[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
[2]
Judgment
THE COURT: In Snell v Glatis (No 2) [2020] NSWCA 166, this Court allowed Mr Snell's appeal in part, setting aside orders made at first instance for the compulsory buy-out of the Glatis interests and instead ordering companies in the SMA Group to be wound up. It is not necessary to repeat the factual background set out in that judgment, or in the reasons of the primary judge, none of whose factual findings of oppressive conduct was challenged on appeal: In the matter of Scientific Management Associates Pty Ltd [2019] NSWSC 1643.
In accordance with directions made on 6 August 2020, and consensually extended thereafter, the parties have reached agreement on the majority of orders to be made resolving the appeal. The entirety of orders 1-11 and 20-26 are now agreed. Submissions on the orders which remain in issue were supplied on 15 October 2020, with the Glatis interests supplying further submissions in response on 29 October 2020.
Mr Snell was very unwell when the appeal was heard. He has since died. That is reflected in order 1, and in the change of parties to this appeal. However, it is most convenient to refer to the submissions as being those made on behalf of "Mr Snell" and the "Glatis interests", as well as Mr Owen Culley, who was not actively involved in the trial or the appeal, and indeed was joined as a defendant and was represented at trial by the same lawyers as Mr Snell, but who is now separately represented and has filed a submission in relation to one proposed order (order 24).
Rather than descending immediately into the detail of the orders, the most convenient course is to identify each remaining area of disagreement and summarise and resolve the competing submissions, in light of which orders resolving all aspects of the appeal can be made. Before doing so, it is convenient to summarise what was said concerning the unsecured loans caused to have been made by Mr Snell.
[3]
The unsecured loans made by Mr Snell
Part of the oppressive conduct engaged in by Mr Snell was causing two of the companies in the group, SMA Victoria and SMA Operations, to make unsecured loans to members of his family and friends. These were substantial. They were summarised at [69]-[73] of the reasons of this Court.
Relevantly to the first two issues concerning orders, there was substantial agreement by the conclusion of the appeal in relation to those loans, and to the extent there was disagreement, it was resolved in the earlier judgment. While those loans may not represent all of the unsecured loans which Mr Snell caused to be paid, it is now accepted that Mr Snell should pay:
1. $7,747,680.50, plus interest at $899.66 per day for the period from 15 July 2020 to the date of these orders, to the Glatis Family Limited Partnership, and
2. $7,864,189, plus interest of $913.19 per day for the period from 15 July 2020 to the date of these orders, to Mr Glatis.
(Three discrepancies may be noted, lest they give rise to any doubt. First, there is a divergence of $50,000 between the principal payable to the Glatis Family Limited Partnership above and the amount recorded in [72] of this Court's earlier judgment. There appears to have been a calculation error in a schedule provided to the Court, not hitherto detected. However, the parties are agreed that the total should be some $7.747m, rather than some $7.797m. Secondly, the orders provided by Mr Snell refer to interest at $905.47 per day. That appears to reflect a calculation based on the $7.797m amount, rather than the $7.747m which is common ground. The daily interest of $899.66 in Mr Glatis' orders appears to be correct. There is also a discrepancy of some $5,000 in the amount repayable to Mr Glatis and the amount recorded in [72] of this Court's earlier judgment. However, the amount of $7,864,189 is agreed.)
In this Court's judgment, it was made clear that while those loans might not represent all the unsecured loans which Mr Snell caused to be made, they were the only loans which should be the subject of findings by the Court binding the liquidators and leading in turn to a judgment in a sum certain. Favourably to Mr Snell, the Court stated that the obligation to pay the judgment amount should be delayed pending the realisation of other corporate assets: at [73]. Favourably to the Glatis interests, the Court stated that the liquidators' costs of realising the unsecured loans should be borne solely by Mr Snell: at [79]. Each of those paragraphs is reproduced below, because it is the working out of the extent to which the liquidators' costs are to be borne by Mr Snell, and the timing of the payment to be made by him, which has given rise to the first two issues.
