to commercial realities. Commercial realities will be relevant in considering what resources are available to the company to meet its liabilities as they fall due, whether resources other than cash are realisable by sale or borrowing upon security, and when such realisations are achievable: Sandell v Porter; Taylor v ANZ; Newark and Sheahan v Hertz.
(iii) in assessing whether a company's position as a whole reveals surmountable temporary illiquidity or insurmountable endemic illiquidity resulting in insolvency, it is proper to have regard to the commercial reality that, in normal circumstances, creditors will not always insist on payment strictly in accordance with their terms of trade but that does not result in the company thereby having a cash or credit resource which can be taken into account in determining solvency: Bank of Australasia v Hall [1907] HCA 78; (1907) 4 CLR 1514 at [1907] HCA 78; 1528 ; 14 ALR 51; Norfolk Plumbing at 615; Taylor v ANZ at ACLR 784; Guthrie v Radio Frequency Systems Pty Ltd [2000] WASC 152; (2000) 34 ACSR 572 at 575;
(iv) the commercial reality that creditors will normally allow some latitude in time for payment of their debts does not, in itself, warrant a conclusion that the debts are not payable at the times contractually stipulated and have become debts payable only upon demand: Antico at 331; Hall v Aust-Amec (above); Melbase (above) at 199; Carrier (above) at 253; Cuthbertson & Richards Sawmills Pty Ltd v Thomas (above) at 320; Lee Kong (above) at 112;
(v) in assessing solvency, the court acts upon the basis that a contract debt is payable at the time stipulated for payment in the contract unless there is evidence, proving to the court's satisfaction, that:
(vi) it is for the party asserting that a company's contract debts are not payable at the times contractually stipulated to make good that assertion by satisfactory evidence: Powell v Fryer (above) at 600; Melbase (above); Cuthbertson & Richards Sawmills Pty Ltd v Thomas (above).[5]
41 Wimpole does not rely upon any presumption of insolvency. As Austin J said in Australian Beverage Distributors Pty Ltd v Redrock Co Pty Ltd[6]
I think that I must approach the application of s 95A of the CA with two considerations in mind. First, the words of s 95A must be construed as they stand, without addition or subtraction. Second, the law both before and after the enactment of s 95A is unequivocally and emphatically clear that insolvency is, first and last, a question of fact 'to be ascertained from a consideration of the company's financial position taken as a whole. In considering the company's financial position as a whole, the Court must have regard to commercial realities. Commercial realities will be relevant in considering what resources are available to the company to meet its liabilities as they fall due, whether resources other than cash are realisable by sale or borrowing upon security, and whether such realisations are achievable': Southern Cross Interiors Pty Ltd (in liq) vDCT (2001) 53 NSWLR 213 at 224 ...
...
42 Beloti's case in opposition to Wimpole's application was summarised in its final submissions in the following terms:
The applicant has not discharged the onus of proof necessary to satisfy the court that the company should be wound up and in turn that a provisional liquidator should be appointed. The defendant's principal point of opposition is the ground that the plaintiff is the cause of the company's impecuniosity and as such the application is oppressive and an abuse of process. No winding up order should be made in a proceeding where there is another proceeding before the court with a claim showing a prima facie case that the plaintiff is the cause of the defendant's impecuniosity. The winding up jurisdiction is inappropriate to enforce the collection of debts. In the light of the report of the Special Referee showing substantial moneys of $2,989,888 owing to Beloti by the applicant for winding up, Wimpole, the application should be dismissed or stayed.
43 Beloti submitted that the application was not bona fide, but was designed to gain a collateral advantage in proceeding No 164 of 2010. Beloti's contention assumed a strong case in the two related proceedings, and that it was Wimpole's conduct in breach of the partnership agreement that was the cause of Beloti's impecuniosity. Beloti also attached great significance to the management fees that had been calculated and applied by the former accountants for the joint venture. Inherent in Beloti's complaint was an acceptance that it was impecunious, but explained by Wimpole's failure to distribute profit. Beloti argued that Wimpole would not want its wrongdoing exposed. Thus, Beloti argued, the court should infer that it was Wimpole's objective to prevent Beloti advancing a case that would expose its level of wrongdoing and the means by which it was achieved.
44 Wimpole's evidence was primarily directed to demonstrating that Beloti was hopelessly insolvent, with no real prospect of finding support from within the Simms Corp Group of entities to remedy its parlous financial state. Evidence was also directed to demonstrating Beloti's disregard of corporate and statutory responsibilities.
45 Beloti did not seek to respond to these allegations as might have been expected. Its responses were often unsupported assertions concerning asset values, and implausible explanations for impugned transactions and its failure to discharge statutory obligations. There were very obvious gaps in Beloti's evidence that were surprising on an application such as this. For example, it did not produce up to date accounts for the group. It did not produce credible valuations for assets it relied upon as available to support the group. It did not explain how such assets might have been employed to overcome its very evident inability to pay its debts.
46 In support of its winding up application, Wimpole relied on the evidence of Andrew Barnet Troedel, a director of Wimpole; Andrew Gray, Wimpole's solicitor; and Mr Phillips. Wimpole filed three affidavits of Mr Gray. The first was dated 16 December 2011. Mr Gray gave evidence that Beloti had not produced profit and loss statements for the Koonwarra and Somers Holiday Parks to 30 June 2011. He also gave evidence of debts of Beloti including to Gippsland Secured Investments Ltd and Lowe Lippmann Pty Ltd.
47 Mr Gray swore a further affidavit on 13 January 2012 in which he made complaints about Beloti's compliance with the requirements of the Special Referee. In his third affidavit, sworn 3 February 2012, Mr Gray exhibited, although with little explanation, correspondence passing between Mr Szmerling and himself on a variety of topics relating to assertions made by Mr Simitzis and Mr Troedel in their affidavits, the status of some debts, the production of some further material and communications with the Special Referee.
48 Wimpole also relied on two affidavits of Mr Troedel. The first affidavit, dated 7 December 2011, was divided into topics and set out under headings which provided a useful description of its content. Mr Troedel gave evidence of a judgment debt against Beloti, in favour of Wimpole in the sum of $14,812.78. That order was made in the Magistrates' Court on 7 September 2011. A stay of only 30 days had been granted. The debt has not been paid. On 14 November 2011, a costs order was made in favour of Wimpole against Beloti in the sum of $79,127.95. That amount has not been paid. A further order was made following a taxation of costs on 15 November 2011 under which Beloti owes Wimpole $51,264.96. Those amounts have not been paid. There was a perfunctory oral application for a stay, made during the course of this trial, that was not pursued. I have taken that application to have been abandoned.
49 Mr Troedel gave evidence that Wimpole had discharged a joint debt owed to the NAB resulting from the purchase of the Koonwarra Holiday Park. The initial debt was $2.240 million which had been reduced over time and eventually paid out by Wimpole, without contribution from Beloti. Putting aside other adjustments between the parties, Beloti would prima facie be liable for two-thirds of that debt. Wimpole paid out the entire balance on 24 March 2011 in the amount of $597,002.31. In addition, Wimpole repaid an overdraft facility of $119,271 in March 2011, again without any contribution from Beloti.
50 Mr Troedel deposed that putting to one side Wimpole's claim for damages and the outstanding judgment debt, he estimated that Beloti owed Wimpole $687,101. That claim only took into account Beloti's share of the NAB facilities paid out by Wimpole and some other adjustments.
