Tam v MLPG Holdings Australia Pty Ltd [2024] FCA 394 | Case summary

Federal Court of Australia|2024-04-04|Before: Re J, Mr J, Halley J

A. The plaintiff, by his counsel, has given the usual undertaking as to damages. THE COURT ORDERS THAT:

Pursuant to s 472(2) of the Corporations Act 2001 (Cth) (Act), Phillip Hosking of Helm Advisory is appointed provisional liquidator of MLPG Holdings Australia Pty Ltd (ACN 643 965 119) (Company) until the making of a winding up order or otherwise until further order.
The provisional liquidator shall have, in respect of the Company, all the powers that a liquidator of a company would have pursuant to ss 472(3) and (4) and s 477 of the Act and, without limiting the foregoing, the following powers: (a) to enter into possession and take control of all assets of the Company including all assets of the Company used in or relating to its operations, together with all books, records, computers, computer disks, and any other papers or records relating thereto; (b) to deal with any monies held by or on behalf of the Company or its officers, employees or agents or any of them, being monies received in relation to or employed in the Company's operations; (c) to operate and inspect any account at any bank or other financial institution being an account operated by the Company or its officers, employees or agents or any of them and to withdraw any such monies and to pay any such monies into an account or accounts opened or maintained by or for the provisional liquidator; (d) to appoint a solicitor, accountant or other professionally qualified person either within or outside Australia to assist the provisional liquidator; (e) to delegate to his partners, directors, employees and agents whether within or outside Australia any business or matter that the provisional liquidator is unable to do himself or that can be done more conveniently by those others; (f) to receive any monies due to the Company relating to its operations; (g) to compromise any calls, liabilities to calls, liabilities capable of resulting in debts and any claims (present or future, certain or contingent, ascertained or sounding only in damages) subsisting or supposed to subsist between the Company and a contributory or other debtor or person apprehending liability to the Company, and all questions in any way relating to or affecting the property of the Company, on such terms as are agreed, and take any security for the discharge of, and give complete discharge in respect of, any such call, debt, liability or claim; (h) for the purposes of maintaining and securing the assets of the Company: (i) to pay any expense, including for the purposes of insurance; (ii) to execute any document; (iii) to carry on business; (iv) to obtain credit; and (v) do any other act or thing, in the name of or on behalf of the Company, its officers, employees or agents or any of them; (i) to make any application to any court or regulatory agency for the purposes of exercising the powers in (a) to (h) above; (j) to apply for further orders, including the power to realise the assets and pay the liabilities of the Company and to seek directions as to the disposition of any remaining proceeds, and to apply for the power that a liquidator would have under s 568 of the Act to disclaim onerous property or unprofitable contracts and for leave to exercise the power; and (k) to receive remuneration on a time basis within the scale of charges approved by the Court, such remuneration to be paid from the proceeds of the winding up.

A. INTRODUCTION 1 On 4 April 2024, I made orders as the Commercial and Corporations Duty Judge pursuant to s 472(2) of the Corporations Act 2001 (Cth) (Act), that Phillip Hosking of Helm Advisory, be appointed as a provisional liquidator of the defendant, MLPG Holdings Australia Pty Ltd (ACN 643 965 119) (MLPG). 2 By an originating application filed on 26 March 2024, the plaintiff, Jeffrey Tam, seeks an order for the winding up of MLPG, both on the just and equitable ground and on the ground of insolvency. 3 In a related proceeding, Mr Tam also seeks an order for the winding up of 5 Autumndale Holdings Pty Ltd (ACN 653 551 458) (5 Autumndale), both on the just and equitable ground and on the ground of insolvency: Tam v 5 Autumndale Holdings Pty Ltd [2024] FCA 395. 4 Mr Tam also seeks an order for the appointment of a liquidator provisionally to 5 Autumndale in the related proceeding. 5 Mr Tam relied on: (a) his affidavit sworn on 25 March 2024 and its exhibits; (b) the affidavit of Daniele Phair, a solicitor for the plaintiff, sworn on 3 April 2024; and (c) the preliminary report of Mr Hosking dated 27 March 2024. 6 These are my reasons for making the orders on 4 April 2024.