[4]
Liquidators' costs of recovering unsecured loans
It was said at [79] of the main judgment that:
"It is difficult to say with any certainty, but there is every prospect that the steps to be taken by the liquidator to recover the unsecured loans which Mr Snell caused the companies to make will occupy a deal of the time of the liquidators. As raised during submissions, it is appropriate that those costs be borne solely by Mr Snell, noting that the borrowers were in many cases his friends or family members. Otherwise, the costs of the liquidation should be borne by the companies in the usual way."
The parties disagree in relation to the costs of the liquidators of recovering all unsecured loans. Mr Snell proposes that he be responsible for the entirety of the liquidators' costs of recovering only those loans which had been identified in the appeal. The respondents contend that Mr Snell should bear the entirety of the liquidators' costs of recovering all unsecured loans, even those which were not the subject of findings of oppressive conduct.
On that issue, Mr Glatis is correct. The intent of [79] of the reasons was for Mr Snell to bear the entirety of the liquidators' costs of recovering all unsecured loans. It was clear from what had previously been said at [69] that the unsecured loans which had been particularised at trial and had led to findings of oppressive conduct were not the only unsecured loans of which the Glatis interests complained. Mr Snell should not have caused the companies to make any unsecured loans. That is so irrespective of whether the loans were instances of oppressive conduct in evidence at trial. A special order causing Mr Snell to bear the cost of realising all the unsecured loans which he caused to be made, none of which should ever have been made, is appropriate.
[5]
Post-judgment interest
This dispute arises out of [69]-[73] of the judgment. It concerns the common position that Mr Snell be ordered to make payments reflecting the value of loans made by him to associates, which the primary judge identified as instances of oppression. It is now agreed that amounts totalling $7,747,680.50 and $7,864,189, plus interest to the date of the orders made by this Court, should be paid to the Glatis Family Limited Partnership and Mr Glatis.
There was argument when the appeal was heard as to whether those payments should be made immediately or from distributions made by the liquidators. That issue was summarised and resolved in [73] as follows:
"The outstanding issue was whether, as Mr Glatis contended, those amounts should be paid immediately, or, as Mr Snell contended, they should be treated as a first charge from such surplus as was achieved in the winding up of any of the SMA companies. The guiding principle here is what orders are appropriate to redress Mr Snell's oppressive conduct. Had the loans not been entered into, it seems unlikely that liquid amounts would have been retained in the companies. That suggests that the amount should be paid from distributions made by the liquidators. Against the possibility (said to be unlikely if not hypothetical) that the surplus might be insufficient to pay the sum of $17 million, Mr Snell should be required to indemnify Mr Glatis in respect of any shortfall (in accordance with a suggestion made by him). The consequence is that orders 1, 2, 2A and 3 of the document supplied to the Court on 15 July 2020 should in due course be made, substantially in the terms propounded by Mr Snell as refined in argument and reflecting an obligation that the entirety of the amount owing should be treated in effect as a first charge on any of the distributions made by the liquidators to Mr Snell. I shall return below to the costs of the liquidators in realising those receivables."
Mr Snell denies that there should be any obligation to pay interest on those amounts after the date of this Court's orders. He accepts that there should be pre-judgment interest, but maintains that there should be no interest thereafter.
Mr Snell submits, first, that no claim was made by the respondents for interest accruing after the date orders were made. Secondly, he submits that the aim of any order pursuant to s 233 of the Corporations Act 2001 (Cth) is to put an end to the oppressive conduct by providing a remedy that is proportionate to such conduct. Thirdly, Mr Snell submits that for the SMA Group, being a non-trading group with significant and widespread real estate and other assets, a winding up is the only appropriate remedy to enable the Glatis interests to retrieve the true interest of their shares, as was stated at [35] and [39] of the earlier judgment. He concludes:
"Accordingly, even absent the oppressive conduct, for the Respondents to recover the true value of their shares in the SMA Group, it was necessary for its assets to be liquidated. The effect of the oppressive conduct and the consequential litigation has, at best for the Respondents, delayed that liquidation. Once the order for a liquidation has been made, then the consequences of the oppressive conduct have been remedied. The detrimental consequences of the delay in obtaining that remedy is neutralised by the order for interest being calculated to the day the order is made. If interest is to be calculated and paid for the period after the liquidation order is made until the adjustment amount is paid, then the remedy extends beyond the consequences of oppressive conduct. Such a remedy goes beyond ending the oppression and extends beyond what is proportionate to the subject matter."