51 Mr Troedel deposed to Beloti's failure to pay water charges in relation to the Koonwarra Holiday Park and outstanding claims made by East Gippsland Water against Wimpole and Beloti for $16,384.87. East Gippsland Water brought a proceeding in the Magistrates' Court against Wimpole to recover the outstanding rates, and Wimpole had made a claim over against Beloti. Beloti did not file any defence to Wimpole's notice of contribution. On 7 September 2011 Wimpole obtained judgment against Beloti in the sum of $12,912.45. Costs brought the amount to $14,812.78. Mr Troedel deposed that there were continuing faults by Beloti in relation to the payment of water rates to East Gippsland Water with new outstanding charges of $8,742.94.
52 Mr Troedel deposed to unpaid council rates in relation to the Koonwarra Holiday Park in the sum of $11,143.30, due on 15 February 2012. According to Mr Troedel, Beloti had failed to lodge business activity statements and instalment statements with the Commissioner of Taxation for and during the financial years 2009 to 2011 inclusive. This matter, and Beloti's failure to pay water and council rates were relied upon by Wimpole as evidence of what it described as Beloti's disregard of its corporate responsibility and statutory obligations.
53 Next, Mr Troedel gave evidence of Beloti's covert sales of leases in 2009, and that it had encumbered, without permission from Wimpole, the jointly owned Somers property to secure the facility. Mr Troedel said that it was only in September 2011 that he first became aware of advertisements offering the Koonwarra and Somers Holiday Parks for sale in their entirety. These offers for sale were made without the knowledge of Wimpole.
54 It is common ground that Beloti is in default under a facility negotiated with the National Australia Bank in late 2008. The advances made by the NAB are secured over the Somer's freehold, other real estate and by a charge over the assets of Beloti. The amount owed to NAB exceeds $3 million, and interest is accruing at the rate of $125,000 per quarter. Interest and has not been paid since January 2011. The facility has expired and Beloti is being charged the higher rate of interest.
55 Finally, Mr Troedel deposed to Beloti's financial position as disclosed in draft financial statements for the financial years 2006 to 2010. By reference to financial statements prepared for Beloti by its previous accountants, Lowe Lippmann, he drew attention to Beloti's net operating loss for 2006 of $101,783 with net assets of $172,194. By reference to the 2008 financial statements, he drew attention to a net operating loss of $407,144 for 2008 with a negative net asset position. The draft profit and loss statements for the year ended 30 June 2009 disclosed a small profit of $10,144.47 after 'add backs'; and for the year ended 30 June 2010, there was a consolidated net loss of $123,240.40, which had been converted to a profit of $101,619.53 after various 'add backs'. On 16 February 2012, Mr Troedel prepared a further affidavit to which he exhibited the terms of settlement between Wimpole and Mr Downing.
56 When cross-examined, Mr Troedel was asked what became of approximately $7 million said to have been generated from the sale of leaseholds at Bluegum, Somers and Koonwarra. He said that he understood that the NAB took 70% of the proceeds, and that the balance was used within the partnership for development and other costs. Mr Troedel said that funds were not paid to either Beloti or Wimpole. According to Mr Troedel, there was an allocation of management fees made according to each partner's respective entitlements to profit, which was no more than a book entry to record the treatment of profit utilised for development costs and expenses.
57 Wimpole relied upon a financial analyse undertaken by Mr Phillips outlined in two affidavits. The first affidavit is dated 15 December 2011 and the second, 20 February 2012. In his first affidavit, Mr Phillips deposed to items of expenditure by Beloti paid for by drawing down on the Somers NAB facility. The point of the allegation appears to be two-fold. First, that a facility secured over jointly owned property was being employed for private expenditure by Beloti on behalf of Mr Simitzis; secondly, that earlier assertions by Mr Simitzis that the facility was being employed solely for partnership business were incorrect.
58 Mr Phillips also deposed to the transfer of a cabin from a lease-site at Koonwarra to a caravan park at Echuca operated by Pherst Pty Ltd, a company related to Beloti. The cabin was said to have been paid for out of partnership money in June 2006. Next, Mr Phillips deposed to his inspection of bank statements for accounts used in the operation of the Koonwarra and Somers Caravan Parks. By reference to the bank statements, Mr Phillips said that between 23 February 2008 and 29 March 2010 Beloti had paid out not less than $427,000 from those accounts to other entities controlled by Mr Simitzis. The relevance of that allegation was, of course, that creditors, including Wimpole, were being denied access to cash from the operation of the businesses at Koonwarra and Somers that were being conducted by Beloti.
59 Mr Phillips undertook a review of draft balance sheets prepared by Lowe Lippmann, for the 2007 to 2010 financial years. From these draft accounts, Mr Phillips pointed out that the net assets of Beloti had deteriorated between 2007 and 2010. In 2007, the net assets were $270,917, but by 2010 the asset position was negative ($602,343). Beloti did not rely on the draft accounts and Mr Simitzis challenged their accuracy. Nevertheless, apart from some incomplete accounts for Beloti for 2011, the Lowe Lippmann draft accounts and the income tax returns for some entities were the only such financial reports for Beloti and the group that were available.
60 Mr Phillips pointed out that in the draft balance sheet for 2010, Beloti was recorded as having loaned $526,975 to Simms Corp Hotels & Leisure. The income tax return for that entity recorded net assets in 2010 of negative ($273,884). Thus, so Wimpole argued, the financial position of Beloti was further imperilled because the loan to Simms Corp Hotels & Leisure should be regarded as irrecoverable. Simms Corp Hotels & Leisure is itself the subject of a winding up application in this court.
61 Mr Phillip's second affidavit, dated 20 February 2012, was designed to respond to the questions posed for the Special Referee, in advance of the preparation of his report. Mr Phillips went a step further and allocated expenditure in an attempt to arrive at a definitive balance between the parties. His methodology involved three stages. Mr Phillips said,
62 By the application of this methodology, Mr Phillips calculated the total profit on the sale of leases at Bluegum at $681,448, to which Beloti was entitled to half. The total profit on the sale of leases at Koonwarra was assessed at $2,607,923, to be allocated as to one-third to Wimpole and as to two-thirds to Beloti. Mr Phillips calculated the total profit from lease sales at Somers at $1,232,628, to be allocated in the same proportions as for Koonwarra.
63 Mr Phillips calculated the operating profit for the business at Koonwarra, for the years 2005 to 2011, at $238,997 to be divided as to one-third for Wimpole and two-thirds for Beloti. He excluded interest and finance charges relating to the acquisition costs. Mr Phillips said,
64 The same methodology was applied by Mr Phillips in his assessment of operating profit at Somers. The operating profit for Somers for the same period, apportioned on the same basis as for Koonwarra, was $20,661.
65 According to Mr Phillips, Beloti had a total entitlement to profit from the sale of lease and park operations for the period 2005 to 2011 inclusive of $3,074,197. He calculated Wimpole's share at $1,107,460. Mr Phillips made adjustments by reference to the amounts spent on capital improvements to the properties, and financing costs, all to be allocated according to the agreed ownership entitlements. He calculated that Beloti had already received or had the benefit of $3,535,931, while Wimpole had received or had the benefit of $1,199,712. Thus, Mr Phillips concluded, Beloti was indebted to the partnership in the sum of $461,734 while Wimpole was a creditor of the partnership in the sum of $507,748. To that sum, Mr Phillips said, should be added a further $687,102 owed by Beloti to Wimpole as a consequence of Wimpole's discharge of the Koonwarra NAB facilities, Beloti's discharge of the Somers NAB facility and Wimpole's over contribution to the purchase of Koonwarra.
