Plaintiff v Defendants

For the Fifth Defendant (including in his capacity as liquidator of Bellrock UAV Pty Ltd on 3 April 2023)

1 The plaintiff (Mr Duggal) seeks:[1]

(a) leave to bring a proceeding on behalf of the first defendant (Bellrock Cleaning) against the third and fourth defendants, receivers of Bellrock Cleaning (the Receivers), pursuant to s 237 of the Corporations Act 2001 (Cth) (Corporations Act); and

(b) leave to bring a proceeding on behalf of the second defendant (Bellrock UAV) against the Receivers (who are also receivers of Bellrock UAV), the fifth defendant, formerly the administrator of Bellrock UAV and now the liquidator (the Administrator) and the sixth defendant, the secured creditor of Bellrock Cleaning and Bellrock UAV (Grow), pursuant to the inherent jurisdiction of the Court, or alternatively, s 90-15 of Schedule 2 to the Corporations Act;

(c) alternatively, to set down for final hearing an application for an order pursuant to s 90-15 of Schedule 2 to the Corporations Act.

2 Mr Duggal is a director and shareholder of Bellrock UAV and Bellrock Cleaning.[2]

3 Mr Duggal has provided a proposed statement of claim (proposed statement of claim).[3]

4 Mr Duggal also seeks orders to continue interim injunctions until trial that each of the Receivers, the Administrator and Grow be restrained from realising, selling, dealing, encumbering or otherwise disposing of the "Security Property". The term "Security Property" is defined in the security agreements between Grow and Bellrock Cleaning and Bellrock UAV, among other companies within the Bellrock Group. These finance arrangements between the Bellrock entities and Grow are addressed later in these Reasons.

5 The parties agreed to the applications for derivative leave and the continuation of the interim injunctions being heard and determined by the Court together. I refer to Other Matters in these Reasons commencing at paragraph [259]. This concerns the very recent appointment of a liquidator to Bellrock UAV. On 31 March 2023, the Court was informed by the Administrator's solicitors that Bellrock UAV was now in liquidation and the fifth defendant (i.e. the Administrator) was now the liquidator (the Liquidator). Later that day, the Court asked the parties whether they wished to be heard further and whether there are any matters arising from the appointment of the Liquidator that should be brought to the Court's attention. The Court informed the parties that if no response was received then the Court would determine the applications based upon the present evidence and submissions of the parties. All parties informed the Court this morning that they did not wish to be heard. No party informed the Court of any matter arising from the appointment of the Liquidator that should be brought to the Court's attention except for the following:

(a) Mr Duggal submitted that if leave is granted to bring a derivative proceeding then the Liquidator will need to be joined in his capacity as liquidator of Bellrock UAV Pty Ltd (not only in his capacity as Administrator); and

(b) the Liquidator stated he did not consider that the change in Bellrock UAV's status affects Mr Duggal's claim and the applications for leave. He submitted (in his former capacity as the Administrator) that he had previously made the submission that the authorities on seeking derivative leave could be applied by an analogy to a company that is under administration, however, given that Bellrock UAV is now in liquidation, that submission is now moot.

(a) refuse the application pursuant to s 237 of the Corporations Act for Mr Duggal to bring a proceeding in the name of Bellrock Cleaning against the Receivers;

(b) refuse the application pursuant to the Court's inherent jurisdiction, and the application pursuant to s 90-15 of Schedule 2 to the Corporations Act, for Mr Duggal to bring a proceeding in the name of Bellrock UAV against the Receivers, Grow and the Administrator; and

(c) not set down for final hearing any application for any other order(s) pursuant to s 90-15 of Schedule 2 to the Corporations Act.

(a) dismiss Mr Duggal's amended summons filed 3 February 2023;

(b) discharge the interim injunctions initially made on 20 December 2022 and release the parties from their undertakings. This is because there are no claims that support their continuation; and

(c) dismiss the proceeding. This is because there are no further matters to determine in the proceeding.

8 Mr Duggal, by way of an originating motion filed 20 December 2022, sought the following relief:

1. Pursuant to s 198(G)(3)(b) of the Corporations Act 2001 (Cth) (Act), the plaintiff have leave to prosecute this proceeding.
2. Pursuant to s 440D of the Act, the plaintiff have leave to prosecute this proceeding.
3. Until further order of the Court, each of the third and fourth defendants (Receivers) and the fifth defendant (Administrator) is restrained from taking steps to realise, sell or otherwise dispose of the "Security Property" as that term is defined in the Bellrock UAV GSA, the Bellrock Cleaning GSA, the Bellrock Protective Services GSA and the Bellrock Technology GSA.
4. The Receivers be removed as receivers in respect of the first and second defendants.
5. Alternatively, the Receivers are enjoined from acting as receivers and managers in respect of the first and second defendants.
6. The sixth defendant is restrained from taking steps to enforce "Security Property" as that term is defined in the Bellrock UAV GSA, the Bellrock Cleaning GSA, the Bellrock Protective Services GSA and the Bellrock Technology GSA .
7. The Receivers pay the Plaintiff's costs of the Summons dated 19 December 2022.
8. Such further or other orders as this Honourable Court deems fits.

9 The originating motion is premised upon Mr Duggal prosecuting claims in his own name. No claim is made in the originating motion based upon s 90-15 of Schedule 2 of the Corporations Act. In that context, orders were made by consent on 20 December 2022 that, in effect, provided Mr Duggal with an opportunity to make an application for derivative leave, or any other application, and to preserve the status quo. The Court made the following orders, inter alia, by consent:

1. Pursuant to s 198G(3)(b) of the Corporations Act 2001 (Cth) (Act), the plaintiff have leave to prosecute this proceeding until 4:00pm on 6 February 2023.
2. Pursuant to s 440D of the Act, the plaintiff have leave to prosecute this proceeding until 4:00pm on 6 February 2023.
3. Until 4:00pm on 6 February 2023 or further order of the Court, each of the third and fourth defendants (Receivers) and the fifth defendant (Administrator) is restrained from realising, selling, dealing, encumbering or otherwise disposing of the "Security Property" (other than debtors which are realised in the ordinary course of business) as that term is defined in the General Security Agreements.
4. Until 4:00pm on 6 February 2023 or further order the sixth defendant is restrained from realising, selling, dealing, encumbering or otherwise disposing of the "Security Property" (other than debtors which are realised in the ordinary course of business) as that term is defined in General Security Agreements.

...

1. The proceeding is adjourned to 10:00am on 6 February 2023.

...

10 The orders also recorded the following, inter alia, in 'Other Matters':

...

1. The Plaintiff, by his counsel, undertakes to the Court to abide by any order the Court may make as to damages, in case the Court shall hereafter be of the opinion that any of the Defendants have sustained any loss, by reason of this order or of the undertakings, which the party giving the undertaking ought to pay.

2. Subject to further order the Third, Fourth and Fifth Defendants, by their respective solicitors, undertake to the Court not to draw upon the "Security Property" (as that term is defined in the General Security Agreements between the Sixth Defendant and each of Bellrock Protective Services Pty Ltd, Bellrock Technology Services Pty Ltd, Bellrock UAV Pty Ltd and Bellrock Cleaning Services Pty Ltd (collectively, the General Security Agreements)) for further fees, costs or expenses, excluding trading expenses incurred in the ordinary course of business, without the Plaintiff's prior written approval or Court order.

3. The undertaking in paragraph C does not displace the operation of s 60-10 of Schedule 2 of the Insolvency Practice Schedule Corporations.

4. The prohibition in order 3 on "encumbering" the "Security Property" does not limit the ordinary operation of section 443F of the Corporations Act 2001 (Cth).

...

11 Paragraphs 1 to 4 of the order have been extended on a number of occasions. They are presently made until further order to enable the Court to consider and determine the applications for leave.

12 Mr Duggal, by his amended summons filed 3 February 2023, applied for orders as follows:

1. Pursuant to the inherent jurisdiction of the Court, section 90-15 of Schedule 2 s 198(G)(3)(b) of the Corporations Act 2001 (Cth) (Act) and 447A of the Act, the plaintiff have leave to prosecute this proceeding in the name of the first defendant (Bellrock Cleaning) and the second defendant (Bellrock UAV) against the third and fourth Defendants (Receivers) and the fifth defendant (Administrator) (collectively, the Proceeding).[4]

1B. The plaintiff have leave to file, on behalf of Bellrock Cleaning and Bellrock UAV, a statement of claim substantially in the form set out in the affidavit of Rajan (Ricky) Duggal sworn 1 February 2023 (Statement of Claim) within 21 days of the date of these orders.

1. Pursuant to s 440D of the Act, the plaintiff have leave to prosecute this proceeding.
2. Until further order of the Court, each of the third and fourth defendants (Receivers) and the fifth defendant (Administrator) is restrained from taking steps to realise realising, selling, dealing, encumbering or otherwise dispose disposing of the "Security Property" (other than debtors which are realised in the ordinary course of business) as that term is defined in the General Security Agreements Bellrock UAV GSA, the Bellrock Cleaning GSA, the Bellrock Protective Services GSA and the Bellrock Technology GSA.
3. The Receivers be removed as receivers in respect of the first and second defendants.
4. Alternatively, the Receivers are enjoined from acting as receivers and managers in respect of the first and second defendants.
5. Until further order of the Court, T the sixth defendant is restrained from realising, selling, dealing, encumbering or otherwise disposing of taking steps to enforce the "Security Property" (other than debtors which are realised in the ordinary course of business) as that term is defined in the General Security Agreements Bellrock UAV GSA, the Bellrock Cleaning GSA, the Bellrock Protective Services GSA and the Bellrock Technology GSA.
6. The Receivers pay the Plaintiff's costs of the summons dated 19 December 2022 and this amended summons, be costs in the cause of the Proceeding.
7. Such further or other orders as this Honourable Court deems fits.

13 The Court requested the parties, after the hearing on 16 March 2023, to address whether the application to bring a proceeding on behalf of Bellrock Cleaning should have been made pursuant to s 237 of the Corporations Act and not the Court's inherent jurisdiction_._ The parties filed further submissions and informed the Court that they did not wish to make any further oral submissions. There is no dispute between the parties that s 237 of the Corporations Act applies to the application to bring a proceeding on behalf of Bellrock Cleaning. I agree. Mr Duggal seeks leave from the Court to bring a proceeding on behalf of Bellrock Cleaning. This application must be determined pursuant to s 237 of the Corporations Act. This is because it is in receivership and not in administration.[5]

14 Mr Duggal made submissions in support of an application for leave pursuant to s 237 of the Corporations Act. The Receivers objected to the late application pursuant to s 237 of the Corporations Act and, in the alternative, addressed the merits of the application_._

15 In my view, it is appropriate and just for Mr Duggal to have leave to make an application pursuant to s 237 of the Corporations Act:

(a) First, both parties initially made an erroneous assumption that Mr Duggal's application for leave to bring a proceeding on behalf of Bellrock Cleaning should be determined pursuant to the Court's inherent jurisdiction.

(b) Secondly, the submissions relied upon by Mr Duggal are substantially based upon the same submissions he made with respect to his application for leave pursuant to the inherent jurisdiction.

(c) Thirdly, the Receivers did not identify any relevant prejudice.

(d) Finally, the Receivers addressed the merits of the application so that the Court is in a position to determine the application with the benefit of submissions of all parties.

16 Mr Duggal did not press any application pursuant to s 447A of the Corporations Act.

(a) affidavits of Mr Duggal affirmed on 19 December 2022 (First Duggal affidavit), 1 February 2023 (Second Duggal affidavit) and 24 February 2023 (Third Duggal affidavit);

(b) affidavits of Mr George Michael Livaditis, solicitor for Mr Duggal, made 20 December 2022 (First Livaditis affidavit) and 5 February 2023 (Second Livaditis affidavit); and

(c) submissions filed on 24 February 2023, 16 March 2023 and 21 March 2023.[6]

18 The Receivers/Grow were jointly represented and relied upon:

(a) an affidavit of Mr Richard Albarran, registered liquidator and the fourth defendant, sworn 20 December 2022 (Albarran affidavit);

(b) an affidavit of Mr Benjamin Thomas Skinner, partner of SLF Lawyers, solicitors for the Receivers and Grow, affirmed 15 February 2023 (Skinner affidavit);

(c) affidavits of Ms Kathleen Elizabeth Vouris, registered liquidator and the third defendant, sworn 17 January 2023 (First Vouris affidavit) and 2 March 2023 (Second Vouris affidavit);

(d) affidavits of Mr Gregory Woszczalski sworn 2 March 2023 (First Woszczalski affidavit) and 7 March 2023 (Second Woszczalski affidavit); and

(e) submissions filed on 2 March 2023[7] and 21 March 2023.

(a) an affidavit of Mr Shumit Banerjee, registered liquidator and the fifth defendant, sworn 17 January 2023 (Banerjee affidavit); and

(b) submissions filed on 2 March 2023 and 15 March 2023.

Leave pursuant to the Court's inherent jurisdiction

20 Mr Duggal requires leave pursuant to the Court's inherent jurisdiction to bring a proceeding on behalf of Bellrock UAV. It was in administration. It is now in liquidation. Section 237 of the Corporations Act does not apply to a company in administration[8] or in liquidation. The Court has inherent jurisdiction to give leave to an appropriate person, including a shareholder, to bring proceedings on behalf of a company in administration or in liquidation.[9]

21 The following three principal considerations arise in considering whether the Court's inherent jurisdiction should be exercised:[10]

(a) whether the proposed claims have some solid foundation in that they exhibit such a degree of merit as to be neither vexatious nor oppressive and present reasonable prospects of success;

(b) the attitude of the administrator or liquidator to the proposed proceedings;

(c) whether practical considerations support the initiation of the proceeding, with particular reference to the financial protection of the assets of the company by means of indemnity and, if indicated, security.

22 These considerations are not exhaustive and the Court will have regard to all of the relevant circumstances of the case.[11] This includes whether granting leave would be likely to produce a tangible benefit for the company.[12] The question of tangible benefit is linked to the first principal consideration above and the strength of the claims sought to be made.

23 In Daiwa Can Company v Barokes Pty Ltd,[13] Sifris J (as he then was) said in the context of an application pursuant to s 237 of the Corporations Act:[14]

1. The function of the Court, on applications of this kind are not in dispute. The Court does not resolve the dispute but merely exposes and identifies its existence and then determines whether it is serious or frivolous. Further it is not the function of the Court and it is preferable that the Court not express any view on the relative strengths and weaknesses of the respective claims.

24 In my view, these observations equally apply to an application for derivative leave pursuant to the inherent jurisdiction of the Court.

25 In Re Connective Services Pty Ltd,[15] Robson J said, in the context of an application under s 237 of the Corporations Act, that it would be inappropriate, and perhaps prejudicial to the further hearing of the matter, to allow a person to be cross-examined.[16] I agree. In my view, these observations equally apply to an application for derivative leave pursuant to the inherent jurisdiction of the Court. This is because if cross-examination was permitted in such applications, especially on matters relevant to whether there is a solid foundation for the claim the subject of the application for leave, it would result in the applications becoming, in effect, a trial of those claims.

Leave pursuant to s 237 of the Corporations Act

26 Section 237 applies to an application for leave to bring a proceeding on behalf of a company in receivership.

27 Section 237(1) relevantly provides that a person referred to in s 236(1)(a) may apply to the Court for leave to bring proceedings. Section 236(1)(a) provides that such person includes a member and an officer of the company.

28 Section 237(2) provides:

The Court must grant the application if it is satisfied that:

(a) it is probable that the company will not itself bring the proceedings, or properly take responsibility for them, or for the steps in them; and

(b) the applicant is acting in good faith; and

(c) it is in the best interests of the company that the applicant be granted leave; and

(d) if the applicant is applying for leave to bring proceedings--there is a serious question to be tried; and

(e) either:

(i) at least 14 days before making the application, the applicant gave written notice to the company of the intention to apply for leave and of the reasons for applying; or

(ii) it is appropriate to grant leave even though subparagraph (i) is not satisfied.

29 Recently, in Landsville Huynh Pty Ltd v Huynh,[17] Lyons J said:[18]

1. ...it is important to note that leave to bring a derivative action must not be given lightly. An application under s 237 is not interlocutory in character and the applicant bears the onus of satisfying the court that the matters set out in s 237(2) have been met.
2. In this regard, I note that in Re Fishinthenet Investments Pty Ltd, Black J noted that he was required to assess whether the proposed proceedings were in the best interests of the Company 'on the basis of the evidence that is presently available, not speculation that something more may turn up'. I would endorse those comments and add that they apply with equal force at least to the serious question requirement.
3. It is also important to note that many of the criteria or requirements in s 237(2) overlap: for example, if there is no serious question to be tried, it would not be possible to establish the proposed claim was in the best interests of the company.
4. Further, as to the requirement in s 237(2)(a) (that it is probable the company will not itself bring the proceedings), this is not a high threshold. It is sufficient if the court is satisfied there are grounds for finding that it is probable the company itself will not bring proceedings.

Probability that the Company will not bring the proceeding: s 237(2)(a)

30 In Re Kalimpa Park Pty Ltd,[19] (Kalimpa Park), Osborne J explained:[20]

1. Absent an express and authoritative refusal by the Company, after a properly articulated request by the applicant to take specific proceedings, the applicant bears the onus of establishing that in the circumstances actual refusal or the probability of refusal is to be inferred.

Good faith: s 237(2)(b)

31 The Court will have regard to two primary interrelated factors with respect to the good faith requirement in s 237(2)(b) as follows:[21]

(a) the first is whether the applicant honestly believes that a good cause of action exists and has reasonable prospects of success; and

(b) the second is whether the applicant is seeking to bring the derivative claim for a collateral purpose which would amount to an abuse of process.

32 In Kalimpa Park, Osborne J observed:[22]

1. As Palmer J explained in Swansson v RA Pratt Property Pty Ltd ('Swansson'), there are two interrelated factors to which courts will always have regard in determining whether the good faith requirement is satisfied:

The first is whether the applicant honestly believes that a good cause of action exists and has a reasonable prospect of success. ... The second factor is whether the applicant is seeking to bring the derivative suit for such a collateral purpose as would amount to an abuse of process.

1. In Chahwan v Euphoric Pty Ltd ('Chahwan'), Tobias JA expanded on Palmer J's observations, stating that:

... an applicant will only be acting in good faith for the purpose of s 237(2)(b) where, as a current or former shareholder or director of the company, he or she would suffer a real and substantive injury if a derivative action were not permitted provided that that injury was dependant upon or connected with the applicant's status as such shareholder or director. It might be a positive indication of the good faith of a shareholder if he or she sought to institute a derivative action which would have the effect, if successful, of restoring value to his or her shares in the company.

1. His Honour expressly rejected the proposition that an absence of good faith would only be established if the application was an abuse of process within the principles articulated by the High Court in Williams v Spautz. His Honour stated that the submission to that effect overlooked two factors:

The first is that it is for the applicant to affirmatively establish that he or she is acting in good faith to the satisfaction of the court. It is not for the respondent to any such application to establish bad faith. The second is that I see no reason why the expression 'good faith' in s 237(2)(b) should be restrictively construed in the manner asserted by the appellant.

1. Further, in relation to the good faith requirement, Tobias JA differentiated between the personal interests of a person and their interests as a shareholder:

As I have already observed, it must be kept well in mind that the onus lies upon the applicant to satisfy the court that, in applying to it for leave to bring the relevant proceedings, he or she is acting in good faith. If such an applicant is in reality seeking to further his or her own personal interests other than as a current or former shareholder of the company, rather than the interests of the company as a whole, then in my view that onus will not have been discharged.

Best interests of the Company: s 237(2)(c)

33 As observed by Lyons J in Landsville Huynh Pty Ltd v Huynh:[23]

1. As to the best interests requirement, s 237(2)(c) requires that it is (not may be or is likely to be) in the best interests of the company that the applicant be granted leave. The onus is on the applicant to establish the bests interests requirement. In Daiwa Can Company v Barokes Pty Ltd (Daiwa Can Company), Sifris J held that the phrase 'best interests' directs attention to the company's separate and independent welfare and that:

There is no fixed test to determine best interests and there is no special standard of proof or any presumption or disposition against the granting of relief. However, the court will always have regard to whether the benefits of the proceeding are outweighed by the costs and risks that the company would suffer in bringing them.

1. In Swansson, Palmer J noted that the 'best interests' criteria requires the applicant to establish, on the balance of probabilities, a fact which can only be determined by taking into account all of the relevant circumstances and would ordinarily, at least, include matters relating to:

(1) the nature or the character of the company, including whether it is a small private company or a publicly listed company;

(2) the business of the company, so that the effects of the proposed litigation on its proper conduct may be appreciated;

(3) whether there are any other means of obtaining the same redress which does not require the company to be brought into litigation against its will; and

(4) the ability of the proposed defendant to meet at least a substantial part of any judgement in favour of the company.

1. In Robash Pty Ltd v Gladstone Pacific Nickel Pty Ltd, Ball J listed other relevant matters to consider in relation to the best interests requirement, being:

(1) the prospects of success of the proposed claim;

(2) the likely recovery if the proposed claim is successful;

(3) the likely costs of the proposed claim;

(4) the likely consequences if it is not successful;

(5) related to (3) and (4), the nature of any indemnity the applicant has offered to the company if the proposed claim is brought and the likelihood that the company will recover under that indemnity; and

(6) the resources of the company required to be devoted to the proposed claim and the resources it has available, together with the effect that the proposed claim may have on other aspects of its business.

1. I would add to that list, to the extent it is not already expressed, the likely damages that might be awarded. This is linked to the likely recovery of damages if the proposed claim is successful. The Victorian Court of Appeal recently noted '[i]f the applicants could not show at least a reasonable prospect that the proposed proceeding would yield significant damages... then they could not establish that bringing the proceeding was in the best interests of the company'.

Serious question to be tried: s 237(2)(d)

34 The applicant has the same relatively low threshold to surmount as in the case of an application for interlocutory injunction.[24] The Court will not normally enter into the merits of the proposed derivative action to any great degree.[25]

35 The criteria in s 237(2) overlap[26]. For example, if there is no serious question to be tried then it is not in the best interests of the company for leave to be granted to bring the proceeding.[27]

Nature of the application and cross-examination

36 As I have already said in these Reasons, it would be inappropriate, and perhaps prejudicial to the further hearing of the matter, to allow a person to be cross-examined at this stage in the proceeding.[28]

Section 90-15 of Schedule 2 of the Corporations Act

37 Section 90-15(1) provides that the Court may make such orders as it thinks fit in relation to the external administration of a company. Section 5-15(a) provides that a company is taken to be under external administration if the company is under administration. The note to s 5-15 states that a company is not under external administration for the purposes of Schedule 2 merely because a receiver and manager has been appointed in relation to property of the company.

38 Section 90-15(2)(b) provides that the Court may exercise the power under s 90-15(1) on an application under s 90-20.

39 Section 90-20(1) relevantly provides:

(1) Each of the following persons may apply for an order under section 90-15:

(a) a person with a financial interest in the external administration of the company;

...

(d) an officer of the company;

...

40 Section 90-15(3) relevantly provides:

(3) Without limiting sub-section (1), those orders may include any one or more of the following:

(a) an order determining any question arising in the external administration of the company;

...

41 There are a number of Bellrock companies within the Bellrock Group.

(a) Mr Duggal and a Mr Peter Robert Asimus are the directors.[29]

(b) Mr Duggal is the sole shareholder.[30]

(c) It commenced trading 'in its own right' in January 2022.[31]

(d) It carries on business as a security provider of static, roaming and security personnel to various institutions and establishments.[32] Mr Duggal gave evidence that, as at 19 December 2022, it employed in excess of 100 persons and had a turnover of more than $8,000,000.00 per annum.[33] Mr Duggal also submitted that, as at 12 December 2022, it employed 42 persons and used the services of subcontractors.[34] Ms Vouris gave evidence that as at 12 December 2022, it had 86 employees of which 45 were scheduled to finish up following the loss of a major client.[35]

(a) Mr Duggal is the sole director and shareholder.[36]

(b) It carried on the business of a cleaning contractor.[37] It ceased trading in June 2022.[38] Mr Duggal gave evidence that it employed 10 persons and had a turnover of more than $4 million per annum.[39]

44 The businesses of two other companies in the Bellrock group of companies, Bellrock Protective Services Pty Ltd (Bellrock Protective Services) and Bellrock Technology Services Pty Ltd (Bellrock Technology) were, in effect, 'merged' into Bellrock UAV in January 2022 as a result of a failed sale of those two businesses to a third party.[40] How this merger took place has not been explained. The merged businesses then became known as "Bellrock Australia".