We do not agree with Mr Snell's submissions. The treatment of the identified oppressive loans provided a basis to order an accelerated payment by Mr Snell consequent upon one (significant) aspect of Mr Snell's oppressive conduct. That, unlike the realisation of the rest of the value of the corporate group, has enabled a precise quantification of the amounts to which the Glatis interests are presently entitled. Although for the reasons contained in [73], it is not appropriate to require Mr Snell to pay those amounts immediately, but rather, to await the distribution by the liquidators, there is no reason to displace the ordinary entitlement to post-judgment interest under s 101 of the Civil Procedure Act 2005 (NSW) which applies, subject to the Court otherwise ordering, to all money judgments.
The point of the delay in payment was to avoid the possibility of a shortfall on the part of Mr Snell who was faced with an immediate obligation to pay some $15,000,000, and who might in the short term have difficulty in doing so, although there is every reason to expect that substantially more will be realised by the liquidators and distributed to him.
However, the benefit to Mr Snell of not being obliged immediately to make compensation to the Glatis interests so as to avoid any short-term lack of liquidity does not extend to a gift of the time-value of a judgment debt exceeding $15,000,000 until a distribution is made. That is potentially a substantial amount (bearing in mind that the parties have agreed, for the period up to the date of these orders, to pre-judgment interest of more than $1,800 each day).
The fact that no such order was sought is not to the point. Parties do not need to seek post-judgment interest in their originating processes.
If Mr Snell wishes to pay the amount of compensation which this Court has determined should be paid, attributable to his oppressive conduct, he is free to do so immediately. If he pays the full amount within 28 days, then no differently from any other judgment debtor, no post-judgment interest will be charged: Civil Procedure Act 2005 (NSW), s 101(3). If he does not (and, to be clear, he is entitled to delay doing so until distributions are made by the liquidators), then interest at ordinary post-judgment rates will apply to the unpaid balance of the judgment debts.
[6]
The charging order
Mr Snell also disputes the charging order proposed by the Glatis interests (order 19). He complains that it was not the subject of the draft orders considered during the hearing of the appeal.
Mr Snell is correct about this order not originally having been formulated. However, as explained in [73], it reflected a proposal propounded by Mr Snell during argument. That order will be made.
[7]
Costs of the appeal
The final dispute between Mr Snell and the Glatis interests concern the costs of the appeal. It is accepted that Mr Snell pay the Glatis interests' costs at first instance, and that Mr Snell reimburse the companies the costs paid by them in connection with his appeal (orders 25 and 26).
Mr Snell seeks, by order 27, an order that the respondents pay one half of the appellant's costs of the appeal, reflecting what he says is his substantial success in setting aside the buy-out order.
The Glatis interests ask the Court to make no order as to the costs of the appeal, with the intention that the parties bear their own costs. They point to the success they enjoyed in the appeal, including that the money judgment was left undisturbed, that some of the grounds of appeal were abandoned, that they obtained substantial adjustments in their favour exceeding $15,000,000, and they emphasise that the winding up orders obtained by Mr Snell were sought for the first time in the amended notice of appeal, served shortly before the final hearing. They also rely upon evidence that Mr Snell was causing the SMA Companies to pay the costs of his appeal, despite the Glatis interests' objection. They say that the appellant has not incurred any litigation costs, and the order requiring Mr Snell to reimburse the SMA Companies was a remedial order to undo the effects of his (most recent) oppressive conduct. For those reasons they say that there should be no order for them to pay any part of Mr Snell's costs.
Setting aside the buy-out order was a significant success achieved by Mr Snell. However, given that it was formulated shortly before the appeal was heard, much of the costs of the appeal reflected other issues. Further, Mr Snell was unsuccessful on most of the other issues litigated. Taking all those matters into account, and noting that the costs of the appeal are small compared to the costs of the trial and the amounts at stake, the appropriate order is that identified by the Glatis interests. There should be no order as to costs, with the intent that the parties bear their own costs.
Mr Snell also sought minor changes to order 12 (to clarify that "each of the adjustments" extends to credit and debit entries) and orders 18(c) and 20(c) (to insert "that" after the word "credit"). These are unnecessary.