B. BACKGROUND 7 Mr Tam and Paul Jaque Giezekamp are directors of MLPG. Mr Giezekamp and Mr Tam's company, Tam 01 Development Pty Ltd are the shareholders of MLPG. 8 On 22 July 2022, Mr Tam entered into a joint venture agreement with MLPG (JVA) for the construction of six townhouses on the property at 11 Geum Street, Hadfield, Victoria (Geum Property). 9 Clause 3.1 of the JVA provided that Mr Tam had to contribute capital either by subscribing for shares in MLPG or by providing a loan advance to MLPG in an aggregate amount of $750,000. Clause 2.1(c) of the JVA provided that Mr Tam was to receive an agreed return of an additional amount of $430,000 by way of a profit share, in total an amount of $1,180,000. 10 On 22 July 2022, Mr Tam advanced $320,000 to MLPG and subsequently on 7 September 2022, Mr Tam paid the balance outstanding under cl 3.1 of the JVA of $430,000 to MLPG. 11 Clause 3.6 of the JVA provided that the monies advanced by Mr Tam were to be used by MLPG to reduce the loan amount advanced by Mr Giezekamp and his company, U Money Australia Pty Ltd, to MLPG in respect of the Geum Property. Mr Tam gave evidence that this has not occurred. 12 Mr Tam gave evidence that the Geum Property is still owned by MLPG with an existing mortgage to the Commonwealth Bank of Australia. Building work on the Geum Property has not been carried out and the property remains in the same condition as when it was first purchased. Mr Tam also gave evidence that Mr Giezekamp has never provided any evidence of a construction loan application, the JVA has been abandoned by MLPG, and MLPG is not presently trading. 13 Mr Tam has not been repaid any part of the $750,000 advanced by him and Mr Giezekamp has not responded to correspondence or telephone calls. 14 On 6 March 2024, Mr Hosking was appointed by order of this Court in proceedings NSD 218 of 2024 to be provisional liquidator of MHPG Holdings Australia Pty Ltd (MHPG), a company of which Mr Giezekamp is also the sole director and shareholder. Mr Hosking's Preliminary Report to the Court dated 27 March 2024 was relied upon by Mr Tam at the hearing.

C. PRINCIPLES 15 The applicable principles in relation to the appointment of a liquidator provisionally pending the final hearing of a winding up application can be summarised as follows. 16 First, the usual, although not the only, purpose for which a provisional liquidator is appointed is to preserve the assets of the company and the status quo in relation to its affairs: Re J N Taylor Holdings Ltd; Zempilas v J N Taylor Holdings Ltd (1990) 3 ACSR 518 (King CJ, Cox and Olsson JJ); Australian Securities and Investments Commission v Sino Australia Oil and Gas Ltd (2015) 106 ACSR 575; [2015] FCA 531 at [10] (Davies J). 17 Second, the primary duty of a provisional liquidator is to preserve the status quo so as to ensure the least possible harm to all concerned and to enable the Court to decide, after a proper final hearing, whether the company should be wound up: Australian Securities and Investments Commission v ActiveSuper Pty Ltd (No 2) (2013) 93 ACSR 189; [2013] FCA 234 at [16(c)] (Gordon J) citing Re Carapark Industries Pty Ltd (in liq) (1966) 9 FLR 297 at 303; [1967] 1 NSWR 337 (Street J). 18 Third, the appointment of a provisional liquidator pending a determination of a winding up petition, is a drastic intrusion into the affairs of a company and is not to be contemplated if other measures would be adequate to preserve the status quo: Zempilas, Constantinidis v JGL Trading Pty Ltd (1995) 17 ACSR 625 at 635 (Kirby P, Meagher and Powell JJA); ActiveSuper Pty Ltd (No 2) at [7]. 19 Fourth, the Court should only appoint a provisional liquidator where it is satisfied that there is a reasonable prospect that a winding up order will be made at a final hearing: ActiveSuper Pty Ltd (No 2) at [15] (Gordon J) citing Australian Securities Commission v Solomon & Ors [1996] 19 ACSR 73 at [7] (Tamberlin J). 20 Fifth, in addition to considering whether there is an arguable case to establish a ground for winding up, the Court must consider the degree of urgency, the need established by the applicant creditor, and the balance of convenience: ActiveSuper Pty Ltd (No 2) at [16] citing Re Club Mediterranean Pty Ltd (1975) 11 SASR 481; Lubavitch Mazal v Yeshiva Properties No. 1 Pty Ltd (2003) 47 ACSR 197; [2003] NSWSC 535 at [106] (Austin J). 21 Sixth, a creditor has standing to seek a winding up order under s 462(2)(b) of the Act, and therefore has standing to seek the appointment of a provisional liquidator under s 472(2): Allstate Exploration v Batepro [2004] NSWSC 261 at [21]. 22 Seventh, the appointment of a provisional liquidator may be appropriate in a case involving a dispute between parties to a joint venture but that course is not lightly to be adopted: Grace v Grace [2007] NSWSC 6 at [28] (Brereton J) citing Zempilas and Constantinidis.

