Federal Court of Australia

Brooks (Liquidator) v Bull, in the matter of DV Bull Pty Ltd (in liq) [2021] FCA 967

ORDERS

THE COURT ORDERS THAT:

1.    The Deputy District Registrar issue, pursuant to section 530C(1) of the Corporations Act 2001 (Cth), a warrant in the form annexed to these orders (Warrant).

2.    Any requirement that this originating process be served on the defendants be dispensed with, and leave is granted to the first plaintiff to make the application referred to in order 1 ex parte.

3.    Subject to order 6, the affidavits of Shelley-Maree Brooks and Matthew Riley affirmed on 10 August 2021 remain confidential and, except with leave of the Court, are not to be open to inspection by any person other than the Court and Court staff.

4.    Subject to order 6, the file in this proceeding is to be kept confidential and, except with leave of the Court, is not to be disclosed to anyone other than the Court and Court staff.

5.    Within seven (7) days of the search of the premises referred to in the Warrant, the first plaintiff will file an affidavit reporting on the execution of the Warrant and the seizure of any property pursuant to the Warrant.

6.    On the filing of the affidavit referred to in order 5, orders 3 and 4 are discharged.

7.    The first plaintiff must serve a copy of this order and a copy of the reasons for the decision of the Court (if any) on the defendants prior to or at the same time as execution of the Warrant.

8.    Service on the first defendant may be made by leaving the documents referred to in order 7 with the person in charge of the Risdon Prison Complex.

9.    Within seven (7) days of the execution of the Warrant, any person who wishes to claim an interest in any of the seized property must file and serve a notice in this proceeding.

10.    The first plaintiff’s costs of this application as liquidator be paid out of the assets of the second plaintiff.

11.    Any party or other person claiming to be affected by these orders has liberty to apply on 24 hours’ notice to the parties and to the Court.

12.    The matter be listed for case management hearing on 2 September 2021 at 10.15 am.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

(Revised from transcript)

DAVIES J:

1    The plaintiff Shelley-Maree Brooks is liquidator of DV Bull Proprietary Limited (in liquidation) (the company), which went into liquidation on 15 July 2021. The sole director of the company is Darcy Vincent Bull, the first defendant. Tiana Prince, who is the second defendant, is the sister of Mr Bull.

2    Ms Brooks, in her capacity as liquidator of the company, has applied for an order pursuant to s 530C of the Corporations Act 2001 (Cth) (Corporations Act) that the Court issue a warrant authorising her to search and seize property of the company. Section 530C provides as follows:

530C Warrant to search form and seize, company’ property or books

(1)     The Court may issue a warrant under subsection (2) if:

(a)     a company is being wound up or a provisional liquidator of a company is acting; and

(b)     on application by the liquidator or provisional liquidator, as the case may be, or by ASIC, the Court is satisfied that a person:

(i)     has concealed or removed property of the company with the result that the taking of the property into the custody or control of the liquidator or provisional liquidator will be prevented or delayed; or

(ii)     has concealed, destroyed or removed books of the company or is about to do so.

(2)     The warrant may authorise a specified person, with such help as is reasonably necessary:

(a)     to search for and seize property or books of the company in the possession of the person referred to in subsection (1); and

(b)     to deliver, as specified in the warrant, property or books seized under it.

(3)     In order to seize property or books under the warrant, the specified person may break open a building, room or receptacle where the property is or the books are, or where the person reasonably believes the property or books to be.

(4)     A person who has custody of property or a book because of the execution of the warrant must retain it until the Court makes an order for its disposal.

3    The application is supported by three affidavits, one sworn by Ms Brooks, another sworn by Matthew Reilly, a senior analyst assisting Ms Brooks in her role as liquidator, and the third by a solicitor in the employ of the solicitors for the plaintiffs.

4    The affidavit of Ms Brooks sets out in detail the attempts that have been made to locate the assets of the company. In short, Ms Brooks gave evidence that prior to the company going into liquidation, the company carried on an office furniture retail business at 258-260 Argyle Street, North Hobart, Tasmania (the premises) for and on behalf of the Bull Trust, of which it is the trustee. The company’s financial records as at 16 April 2020 indicated that the company in its capacity as trustee of the Bull Trust had inventory or stock of approximately $86,000.

