Solicitors:
Chambers Russell Lawyers - First and Second Plaintiffs
First Defendant - Self-Represented
Second Defendant - No Appearance
Third Defendant - Corrs Chambers Westgarth
Fourth Defendant - No Appearance
File Number(s): 2015/98239
[2]
EX TEMPORE Judgment
HIS HONOUR: This is an application brought by amended Notice of Motion filed on 3 October 2019 by the first defendant, Gregory Ray Golding (Golding), for orders that a winding up, which I ordered on 12 September 2019, of the third defendant company be stayed. Because the winding up has already taken effect, the Motion includes a prayer for leave to proceed and that the winding up itself be stayed.
These reasons should be read in conjunction with my 12 September 2019 reasons: Stephen Richard O'Ryan v Greg Ray Golding [2019] NSWSC 1229 (the reasons). Definitions used there are used here. I shall refer to Mr O'Ryan as O'Ryan.
The basis for the application is that Golding intends to appeal the winding up order. As appears from the reasons, the winding up order was made because of the conclusion I reached that the company is in irresolvable deadlock. I concluded that the only feasible solution was a winding up, unless the parties came to an agreement and I gave them the opportunity to do so. The conclusion to which I had come was confirmed by Golding's agreement that winding up was inevitable unless the parties came to a consensual position. He does not seek to withdraw his assent to the proposition, nor does he put that it was a mistake.
In written submissions dated today provided by Golding in respect of the application, he identifies his proposed grounds of appeal that I did not hear complete evidence or submissions on the status of building works or the strata conversion and what actions are still to be done to achieve those objectives, including those actions that require cooperation between the parties and that I did not hear complete evidence or receive submissions as to the prejudice to the Goldings, or the interests of shareholders generally, in making the orders. As noted in the reasons, the third shareholder, Freyberg, it can be inferred, supports the O'Ryans.
Golding does not suggest that the company is not deadlocked, although he repeatedly, but unconvincingly, referred to the possibility of a consensual resolution. I find that he is the obstacle to such a resolution.
Golding does not suggest that the building is not in need of repair, nor does he suggest that a building contract has not been prepared.
Because of the nature of his proposed complaint and even though his written submissions made no reference to his agreement, I have taken, perhaps unusually in a stay application, the course of hearing him on the full ambit of the evidentiary matters which he says I should have taken into account and giving him the opportunity to make further submissions as to whether the winding up was appropriate in the circumstances.
To that end I have had regard to affidavit evidence not before me on the hearing of the winding up application itself but which has been placed before me for the purposes of the stay application.
Golding's oral submissions took about two and a half hours. He recanvassed his written submissions of 11 September 2019 (incorrectly dated 18 September 2019) which were before the Court on the winding up application and to which I had regard. His references to evidence hardly, if at all, included anything not referred to in those submissions. He also provided further written submissions today.
The additional materials before the Court and Golding's submissions have served only to reinforce the conclusion that the winding up order was justified.
It is to be observed that in his 11 September 2019 submissions, Golding's position is that the Deed of 23 October 2015, which provided a regime for determining and carrying out building work and the Strata conversion, cannot be specifically enforced.
The Goldings and the O'Ryans (and Freyberg) remain in irresolvable deadlock on matters necessary for the survival of the company and its proposal to become a Strata scheme.
Golding told me that the building is an old Georgian mansion. The matters about which the parties remain in intractable dispute include, but are not limited to:
how Woollahra Council should be treated with,
access to electricity boards beneath the staircase,
replacement of garage driveway gates,
whether windows should be repaired or replaced and the cost,
whether vines should be removed and underlying sandstone regrouted,
whether eaves should be replaced,
a regime for promoting the Strata application,
what building works (in three separate "buckets") should be done and how much should be paid for it.
Golding has suspicions that because the Goldings have 54% of the shares in the company, the O'Ryans are prepared to pay pumped up prices for the work on the footing that the Goldings will have to bear more than half the cost. I consider this to border on the irrational.
