Federal Court of Australia

Krecji (Liquidator), in the matter of Plasterboard & Render Pty Ltd (in liq) v Raber [2022] FCA 1180

ORDERS

THE COURT ORDERS THAT:

1.    The Plaintiffs be given leave to file the interlocutory process dated 30 September 2022 (Interlocutory Process) in Court.

2.    In the first instance, the Interlocutory Process be returnable instanter.

3.    Orders 2 and 3 of the orders made by Goodman J on 18 May 2022 are discharged.

4.    Until 6.00 pm on Tuesday, 4 October 2022, and pursuant to section 1323(3) of the Corporations Act 2001 (Cth) (Act), the First and Second Defendant be prohibited from selling, disposing, transferring, dealing with, Encumbering or otherwise diminishing the value of any assets in which they each or together have an interest, including funds in any bank account or in any real property, including the Properties and the Net Sale Proceeds.

5.    From their assets, the First and Second Defendants are each entitled to:

(a)    pay up to $5,000 a week in respect of ordinary living expenses; and

(b)    pay up to $5,000 per week with respect to their reasonable and properly incurred legal expenses in connection with this proceeding.

6.    The Second Defendant file and serve, by 10.00 am on 5 October 2022, an affidavit explaining:

(a)    the following matters with respect to the proceeds of settlement from the sale of Unit 1408/65 Varsity Parade, Varsity Lakes QLD 4227 being the whole of the land contained in certificate of title, folio identifier 51100703, which sale settled on or about 19 September 2022:

(i)    the ultimate recipient of the deposit;

(ii)    the ultimate recipient of the payment direction of $553,447.81 to Legalstream Pty Limited;

(iii)    the ultimate recipient of the payment direction of $349,966.45 to DJR Conveyancing; and

(iv)    the relationship between Yvonne Wineberg and the Defendants, a copy of the agreement dated 22 April 2022 and all other documents underpinning caveat number 721958906 and an explanation as to why this agreement was not disclosed in the Second Defendant’s earlier affidavits of 4 May 2022, 11 May 2022 or 18 May 2022;

(b)    the following matters with respect to the property at 290 Storey Street Maroubra, NSW 2035 being the whole of the land contained in certificate of title, folio identifier 22/253422:

(i)    why a caveat was lodged by the Second Defendant on 11 April 2022;

(ii)    an explanation as to why this caveat was not disclosed in the Second Defendant’s earlier affidavits of 4 May 2022, 11 May 2022 or 18 May 2022; and

(iii)    an explanation as to whether the caveat affects the equity position of the property and, if so, how;

(c)    the following matters with respect to the property at 1906/420 Macquarie Street, Liverpool NSW 2170, being the whole of the land contained in certificate of title, folio identifier 125/SP91093:

(i)    an explanation as to why caveat number AS11580 was not disclosed in the Second Defendant’s earlier affidavits of 4 May 2022, 11 May 2022 or 18 May 2022; and

(ii)    an explanation as to whether caveat number AS11580 affects the equity position of the property and, if so, how;

(d)    the following matters with respect to the property at 506/2F Wentworth Park Road, Glebe NSW 2037 being the whole of the land contained in certificate of title, folio identifier 16/SP94021:

(i)    an explanation as to why caveat number AS11580 was not disclosed in the Second Defendant’s earlier affidavits of 4 May 2022, 11 May 2022 or 18 May 2022;

(ii)    an explanation as to whether caveat number AS11580 affects the equity position of the property and, if so, how;

(iii)    the relationship between City Wide Constructions A.C.T Pty Ltd and the Defendants, a copy of the signed deed of settlement and release dated 18 March 2022 and all other documents underpinning caveat number AS76619 and an explanation as to why this signed deed of settlement and release was not disclosed in the Second Defendant’s earlier affidavits of 4 May 2022, 11 May 2022 or 18 May 2022; and

(iv)    an explanation as to why caveat number AS76619 was not disclosed in the Second Defendant’s earlier affidavits of 4 May 2022, 11 May 2022 or 18 May 2022; and

(e)    the following matters with respect to the property at 501/2H Wentworth Park Road, Glebe NSW 2037 being the whole of the land contained in certificate of title, folio identifier 27/SP94023:

(i)    an explanation as to why caveat number AS11580 was not disclosed in the Second Defendant’s earlier affidavits of 4 May 2022, 11 May 2022 or 18 May 2022; and

(ii)    an explanation as to whether caveat number AS11580 affects the equity position of the property and, if so, how.