5    On 16 April 2021, the company’s landlord locked the company out of the premises for non-payment of rent, however Mr Bull was given permission by the landlord to access the premises for the purposes of removing furniture from the premises. It appears that whatever was in the premises was removed, but the company’s books and records do not indicate what has happened to the inventory and stock in trade that was removed, nor has Ms Brooks been able to locate the whereabouts of that stock and inventory, notwithstanding her investigations and her requests of Mr Bull to inform her as to the location of that inventory.

6    Of particular concern to Ms Brooks is that she has received inconsistent information concerning the removal of the furniture from the premises. Mr Bull informed the liquidator that he was given only four hours in which to remove that inventory, whereas the landlord says he permitted Mr Bull to remove the furniture from the premises over a number of days between 30 April 2021 and 4 May 2021. The landlord has also told the liquidator that he saw Ms Prince present when the furniture was being removed. Mr Bull also told Ms Brooks that the company stock was in a storage container in Moonah, for which his sister Ms Prince had details. Ms Prince gave Ms Brooks a key for a storage container at Sunderland Storage, but it contained very few items of stock and most were of little or no value. Further investigations undertaken by the liquidator have indicated that Mr Bull has another storage container, number 111, in his name at Sunderland Storage, for which the company has been paying since March 2021, and that Ms Prince appears to have access to at least two containers, one of which is reported to be full of chairs. Investigations have also indicated that Mr Bull and Ms Prince have access to at least another three storage containers, numbers 86, 87 and 97. Despite questioning, neither Mr Bull nor Ms Prince have given the liquidator details of those containers. Further, contrary to what Mr Bull initially told the liquidator, both Mr Bull and Ms Prince have subsequently told the liquidator that there was some limited furniture stored at Mr Bull’s residence. Ms Brooks’ concern based upon her investigations is that neither Mr Bull nor Ms Prince have been full and frank in their disclosure of the location of the stock. Whilst the material presently available to the liquidator indicates there were significant quantities of stock holdings at the premises, as at 16 April 2021 it has not been located and there is nothing to indicate that the company continued to trade following 16 April 2021 and prior to the company being placed into liquidation.

7    There are three requirements for an order to be made under s 530C of the Corporations Act. The first is that the company is being wound up, which is the case here. Secondly, that the application is made by a liquidator, which is also the case here. The third is that the Court must be satisfied that a person has concealed or removed property of the company with the result that the taking of the property into the custody or control of the liquidator will be prevented or delayed. I am satisfied on the basis of the evidence that is before me that Mr Bull and/or Ms Prince have removed property of the company from the premises at which the company was trading and have failed to account to the liquidator for the location of that property, the whereabouts of which remains unknown, with the result that the taking of the property into the custody or control of the liquidator will be prevented or delayed. I am also satisfied that the failure of Mr Bull to disclose to the liquidator the whereabouts of that property enables the Court to draw the inference that Mr Bull has concealed the location of that property from the liquidator, with the result that the ability of the liquidator to take that property into her custody or control has been prevented and delayed and continues to be so. For those reasons I am satisfied that the power of the Court to issue a warrant has been enlivened under s 530C(1) of the Corporations Act.

8    Ms O’Farrell, the solicitor for the plaintiffs properly brought to the Court’s attention that the company acted as trustee of the Bull Trust and conducted the business of the furniture business in that capacity, raising the question as to whether or not the property which was removed constitutes property of the company for the purposes of s 530C of the Corporations Act. It is sufficiently clear, in my view, that the fact that the property in question is trust property does not preclude it from being property of the company for the purposes of s 530C of the Corporations Act: Carter Holt Harvey Woodproducts Australia Pty Ltd v Commonwealth [2019] HCA 20; (2019) 386 ALR 390, [90].

9    The orders sought also seek an order for two of the affidavits in support to be kept confidential until further order. Ms Brooks gave evidence supporting the application for confidentiality, on the basis of which I am satisfied that it is appropriate to make an interim confidentiality order, but I am not prepared to leave it as open-ended until further order as sought. Rather, the confidentiality order should be made to subsist until after the warrant has been executed and the affidavit of the liquidator filed in accordance with paragraph 5 of the orders. Should the liquidator seek to extend the order for confidentiality, an application can be made for such an order to be obtained.

Associate:

Dated:    16 August 2021