FEDERAL COURT OF AUSTRALIA
Team Dreegan Pty Ltd v Moss, in the matter of Symich Building Pty Ltd [2024] FCA 636
ORDERS
Plaintiff | ||
AND: | Defendant | |
DATE OF ORDER: | 17 june 2024 |
THE COURT ORDERS THAT:
The defendant’s interlocutory application filed on 5 December 2023
1. The notice to produce addressed to the defendant and dated 8 August 2023 be set aside.
2. The plaintiff pay the costs of the defendant’s interlocutory application filed on 5 December 2023, on an indemnity basis from 5 December 2023.
The plaintiff’s interlocutory application filed 28 December 2023
3. With respect to the plaintiff’s interlocutory application filed on 28 December 2023, the legal representatives of the parties are to confer and provide to the Associate to Goodman J by 28 June 2024:
(a) agreed orders, giving effect to these reasons for judgment; or
(b) failing such agreement competing orders and written submissions (not exceeding three (3) pages) in support thereof.
Case management
4. The proceeding be listed for a case management hearing at 9:30am on 4 July 2024, or such other date as may be mutually agreed between the legal representatives of the parties and the Associate to Goodman J.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
GOODMAN J
1 The plaintiff is a creditor of Symich Building Pty Ltd (in liquidation). The defendant, of Chifley Advisory Pty Ltd, is the liquidator of Symich and a related company, Perich Constructions (NSW) Pty Ltd (in liquidation) (PCPL). This proceeding arises out of a meeting of creditors of Symich held on 28 June 2023, at which a vote initiated by the plaintiff to replace the defendant as liquidator was unsuccessful.
2 These reasons for judgment address:
(1) an interlocutory application brought by the defendant for orders setting aside a notice to produce served by the plaintiff purportedly pursuant to r 20.31 of the Federal Court Rules 2011 (Cth); and
(2) an interlocutory application brought by the plaintiff for orders requiring the defendant to produce or provide discovery of various documents or categories of documents.
3 For the reasons set out below, the notice to produce should be set aside and the defendant should provide discovery of the documents described in some, but not all, of the categories.
4 The following description of the background to the present applications is taken from evidence which I understand to be uncontroversial.
5 On 7 February 2022, the defendant was appointed as liquidator of Symich pursuant to a voluntary winding up initiated by its director, Mr Daren Perich. On the same day, the defendant was appointed as liquidator of PCPL.
6 On 21 February 2022, the defendant sent an initial notice to the creditors of Symich.
7 On 6 May 2022, the defendant sent a further report to creditors.
8 On 27 January 2023, the defendant sent a further report to creditors of Symich and gave notice of a creditors’ meeting to be held on 14 February 2023.
9 On 14 February 2023, at that meeting, the plaintiff sought the removal of the defendant as liquidator of Symich, but this issue was not resolved, after the defendant indicated that the requisite notice of such a resolution had not been provided to creditors.
10 On 18 May 2023, the defendant issued a further report to creditors. He also gave notice of a meeting of creditors of Symich to be held on 7 June 2023.
11 On 7 June 2023, at that meeting, the creditors considered a motion to remove the defendant as liquidator of Symich. The vote on that motion was adjourned to 28 June 2023.
12 On 19 June 2023, the defendant sent a further report to creditors of Symich.
13 On 28 June 2023, a vote was taken on the motion to remove the defendant as liquidator of Symich. The defendant recorded eight creditors voting for his removal, with total claims of $2,501,302.54; and 20 creditors against his removal, with total claims of $1,700,915.90. The defendant declined to use his casting vote in favour of the motion and the motion failed.
14 On 12 July 2023, the plaintiff commenced this proceeding by filing an originating process, which included:
On the facts stated in the supporting affidavit(s), the plaintiff claims:
1. An order, pursuant to r 75-100 IPR, challenging and setting aside the defendant’s decision on 28 June 2023, at a meeting of creditors for Symich Building, to admit a proof of debt or like claim for each of the entities listed in Schedule 1 to this originating application.
2. A declaration that the voting result was invalid for the resolution proposed on 28 June 2023, namely, to remove the defendant as the external administrator of Symich Building and replace him with Mr Stephen Wesley Hathway (resolution).
3. A declaration that the resolution carried.
4. In the alternative to prayers 2 and 3:
a. An order directing the defendant to reconvene a meeting of creditors in order to vote on the resolution.
b. A declaration, made in respect of each of the entities listed in Schedule I, that it is not a creditor for voting purposes pursuant to r 75-85 IPR.
Further, and in the alternative,
5. An order under section 90-l 5(3)(b) IPS that the defendant cease to be the external administrator of Symich Building.
6. An order under section 90-l 5(3)(c) IPS that Mr Stephen Wesley Hathway of Helm Advisory be appointed as external administrator of Symich Building in the place of the defendant.
Further,
7. An order that the defendant pay the plaintiff’s costs without indemnity in the event that this application is opposed.