66 The purpose of the calculations made by Mr Phillips was to demonstrate that Beloti's claim against Wimpole for misappropriation of profits was without substance, because Beloti was a net debtor to the partnership and to Wimpole. Such a contention did not, of course, take account of Beloti's claim for damages for breach of the partnership agreement.
67 While Mr Troedel and Mr Phillips were cross-examined, their evidence was not substantially challenged. Importantly, the central allegations of misappropriation made by Mr Simitzis in his affidavits were not put to Mr Phillips, nor was his evidence tested in that regard.
68 Beloti relied upon the evidence of its director, Peter Simitzis, and its solicitor, Isaac Szmerling. In his first affidavit dated 25 February 2012, Mr Simitzis sought an adjournment of the proceeding pending delivery of the Special Referee's report. Mr Simitzis otherwise dealt with the issues in the order and according to the topics in the same orders as Mr Troedel. His first point was that Beloti had not been served with a statutory demand pursuant to s 459B of the Corporations Act 2001.
69 Beloti also claimed to be entitled to refuse to register the transfer of Mr Downing's shares because of the pre-emptive right provisions contained in its constitution. As to its failure to pay water charges to East Gippsland Water Corporation, Mr Simitzis said that Beloti had entered into a re-payment arrangement and, as at 6 January 2012, the balance outstanding for water rates was only $5,759.55. He said that Beloti had also entered into a repayment arrangement with the East Gippsland Shire in relation to rates for the Koonwarra property.
70 Mr Simitzis attributed responsibility for Beloti's financial predicament to Wimpole. He said 'that Wimpole has inappropriately taken all of the proceeds from the sale of leaseholds at the three (3) Caravan Parks without properly accounting to Beloti for 50% of the net profit from those Leasehold sales'. He alleged inappropriate and unauthorised charges made by Wimpole against the partnership. He relied on what he described as the suspension of leasehold sales by Wimpole as evidence of its repudiation of the partnership agreement. That contention was, however, about to be abandoned by Beloti in its amended statement of claim. Mr Simitzis also attributed Beloti's financial predicament to the appointment of the receiver, the default interest charged by the NAB and interest charges made by Wimpole.
71 The position adopted by Beloti in relation to its central complaint against Wimpole is confusing. Mr Simitzis contended that Beloti received nothing from the sale of leaseholds during the period of the partnership. When it was put to Mr Simitzis that he could have examined the financial position of Wimpole through the discovery process in the other proceedings, to ascertain where the money had gone, he deflected the question by merely continuing to assert that he had not received a share of the profits. He said that he had adduced evidence of the enrichment of Wimpole as a consequence of the diversion of funds to it. There was no such evidence.
72 When pressed in cross-examination as to where he said the money from the sale of leaseholds had gone, Mr Simitzis said he didn't know. When asked whether he had ever sought an explanation, he replied that he had done so, and said that he was told that the funds had been disbursed as expenses. He continued to assert that 'we didn't receive any of the proceeds from the investment and profit share agreement sales'.
73 Mr Simitzis said that Beloti owned valuable assets, some of which were not recorded in its accounts. He mentioned a parcel of land at Myers Street, Lakes Entrance which it proposed to sub-divide and develop into residential sites, subject to a re-zoning of the land which was due to take place some time this year. Beloti was seeking compensation from a company known as Lakes Oil for $1.2 million in relation to its proposed drilling operation on the land. There was a mediation underway.
74 Mr Simitzis claimed that the Myer Street land was worth $3 million. In addition to the negative impact of the Lakes Oil dispute, there are two caveats. One caveat was lodged by East Gippsland Region Water Corporation in respect of a claimed reserve of land set aside for a pumping station. The other caveat was lodged by Antonio and Diane Iannaccio claiming a constructive trust. The basis for the claim is unclear, but it seems to relate in some way to a proposed roadway through the claimants' property to connect the subdivision to the main road. No valuation for the land was introduced in evidence.
75 There was an auction of the Myers Street property on 26 August 2010, although without a single bid. Mr Simitzis conceded that it was very difficult to sell the property because of the issue with Lakes Oil. The caveats must also be an impediment. Mr Simitzis was uncertain as to whether any proceeding had been commenced to remove the caveats. In any event, the land is mortgaged to Gippsland Secured Investments for around $2.4 million. There is no basis to contend that the asset is readily realisable or in some way might be utilised to assist the chronic cash shortage of Beloti.
76 Mr Simitzis sought to deal with the Somers NAB facility, secured in part by jointly owned land, on the basis that, at the time it was negotiated, Beloti was in possession of the land and business without any support or cooperation from its former partner. Following dissolution of the partnership, Beloti considered itself to be entitled to deal with the partnership assets which it then controlled. That position was confirmed by Mr Simitzis in cross-examination. He reiterated an earlier claim that the facility had only been applied for the development and upkeep of the Somers Holiday Park. That contention was challenged by Wimpole.
77 Mr Simitzis attributed Beloti's default under the Somers NAB facility to its inability to sell leaseholds following wrongful termination of the joint venture by Wimpole. The facts did not support that contention. Beloti had continued to sell leases without Wimpole's knowledge or cooperation. Mr Simitzis seemed to gain some comfort from the fact that, notwithstanding Beloti's default, the bank had not taken any action against it under the facility. He argued that upon sale of the remaining unsold leases at Somers there should be sufficient funds available to discharge the NAB facility in full. Any satisfaction the bank may have as a secured creditor, or comfort experienced by Mr Simitzis is no reason for Beloti to disregard its obligations to its unsecured creditors.
78 Responding to Wimpole's evidence about its repayment of the Koonwarra NAB facility, Mr Simitzis claimed that $85,000 had been drawn down from the facility by Wimpole. Mr Simitzis also said that Wimpole had been obliged to discharge the liabilities in order to provide a clear title to the Nicholson River Caravan Park sold in February 2011.
79 As for the alleged failure by Beloti to lodge Business Activity Statements with the Australian Taxation Office, Mr Simitzis said that during the course of the partnership its financial affairs were in the hands of Smith McCarthy Wilson Pty Ltd, accountants, with whom it had virtually no contact or communication. Mr Simitzis said that it had not been possible for Beloti to complete financial statements and Business Activity Statements, but that it would be in a position to do so after receipt of the Special Referee's report.
80 Mr Simitzis responded to the allegation of covert sales by contending that when advertising Koonwarra for sale, and selling leases at Somers and Koonwarra, 'Beloti was not looking to withhold information about that selling activity from Wimpole'. That may be strictly true, but the fact remained that Beloti failed to disclose those transactions, and did not voluntarily discover related documents to Wimpole, notwithstanding its continuing discovery obligations.
81 The second affidavit of Mr Simitzis, sworn 14 February 2012, verified Beloti's objections to the winding up order. The grounds of objection filed by Beloti were as follows:
82 In his third affidavit, sworn 26 February 2012, Mr Simitzis repeated some of his earlier evidence about Beloti's debts. He also said that Mr Troedel's calculations did not take account of the extent to which Beloti had paid interest on behalf of Wimpole. Mr Simitzis reiterated that it had not been possible to prepare financial statements since 2007 because of the unresolved dispute between the parties, and said that there were many fewer outstanding Business Activity Statements than suggested by Mr Troedel.