45 On or about 30 July 2021,[41] Bellrock Cleaning, Bellrock UAV, Bellrock Protective Services and Bellrock Technology (together, the Bellrock entities) entered into a number of agreements with Grow in relation to the provision of an invoice factoring facility. These agreements include the following:

(a) an agreement between Grow, Mr Duggal and the Bellrock entities titled "Factoring Facility Agreement with Guarantee" (Debt Factoring Agreement).[42] Each of the Bellrock entities is described as a "Client" and Mr Duggal as "Guarantor";

(b) an agreement between Grow, Mr Duggal and the Bellrock entities titled "Deed Collateralising Securities and Security Sharing" (Cross Collateralising Deed).[43] Each of the Bellrock entities is described as a "Client" and Mr Duggal as "Guarantor";

(c) agreements between Grow and each of Bellrock Cleaning[44], Bellrock UAV[45], Bellrock Protective Services[46] and Bellrock Technology[47] titled "General Security Agreement" (each a General Security Agreement). Grow is described as the "Secured Party" and the relevant Bellrock entity is described as the "Grantor". These each refer to a memorandum of common provisions. The "Memorandum of Common Provisions" numbered AA5436 has been registered.[48]

46 The Debt Factoring Agreement relevantly provides, inter alia:[49]

Security Release Fee means the sum specified in the Schedule which we will be entitled to charge each time we release a Security Interest that arises under a Relevant Document.

...

Fees means the Discount Charge, Service Fee, Establishment Fee, Additional Take On Fee, Same Day Fee, Refactoring Fee and Overpayment Fee;

...

9.5 Estimate

You agree that we may in our absolute discretion estimate an amount payable where the actual amount cannot be immediately determined. We will promptly adjust this estimate once it has determined the actual amount.

...

12. Fees

12.1 Establishment Fee

You will pay to us the Establishment Fee on the Commencement Date.

12.2 Service Fee

When you have given (or should have given) us particulars of a Debt, you must pay us a service fee calculated by multiplying the Invoice Value of that Debt by the Service Fee Percentage. You agree that if the total service fees payable by you in any month are less than the Minimum Annual Fee divided by 12, you will pay us the shortfall for that month.

12.3 Same Day Payment Fee

You may request and we may (but are not obliged to) agree to make any payment which we are required to make to you under this Agreement on the same day as you request it. If we agree to do so, you agree to pay us the Same Day Payment Fee each time we make that payment.

12.4 Additional Take On Fee

On the later of the Commencement Date or the day on which you provide us with the First Debt Schedule, you must pay us the Additional Take On Fee which is calculated by multiplying the sum of the Invoice Values of the Debts specified in the First Debt Schedule by the Additional Take On Percentage.

12.5 Refactoring Fee

For each month, you must pay us a Refactoring Fee which will be calculated by multiplying the sum of Old Debts as at the last day of that month by the Refactoring Fee Percentage.

12.6 Overpayment Fee

Notwithstanding clause 5.7 (b)(iii) or clause 5.10, we may agree to permit Exposure to exceed the Facility Limit. If we do so, our agreement must be in writing only and we will include terms that we in our discretion require including the time for repayment of the amount of the Exposure exceeding the Facility Limit and that you must pay us the Overpayment Fee.

12. 7 Other Cost

You must pay all of our costs and your costs associated with the entry into this Agreement and all Relevant Documents including our solicitor's costs (on a full indemnity basis) and any registration fees, including without limitation, the Security Release Fee.

12.8 Payment of Discount Charge

We will charge you a Discount Charge for each month calculated daily by multiplying the outstanding balance of Exposure by the Discount Charge Percentage. Interest will be charged to the Current Account in arrears on the first business day of each calendar month in respect of interest Discount Charge accrued during the previous month.

12.9 Compensatory service fee charge

You agree that we will incur substantial overhead costs, including employment, rental, equipment and finance facility costs to carry out our obligations under this Agreement. You agree that if the Agreement ends following an Event of Default, we will be entitled to a compensatory service fee charge that is equal to the Minimum Annual Fee. You agree that the amounts payable under this clause are a genuine pre-estimate of the loss we will suffer.

12.10 Payments following a default

If:

(a) we do not receive, when due, an amount payable to us under a Relevant Document; or

(b) you do not perform an obligation under a Relevant Document,

then, without prejudice to any other right exercisable by us, you will pay interest on that overdue amount (including interest payable under this clause) calculated from its due date to the date of its receipt by us (after as well as before judgment) compounded and payable at intervals selected by us at our discretion at the Default Interest Rate.

12.11 Additional costs

You acknowledge that we may, at your cost and our discretion, employ consultants (including without limitation, solicitors (on a solicitor/ client cost basis) or accountants) from time to time in respect to any matters associated with a Relevant Document. The costs of any such consultant shall be payable by you to us on a full indemnity basis and you agree that we may debit those costs to any of your accounts with us (including the Current Account).

12.12 Goods and Services Tax

(a) If any supply by us to you under or in connection with this Agreement is a taxable supply under the GST Act then, in addition to the amount specified elsewhere in this clause 12 you must pay GST to us.

(b) We will provide to you with any tax invoice required to be provided by us under the GST Act and the client must reimburse and indemnify us for all GST on demand.

...

14.3 Effect of termination of this Agreement

(a) Effect of termination

If this Agreement is terminated under clause 14, then:

(i) all outstanding Approved Debts will immediately become Disapproved Debts; and

(ii) you will immediately become liable to repurchase at the value notified by us all Debts outstanding at the termination date together with all Associated Rights, provided however that none of the Debts or Associated Rights will be reassigned to you until you have paid to us all amounts due and you have otherwise performed all other obligations to us under this Agreement; and

(iii) subject to any provision requiring earlier payment you must repay the Exposure to us on termination of this Agreement.

(b) Existing rights unaffected

Termination of this Agreement does not affect the rights and obligations of the parties to this Agreement in relation to Debts and any Associated Rights which came into existence prior to termination and after termination, which remain in full force and effect and continue to be assigned to us until we have confirmed to our satisfaction that the Exposure has been repaid.

(c) Continued assignment

Notwithstanding termination, all present and future Debts continue to be assigned to us immediately free of any Security Interest (other than a Permitted Security Interest) when they come into existence until all of your liabilities to us under this Agreement have been fully discharged under this Agreement and we are satisfied that we will not be required by any insolvency law to repay money paid to us by you or any other person.

47 The Bellrock UAV General Security Agreement relevantly provides, inter alia:[50]

OPERATIVE PROVISIONS

1. DEFINITIONS

In this Security, the definitions apply and unless the context otherwise requires:

1.1. "Agreement" means the Factoring Facility Agreement with Guarantee between the Secured Party and the Obligors entered into on or around the date of this Security and includes any variations to the Agreement as permitted by the terms of the Agreement;

1.2. "Debt" means the aggregate amount from time to time of all unpaid or outstanding principal, interest, fees and Costs owing to the Secured Party in connection with the Agreement, including (but not limited to) all Advances, all accrued but unpaid interest, fees and Costs, and all other money actually or contingently payable by the Grantor to the Secured Party for any reason;

1.3. "Grantor" means the person or persons named in Item 1 of the Schedule;

1.4. "Memorandum" means the Memorandum of Common Provisions specified in Item 4 of the Schedule, a copy of which is provided with this Security at the time the Grantor signs this Security;

1.5. "Secured Party" means the person or persons named in Item 2 of the Schedule;

1.6. "Security" means this General Security Agreement document and the Memorandum read together;

1.7. "Security Property" means the property described in Item 3 of the Schedule.

1. INTERPRETATION

(a) This Security is in full force and effect notwithstanding the absence of any of the Items in the Schedule and/or "N/A" or the like being written in respect of any of the Items, and in that instance to the extent possible it is presumed that those Items are not applicable and this Security otherwise is in full and effect.

1. SECURITY

The Grantor gives this Security, and agrees to the terms of this Security, in favour of the Secured Party. Amongst other things, the Grantor charges and mortgages and grants a Security Interest in all of its estate, rights, title and interest, present and future in, or arising under or in connection with, the Security Property to the Secured Party to secure the performance of the obligations of the Grantor including amongst other things the Grantor's obligation to pay the Debt.

BELLROCK UAV PTY LTD (ACN 626 101 915) of Suite 12320 NS & Associates Pty Ltd, 1 Queens Road, Melbourne VIC 3004

GROW INVOICE FINANCE PTY LTD (ACN 619 556 231) of Level 4, 333 George Street, Sydney, NSW 2000

All the Grantor's present and after acquired property of whatever kind and nature and all the Grantor's accounts

Memorandum of Common Provisions which is registered in Victoria as no. AA5436, and a copy of which is provided with this document

48 The Memorandum of Common Provisions relevantly provides, inter alia:[51]

1.8. "Costs" include all charges, expenses, liabilities, costs (including legal costs on a solicitor own client basis or indemnity basis, whichever is the higher), outlays, fees, Taxes and the Lender's reasonable internal administration costs;

1.9. "Debt" means the aggregate amount from time to time of all unpaid or outstanding principal, interest, fees and Costs owing to the Lender in connection with this Agreement, including (but not limited to) all Advances, all accrued but unpaid interest, fees and Costs, and all other money actually or contingently payable by the Borrower to the Lender under this Agreement;

...

5.1. Payment

The Grantor must pay to the Secured Party the full amount of the Debt, and any portion and component (including principal, interest, fees and Costs) of the Debt, on time and in accordance with the Finance Documents.

...

5.3. Costs

The Grantor must pay to, or as directed by, the Secured Party and, if required by the Secured Party, indemnify the Secured Party against, all Costs paid or incurred by the Secured in respect of or incidental to:

...

(b) any breach of, or default or Event of Default under, this Security by the Grantor (including the fees of all lawyers, advisers and consultants incurred by the Secured Party in consequence of or in connection with, any such breach or default);

...

whether or not any Advances are made available. The Secured Party is entitled to capitalise any such Costs and add such Costs to the Debt, and such Costs shall bear interest in accordance with the Finance Documents and/or the Law and the Grantor is required to fully pay for such Costs or fully reimburse the Secured Party for such Costs immediately.

...

1. EVENT OF DEFAULT

Each of the following events is an Event of Default:

(a) Non-Payment

An Obligor fails to pay when due any amount payable by the Obligor under any Finance Document (including payment of any interest, fees or Costs) in accordance with the terms and conditions of that Finance Document.

...

(f) Insolvency

An Obligor suffers an Insolvency Event.

...

In addition, the occurrence of any of the events described in this clause in respect of a "related body corporate" (as defined in the Corporations Act 2001 (Cth)) of an Obliger also constitutes an Event of Default.

A determination by the Secured Party in its absolute discretion that an Event of Default has occurred will be final and binding on the Grantor. The Grantor must promptly inform the Secured Party in writing upon the happening of any of the events referred to in this clause.

1. SECURED PARTY'S RIGHTS

7.1. Rights of Secured Party After Event of Default Occurs

Any time after an Event of Default occurs, the Secured Party can do anything it considers appropriate to obtain full payment of the Debt or to enforce this Security. Amongst other things, the Lender may do any of the following without further notice:

...

(e) sell, transfer, assign, let, part with possession, mortgage, charge, encumber, grant a Security interest, give control or otherwise dispose of or deal with the whole or any part of the Security Property, in any manner and on any terms and conditions the Secured Party considers appropriate (including as the Security Property stands at the date of the occurrence of any Event of Default, without the Secured Party otherwise exercising some or any of its rights under this Security);

(f) terminate, rescind, vary or complete any contract of sale of the whole or any part of the Security Property;

...

(s) appoint in writing any one or more persons jointly and/or severally to be a Receiver in respect of the whole or any part of the Security Property in accordance with the terms of this Security and otherwise on the terms agreed upon by the Secured Party, and pay and/or indemnify any such persons in respect of their remuneration, liabilities, Costs and expenses in connection with their appointment on terms as the Secured Party considers appropriate;

...

...

1. RECEIVER

8.1. Secured Party's Rights with respect to Receiver

Where a person has been appointed as Receiver in respect of the whole or any part of the Security Property:

(a) the Secured Party may remove and terminate that appointment and appoint one or more persons in their place to as Receiver over the whole or any part of the Security Property; and

(b) the Secured Party may fix or agree the terms of the remuneration of the Receiver.

8.2. Capacity of Receiver

A person appointed as Receiver in respect of the whole or any part of the Security Property at all times acts as the agent of the Grantor where the that person has been appointed as the receiver, manager or receiver and manager of the whole or any part of the Security Property.

8.3. Powers of Receiver

A person appointed as Receiver in respect of the whole or any part of the Security Property may do anything it considers appropriate to recover the Debt and deal with the Security Property, including (amongst other things):

(a) exercising any powers or rights conferred on the Secured Party by this Security or on the Receiver by Law;

(b) borrow or raise money (including from the Lender or Secured Party) from the exercise of any of the Receiver's powers, on any terms as the Receiver considers appropriate;

(c) pay or transfer to the Secured Party (or any person nominated by the Secured Party) all money and assets which may be received by the Receiver;

(d) commence, prosecute and defend any claim or proceedings of any kind in the Grantor's name or otherwise;

(e) negotiate, agree and enter into any settlement, arrangement, agreement or compromise which the Receiver considers appropriate and expedient;

(f) with the Secured Party's prior written consent delegate to any person any of the powers conferred on the Receiver on the terms approved by the Secured Party;

(g) pay or obtain reimbursement out of the Security Property any of the Receiver's expenses, costs, remuneration and fees;

49 Ms Vouris gave evidence that the Debt Factoring Agreement "established what is commonly called a 'factoring' or 'debtor invoice' facility whereby Grow agreed to finance a percentage of the Companies' invoices in exchange for the purchase or assignment of them to Grow, in addition to which the Companies granted Grow a security interest in relation to all of the present and after acquired property of the Companies and its accounts within the meaning of the PPSA (Security Interests)."[52]

50 On 1 March 2022, Mr Asimus sent a letter to Grow purporting to terminate the services provided by Grow to Bellrock Protective Services with three months' notice.[53] The letter states that "[w]e wish to continue Grow Finance services with Bellrock Cleaning Services Pty Ltd at this time as we assess the services provided."[54]

Correspondence concerning the Debt owed to Grow

51 Mr Duggal gave evidence of the correspondence he exchanged with Grow concerning the outstanding Debt owed under the Debt Factoring Agreement in the period May to October 2022. Ms Vouris gave evidence that in the period May 2022 to December 2022, the Bellrock entities were in continued default of their financial obligations to Grow.[55]

52 On 27 September 2022, orders were made in the Federal Court of Australia winding up Bellrock Protective Services in insolvency and appointing a liquidator.[56]

53 Mr Duggal and Mr Asimus, the directors of Bellrock UAV, are in dispute about the management of Bellrock UAV.

54 There is evidence that by June 2022 Mr Asimus raised concerns with Mr Duggal that Bellrock UAV did not have the means to continue servicing the debts of Bellrock Protective Services and Bellrock Technology.[57]

55 On 6 December 2022, SLF Lawyers (at that time acting for Bellrock UAV's director, Mr Asimus, and now acting for the Receivers and Grow), wrote to Bellrock UAV.[58] The letter states, inter alia:[59]

1. The above documents indicate that the Company is in what could only be described as a dire financial position and is unquestionably Insolvent. In support of that proposition we refer to some of the following salient matters within the Company's Financial Documents

(a) It has current liabilities totalling $3,297,111.00, including the following concerning items:

i. $1,004,503.00 in PAYG;

ii. $465,214.00 in GST;

iii. $178,179.00 in Superannuation;

iv. $841,842.00 in accrued annual and personal leave; and

v. $878,990.00 in Accounts Payable.

(b) It has incurred an average monthly loss of $101,041.00 from 1 July 2022 - 31 October 2022;

(c) It has incurred a calendar year to date loss of $962,938.00;

(d) It has negligible fixed assets; and

(e) Its primary asset is accounts receivable in the amount of $1,633,330.00.

...

1. In all of the above circumstances, with a particular emphasis on the matters set out in paragraphs 7 and 8, it is incumbent upon you and our client to place the Company into a form of external administration - either voluntary administration, or liquidation.

...

1. For the above reasons, our client is willing to provide you until 4:00pm 9 December 2022 (Due Date) to:

(a) Confirm and provide the Required Funding; or

(b) Agree to place the Company into Voluntary Administration, to which our client can procure the appropriate consent and documentation.

1. In the event that you fail to do either of the above by the Due Date, our client will have no choice but to undertake the actions set out at paragraphs 17 and 18 above. Further, and given the matters set out at paragraph 10 above and that you have been put on notice of these issues for some time yet have refused to do anything about them, we will be seeking orders that the Court depart from the usual position in s 466(2) of the Act that the Company bears the costs of the application, and instead seek orders that you pay the costs personally in accordance with the principles set out in Brancato v Azzurri Stone (NSW) Pty Ltd, in the matter of Azzurri Stone (NSW) Pty Ltd [2020] FCA 466.
2. All of our client's rights are otherwise reserved, whether they are foreshadowed in this correspondence or otherwise.

Appointment of Administrator and now Liquidator

56 On 12 December 2022, Mr Banerjee was appointed by Grow pursuant to section 436C of the Corporations Act as the administrator of Bellrock UAV.[60] On 31 March 2023, Mr Banerjee was appointed liquidator.

1. I note that nowhere in the Banerjee affidavit does Mr Banerjee depose to the investigations carried out prior to his appointment as administrator of Bellrock UAV. Furthermore, Mr Banerjee does not depose to any conversations with the Receivers. I note that the Mr Banerjee was appointed by Grow.
2. I believe Bellrock UAV should not have been placed into external administration because at the date of the appointment of Mr Banerjee there was sufficient funds to discharge the debt owed to Grow.

58 The Administrator's Form 531 entitled "Copy of declaration of relevant relationships and/or declaration of indemnities" states that the appointment was referred to Mr Banerjee by Mr Jovan Singh of Hall Chadwick, being the firm of the Receivers.[62] It is dated 13 December 2022 (i.e. the day after the date of the appointment of the Administrator and the Receivers). This document refers to, inter alia:

(a) the Administration being a "Voluntary Administration" and Mr Banerjee being the "Voluntary Administrator".[63] Such an appointment would be an appointment under s 436A and not s 436C of the Corporations Act;

(b) the Administrator's appointment as being an "appointee of the Company".[64] The "Company" is defined as Bellrock UAV. It does not refer to any appointment by Grow;

(c) a "Deed of Appointment".[65] No such deed is otherwise referred to in the evidence.

59 This evidence establishes that correspondence was exchanged, and there were discussions between, the Administrator and a person within the firm of the Receivers and Mr Albarran, prior to the appointment of the Receivers and the Administrator, concerning a voluntary administration of Bellrock UAV. Mr Asimus' solicitors (now the solicitors for the Receivers and Grow) had requested, as recently as 6 December 2022, for Mr Duggal to agree to Bellrock UAV being placed in voluntary administration.[66] There was no dispute between the parties, however, that the Administrator was appointed by Grow and was not an appointment by Bellrock UAV. The parties did not otherwise make any submissions based on these discussions concerning a "voluntary administration". Mr Duggal referred to these discussions in the context of submitting that there was no evidence of discussions of the purpose of appointing an administrator. This is addressed later in these Reasons. The parties did not otherwise make any submissions on the fact that this document recorded an appointment by Bellrock UAV pursuant to a deed of appointment and by Grow.

60 Mr Woszczalski, a director of Grow, gave evidence regarding Grow's appointment of the Administrator:[67]

Indebtedness to Grow

1. For the period on or about May 2022 to December 2022, the Companies were in continued default of their financial obligations to Grow in accordance with the Facility Agreement. A number of emails were exchanged between representatives of both parties.

2. Having read the Vouris Affidavit, the emails exchanged are located at pages 146 to 156.

3. By reason of the above, I held grave concern over the solvency of the Companies as a whole, rather than just simply a concern that the Companies would not be able to satisfy the outstanding monies owed to Grow.

4. The above concerns were compounded by the fact that on 27 September 2022, Bellrock Protective Services Pty Ltd was wound up in insolvency by the Commissioner of State Revenue.

Appointment

1. On 12 December 2022 and pursuant to the powers contained in the Facility Agreement, Grow appointed Mr. Albarran and Ms. Vouris as Receivers and Managers over the Companies.

2. I understand that the objective of a voluntary administration is to:

3. maximise the chances of the company's business continuing in existence; or

4. if continuation of the business is not possible, provide for a better return to creditors than if an immediate liquidation of the company occurred.

...

1. The appointment of Mr. Banerjee was made as Grow wanted to maximise the prospects of Bellrock UAV and the wider group of Companies to be administered in a way that maximises the chances of their continued existence. In discussions with Mr. Albarran, I formed the opinion that this is not something a receiver alone could (nor would be expected) to do.

61 On 12 December 2022, the Receivers were appointed by Grow as receivers and managers over the Bellrock entities.[68] On that day, the Receivers sent an email to Mr Duggal (attaching a number of ASIC Forms) and notifying him of their appointment.[69]

Key events during the receivership and administration

62 Upon their appointment, the Receivers commenced to trade the business of Bellrock UAV.

63 On 12 December 2022, the sum of $238,794.91 was in an account of Bellrock UAV with the Commonwealth Bank of Australia.[70]

64 The balance sheet of Bellrock UAV as at 12 December 2022 refers to liabilities of, inter alia: "provision for annual and personal leave" in the sum of $841,841.54 and "superannuation payable" in the sum of $199,317.84.[71]

65 On 12 December 2022, the Receivers convened a meeting with the "management team" of Bellrock UAV.[72] Mr Duggal gave evidence that he was not permitted to attend the meeting and was not told of the outcome of the meeting.[73] Ms Vouris gave evidence:[74]

1. Shortly following our appointment and on the same day, we met with the management staff of Bellrock UAV to discuss the trading requirements of that company. One matter which was discussed was the ongoing wage and entitlement commitments of Bellrock UAV which I was advised by one of the Directors being Mr. Peter Asimus and the Chief Executive Officer of the company to be in the vicinity of $230,000 for the period 5 December 2022 to 18 December 2022 which were due to be processed on 22 December 2022. This ultimately amounted to the sum of $225,206.09, details of which were obtained during the week commencing 19 December 2022.

66 Mr Duggal gave evidence that he has been denied access to the books and records of the Bellrock entities, including of Bellrock UAV and Bellrock Cleaning.[75]

67 In the period between 12 December 2022 and 14 December 2022, communications were exchanged between Mr Duggal and his solicitor, Mr Livaditis, and the Receivers in relation to the sum outstanding to Grow.[76]

68 On 12 December 2022, Mr Livaditis sent an email to Mr Ricky Cheng of Hall Chadwick, the Receivers' firm, and the Receivers requesting an urgent payout figure.[77]

69 On 12 December 2022, Mr Cheng wrote to Mr Woszczalski of Grow seeking clarification of the amount then outstanding to Grow.[78]

70 On 13 December 2022, the Receivers sent letters to Mr Duggal concerning each of the Bellrock entities containing a number of attachments including as follows:[79]

(a) notice of appointment;

(b) a questionnaire, being Part B of the Report on Company Activities and Property; and

(c) a demand for the books and records.

71 On 13 December 2022, Mr Livaditis sent an email to the Receivers in which it is stated, inter alia:[80]

We refer to your call to the writer this morning at 9.45am. We note you advised that your client's Managing Director has advised you that the debt is now in the vicinity of $200,000, which as discussed, this morning, this is quite concerning and a great disparity from the $46,000 stated as owing in correspondence sent to our client by your appointor client in late October 22.

We confirm you advised the writer you would provide in a couple of hours details of the payout figure with calculations.

It is now over 4.5 hours since we spoke with nothing received as to a payout figure, which we note we are instructed our client has funds to pay.

In the interim we have been advised your team is writing to our client's customer base advising of the receivership appointment. Our client finds this most concerning as such proposed action will irreparably harm and damage our client's business. Our client demands such actions cease immediately.

As noted in our correspondence we have reserved (and continue to so unconditionally reserve) our clients rights generally as to damages suffered should such action persist by your office when one would have assumed, that the amount of indebtedness would have been raised with your office upon your initial appointment.

We await your urgent written reply and confirmation you will stop writing to our client's customers, noting we will produce this correspondence and our previous correspondence should proceedings be required to be issued. Time is of the essence.

72 On 13 December 2022, Mr Livaditis sent a further email to the Receivers in which it is stated:[81]

We refer to our unanswered email of yesterday and of earlier today.

We note since our earlier email of today we have been subsequently sent numerous emails from various employees of Hall Chadwick with various notices having been issued and we also received notice from Westburn advisory that they have been appointed as voluntary administrator of Bellrock UAV Pty Ltd.

The question arises why an administrator is appointed by Grow Finance if they have already appointed Receiver Managers. This is also more alarming when the administrator has advised he has not been provided with a quantum of the debt owed to Grow.

A closer look at the documentation shows the factoring agreements were terminated some 6 months ago and therefore your clients' emails of October 22 stating the debt owed is $46,000 does not give much credence to the argument by your client there was a miscalculation, and the amount is now $200,000.

Your firms' fees have been increased today by the numerous letters sent and the main point what is the debt owed, has still not been addressed, despite now the third request in 24 hours. In that regard we reserve our clients' rights concerning generally seeking appropriate court relief and damages being sustained due the actions being taken including letters to creditors/suppliers/clients concerning the receivership and the appointment of an administrator.

We await your urgent reply, noting time is of the essence.