(bold emphasis in the original)
15 The persons listed in Schedule 1 to the originating process (Schedule 1 creditors) are:
(1) MKP Projects Pty Ltd;
(2) Mr Daren Perich;
(3) Ms Monica Perich;
(4) Wisdom Business Consultants Pty Ltd;
(5) All Business Accounting Solutions Pty Ltd;
(6) Allcon (NSW) Pty Ltd;
(7) Master Steel Solutions Pty Ltd;
(8) Cemcon Group Pty Ltd;
(9) Lavish Painting & Decorating;
(10) Sydney Civil Services Pty Ltd;
(11) Ozi Roofs;
(12) Deutsch Partners Pty Ltd;
(13) Font Built Pty Ltd (incorrectly described as Fontbuild Pty Ltd);
(14) Agi Civil Pty Ltd;
(15) Australian Consulting Engineers Pty Ltd;
(16) Inbuilt Plumbing Solutions Pty Ltd; and
(17) Utech Pty Ltd
16 The originating process was not accompanied by a statement of claim, but instead by an affidavit of the plaintiff’s director, Ms Melissa Mastin sworn on 11 July 2023. The plaintiff subsequently filed affidavit evidence from: (1) Ms Helen Bortfeld (its office manager); (2) Mr Scott McCreery (a friend of Ms Mastin who attended the 28 June 2023 creditors meeting); (3) Mr Timothy Gillespie (a consultant, who attended the 28 June 2023 creditors meeting); and (4) Mr Gregory Mastin (a brother-in-law of Ms Mastin).
17 On 19 July 2023, the defendant informed the plaintiff that he neither consented to nor opposed the plaintiff’s application however he proposed to file an affidavit and to make submissions to assist the Court.
18 On 8 August 2023, the plaintiff’s solicitor, Mr Derek Ziman served on the defendant’s solicitor, Mr John Hunt, a notice to produce. The notice to produce purported to be a notice under r 20.31(1) of the Rules which enables the service of a notice to produce for the inspection of any document mentioned in a pleading or affidavit served by another party. However, the notice to produce calls mainly for documents relating to various topics which in turn were referenced to documents referred to in documents annexed to the affidavits of Ms Mastin and Ms Bortfeld (being affidavits served by the plaintiff, not the defendant).
19 On 11 August 2023, Mr Hunt wrote to Mr Ziman in the following terms:
I note Rule 20.31 allows a party (the first party, eg the Applicant) to serve a Notice to Produce on another party (the second party, eg the Respondent) requiring the second party to produce documents referred to in a pleading or affidavit filed by the second party. I note however the Notice to Produce attached to your email below requests production of documents referred to in affidavits filed by your client.
I am instructed my client intends to provide copies of the proxies and proofs of debt and supporting documents received for the relevant meeting of creditors of Symich Building Pty Ltd (Receivers & Managers Appointed) (in Liquidation) as part of his affidavit.
In the circumstances of the present case my client is of the opinion that it is otherwise not reasonable for him to comply with a request for the other documents referred to in the Notice to Produce.
20 On 10 October 2023, the defendant filed an affidavit that he made on that date. The defendant’s affidavit has an exhibit titled Exhibit Moss-1.
21 On 11 October 2023 I made an order, by consent, that the defendant produce to the plaintiff or otherwise provide discovery of the documents the subject of the notice to produce. On 10 November 2023 Mr Hunt, the solicitor for the defendant, indicated that upon further consideration he should not have consented to the order made on 11 October 2023. After hearing submissions, I made orders providing a timetable for an application to set aside the notice to produce and for an application for discovery.
22 On 4 December 2023, Mr Hunt wrote to Mr Ziman seeking his consent to an order setting aside the notice to produce.
23 On 5 December 2023, the defendant filed an interlocutory application seeking orders setting aside the notice to produce and for the payment of his costs of that application on an indemnity basis. That application was supported by an affidavit of Mr Hunt affirmed the same day.
24 On 28 December 2023, the plaintiff filed its interlocutory application, supported by an affidavit of Mr Ziman affirmed 20 December 2023.
25 On 15 February 2024, I granted leave to the plaintiff to amend its originating process by:
(1) inserting prayer 3A in the following form:
An order, pursuant to s 75-43 Insolvency Practice Schedule, declaring that the resolution of 28 June 2023, for the removal of Mr Moss from Symich Building Pty Ltd, is taken to have been passed at the meeting. ;
(2) inserting prayer 3B in the following form:
Such further order as the Court thinks fit with respect to the time when the resolution of 28 June 2023 is taken to have effect. ;
(3) amending prayer 4 to refer to the new prayers 3A and 3B above.
26 An amended originating process is yet to be filed, albeit an unsealed version was provided to the Court at the hearing of the present applications.
C. THE DEFENDANT’S APPLICATION TO SET ASIDE THE NOTICE TO PRODUCE
27 As noted above, by its interlocutory application filed on 5 December 2023, the defendant seeks to set aside the notice to produce.
