FEDERAL COURT OF AUSTRALIA

Rowe, in the matter of Premium Drilling Contractors Pty Ltd (Receivers and Managers Appointed) v Englebert [2011] FCA 598

IN THE MATTER OF PREMIUM DRILLING CONTRACTORS PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ACN 093 988 053)

THE COURT ORDERS THAT:

1.    The name of the respondents is amended so as to remove Taylor Woodings Chartered Accountants and to replace that name with the names of Mark David Peter Englebert and Ian Charles Francis.

2.    The application by the applicants for interlocutory relief is dismissed.

3.    The applicants pay the respondents’ costs of the application.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court’s website.

IN THE MATTER OF PREMIUM DRILLING CONTRACTORS PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ACN 093 988 053)

REASONS FOR JUDGMENT

1    Before the Court is an urgent application for an injunction to delay the sale of assets of Premium Drilling Contractors Pty Ltd (Receivers and Managers Appointed) ACN 093 988 053 (Premium Drilling). The assets consist essentially of mine drilling equipment. The auction of this equipment is scheduled to commence in a few minutes in Kalgoorlie.

BACKGROUND

2    Premium Drilling was placed into receivership by the National Australia Bank (NAB) on 22 January 2011. Mark David Peter Englebert and Ian Charles Francis were appointed receivers and managers. They are partners of Taylor Woodings, a firm of Chartered Accountants. The firm is wrongly named as the respondent. The applicants seek relief against the receivers and managers of Premium Drilling.

3    The receivership was precipitated by the failure of Premium Drilling to pay an amount owed to NAB of just over $1 million. The first applicant, Peter Andrew Rowe, is a guarantor of the debt owed by Premium Drilling.

4    The matter has been brought on urgently. The material filed on behalf of the applicants has some serious gaps. For example, the second applicant, Southland Agribusiness Holdings Pty Ltd (Southland) is not an obvious party to the application. It has a contractual relationship with Premium Drilling which was apparently intended to allow Premium Drilling to continue its business and retain the goodwill of its customers by engaging Premium Drilling to do work for it. On that basis, it is not easy to see what interest Southland has in the current dispute.

SUBMISSIONS OF THE PARTIES

5    Piecing together the evidence which has been filed on behalf of the applicants, the high point of their case is the allegation that the receivers and managers acted unconscionably and in a misleading and deceptive way in breach of the Competition and Consumer Act 2010 (Cth). The alleged conduct was the failure of the receivers and managers to accept an offer to pay the debt owed to NAB made on 16 February 2011 by Mr Zygmund Wolski. Mr Wolski swore an affidavit on 18 April 2011 in which he said that he met with Mr Mark Curran, an employee of Taylor Woodings, and said that he was prepared to pay NAB the entire outstanding debt owed by Mr Rowe in the amount of $1,080,000, and that he had the ability to raise the funds at that time.

6    Mr Wolski said at [8] of his affidavit:

Mr. CURRAN informed me that my offer could not be accepted as “it (the company in liquidation) was in the system and had to run its course”. He went on to inform me that interest charges and fees would also be added to the default amount and that I would need to enter a tender for the plant and equipment with Gregsons Auctioneers.

7    Mr Wolski’s affidavit then refers to the receipt of tender documents from Gregsons Auctioneers. He said that he then spoke to Mr Nick Veitch, another employee of Taylor Woodings, and said that his circumstances had changed since the original offer, and that he was now prepared to bid $900,000 to secure the plant and equipment of the company, which he assumed would be in excess of any other bid.

8    Although the affidavits filed by the applicants were only served on Taylor Woodings on 24 May 2011, last evening, and their solicitors are located in Perth, the solicitors for Taylor Woodings have, in an admirable effort, produced a draft affidavit of Mr Englebert explaining some of the facts more fully. In particular, the affidavit explained that there was correspondence between the receivers and managers and Mr Wolski from 1 March 2011 to 13 April 2011 in which Mr Wolski was asked on a number of occasions to comply with the tender process, firstly by paying a deposit of $45,000 and, secondly, by providing a banker’s reference letter confirming his financial capacity to honour the offer of $900,000. Neither of these conditions was met by Mr Wolski.

9    Mr Costello, who appeared on behalf of Taylor Woodings, contended in circumstances of great urgency, where only minutes were available for consideration of the case before the auction was to proceed, that the material filed by the applicants did not establish a serious issue to be tried. He contended that if the offer made by Mr Wolski was an offer to pay out the bank debt without the acquisition of the property of the company, then that offer could be effectuated at any time including right up to the present. There is no impediment faced by Mr Wolski which would prevent the receivership coming to an end by the full payment of the debt owing to NAB.

10    If the offer by Mr Wolski on 16 February 2011 was, instead, an offer to acquire the assets of Premium Drilling, as seems more likely, then as Mr Costello contended, the receivers and managers had no other course but to act as they did in conducting a transparent, competitive process to realise the value of the company’s assets. The receivers and managers were bound by s 420A of the Corporations Act 2001 (Cth) to take all reasonable care in the sale of the property, and to sell it for no less than the market value, or the best price reasonably obtainable if there is no market value. He explained that the authorities had established that s 420A requires receivers and managers in such circumstances to engage in a competitive process involving, as was done in this case, a tender process.

CONSIDERATION

11    I accept the argument put by Mr Costello that, even if the gaps which exist in the applicants’ evidence are filled and it is assumed in their favour that the receivers and managers acted in respect of Mr Wolski’s offer in the way the applicants contended, no serious issue is raised for the consideration of the Court.

12    Additionally, there is a compelling discretionary factor which leads to the same conclusion. The application for an injunction was filed less than 24 hours before the auction was to commence. The applicants have been aware of the pending auction for some time. The auction was first advertised on 14 May 2011. No explanation has been given in the applicants’ material why the application was not brought earlier. Furthermore, the last correspondence with Mr Wolski occurred on 13 April 2011 when Mr Veitch, on behalf of the receivers and managers, again sought confirmation that the tender conditions would be met by Mr Wolski.

13    Finally, even if a serious issue to be tried had been established, there is no evidence filed on behalf of the applicants that damages would not be an adequate remedy for their complaints. The evidence is silent on the consequences to the applicants of the sale of the equipment. In relation to Premium Drilling, there is no evidence at all about the consequence to it of the sale of the equipment. Further, Mr Costello made the point that it was open to Mr Rowe or Mr Michael Pratt, the sole director of Southland, to bid at the auction for the assets of Premium Drilling.

14    For these reasons, the application for an injunction is dismissed.

15    The applicants must pay the respondents’ costs of the application. The respondents claimed costs on an indemnity basis. Whilst there are features of the application which may point to some deviousness in the conduct of the applicants, I am not persuaded that it exists at a level which would justify deviation from the usual course of awarding costs on a party party basis.

Associate:

Dated:    31 May 2011