73 On 14 December 2022, Grow sent to the Receivers a Client Termination Calculation and Checklist advising that the total amount outstanding was $78,034.41.[82]

74 On 14 December 2022 the Receivers sent a letter to Mr Livaditis (the 14 December Letter) which stated, inter alia:[83]

I refer to previous discussions held with my office with respect to Bellrock UAV and understand that you act for Mr Rajan Duggal, being one of the directors of Bellrock UAV.

As you are aware, Kathleen Vouris and I were appointed as Joint & Several Receivers and Managers of the Companies by Grow Invoice Finance Pty Ltd ("the Secured Creditor") on 12 December 2022.

As requested, the total outstanding sum due to the Secured Creditor including enforcement costs and current exposure as at close of business 13 December 2022 is $373,043.41 ("the Secured Debt"), which is summarised in the following table:

Amounts owing to Grow Invoice Finance Pty Ltd pursuant to Factoring Facility Agreement with Guarantee dated 30 July 2021

Receivership fees and expenses incurred up to 13 December 2022 with respect to Bellrock UAV (estimated)

Receivership fees and expenses incurred up to 13 December 2022 with respect to Bellrock Protective Services (estimated)

Receivership fees and expenses incurred up to 13 December 2022 with respect to Bellrock Technology Services (estimated)

Receivership fees and expenses incurred up to 13 December 2022 with respect to Bellrock Cleaning Services (estimated)

Trading Expenses incurred up to 13 December 2022 (estimated)

Total Outstanding Sum as at 13 December 2022 (estimated)

Please note that the above outstanding sum is an estimate only based on information available to date and that further costs and interests will continue to accrue until the Secured Debt is discharged in full. Should your client be in a position to discharge the Secured Debt, please provide an indicative date on when the discharge is likely to occur so we may revise the Secured Debt accordingly.

I also note that circulating assets of the Companies, are subject to priority provisions as set out in the Corporations Act 2001, and may not be available to discharge the Secured Debt, in the event of a distribution to creditors of the Companies.

75 Mr Duggal gave evidence that he "accessed the GIF portal with respect to the Debt Factoring Agreement" on 15 December 2022, and that according to the portal, the amount allegedly owing to Grow was $51,783.[84]

76 On 15 December 2022, the first meeting of creditors took place.

1. ... Shortly after our appointment and following a review of each of the Companies corporate status and operations, it became apparent that Bellrock UAV was the principal trading entity. We sought clarity from one of the directors, Peter Asimus (Asimus) as to this and the other company's roles within the group, to which Asimus provided us with an email on 16 December 2022 outlining same. In summary:

1. Bellrock Technology and Bellrock Protective Services are related entities within the meaning of section 9 of the Corporations Act 2001 (Act) however historically operated separate businesses from one another and discussions were held with management from as early as May 2020 to merge the two businesses / assets into one company;
2. several transition team meetings were held including one referenced by Asimus in August 2021 which outlined the engagement of De Jonge Read (consultant) to document and facilitate the transition;
3. Asimus advised that the consultant ceased providing their services shortly after their engagement as their fees were not paid by Duggal;
4. no formal agreements between the entities were entered into with respect to the transition;
5. all employees were asked to sign new employment contracts with Bellrock UAV Pty Ltd and all employee entitlements were transferred. Asimus advised that this excluded superannuation entitlements, however I note that this is not referred to in the new employment contracts; and
6. notwithstanding the above, Bellrock UAV had absorbed the businesses and assets of Bellrock Technology and Bellrock Protective and commenced to trade in January 2022 and has continued trading since as Bellrock Australia (hereafter referred to as Bellrock Australia).

78 Mr Duggal gave evidence that, as of the date of the Receivers' appointment, Bellrock UAV had $248,000 in its Commonwealth Bank of Australia account, and that "[t]his was more than enough money to discharge the alleged debt owed to GIF", which has been paid.[86]

79 On 15 December 2022, monies in the sum of $238,694.91 were withdrawn from Bellrock UAV's Commonwealth Bank of Australia account and paid into the Receivers' account opened for the receivership with Macquarie Bank.[87] It is common ground that this was not used to pay the Debt to Grow.

80 The Receivers commenced a marketing campaign with advertisements appearing in newspapers on 15 December 2022 and 17 December 2022.[88] Ms Vouris gave evidence regarding the sale campaign, inter alia, as follows:[89]

1. At the time of swearing my affidavit, the sale campaign has resulted in 5 offers being received. One of the offers was received from one of the directors of the Bellrock Australia namely Duggal. The offers range from $200,000.00 to $895,000.00. Notwithstanding this, a number of offers have certain conditions that will need to be considered as to whether they are able to be met and as such, the highest offer may not be the best offer at this stage.

81 On 16 December 2022 Mr Duggal paid the sum of $51,783 to Grow[90] and Mr Livaditis informed the Receivers of the payment the same day.[91]

82 Ms Vouris gave evidence that she was advised by Mr Cheng that Grow confirmed that Mr Duggal's payment had been received in its account on 16 December 2022.[92]

83 On 16 December 20222, Mr Livaditis sent an email to the Receivers in which he stated, inter alia:[93]

With reference to the receiver's letter of 14 December 2022 concerning their fees claimed of $295,000, please urgently provide a spreadsheet of all reasonable work undertaken in a progress schedule of all time expended in this matter.

We note our client has this morning paid direct into Grows account the amount of $51,738 (receipts attached). This payout amount was retrieved last night from the client's portal with Grow (copy enclosed). We note the $78,000 claimed in Hall and Chadwick's letter as owing does not match the portal nor was any explanation provided of the calculation.

We accordingly request your immediate written advices by no later than 10.00am on 19 December 2022 that the receivers appointment be immediately terminated by Grow, the receivers cease and desist any further action and that the administration be also immediately terminated by Grow and the administrator cease and desist any further action.

If we do not receive written notification by the time stipulated herein then we are instructed to proceed with injunctive relief against all parties.

We are instructed that the amount of $238,694.91 from Bellrocks UAV account was yesterday withdrawn from its account and placed into a Hall Chadwick account (copy of the transaction enclosed, see 4th photo). Our client demands that the $238,694.41 be frozen and not drawn upon or dissipated in any way until the issue of the receivers' fees are agreed upon with our client or determined upon by a Court.

We await your urgent reply, we reserve our clients' rights generally.

84 On 19 December 2022, Mr Jovan Singh of Hall Chadwick wrote to Mr Woszczalski of Grow and sought confirmation that the following breakdown (of the $78,034.41 figure[94]) was correct:[95]

(a) Outstanding Debt - $51,758.00.

(b) Termination Fee - $17,600.00.

(c) PPSR Security Fee - $275.00.

(d) Default Fee - $8,411.00.

85 Mr Woszczalski confirmed that was what was on the "spreadsheet". Ms Vouris gave evidence that she understood him to be referring to the Client Termination Calculation and Checklist.[96]

86 In summary, Mr Woszczalski gave evidence concerning the fees that are part of the sum of $78,034.41 as follows:

(a) Termination Fee: the Termination Fee was based on Grow's entitlement to charge a compensatory service fee charge equal to the Minimum Annual Fee of $24,000 per each of the four facilities, being $96,000 per annum, where the Debt Factoring Agreement ends following an Event of Default. Grow, however, only charged one annual fee of $24,000 which was pro-rated to $16,000 (for 8 months based upon the date of termination) which with GST added amounted to $17,600.[97]

(b) PPSR Security Fee: the charge of $275 for the PPSR Security Fee was the Security Release Fee of $250 set out in the schedule to the Debt Factoring Agreement, which with GST, amounted to $275.[98]

(c) Default Fee: the Default Fee was based on Grow's entitlement to charge interest on any overdue amount calculated from the due date to the date of receipt compounded and payable at intervals selected at Grow's discretion at the Default Interest Rate. The Default Fee was made up of components being default interest and legal costs (including fees for advice plus disbursements such as for the lodging of caveats). [99]

87 On 19 December 2022, the Receivers sent a letter to Mr Livaditis (the 19 December Letter) which stated, inter alia:[100]

As requested, please find enclosed at Annexure "A", schedules of all time costs incurred with respect to the Receiverships and Companies as at 13 December 2022 together with summaries of tasks completed for each company.

Please note that my correspondence dated 14 December 2022 included provisions and estimates of the Receivers' and Managers' fees and expenses (including trading expenses) as at 13 December 2022. During the period 14 December 2022 to 16 December 2022, I estimate further costs have been incurred as outlined in the following table:

Receivership fees and expenses incurred from 14 December 2022 to 16 December 2022 with respect to Bellrock UAV (estimated and subject to completion of timesheets)

Receivership fees and expenses incurred from 14 December 2022 to 16 December 2022 with respect to Bellrock Protective Services (estimated and subject to completion of timesheets)

Receivership fees and expenses incurred from 14 December 2022 to 16 December 2022 with respect to Bellrock Technology Services (estimated and subject to completion of timesheets)

Receivership fees and expenses incurred from 14 December 2022 to 16 December 2022 with respect to Bellrock Cleaning Services (estimated and subject to completion of timesheets)

Trading Expenses incurred from 14 December 2022 to 16 December 2022 (estimated)

Total Fees and Expenses incurred from 14 December 2022 to 16 December 2022 (estimated)

I note that the next fortnightly payroll for the business of Bellrock UAV will be in the vicinity of $230,000, which is due to be paid on 22 December 2022. The funds you referred to in your email correspondence, which have been transferred to the Receivership bank account of Bellrock UAV will be utilised to discharge this priority debt in the ordinary course of business.

With respect to the sum owing under the Secured Creditor's facility totalling $78,043.41, this amount comprises of the following components:

- Outstanding debt under the facility - $51,757.77

- Termination Fee - $17,600.00

- PPSR Security Fee - $275.00

- Default Fee - $8,410.64

Total - $78,043.41.

I note that the aforementioned charges continue to accrue during the course of the Receivership of the Companies.

Should your client be in a position to discharge the outstanding sum due to the Secured Creditor including enforcement costs, please provide an indicative date on when the discharge is likely to occur so we may provide you with an updated payout.

88 Ms Vouris also gave evidence of further correspondence with Mr Duggal, which included, inter alia: [101]

1. On 21 December 2022 and without admitting the validity of my appointment, Duggal offered to buy the business of Bellrock UAV for the sum of $600,000.00 payable within 60 days.

89 Correspondence was subsequently exchanged between the Receivers and Mr Duggal regarding the Receivers' inability to enter into any contract of sale due to the Court's orders.[102]

1. ... I admit forwarding to the Receivers an offer to purchase the assets of Bellrock UAV. I made the offer to protect the company's assets and, if successful in purchasing the asset, to continue running the business...
2. ... I repeat that I have recently managed to secure funding from overseas for the purpose of working capital for Bellrock UAV. I am also willing to continue supporting Bellrock UAV. I understand that the Receivers have received an offer of $895,000 to purchase the assets of Bellrock UAV. In light of my recent ability to secure funding, I propose sending a revised offer to the Receivers to purchase the assets of Bellrock UAV.

91 On 17 January 2023, the Administrator completed his second report to creditors.[104] It stated, inter alia:[105]

In accordance with section 435A of the Act, the objective of a Voluntary Administration is to:

(i) maximise the chances of the Company's business continuing in existence; or

(ii) if continuation of the business is not possible, provide for a better return to creditors than if an immediate Liquidation of the Company occurred.

This report will provide creditors with sufficient information on the Company's business, affairs and financial circumstances which will enable you to vote at the Decision Meeting on whether:

a) the Company should be placed into Liquidation;

b) the Administration should end; or

c) adjourn the meeting for a period of up to 45 business days.

This report has been prepared in accordance with section 439A of the Act and 75-225 of the Insolvency Practice Rules (Corporations) 2016, for the purpose of assisting you in making a decision on the future of the Company. I have relied upon Company records and information supplied by (amongst other parties) the Mr Asimus, employees, the Receivers office and the ATO, as well as from my own inquiries. The scope of my investigation into the affairs of the Company has been limited by the time constraints imposed by the Act. Whilst I have no reason to doubt the information contained herein, except where stated, I reserve the right to alter any conclusions reached on the basis of any change in information that may become available.

...

4.2.2. Employee Entitlements

Employee claims relate to outstanding leave entitlements (annual leave, leave loading and long service leave), retrenchment (Payment In Lieu of Notice ("PILN") and redundancy) and superannuation. The estimated outstanding employee entitlements (as calculated by the Receivers office) is summarised below:

1. Wages - I understand that no wages were outstanding to employees as at the date of my appointment.
2. Superannuation - the Australian Taxation Office ("ATO") portal indicates nil outstanding Superannuation Guarantee Charges ("SGC"), however it appears SCG returns have not been lodged from 1 April 2022 onwards.. The Receivers office has advised of unpaid superannuation for the quarters ending 30 June 2022, 30 September 2022 and 31 December 2022 totalling $242,125 (excluding superannuation owed to the Director in excess of the $2,000 cap for excluded creditors (refer below for further commentary)). As such I estimate the total superannuation outstanding to employees to total $244,056.
3. Annual leave - this amount relates to accrued leave entitlements which have crystallised and is payable by the Company if called upon.

Long Service Leave ("LSL") - Generally, employees that have been working for the same employer for over 10 years are entitled to long service leave. In the event the employer terminates, the employees are eligible for a pro-rata entitlement after five years. One current employee is entitled to LSL.

1. Redundancy/PILN - Generally a Company is required to employ at least fifteen (15) full time equivalent employees to be eligible for redundancy entitlements. As noted herein the Company employs approximately (42) forty-two employees as at my appointment. As such redundancy is applicable. In this regard, I understand that the Receivers continue to employ employees and as such redundancy and PILN entitlements have not crystalised (albeit Redundancy/ PILN in relation to a few employees who have been terminated during the Receivership period).

2. Excluded employees - in the event of Liquidation, directors and certain relatives of directors are classified as "excluded employees" under the Act and their claims to priority are limited to $2,000 for wages and superannuation and $1,500 for leave entitlements each. Excluded employees do not receive priority for any retrenchment payments. This limitation applies only to the priority of payment and excluded employees rank as ordinary unsecured creditors for the non-priority portion of their claims.

Should there be a shortfall in relation to employee claims and the Company is placed into Liquidation, FEG may (in respect of terminated employees only), subject to certain limitations, meet unpaid wages up to 13 weeks, annual leave, long service leave, PILN up to a maximum of five weeks and redundancy pay up to a maximum of four weeks per full year of service (where such entitlements arise under a written instrument of employment). FEG does not cover superannuation. Where such payments have been met under FEG, the Commonwealth government will rank by way of subrogation as a priority creditor in the liquidation for the amount so advanced. I note that FEG payments however are discretionary. Please refer to FEG's website for further details regarding FEG (https://www.jobs.gov.au/fair-entitlements-guarantee-feg).

...

9.3. Liquidation

Due to the fact that no Deed has been proposed, I DO RECOMMEND that the Company be placed into liquidation.

However, I refer creditors to my comments below with respect to an adjournment of the Decision Meeting.

Employee creditors should note that FEG is likely to meet any participating employee creditors' claims (albeit superannuation) with three (3) months of the date of Liquidation.

92 On 27 January 2023, Mr Duggal's solicitors sent a proposed Deed of Company Arrangement to the Administrator.[106]

93 Mr Duggal gave evidence in relation to the Report on Company Activities and Property he completed concerning Bellrock Cleaning:[107]

1. On 30 January 2023, I caused a completed Report on Company Activity and Property (ROCAP) in relation to Bellrock Cleaning to be sent to the Receivers. At page 8 - 53 is a true copy of the ROCAP.
2. For the reasons outlined above, I had limited material available to me at the time of completing the ROCAP. I am now aware that there is an error in the ROCAP in that I believe there is no debt still owing to Grow as a result of the Receivers realising the funds in Bellrock UAV's bank account and the payment made to Grow on 16 December 2022.
3. To the extent there are any other errors in the ROCAP, such errors are inadvertent and due to not having access to the relevant companies' books and records and/or the ability to discuss those matters with the companies' accountant.

94 Mr Albarran gave evidence that, as at 20 December 2022, Mr Duggal had not completed the Report on Company Activities and Property concerning Bellrock UAV.[108]

95 Mr Albarran gave evidence that Mr Asimus is supportive of the Receivers' appointment and for any required restructure, by way of sale or otherwise, to take place.[109]

96 Ms Vouris gave evidence as to declining expressions of interest and offers for the sale of the businesses:[110]

1. The expressions of interest and offers to date have declined over time due to concerns expressed from offerors in relation to clients, and key staff that have left since our appointment. The management team of Bellrock UAV has advised the following with respect to lost clients (and consequently lost revenue) since our appointment:

1. We note that the majority of the Guarding Services revenue loss of approximately $2,100,000 relates to a client who had advised Bellrock UAV of cancellation of services prior to the appointment of the Receivers and Managers.
2. At the time of our appointment Bellrock UAV had 86 employees. Of those employees, 45 were scheduled to finish up with Bellrock UAV following the loss of the major client which was prior to the appointment of the Receivers and Managers.
3. The latest payroll consists of 27 employees. Some of these employees resigned to pursue other opportunities and some employees were terminated in the ordinary course of business and as a result of further loss of clients making their services redundant.
4. An offeror has submitted offers starting at $895,000.00 down to $595,000.00 with the passing of time. As a result of this, on Monday, 20 February 2023, we sent an email to all parties that had previously submitted expressions of interest to provide their best, final and unconditional offer by close of business Wednesday, 22 February 2023. The aforementioned offer is now at $300,000 as a result of the passage of time and the uncertainty regarding the sale.
5. As at the date of swearing this affidavit, we have 5 current offers from unrelated parties ranging from $182,975.00 to $300,000.00 each with varying conditions attached.

97 On 21 February 2023, Mr Livaditis sent an email to Mr Skinner, solicitor for the Receivers and Grow, which stated, inter alia:[111]

Concerning your client's letter of 19 December 22, the letter refers to a summary of the receivers' costs, the letter annexures also refers to the timesheets, unfortunately the letter does not include timesheets for each individual working on the matters in question. Could you accordingly please arrange for those timesheets for the relevant period, including the timesheets for the period 14-16 December 22 to be provided to our office as a matter of urgency.

98 Correspondence was exchanged between the representatives for Mr Duggal and the Receivers between 20 February 2023 and 1 March 2023 in relation to the sale campaign.[112] This included, inter alia, without prejudice correspondence regarding additional time for Mr Duggal to submit a final unconditional offer and "clarification as to what was being sold being all of the business and assets of the entities to which we were appointed including goodwill, client contracts, equipment, intellectual property (IP), and any other assets owned or operated by those entities (the Business)".[113]

99 The Receivers' representatives advised Mr Duggal's representatives that "...in the event an offer was not forthcoming, we would have no choice but to approach the Court for an urgent listing to seek a carve out of the present undertakings to enable the sale of the Business".[114]

100 Further correspondence was exchanged between Mr Duggal's and the Receivers' representatives in relation to matters including, inter alia, details of current clients, current employees and revenue.[115]

101 The 14 December Letter stated that the estimated receivership fees and expenses for the period 12 December 2022 to close of business on 13 December 2022 totalled $215,000.[116] This does not include trading expenses or the sum of $78,043.41 which were also set out. The 19 December Letter has an Annexure "A" that provides further detail concerning what the Receivers say were the actual receivership fees and expenses for the period the period 12 December to close of business on 13 December 2022.[117] The following is a comparison of the estimated and actual expenses:

102 The 19 December Letter also stated that the estimated receivership fees and expenses for the period 14 December 2022 to 16 December 20022 totalled $120,880.50.[120] This does not include trading expenses or the sum of $78,043.41 which were also set out. The following is a summary:

Estimated fees and expenses 14 to 16 December 2022

103 There is no evidence of the actual receivership fees and expenses for the period 14 to 16 December 2022.

104 There is evidence of the work performed by the Receivers and their staff set out in:

(a) Annexure "A" to the 19 December Letter setting out time spent and a summary of tasks in the period 12 December 2022 to the close of business on 13 December 2022. These concern each of the Bellrock entities;[121]

(b) chronologies prepared concerning Bellrock UAV and Bellrock Protective Services setting out a brief chronology of work undertaken and a summary of other work undertaken. These are not limited to the period 12 to 19 December 2022. There are no chronologies prepared for Bellrock Cleaning or Bellrock Technology.[122]

105 Ms Vouris also gave evidence, as at 2 March 2023, of the work done by the Receivers (and employees of Hall Chadwick) since their appointment:[123]

Chronology

1. Since our appointment and in relation to the Companies, we have prepared specific tasks in relation to each company in addition to general tasks undertaken since our appointment.

2. In preparing the earlier Vouris Affidavit, my staff prepared a detailed chronology of the tasks undertaken in relation to each of the Companies, in addition to tasks of a general nature. A copy of those tasks were summarised and are contained in the earlier exhibit bundle.

3. By way of summary only and in relation to the Companies, we have:

4. opened bank accounts in respect of each of the Companies and transferred the available cash at bank of Bellrock UAV Pty Ltd (Bellrock UAV) as at the date of our appointment, being the amount of $238,649.91 (Bank Accounts);

5. obtained access to the management accounts and reviewed various reports;

c. issued various statutory notifications;

1. attended the trading premises to identify and secure various assets and requested a valuation be undertaken in relation to same;

2. entered into a licence agreement with a third-party to assist with ongoing trading requirements; and

3. commenced a sale campaign with respect to the business of the Companies.

4. Following our appointment, we proceeded to secure the assets of the Companies and to obtain an understanding of the Companies financial position and the trading activities of Bellrock UAV.

5. We were required to liaise with valuers and hold several meetings with the management staff of the Companies to advise of the appointment and discuss the trading requirements and procedures of Bellrock UAV. We were required to have staff attend multiple sites of the Companies which included 2 locations in Perth and 1 location in Melbourne.

6. A substantial amount of information was required to be prepared and collated to enable an analysis to be undertaken with respect to the ongoing trading of Bellrock UAV which included, but is not limited to assessing the available working capital, understanding the different client types, the servicing of same and managing staffing and subcontractor requirements.

7. In addition, our office was required to set up numerous accounts with suppliers which included facilitating negotiations for ongoing supply and payment terms.

Costs and Time

1. As at 13 December 2022, we incurred time costs with respect to the Receiverships of the Companies in the sum of $157,670.70 as follows:

1. The disbursements incurred relate to a provision for valuation costs with respect to the assets of the Companies as well as advertisements placed in national newspapers for the Sale Campaign.

106 Mr Duggal gave evidence that he has been successful in securing funding from overseas sources in the sum of $1,000,000.00 for the purpose of working capital for Bellrock UAV.[124]

107 Ms Vouris gave evidence that, it is the opinion and belief of the Receivers, that the Bellrock entities are suffering from an endemic shortage of working capital such that they are unable to pay their debts as and when they are due, and are accordingly insolvent within the meaning of the Corporations Act.[125]

1. ... Our office has prepared a trading statement in relation to Bellrock Australia for the period 12 December 2022 to 22 January 2023 (Trading Statement) in addition to a Summary of Receipts and Payments from 12 December 2022 to 10 January 2023 which provides line item details identifying, inter alia:

1. trading receipts such as post appointment receipts and GST refunds; and
2. trading expenses such as GST liability, Workcover, subcontractors and wages and salaries (including superannuation).

1. In accordance with the Trading Statement, for the period 12 December 2022 to 8 January 2023, Bellrock Australia incurred a loss in the sum of $168,817.92 and is forecasted to incur a further loss of $61,841.17 for the period 9 January 2023 to 22 January 2023 (Trading Estimate)
2. Further to the above, our office has prepared a forecast for the periods 23 January 2023 to 23 April 2023 and 24 April 2023 to 23 July 2023 (Forecasts). The Forecasts represent a loss for each period in the sum of $775,423.23. ...

1. Unless the Receivers and Managers are permitted to deal with the Secured Property by way of sale following the outcome of the hearing on 6 March 2023, we intend to cease trading. This is due to:

1. Bellrock UAV previously trading at a loss prior to the appointment of the Receivers and Managers;
2. the ongoing trading loss which is continuing to deplete the available assets. For the period 12 December 2022 to 26 February 2023, the Receivers and Managers have traded at an estimated loss of $465,904.08;
3. the forecasted trading loss detailed in the January Vouris Affidavit;
4. current clients no longer requiring services due to no fixed contracts in place;
5. no new clients / supply agreements have been generated since the appointment of the Receivers and Managers;
6. resignations by employees during the period of the Receivership; and
7. the length of the Sale Campaign which has run for an extended period which has caused concern for potential purchasers as to whether a sale will ever take place and what part of the business/assets are available at the time of sale.

1. Based on my review of the Financial Documentation, I make the following comments with respect to Bellrock Australia:

1. as at 30 June 2022, there was an asset deficiency in the sum of $556,692.82;
2. as at 12 December 2022, there was cash at bank in the amount of $238,749.91, however an asset deficiency in the sum of $1,020,362,90;
3. the balance sheet records provisions for leave entitlements and unpaid superannuation with respect to priority unsecured creditors. Based on information available to date together with provisions in relation to retrenchment payments following termination of employees, we have determined that outstanding employee entitlements may amount to $848,958.73;
4. the value of unsecured creditors as recorded in the management accounts comprises of statutory creditors, related and unrelated unsecured creditors. Based on information available, we have determined unsecured creditor claims in the sum of $2,521,535.59; and
5. Based on information available, we have determined that the asset deficiency of Bellrock Australia as at 12 December 2022 would be in excess of $2,000,000.00.