28 The plaintiff’s counsel indicated at the commencement of the hearing that the plaintiff consented to an order setting aside the notice to produce and suggested that the question of costs be costs of the application generally. Mr Hunt did not address the question of costs orally, but relied upon his written submissions. By those submissions, the defendant sought indemnity costs on several bases. It is not necessary to address all of those bases. It is sufficient to record that I am satisfied that costs of that application should be awarded on an indemnity basis, from 5 December 2023, in circumstances where:
(1) as Mr Hunt pointed out in his 11 August 2023 email, the notice to produce did not comply with r 20.31(1), in that it did not seek the production of documents referred to in any affidavit served by the defendant, but rather (on a construction of the notice to produce most favourable to the plaintiff) sought documents referred to in the plaintiff’s own affidavits;
(2) although the defendant initially agreed to produce the documents, it was clear from 10 November 2023 that the validity of the notice to produce was in issue;
(3) on 4 December 2023, Mr Hunt invited the plaintiff to consent to an order setting aside the notice to produce (which order did not include any provision as to costs);
(4) despite these matters and in particular the early indication from Mr Hunt of reasons why the notice to produce was hopelessly flawed, the plaintiff did not resile from the notice to produce, accept Mr Hunt’s offer, or accede to the defendant’s 5 December 2023 application to set it aside until the commencement of the hearing; and
(5) in the interim, the defendant was unnecessarily put to the time and expense of preparing an interlocutory application, an affidavit and submissions in support thereof and preparing for the hearing of that application.
D. THE PLAINTIFF’S APPLICATION
29 I turn now to consider the plaintiff’s application.
30 The plaintiff seeks the following principal orders:
1. An order directing the respondent to produce to the applicant, within 7 days, the documents mentioned in Exhibit Moss-1 dated 11 October 2023 and listed in Schedule A to these orders.
2. An order directing the respondent to give discovery to the applicant of documents within the categories identified in Schedule B to these orders.
31 Schedule A (to the extent that it was pressed) and Schedule B are reproduced as Schedules A and B respectively to these reasons for judgment.
32 In support of its application, the plaintiff read the affidavits of Mr Ziman affirmed on 15 August 2023 and 20 December 2023. The plaintiff also tendered the defendant’s affidavit and Exhibit Moss-1 on its application for the purpose only of determining questions of relevance.
D.1 Paragraph 1 and Schedule A to the plaintiff’s application
33 The plaintiff sought the documents described in Schedule A to the plaintiff’s application – in so far as that Schedule is pressed – on two bases: first, pursuant to r 20.31 and secondly, by way of discovery. Although no notice to produce was served, and paragraph 1 of the plaintiff’s application is not expressed in terms of discovery, neither point was taken and I will deal with this aspect of the application as if such a notice had been served and as if paragraph 1 had sought discovery of the documents mentioned therein.
D.1.1 Production as if by notice to produce
34 The documents sought in Schedule A to the plaintiff’s application, as pressed, are documents which are either mentioned in Exhibit Moss-1 or whose existence may be inferred from information in that exhibit.
35 The parties are at issue as to whether r 20.31 – which as noted above enables the service of a notice to produce for the inspection of any document mentioned in a pleading or affidavit served by another party – enables the production of documents mentioned in an exhibit to an affidavit served by another party (relevantly, Exhibit Moss-1).
36 The plaintiff relied upon In Re Hinchliffe [1895] 1 Ch 117 for the proposition that documents referred to in an exhibit are producible. The defendant relied upon the following statement of Greenwood J in Kortz Ltd v Data Acquisition Pty Ltd [2006] FCA 1722; (2006) 155 FCR 556 at 562 [29]:
Plainly enough, for the purposes of the Federal Court Rules, any original document relied upon by a deponent in an affidavit to the extent that the document is to be used in conjunction with the affidavit must be marked as an exhibit to the affidavit and any document referred to in an affidavit, for the purposes of the Victorian Supreme Court (General Civil Procedure) Rules, may be referred to in the affidavit as an exhibit but not an annexure. For the purposes of each of these rules and as a matter of principle, documents marked as an exhibit to an affidavit do not form part of the affidavit.
(emphasis added)
37 I do not accept the plaintiff’s submission that In Re Hinchliffe is authority for the proposition that documents mentioned in an exhibit to an affidavit are producible under r 20.31. That is so, for the reasons that I set out in Saffari v Amazon Commercial Services Pty Ltd [2024] FCA 436 at [121] to [135]. In summary: (1) documents which are mentioned in an exhibit to an affidavit are not thereby documents mentioned in an affidavit for the purposes of r 20.31; and (2) In Re Hinchliffe properly understood, is authority only for the proposition that a person who has a right to inspect and copy an affidavit has also the right to inspect and copy any exhibit to that affidavit: see In Re Koscot Interplanetary (UK) Ltd [1972] 3 All ER 829 at 835 (Megarry J); and Robowash Pty Ltd v Robowash Finance Pty Ltd [2000] WASCA 409; (2000) 158 FLR 338 at 342 [17] (Kennedy J, with whom Wallwork and Anderson JJ agreed).
38 Of course, for the documents sought that are not mentioned in Exhibit Moss-1, but whose existence might be inferred from information in that exhibit, the link to r 20.31 is even more tenuous.
39 Thus, this aspect of the plaintiff’s application must fail.
D.1.2 Production as if by way of discovery
40 I turn now to consider paragraph 1 as a request for discovery.
41 Part 20 of the Rules concerns discovery and inspection of documents. Rule 20.11 provides:
A party must not apply for an order for discovery unless the making of the order sought will facilitate the just resolution of the proceeding as quickly, inexpensively and efficiently as possible.