83 Mr Simitzis asserted that Beloti was not insolvent, although at the very same time Beloti seemed to accept that it was impecunious, because 'Wimpole has misappropriated all profits and failed to account to Beloti' in respect of the sale of leaseholds at Bluegum, Koonwarra and Somers between 2005 and 2007. I take Beloti to be submitting that it was experiencing only temporary illiquidity due to the wrongful conduct of Wimpole but, having regard to its asset position, and the latitude given to it by some creditors and its bankers, it could rely upon support from within the group to avoid a finding of insolvency. I take Beloti to have argued, it should not be found to be insolvent in the legal sense.
84 Mr Simitzis sought to deal with the allegation that he had appropriated partnership funds to meet his personal expenses, by indicating that a loan account had been raised in respect of the expenditure. This allegation related to some work done by Mr Simitzis at his property at Shoreham. It was a relatively minor matter. In relation to another relatively minor matter, the alleged transfer of a cabin to the Echuca Caravan Park, Mr Simitzis said that Mr Phillips had been aware of the transaction in 2006. He retaliated by alleging that Wimpole had failed to pay for cabins purchased for the Nicholson River Caravan Park in 2006.
85 Mr Simitzis complained in a number of places about the transfer of $85,000 from a Koonwarra account to Wimpole in August 2007. He said that 'if the $85,000 had not been transferred, then there would have been sufficient funds in 2007 to pay all outstanding creditors including any tax liability and wages'. This was one example of Mr Simitzis' tendency to make unsupported assertions about the cause of Beloti's financial difficulty. The assertion also carried an implied admission of financial stress and Beloti's failure to discharge corporate and statutory responsibilities extending as far back as 2007. He said that if Wimpole had not 'unilaterally and systematically diverted all sale proceeds to Wimpole, in breach of the partnership agreement', the Koonwarra and Somers NAB facilities would have been paid out during the term of the partnership and the Beloti balance sheet and financial status would have been far better. That was just another unsupported assertion.
86 Mr Simitzis asserted a belief that the sole reason for Wimpole bringing this application to wind up Beloti was to prevent Beloti from successfully bidding for and acquiring the unsold leases at Bluegum, Koonwarra and Somers; and to prevent the truth from coming out about the way in which Wimpole, through Mr Phillips and Emerald Systems, had diverted all net proceeds from the sale of leaseholds during the term of the partnership to Wimpole. He asserted that another reason why the plaintiff brought the application was to prevent Beloti from prosecuting its claims. That was the substance of Beloti's contention that the proceeding was not bona fide and an abuse of process.
87 Under cross-examination, Mr Simitzis confirmed that which was evident from his affidavits and the available financial records. He said that Wimpole lost its right to a profit share from the operation of Koonwarra and Somers following a dissolution of the partnership agreement. Following the termination of the partnership in 2007, Mr Simitzis assumed complete control of Somers and Koonwarra and dealt with those properties, the leaseholds and the funds generated from sales and management activities, as if his own. He gave various explanations for that conduct, ranging from necessity to entitlement. His approach, while legally questionable, was glaringly obvious and must have been so to Wimpole. After all, he was servicing the NAB facilities without the cooperation of Wimpole, who did not seek to interfere prior to the application for the appointment of the receiver.
88 When it was put to Mr Simitzis that Beloti had been unable to pay its debts since at least September 2009, he agreed. He said,
Yes, and the reason for that is Beloti, even though its interest it hasn't been able to pay through to the National Australia Bank because of the penalty rates that it was on, and its - because of this issue that has been happening here for the last two years, that's why it's been in the position that it is... So since its been stripped of its - completely of all its profits in order for Beloti to have had, Mr Forbes, it wouldn't have had this problem, the debts would have been paid down, there wouldn't have been any debt at all, as with all my other related entities as well.
89 Mr Simitzis was cross-examined about the payment arrangements negotiated with the East Gippsland Shire for rates. He would not accept that the arrangements were made because Beloti was in financial difficulty. He explained the repayment arrangements on the basis that, 'it's good business'. Mr Simitzis accepted that Beloti had also entered into a repayment plan with his previous solicitors.
90 I accept that the ability of a debtor to negotiate accommodation with creditors is a relevant consideration when examining the company's position taken as a whole. It is also appropriate to have regard to the capacity of other members of the group to come to the aid of Beloti. But in the present case that also requires a consideration to the extent to which Beloti has supported other members of the group, and their ability to repay loans.
91 Beloti has not filed an income tax return for the year ended 30 June 2007 or for any year since. Mr Simitzis said that that was because the figures were disputed, and Lowe Lippmann had not prepared accurate accounts. Mr Simitzis seemed to adopt inconsistent positions. He did not disagree with the proposition that there was an increasing PAYG liability to the ATO, or that the records disclosed unpaid superannuation entitlements. He said that his accountants were in the process of reviewing all of Beloti's accounts. But when pressed on the amount of such entitlements and obligations that were outstanding, Mr Simitzis said that they had not been brought to his attention, nor would he concede the amounts.
92 Mr Simitzis could not recall how many director penalty notices he had received, although conceded that there had been 'a couple of them'. He said they had all been satisfied. He said that they arose as a consequence of an audit carried out because of defective work by Lowe Lippmann. Some penalty notices were for unpaid GST. While Mr Simitzis had a dispute with Lowe Lippmann, he conceded that he had reviewed draft accounts prepared by them from time to time 'that gave us a good picture of ... the performance ...'
93 At the end of 2007 Beloti engaged RSM Bird Cameron to attempt to work out where the partnership funds had gone. But having received the report, Mr Simitzis would not accept the Bird Cameron analysis, claiming that it relied upon the inaccurate accounts prepared by Mr Phillips through Emerald Systems. Part of Mr Simitzis' explanation for refusing to accept the accounts prepared by Mr Phillips, Lowe Lippmann and the review by Bird Cameron was his refusal to accept the consequence of the internal management fees.
94 Mr Simitzis rejected the proposition that the group suffered from a chronic cash shortage or that the way in which the group was operated was to keep creditors at bay by paying small amounts. He claimed that the asset values in the debtor companies were enough to cover their debts. Mr Simitzis asserted that the net assets of Beloti were $5.1 million.
95 Mr Simitzis gave evidence about his banking facilities. There were facilities provided by the NAB and Westpac. There was also the Gippsland Secured Investment facility. Mr Simitzis said that the NAB had provided financial accommodation to entities in the group other than Beloti. He said that all facilities, other than those provided to Beloti, were being serviced. Mr Simitzis said there was an NAB facility in relation to Mornington Peninsular Developments, Pherst Pty Ltd, Concord Lane, Bega, Simms Corp and Lifestyle Villas. He produced a chart depicting his corporate group. According to the chart, Bega Retirement Village trades as Lifestyle Villas. Presumably Simms Corp, mentioned by him, is Simms Corp Hotel & Leisure, although there were at least three other entities which might have been described as Simms Corp. Mr Simitzis conceded that Beloti's indebtedness to the NAB exceeded $3 million and that interest was accruing at the rate of about $43,000 per month. Interest was not being paid. Mr Simitzis said that accounts were being prepared by his new accountants, Sayers Partners, which demonstrated that Beloti had net assets of around $5 million. But those accounts were not relied on by Beloti in evidence, even though Mr Sayers had been engaged in December 2010. Mr Szmerling prepared an affidavit dated 3 February 2012, attaching a report from Mr Sayers. The affidavit was eventually withdrawn from evidence.