7.    The time for service of the Interlocutory Process and the affidavit of Blake O’Neill affirmed on 30 September 2022 be abridged to 6.00 pm on 30 September 2022.

8.    The Plaintiffs serve the Defendants with a copy of these Orders by 6.00 pm on 30 September 2022.

9.    The hearing of prayers 12 to 15 of the Interlocutory Process be stood over for hearing at 2.15 pm on Tuesday, 4 October 2022 before the Commercial & Corporations Duty Judge.

10.    These Orders be entered forthwith.

In these orders:

Genna’s Properties    means: the properties situated at and known as:

Encumbering:     means: mortgaging, charging, pledging, granting any other security over title to the Properties or its sale proceeds in anyway so as to restrict free and clear title from being passed, or increasing the indebtedness to any person holding a current security over the Properties or its sale proceeds.

Yael’s Properties:    means: the properties situated at and known as:

Net Sale Proceeds:    means: the proceeds from the sale of and one or more of the Properties less:

Properties:    means: each of the properties comprising Genna's Properties and Yael’s Properties.

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

EX TEMPORE REASONS FOR JUDGMENT

(Revised from transcript)

HALLEY J:

Introduction

1    The plaintiff, Peter Krejci in his capacity as the liquidator (Liquidator) of Plasterboard & Render Pty Limited (in liq) (Company), moves today for orders pursuant to s 1323 of the Corporations Act 2001 (Cth) (Act), seeking the appointment of a receiver over certain properties held in the name of the defendants and the net sale proceeds, as the case might be, of those properties.

2    In the alternative to that order, the Liquidator seeks an order, pursuant to s 1323(3) of the Act, that the first and second defendants be prohibited from selling, disposing, transferring, dealing with, encumbering or otherwise diminishing the value of any assets in which they each altogether have an interest, including funds in any bank account or in any real property, including the properties and the net sale proceeds.

3    Mr Notley of counsel appeared for the plaintiffs today and provided a detailed written outline of submissions in support of the application made by the plaintiffs.

LEGAL Principles

4    In his written submissions, Mr Notley set out the relevant legal principles for the Court to grant interim relief pursuant to an application under s 1323(3) of the Act. Those principles are well established and do not need to be restated for the purposes of today’s application.

5    In short, s 1323(1) of the Act provides that where a relevant person who is or may become liable to pay money, whether in respect of a debt, by way of damages or compensation or otherwise, or to account for financial products or other property, and where there is a liability to another person, called the aggrieved person, and the Court considers it necessary or desirable to make the orders for the purpose of protecting the interests of the aggrieved person, orders may be made pursuant to s 1323: Australian Security and Investments Commission v Carey (No 3) (2006) 57 ACSR 307; [2006] FCA 433 at [22] (French J, as his Honour then was).

Evidence

6    The Liquidator relies upon an affidavit of his solicitor, Mr Blake O’Neil, affirmed 30 September 2022. Mr O’Neil gives evidence of matters which have recently come to the attention of the Liquidator, which I am satisfied demonstrate, at least on a prima facie basis, material non-disclosures made by the second defendant in affidavits that she provided to the Court in connection with an earlier application made pursuant to s 1323 of the Act.

7    The Liquidator also relies on his affidavits affirmed on 2 May 2022 and 16 May 2022, and exhibits to those affidavits in support of today’s application. In addition, he has tendered the affidavits sworn by the second defendant on 4, 11 and 18 May 2022 as admissions of the extent of disclosures made by the second defendant of interests that she held in certain properties.