42 Rules 20.14 and 20.15 provide in so far as is presently relevant:
20.14 Standard discovery
(1) If the Court orders a party to give standard discovery, the party must give discovery of documents:
(a) that are directly relevant to the issues raised by the pleadings or in the affidavits; and
(b) of which, after a reasonable search, the party is aware; and
(c) that are, or have been, in the party’s control.
(2) For paragraph (1)(a), the documents must meet at least one of the following criteria:
(a) the documents are those on which the party intends to rely;
(b) the documents adversely affect the party’s own case;
(c) the documents support another party’s case;
(d) the documents adversely affect another party’s case.
...
(4) In this rule, a reference to an affidavit is a reference to:
(a) an affidavit accompanying an originating application; and
(b) an affidavit in response to the affidavit accompanying the originating application.
20.15 Non-standard and more extensive discovery
(1) A party seeking an order for discovery (other than standard discovery) must identify the following:
(a) any criteria mentioned in rules 20.14(1) and (2) that should not apply;
(b) any other criteria that should apply;
...
(2) An application by a party under subrule (1) must be accompanied by the following:
(a) if categories of documents are sought—a list of the proposed categories; and
...
(3) An application by a party seeking more extensive discovery than is required under rule 20.14 must be accompanied by an affidavit stating why the order should be made.
(4) For this Division:
category of documents includes documents, or a bundle of documents, of the same or a similar type of character.
(emphasis in original)
43 Rule 20.14 concerns standard discovery. The plaintiff does not seek standard discovery in the present case. As discovery other than standard discovery is sought, the plaintiff must identify any criteria mentioned in r 20.14(1) and (2) that should not apply: r 20.15. Relevantly, the applicant has not suggested that the criterion in r 20.14(1)(a) – that discovery is limited to documents directly relevant to the issues raised by the pleadings or in the affidavits – should not apply. Thus, it is appropriate to assess the application on the basis that the documents sought must be directly relevant to the issues raised by the pleadings or in the affidavits.
44 In the present case, there are no pleadings. The proceeding was commenced by an originating process, which is not a “pleading” as that term is defined in Schedule 1 to the Rules. As noted earlier, no statement of claim has been filed. Thus, it is necessary to identify the issues raised in the proceeding by reference to the “the affidavits”. The effect of r 20.14(4) is to limit, for the purposes of r 20.14(1), “the affidavits” to the affidavits accompanying the originating application (here, Ms Mastin’s affidavit sworn on 11 July 2023) and any affidavits in response to that affidavit.
45 Ms Mastin’s affidavit puts in issue the 28 June 2023 meeting (at [5]) and in particular she contends that:
(1) the votes of: (a) each of the Schedule 1 creditors; and (b) DMK Corporation Pty Ltd, should not have been admitted (at [6]); and
(2) there was an increase in the number of votes held by the defendant against his removal – from three at the time of the May 2023 report to creditors to 16 at the 28 June 2023 meeting – and that most of those additional votes belonged to creditors who had not previously been recorded as such (at [10], [13] to [15]).
46 The defendant’s affidavit addresses, inter alia, the topics raised in Ms Mastin’s affidavit and in particular the proofs of debt and proxies received by the defendant for the 28 June 2023 meeting and the votes admitted on the motion to remove the defendant as liquidator of Symich.
47 Notably, Ms Mastin did not in her affidavit contend, and the defendant did not in his affidavit address any contention:
(1) that the defendant’s appointment occurred or has continued in circumstances where he has lacked the requisite independence;
(2) that the defendant has been tardy in pursuing preferential payments; or
(3) concerning the validity of the appointment of a receiver and manager to Symich.
48 As noted above, Ms Mastin’s affidavit identifies DMK Corporation as a creditor whose vote she contends should not have been admitted. DMK Corporation is not listed as a Schedule 1 creditor, however I do not propose to take a narrow approach on this question in circumstances where the absence of DMK Corporation from Schedule 1 to the originating process may be an oversight and the validity of the vote of DMK Corporation may well be in issue in any event. In effect, I will treat DMK Corporation as if it had been included in Schedule 1 to the originating process.
49 I turn now to consider the paragraphs of Schedule A that are pressed.
50 Counsel for the plaintiff dealt with paragraphs 1 and 3 together. Those paragraphs are:
Symich Building Pty Ltd (in liquidation)
1. Copy of the MYOB data file for Symich Building Pty Ltd (Symich) (likely in *.myo or *.zip format).(Exhibit Moss-1, pp 130,268,352, 120)
...
3. Symich financial statements for 30 June 2020 to 14 February 2022 inclusive. (Exhibit Moss-1, p122)
51 Counsel for the plaintiff submitted that discovery pursuant to these two categories is sought because they will provide probative evidence as to the status of those persons who became creditors shortly prior to the 28 June 2023 meeting.
52 The MYOB data file for Symich, in so far as it records the debts owed by Symich to each of the Schedule 1 creditors and DMK Corporation, is likely to be directly relevant, probative and readily producible. I do not, however, consider it appropriate that discovery be provided of the entire MYOB data file. Thus, the defendant should provide discovery not in terms of category 1 but instead of a copy of the MYOB data file in so far as that file records debts owed by Symich to any Schedule 1 creditor and DMK Corporation.