96 Mr Simitzis conceded that Beloti was indebted to Gippsland Secure Investments, which had commenced a proceeding in this court to recover a debt of around $2.25 million. He said that 'the proceeding is on hold at this point'. He mentioned the dispute with Lakes Oil. No detail was given about the proceeding, or the terms upon which it was 'on hold'. There were other proceedings that were not mentioned by Mr Simitzis in his evidence until after he was recalled for further cross-examination. There was a proceeding against Mr Simitzis by the NAB in which it recently entered judgment for $2,595,434.78. There was also a winding up proceeding against Simms Corp Hotel & Leisure.
97 Mr Simitzis attributed a value to Beloti's interest in the Somers Holiday Park at between $3.5 and $5 million. He valued Beloti by reference to '$400,000odd net operating income' to arrive at a valuation of $6 million. By reference to the profit and loss account as at 30 June 2011, there was an operating profit of only $112,898. The accounts were of limited value as they were prepared on a cash basis. In the absence of a proper foundation, I do not accept Mr Simitzis' assertion of a value for Beloti based upon rental income.
98 Beloti's counsel sought to introduce, in the course of his re-examination of Mr Simitzis, evidence about the assets and cash flow of the group. The new evidence was permitted because, until that point, Beloti had not responded to the evidence adduced by Wimpole to establish Beloti's insolvency. When introduced, the new evidence was superficial. It was not supported by accounts, credible valuation or any plan to realise assets to meet creditors' demands.
99 Mr Simitzis was asked by Beloti's counsel - 'are you able to put a value on the worth of Beloti?' Wimpole, of course, objected but Mr Simitzis was permitted to answer. He approached the value of Beloti by reference to the value of unsold leases multiplied by the number left. His valuation of the unsold leases was between $3.5 and $5 million. He valued the Myers Road property at Lakes Entrance at between $1.5 and $2.5 million. He purported to value Beloti by reference to rental income of $400,000 and a discount rate of 8%.
100 There were no independent valuations and, but for a 2011 profit and loss account for Beloti, and an incomplete balance sheet as at 31 December 2011, the only accounts were those produced by Wimpole. Those accounts were in draft form and had been prepared by Lowe Lippmann. Mr Simitzis' evidence of income streams for entities other than Beloti were not assisted by any verifying material.
101 Having had an opportunity to address the issues raised by Wimpole's evidence, Beloti's response was surprising. The evidence adduced in re-examination was no doubt intended to persuade the court that Beloti had available to it assets within the group that might be rallied in support of its financial predicament. But there was no explanation as to how that might occur, or how long it might take. There was no plan advanced for the realisation of assets. I infer that there was no plan. Most, if not all, assets are charged or mortgaged to banks. It seemed reasonably clear that the banks would not make further advances. Beloti did not suggest that they had even been approached the bank for further assistance.
102 Mr Simitzis valued Lifestyle Villas Pty Ltd, which owned another property in Lakes Entrance. He said 'that is about $750,000'. He moved on to Concord Lane Pty Ltd, which is a family company. It is trustee of the Peter Simitzis Family Trust, and owns three rental properties; one in Glen Iris, one in Springvale North and another in Kew. He said that the combined value of those properties was 'about $4 million to $4.5 million. Four at worst, four-and-a-half at best'. Next came Simms Corp Investments Pty Ltd which he said owned an apartment in Malvern, that he valued at $700,000. He said that Simms Corp Management Advisory Pty Ltd, which provided management services to the operators of caravan parks, did not have a value. Tsolakis Investments Pty Ltd, was a shelf company with no assets. Finally, he said that he owned a property at Shoreham which he valued at around $2 million.
103 Mr Simitzis produced a summary of assets and liabilities for the principal entities. The summary had been prepared that day. The four entities identified were Mornington Peninsular Developments Pty Ltd, Pherst Pty Ltd, Lifestyle Villas Pty Ltd and his personal assets. The assets of Mornington Peninsular Developments were said to be valued at $4 million, with a liability of $265,000; the assets of Pherst Pty Ltd were said to be worth $6 million, with a liability of $750,000; the assets of Lifestyle Villas were said to be worth $750,000, with liabilities of $560,000; and his personal assets were said to be valued at $5.5 million with liabilities of $2,650,000. In the result, Mr Simitzis would have the court believe that the group had a net asset position of $12,025,000.
104 The asset values and liabilities recorded in the document put forward by Mr Simms do not correspond with the evidence that was recently given by him in reexamination. While the asset position of Mornington Peninsular Developments and Pherst Pty Ltd set out in his summary of assets approximated the evidence earlier given by Mr Simitzis, he said of Lifestyle Villas, 'It doesn't really have any significant value attached to it'. The only personal assets of which Mr Simitzis gave evidence, and mentioned in his Simms Corp Group Structure Chart was the property at Shoreham, to which he had attributed a value of around $2 million.
105 Mr Simitzis said that the value of the remaining leases and the management rights owned by Mornington Peninsular Development was around $4 million. He valued Simms Corp Hotel & Leisure at 'half-a-million', with estimated average annual income of between $800,000 to $1.2 million. He said that the company operated a consulting business. Mr Simitzis conceded that the values attributed by him were an estimate. Beloti's counsel sought to qualify Mr Simitzis as an expert to value businesses by asking him 'have you conducted business valuations before?', to which he replied, 'I've carried out business valuations over the years, yes.' Even if he could have been qualified as an expert valuer, his evidence of valuations was unsupported.
106 Mr Simitzis said that the freehold property of a similar scheme (to that at Somers and Koonwarra) undertaken by Mornington Peninsular Developments (Vic) Pty Ltd had recently been sold for $3 million. This evidence was no doubt intended to support his valuation of Beloti as owner of a two thirds interest in the freehold of Somers and Koonwarra.
107 Next, Mr Simitzis was asked questions by Beloti's counsel about Pherst Pty Ltd, the trustee of the Echuca Trust and the Rich River Trust, which operates the Rich River Holiday Park. Mr Simitzis said that the company held 70 remaining titles and was generating annual income of just over $1.1 million. He gave it a current valuation of around $6 million.
108 Mr Simitzis conceded that having given evidence of the value of Mornington Peninsular Developments, Simms Corp Hotel & Leisure, Bega Retirement Village and Pherst Pty Ltd he had not produced any accounts, profit and loss or balance sheets for any of those entities. The following exchange took place.
HIS HONOUR: Mr Simitzis, there's one thing that I'm having some difficulty with. Put to one side the discovery issues that you are being asked about. You've said on a number of occasions that the 2011 accounts would reveal a very different picture about the financial wellbeing of the group. But with the exception of the accounts that were produced a little earlier, that is Exhibit H, we don't have any 2011 accounts. This is an application which is in part to appoint a liquidator of Beloti and it's apparent that Beloti's financial position depends in part on the wellbeing of other entities in the group, for example, their ability to repay debt. I would have thought that in those circumstances you would have had prepared, well in advance of this hearing, the financial statements, profit and loss and balance sheets for all of those entities; at least those that are indebted to Beloti and those that have some bearing upon the viability or the course of Beloti's business. Now, we don't see that. Can I ask, do you have an explanation as to why we don't have that kind of material before the court?