The costs incurred for the purpose of formulating orders are separate from the above. Although in large measure agreed, on each of the disputed areas, Mr Snell has been unsuccessful. His stance has caused the Glatis interests to incur costs needlessly. Since the costs relating to the making of final orders in the period after this Court's main judgment are severable from the costs in respect of the rest of the appeal, those costs should follow the event. Mr Snell should pay the Glatis interests' costs of the making of orders resulting in this judgment.
[8]
Dispute between the Glatis interests and Mr Culley
Separately from the above, there is a dispute between the Glatis respondents and Mr Culley as to the amount to which he is entitled from the distribution of surplus assets from SMA Operations.
The Glatis interests say that Mr Glatis and Mr Snell are each entitled to 36.66% of any surplus in SMA Operations, while Mr Culley is entitled to 26.66%. Mr Culley says that each of he, Mr Glatis and Mr Snell should be entitled to 33.33% of any surplus. Mr Snell makes no submissions in relation to this issue.
The Glatis interests submit that in addition to the 20% interests in SMA Operations owned by each of Mr Snell, Mr Glatis and Mr Culley, the Shareholders Agreement made provision for the remaining 40% of SMA Operations' share capital to be held for the benefit of management and employees. Those trusts were never established. The Shareholders Agreement contemplated that Mr Snell would allocate a 20% interest to an "SMA Operations Management Trust" and a 20% to an "SMA Operations Employee Trust".
Clauses 3.5(k) and 3.5(l) of the Shareholders Agreement provide as follows:
"(k) If at the end of the term of the Second Shareholder's position as Group Managing Director, no allocation is made of B class Shares to the SMA Operations Allocation Management Trust, those shares will be transferred equally between the First Shareholder [Mr Glatis], the Second Shareholder [Mr Snell] and Owen Culley.
(l) If at the end of the term of the Second Shareholder's position as Group Managing Director, no allocation is made of C class Shares to the SMA Operations Employee Trust, those shares will be transferred to SMA Victoria."
As will be seen below, these clauses did not reflect the shares issued by SMA Operations by the time of trial, although there is a similarity in the proportions held by Messrs Snell, Glatis and Culley and those which SMA Operations held for management and employees.
The Glatis interests submit that the shares presently held by Mr Snell which represent the 40% to be allocated to management and employees should be treated in accordance with those provisions. On that basis, in addition to the one fifth of any surplus to which Mr Snell is entitled in his own right, Mr Snell is required to treat one fifth in accordance with cl 3.5(k) and one fifth in accordance with cl 3.5(l), leading to the result that Mr Snell and Mr Glatis are each entitled to (20% + 10% + 6.66% = 36.66%) of any surplus, while Mr Culley is entitled to (20% + 6.66% = 26.66%) of any surplus.
Mr Culley accepts that the trusts representing 40% of the capital of SMA Operations were never established. However, he says that while in the ordinary course of business, he would have ended up with 26.66% of the capital, that is not what is presently occurring. Mr Culley submits that the formulation of orders by the Glatis interests' orders "proceeds from an artificial construct whereby this court will direct that a liquidation of SMA Operations proceed upon the notional basis as if certain shareholdings were applicable and that such shareholdings were equal in entitlements (such as distributions of dividends) in order to provide the innocent parties with a degree of compensation reflecting the findings of oppression on the part of Mr Snell insofar as SMA Operations was concerned". He adds that in argument on the appeal, submissions proceeded on a "one-third each" split, and that there was no dispute between the parties in this respect.
We respectfully disagree with Mr Culley's submissions.
It was admitted on the pleadings that there were five shares of SMA Operations. In addition to the two ordinary shares, one E class share was issued to Mr Glatis, one F class share to Mr Snell, and one G class share to Mr Culley (Further Amended Points of Claim and Defence, paragraph 3). That represents the same division of share capital as was contemplated in the Shareholders Agreement (60% to Messrs Snell, Glatis and Culley, 40% to management and employees).