53 Discovery should be ordered in terms of category 3 as the financial statements may contain evidence directly relevant to the status of the Schedule 1 creditors and DMK Corporation at particular times.
54 Paragraph 4 is:
ACN 135 263 599 Pty Ltd (in liquidation)
4. Final report on the liquidation of ACN 135 263 599 Pty Ltd. (Exhibit Moss-1, p146)
55 Ms Mastin’s affidavit does not refer to ACN 135 263 599 Pty Ltd. There is evidence that suggests that: (1) on 6 March 2022, the defendant made a declaration of independence, relevant relationships and indemnities pursuant to s 506A of the Corporations Act 2001 (Cth); and (2) within that declaration, the defendant disclosed that he had previously been appointed as the liquidator of ACN 135 263 599 Pty Ltd, a company of which Mr Daren Perich had been a director.
56 The plaintiff’s counsel submitted that this category seeks documents relevant to the independence of the defendant. As this issue was not raised in Ms Mastin’s affidavit, I decline to order discovery by reference to this category.
57 Paragraph 5 is:
Allcon (NSW) Pty Ltd
5. Email on or about 28 June 2023 submitting proxy form and proof of debt for Allcon (NSW) Pty Ltd. (Exhibit Moss-1, p269)
58 Allcon is a Schedule 1 creditor. In paragraph 6.7 of her affidavit, Ms Mastin deposes that:
6.7 The vote cast by Allcon (NSW) Pty Ltd was incorrectly admitted. The applicant challenges the circumstances and admissibility of its vote and also challenges its creditor status. Allcon first appeared as a creditor in the respondent’s report dated 18 May 2023.
6.7.1 Mr McCreery told me that Mr Tim Gillespie told him on about 7 June 2023 that he ‘has proxy votes for Allcon and Master Steel in favour of removing the respondent’. Mr Gillespie told him on 27 June 2023 that ‘I gave the proxy votes to the liquidator at 4pm’. That was the day before the resumed meeting.
6.7.2 On 28 June 2023, the day of the vote, the respondent told Mr McCreery that he had ‘received newer proxy votes from Allcon and Master Steel in my favour’ or words to that effect. This was after the cut-off time for votes set by the respondent.
6.7.3 After the meeting I learned that Allcon also claimed to be a creditor of Perich Constructions (NSW) Pty Ltd (above). Mr McCreery tells me he ‘contacted Allcon who said that its invoices were to Perich Constructions and it had owed money for a long time’ or words to that effect.
59 Exhibit Moss-1 contains an appointment of proxy form apparently submitted by Allcon and dated 28 June 2023 (i.e., the day of the creditors’ meeting) which appoints the chairperson of the meeting as Allcon’s special proxy, to vote against the motion to remove the defendant as liquidator of Symich. It also contains a notation apparently from the director of Allcon:
NOTE: I [director], Remove my previous vote and resubmit my previous vote as bellow (sic).
60 I am satisfied that the email sought may be directly relevant to the issue of the veracity of the proxy and proof of debt submitted by Allcon. Discovery in the terms of paragraph 5 should be ordered.
61 Paragraph 7 is:
Deutsch Partners
7. Email correspondence with members of Deutsch Partners on 7 February 2022. (Exhibit Moss-1, p297)
62 On 7 February 2022, Deutsch Partners, who apparently were legal advisers to Symich, rendered a tax invoice to Symich which included an entry for that day (being the day on which the defendant was appointed as liquidator of Symich) in the following form:
Numerous calls and emails from Gavin, Andrew, Mitch, Daren and Brendan ...
63 At best, on the basis that the reference to “Gavin” is a reference to the defendant, this category goes to the issue of the independence of the defendant. As noted above, the independence of the defendant is not raised as an issue in this proceeding. I decline to order discovery by reference to this category.
64 Paragraph 13 is:
Northrop Consulting
13. Notice of assignment and instrument of assignment for Northrop Consulting Pty Ltd. (Exhibit Moss-1, pp348-9)
65 The proof of debt submitted by MKP Projects recorded that the claimed debt was a debt of $3,300 assigned by “Northrop” to MKP Projects. Apparently attached to that proof of debt was a tax invoice from Northrop Consulting Engineers Pty Ltd dated 30 September 2021, for $3,300.
66 As this category seeks a single document which may be directly relevant to the validity of the vote cast by MKP Projects, I will order that discovery of this category be provided. However, as the category refers to “Northrop Consulting Pty Ltd”, the proof of debt refers to “Northrop’s debt” and the tax invoice is on the letterhead of “Northrop Consulting Engineers Pty Ltd” it may be that the category should be recast to include “Northrop Consulting Engineers Pty Ltd”.
67 Paragraph 16 is:
Sargon CT Pty Ltd
16. Loan agreement between Symich and Sargon CT Pty Ltd (Exhibit Moss-1, p115)
68 Sargon CT Pty Ltd is not a Schedule 1 creditor and is not referred to in Ms Mastin’s affidavit.
69 Counsel for the plaintiff submitted that: (1) a loan agreement between Symich and Sargon CT ostensibly created a debt, which led to the appointment of a receiver and manager to Symich; (2) Sargon CT is a company related to Mr Daren Perich; and (3) the loan agreement is sought to determine whether or not the appointment of the receiver was valid.