WITNESS: The appointment of Sayers Partners, Your Honour, he is doing a review on the whole group. He is coming up with his final balances for the 2011 figures. All the final figures within the company have been provided to Mr Sayers.
HIS HONOUR: He was appointed a year ago, more than a year ago?
WITNESS: He was only appointed in December 2010, he started his commencement in January.
HIS HONOUR: ... You keep saying that it's a strong group but do you understand the significance and the seriousness of the application that is being made to appoint a liquidator to Beloti?
WITNESS: Yes I do. I do and I had faith in the figures in the group and the incomes and the profit margins that are being achieved. You know, technicalities like this bit about the super and bits like that sort of thing
HIS HONOUR: Put those things to one side. We are concerned about the financial viability, as one issue, of Beloti. Beloti's role in the group is not an insignificant one is it?
WITNESS: Well, because it has been tied up in these proceedings it has been very difficult in order to try - I mean, we've tried to get this to a head so many times until now. But, yes, it is, obviously we've got substantial assets on hold here because of this whole saga and that includes some substantial assets of my own personal. It is, it's very very concerning, very concerning.[7]
109 Mr Simitzis gave two reasons for the absence of accounts. First, Lowe Lippmann had failed to provide adjustment journals to the new accountant, Michael Sayers. He said that the documents only became available after Wimpole had subpoenaed Lowe Lippmann for its accounting records and produced them as discovered documents to Beloti in about December 2011. The second reason was that Lowe Lippmann had not reconciled the loan accounts.
110 Wimpole was permitted to further cross-examine Mr Simitzis. It established that the information contained in the brief summary of asset values document produced by Mr Simitzis had been prepared by a person in Mr Simitzis' office from information provided to that person by Mr Simitzis.
111 This is not a case where the debts due to Wimpole, and relied upon by Wimpole for standing to bring this application, are contested. Beloti's only contention in that regard is that it is not obliged to pay those amounts because of the strength of its case against Wimpole in proceeding 164 of 2010. Contrary to Beloti's submissions, there is a very real and immediate public interest in the appointment of a liquidator at this time. Beloti is unable to pay its debts as and when they fall due. Its debts are increasing rapidly. Creditors are at risk.
112 Beloti is not just suffering temporary illiquidity. From every relevant perspective, it has a chronic inability to pay its debts with no reasonable prospect that the position will improve so as to avoid a continuing risk to creditors which include trade creditors, leaseholders, staff members and the ATO. Whether viewed as a member of the Simms group of companies, or as a standalone entity, its future is bleak. The available assets within the group, identified by Mr Simitzis, do not provide a satisfactory foundation to contend that Beloti has sufficient assets at its disposal to rectify its parlous financial position.
113 When deciding this application the court must have regard to Beloti's ability to generate funds from existing and contingent assets. In the absence of a credible plan to realise assets, the mere fact that Beloti may have realisable assets is of little comfort to creditors. Beloti's financial position is deteriorating and the prospect of support from other members of the group, including Mr Simitzis, is virtually non-existent.
114 The asset values and net worth put forward by Mr Simms during his reexamination are of limited consequence to the financial position of Beloti, unless Mr Simitzis and the entities mentioned in his chart of assets choose, and have the capacity, to use those resources to support Beloti. The assets are heavily mortgaged. Some entities appear to have been dependent on Beloti for cash. Mornington Peninsular Developments is a creditor, as is Pherst. A substantial debtor, Simms Corp Hotels & Leisure ($595,010), was said by Mr Simitzis, without the advantage of prepared accounts or other material, to be worth only about $500,000. There is also a serious question over its solvency. The commercial reality of Beloti's position is best evidenced by its inability to service its loans, with interest accruing at the rate of around $750,000 per annum.
115 Beloti has failed to comply with its statutory obligations. It has failed to lodge income tax returns and quarterly statements with the Australian Taxation Office. It has failed to discharge its statutory duty to make superannuation contributions, or to maintain proper accounts. These are all matters of public interest. Perhaps the most pressing matter is Beloti's intention to continue to trade when to do so will put present and future creditors at risk. While it may be argued that its impecuniosity is to some extent a matter of choice, because it has been providing support to other group entities, the level of its debt is such that, even if it were the to cease diverting its cash to other entities, it would not generate sufficient income to meet its financing and operating expenses.
116 Beloti cannot rely on the sale of assets. There is no credible plan or reasonable prospect for assets sales. More particularly, its assets are mortgaged. There is nor credible evidence that a sale would result in any proceeds available for creditors.
117 Beloti has taken a cavalier approach to this application by waiting until the re-examination of Mr Simitzis to advance valuations and cash flow estimates. They were no more than unsupported estimates.
118 Beloti's two-thirds interest in the freehold Somers and Koonwarra, and the remaining unsold leases at Somers, Koonwarra and Blue Gum have some value but the evidence does not demonstrate that these are readily realisable assets. There were valuations for the leases at Blue Gum, Somers and Koonwarra, mentioned by Mr Simitzis in his evidence, which he said were made in 2007. The valuations were not put in evidence.
119 Lease sales at Somers are very slow. Lease sales on Blue Gum have stalled because of a requirement for capital expenditure in order to facilitate a sale. A sale by the receiver of the leases in 'one line' is unlikely to yield anything approaching the kind of value attributed to them by Mr Simitzis. The NAB claims to be entitled to any proceeds of sale to which Beloti is entitled pursuant to a charge supporting the Somer's NAB facility.
120 While the balance sheet put forward by Beloti for the year ended 31 December 2011 was manifestly incomplete, it disclosed loan assets of $1.2 million which are of doubtful value.
121 While Beloti derives cash from site rentals at Somers and Koonwarra, although it has not paid a substantial part of the amount due to lease owners. It is in the practice of making that cash available to other entities within the group, leaving its bankers and other creditors unpaid. That is not sustainable. Wimpole submitted that there was a continuing risk to the assets of Beloti because money had been transferred to other entities in the group without any real prospect of recovery. I am satisfied that large debts due to Beloti from within the group are irrecoverable. Beloti's practice of diverting cash, which seemed part of the business practice within the group, should not be tolerated when it exposes present and future creditors of Beloti to the very real risk that they will not have their debts paid.
122 Mr Simitzis did not seek to conceal the way in which he managed the businesses in the group. Cash was taken from wherever it was available for use in entities where it was required. It was clear from the evidence, and only faintly challenged, that there was not enough cash to meet all of the obligations of the entities in the group. Even though loan accounts had been established, in most instances, to record the advances within the group, the consequence of that practice is to deny creditors of Beloti access to value, because the value of the loan account assets created by Beloti are highly questionable.
123 While Beloti's major creditors are secured, there are some substantial unsecured creditors. It is the existing and future unsecured creditors who are entitled to the protection of the court if Beloti proposes to continue to trade. Mr Simitzis has made it clear that Beloti intends to continue to trade.
124 The most significant uncontroversial debts are owed to the NAB and to Gippsland Secured Investments. They are secured. Some of the external debts of Beloti, in particular those owed to the Shire of Gippsland and to East Gippsland Water, are subject to repayment plans and arrangements. The repayment schemes have been negotiated because Beloti does not have the cash to meet the whole of the obligations when due.