D. CONSIDERATION 23 Mr Tam has standing to seek the appointment of a provisional liquidator to MLPG. He is a creditor of MLPG for at least the principal amount of the loan that he has advanced of $750,000. It is not necessary to make any finding as to whether he was also entitled to the proposed return of $430,000 pursuant to cl 2.1(c) of the JVA. 24 I was satisfied that Mr Hosking should be appointed as a provisional liquidator of MLPG until the making of a winding up order, or otherwise until further order, in order to protect the interests of its creditors, in particular Mr Tam, for the following reasons. 25 First, Mr Tam advanced $750,000 to MLPG pursuant to the terms of the JVA in two tranches in July and September 2022 to fund, in substantial part, the development of townhouses on the Geum property, but no work has been commenced on the Geum property. 26 Second, Mr Tam has not received any repayment of the $750,000 that he has advanced to MLPG, the principal director of the company, Mr Giezekamp, has not responded to any telephone calls or correspondence from Mr Tam, and MLPG is not currently trading. 27 Third, given MLPG presently owes Mr Tam an amount of at least $750,000, being the principal amount of the loans that he has advanced, MLPG is not trading, and no work has been commenced on the Geum property, it is likely that MLPG is insolvent and a winding up order will be made against MLPG at the final hearing. 28 Fourth, there is a particular need for an independent person to be appointed with power to investigate the affairs of each company, especially in relation to the conduct of Mr Giezekamp, the significant amounts advanced by Mr Tam to MLPG, and the whereabouts of the monies advanced by Mr Tam. These circumstances call for a proper and independent investigation. Relevantly, Mr Hosking has already commenced investigations in relation to the affairs of MHPG, a company of which Mr Giezekamp is also the sole director and shareholder. 29 Fifth, there is no apparent prejudice to MLPG should a provisional liquidator be appointed as building works have not commenced on the Geum property and MLPG is not presently trading. 30 Sixth, given Mr Giezekamp's failure to respond to any communications from Mr Tam, there is no reasonable alternative to the appointment of a provisional liquidator, and there is nothing to suggest that Mr Tam is not acting reasonably and bona fide in seeking Mr Hosking's appointment. 31 Seventh, the balance of convenience also favours the appointment of a provisional liquidator. The adverse consequences to Mr Tam of allowing the present position to continue significantly outweigh any possible adverse consequences to MLPG arising from the appointment of a provisional liquidator.

DISPOSITION 32 By reason of the above matters, I was satisfied that this was an appropriate case to make an order that Mr Hosking be appointed provisional liquidator of MLPG. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Halley.

Tam v MLPG Holdings Australia Pty Ltd

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