Consideration

8    I am satisfied in this case that both defendants are relevant persons and the Liquidator and the Company are aggrieved persons. The only issue remaining is whether it is necessary or desirable for the Court to make the orders sought.

9    The most significant concerned identified by the Liquidator is that a settlement statement for the sale of a property at Varsity Lakes in Queensland reveals a payment of some $349,966.45, described as “other” and recorded as a payment to “DJR Conveyancing”. The covering letter from HWL Ebsworth Lawyers to ERA Legal, the solicitors for the Liquidator, dated 27 September 2022, refers to the proceeds of sale of the Varsity Lakes property being applied to a mortgagor (presumably intended to be a reference to a mortgagee) and a caveator.

10    The caveator would appear to be a Ms Yvonne Wineberg, who has filed a caveat dated 22 April 2022 over the Varsity Lakes property. The caveator’s interest is alleged to be pursuant to an agreement between the registered owner and the caveator whereby the registered owner agreed to charge all their interest in the land with payment of moneys owing to the caveator, Ms Wineberg. The existence of that caveat was not disclosed by the second defendant in any of her three affidavits that she has provided to the Court and which were before Goodman J at a time that he made orders by consent that, upon the applicant’s counsel giving the usual undertaking as to damages, the first and second defendants would undertake, until the final determination of the proceedings, to give the plaintiffs 21 days’ notice of any intention to sell, dispose, transfer, or deal with, or encumber, or further encumber any interest they had in properties, including the Varsity Lakes property.

11    That and other material non-disclosures have given rise to a significant concern on the part of the Liquidator that unless he was to move ex parte on the present application, there would be a further risk that there would be a potential dissipation of assets.

12    The primary purpose of the s 1323 procedure is to protect the interests of aggrieved persons. The Liquidator had, on a previous occasion before Goodman J, accepted the bona fides of the defendants and accepted undertakings from the defendants in good faith. Given the material nondisclosures apparent by at least the second defendant in affidavits that had been relied upon before Goodman J, the Liquidator is concerned that the undertakings have little value and there is now a serious risk of dissipation of assets.

13    That concern is reinforced by the following matters, as Mr O’Neill identifies in his affidavit: the defendants have been directors of a number of companies that had been placed into some form of external administration, leaving creditors, including the Australian Taxation Office, owed millions of dollars; the first defendant was disqualified by the Australian Securities Investments Commissions from managing corporations for a period of two and a half years; one of the most recent emanations of the group of companies carrying on the plastering and rendering business of the defendants has now been deregistered; and the Company has engaged subcontractors and incurred liabilities on behalf of a related company, Render Design (Aust) Pty Limited (in liq) (RDA), in order for it to complete head contracts in circumstances where there was no contract in place between RDA and the Company and there was no profit margin.

14    The outstanding creditor claims identified by the Liquidator initially amounted to $6,272,670.30, but given additional creditors’ claims, they now total some $6,326,724.78. This amount, however, does not include any loan owed by the Company to a company known as Oregano Lane, which the balance sheet of the Company records as being owed an amount of $2,078,262.20.

15    Further, the Liquidator’s concerns arise in circumstances where, based on the Liquidator’s investigations to date, the Liquidator presently claims in these proceedings an amount of:

(a)    $9,799,601.59 from the first defendant, pursuant to ss 79, 180 to 183 and 1317H of the Act (being what are described as insolvent trading debts, group advances and payments to related parties);

(b)    $2,763,441.90 from the second defendant pursuant to ss 79, 180 to 183 and 1317H of the Act (being group advances and payments to related parties); and

(c)    the amount being distributed to the second defendant by WGR, in her capacity as a unitholder of a trust pursuant to s 37A of the Conveyancing Act 1919 (NSW).

Disposition

16    Given each of these matters outlined above, I am satisfied that it is necessary and desirable for the s 1323(3) orders to be made, but for the matter to be brought back before the Commercial and Corporations Duty Judge of New South Wales at the first available opportunity.

17    For these reasons, I have made the orders sought in the interlocutory process.

Associate:    

Dated:    4 October 2022