70 Thus, the only asserted relevance of this category is a challenge to the appointment of the receiver and manager. This falls outside the scope of the matters in issue in this proceeding. I decline to make an order for discovery with respect to this category.
71 Paragraph 18 is:
Wisdom Business Consultants Pty Ltd
18. Proof of debt and supporting documents for Wisdom Business Consultants Pty Ltd as at 23 January 2023. (Exhibit Moss-1, p183)
72 Wisdom is a Schedule 1 creditor, and is addressed by Ms Mastin in her affidavit.
73 The 23 January 2023 creditors report, which is annexed to Ms Mastin’s affidavit and also forms part of Exhibit Moss-1, attaches a list of creditors which includes Wisdom and records Wisdom as having submitted a proof of debt in the sum of $30,000. In the 18 May 2023 report to creditors, which is also annexed to Ms Mastin’s affidavit and forms part of Exhibit Moss-1, Wisdom is recorded in the list of creditors as having lodged a proof of debt in the sum of $70,000.
74 Counsel for the plaintiff submitted that: (1) there was an increase in the amount claimed of $40,000 during a period when Symich was in liquidation; and (2) the original proof of debt is sought so that it can be cross-checked against the second proof of debt. As this category seeks a small number of documents which may be directly relevant to the voting at the 28 June 2023 meeting, I will order that discovery of documents in this category be provided.
D.2. Paragraph 2 and Schedule B to the plaintiff’s application
75 I turn now to consider paragraph 2 of the plaintiff’s interlocutory application. As noted above, that paragraph seeks an order for discovery of the documents in Schedule B to that application.
76 The observations made at [41] to [48] above are again relevant.
77 Counsel for the plaintiff, in his oral submissions, classified the categories sought in Schedule B as belonging in five groups. It is convenient to address this part of the application by reference to those groups.
D.2.1 First group – validity of creditors
78 The first group was described as “Validity of creditors”. The proposed discovery categories in Schedule B which fall within in this group are those numbered 4, 13, 17, 18, 19, 22 and 34. Those categories are:
Cemcon Group Pty Ltd
4. Contract between Cemcon Group Pty Ltd and Symich for work at 70 Bridge Street, Picton in 2021. (Exhibit Moss-1, p 286)
Dennis Rousiano (sic) t/as Lavish Painting & Decorating
13. Quotes to Symich from lavish (sic) Painting and Decorating for ‘lngleburn Project’.
DMK Corporation Pty Ltd
17. Quotations by DMK Corporation Pty Ltd to Symich:
17.1 For hire of plant and equipment between June 2019 and March 2021 for 7 Avon Road at Pymble;
17.2 For supply of labour, plant and equipment for the ‘Picton Industrial Project’ and ‘Picton Industrial Units’;
17.3 For services provided by DMK Corporation in 2021.
Font Built Pty Ltd
18. Contract between Symich and Font Built Pty Ltd for provision of site manager at:
18.1 10-12 Leonard Street, Hornsby;
18.2 7 Avon Road, Pymble; and
18.3 70 Bridge Street, Picton.
Inbuilt Plumbing Solutions Pty Ltd
19. Contract between Symich and Inbuilt Plumbing Solutions Pty Ltd for work at 70 Bridge Street in Picton
Ozi Roofs
22. Contract between Ozi Roofs and Symich for work in 2021-2022.
Utech Pty Ltd
34. Contract and variation agreement Symich and Utech Pty Ltd for work at Picton.
79 Each of these categories concerns a Schedule 1 creditor which is the subject of contention in Ms Mastin’s affidavit (adopting the benevolent approach to DMK Corporation described at [48] above). In each case, the category seeks a single document or a small number of documents likely to be directly relevant to the veracity of the proof of debt lodged by the particular creditor. Discovery of documents with respect to these categories should be ordered.
D.2.2 Second group – arrangements for the defendant’s appointment
80 The second group was described as “Arrangements for defendant’s appointment”. The proposed discovery categories in Schedule B which fall within in this group are those numbered 1, 3, 14 and 37. Counsel for the plaintiff identified these proposed discovery categories as being relevant to arrangements which were made for the appointment of the defendant to Symich. The documents sought are, in summary:
(1) correspondence and file notes of discussions between Chifley Advisory and Symich’s external accountant, All Business Accounting;
(2) correspondence between Symich and All Business Accounting;
(3) costs disclosure from Deutsch Partners to Symich; and
(4) correspondence between Chifley Advisory and Mr Stark of Wisdom.
81 At best, these documents may be relevant to the independence of the defendant but, as discussed above, that issue is not part of the present proceeding. I decline to order discovery by reference to these categories.
D.2.3 Third group – Validity of creditors and arrangements for defendant’s appointment
82 The third group of proposed discovery categories was described as “Validity of creditors and arrangements for defendant’s appointment”. As this descriptor suggests, it is said to be a combination of the first two proposed groups of discovery categories. The categories in Schedule B which fall within in this third group are those numbered 6, 10, 12 and 15.