Up until the time the liquidators were appointed, Golding had sole possession of the company records and kept them in a locked box. This in itself would warrant a winding up application. He has now released the records to the liquidators.
Expert consultants earlier retained have terminated their services due to the deadlock.
There is a Fire Order from the Woollahra Council. Fire safety equipment needs to be upgraded to modern standards. There is undoubtedly a public interest consideration in this being done.
The O'Ryans and Freyberg occupy the top floor and they are under the roof. It is leaking. The Goldings do not have this problem. It is plain that they are frustrating this repair. Golding said from the Bar table that the original arrangements were that each shareholder would look after themselves. He considers that he should have a veto.
Added to the above, in an affidavit from Mr McInerney, one of the liquidators, sworn 2 October 2019 and read without objection, he deposes to the fact that the company is insolvent. His unchallenged evidence is that it has become apparent to him during the course of the liquidators' investigations that the relationship between O'Ryan and Golding has reached such a level of dysfunctionality to the point where the ability of the company to make decisions is effectively paralysed and that the appointment of an independent third party such as a liquidator was necessary to implement the proposed Strata scheme.
Mr McInerney suggests that a solution which will allow necessary levies to be raised to complete the building work and Strata conversion is the appointment of a voluntary administrator under section 437A(d) of the Corporations Act 2001 (Cth) who will be able to exercise the powers of the company officers to raise those levies.
He proposes to apply for leave to be appointed, together with Mr Campbell-Wilson, as voluntary administrators, and to apply for orders dispensing with various statutory requirements. His suggestion is intelligent, reasonable, and a practical solution to an otherwise irresolvable conflict.
Golding has repeatedly said that the property is his family home and that he does not wish to lose it. He is sentimentally attached to it. The course he has taken in opposing the winding up, and now the voluntary administration, it seems to me, would, if successful, be the most likely way that that very result would be achieved.
The Goldings have apparently borrowed some $2 million from the National Australia Bank on the security of their shares. They took the step of notifying the Bank of the winding up order and the Bank has written to them stating that this 'may' be a default under their facilities. He relies on this as being potential prejudice to the Goldings from the winding up. However, Golding did not point to any particular provision making the winding up order a default and I do not consider, on the material available, that a conclusion can be realistically drawn that the Bank will move to sell the shares rather than be in favour of the repairs and Strata scheme proceeding so as to enhance the value of its security.
Again, the liquidators' proposal appears to be a rational method of avoiding the consequence that Golding says he fears.
It has become apparent to me, having heard from and observed Golding extensively, that he is prepared to agree to nothing with the O'Ryans. I suspect that he is now not capable of doing so. In his written submissions of today's date, Golding made an unwarranted and gratuitous assertion of lack of candour on the part of the liquidators. He continually refers to 'complexities' standing in the way of resolution, but seems incapable of articulating them.
The liquidators seek time to make an application to be appointed voluntary administrators (the VA application). O'Ryan has indicated that he will fund the application. Golding's attitude to the application is that he opposes it "at this time".
There is no present intention on the part of the liquidators to sell the property. Quite the contrary, the liquidators are prepared to undertake not to embark on a process of sale without giving the Goldings 14 days' notice.
Little or nothing will happen until the VA application is dealt with and certainly little or nothing that could be seen as being to the detriment of the Goldings. The practical effect of this is that if Golding wishes to approach the Court of Appeal for a stay pending his foreshadowed appeal, as of course is his right, he will have adequate opportunity to do so. He told me that he has retained eminent senior counsel.
There is every reason, including safety reasons why the process suggested by the liquidators should commence as soon as possible and why crucial work should begin as soon as possible.
For the above reasons I do not consider that a stay of the winding up or the operation of my orders is justified or desirable. The amended Notice of Motion filed 3 October 2019 is dismissed.
[3]
Amendments
04 October 2019 - paragraph 7 amended
10 October 2019 - Correct spelling of Stephen
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Decision last updated: 10 October 2019