111 Ms Vouris gave evidence in relation to priority creditors:[129]

1. Shortly following our appointment and on the same day, we met with the management staff of Bellrock UAV to discuss the trading requirements of that company. One matter which was discussed was the ongoing wage and entitlement commitments of Bellrock UAV which I was advised by one of the Directors being Mr. Peter Asimus and the Chief Executive Officer of the company to be in the vicinity of $230,000 for the period 5 December 2022 to 18 December 2022 which were due to be processed on 22 December 2022. This ultimately amounted to the sum of $225,206.09, details of which were obtained during the week commencing 19 December 2022.
2. Further to the above, on the day of our appointment, the sum of $238,794.91 was available in the pre-appointment bank account of Bellrock UAV held with the Commonwealth Bank of Australia (CBA). On the same day, a request was made for the transfer of these funds (less $100.00) to a bank account under the control of the Receivers and Managers in order to have those funds available to facilitate the payment of wages and entitlements due on 22 December 2022.
3. Despite numerous phone calls from our office to the CBA, together with further correspondence on 14 December 2022, these funds were only processed by the CBA on 15 December 2022.

Now produced and shown to me at pages 12 to 24 of the Exhibit Bundle is a copy of the above correspondence with the CBA.

1. On 13 December 2022, we were provided with access to the management accounts of Bellrock UAV maintained through Xero which indicate that Bellrock UAV was balance sheet insolvent as summarised in the following table:

Now produced and shown to me at pages 25 to 26 of the Exhibit Bundle is a copy of the Bellrock UAV Balance Sheet as at 12 December 2022.

1. Furthermore, the balance sheet disclosed a superannuation liability in the sum of $199,317.84 and provision for annual and personal leave entitlements in the sum of $841,841.54.
2. Following further investigations into the management accounts, including liaising with one of the Directors being Mr. Peter Asimus and the Chief Financial Officer and obtaining updated reconciliations, I have determined that at the time of signing this affidavit that employee entitlements amounted to the following (noting that such figures may change following receipt of additional information):

1. Taking into account the above our initial investigations disclosed that the cash at bank was not sufficient to pay priority creditors, and therefore we were not in a position to simply pay Grow and retire.

Section 433 of the Corporations Act

1. In relation to property subject to circulating security interests, pursuant to section 433 of the Corporations Act 2001 (the Act), the Receivers and Managers are required to pay from any property subject to a circulating security interest, priority creditor claims being employee entitlements in priority to a claim of the secured party.

2. The requirement to discharge priority employee entitlements before paying any secured creditors in accordance with section 433 of the Act is a positive obligation, and was something that I was required to investigate and consider when determining whether there were sufficient assets available upon my appointment to satisfy the obligations to Grow.

Assets

1. With respect to the property of Bellrock UAV, these primarily consisted of circulating assets and a summary of funds being made available for utilisation by the Receivers and Managers are outlined in the following table for the period 12 December 2022 through to 31 December 2022:

1. If we had immediate access to the circulating property of Bellrock UAV at the date of appointment (which to be clear, we did not have such access), there would have been insufficient funds available to enable any part of Grow's claim to be discharged pursuant to section 433 of the Act.
2. Upon appointment, a summary of the shortfall being the sum of $556,616.90 is as follows, noting retrenchment entitlements have not yet crystalised and are subject to change:

1. Accordingly, if upon my appointment as receiver, I had paid Grow the amount it claimed as secured lender ($78,043) and held back an amount on account of remuneration and expenses (which was already $157,670 as at 13 December 2022), that would have exhausted almost all the cash at bank held by Bellrock UAV. It would not have left sufficient funds to pay priority creditors which were predominantly employees. It would have been preferring the interests of Grow over the interests of the priority creditors of Bellrock UAV. It would have left me exposed to an allegation that the Receivers and Managers had breached their duties to the Bellrock companies over which we were appointed.

112 In summary, Ms Vouris' evidence concerning priority debts and amounts concerned:

(a) information available to the Receivers concerning potential priority debts and amounts upon their appointment. This is set out in the Second Vouris affidavit at paragraphs 15 and 19;

(b) the Receivers' investigation and determination of the actual priority debts and amounts as at 12 December 2022 (i.e. the date of appointment of the Receivers). This is set out in the Second Vouris affidavit at paragraph 26;

(c) the Receivers' investigation and determination of the actual priority debts and amounts as at 2 March 2023 (the date of the Second Vouris affidavit). This is set out in the Second Vouris affidavit at paragraph 20.

113 The proposed statement of claim sets out the following allegations concerning the relevant background:

(a) Mr Duggal's directorships of Bellrock UAV and Bellrock Cleaning;[130]

(b) the finance arrangements with Grow;[131]

(c) the alleged termination of the finance arrangements insofar as they concerned Bellrock Protective Services and its subsequent liquidation;[132]

(d) correspondence exchanged between Mr Duggal and Grow about the Debt prior to 12 December 2022;[133]

(e) the appointment of the Receivers and the Administrator;[134]

(f) correspondence between Mr Duggal and Grow concerning the payout of the Debt;[135]

(g) the available funds in Bellrock UAV's Commonwealth Bank of Australia account in the sum of $236,666.92; the Receivers' withdrawal of $238,694.91 from the account on 15 December 2022 and the payment by Mr Duggal to Grow of part of the Debt in the sum of $51,783 on 16 December 2022;[136]

(h) the Receivers' sale of business campaign.[137]

114 The duties of the Receivers are alleged in the following terms:[138]

1. By reason of the matters pleaded at paragraph 19 above, the Receivers had a duty to Bellrock Protective Services, Bellrock Technology, Bellrock UAV and Bellrock Cleaning:

1. to pay over to Grow the amount secured by the GSAs and to pay to Bellrock Protective Services, Bellrock Technology, Bellrock UAV and/or Bellrock Cleaning or to surrender to them the surplus assets;

b. to exercise their powers in good faith;

1. to act strictly within, and in accordance with the conditions of their appointment; and

2. to terminate the receivership by handing over the surplus assets to Bellrock Protective Services, Bellrock Technology, Bellrock UAV and/or Bellrock Cleaning as soon as the interests of Grow have been satisfied.

(collectively, the Duties).

PARTICULARS

The Duties arose as a matter of law.

115 The breaches of the Receivers are alleged as follows:[139]

30. Wrongfully and in breach of the Duties, the Receivers:

1. failed to pay over to Grow the amount secured by the GSAs and to pay to Bellrock UAV and/or Bellrock Cleaning or to surrender to them the surplus assets;

b. failed to exercise their powers in good faith;

1. failed to act strictly within, and in accordance with the conditions of their appointment; and

2. failed to terminate the receivership by handing over the surplus assets to Bellrock UAV and/or Bellrock Cleaning as soon as the interests of Grow could have been satisfied,

in that the Receivers:

1. should have paid Grow the Debt (as that term is defined in the Memorandum) when the Receivers withdrew the sum of $236,666.92 from Bellrock UAV's bank account and the payment by the plaintiff of the sum of $51,783.00 to Grow).
2. should have paid to Bellrock UAV and/or Bellrock Cleaning or surrendered to them the surplus assets realised after paying the Debt.
3. provided an inflated payout figure to Bellrock UAV on 14 December 2022 and 19 December 2022 to discharge the Debt owed by Bellrock UAV, Bellrock Protective Services, Bellrock Technology and Bellrock Cleaning to Grow.
4. should have resigned their appointment because they knew or should have known that they had realised sufficient funds to pay the Debt.

116 I make the following observations on the alleged breaches:

(a) each of the matters in paragraph 30(e) to (h) are alleged to be a breach of each of the duties alleged in paragraphs 30(a)-(d);

(b) no particulars are provided;

(c) paragraph 30(e) does not identify the quantum of the Debt, when the Receivers should have paid it or why they should have paid the Debt (i.e. using what available funds). The proposed statement of claim has a part titled 'Payment of secured debt and available funds'[140] and that identifies monies in Bellrock UAV's Commonwealth Bank of Australia account and the payment made by Mr Duggal to Grow on 16 December 2022. No other available funds are identified;

(d) paragraph 30(g) does not identify the basis for the allegation that the Receivers provided an "inflated payout figure" in the 14 December Letter and the 19 December Letter.

117 As a result, fundamental issues concerning breach were addressed, at least in part, in submissions. This concerned:

(a) the quantum of Debt in the period 12 to 19 December 2022 and the funds available to the Receivers to pay the Debt (including other potential funds and also potential liabilities of Bellrock UAV);

(b) which particular figures in the 14 December Letter and the 19 December Letter are inflated and why they are inflated.

118 The alleged breaches of duties relate, in effect, to two separate categories of breaches:[141]

(a) the Receivers' alleged breaches of duties to pay the Debt to Grow and to then pay to Bellrock UAV and Bellrock Cleaning, or surrender to them, the surplus assets and then resign their appointment;[142]

(b) the Receivers' alleged breaches of duties in providing the alleged inflated payout figures.[143]

119 Causation and loss is alleged as follows:[144]

1. By reason of the breach of Duties, Bellrock UAV and Bellrock Cleaning have suffered loss and damage.
2. The Receivers are liable to compensate Bellrock UAV and Bellrock Cleaning for the loss and damage caused by the breach of the Duties.

120 No particulars are provided. Mr Duggal did not otherwise adequately, if at all, identify the loss and damage in submissions.

121 Mr Duggal did submit that if the Receivers did not provide an inflated payout figure then he would have paid it and the Receivers then would have resigned and terminated the receivership. This is not pleaded in the proposed statement of claim. Again, as a result, fundamental issues concerning causation were only identified and addressed, at least in part, in submissions.

122 In summary, the prayer for relief sets out the following substantive relief against the Receivers:[145]

(a) an order restraining the Receivers from realising, selling, dealing, encumbering or otherwise disposing of the "Security Property";

(b) declarations that the "Debt" was discharged upon the withdrawal on 15 December 2022 by the Receivers of the sum of $236,666.92 from Bellrock UAV's bank account and on 16 December 2020 upon the payment by the plaintiff to Grow of the sum of $51,783.00, and, that the Receivers breached their duty at common law;

(c) an order that the Receivers reconvey to Bellrock UAV and Bellrock Cleaning their respective assets; and

(d) damages.

123 The claims concerning the administration are alleged as follows:[146]

1. The appointment of the Administrator by Grow was exercised for an ulterior or extraneous purpose and not in furtherance of the object of Part 5.3A of the Act.

PARTICULARS

The plaintiff refers to and repeats the matters pleaded at paragraphs 4 to 27 above and says that the appointment of the Administrator was for the purpose of attempting to prevent the plaintiff exercising his powers as a director of the Bellrock UAV including but not limited to challenging the conduct of the Receivers.

1. In the premise, the appointment of the Administration is void and of no effect.

124 This is a claim against Grow concerning its purpose in appointing the Administrator. No claims are made concerning the conduct of the Administrator. Mr Duggal submitted that the Administrator is only sought to be joined as a necessary party given the relief that is sought in relation to his appointment (i.e. the administration is void and of no effect).

125 The particulars of the extraneous/ulterior purpose are manifestly inadequate. As a result, fundamental issues concerning the alleged purpose were only identified and addressed, at least in part, in submissions.

126 No express claim is made for loss and damage against Grow in the pleading. This is in contrast to the claim for loss and damage made against the Receivers.

127 In summary, Bellrock UAV seeks the following substantive relief concerning the administration, inter alia:[147]

(a) an order restraining the Administrator from realising, selling, dealing, encumbering or otherwise disposing of the "Security Property";

(b) a declaration that the purported appointment by Grow of the Administration is void and of no effect; and

(c) an order that the Administrator reconvey to Bellrock UAV and Bellrock Cleaning their respective assets.

(a) Should the Court grant leave to Mr Duggal, pursuant to the Court's inherent jurisdiction or s 90-15 of Schedule 2 to the Corporations Act, to bring a proceeding on behalf of Bellrock UAV against the Receivers, Grow and/or the Administrator (now the Liquidator)? If so, on what conditions?

(b) Should the Court grant leave to Mr Duggal, pursuant to s 237 of the Corporations Act, to bring a proceeding on behalf of Bellrock Cleaning against the Receivers? If so, on what conditions?

(c) If the answer to (a) is no, should the Court set down for final hearing whether an order(s) pursuant to s 90-15 of Schedule 2 of the Corporations Act should be made and that any final hearing should follow the service of pleadings and evidence?

(d) If a claim is brought, by leave or otherwise pursuant to s 90-15 of Schedule 2 to the Corporations Act, should the Court continue the interim injunctive relief, or grant some other interlocutory injunctive relief, until the hearing and determination of the proceeding?

129 There was no dispute between the parties concerning the following key matters:

(a) Bellrock UAV owed Grow the sum of at least of $51,757.77 as at 12 December 2022. Mr Duggal submitted that the Debt was $51,782.23 upon the appointment of the Receivers. The Receivers/Grow submitted that Debt was $78,043.41 which was constituted in part by the sum of $51,757.77;

(b) Bellrock UAV was in default of the Debt Factoring Agreement on 12 December 2022;

(c) the appointment of the Receivers was valid;

(d) on 12 December 2022, Bellrock UAV had the sum of $238,794.91 in an account with the Commonwealth Bank of Australia;

(e) on 15 December 2022, the monies in Bellrock UAV's Commonwealth Bank of Australia account in the sum of $238,694.91 were transferred to the Receivers by being deposited into the Receivers' account for the receivership with Macquarie Bank;

(f) the Receivers did not apply any monies received into the receivership Macquarie Bank account from the Bellrock UAV bank account in payment of the Debt;

(g) Mr Duggal paid an amount of $51,783 directly to Grow on 16 December 2022. This reduced the Debt owed to Grow by that sum;

(h) the Receivers sent to Mr Duggal's solicitor the 14 December Letter and the 19 December Letter;

(i) Bellrock UAV and Bellrock Cleaning owe an amount to Grow, being now part of the Debt, for remuneration costs and expenses as a result of the valid appointment of the Receivers. There is a dispute as to the quantum of these costs and expenses. Mr Duggal says that they are inflated and that their fees and expenses would have been "minimal" for the first few days.

Is there a solid foundation for the alleged breaches of duties by the Receivers for giving inflated payout figures?

130 The proposed statement of claim includes a claim that the Receivers provided inflated payout figures in the 14 December Letter and the 19 December Letter, that the Receivers breached their duties as a result and that Bellrock UAV suffered loss and damage. This is alleged in paragraphs 30(h), 31 and 32 and is the subject of the prayer for relief at paragraph F. The loss and damage is not particularised. It was not addressed in submissions. It is not in dispute that Bellrock UAV has not paid any part of the alleged inflated payout figure except the sum of $51,783 which it admits that it owed.

131 During oral submissions, Mr Duggal also submitted that, if the Receivers did not inflate the payout figure, he would have paid the non-inflated payout figure directly to Grow and that, as a consequence, the Receivers would have resigned and terminated the receivership and not incurred any further fees, expenses and trading expenses.[148] This is not pleaded in the proposed statement of claim.

132 Mr Duggal did not adequately address which alleged duties were breached as a result. The relevant duties to this claim appear to be those in paragraphs 29(b) and (c) of the proposed statement of claim. The Receivers accepted that they owed these duties. They disputed the duties alleged in paragraphs 29(a) and (d). These duties are addressed in the context of the claims concerning the failure to pay the Debt later in these Reasons.

(a) the Receivers' rates were excessive;

(b) the Receivers' fees, expenses and trading expenses were excessive;

(c) the Receivers' fees and expenses were unnecessary; and

(d) the Receivers' fees and expenses do not reflect the work done, including in the timesheets for 12 and 13 December 2022.

134 It is convenient to address the parties' submissions and the Court's consideration of each of the figures or categories of figures in the 14 December Letter and the 19 December Letter that are said to be inflated.

135 Mr Duggal did not submit that the Receivers inflated this amount. This is because this is the figure provided by Grow to the Receivers as the amount of the Debt owed to Grow upon the appointment of the Receivers. Mr Duggal nonetheless submitted that it was inflated. Mr Duggal made oral submissions that:[149]

(a) the Receivers should have, prior to their appointment, worked out how much money was owing to Grow;

(b) the Receivers delayed until 14 December 2022 in obtaining information about the Debt owed to Grow;

(c) the Receivers did not consider whether the full amount of $78,043.41 was owed to Grow before sending the 14 December Letter and the 19 December Letter.

136 First, I am not satisfied there is a solid foundation for the claim the Receivers breached their duties by not, prior to their appointment, working out how much money was owing to Grow. This claim is patently hopeless. It is not arguable that the Receivers owed any duties to Bellrock UAV prior to their appointment as Receivers.

137 Secondly, I am not satisfied there is a solid foundation for the claim that the Receivers delayed in obtaining the information about the Debt owed to Grow. On 12 December 2022, the day of their appointment, the Receivers sought clarification of the amount owing to Grow.[150] On 14 December 2022, Grow provided the information to the Receivers. On 14 December 2022, the Receivers provided the information to Mr Duggal. There is no solid foundation for any claim of delay by the Receivers. No explanation was provided by Mr Duggal how this constituted any delay on the part of the Receivers.

138 Thirdly, I am not satisfied there is a solid foundation for the claim the Receivers breached their duties by not considering whether the full amount of $78,043.41 was owed to Grow before sending the 14 December Letter and the 19 December Letter. On 12 December 2022, Mr Duggal asked for a payout figure urgently. Once the Receivers received a response from Grow, it was provided to him that day.

139 Fourthly, I am not satisfied, to the extent it was submitted by Mr Duggal, there is a solid foundation for the claim that the Receivers breached their duties by setting out the amount said to be owed to Grow in the 14 December Letter and 19 December Letter on the basis those amounts were inflated. Mr Duggal did not submit that the Receivers' inflated this figure.

140 Fifthly, in any event, I am not satisfied there is a solid foundation for the claim that the figure of $78,043.41 is inflated. The sum of $78,043.41 is constituted by four amounts:[151]

(a) Outstanding Debt: $51,757.77;

(b) Termination Fee: $17,600;

(c) PPSR Security Fee: $275;

(d) Default Fee: $8,410.64.

(a) Mr Duggal admits that the outstanding Debt under the Debt Factoring Agreement was $51,782.33 at the time the Receivers were appointed. Mr Duggal made a payment to Grow on 16 December 2022. This was in the sum of $51,783;

(b) the sum of $51,757.77 was then erroneously included in the 19 December Letter. Mr Duggal submitted that the sum of $51,757.77 should not have been included in the 19 December Letter and, as a result, the payout figure was inflated;

(c) it was obviously included in error. Mr Duggal knew it was an error. He had just made the payment to Grow;

(d) as a result, the inclusion of the amount of $51,757.77 did not inflate the payout figure of the Debt. It was just a mistake;

(e) as a result, I am not satisfied that there is a solid foundation for the claim that this figure was inflated.

142 As to the 'Termination Fee' in the amount of $17,600:

(a) the 'Termination Fee' is a reference to 'Minimum Annual Fee'. It is payable if the Debt Factoring Agreement ends following an Event of Default. It is $24,000 in relation to each of the Bellrock entities. None of these matters were disputed by Mr Duggal;

(b) Grow charged a fee of $17,600 based upon the following:

(i) Grow was entitled to charge $96,000, being 4 x $24,000 for each of the Bellrock entities, but only charged a single fee of $24,000;

(ii) Grow then further discounted this fee by a pro rata calculation based upon $2,000 per month for 8 months. There was no explanation why this was 8 months. GST was then added resulting in $17,600;

(c) Mr Duggal submitted that Grow was only arguably entitled to charge one fee of $24,000. Mr Duggal then submitted that the pro rata calculation should have been for a period of 85 days (i.e. 5 May 2022 to 30 July 2022);[152]

(d) Mr Duggal submitted that "we can't calculate as to how much of that $24,000 had already been paid".[153] As a result, the claim concerning $24,000 is speculation. It does not support a solid foundation that the sum is inflated;

(e) Mr Duggal also took issue with the unilateral discounts applied by Grow which actually reduced the sum of $24,000;

(f) as a result, I am not satisfied that there is a solid foundation for the claim that this figure was inflated.

143 As to the 'PPSR Security Fee' in the amount of $275:

(a) the 'PPSR Security Fee' is a reference to the 'Security Release Fee' under clause 12.7 of the Debt Factoring Agreement. The 'Security Release Fee' is a fee of $250 plus GST. This equates to $275. The Security Release is payable upon any payout of the Debt and the release of the security;

(b) none of these matters were disputed by Mr Duggal. Mr Duggal submitted that it was not payable as the security had not, in fact, been released;

(c) Mr Duggal had asked for a payout figure. The payout of the Debt would have resulted in the release of the security. As a result, it was appropriate for the fee to be included in the payout figure;

(d) as a result, I am not satisfied that there is a solid foundation for the claim that this was an inflated figure.

144 As to the 'Default Fee' in the amount of $8,410.64:

(a) the Default Fee is a reference to interest and legal fees. Mr Duggal's submissions were confined to the interest calculation. Mr Duggal repeatedly submitted that the interest could actually be higher than the calculations of the interest by Grow. Mr Duggal submitted "[i]t could be actually higher than that, but we just don't know...";[154]

(b) he also submitted that the calculations have not been adequately explained.[155] The Court then asked Mr Duggal to explain how this supports his submission that there is a solid foundation for the claim that the figures are inflated. Mr Duggal then submitted that he had performed a calculation and the interest is $2,350.40 based upon the sum of $51,757.77 at an interest rate of 19.5% for 85 days being the period from the date of the termination of the Debt Factoring Agreement (i.e. 5 May 2022) to the date of the term of the Debt Factoring Agreement (i.e. 30 July 2022).[156] This is less than the interest of $3,088.21 identified by Grow;[157]

(c) pursuant to clause 12.10 interest was payable "on that overdue amount (including interest payable under this clause) calculated from its due date to the date of its receipt" by Grow. The sum of $51,757.77 was not paid until 16 December 2022. Mr Duggal did not explain why the interest was only payable until 30 July 2022;

(d) as a result, I am not satisfied that there is a solid foundation for the claim that this was an inflated figure.

145 Mr Duggal made the following primary submissions:

(a) the work was excessive and unnecessary, the rates charged were excessive and the fees "[don't] reflect the work that we can understand was actually done";[158]

(b) this "could've been avoided if the receivers had put it on timesheets or provided them as we had requested, but forensically or for whatever other reason, they chose not to adduce the material";[159]

(c) the Receivers incurred $560,000 of fees and expenses in such a short period of time in circumstances where two of the companies do not trade and one is in liquidation;[160]

(d) there is no material provided to support any of the work actually done;

(e) 193.1 hours were spent in two days and there is no explanation that has been provided as to why such significant fees were incurred;[161]

(f) Mr Duggal referred to the summary of tasks set out in the attachments to the 19 December Letter and submitted "So that doesn't help in trying to identify what work has been done, it identifies that they've just taken some generic descriptions and cut and paste them. It doesn't assist the court in identifying if the work was reasonable. And we say it can be inferred - it's relevant because we say it can be inferred that that supports the proposition that there is no identification of work actually done, and it appears to be inflated"[162];

(g) the evidence is inconsistent with incurring such significant costs;[163]

(h) the Receivers' work was "potentially one day's worth of work, maybe two, who knows. We don't know because you're not going to get a detailed fee breakdown";[164]

(i) there is no evidence of how the estimates in the 14 December Letter and the 19 December Letter have been calculated;[165]

(j) no time sheets have been produced despite request;[166]

(k) the Receivers' remuneration should have been minimal in the first few days.[167] The costs and expenses of the Receivers would have been less than the bank account monies;[168]

(l) no explanation has been provided why such significant Receiver remuneration was incurred;[169]

(m) the work was unnecessary. The rates were excessive. The time spent was excessive.[170] Mr Duggal said that he did not know whether the Receivers did the work or not. Mr Duggal submitted that it may be inferred that the fees do not reflect the work done. He submitted that filing a document with ASIC does not correspond with 196 hours;[171]

(n) Mr Cheng appears to have spent 28.5 hours in the space of two days dealing with this matter and an intermediate person, namely Mr Tran, has spent 22.8 hours and there is no explanation as to why all this time was spent, and this has caused the payout figure to be significantly inflated;[172]

(o) minimal work should have been spent on the receiverships of Bellrock Cleaning and Bellrock Protective Services. Instead, the Receivers and their staff spent 35 hours on the receivership of Bellrock Cleaning and 28.7 hours on the receivership of Bellrock Protective Services;[173]

(p) the individual time purportedly spent by the Receivers and their staff raises serious concerns:

(i) in the period 12 to 14 December 2022, three partners and three other persons, worked for a total of 117.1 hours;[174]

(ii) no explanation has been provided as to the work these persons carried out;[175]

(iii) no timesheets have been provided despite request;[176]

(q) the charge out rates of the Receivers and their staff are excessive compared to the rates of the Administrator;[177]

(r) the purported fees and expenses cannot be reconciled with the limited work purportedly carried out. Mr Duggal referred to the chronologies of the work prepared by the Receivers[178] insofar as they concern 12 and 13 December 2022 and submitted that the disparity between the purported fees and expenses incurred and the work carried out in the chronologies raises a solid foundation for a breach of duty;[179]

(s) the 19 December Letter included a sum of $22,000 as a "Provision for Valuation Costs and Sale Advertisements".[180] Mr Duggal submitted that there was no evidence the valuation was actually done;[181]

(t) there is no evidence concerning the calculation of the estimate of the additional costs and expenses in the sum of $100,000 for the period 12 to 16 December 2022.