83 Category 6 is in the following terms:
Daren Perich
6. Invoices from Daren Perich to Symich for payment of director fees.
84 Mr Daren Perich is a Schedule 1 creditor. In paragraph 6.2 of her affidavit, Ms Mastin deposed:
The vote cast by Daren Perich personally was incorrectly admitted. He is the director of Symich and has an insolvent demand against him from the respondent for $1,298,122.16. He only lodged his proof of debt for $600,000.00 between the meeting of 7 June 2013 and its resumption on 28 June 2023. The applicant disputes that he is a creditor.
85 Within Exhibit Moss-1 is a proof of debt lodged by Mr Daren Perich on 11 May 2022, in which he asserts that he is owed directors’ fees of $600,000 for work carried out between 2017 and 2022. I am satisfied that the invoices sought may be directly relevant to the veracity of the proof of debt, and that their production should not be burdensome. Discovery of documents by reference to this category should be ordered.
86 The remaining categories in this third group are:
10. Correspondence including emails between Chifley Advisory and Daren Perich, and file notes of discussions held with Daren Perich:
10.1 for 6 and 7 February 2022 inclusive;
10.2 for 31 May 2023 to 7 June 2023 inclusive;
10.3 for 25 to 28 June 2023 inclusive;
10.4 about your ‘initial remuneration and expenses’
10.5 about $400,000 alleged payment by Monica Perich.
12. Correspondence between Chifley Advisory and Daren Perich, together with file notes of discussions held with Daren Perich, between 1 February 2022 and 30 March 2022 inclusive, in respect of:
12.1 ACN 135 263 599 Pty Ltd (in liquidation)
12.2 ACN 602 534 529 Pty Ltd (in liquidation)
12.3 Perich Constructions (NSW) Pty Ltd (in liquidation)
12.4 DMK Projects Pty Ltd (in liquidation)
15. Correspondence between Chifley Advisory and Deutsch Partners between 6 and 8 February 2022 inclusive.
87 These categories have no apparent relevance to the issues as identified by reference to the affidavits of Ms Mastin and the defendant. At best, they might be relevant to the independence of the defendant which, as noted above, has not been put in issue. Discovery with respect to categories 10, 12 and 15 should not be ordered.
D.2.4 Fourth group – legitimacy of company receiver
88 The fourth group was described as “Legitimacy of company receiver”. The proposed discovery categories in Schedule B which fall within in this group are those numbered 27 and 31:
Mr Mitchell Ball and Mr Domenico Calabretta
27. Correspondence to Messrs Ball and Calabretta seeking documentation relating to their appointment as receivers and managers, and their reply.
Sargon CT Pty Ltd
31. Loan agreement between Symich and Sargon CT Pty Ltd.
89 As noted above, Ms Mastin’s affidavit did not put in issue the validity of the appointment of the receiver and manager and the validity of that appointment is not a matter in issue in this proceeding. Discovery with respect to categories 27 and 31 should not be ordered.
D.2.5 Fifth group – preferences
90 The fifth group was described as “Preferences”. The proposed discovery categories in Schedule B which fall within in this group are those numbered 24 to 26 and 29 to 30:
Link Equipment Services Pty Ltd
24. Symich records indicating payments to Link’s benefit.
25. Symich records indicating a loan ostensibly to Link, repaid by Symich, was a loan made for Pymble’s benefit.
26. Reply to demand on Link for $2,312,485.72
Pymble NSW Project Pty Ltd
29. Symich books and records indicating payments by Symich to Pymble’s benefit.
30. Reply to demand on Pymble for $1,926,564.
91 The plaintiff’s counsel submitted that the defendant in his reports to creditors has identified potential preference claims, but he has not pursued those claims, other than as against the plaintiff. However, Ms Mastin’s affidavit did not contain any contention that the defendant has failed to pursue preference claims. Thus, categories 24 to 26 and 29 to 30 have no apparent relevance to the issues in this proceeding and discovery with respect to those categories should not be ordered.
D.2.6 The remainder of Schedule B
92 Falling outside those five identified groups are the remaining categories in Schedule B, namely categories 2, 5, 7, 8, 9, 11, 16, 20, 21, 23, 28, 32, 33, 35 and 36. These categories were not expressly abandoned by counsel for the plaintiff when he identified the above five groups in his oral submissions. However, in circumstances where no attempt has been made – whether by way of supporting affidavit, in submissions or otherwise – to explain why an order for discovery of these categories should be made, it is unnecessary to address these categories further. No order for discovery should be made with respect to these categories.
93 For the reasons set out above: (1) the notice to produce dated 8 August 2023 should be set aside, with the plaintiff to pay the defendant’s costs of its application to set aside that notice on an indemnity basis from 5 December 2022; (2) the plaintiff’s oral application for production under r 20.31 of the documents in Schedule A to the plaintiffs’ application should be dismissed; and (3) discovery should be provided in accordance with some but not all of the proposed discovery categories, with the plaintiff’s application for discovery otherwise dismissed.
I certify that the preceding ninety-three (93) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Goodman. |
Associate:
Symich Building Pty Ltd (in liquidation)
1. Copy of the MYOB data file for Symich Building Pty Ltd (Symich) (likely in *.myo or *.zip format) (Exhibit Moss-1, pp 130, 268, 352, 120)
...