Mr Snell accepts, properly, that he cannot obtain the benefit of the 2 ordinary shares held by him. In [21] of the reasons of the primary judge, her Honour recorded:
"SMA Operations had two ordinary shares held by Mr Snell but, as explained by Mr Snell to Mr Skyring after Mr Glatis Snr passed away:
We understand that equitable interest in the shares reside with the following individuals:-
20% - George Glatis
20% - Owen Culley - part held with equitable title, part to vest only on completion of agreed service periods
40% - Mr Keith Snell - Held for future allocation to staff for incentive purposes
20% - Mr Keith Snell (personal holding)
That is, Mr Glatis Snr had an equitable interest in 20% of the shares of SMA Operations. Today, SMA Operations operates the ongoing business of the SMA Group and is the most valuable company in the group after SMA Victoria."
It is no longer possible for Mr Snell to hold the ordinary shares for the benefit of management and employees in accordance with the Shareholders Agreement. In circumstances where the Shareholders Agreement made explicit reference to how those shares should be held, the distribution on winding up should reflect that division. That leads to the distribution proposed by the Glatis interests.
Another way of testing that conclusion is to observe that acceptance of Mr Culley's submission involves either pretending that the two ordinary shares do not exist, or else requiring Mr Snell to account to Mr Glatis and Mr Culley equally in respect of those shares' entitlement to participate in any surplus. But that requires a departure from what was agreed in the Shareholders Agreement.
Thus, contrary to Mr Culley's submission, the distribution proposed by the Glatis interests does not proceed on some "artificial construct". Rather, it respects the actual shares which have been allotted, and the entitlements on which the Shareholders Agreement proceeded.
The costs of the dispute between the Glatis interests and Mr Culley are, in the scheme of things, too small to warrant a separate order as to costs.
[9]
Orders
For those reasons, orders substantially in accordance with those proposed by the Glatis interests will be made, together with the orders as to costs described above:
Substitution of appellant
1. Order that Margaret Edith Snell, as the Executrix of the deceased estate of the Late Keith Eddy Snell (the Appellant), be substituted as the Appellant in these proceedings.
Stay of orders and liberty to restore
1. Each of Orders 4 to 24 below are stayed for a period of 62 days from the date these orders are made, such that they are of no force or effect until the 63rd day after the day these orders are made.
2. The parties have liberty to restore these proceedings on three days' notice, for the purpose of making an application to set aside orders 4-24 by consent pursuant to UCPR 36.15(2).
Winding-up orders
1. Order that Scientific Management Associates Pty Ltd ACN 008 560 316 (SMA) be wound up.
2. Order that Jonathon Colbran and Richard Stone of RSM Australia Partners, Equinox Building 4, Level 2, 70 Kent Street Deakin ACT 2600, and Level 13, 60 Castlereagh Street Sydney NSW 2000 (Liquidators) are appointed joint and several liquidators of SMA.
3. Order that Scientific Management Associates (Australia) Pty Limited ACN 008 645 618 (SMA Australia) be wound up.
4. Order that the Liquidators are appointed joint and several liquidators of SMA Australia.
5. Order that Scientific Management Associates (Victoria) Pty Limited ACN 008 649 081 (SMA Victoria) be wound up.
6. Order that the Liquidators are appointed joint and several liquidators of SMA Victoria.
7. Order that Scientific Management Associates (Operations) Pty Limited ACN 092 811 035 (SMA Operations) be wound up.
8. Order that the Liquidators are appointed joint and several liquidators of SMA Operations.
Credits made to Keith Snell's Loan Account with SMA Victoria
1. Order that, for the purposes of calculating the Appellant's indebtedness under any loan accounts, each of the adjustments set out in the schedule annexed to these orders and marked A (Schedule A) be reversed ab initio.
Distribution of surplus - adjustment for costs
1. Order that, in respect of any surplus assets from the winding-up of SMA available for distribution, the Liquidators:
1. calculate the sum equal to the Liquidators' reasonable costs, expenses and remuneration incurred in relation to unsecured loans owing to SMA (including all costs, expenses and remuneration incurred in relation to the investigation, recovery or attempted recovery of such loans) (SMA Unsecured Loan Costs);
2. deduct from the amount of any SMA surplus assets as would, but for this order, be distributed to the Appellant, the sum equal to 50% of the SMA Unsecured Loan Costs; and
3. credit to the amount of any SMA surplus assets as would, but for this order, be distributed to the Glatis Family Limited Partnership (GFLP), the sum equal to 50% of the SMA Unsecured Loan Costs.