146 The Receivers/Grow submitted that the claims do not have a solid foundation and submitted:

(a) there is no evidence that the figures were inflated, it is a matter of speculation from the Bar table;[182]

(b) the hours incurred by the Receivers were incurred in a complicated receivership, with many moving parts, with many employees engaged in the matter;[183]

(c) the Receivers had to get in and understand the business very quickly;[184]

(d) the authors of the 14 December Letter and the 19 December Letter were not cross-examined. None of the matters relied upon were put to them;[185]

(e) the Receivers were entitled to estimate and preserve a fund for their costs and expenses of the receivership. This is set out in the 14 December Letter and the 19 December Letter;[186]

(f) the breach alleged is that an inflated payout figure was provided when what was provided was estimates. The estimates were reasonable;[187]

(g) to establish a breach of the duty it would need to be established that they were charging fees that they were not entitled to;[188]

(h) the 14 December Letter and the 19 December Letter do not have inflated amounts. There is no evidence to support this. The amounts in the 14 December Letter are supported by the attachments to the 19 December Letter;[189]

(i) it was appropriate for the Receivers to set an amount of what the remuneration fees and expenses are for the release of the security;[190]

(j) it was reasonable and appropriate for the Receivers to estimate a reasonable amount likely to be incurred by them on account of remuneration, fees and expenses for the receiverships of all Bellrock entities and to require that amount to be set aside as a retention fund;[191]

(k) the bulk of the estimated remuneration and expenses related to Bellrock UAV with much smaller amounts estimated to be for the other Bellrock entities;[192]

(l) it was not unreasonable for the Receivers to provide estimates on 14 and 19 December 2022 concerning their fees and expenses pursuant to clause 9.5 of the Debt Factoring Agreement. They submitted that this enabled then the Receivers to make demand for a Debt based upon estimates and for the companies to pay this and then to seek an taking of account. This means that upon an account, the actual fees and costs would be determined and any over payment to be repaid to the companies;

(m) the Receivers referred to the large number of employees and with offices in Victoria and Western Australia. A trade-on decision was made to continue to trade the business of Bellrock UAV and to sell the assets. It is a large security business. It is nonsense to suggest that the Receivers could have worked through all of the issues in one or two days. The Receivers had to understand the business very quickly;

(n) the Receivers provided detailed information concerning their remuneration and costs in the attachments to the 19 December Letter. This is only one week after the commencement of the receivership of the Bellrock entities;

(o) Mr Duggal could have paid the payout figure in the 14 December Letter and then sought an equitable account from Grow;

(p) the 19 December Letter shows that significant work was being performed with respect to Bellrock UAV and much less work with respect to the other Bellrock entities;

(q) it is for Grow to agree the rates of the Receivers. It is not a Court appointed receivership.[193]

147 I am not satisfied that there is a solid foundation for this claim.

148 First, I am not satisfied that there is a solid foundation for the claim that the hourly rates of the Receivers and their staff are excessive. Mr Duggal submitted that the Receivers' rates are "astronomical".[194] No reason was given why the rates of the Receivers should accord with the rates of the Administrator. This is assertion and speculation. They perform different roles. There was no evidence that the rates of the Administrator are the appropriate rates for the Receivers. There was no other basis for Mr Duggal's submission that the rates are excessive.

149 Secondly, I am not satisfied that there is a solid foundation for the claim that the remuneration fees and expenses are inflated in any particular respect. Mr Duggal's submissions were characterised by assertion and speculation. He invited, in effect, the Court to speculate that the figures were inflated. Mr Duggal did not identify the nature or extent of the inflated figures with any precision:

(a) Mr Duggal submitted that "we know what a reasonable fee would be for a receiver for those few days"[195] but never said what it was;

(b) Mr Duggal submitted that the Receivers' fees in the first few days would have been minimal but did not identify this with any further precision;

(c) Mr Duggal referred to the figures in the 19 December Letter for Bellrock Technology, Bellrock Protective Services and Bellrock Cleaning (all in amounts less than $6,000) and then submitted that there is no evidence as to how these are calculated and no time sheets.[196] He did not explain why he says these are inflated apart from submitting that Bellrock Cleaning had ceased trading and Bellrock Protective Services was in liquidation. This is further addressed below;

(d) Mr Duggal referred to the additional fees and expenses in the sum of $50,000 and submitted that there is no evidence how this is calculated.[197] He did not explain why he submitted these are inflated;

(e) Mr Duggal referred to the summaries in the attachments to the 19 December Letter and submitted that "all they've done is just cut and paste it. They haven't done anything".[198] This is just assertion and speculation. Some of the entries are expressed in similar terms but, in my view, this is not a solid foundation for a claim that the fees are inflated.

150 Thirdly, Mr Duggal submitted that "[l]ittle if any work should have been spent"[199] on the receiverships for Bellrock Cleaning as it had ceased training and Bellrock Protective Services as it was in liquidation. Mr Duggal did not otherwise explain this submission. I am not satisfied that, as a result, there is a solid foundation for the claim that these fees are inflated. Mr Duggal gave no evidence and made no submissions that enabled the Court to be so satisfied. The fees with respect to these two companies are considerably less than the fees with respect to Bellrock UAV.

151 Fourthly, Mr Duggal referred to the hours worked by the Receivers and their staff on 12 and 13 December 2022 and submitted that this "raises serious concerns", that it was unbelievable and that there was no explanation of what work the persons carried out.[200] These are matters of assertion and speculation. Mr Duggal gave no evidence and made no submissions that enabled the Court to be so satisfied. Mr Duggal also submitted that:[201]

And the question is, well what did they do, and the answer is we don't know, because all we've got are these summaries which just don't tell us anything of what they did, and when you compare those summaries to some of the other evidence it's unclear as to what the quantum ought to be.

152 Despite this he submitted that they were "inflated". This is in circumstances in which the attachments to the 19 December Letter set out the hours worked and the rates of the persons who performed the work.

153 Fifthly, Mr Duggal also submitted that the Receivers' fees and expenses do not reconcile with the limited work purportedly carried out.[202] He submitted that the disparity between the purported fees and expenses incurred and the work carried out raises a solid foundation for a breach by the Receivers of their duties.[203] He also submitted that "we don't know if they did the work or not because they haven't produced the timesheets".[204] I am not satisfied that there is a solid foundation for this claim. This is because Mr Duggal's submissions only selectively addressed the relevant evidence. His submissions were limited to addressing the work identified as being only performed on 12 and 13 December 2022. This is set out in the chronologies prepared by the Receivers.[205] The chronologies also set out work undertaken throughout the receiverships of the companies. For example, in the case of Bellrock UAV, this work is extensive.

154 Sixthly, Mr Duggal referred to figure of $20,000 which is described in a schedule attached to the 19 December Letter as a disbursement. He submitted that there is no evidence of what was actually done and what it relates to. The item is described as "Provision for Valuation Costs and Sale Advertisements". It plainly related to the sale of the business and or assets of Bellrock UAV that was advertised on 15 December 2022 and 17 December 2022. Further, Mr Duggal knew that this figure was only a provisional amount. Mr Duggal submitted that "this valuation was a provision only".[206] In my view, this is not inflated as it clearly sets out the amount is a "provision" and not that the whole sum had been incurred.

155 I am not satisfied that there is a solid foundation for the claim that the estimated trading expenses of $80,000 and $120,000 were inflated. There is not sufficient evidence for me to be so satisfied. The claim is based upon speculation.

156 First, in submissions, Mr Duggal referred to the sums of $80,000 and $120,000 and submitted that there is no evidence how these estimates were calculated. Mr Duggal submitted as to the sum of $80,000 "it is unbelievable that such trading expenses would have been incurred in only two days for which the Receivers were personally to pay"[207] but made no further submissions explaining this submission. Mr Duggal did not identify why it was "unbelievable". Mr Duggal did not explain upon what basis there is a solid foundation for the claim that the trading expenses are inflated. He did not, for example, refer to any financial documents of Bellrock UAV and submit the trading expenses were likely to be not more than a particular amount. This in the context in which, as I have already said, Mr Duggal's evidence was that, as at 19 December 2022, Bellrock UAV employed in excess of 100 persons and had a turnover of more than $8M per annum.[208]

157 Secondly, Mr Duggal did not submit that the Receivers did not incur any trading expenses. Section 419 of the Corporations Act relevantly provides that a receiver who assumes control of any property of a corporation for the purpose of enforcing any security interest is liable for the debts incurred by the receiver in the course of the receivership. Bellrock UAV continued to trade, inter alia, in the period 12 to 16 December 2022.

158 The Court is left with the speculation by Mr Duggal that the trading expenses are inflated. This is not a solid foundation for a claim.

(a) the 19 December Letter failed to take into account that the Receivers had withdrawn the monies from Bellrock UAV's Commonwealth Bank of Australia account; and

(b) the 19 December Letter failed to take into account the income received from trading the business on and from 12 December 2022.

160 I am not satisfied that there is a solid foundation for the claim that the 19 December Letter is inflated as it did not include these matters. These had not been used to pay the Debt. As a result, it was correct for them not to be included. Mr Duggal did not submit the Debt was paid. As a result, these matters are more appropriately considered as part of the proposed claims that they should have been used to pay the Debt.

161 I am also not satisfied that there is a solid foundation that any of the matters raised by Mr Duggal about the alleged inflated payout figures constitute a breach of the Receivers' duties. Mr Duggal submitted:[209]

...we would say that what they then provided us were inflated figures as to their remuneration expenses, and the issue then is does that amount to a breach which we would have an action against. That's what you're left with.

162 The issue was left without an adequate answer as Mr Duggal did not otherwise identify in what respect these matters constituted a breach of the Receivers' duties. For example, there was no explanation as to whether any of the following constituted a breach of the duty of good faith and, if so, how:

(a) the Receivers' rates were excessive;

(b) the Receivers' fees, expenses and trading expenses were excessive;

(c) the Receivers' fees and expenses were unnecessary; and

(d) the Receivers' fees and expenses do not reflect the work done, including in the timesheets for 12 and 13 December 2022.

163 If I am incorrect and there is a solid foundation for any of the claims I have just addressed, including that the Receivers provided inflated payout figures in the 14 December Letter and the 19 December Letter and, as a result, breached their duties, I am not satisfied that there is a solid foundation for the claim that Mr Duggal would have paid the non-inflated payout figure and, as a consequence, the Receivers would have resigned and terminated the receivership and not incurred any further fees and expenses. There is not sufficient evidence for me to be so satisfied. This claim is based upon speculation. There is no evidence that Mr Duggal would have paid the non-inflated payout figure. He did not give any evidence that he had the funds to pay it and would have paid it. This is determinative. In an email from Mr Duggal's solicitor to the Receivers on 12 December 2022 his solicitors requested an urgent payout figure and stated that Mr Duggal has funds to pay.[210] The Receivers then provided a payout figure and Mr Duggal did not pay it.

164 Mr Duggal did not submit that Bellrock UAV has suffered any loss and damage. Bellrock UAV has not paid any part of the alleged inflated payout figure. Mr Duggal paid an amount in the sum of $51,783 which he admits was owed to Grow. Mr Duggal did not identify any loss and damage in submissions. If I am incorrect and there is a solid foundation for the claims I have just addressed, I accept that Bellrock UAV may have some claim to, in effect, challenge and obtain an account of the quantum of these fees. The quantum of any inflated fees, expenses and trading expenses was not addressed by Mr Duggal. I address this further in the context of whether the claim would have any tangible benefits for Bellrock UAV.

Is there a solid foundation for alleged breaches of duty for not paying the Debt?

165 Mr Duggal submitted that the duties are based upon the observations of Needham J in Expo International Pty Ltd v Chant.[211] [212] Needham J said of the duties that a receiver owes to a mortgagor:[213]

... Those duties include the duty to exercise his powers in good faith (including a duty not to sacrifice the mortgagor's interests recklessly); to act strictly within, and in accordance with, the conditions of his appointment; to account to the mortgagor after the mortgagee's security has been discharged, not only for the surplus assets, but also for his conduct of the receivership. The latter duty, in my opinion, involves the duty to terminate the receivership by handing over the surplus assets to the mortgagor as soon as the interests of the mortgagee have been satisfied...

166 In summary, the duties identified by Needham J are:

(a) to account to the mortgagor after the mortgagee's security has been discharged, not only for the surplus assets, but also for his conduct of the receivership. This involves the duty to terminate the receivership by handing over the surplus assets to the mortgagor as soon as the interests of the mortgagee have been satisfied;

(b) the duty to exercise his powers in good faith;

(c) to act strictly within, and in accordance with, the conditions of his appointment.

167 The Receivers referred to Forest Marsh Pty Ltd v Pleash,[214] in which Yates J observed:[215]

[84] ...It is significant that Needham J saw the receiver's duty to the mortgagor or chargor to terminate the receivership as an incident of the duty to account to the mortgagor or chargor after the security has been discharged. In my view, Needham J's formulation of the duty carries with it that necessary limitation. After that time it is difficult to see what legitimate interest of the appointor the receiver could possibly serve by continuing the receivership...

168 As I have already said, the Receivers accepted that they owed the duties alleged in paragraphs 29(b) and (c) of the proposed statement of claim. The Receivers submitted that they do not owe the duties alleged in paragraphs 29(a) and (d) of the proposed statement of claim. They submitted that there is no duty for a Receiver to make a payment to the secured creditor and then resign and pay back any surplus assets to the mortgagor.[216]

169 In my opinion, the duty alleged in paragraph 29(a) of the proposed statement of claim has no legal foundation.

170 First, the alleged duty does not accord with the observations made by Needham J in Expo International Pty Ltd v Chant[217]. Needham J identified the relevant duty, in this context, as a duty "to account to the mortgagor after the mortgagee's security has been discharged, not only for the surplus assets, but also for his conduct of the receivership". This is not a duty to make a payment to the secured creditor of the amount secured.

171 Secondly, the duty alleged in paragraph 29(a) is expressed in absolute terms. That is, the Receivers had a duty to pay over to Grow the amount secured. It has no limitation. For example, it is not qualified by the Receivers having sufficient funds to do so. The Receivers did not have an absolute duty to make a payment in circumstances where there were not sufficient funds. This is important given the potential existence of priority debts or amounts. For example, pursuant to s 433 of the Corporations Act, in summary, the Receivers had to pay out of the property coming into their hands, in priority to any claim for principal or interest in respect of the debentures, inter alia, any debt or amounts that in a winding up is payable in priority to other unsecured debts pursuant to s 556(1)(e), (g) or (h) of the Corporations Act (priority debts). The alleged duty does not take into account this obligation. These matters are not determinative on this application as Mr Duggal did not submit that the Receivers should have paid the Debt regardless of having sufficient funds or if there were priority debts and payments.

172 The duty alleged in paragraph 29(d) of the proposed statement of claim accords with the observations of Needham J. The alleged duty to terminate the receivership arises as soon as the interests of Grow (the mortgagee) have been satisfied. It does not concern a duty to pay or to terminate the receivership upon payment to the secured creditor. As a result, I do not accept the Receivers' submission concerning the duty in paragraph 29(d) of the proposed statement of claim.

173 Mr Duggal submitted that at the time of the Receivers' appointment on 12 December 2022 the Receivers should have used the monies in the bank account of Bellrock UAV in the sum of $238,694.91 to pay the Debt to Grow $51,782.23. This was based upon Mr Duggal's evidence in the First Duggal affidavit that "[the monies in the bank account] was more than enough money to discharge the alleged debt owed to [Grow]."[218] Mr Duggal submitted:[219]

1. There can be no serious dispute that at the date of the Receivers' appointment there was more than sufficient funds in Bellrock UAV's bank account to pay the Debt. At that time the debt owed to Grow was either $51,783 or $78,043.41 and there was $238,694.91 in Bellrock UAV's CBA bank account. In those circumstances, the Receivers should have immediately paid the Debt, paid Bellrock Cleaning and/or Bellrock UAV or surrender to them the surplus funds from Bellrock UAV's bank account and then resign from their appointment. Instead, in breach of their duties, the Receivers went about incurring considerable fees and expenses in trading the business and engaging in a sale of business campaign.

174 During oral submissions, Mr Duggal also submitted the Receivers should have paid the Debt to Grow in the period 12 December 2022 (i.e. date of their appointment) to 19 December 2022 (i.e. date prior to the consent injunctive relief being granted).[220] Mr Duggal made the following primary submissions:

(a) the Debt was constituted by the sum of $51,782.23 as at 12 December 2022 (i.e. upon appointment of the Receivers);

(b) Bellrock UAV had $238,694.91 in its bank account as at 12 December 2022 (i.e. upon appointment of the Receivers) that was available to pay the Debt;[221]

(c) Mr Duggal made a payment to Grow of $51,783 on 16 December 2022. The Debt was reduced by this amount;[222]

(d) alternatively, the Receivers could have used the profits from their on-trading of the business of Bellrock UAV to pay the debts being incurred to conduct the business and to also pay the Receivers' remuneration expenses.[223] Mr Duggal submitted that the profit that was generated from the on-trading of the business by the Receivers did not fall within the scope of the priority creditor regime in s 433 of the Corporations Act.[224] He referred to them as "post-receivership profits" and as "the money that the receivers have earnt from their own activities post-receivership."[225] Upon questioning by the Court to identify the solid foundation for the claim that the monies from on-trading were available, Mr Duggal submitted:

(i) "we just don't have any material from the receivers as to what the profit position was";[226]

(ii) "well, we simply say that we just don't know and the receiver's going to put on the evidence as to what happened to the funds that he recovered from on-trading the business...";[227]

(iii) "we just don't have the information";[228]

(iv) when again pressed why there is a solid foundation for the claim that the monies from on-trading were available submitted "Yes, Your Honour. I'll move on";[229]

(v) Mr Duggal also referred in submissions to a summary of receipts and payments for Bellrock UAV for the period 12 December 2022 to 10 January 2023 and submitted that he did not know whether this showed a profit and the Receivers have all of the information;[230]

(vi) the Receivers' trading account established with respect to the receivership with Macquarie Bank. A deposit was paid into this account in the sum of $66,756.56 on 19 December 2022;[231]

(e) the Debt increased upon the appointment of the Receivers as a result of the fees and expenses incurred by the Receivers:[232]

(i) Mr Duggal submitted that "we know what a reasonable fee would be for the receivers for the first few days"[233] but Mr Duggal did not identify it;

(ii) Mr Duggal submitted that they would have been "minimal"[234] and would have been less than the monies in the bank accounts after taking into account the amount of $51,782.23 paid by Mr Duggal to Grow;[235]

(iii) in answer to a question from the Court as to the amount of the Debt, Mr Duggal submitted: "Well, that's the biggest problem. We say we just don't know, because you can't tell - because the receiver's fees are, we say, inflated".[236]

175 Mr Duggal submitted the Debt would have then have been paid and the Receivers then should have "paid Bellrock Cleaning and/or Bellrock UAV or surrender to them the surplus funds from Bellrock UAV's bank account and then resign from their appointment".[237]

176 The Receivers/Grow made the following primary submissions:

(a) the Receivers had information upon their appointment that indicated that there may be potential priority creditors. The Receivers had a competing duty to act in the interest of priority creditors under s 433 of the Corporations Act. The potential priority claims far exceeded the cash available. They submitted: [238]

The balance sheet at that time, so on the 13th they were aware that there is a superannuation liability of 199,317 according to the balance sheet. And a provision for annual and personal leave entitlements in the sum of 841,841.54 cents. So that's the position that they were aware of on appointment effectively, the day after appointment. So there are priority creditors there potentially of almost a million dollars. And they've got to assess that against what assets they had at that particular point in time.

(b) Bellrock UAV was trading at a loss and no monies from trading were available to be put towards the Debt;[239]

(c) the Debt increased in the period 12 December 2022 to 19 December 2022 as the Receivers incurred fees, costs and trading expenses.[240]

177 In reply, Mr Duggal made the following primary submissions concerning the priority creditors:

(a) he referred to s 433 of the Corporations Act and submitted "[i]n short, it's a regime established to make sure that employees get paid their entitlements before the secured creditors get paid. That's the simple idea of this regime";[241]

(b) there is no evidence of any detailed analysis or investigations carried out by the Receivers as to what precise amounts were owed to priority creditors as at 12 December 2022;[242]

(c) the evidence concerning priority creditors is also "unhelpful" because there is no evidence of the amount owed to them as at 12 December 2022.[243] Mr Duggal's submission focused on whether there were any actual priority creditors as at 12 December 2022 and not whether there was information that was required to be investigated;

(d) Mr Duggal referred, inter alia, to the following:

(i) wages: the report of the Administrator says that no wages were outstanding.[244] The evidence of Ms Vouris concerning wages in paragraph 15 of the Second Vouris does not state the amount of wages owed as at 12 December 2022. The balance sheet as at 12 December 2022 shows nil wages owed as it shown as a negative figure and therefore an asset;

(ii) superannuation: the report of the Administrator says that the ATO portal shows nil outstanding Superannuation Guarantee Charges but that Superannuation Guarantee Charges returns have not been lodged from 1 April 2022 onwards. The Administrator's report states that the Receivers have advised an estimate of outstanding superannuation owed to employees in the sum of $242,125. Mr Duggal submitted there was no analysis of this. Mr Duggal submitted that this concerned the quarter ended 31 December 2022.[245] He also submitted that this figure is different to the one in the balance sheet as at 12 December 2022;

(iii) annual leave/long service leave: The balance sheet of Bellrock UAV refers to a 'provision' for annual and personal leave. This does not mean that it was payable. Mr Duggal submitted "[i]n relation to paragraph 19 [of the Second Vouris affidavit] you can't draw the conclusion that the full $891,841.54 was due and payable as at 13 December 2022. Because it says it's a provision for annual leave. So the inference is, that ought to be drawn, is that when you take it, that's when it's payable. And there's no evidence that - and they haven't put on the evidence, that it was payable at that time. And that's the critical issue.";[246]

(iv) there is no calculation of the priority creditors as at 12 December 2022.[247]

178 I am not satisfied that there is a solid foundation for the claim that the Receivers should have paid the Debt in the period 12 to 19 December 2022.

179 First, I am not satisfied there is a solid foundation for the claim that the Receivers had the available funds to pay the Debt immediately upon their appointment (i.e. on 12 December 2022). This was the primary case alleged by Mr Duggal and the case set out in the proposed statement of claim. I am not satisfied because:[248]

(a) Bellrock UAV owed Grow the sum of at least of $51,757.77 as at 12 December 2022. Mr Duggal submitted that the Debt was $51,782.23 upon the appointment of the Receivers. The Receivers/Grow submitted that the Debt was $78,043.41 which was constituted in part by the sum of $51,757.77;

(b) on 12 December 2022 and 14 December 2022, the Receivers had requested the Commonwealth Bank of Australia urgently transfer to them the monies in Bellrock UAV's Commonwealth Bank of Australia to the Receivers' Macquarie Bank account.[249] These were not transferred to the Receivers' Macquarie Bank account until 15 December 2022;[250]

(c) there were no monies in the Receivers' Macquarie Bank account.[251] It was only opened on 12 December 2022 and had a nil balance.

180 Secondly, I am not satisfied that there is a solid foundation for the claim that the Receivers could have used profits from their on-trading of the business of Bellrock UAV to pay the Debt (e.g. to pay the Receivers' fees and expenses):

(a) Mr Duggal did not identify the available profits from any on-trading. He submitted that payments were received into Bellrock UAV's Commonwealth Bank of Australia account and the Receivers' receivership account with the Macquarie Bank. Mr Duggal submitted, in effect, that there is no evidence of whether the Receivers could have, in fact, used the payments received from on-trading to pay the Debt (i.e. including their own fees and expenses) given the other debts of Bellrock UAV. As a result, this claim is speculation;

(b) in any event, it is speculation whether the Debt was able to be paid in the period 12 December 2022 to 19 December 2022, even assuming that all of the deposits into Bellrock UAV's Commonwealth Bank of Australia account and the Receivers' Macquarie Bank account were from their on-trading of the business of Bellrock UAV, and assuming that they were not subject to priority debts pursuant to s 433 of the Corporations Act:

(i) Bellrock UAV owed Grow the sum of at least of $51,757.77 as at 12 December 2022. Mr Duggal submitted that the Debt was $51,782.23 upon the appointment of the Receivers. The Receivers/Grow submitted that the Debt was $78,043.41 which was constituted in part by the sum of $51,757.77;

(ii) the Debt included further amounts for the Receivers' fees, costs and trading expenses, for a period of 1 to 8 days, including the period 12 December 2022 to 19 December 2022. There is no dispute about this. The dispute concerns the amount of the fees, costs and trading expenses;

(iii) even assuming (without deciding) that the deposits into the bank accounts were available to pay the Debt they totalled $85,453 as at 19 December 2022, with the substantial amount of this only being received on 19 December 2022;[252]

(iv) it is speculation whether the deposits into the bank account would have been sufficient to pay the Receivers' fees, costs and trading expenses.