125 Another category of debt owed by Beloti is to the Australian Taxation Office and in respect of superannuation entitlements of its employees. Beloti did not file an income tax return for the year ended 30 June 2007 and has not done so since then. There is evidence that Beloti is liable to the Australian Taxation Office for unpaid PAYG instalments and GST in a sum exceeding $150,000. There is evidence of unpaid superannuation entitlements of $24,000. There is evidence that Beloti has failed to comply with its statutory obligation to file quarterly instalment statements. What is not clear is the impact on Beloti if the Special Referee is correct in his assessment, and the tax treatment of profits derived from the sale of leases prior to the dissolution of the partnership must be revised.
126 There is evidence of intervention by the Commissioner of Taxation in the affairs of the group, including an audit and the imposition of director penalty notices and assessments. Mr Simitzis complained that the notices were the product of accounting mistakes by the group's previous accountants, Lowe Lippmann. Beloti's liability to the Australian Taxation Office is uncertain. Notwithstanding the advertising of this application in the usual manner, the ATO has not seen fit to participate in this application.
127 The 2006 balance sheet of Beloti reveals a debt due to Mainland Developments Pty Ltd, a related entity, of $500,000. That company has since gone into liquidation. The status of that debt is uncertain. There is no evidence that it is being pursued by the liquidator of Mainland. Beloti did not provide any helpful explanation about the debt, apart from the contention in its written submissions that the loan had been repaid in 2005. In other words, Beloti seems to contend that its balance sheet erroneously recorded the loan.
128 Wimpole relied upon Beloti's indebtedness to its previous solicitors, Keelins and to Mr Szmerling, its present solicitor. There is a deed of compromise between Beloti and Keelins. Instalments are due. Beloti is indebted to its present solicitor who continues to act. Wimpole complained that Beloti had failed to clarify its financial arrangements with its present and former solicitors and from that, presumably, seems to submit that it should be inferred that Beloti is struggling to pay its legal fees. It is not clear what, if any, inferences can be drawn from the material relating to Beloti's indebtedness to lawyers for legal fees.
129 It would seem that legal fees were incurred on behalf of Beloti and other members of the group. There was no evidence of any apportionment, or precisely how much was owed to Mr Szmerling, or the current status of the instalment plan with Keelins. Having regard to Beloti's difficulty in meeting its financial obligations to its financiers, service providers, employees and others it would be surprising if its relationships with its past and present solicitors were without some financial stress. But, as I have said, Mr Szmerling continues to act and the debt due to Keelins is the subject of a repayment plan.
130 Lowe Lippmann is a creditor of Beloti for unpaid fees of $15,202. It commenced a proceeding in the Magistrates' Court to recover those fees. Beloti proposes to counterclaim for $10 million. The basis for the counterclaim is not entirely clear, although it seems to be related to the collapse of Sippy Downs Operation Pty Ltd. Mr Simitzis disavowed the accuracy of draft accounts prepared by Lowe Lippmann relied upon by Wimpole. Beloti engaged new accountants in late 2010, although they have not yet prepared accounts that are relied on by Beloti in resisting this application. That is a matter of real concern.
131 There are some trade creditors. Wimpole alleged that Beloti had collected but failed to remit site rental to leaseholders. From a balance sheet as at 30 December 2011, it appeared that Beloti owed leaseholders rent of $125,716, with trade creditors of $405,592. The identity and trading terms of the trade creditors is unclear. Some may be members of the Simms Corp group. Unfortunately, this is another example of Beloti's failure to address an issue when it could have presented information that might have assisted the court in understanding the nature and scope of the risk to creditors of Beloti continuing to trade.
132 Apart from the trade creditors, there are group entities to whom Beloti is indebted. These include Mornington Peninsular Developments Pty Ltd ($200,500); Bega Retirement Village Trust ($68,931); Mornington Peninsular Trust ($31,038); Pherst Pty Ltd ($5,038); Somers Developments Pty Ltd ($33,785); and Koonwarra Developments Pty Ltd ($3,357). These amounts are recorded in Beloti's balance sheet as at the end of December 2011. As mentioned above, the substantial loan account assets are amounts owed by Simms Corp Hotels & Leisure in the sum of $595,010, and by Sippy Downs in the sum of $622,247. Slippy Downs is in liquidation. As at 30 June 2010 Simms Corp Hotels & Leisure was indebted to other members of the group for almost $3 million. As noted above, a winding up application was recently issued in this court against the company. Mr Simitzis said that there had been a compromise with the creditor. No details were provided.
133 A review of the worth of group assets, to the extent any assessment could be made from the available material, did not provide grounds for any optimism about the ability of the debtors to repay Beloti. Furthermore, Simms Corp Hotels & Leisure is a guarantor of Beloti's debt to the NAB, and has granted a charge over its assets in support of that obligation. Apart from assertion by Mr Simitzis of estimated values, nothing was advanced on behalf of Beloti to clarify the worth of group members supporting one another. It is surprising that, faced with a winding up application, Beloti did not present comprehensive group accounts prepared by its new accountant. It must be remembered that this application was commenced in December 2011. By that time, Beloti's new accountants had been retained for almost one year.
134 The final category of debts owed by Beloti are those owed to Wimpole. The judgment debts are, in aggregate, $145,205. These amounts are uncontested. Wimpole also contends that Beloti is indebted to it for a share of the amount paid by Wimpole to discharge borrowings in relation to the acquisition of Koonwarra. Mr Phillips calculated an amount due from Beloti to Wimpole on settlement of the partnership accounts in the sum of $455,538. The grand total claimed to be owed by Beloti to Wimpole was $1,287,844. This amount is contested.
135 Most of the evidence about Beloti's debts was introduced by Wimpole. Mr Simitzis gave some explanations in the course of his cross-examination, although his evidence did not seriously challenge that advanced on behalf of Wimpole. Even though Mr Simitzis rejected the assessment made by Mr Phillips, he did not advance any explanation as to where Mr Phillips' methodology or calculations were incorrect. Mr Phillips' evidence was not challenged in cross-examination. It was as if Beloti's case on this application was conducted at a high level, deliberately sidestepping the detail of the financial records and Mr Phillips' evidence.
136 I am in no position in this proceeding to finally determine the value of Beloti's claim against Wimpole for misappropriation. This application is not the trial of proceeding 164 of 2010. But in the face of the evidence of Mr Phillips, who set out in some detail the basis of Wimpole's case, Beloti did little more than complain about the use of management fees as a mechanism for distribution, and relied upon the report of the Special Referee that stopped short of making the adjustments that were made by Mr Phillips. While Beloti's case against Wimpole is arguable, it will be for a liquidator, acquainted with the full facts, to decide whether or to what extent it should be pursued.
137 In addition to its claim for an account of misappropriated profits, Beloti claims damages for breach of the partnership agreement. This claim is based on the lost opportunity to profit from sales of leases at each of Somers, Blue Gum and Koonwarra. With the exception of Blue Gum, Beloti proceeded with sales at Somers and Koonwarra after the dissolution of the partnership in 2007. Sales are now being made by the receiver. Sales were and are slow. While it might be argued that sales could have been more rapid, had the partners continued to jointly pursue the business, that proposition is not supported by the evidence as it presently stands.
138 Beloti's case for repudiation and damages was not advanced on this application, and I am unable to form any concluded view about its prospects. I regard the case as arguable. But even if Beloti were to succeed in proving a breach by Wimpole of the partnership agreement, there are many factors that would limit the amount of any award of damages, not least of which is the evidence concerning the sales of leases over the last few years. Once again, that case may be pursued by a liquidator, if so advised.