1. Order that, in respect of any surplus assets of SMA Australia available for distribution, the Liquidators:
1. calculate the sum equal to the Liquidators' reasonable costs, expenses and remuneration incurred in relation to unsecured loans owing to SMA Australia (including all costs, expenses and remuneration incurred in relation to the investigation, recovery or attempted recovery of such loans) (SMA Australia Unsecured Loan Costs);
2. deduct from the amount of any SMA Australia surplus assets as would, but for this order, be distributed to the Appellant, the sum equal to 50% of the SMA Australia Unsecured Loan Costs; and
3. credit to the amount of any SMA Australia surplus assets as would, but for this order, be distributed to the GFLP, the sum equal to 50% of the SMA Australia Unsecured Loan Costs.
1. Order that, in respect of any surplus assets of SMA Victoria available for distribution, the Liquidators:
1. calculate the sum equal to the Liquidators' reasonable costs, expenses and remuneration incurred in relation to unsecured loans owing to SMA Victoria (including all costs, expenses and remuneration incurred in relation to the investigation, recovery or attempted recovery of such loans) (SMA Victoria Unsecured Loan Costs);
2. deduct from the amount of any SMA Victoria surplus assets as would, but for this order, be distributed to the Appellant, the sum equal to 50% of the SMA Victoria Unsecured Loan Costs; and
3. credit to the amount of any SMA Victoria surplus assets as would, but for this order, be distributed to the GFLP, the sum equal to 50% of the SMA Victoria Unsecured Loan Costs.
1. Order that, in respect of any surplus assets of SMA Operations available for distribution, the Liquidators:
1. calculate the sum equal to the Liquidators' reasonable costs, expenses and remuneration incurred in relation to unsecured loans owing to SMA Operations (including all costs, expenses and remuneration incurred in relation to the investigation, recovery or attempted recovery of such loans) (SMA Operations Unsecured Loan Costs);
2. deduct from the amount of any SMA Operations surplus assets as would, but for this order, be distributed to the Appellant, the sum equal to 66⅔% of the SMA Operations Unsecured Loan Costs;
3. credit:
1. to the amount of any SMA Operations surplus assets as would, but for this order, be distributed to Christopher Glatis (Mr Glatis), the sum equal to 33⅓% of the SMA Operations Unsecured Loan Costs; and
2. to the amount of any SMA Operations surplus assets as would, but for this order, be distributed to Owen Culley (Mr Culley), the sum equal to 33⅓% of the SMA Operations Unsecured Loan Costs.
Distribution of surplus - adjustment for receivables in SMA Victoria and SMA Operations
1. Subject to Orders 20 and 21 below, order that the Appellant pay to GFLP the sum of:
1. $7,747,680.50; plus
2. interest for the period 15 July 2020 to the date of these orders, calculated at the daily rate of $899.66; plus
3. interest on any part of the total of the sums at Orders 17(a) and 17(b) which is not paid, for the period from the date of these orders to the date of payment, calculated pursuant to section 101 of the Civil Procedure Act 2005 (NSW) (CPA);
(the SMA Victoria Receivables Adjustment Amount).
1. Subject to Orders 22 and 23 below, order that the Appellant pay to Mr Glatis the sum of:
1. $7,864,189.00; plus
2. interest for the period 15 July 2020 to the date of these orders, calculated at the daily rate of $913.19; plus
3. interest on any part of the total of the sums at Orders 18(a) and 18(b) which is not paid, for the period from the date of these orders to the date of payment, calculated pursuant to section 101 of the CPA;
(the SMA Operations Receivables Adjustment Amount).
Charging order
1. Order that any surplus assets from the liquidation of SMA, SMA Australia, SMA Victoria and SMA Operations to which the Appellant would, but for this order, be entitled, is subject to a first charge in favour of the GFLP for the total of:
1. the SMA Victoria Receivables Adjustment Amount; and
2. the SMA Operations Receivables Adjustment Amount.