181 Thirdly, I am not satisfied that there is a solid foundation for the claim that the Receivers should have paid the Debt in the period 12 to 19 December 2022 using the sum of $238,694.91 that was transferred to the Receivers' Macquarie Bank account.[253] This is because the Receivers had to investigate potential priority debts and amounts within the meaning of s 433 of the Corporations Act before making any payment of the Debt using the sum of $238,694.91 that was transferred to the Receivers' Macquarie Bank account.

182 Section 433 of the Corporations Act relevantly provides:

1. Property subject to circulating security interest - payment of certain debts to have priority

(2) This section applies where:

(a) a receiver is appointed on behalf of the holders of any debentures of a company or registered body that are secured by a circulating security interest, or possession is taken or control is assumed, by or on behalf of the holders of any debentures of a company or registered body, of any property comprised in or subject to a circulating security interest; and

(b) at the date of the appointment or of the taking of possession or assumption of control (in this section called the relevant date):

(i) the company or registered body has not commenced to be wound up voluntarily; and

(ii) the company or registered body has not been ordered to be wound up by the Court.

(3) In the case of a company, the receiver or other person taking possession or assuming control of property of the company must pay, out of the property coming into his, her or its hands, the following debts or amounts in priority to any claim for principal or interest in respect of the debentures:

(a) first, any amount that in a winding up is payable in priority to unsecured debts pursuant to section 562;

(b) next, if an auditor of the company had applied to ASIC under subsection 329(6) for consent to his, her or its resignation as auditor and ASIC had refused that consent before the relevant date - the reasonable fees and expenses of the auditor incurred during the period beginning on the day of the refusal and ending on the relevant date;

(c) subject to subsections (6) and (7), next, any debt or amount that in a winding up is payable in priority to other unsecured debts pursuant to paragraph 556(1)(e), (g) or (h) or section 560.

...

(a) the Receivers were appointed on behalf of Grow who was the holder of a debenture of Bellrock UAV that is secured by a circulating security interest, so that s 433(2)(a) of the Corporations Act was satisfied;[254]

(b) at the date of the appointment of the Receivers, Bellrock UAV had not commenced to be wound up voluntarily and had not been ordered to be wound up, so that ss 433(2)(b) was satisfied.[255]

184 Section 556(1) of the Corporations Act relevantly provides:

(1) Subject to this Division, in the winding up of a company the following debts and claims must be paid in priority to all other unsecured debts and claims:

...

(e) subject to subsection (1A) - next:

(i) wages, superannuation contributions and superannuation guarantee charge payable by the company in respect of services rendered to the company by employees before the relevant date; or

(ii) liabilities to pay the amounts of estimates under Division 268 in Schedule 1 to the Taxation Administration Act 1953 of superannuation guarantee charge mentioned in subparagraph (i);

...

(g) subject to subsection (1B) - next, all amounts due:

(i) on or before the relevant date; and

(ii) because of an industrial instrument; and

(iii) to, or in respect of, employees of the company; and

(iv) in respect of leave of absence;

(h) subject to subsection (1C) - next, retrenchment payments payable to employees of the company.

185 In Re Force Corp Pty Ltd (in liq),[256] Gleeson J said:[257]

[46] The provision has been described as a remedial provision that favours the specified priority creditors by giving them a statutory entitlement to be paid from assets that would otherwise not have been available because those assets would have become the subject of a fixed charge when the floating charge crystallises on the appointment of receivers: CMI Industrial Pty Ltd (in liq), Re: Byrnes v CMI Ltd [2016] 1Qd R 241; [2015] QSC 96 at [45].

186 In Korda v Silkchime,[258] Le Miere J said:[259]

[46] The purpose and effect of s 433 and its statutory predecessors is to protect the position of preferential creditors by giving preferential claims priority over the claims of floating chargees who would have otherwise 'scooped the pool' of the chargor's assets.

187 The Receivers had notice, upon their appointment, of potential priority debts and amounts within the meaning of s 433 of the Corporations Act that may need to be paid prior to the Debt. The evidence of the potential priority debts and claims included:

(a) wages for services provided prior to 12 December 2022 in an uncertain sum. This is because, upon appointment, the Receivers had an estimate of $230,000 for wages payable on 22 December 2022 and this included the period 5 to 18 December 2022 (meaning that approximately 50% of the time was prior to 12 December 2022);[260]

(b) superannuation in the sum of $199,317.84;[261]

(c) a "provision" for annual leave and personal leave in the sum of $841,841.54, which did not state if it was payable by Bellrock UAV or was a future provision.[262]

188 Mr Duggal referred to the sum of $891,841.54 and submitted that "you can't draw the conclusion that the full $891,841.54 was due and payable. And there's no evidence that - and they haven't put on the evidence, that it was payable at that time. And that's the critical issue."[263] I accept that there is no evidence that this amount was actually due and payable. I reject that this matter is the critical issue. The critical issue is that it was a matter that required investigation, prior to the payment of the Debt, in order to determine if it was a priority debt or amount subject to s 433 of the Corporations Act.

189 It is convenient to address this claim in relation to the two periods identified by Mr Duggal:

(a) 12 December 2022 (the date of appointment of the Receivers) to 15 December 2022 (the date when the Receivers received the sum of $238,694.91); and

(b) 16 December 2022 (the date of payment by Mr Duggal to Grow of the sum of $51,783) to 19 December 2022 (the date prior to the interim injunctions ordered by consent).

190 In the period 12 December 2022 to 15 December 2002, I assume (without deciding) the following:

(a) Bellrock UAV owed Grow the sum of at least of $51,757.77 as at 12 December 2022. Mr Duggal submitted that the Debt was $51,782.23 upon the appointment of the Receivers. The Receivers/Grow submitted that the Debt was $78,043.41 which was constituted in part by the sum of $51,757.77;

(b) that the Receivers' fees, expenses and trading expenses were 'minimal'. The Receivers/Grow dispute this and submit that for the period 12 to 13 December these totalled $373,043.41;

(c) the monies in the Bellrock UAV bank account were available. These totalled $238,694.91 when transferred to the Receivers' account with the Macquarie Bank on 15 December 2022. The Receivers/Grow dispute that these funds were available to pay the Debt.

191 As a result of the matters set out in the paragraph above, I observe:

(a) if the monies from the Bellrock UAV bank account in the sum of $238,694.91 were used to pay the Debt this would have left the sum of $186,937.14 less a sum for the Receivers' fees, expenses and trading expenses for a period of 1 to 4 days (i.e. 12 to 15 December 2022);

(b) the potential priority debts and amounts exceeded the sum of $186,937.14which does not take into account the Receivers' fees, expenses and trading expenses that would have needed to be paid.

192 In the period 16 December 2022 to 19 December 2022, I assume (without deciding) the following:

(a) Bellrock UAV owed Grow the sum of at least of $51,757.77 as at 12 December 2022. Mr Duggal submitted that the Debt was $51,782.23 upon the appointment of the Receivers. Mr Duggal paid the sum of $51,783 on 16 December 2022. The Receivers/Grow submitted that the Debt was $78,043.41 which was constituted in part by the sum of $51,757.77;

(b) the Debt on and from 16 December 2022 to 19 December 2022 now included further amounts for the Receivers' fees, costs and trading expenses, for a period of now 5 to 8 days, including the period 12 December 2022 to 19 December 2022. There is no dispute about this. The dispute concerns the amount of the fees, costs and trading expenses;

(c) the monies in the Bellrock UAV bank account (transferred into the receivership Macquarie Bank account on 15 December 2022) were available. These totalled $238,694.91. The Receivers/Grow dispute the availability for use of these funds.

193 As a result of the matters set out in the paragraph above, I observe:

(a) if the monies from the Bellrock UAV bank account in the sum of $238,694.91 were used to pay the Debt this would have left the sum of $238,694.91 (as the sum of $51,783 was paid on 16 December 2022 by Mr Duggal to Grow directly) less a sum for the Receivers' fees, expenses and trading expenses for a period of 5 to 8 days;

(b) the potential priority debt and payments exceeded the sum of $238,694.91 which does not take into account the Receivers' fees, expenses and trading expenses that would have needed to be paid for a period of 5 to 8 days.

194 As a result, these potential priority debts and amounts had to be investigated and assessed to ensure that the Receivers complied with s 433 of the Corporations Act. This had to be done prior to the payment of the Debt. The Receivers conducted such investigations.

195 Secondly, the actual priority debts and amounts as assessed by the Receivers owed by Bellrock UAV as at 12 December 2022 exceeded the sum available to pay the Debt in the period 12 to 19 December 2022. As a result, I do not accept Mr Duggal's submission that there was no calculation of the priority debts as at 12 December 2022. The actual priority debts included the following amounts totalling $573,392.18:[264]

(a) wages in the sum of $95,566.42 for the period 5 to 11 December 2022.[265] Mr Duggal submitted that the Administrator's report to creditors dated 18 January 2023[266] stated that "no wages were outstanding to employees as at the date of [the Administrator's] appointment".[267] I observe that the relevant question for s 566(1)(e)(i) of the Corporations Act is not whether the wages were "outstanding" but rather whether the services (of the employees) had been rendered to the company;

(b) superannuation in the sum of $244,056.55.[268] Mr Duggal submitted that this included the quarter to 31 December 2022 and as a result contained amounts post 11 December 2022. This is incorrect. The calculation of the December amount of $244,056.55 is based on the period to 11 December 2022;[269]

(c) leave entitlements in the sum of $233,769.21.[270]

196 As a result, these exceeded the sum available to pay the Debt in the period 12 to 19 December 2022.

197 Finally, I am not satisfied that there is a solid foundation for the claim in paragraphs B and C of the prayer for relief in the proposed statement of claim that seeks declarations that the Debt was discharged upon the withdrawal on 15 December 2022 by the Receivers of the sum of $236,666.92 from Bellrock UAV's bank account and on 16 December 2020 upon the payment by Mr Duggal to Grow of the sum of $51,783.00. This is because:

(a) there is no allegation in the proposed statement of claim that supports this relief;

(b) the alleged breaches in the proposed statement of claim are based upon the Receivers failure to pay the Debt. For example, I refer to paragraphs 30(e), (f) and (h) of the proposed statement of claim;

(c) the evidence establishes that the Receivers did not use the monies in Bellrock UAV's Commonwealth Bank of Australia account to pay the Debt to Grow. There was no dispute between the parties about this. As a result, it is not arguable that the Debt has, in fact, been discharged;

(d) Mr Duggal did not submit that the whole of the Debt has been paid at any time. His case is that the Receivers breached their duties by not paying the Debt.

Is there a solid foundation for the claims against Grow and the Administrator?

198 As I have already said in these Reasons, the claim against Grow and the Administrator in the proposed statement of claim is that the appointment of the Administrator by Grow was exercised for an ulterior or extraneous purpose and not in furtherance of the object of Part 5.3A of the Corporations Act.

199 In the particulars subjoined to paragraph 33 of the proposed statement of claim, Mr Duggal says that the appointment of the Administrator was for the purpose of attempting to prevent Mr Duggal from exercising his powers as a director of Bellrock UAV, including but not limited to challenging the conduct of the Receivers (the alleged purpose).

200 Mr Duggal submitted that the claims concerning Grow having the alleged purpose have a solid foundation.

201 Mr Duggal submitted that there is a solid foundation for an inference concerning the alleged purpose and relied upon the following primary submissions:

(a) it is "an inferential case";[271]

(b) there was "obviously" an ulterior purpose;[272]

(c) he submitted "[t]here is just no evidence, there's a clear lack of evidence as to the turning of the attention and what was actually said, and it appears from the evidence that it was simply just an appointment based on conversations with the receivers and that's it. And there has - a significant issue arises as to why were they appointed? You take an appointment where you don't even speak to the appointor? The secured creditor?"[273];

(d) the context set out in paragraph 62 of his submissions filed 24 February 2022, being that (a) Duggal knew nothing of the administration at the time of the appointment; (b) Grow appointed the Administrator on the same day as the Receivers; (c) Grow was fully secured having a security interest over all of the assets of Bellrock UAV, and, (d) there is no evidence of any deed of company arrangement being proposed. Mr Duggal did not rely upon all of the matters in paragraphs 4 to 27 of the proposed statement of claim, despite this being the particulars of the alleged purpose;[274]

(e) he submitted "[a]nd we say that absent any proper explanation and in light of the evidence that's currently in the matters relied upon in 64, it's appropriate that the inference can be drawn as suggested";[275]

(f) no proper explanation has been provided of the reasons for the appointment;[276]

(g) there is no logical explanation for the appointment that is consistent with the objectives set out in s 435A.[277] In particular, there is no evidence:

(i) about any negotiations, discussions or reasons why the appointment of an administrator to Bellrock UAV maximises the chances of Bellrock UAV, or as much as possible of its business, continuing in existence;[278]

(ii) of any consideration that if it is not possible for Bellrock UAV or its business to continue in existence, that the appointment of an administrator would result in a better return for Bellrock UAV's creditors and members than would result from an immediate winding up. For example, Mr Duggal submitted that there is no evidence of Grow, the Administrator or Receiver having discussions with him or the other director of Bellrock UAV about proposed a deed of company arrangement;[279]

(iii) that any there was any need for any moratorium period. There was no threat to evict Bellrock UAV from its premises. [280]

(h) there has not been any proper explanation of the purpose in appointing the Administrator;[281]

(i) as to the evidence of Mr Woszczalski, the director of Grow, Mr Duggal submitted:

(i) there is no evidence of discussions with the Administrator;[282]

(ii) there is no evidence of what he knew at the time of the appointment of the Administrator;[283]

(iii) there is no evidence that he read the emails referred to in his first affidavit at paragraph 10;[284]

(iv) there is no evidence of when his discussions with Mr Albarran took place or what was said;[285]

(v) the evidence is conclusionary and should be given minimal weight;[286]

(j) the evidence establishes that Grow did not speak with the Administrator. Mr Duggal submitted that alarm bells should have been ringing for the Administrator as he was not contacted by Grow prior to his appointment;[287]

(k) if Grow was truly concerned about maximising the chance of Bellrock UAV continuing in existence or providing better return for creditors then there was a whole regime in the Debt Factoring Facility Agreement, including in clause 8.1(i), that could have provided Grow with the information Grow would need to work out whether the appointment of an administrator was required to achieve the objects in Part 5.3A of the Corporations Act. It chose not to do so.

202 The Administrator submitted that the claims concerning the alleged purpose do not have a solid foundation and relied, inter alia, upon the following submissions:

(a) the claim against the Administrator does not have a solid foundation. It is baseless. The particulars in the proposed statement of claim are inadequate and refer to background matters;[288]

(b) Mr Duggal has not been able to adduce any evidence to prove this claim;[289]

(c) the appointment of the Administrator was best practice to ensure that the company or the prospects of selling the business and maximising the chances of return to creditors and secured creditor would be increased;[290]

(d) there were concerns about insolvency and the appointment of the Administrator meant that issues within the broader group of companies could be dealt with;[291]

(e) Grow was aware of a number of factors, that would only give increasing concern to it, of the potential insolvency of Bellrock UAV and the need to protect its assets from any further diminution. This included:[292]

(i) Bellrock UAV had defaulted on the terms of its facility;

(ii) Bellrock Technology and Bellrock Protective Services had been merged into Bellrock UAV; and

(iii) Bellrock Protective Services had been wound up in insolvency.

(f) there is no evidence that it is out of the ordinary, or anything other than good practice, for a secured creditor who has identified that a company is insolvent, and part of whose strategy is to trade on a business using leased premises and assets, to appoint an administrator for cogent reasons, consistent with the objectives of Part 5.3A of the Corporations Act, inter alia, to maximise the possibility of the company's insolvency crisis being addressed successfully in accordance with the statutory regime in Part 5.3A of the Corporations Act;[293]

(g) the final relief is hopeless as "a hopelessly insolvent company will return back to its directors. We submit that that's totally against public policy here and that it shouldn't be accepted or shouldn't be considered, particularly because of the way that this company - the insolvency of this company".[294]

(a) Mr Woszczalski sets out the purpose of the appointment of the Administrator in paragraph [16] of his first affidavit;[295] and

(b) the inference of the alleged purpose cannot be made as the appointment of the Administrator did not prevent Mr Duggal from exercising his powers as a director of Bellrock UAV to challenging the conduct of the Receivers. In the absence of the appointment of the Administrator Mr Duggal still would have required leave to bring the derivative action claim.[296]

204 The Administrator was appointed pursuant to s 436C of the Corporations Act. Section 436C provides:

436C Secured party may appoint administrator

(1) A person who is entitled to enforce a security interest in the whole, or substantially the whole, of a company's property may by writing appoint an administrator of the company if the security interest has become, and is still, enforceable.

(1A) Subsection (1) applies in relation to a PPSA security interest only if the security interest is perfected within the meaning of the Personal Property Securities Act 2009.

(2) Subsection (1) does not apply to a company if a person holds an appointment as liquidator, or provisional liquidator, of the company.

205 It is not in dispute that at the time the Administrator was appointed the requirements in s 436C were satisfied.

206 While a company is under administration, the administrator has control of the company's affairs (s 437A), including the bringing and defending of proceedings (s 442A), to the exclusion of other "officers" of the company.

207 Section 435A of the Corporations Act sets out the objects of Part 5.3A (including s 436C):

435A Object of Part

The object of this Part, and Schedule 2 to the extent that it relates to this Part, is to provide for the business, property and affairs of an insolvent company to be administered in a way that:

(a) maximises the chances of the company, or as much as possible of its business, continuing in existence; or

(b) if it is not possible for the company or its business to continue in existence - results in a better return for the company's creditors and members than would result from an immediate winding up of the company.

Note: Schedule 2 contains additional rules about companies under external administration.

208 In Darkinjung Pty Ltd v Darkinjung Local Aboriginal Land Council; Hill v Darkinjung Pty Ltd; Darkinjung v Warner,[297] Barrett J made a declaration that the appointment of the administrators was invalid, void and of no effect. Barrett J said:[298]

1. In Kazar v Duus, Merkel J also pointed out that a decision to appoint voluntary administrators may be vitiated by improper purpose. His Honour said (at p.335):

"A statutory power must be exercised for the purpose for which it was conferred. If the power is exercised for more than one purpose, where one of those purposes is improper, the exercise of the power will be vitiated if the improper purpose was a substantial purpose in the sense that the decision would not have been made but for the ulterior purpose: see Samrein Pty Ltd v Metropolitan Water Sewerage and Drainage Board [1935] ArgusLawRp 105; (1982) 41 ALR 467 at 468, and Thompson v Council of the Municipality of Randwick [1950] HCA 33; (1950) 81 CLR 87 at 106, cf Knuckey v FCT (16 September 1988, Fed C of A, Black CJ, Tamberlin and Goldberg JJ, unreported at 11-13."

1. After observing that an appointment of an administrator must be in furtherance of the object of Pt 5.3A stated in s 436A, Merkel J said that the power of appointment would be invalidly exercised if exercised "for a purpose unrelated to that object but for an ulterior and extraneous purpose", since the ulterior and extraneous purpose would be an improper purpose.
2. Improper or ulterior purpose is also a basis on which an order terminating a voluntary administration may be made. Section 447A(2)(b) gives, as an example of the orders that may be made under s.447A, an order that "because provisions of this Part are being abused ... the administration is to end": see, for example, Aloridge Pty Ltd v Christianos [1994] FCA 972; (1994) 13 ACSR 99; Blacktown City Council v Macarthur Telecommunications Pty Ltd [2003] NSWSC 883; (2003) 47 ACSR 391.

209 I accept that there may be other purposes, in addition to those stated in s 435A, for an appointment of an administrator under s 436C. These are not, however, relevant to the present case, as the evidence of the director of Grow was that Grow appointed the Administrator as it wanted to maximise the chances of the Bellrock entities continuing in existence. This is the object set out in s 435A(a) of the Corporations Act.

210 I am not satisfied that the claim that Grow had the alleged purpose has a solid foundation. There is insufficient evidence for me to be so satisfied. It is a claim based upon inferences based upon speculation and a lack of evidence. Mr Duggal seeks, substantially, to rely upon a lack of evidence to establish that there is a solid claim that that Grow had the alleged purpose. The submissions were characterised by a lack of explanation as to precisely on what basis the alleged purpose may be inferred. This was the consequence, at least in part, of the evolving nature of Mr Duggal's submissions on this claim.

211 First, I am not satisfied that there was "obviously" the alleged purpose as submitted by Mr Duggal. The claim is based upon inference and it is not obvious.

212 Secondly, the proposed statement of claim gives particulars of the alleged purpose by referring to and repeating the matters in paragraphs 4 to 27 of the pleading and then identifying the alleged purpose. Mr Duggal did not make submissions that there is a solid foundation for the claim that the alleged purpose may be inferred from the matters in paragraphs 4 to 27. No alternate form of pleading was provided that set out other particulars of the claim. Mr Duggal relied upon other matters in submissions to support his submission that this claim had a solid foundation based upon inference. As I have already said, these submissions continuously evolved. This is unsatisfactory. It is important in an application for derivative leave that the proposed pleading adequately sets out the case to made, especially a serious allegation based upon inference. This is important as then the parties are aware of what matters need to be addressed in submissions and evidence upon the application for leave. I have not, however, confined my consideration to the matters in the proposed statement of claim.

213 Thirdly, Mr Duggal's initial claims about the appointment of the Administrator were based upon:[299]

(a) there being no evidence of the Administrator's investigations carried out prior to appointment;

(b) there being no evidence of conversations between the Administrator and the Receivers; and

(c) that Bellrock UAV should not have been placed into external administration given that, as at 12 December 2022, there were sufficient funds to discharge the debt owed to Grow.

214 I have said earlier in these Reasons, that there is no solid foundation for the claim that the Receivers had sufficient funds to pay the Debt to Grow on 12 December 2022. The other complaints are based upon there being no evidence of certain matters. This simply invites speculation. Further, these matters were then addressed by evidence that the Administrator did have communications with the Receivers' firm and also a brief discussion with Mr Albarran in the period 7 December 2022 to 12 December 2022.[300]

215 Fourthly, Mr Duggal then submitted, in effect, that there is no evidence that Grow's purpose was a purpose in accordance with the objects set out in s 435A of Part 5.3A of the Corporations Act and he referred to a number of authorities.[301] Mr Woszczalski then gave evidence that Grow appointed the Administrator to maximise the prospects of Bellrock UAV and the other Bellrock entities being administered in such a way that maximises the chances of their continued existence. There is no dispute between the parties that such a purpose is in accordance with the objects of Part 5.3A of the Corporations Act.

216 Fifthly, Mr Duggal initially only relied upon the matters in paragraphs [58] to [63] of his submissions filed 24 February 2023 in which he relied upon the following context:

(a) the purpose of an appointment of an administrator set out in s 435A of the Corporations Act;

(b) Mr Duggal knew nothing of the administration at the time of the appointment;

(c) Grow appointed the Administrator on the same day as the Receivers;

(e) there is no evidence of any deed of company arrangement being proposed.