139 I need no persuasion that if the court were to be satisfied that the application to wind up Beloti was made for an improper purpose, such as to obtain a collateral advantage in another proceeding, it ought to be dismissed as an abuse of process.[8] Beloti went so far as to submit that Wimpole's application was malicious, brought without reasonable and probable cause. It informed the court that it would institute a separate proceeding for a claim for damages for malicious presentation of a winding up application. No such proceeding has been commenced.
140 Beloti relied on Re Kolback Group Ltd.[9] In that case the applicant sought a winding up order against a public company, Tricontinental. The plaintiff did not allege any particular debt was due, or that there had been default of payment of a particular debt, with one exception relating to interest on unsecured convertible notes. The plaintiff was not a holder of such notes. The plaintiff, along with its directors were, however, defendants in a proceeding commenced in Queensland by a subsidiary of Tricontinental which had claimed relief in an oppression suit. It was only after the Queensland proceeding was underway that the plaintiff purchased a nominal shareholding in Tricontinental, and approached the Supreme Court of New South Wales as a contributory to make a winding up order.
141 The mechanism by which the plaintiff in Kolback sought to adduce evidence to support its application was to issue multiple subpoenas enquiring about the financial circumstances of Tricontinental. Bryson J set aside the subpoenas and dismissed the proceeding, having formed the view that the litigation was not a sincere approach to the court to obtain justice and protection of the plaintiff's interest as a contributory, and to obtain an order for which the plaintiff sued. He concluded that the litigation was a manoeuvre which had as its object the assistance of the plaintiff's position in other litigation. He held that the subpoenas were an abuse of process designed to embark upon what amounted to discovery to fish out a case.
142 The allegation that the acquisition of a shareholding was a device to gain standing, was not repeated in this case. Perhaps that was because Wimpole did not press for standing on the basis of its agreement with Mr Downing to acquire his shares in Beloti. Had it done so, Beloti might well have advanced such a contention.
143 Putting that element to one side, the facts of Kolback bear no material relationship to the facts of this case. Wimpole is a substantial creditor of Beloti, with outstanding judgment debts. Wimpole has assumed the evidentiary burden to establish Beloti's parlous financial position. In my opinion it has succeeded in doing so. Even Beloti describes itself as impecunious, but of course that is not the end of the matter.
144 Beloti's contention that the proceeding is not bona fide seems to rest on a number of assumptions, one of which is that its claims may not be prosecuted if a liquidator is appointed. That is to misunderstand the duty of a liquidator. He or she will no doubt take advice and make an informed decision. Another assumption is that Wimpole's purpose is to prevent scrutiny by the court of Beloti's case against Wimpole and of Wimpole's misconduct. While Wimpole may be legitimately criticised for its aggressive litigation tactics, it is entitled to bring this proceeding. If a liquidator is persuaded to pursue Beloti's case, or Wimpole directly for that matter, any misconduct will be exposed. In any event, the facts of this case do not support an inference of the improper purpose for which Beloti contends.
145 Nor can Beloti draw comfort from the decision in Australian Beverage Distributors Pty Ltd v Evans & Tate Premium Wines Pty Ltd.[10] In that case the plaintiff brought a proceeding to wind up the defendant on the basis of its failure to pay a costs order. The defendant made application for a stay of enforcement of the order. A question arose as to whether it was an abuse of process for the plaintiff, as a creditor, to proceed with a winding up application in such circumstances. The court recognised a distinction between the discretion to refuse to make an order where, for example, there was a more suitable alternative means of resolving a disputed claim against the company sought to be wound up, and an abuse of process per se, based upon the principles in Williams v Spautz.[11] Thus, there may be an abuse of the winding up process, although the facts may be insufficient to invoke inherent jurisdiction of the court to prevent an abuse of process of the kind under consideration in Williams v Spautz.
146 The facts of that case were complicated by an application for summary dismissal of the winding up application and the formulation of the issues on appeal. At trial, the judge considered that it was an abuse of process to bring the winding up application to recover a disputed debt when there was a proceeding on foot to determine liability for that debt. The trial judge also found that it was an abuse of process for the plaintiff to have prematurely published notice of a winding up proceeding. The Court of Appeal concluded that the trial judge erred in his conclusion that, where there was a substantial dispute as to the enforceability of a debt, to bring a winding up proceeding in such circumstances was an abuse of process.
147 The trial judge had found that the plaintiff's subjective intention, to either deter the defendant from proceeding with its claim to stay the enforcement of the costs order, or to persuade a liquidator to pursue such a claim, or to retaliate against the claim having been brought, was evident in a press release by the plaintiff. The Court of Appeal held,[12]
148 The Court of Appeal held that this was not a case where the principles stated by the High Court in Williams v Spautz applied, but concluded that the defendant had not sought to make out such a case at trial, and that the trial judge had intended to apply principles that related to the abuse of the winding up process. The Court held,[13]
Nevertheless, the Court of Appeal did not disturb the order of the trial judge dismissing the winding up application on other grounds which were open to him in the exercise of his discretion.
149 There is no basis to Beloti's contention that Wimpole's winding up application is an abuse of process of the kind contemplated in Williams v Spautz. It is a different question as to whether, by the application of the 'second branch' so described by McGarvie J in Fortuna Holdings, this proceeding ought to be stayed or dismissed. In my opinion it should not.
150 To exercise the discretion to stay an order for winding up or to dismiss the application, when there is ample evidence of Beloti's insolvency and corporate delinquency, would require compelling circumstances. Had the basis for Wimpole's application been a contested debt, as in the Evans & Tate case, the position may well have been different. It is true that the contest between the parties in the related proceedings might result in some improvement in Beloti's financial position. That is a contingent asset of Beloti, and its ability to pursue the claims will not evaporate as a consequence of an order that it be wound up, although it is acknowledged that Mr Simitzis will lose his control of the proceeding.
151 Wimpole was entitled to bring this proceeding and has discharged the burden of proof required to establish Beloti's insolvency and corporate delinquency. Nothing has been shown to cause the discretion to be exercised against making such an order. The court is concerned with more than just the interests of Wimpole. There is a public interest in winding up Beloti to protect present and future unsecured creditors and bring to an end its corporate delinquency, reflected in its disregard of statutory duties.
152 I propose to order that Beloti be wound up pursuant to s 459A and s 461(1)(k) of the Corporations Act.
[4] [2001] NSWSC 621, [54]; [2001] 53 NSWLR 213; (2001)19 ACLC 1513.
[5] [2001] NSWSC 621, [54].
[6] [2008] NSWSC 3, [146], [157]; [2008] NSWSC 3; (2008) 26 ACLC 74.
[7] Transcript, 1 March 2012, p 41 line 11 to p 42 line 29.
[8] Re Kolback Group Ltd (1991) 4 ACSR 165; 9 ACLC 511.
[9] (1991) 4 ACSR 165, 172-3.
[12] [2007] NSWCA 57; (2007) 69 NSWLR 374, 388, [64], [65].
[13] (2007) 69 NSWLR 392, [83].
Wimpole Properties Pty Ltd
Beloti Pty Ltd
(1907) 4 CLR 1514
(2001) 53 NSWLR 213
(1966) 115 CLR 666
(1992) 174 CLR 509
(2007) 69 NSWLR 374
(2007) 69 NSWLR 392