Payment of Receivables Adjustment Amounts
1. Order that:
1. the SMA Victoria Receivables Adjustment Amount be deducted from the surplus assets of SMA Victoria to which the Appellant would, but for this order and after making the adjustment in Order 15, be entitled;
2. the SMA Victoria Receivables Adjustment Amount be credited to the surplus assets of SMA Victoria to which the GFLP is entitled; and
3. to the extent the surplus assets from the liquidation of SMA Victoria to which the Appellant would, but for this order and after making the adjustment in Order 15, be entitled, are not sufficient to pay to the GFLP the full amount of the SMA Victoria Receivables Adjustment Amount, the Appellant pay to the GFLP the amount of any such shortfall within 28 days of the completion of the winding-up of SMA Victoria.
1. Order that, concurrently with and subject to payment of the SMA Victoria Receivables Adjustment Amount to the GFLP, the Liquidators:
1. calculate the total net amount recovered by the Liquidators in respect of each of the SMA Victoria receivables set out in Schedule B to these orders (SMA Victoria Receivable Recoveries); and
2. deduct 50% of the SMA Victoria Receivable Recoveries from the amount the GFLP would, but for this order, be entitled to be paid from the surplus assets of SMA Victoria; and
3. credit 50% of the SMA Victoria Receivable Recoveries to the amount the Appellant would otherwise be entitled to be paid from the surplus assets of SMA Victoria.
1. Order that:
1. the SMA Operations Receivables Adjustment Amount be deducted from the surplus assets of SMA Operations to which the Appellant would, but for this order and after making the adjustment in Order 16, be entitled;
2. the SMA Operations Receivables Adjustment Amount be credited to the surplus assets of SMA Operations to which Mr Glatis is entitled; and
3. to the extent the surplus assets from the liquidation of SMA Operations to which the Appellant would, but for this order and after making the adjustment in Order 16, be entitled, are not sufficient to pay to Mr Glatis the full amount of the SMA Operations Receivables Adjustment Amount, the Appellant pay to Mr Glatis the amount of any such shortfall within 28 days of the completion of the winding-up of SMA Operations.
1. Order that, concurrently with and subject to the payment of the SMA Operations Receivables Adjustment Amount to Mr Glatis, the Liquidators:
1. calculate the total net amount recovered by the Liquidators in respect of each of the SMA Operations receivables set out in Schedule C to these orders (SMA Operations Receivable Recoveries); and
2. deduct 33 ⅓ % of the SMA Operations Receivable Recoveries from the amount Mr Glatis would, but for this order, be entitled to be paid from the surplus assets of SMA Operations; and
3. credit 33 ⅓ % of the SMA Operations Receivable Recoveries to the amount the Appellant would otherwise be entitled to be paid from the surplus assets of SMA Operations.
Distribution of surplus -SMA Operations
1. Order that, notwithstanding the shareholdings recorded in the records maintained by SMA Operations and the Australian Securities and Investments Commission, all surplus assets of SMA Operations are to be distributed to the Appellant, Mr Glatis and Mr Culley on the basis that, on the basis that, prior to making the adjustments required by orders 16 and 22 above, each of the Appellant, Mr Glatis and Mr Culley have the following entitlements:
1. as regards to the Appellant, an entitlement to 36 ⅔ % of the surplus assets (subject to the above orders);
2. as regards to Mr Glatis, an entitlement to 36 ⅔ % of the surplus assets (subject to the above orders); and
3. as regards to Mr Culley, an entitlement to 26 ⅔ % of the surplus assets (subject to the above orders).
Orders relating to payment of legal costs and expenses
1. Order that the Appellant forthwith reimburse to each of SMA, SMA Australia, SMA Victoria and SMA Operations all amounts paid by each company for legal costs and expenses in connection with proceedings 2019/401280 (Appeal Proceedings).
2. Order that the Appellant pay the costs of Mr Glatis and the GFLP of the proceedings at first instance, being Supreme Court of New South Wales proceedings numbered 2016/183457.
3. Mr Snell pay the Glatis interests' costs of formulating orders following the delivery of judgment on the appeal.
4. There be no other order as to costs of the appeal, with the intention that the parties otherwise bear their own costs of the appeal.
Notes
1. Note that 'surplus assets', as referred to in the above orders, means the assets of each company that remain available for distribution to shareholders after payment of:
1. the Liquidators' costs, expenses and remuneration in respect of the relevant company; and
2. the liabilities of the relevant company.
[10]
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 04 November 2020