217 I am not satisfied that these matters give rise to a solid foundation for the alleged purpose. It was not explained why Grow should have discussed the potential administration with Mr Duggal or why there is anything, in effect, out of the ordinary or unusual in the appointment of the Administrator and the Receivers on the same day. I deal with the issue that Grow was fully secured later in these Reasons.[302]

218 Sixthly, Mr Duggal's claim is now substantially based upon, in effect, establishing that Grow did not have the purpose deposed to by Mr Woszczalski and that, as a result, Grow must have had the alleged purpose. This is because Mr Duggal claims that the alleged purpose was the only purpose. He does not claim that the alleged purpose was a substantial purpose in the sense that the appointment would not have been made but for the alleged purpose. The primary focus of Mr Duggal's submissions then became that there was a solid foundation for the alleged purpose as there was no evidence of certain matters. This concerned:

(a) no evidence of why the appointment of an administrator to Bellrock UAV maximises the chances of, inter alia, Bellrock UAV continuing in existence. This is speculation about the purpose. This is because Mr Duggal did not submit that the appointment of an administrator would not have achieved this purpose;

(b) no evidence of Grow, the Administrator or Receivers having discussions with the directors of Bellrock UAV about proposing, for example, a deed of company arrangement. Mr Duggal did not adequately explain why this supported the making of the inference. For example, he did not explain why such discussions had to take place only before the appointment of the Administrator;

(c) no evidence that the appointment of an administrator would have benefitted the unsecured creditors or Bellrock UAV. Again, this is speculation about the purpose. Mr Duggal did not adequately explain why this supported the making of the inference. For example, Mr Duggal did not submit that the appointment of an administrator would not benefit the unsecured creditors or Bellrock UAV; and

(d) no evidence of discussions between Grow and the Administrator prior to appointment and that "alarm bells" should have been ringing for the Administrator as a result. Mr Duggal did not adequately explain why "alarm bells" would have been ringing or why this supported the inference. This was based upon Grow not discussing the prospective appointment with the Administrator. It was not otherwise adequately explained why alarm bells would have been ringing. Further, Mr Duggal's original complaint was there was no evidence of discussions between the prospective Administrator with the Receivers. There is evidence that the Administrator had a discussion with a person in the offices of the Receivers about "background information" and also a brief discussion with Mr Albarran prior to his appointment.[303]

219 Seventhly, as to Mr Duggal's submissions concerning the evidence of Mr Woszczalski:

(a) Mr Woszczalski gave evidence that Grow appointed the Administrator to maximise the prospects of, inter alia, of Bellrock UAV being administered in such a way that maximises the chances of its continued existence at the time of the appointment of the Administrator;[304]

(b) Mr Woszczalski gave evidence that he had formed the view, as a result of discussions with Mr Albarran, that the Receivers could not achieve this purpose alone.[305] I accept that his evidence is brief and conclusionary but, in my opinion, he is giving evidence about his belief as to why he considered the Receivers alone could not maximise the chances of the continued existence of Bellrock UAV;

(c) the discussions with Mr Albarran took place prior to the appointment of the Administrator;[306]

(d) Mr Woszczalski knew the matters in paragraphs [9], [11] and [12] of the First Woszczalski affidavit at the time of the appointment of the Administrator. In paragraph [10] of the First Woszczalski affidavit he identifies where the emails referred to in paragraph [9] are exhibited. I do not accept that in paragraph [9] he is giving evidence that he has only read them for the first time as exhibits to the First Vouris affidavit. Further, Mr Woszczalski's co-director, Mr David Verschoor is a party to many of the emails;[307]

(e) further, there is no dispute that Bellrock UAV was in default of the Debt Factoring Agreement and had been for some time as at 12 December 2022 and that Bellrock Protective Services was wound up on 27 September 2022.

220 Eighthly, Mr Duggal sought to rely upon Grow not asking for further information from Bellrock UAV, including pursuant to clause 8.1(i) of the Debt Factoring Agreement, to work out whether the appointment of an administrator was required to achieve the objects in Part 5.3A of the Corporations Act to infer the alleged purpose. Mr Duggal did not identify what information could have been requested, how long that process would have taken and why the inference may be made as a result of not asking for this information.

221 Ninthly, Mr Duggal submitted that as Grow had security over all of the assets of Bellrock UAV there does not seem to be a logical explanation to appoint an administration that is consistent with the objects of Part 5.3A of the Corporations Act. Mr Duggal did not further adequately explain this submission. Further, s 436C(1) of the Corporations Act specially contemplates, and provides for, a person who is entitled to enforce a security interest in the whole of a company's property to appoint an administrator.

222 Finally, the claim of the alleged purpose is based upon Grow having the alleged purpose, being a purpose of attempting to prevent Mr Duggal from exercising his powers as a director of Bellrock UAV. Mr Duggal did not identify why it may have been in Grow's interests to have that purpose except with respect to challenging the conduct of the Receivers that it had appointed. Mr Duggal did not identify why Grow, in the circumstances of this case, may want to prevent Mr Duggal from doing that. This is in a context in which there is no dispute that the Receivers were validly appointed as Bellrock UAV was in default in not paying the Debt. Further:

(a) Mr Duggal did not identify what other action he could have taken in his capacity as a director of Bellrock UAV and Bellrock Cleaning to challenge the conduct of the Receivers that was otherwise not available to him as a result of the appointment of the Administrator. Further, Bellrock Cleaning is not in administration;

(b) appointing an administrator to a company, which is also in receivership, does not have the effect that a person, who is a director, cannot challenge the conduct of the receivers at all. In the present case, this is precisely what Mr Duggal is doing.

Do the claims of Bellrock UAV have any tangible benefits?

223 I am not satisfied that the claims of Bellrock UAV will have any tangible benefit for, or be in the best interests of, Bellrock UAV.

224 First, this is because, as I have already said, the claims do not have a solid foundation.

225 Secondly, if I am incorrect and the claim against the Receivers concerning their inflated fees has a solid foundation:

(a) I am of the view, that it is a weak claim. Mr Duggal has not identified with any precision why, inter alia, the fees, expenses or trading expenses are inflated. He also gave no evidence that he had the means to pay any non-inflated fees or that he would have paid them;

(b) I am also not satisfied, based upon the present evidence, that it is a claim that would result in any substantial damages or any substantial reduction in the fees, expenses and trading expenses payable by Bellrock UAV to the Receivers. This was not addressed by Mr Duggal; and

(c) there is another means by which the same redress may be obtained in relation to the alleged inflated fees, expenses and trading expenses of the Receivers. Pursuant to s 423 of the Corporations Act, Mr Duggal is able to make a complaint to the Court about an act or omission of the Receivers in connection with performing or exercising any of their functions and powers. This includes their act in charging fees and expenses. Mr Duggal does not require leave to do this. This was accepted by the Receivers. This does not involve a derivative proceeding. Pursuant to s 423(1) the Court may inquire into the matter and where the Court so inquires may take such action as it thinks fit.

226 Thirdly, if I am incorrect and the claim against the Receivers concerning the payment of the Debt has a solid foundation, in my view, it a weak claim. There is much uncertainty about the available on-trade profits and whether the Receivers' fees and expenses are inflated, and if so, in what amount.

227 Finally, if I am incorrect and the claim against Grow concerning the alleged purpose for the appointment of the Administrator has a solid foundation, in my view it is a weak claim. It is based upon inferences which are based, substantially, upon a lack of evidence of certain matters. It is also a case that has not been formulated with any precision despite the attempt to do so in the proposed statement of claim. In my view, the fact that this claim was not put consistently with the particulars in the proposed statement of claim is further support for it being a weak claim.

228 No party identified this as being a relevant consideration upon this application. This consideration is not of any significance in the context of the claims that are sought to be made by Bellrock UAV. This is because the Administrator submitted that he "is not in a position to assess the complaints made with regard to the receivers"[308] and otherwise the attitude of the Administrator of claims concerning his appointment are not relevant.

229 Given I have found that the claims do not have a solid foundation and have no tangible benefit for Bellrock UAV, it is not necessary me to consider other practical considerations such as whether Mr Duggal should give security for the indemnity he has proffered to give.

230 I have found that the Bellrock UAV's claims against the Receivers, Grow and the Administrator do not have a solid foundation and will not have any tangible benefit for, and will not be in the best interests of, Bellrock UAV.

231 As a result, I will exercise my discretion, in all of the circumstances, to refuse leave for Mr Duggal to bring a proceeding in the name of Bellrock UAV against the Receivers, Grow and the Administrator.

232 Mr Duggal has standing to bring an application pursuant to s 237 of the Corporations Act as he is a shareholder and director of Bellrock Cleaning.

Is it is probable that Bellrock Cleaning will not itself bring the proceedings, or properly take responsibility for them, or for the steps in them?

233 I am not satisfied that it is probable that Bellrock Cleaning will not itself bring the proceedings set out in the proposed statement of claim.

234 First, Mr Duggal relied upon the decision of Osborne J in Kalimpa Park. This case does not assist Mr Duggal. That is because it concerned a circumstance in which there were two directors of a company in receivership and one did not support the proposed claims against the receivers. As observed by Osborne J:[309]

1. As I understood the submission, the Stokie Parties argued that, in relation to the proposed claims against the appointment of the receivers and managers, the statutory criterion in s 271(1)(a) of the Act had not been established as Mr Bzezinski has a right as a director of the Company to bring that proceeding in the Company's name. Had Mr Bzezinski been the sole director of the Company, there might have been something in this submission. However, Mr Bzezinski is only one of two directors, with the other director being Mr Stokie. I do not accept that the directors' residual powers to initiate proceedings in the Company's name, for the limited purpose of the claim against the appointment of Messrs Shaw and Ross as receivers and managers, will allow the proceeding to be commenced by other means. It is accepted that Mr Stokie would not vote in favour of such a proceeding.

235 Mr Duggal did not identify any other reason why he cannot rely upon his residual powers as a director to bring proceedings on behalf of Bellrock Cleaning. For example, he made no submission on the effect of the particular charge in this case on his residual powers as a director to commence proceedings in the name of Bellrock Cleaning against the Receivers.[310]

236 In the present case, Bellrock Cleaning is in receivership. Mr Duggal is the sole director and shareholder. As a result, I am not satisfied, on the evidence and submissions, that he cannot rely upon his residual powers as the sole director to bring a proceeding on behalf of Bellrock Cleaning.

237 Secondly, Mr Duggal also submitted that it is probable that Bellrock Cleaning will not bring proceedings as it is receivership and is without funds. Mr Duggal is the sole shareholder. I am not satisfied that he does not have the monies to fund the proceeding.

238 I am not satisfied that Mr Duggal is acting in good faith. This is because I am not satisfied that Mr Duggal honestly believes that a good cause of action exists and has reasonable prospects of success. Mr Duggal gave evidence that he believes that the "facts" set out in the statement of claim are true and correct.[311] He did not give any evidence that he believes that a good cause of action exists. In any event, even if he did so, I accept that the claims against the Receivers, as set out in the proposed statement of claim and submissions (written and oral) are "highly speculative" as submitted by Grow/the Receivers. For example:

(a) Mr Duggal did not identify the nature and extent of the impugned inflated fees;

(b) the claim that Mr Duggal would have paid the non-inflated fees and that, as a result, the receivers would have resigned and terminated the receivership, was not supported by evidence that Mr Duggal had the means to pay them or would have, in fact, paid them;

(c) the claim that the Receivers should have investigated the quantum of the Debt, prior to their appointment, is patently hopeless for the reasons I have given;

(d) the claim that the Receivers should have paid the Debt using monies in the Bellrock UAV Commonwealth Bank of Australia account and monies in the Receivers' Macquarie Bank account (i.e. in addition to the sum of $238,694.91) was speculation. Mr Duggal did not identify whether any such monies were available, including whether there were other debts that had to be paid;

(e) the claim that the Receivers should have, in effect, immediately upon their appointment simply paid the Debt to Grow without making any investigation of the priority debts and amounts is also patently hopeless. This is also in a context in which he is the sole director of Bellrock Cleaning and one of only two directors of Bellrock UAV.

Is it in the best interests of Bellrock Cleaning that Mr Duggal be granted leave?

239 I am not satisfied that it is in the best interests of Bellrock Cleaning that Mr Duggal be granted leave. The claims of Bellrock Cleaning against the Receivers are identical to the claims of Bellrock UAV against the Receivers. I refer to my Reasons why the claims will not have any tangible benefits for, and not be in the best interests of, Bellrock UAV. As a result, it is not in the best interests of Bellrock Cleaning for Mr Duggal to be granted leave.

240 The proposed claims of Bellrock Cleaning against the Receivers are identical to the proposed claims of Bellrock UAV against the Receivers. I refer my earlier Reasons why the claims do not have a solid foundation. As a result, I am not satisfied that there is a serious question to be tried on the claims of Bellrock Cleaning against the Receivers.

241 I accept the Receivers' submission that Mr Duggal did not give the required notice. He made the original application for leave pursuant to the inherent jurisdiction of the Court by filing the summons. He did not give the required notice, including by giving reasons. He then only made the application pursuant to s 237 of the Corporations Act by submissions filed 21 March 2023. In my view, however, if the other requirements of s 237 had been satisfied, I would have granted leave, even though the required notice had not been given, pursuant to s 237(2)(e)(ii) of the Corporations Act.

242 Mr Duggal has the burden of establishing each of criteria specified in s 237(2) to obtain leave. He has not discharged that burden. As a result, for the reasons I have already given, I will refuse the application for leave pursuant to s 237 of the Corporations Act for Mr Duggal to bring a proceeding in the name of Bellrock Cleaning against the Receivers.

CLAIMS PURSUANT TO SECTION 90-15 OF SCHEDULE 2 TO THE CORPORATIONS ACT

(a) by his amended summons, sought leave pursuant to s 90-15 to bring proceedings in the name of Bellrock UAV and Bellrock Cleaning against the Receivers, Grow and the Administrator;

(b) alternatively, submitted, that an application of whether an order should be made pursuant to s 90-15 should be set down for final hearing following the service of pleadings and evidence.

1. An example of an order which may be made under s 90-15 includes "an order in relation to any loss that the company has sustained because of a breach of duty by an external administrator". The Court may exercise that jurisdiction, relevantly, on an application made under s 90-20.

...

1. The persons who may seek an order are identified in s 90-20 of the IPS and include a person with a financial interest in the external administration of the company and an officer of the company. There is no express requirement for those persons to obtain leave, irrespective of the type of order sought pursuant to s 90-15 of the IPS.

2. In short, s 90-15 of the IPS appears to confer an apparently unfettered right on certain persons to seek an order in relation to the external administration of a company. The question of whether the common law requirement for leave survives the enactment of the IPS has not, to Duggal's knowledge, been considered in any authority. However, the abrogation by statute of the common law leave requirement is consistent with the purpose of the IPS in strengthening and streamlining the regulation of external administrators and empowering creditors.

3. If leave is required, whether leave will be granted turns on the question of whether the claim has "sufficient merit" That question has been dealt with above.

...

1. If the Court accepts Duggal's primary case that the derivative procedure is appropriate in the present circumstances, Duggal's application pursuant to s 90-15 of the IPS would not need to be determined including consideration of whether leave is required to bring proceedings under s 90-15(1) of the IPS and how such proceedings are to proceed.
2. If the Court is not inclined to grant relief to bring derivative proceedings, the Court should set the matter down for a final hearing as to whether the order sought under s 90-15(1) should be made. Duggal submits that any such hearing should follow the service of pleadings and evidence.

245 The only order sought by Mr Duggal in the amended summons, pursuant to s 90-15, is an order seeking leave to bring a proceeding in the names of Bellrock UAV and Bellrock Cleaning. Mr Duggal has not provided the Court with any application seeking any other order pursuant to s 90-15. For example, Mr Duggal does not presently seek to make any application for "an order in relation to any loss that the company has sustained because of a breach of duty by an external administrator".[313] In this context, the Court raised this issue with Mr Duggal during the hearing and asked him to clarify issues concerning this matter.[314]

(a) it is a claim by Mr Duggal in his own right.[315] The claim is exactly the same.[316] Mr Duggal would be the plaintiff;[317]

(b) it is unclear whether he brings that claim in his own name as an officer of the company or brings it on behalf of the company;[318]

(c) it is a claim by Bellrock UAV for an order pursuant to s 90-15.[319] Section 90-15 does not apply to Bellrock Cleaning as it is not in administration;[320]

(d) it is uncertain whether Mr Duggal brings the claim in his own name or on behalf of Bellrock UAV. The legislation is unclear;[321]

(e) it would be Bellrock UAV that brings the proceeding and that is why derivative leave may be needed;[322]

(f) if he brings in it in the name of Bellrock UAV then derivative leave may be required pursuant to 90-15;[323]

(g) the substantive application would be under s 90-15;[324]

(h) Mr Duggal accepted that the only order that he seeks at present under s 90-15 is for leave to bring a proceeding.[325]

247 The following exchange then took place:[326]

HIS HONOUR: I don't readily see it at the moment. I wish to know what order is sought under 90-15. At the moment, it is only leave.

MR KOHN: Yes, Your Honour.

HIS HONOUR: And then in the submissions I read, if I don't give leave, then I'm to set down some other claim of your client under 90-15. I don't understand that because the only order that I'm aware of that your clients seek at the moment is for leave under 90-15.

MR KOHN: I understand.

HIS HONOUR: ...if it's something else pursuant to 90-15, then I'll need that done with clarity and the sooner you give notice to the defendants the better because, at the moment, they do not engage with this at all and, in fact, I don't think they deal with it in any detail whatsoever.

MR KOHN: No, I understand.

HIS HONOUR: It may come as a surprise to them if your client is actually moving for substantive relief under 90-15 and, if he's doing so - for example, if he's doing so as an officer of the court and he's seeking a particular order, for example, an order in the form that it might be set out in the prayer for relief of the existing statement of claim they might need to know that. Because, at the moment, that's not as clear as it should be if that's to be done and that's some other proceeding potentially anyway.

248 Mr Duggal submitted that he would "deal with s 90-15 later on".[327] Mr Duggal subsequently made no further substantive submissions on this issue that clarified the issues, including whether Mr Duggal makes, or seeks to make, any application for any substantive order under s 90-15, and if he does, what it is.

249 The Receivers/Grow submitted there is no further substantive application, and that their response to Mr Duggal's application is based on the matters contained in the amended summons.[328] The Receivers and Grow submitted that paragraph 1 of the amended summons uses s 90-15 as an alternative mechanism to seeking the Court's relief, being an order for leave to commence derivative action in the name of the companies, and nothing further. The Receivers and Grow submitted that the proposed amended statement of claim supports this.

250 Bellrock UAV is under external administration. It is now in liquidation. Bellrock Cleaning is not under external administration or liquidation. Mr Duggal accepted that s 90-15 does not apply to Bellrock Cleaning.[329] Mr Duggal is an officer of Bellrock UAV.

251 Mr Duggal submitted, in effect, that if he brings a proceeding in the name of Bellrock UAV then derivative leave may be required pursuant to s 90-15.

252 First, it is unclear what application, if any, Mr Duggal seeks leave to make pursuant to s 90-15:

(a) Mr Duggal's amended summons and submissions refer to an application pursuant to s 90-15 to bring a proceeding in the name of Bellrock Cleaning and Bellrock UAV. Mr Duggal then clarified that it is only in relation to Bellrock UAV;

(b) it is unclear whether any application is made against the Receivers who are not involved in the "external administration" of Bellrock UAV within the meaning of Schedule 2 of the Corporations Act;

(c) Mr Duggal submitted that an example of an order which may be made under s 90-15 includes an order in relation to any loss that the company has sustained because of a breach of duty by an external administrator, but no such claim is made in the proposed statement of claim.[330] Mr Duggal did not identify whether he, in fact, seeks such an order pursuant to s 90-15 against the Administrator. It is unclear whether such a claim is sought to be made now. No such claim is made in the proposed statement of claim. Further, Mr Duggal submitted that there is no claim against the Administrator made in the proposed statement of claim and that the Administrator is only proposed to be a party as he is a necessary party to the claim against Grow;

(d) Mr Duggal did not provide any proposed application setting out any application for orders pursuant to 90-15 (apart from the application for leave to bring a proceeding); and

(e) the Court is not able to speculate as to form of that application, including the precise relief sought.

253 Secondly, Bellrock UAV is not entitled to make any application, in its own name, for an order under s 90-15. I refer to s 90-20. A company is not one of the persons listed in s 90-20 who may apply for an order under s 90-15. Thirdly, in the event that Mr Duggal seeks leave pursuant to s 90-15 to make an application in the name of Bellrock UAV for an order that the administration is void and of no effect, I refer to my Reasons as to why I consider that this claim does not have a solid foundation.

254 As a result, I will not give any leave to Mr Duggal to bring an application in the name of Bellrock UAV pursuant to s 90-15. This is because, as I have already said, Bellrock UAV is not entitled to make an application for an order under s 90-15 and it is unclear what application, if any, Mr Duggal seeks leave to make pursuant to s 90-15.

255 I will not otherwise, as submitted by Mr Duggal, set the matter down for final hearing as to whether an order pursuant to s 90-15 to Schedule 2 of the Corporations Act should be made and that any final hearing should follow the service of pleadings and evidence. This is because:

(a) the Court cannot make such directions in the absence of the identification of what application is sought to be brought by Mr Duggal. This was not clarified by Mr Duggal despite a request by the Court for him to do so; and

(b) again, in the event that such a claim is limited to an application by Mr Duggal, in his own capacity as a director, for an order that the administration is void and of no effect, I refer to my Reasons as to why I consider that this claim does not have a solid foundation. As I have said, however, it is not clear that Mr Duggal seeks to bring such an application limited to that matter.

(a) refuse the application pursuant to s 237 of the Corporations Act for Mr Duggal to bring a proceeding in the name of Bellrock Cleaning against the Receivers;

(b) refuse the application pursuant to the Court's inherent jurisdiction, and s 90-15 of Schedule 2 to the Corporations Act, for Mr Duggal to bring a proceeding in the name of Bellrock UAV against the Receivers, Grow and the Administrator; and

(c) not set down for final hearing any application for an order pursuant to s 90-15 of Schedule 2 to the Corporations Act following the service of pleadings and evidence.

257 It is appropriate for the Court to discharge the interim injunctions initially made on 20 December 2022 and extended on a number of occasions. This is because I will refuse the applications for leave to bring proceedings in the name of Bellrock UAV and Bellrock Cleaning and there is no other claim that supports the continuation of the injunctions. This proceeding should also be dismissed as there no other matters to determine.

258 I will hear from the parties on the precise form of orders, including on costs, and any other matter arising from this judgment.

259 On 30 March 2023, the Court informed the parties that it would deliver judgment on 3 April 2023.

260 On 31 March 2023, the Administrator's solicitors informed the Court, by email correspondence to Chambers copies to the other parties, that Bellrock UAV is in liquidation and the Administrator had been appointed as the liquidator.

261 On 31 March 2023, the Court, by email correspondence from Chambers to the parties, stated:

Dear Practitioners

We refer to the above proceeding and the below correspondence from the solicitors for the fifth defendant.

First, his Honour understands that the third to sixth defendants do not wish to be further heard in relation to the matter. It also appears that the liquidator, who is the former administrator, is represented by Piper Alderman, and also does not wish to be heard. Please confirm whether these matters are correct.

Secondly, his Honour requests that Mr Duggal inform the Court whether he wishes to be heard on the matter given the appointment of the liquidator.

Thirdly, the Court requests that all parties, and the liquidator, consider whether there are any matters arising from the appointment of the liquidator that should be brought to the Court's attention.

The parties and the liquidator are to inform the Court of the matters above as soon as practicable and by no later than 10:00am on Monday, 3 April 2023.

In the absence of any response from any party that requires any further hearing, the Court will proceed to deliver judgment on Monday, 3 April 2023, at 3:00pm based upon the present evidence and submissions.

Kind regards

262 On 3 April 2022, the following responses were received by Chambers:

(a) the Receivers/Grow stated that they did not wish to be heard further;[331]

(b) Mr Duggal stated that he did not wish to be heard further. He also submitted that he does not believe there are any matters arising from the appointment of the Liquidator that should be brought to the Court's attention save that if the Court grants leave to bring a derivative proceeding, the Liquidator will need to be joined in his capacity as liquidator of Bellrock UAV Pty Ltd (not only in his capacity as Administrator);[332]

(c) the Administrator, and now the Liquidator, stated he did not wish to be heard further. He also submitted that he did not consider that the change in Bellrock UAV's status affects Mr Duggal's claim and application for leave. He submitted that he had previously made the submission that the authorities on seeking derivative leave could be applied by an analogy to a company that is under administration, however, given the fact the company is now in liquidation, that submission is now moot.[333]

263 As a result, I have determined that it was appropriate to proceed to deliver this judgment based upon the evidence and submissions before the Court noting that Bellrock UAV is now in liquidation.

BELLROCK CLEANING SERVICES PTY LTD (ACN 609 043 816) (RECEIVERS AND MANAGERS APPOINTED)

BELLROCK UAV PTY LTD (ACN 626 101 915) (RECIEVERS AND MANAGERS APPOINTED) (ADMINISTRATOR APPOINTED)

KATHLEEN ELIZABETH VOURIS IN HER CAPACITY AS RECEIVER AND MANAGER OF BELLROCK CLEANING SERVICES PTY LTD (ACN 609 043 816) (RECIVERS AND MANAGERS APPOINTED) and BELLROCK UAV PTY LTD (ACN 626 101 915) (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATOR APPOINTED)

RICHARD ALBARRAN IN HIS CAPACITY AS RECEIVER AND MANAGER OF BELLROCK CLEANING SERVICES PTY LTD (ACN 609 043 816) (RECEIVERS AND MANAGERS APPOINTED) and BELLROCK UAV PTY LTD (ACN 626 101 915) (RECIEVERS AND MANAGERS APPOINTED) (ADMINISTRATOR APPOINTED)

SHUMIT BANERJEE IN HIS CAPACITY AS ADMINISTRATOR OF BELLROCK UAV PTY LTD (ACN 626 101 915) (RECIEVERS AND MANAGERS APPOINTED) (ADMINISTRATOR APPOINTED)

[1] Mr Duggal's applications evolved from when he filed the amended summons on 3 February 2023. This is further explained in these Reasons.

[2] First Duggal affidavit [1]; Third Duggal affidavit [5]-[11].

[3] The latest version of the statement of claim was provided in an email from Mr George Livaditis, solicitor for Mr Duggal, to the parties and the Court on 17 February 2023.

[4] The summons does not expressly seek leave to prosecute any proceeding against Grow.

[5] See Re Kalimpa Park Pty Ltd [2021] VSC 654 [53] (M Osborne J).

[6] The parties each filed a number of submissions on or prior to 16 February 2023, however at the mention on 17 February 2023, the Court directed each party to file a final updated submission which would include all submissions previously made and confirmation that each party relied solely on this final updated submission. Ultimately, the parties subsequently also filed further submissions.

[7] On 3 March 2023, by email from Ms Emily Everett of SLF Lawyers to the Court and the parties, the third, fourth and sixth defendants provided a revised submission. Ms Everett's email stated that the revised submission included "the minor addition of a single footnote at paragraph 24".

[8] El-Saafin v Franek (No 2) [2018] VSC 683 [157] (Lyons J).

[10] Ibid [167]-[168] (Lyons J). See also El-Saffin & Anor v Franek & Ors (No 4) [2020] VSC 389 [159]-[165] (Lyons J) and Carpenter v Pioneer Park Pty Ltd [2008] NSWSC 551; (2008) 71 NSWLR 577 [34], [36] (Barrett J).

[11] El-Saafin v Franek (No 4) [2020] VSC 389 [144] (Lyons J).

[13] [2016] VSC 296.

[15] [2017] VSC 609.

[17] [2023] VSC 55.

[18] Ibid [18]-[21] (Lyons J) (citations omitted).

[19] [2021] VSC 654 ('Kalimpa Park').

[20] Ibid [54] (M Osborne J) (citations omitted).

[21] Landsville Huynh Pty Ltd v Huynh [2023] VSC 55 [22] (Lyons J).

[22] Kalimpa Park [55]-[58] (M Osborne J) (citations omitted).

[23] Landsville Huynh Pty Ltd v Huynh [2023] VSC 55 [27]-[30] (Lyons J) (citations omitted).

[26] Kalimpa Park [63] (M Osborne J).

[29] Exhibit SB-1 to the Banerjee affidavit, 11.

[34] Mr Duggal's submissions filed 24 February 2023, [5]. This is consistent with the information set out in the Information Memorandum, see Exhibit KEV-1 to the First Vouris affidavit, 241.

[36] Exhibit GML-02 to the Second Livaditis affidavit, 119-123.

[38] Third Duggal affidavit, [11]. During the hearing, Mr Duggal submitted that the reference to '2023' was a mistake and that it should be '2022'. See Transcript of Proceedings, Duggal v Bellrock Cleaning Services Pty Ltd (Receivers and Managers Appointed) & Ors (Supreme Court of Victoria, S ECI 2022 05239, Attiwill J, 6 March 2023) 45.30-46.15 (Mr Kohn) ('Transcript of Proceedings 6 March 2023').

[40] Third Duggal affidavit, [5]-[11].

[41] Ms Vouris and Mr Woszczalski gave evidence that each of the agreements referred to in this paragraph [45] were entered into on 30 July 2021: First Vouris affidavit, [4]; First Woszczalski affidavit, [4]. Mr Duggal gave evidence that each of these agreements were entered into on 16 August 2021: First Duggal affidavit, [6]-[11]. The discrepancy is not material. The agreements are each dated 30 July 2021.

[42] First Duggal affidavit, [6]; Exhibit RD-01 to the First Duggal affidavit, 37-94.

[43] First Duggal affidavit, [7]; Exhibit RD-01 to the First Duggal affidavit, 95-104.

[44] First Duggal affidavit, [9]; Exhibit RD-01 to the First Duggal affidavit, 105-109.

[45] First Duggal affidavit, [8]; Exhibit RD-01 to the First Duggal affidavit, 120-124.

[46] First Duggal affidavit, [10]; Exhibit RD-01 to the First Duggal affidavit, 115-119.

[47] First Duggal affidavit, [11]; Exhibit RD-01 to the First Duggal affidavit, 110-114.

[48] First Duggal affidavit, [12]. The Memorandum of Common Provisions is at exhibit RD-01 to the First Duggal affidavit, 125-150.

[49] See Exhibit RD-01 to the First Duggal affidavit, 51, 54, 72, 75-76, 79.

[50] Exhibit RD-01 to the First Duggal affidavit, 120-124. The Bellrock Cleaning General Security Agreement is in identical terms.

[51] Exhibit RD-01 to the First Duggal affidavit, 126, 139-146. See also First Vouris affidavit, [9].

[53] First Duggal affidavit, [13]; Exhibit RD-01 to the First Duggal affidavit, 151. Note: At paragraph 13 of the First Duggal affidavit, Mr Duggal deposes to this letter being sent on 1 March 2002, which is a typographical error as the relevant letter is dated 1 March 2022.

[54] Exhibit RD-01 to the First Duggal affidavit, 151.

[56] Order made by Registrar Benter of the Federal Court of Australia on 27 September 2022 in proceeding no. WAD177/2022.

[57] Exhibit SB-1 to the Banerjee affidavit, 13.

[58] Albarran affidavit, [10]-[11]; Exhibit RA-1 to the Albarran affidavit, 151-163.

[59] Exhibit RA-1 to the Albarran affidavit, 151-156.

[60] Banerjee affidavit, [3]. Note: Mr Banerjee incorrectly stated that he was appointed as administrator of the fifth defendant (Bellrock UAV), however, Mr Banerjee in his capacity as administrator of Bellrock UAV is himself the fifth defendant.

[61] Second Duggal affidavit, [13]-[14].

[62] Third Duggal affidavit, [13]; Exhibit RD-03 to the Third Duggal affidavit, 59-66.

[63] Exhibit RD-03 to the Third Duggal affidavit, 61-66.

[66] Exhibit RA-1 to the Albarran affidavit, 151-163.

[67] First Woszczalski affidavit, [9]-[14], [16].

[68] First Vouris affidavit, [8]; Albarran affidavit, [4]; Exhibit RA-1 to the Albarran affidavit, 12. See also the ASIC forms at Exhibit RD-01 to the First Duggal affidavit, 305-316.

[69] Exhibit RD-01 to the First Duggal affidavit, 304.

[72] Exhibit RD-01 to the First Duggal affidavit, 294.

[76] See for example, First Duggal affidavit, [29]-[39].

[77] First Duggal affidavit, [33]; Exhibit RD-01 to the First Duggal affidavit, 298.

[78] First Vouris affidavit, [11]; Exhibit KEV-1 to the First Vouris affidavit, 176.

[79] Albarran affidavit, [5]; Exhibit RA-1 to the Albarran affidavit, 6-150.

[80] First Duggal affidavit, [35]; Exhibit RD-01 to the First Duggal affidavit, 299-300.

[81] First Duggal affidavit, [37]; Exhibit RD-01 to the First Duggal affidavit, 299.

[82] First Vouris affidavit, [11]. See exhibit KEV-1 to the First Vouris affidavit, 176-177. It appears that Ms Vouris made a typographical error as Grow's Client Termination Calculation and Checklist records the "Termination Payment Required" as $78,043.41, see at 177.

[83] First Duggal affidavit, [38]; Exhibit RD-01 to the First Duggal affidavit, 301-303. See also Albarran affidavit, [12]-[13].

[84] First Duggal affidavit, [40]; Exhibit RD-01 to the First Duggal affidavit, 324-325. Note: The figure Mr Duggal appears to be referring to is $51,782.23, see 325.

[86] First Duggal affidavit, [43]-[44]; Exhibit RD-01 to the First Duggal affidavit, 331-339. The bank statement at 331 states that the closing balance for the Bellrock UAV bank account on 12 December 2022 was $238,794.91.

[87] First Duggal affidavit, [42]; Exhibit RD-01 to the First Duggal affidavit, 319, 328-329. It appears that the sum of $238,694.91 was withdrawn. See also Exhibit KEV-1 to the First Vouris affidavit, 187.

[88] Albarran affidavit, [9]. See also exhibit KEV-1 to the First Vouris affidavit, 233-259.

[90] First Duggal affidavit, [41]; Exhibit RD-01 to the First Duggal affidavit, 317-318.

[91] First Duggal affidavit, [42]; Exhibit RD-01 to the First Duggal affidavit, 319-330.

[93] First Duggal affidavit, [42]; Exhibit RD-01 to the First Duggal affidavit, 319-320.

[94] Note: this appears to be a typographical error and the figure is $78,043.41. See : Exhibit KEV-1 to the First Vouris affidavit, 176-177.

[95] First Vouris affidavit, [11]. Note: some of these figures are rounded, see the Client Termination Calculation & Checklist for exact amounts: Exhibit KEV-1 to the First Vouris affidavit, 176-177.

[97] See Second Woszczalski affidavit, [3]-[7].

[98] See Second Woszczalski affidavit, [8].

[100] First Livaditis affidavit, [5]; Exhibit GML-01 to the First Livaditis affidavit, 6-19.

[101] First Vouris affidavit, [35]. See also Exhibit RD-02 to the Second Duggal affidavit, 7.

[102] First Vouris affidavit, [35]-[39]. See also Exhibit KEV-1 to the First Vouris affidavit, 262-265.

[103] Second Duggal affidavit, [10]-[11].

[104] Banerjee affidavit, [5]; Exhibit SB-1 to the Banerjee affidavit, 3-118. Mr Banerjee gave evidence that he intended to issue the second report to creditors on 18 January 2023, see: Banerjee affidavit, [5].

[105] Exhibit SB-1 to the Banerjee affidavit, 10, 18-19, 41.

[106] Second Duggal affidavit, [18]. See also RD-02 to the Second Duggal affidavit, 54-57.

[107] Second Duggal affidavit, [15]-[17].

[108] Albarran affidavit, [5]-[6].

[110] Second Vouris affidavit, [29]-[34].

[111] Exhibit KEV-2 to the Second Vouris affidavit, 86.

[112] Second Vouris affidavit, [35]-[45].

[116] See Exhibit RD-01 to the First Duggal affidavit, 301-303: the 14 December Letter. This is calculated by summing the second to fifth and seventh rows in the table at page 303. The seventh row is provision for both additional fees and expenses. The first and sixth rows, being the amount allegedly owing to Grow and estimated trading expenses, are excluded.

[117] See Exhibit GML-01 to the First Livaditis affidavit, 6-19.

[119] See Exhibit GML-01 to the First Livaditis affidavit, 9-10, 12, 14-15, 17-18.

[120] Ibid 6-19: the 19 December Letter. This is calculated by summing the first to fourth and sixth rows in the table at page 7. The sixth row is provision for estimated additional fees and expenses. The fifth row, being trading expenses, is excluded.

[121] See Exhibit GML-01 to the First Livaditis affidavit, 8-19.

[122] Exhibit KEV-1 to the First Vouris affidavit, 178-181.

[123] Second Vouris affidavit, [5]-[13]. Ms Vouris also provided this information at the time of making her prior affidavit, see First Vouris affidavit, [14]-[16]; Exhibit KEV-1 to the First Vouris affidavit, 178-181.

[124] Second Duggal affidavit, [9], [11].

[125] First Vouris affidavit, [44]; Second Vouris affidavit, [47].

[126] First Vouris affidavit, [22]-[24]. See also Exhibit KEV-1 to the First Vouris affidavit, 222-223.

[127] Second Vouris affidavit, [46].

[129] Second Vouris affidavit, [15]-[27].

[130] Proposed statement of claim [2]-[3A].

[141] Transcript of Proceedings 6 March 2023 (n 38) 50.16-51.15 (Mr Kohn).

[148] Transcript of Proceedings 6 March 2023 (n 38) 52.12-52.20, 117.11-117.20 (Mr Kohn).

[151] Exhibit GML-01 to the First Livaditis affidavit, 7.

[152] Transcript of Proceedings, Duggal v Bellrock Cleaning Services Pty Ltd (Receivers and Managers Appointed) & Ors (Supreme Court of Victoria, S ECI 2022 05239, Attiwill J, 16 March 2023) 34.9-34.20 (Mr Kohn) ('Transcript of Proceedings 16 March 2023').

[155] Ibid 41.3-41.11, 42.5-42.14 (Mr Kohn).

[157] Second Woszczalski affidavit, [12].

[158] Transcript of Proceedings 16 March 2023 (n 152) 86.29-87.9, 89.11-89.12 (Mr Kohn).

[159] Transcript of Proceedings 6 March 2023 (n 38) 102.25-102.28 (Mr Kohn).

[162] Transcript of Proceedings, Duggal v Bellrock Cleaning Services Pty Ltd (Receivers and Managers Appointed) & Ors (Supreme Court of Victoria, S ECI 2022 05239, Attiwill J, 7 March 2023) 124.10-124.17 (Mr Kohn) ('Transcript of Proceedings 7 March 2023').

[163] Transcript of Proceedings 6 March 2023 (n 38) 85.16-85.17 (Mr Kohn).

[164] Ibid 57.26-57.28 (Mr Kohn) (emphasis added).

[165] See, for example, Ibid 66.14-66.20 (Mr Kohn).

[166] Transcript of Proceedings 6 March 2023 (n 38) 66.20-66.21 (Mr Kohn).

[169] See, for example, Ibid 97.24-97.25 (Mr Kohn).

[170] Transcript of Proceedings 16 March 2023 (n 152) 86.26-87.4 (Mr Kohn).

[172] Transcript of Proceedings 6 March 2023 (n 38) 98.19-98.25 (Mr Kohn).

[174] Mr Duggal's submissions filed 24 February 2023, [51]. The figure of 117.1 hours is calculated by summing the amounts in the table.

[175] Mr Duggal's submissions filed 24 February 2023, [52].

[176] Transcript of Proceedings 6 March 2023 (n 38) 66.20-66.21 (Mr Kohn).

[177] Mr Duggal's submissions filed 24 February 2023, [54].

[178] See Exhibit KEV-1 to the First Vouris affidavit, 178-181.

[179] Mr Duggal's submissions filed 24 February 2023, [55]-[56].

[180] Exhibit GML-01 to the First Livaditis affidavit, 10.

[181] Transcript of Proceedings 6 March 2023 (n 38) 102.10-102.23 (Mr Kohn).

[182] Transcript of Proceedings 7 March 2023 (n 162) 64.19-64.22 (Mr Rubenstein).

[183] Ibid 64.28-64.31 (Mr Rubenstein).

[184] Transcript of Proceedings 6 March 2023 (n 38) 131.23-131.28 (Mr Rubenstein).

[185] See, for example, Ibid 135.30-136.5 (Mr Rubenstein) and Transcript of Proceedings 7 March 2023 (n 162) 66.19-66.23 (Mr Rubenstein).

[186] Receivers' submissions filed 2 March 2022, [34].

[187] See, for example, Transcript of Proceedings 7 March 2023 (n 162) 66.7-67.8 (Mr Rubenstein).

[188] Transcript of Proceedings 16 March 2023 (n 152) 58.14-58.16 (Mr Rubenstein).

[189] Transcript of Proceedings 7 March 2023 (n 162) 66.16-66.30 (Mr Rubenstein).

[191] Receivers' submissions filed 2 March 2022, [25]. See also Transcript of Proceedings 7 March 2023 (n 162) 62.15-62.19 (Mr Rubenstein); Transcript of Proceedings 6 March 2023 (n 38) 170.27-171.2, 171.23-171.27 (Mr Rubenstein).

[192] Receivers' submissions filed 2 March 2022, [34].

[193] Transcript of Proceedings 6 March 2023 (n 38) 141.24-141.29 (Mr Rubenstein).

[195] Ibid 82.28-82.29 (Mr Kohn) (emphasis added).

[198] Transcript of Proceedings 7 March 2023 (n 162) 123.27-123.28 (Mr Kohn).

[199] Mr Duggal's submissions filed 24 February 2022, [50].

[201] Transcript of Proceedings 6 March 2023 (n 38) 83.13-83.18 (Mr Kohn) (emphasis added).

[202] Mr Duggal's submissions filed 24 February 2022, [55].

[204] Transcript of Proceedings 16 March 2023 (n 152) 88.18-88.20 (Mr Kohn) (emphasis added).

[205] Exhibit KEV-1 to the First Vouris affidavit, 178-181.

[206] Transcript of Proceedings 6 March 2023 (n 38) 102.13-102.15 (Mr Kohn).

[207] Mr Duggal's submissions filed 24 February 2022, [57].

[209] Transcript of Proceedings 6 March 2023 (n 38) 50.6-50.10 (Mr Kohn) (emphasis added).

[210] Exhibit RD-01 to the First Duggal affidavit, 299-300.

[211] Expo International Pty Ltd (Receivers and Managers Appointed) (In Liq) and Another v Chant and Others [1979] 2 NSWLR 820.

[212] Mr Duggal's submissions filed 24 February 2023, [43].

[213] Expo International Pty Ltd (Receivers and Managers Appointed) (In Liq) and Another v Chant and Others [1979] 2 NSWLR 820, 834 (Needham J).

[214] [2011] FCA 134; 82 ACSR 164. See Receivers' submissions filed 2 March 2023, [24].

[215] Forest Marsh Pty Ltd v Pleash [2011] FCA 134; 82 ACSR 164 [84] (Yates J). See also Re S & D International Pty Ltd (in liquidation) (receiver and manager appointed) [2009] VSC 225 [161].

[216] Transcript of Proceedings 16 March 2023 (n 152) 61.5-62.1 (Mr Rubenstein). See also Receiver's submissions filed 2 March 2023, [30].

[217] Expo International Pty Ltd (Receivers and Managers Appointed) (In Liq) and Another v Chant and Others [1979] 2 NSWLR 820.

[219] Mr Duggal's submissions filed 24 February 2023, [47] (emphasis added). Transcript of Proceedings 16 March 2023 (n 152) 64.16-64.20 (Mr Kohn).

[220] Transcript of Proceedings 16 March 2023 (n 152) 76.14-76.28 (Mr Kohn).

[221] See, for example, Transcript of Proceedings 6 March 2023 (n 38) 60.27-61.4 (Mr Kohn) and 80.31-81.3 (Mr Kohn).

[222] Ibid 64.3-64.6, 76.15-76.17 (Mr Kohn).

[223] Transcript of Proceedings 6 March 2023 (n 38) 60.17-60.26 (Mr Kohn) and 81.4-81.7 (Mr Kohn).

[227] Ibid 62.8-62.11 (Mr Kohn) (emphasis added).

[228] Ibid 62.29-62.30 (Mr Kohn) (emphasis added).

[232] See, for example, Transcript of Proceedings 16 March 2023 (n 152) 65.12-65.14, 65.30-66.2 (Mr Kohn). See also Mr Duggal's submissions filed 24 February 2023, [47].

[233] Transcript of Proceedings 6 March 2023 (n 38) 82.28-82.29 (Mr Kohn).

[235] Transcript of Proceedings 16 March 2023 (n 152) 77.22-77.24, 79.6-79.17 (Mr Kohn).

[237] Mr Duggal's submissions filed 24 February 2023, [47]. See also, proposed statement of claim, [30(e)], [30(f)] and [30(h)].

[238] Transcript of Proceedings 6 March 2023 (n 38) 134.16-134.25 (Mr Rubenstein).

[240] Receivers' submissions filed 2 March 2023, [31].

[241] Transcript of Proceedings 6 March 2023 (n 38) 72.3-72.6 (Mr Kohn).

[244] Exhibit SB-1 to the Banerjee affidavit, 19.

[245] Transcript of Proceedings 7 March 2023 (n 162) 127.17-127.23 (Mr Kohn).

[247] Transcript of Proceedings 6 March 2023 (n 38) 97.1-97-10 (Mr Kohn).

[248] This was the only case that was put by Mr Duggal in his submissions filed 24 February 2022, [47]. See also Transcript of Proceedings 6 March 2023 (n 38) 48.28-49.5 (Mr Kohn).

[249] Exhibit KEV-2 to the Second Vouris affidavit, 12-13.

[250] Exhibit KEV-1 to the First Vouris affidavit, 187.

[252] Ibid and Exhibit RD-01 to the First Duggal affidavit, 332; Exhibit RD-03 to the Third Duggal affidavit, 58.

[253] Transcript of Proceedings 6 March 2023 (n 38) 48.28-49.5 (Mr Kohn).

[256] [2020] NSWSC 1842; 149 ACSR 451.

[258] Korda and another (recs and mgrs apptd) v Silkchime Pty Ltd ((recs and mgrs apptd) ATF Silkchime Unit Trust) and others [2010] WASC 155; 78 ACSR 675.

[260] Second Vouris affidavit, [15].

[263] Transcript of Proceedings 7 March 2023 (n 162) 126.20-126.28 (Mr Kohn) (emphasis added).

[264] Second Vouris affidavit, [26]. This is calculated by summing the employee entitlements component of the table excluding the sum for retrenchment as Ms Vouris gave evidence that this had not yet crystalised.

[265] Second Vouris affidavit, [26].

[266] The Administrator's report to creditors is dated 18 January 2023 but is included in the Banerjee affidavit which was made on 17 January 2023. At paragraph [5], the Administrator stated he finalised the report on 17 January 2023 and dated it 18 January 2023 as he intended to issue it then.

[267] Transcript of Proceedings 6 March 2023 (n 38) 94.3-94.30 (Mr Kohn) referring to Exhibit SB-1 to the Banerjee affidavit, 19.

[268] Second Vouris affidavit, [26].

[269] See Exhibit KEV-1 to the First Vouris affidavit, 199-205.

[270] Second Vouris affidavit, [26].

[271] Transcript of Proceedings 7 March 2023 (n 162) 121.8-121.9 (Mr Kohn).

[274] Transcript of Proceedings 6 March 2023 (n 38) 104.20-104.26 (Mr Kohn).

[276] Ibid 105.11-105.14 (Mr Kohn). See also Mr Duggal's submissions filed 24 February 2023 at footnote 34, which states "At no stage has Grow sought to explain the reasons for the appointment of the Administrator."

[277] Transcript of Proceedings 6 March 2023 (n 38) 104.3-104.6 (Mr Kohn).

[281] Ibid 105.11-105.14 (Mr Kohn). See also Mr Duggal's submissions filed 24 February 2023 at footnote 34, which states "At no stage has Grow sought to explain the reasons for the appointment of the Administrator."

[282] Transcript of Proceedings 6 March 2023 (n 38) 105.2-105.4 (Mr Kohn).

[283] Transcript of Proceedings 7 March 2023 (n 162) 117.21-117.23 (Mr Kohn).

[285] Transcript of Proceedings 6 March 2023 (n 38) 105.4-105.6 (Mr Kohn); Transcript of Proceedings 7 March 2023 (n 162) 117.25-117.30 (Mr Kohn).

[286] Transcript of Proceedings 6 March 2023 (n 38) 105.6-105.10 (Mr Kohn).

[287] Transcript of Proceedings 7 March 2023 (n 162) 118.26-119.8 (Mr Kohn).

[288] Ibid 84.15-85.10 (Mr Mournehis).

[289] Ibid 85.10-85.12 (Mr Mournehis).

[291] Ibid 89.18-89.31 (Mr Mournehis).

[292] Administrator's submissions filed 2 March 2023, [24.3]-[24.4].

[294] Transcript of Proceedings 7 March 2023 (n 162) 103.8-103.12, 103.29-104.7 (Mr Mournehis).

[295] Ibid 114.1-114.6 (Mr Rubenstein).

[296] Ibid 114.19-115.31 (Mr Rubenstein).

[297] Darkinjung Pty Ltd v Darkinjung Local Aboriginal Land Council & Ors; Hillig v Darkinjung Pty Ltd & Ors; Darkinjung Local Aboriginal Land Council v Warner & Ors [2006] NSWSC 1008.

[298] Ibid [245]-[247] (Barrett J).

[299] Second Duggal affidavit, [13]-[14].

[300] Exhibit RD-03 to the Third Duggal affidavit, 59-66.

[301] Mr Duggal's submissions filed 24 February 2023, [58]-[63].

[303] Exhibit RD-03 to the Third Duggal affidavit, 59-66.

[304] First Woszczalski affidavit, [16].

[307] See, for example, Exhibit KEV-1 to the First Vouris affidavit, 150-152.

[308] Administrator's submissions filed 2 March 2023, [22].

[309] Kalimpa Park [69] (M Osborne J) (emphasis added).

[310] See, for example, Keay's Insolvency: Personal and Corporate Law and Practice (10th ed) [18.535] 741 concerning the residual authority of directors of a company in receivership.

[311] Second Duggal affidavit, [21].

[312] Mr Duggal's submissions filed 24 February 2023, [77], [79]-[81], [83]-[84] (citations omitted).

[314] Transcript of Proceedings 6 March 2023 (n 38) 6.22-6.28, 7.25-8.1 (Mr Kohn).

[328] Ibid 12.27-13.7 (Mr Rubenstein).

[330] Mr Duggal's submissions filed 24 February 2022, [77]. See also at [78].

[331] Email from the Receivers' and Grows' solicitors to Chambers and the parties sent on 3 April 2023.

[332] Email from Mr Duggal's solicitors to Chambers and the parties sent on 3 April 2023.

[333] Email from the Administrator's, and now the Liquidator's, solicitors to Chambers and the parties sent on 3 April 2023.