3. Symich financial statements for 30 June 2020 to 14 February 2022 inclusive (Exhibit Moss-1, p122).
ACN 135 263 599 Pty Ltd (in liquidation)
4. Final report on the liquidation of ACN 135 263 599 Pty Ltd (Exhibit Moss-1, p146).
Allcon (NSW) Pty Ltd
5. Email on or about 28 June 2023 submitting proxy form and proof of debt for Allcon (NSW) Pty Ltd (Exhibit Moss-1, p269).
...
Deutsch Partners
7. Email correspondence with members of Deutsch Partners on 7 February 2022 (Exhibit Moss-1, p297).
...
Northrop Consulting
13. Notice of assignment and instrument of assignment for Northrop Consulting Pty Ltd (Exhibit Moss-1, pp348-9).
...
Sargon CT Pty Ltd
16. Loan agreement between Symich and Sargon CT Pty Ltd (Exhibit Moss-1, p115).
...
Wisdom Business Consultants Pty Ltd
18. Proof of debt and supporting documents for Wisdom Business Consultants Pty Ltd as at 23 January 2023 (Exhibit Moss-1, p183).
Symich Building Pty Ltd (in liquidation)
1. Correspondence and file notes of discussions between Chifley Advisory and Symich’s ‘external accountant’, together with All Business Accounting Solutions Pty Ltd, 7 February 2022 to 6 May 2022 inclusive.
2. Notes of ‘identified anomalies’ in Symich’s management accounts.
All Business Accounting Solutions Pty Ltd
3. Correspondence including emails between Symich and All Business Accounting Solutions Pty Ltd, including its servant Sandra Mitchell on:
3.1. 1 to 7 February 2022 inclusive; and
3.2. 8 February 2022 to 6 May 2022 inclusive.
Cemcon Group Pty Ltd
4. Contract between Cemcon Group Pty Ltd and Symich for work at 70 Bridge Street, Picton in 2021. (Exhibit Moss-1, p 286)
5. Payment schedules from Symich to Cemcon Group Pty Ltd for work at 70 Bridge Street, Picton in 2021.
Daren Perich
6. Invoices from Daren Perich to Symich for payment of director fees.
7. Pay slips from Symich to Daren Perich.
8. Symich resolutions to pay director fees.
9. Fee agreements between Symich and Daren Perich.
10. Correspondence including emails between Chifley Advisory and Daren Perich, and file notes of discussions held with Daren Perich:
10.1 for 6 and 7 February 2022 inclusive;
10.2 for 31 May 2023 to 7 June 2023 inclusive;
10.3 for 25 to 28 June 2023 inclusive;
10.4 about your ‘initial remuneration and expenses’
10.5 about $400,000 alleged payment by Monica Perich.
11. Voucher or proof of payment of $11,000 to you for your initial remuneration and expenses.
12. Correspondence between Chifley Advisory and Daren Perich, together with file notes of discussions held with Daren Perich, between 1 February 2022 and 30 March 2022 inclusive, in respect of:
12.1 ACN 135 263 599 Pty Ltd (in liquidation)
12.2 ACN 602 534 529 Pty Ltd (in liquidation)
12.3 Perich Constructions (NSW) Pty Ltd (in liquidation)
12.4 DMK Projects Pty Ltd (in liquidation)
Dennis Rousiano t/as Lavish Painting & Decorating
13. Quotes to Symich from lavish Painting and Decorating for ‘lngleburn Project’. (Exhibit Moss-1, p 342)
Deutsch Partners
14. Costs disclosure from Deutsch Partners to Symich.
15. Correspondence between Chifley Advisory and Deutsch Partners between 6 and 8 February 2022 inclusive.
16. File notes and correspondence between Chifley Advisory and Deutsch Partners, including emails into which you were copied:
16.1. Between 6 and 8 February 2022 inclusive; and
16.2. Between 6 and 8 June 2022 inclusive.
DMK Corporation Pty Ltd
17. Quotations by DMK Corporation Pty Ltd to Symich:
17.1 For hire of plant and equipment between June 2019 and March 2021 for 7 Avon Road at Pymble;
17.2 For supply of labour, plant and equipment for the ‘Picton Industrial Project’ and ‘Picton Industrial Units’;
17.3 For services provided by DMK Corporation in 2021.
Font Built Pty Ltd
18. Contract between Symich and Font Built Pty Ltd for provision of site manager at:
18.1 10-12 Leonard Street, Hornsby;
18.2 7 Avon Road, Pymble; and
18.3 70 Bridge Street, Picton.
Inbuilt Plumbing Solutions Pty Ltd
19. Contract between Symich and Inbuilt Plumbing Solutions Pty Ltd for work at 70 Bridge Street in Picton
20. Payment schedule from Symich to Inbuilt Plumbing Solutions Pty Ltd for work at 70 Bridge Street in Picton.
21. Emails and proof of payment relating to $12,990 paid to Inbuilt Plumbing Solutions Pty Ltd.
Ozi Roofs
22. Contract between Ozi Roofs and Symich for work in 2021-2022.
23. Payment schedule from Symich to Ozi Roofs, January-February 2022.
Link Equipment Services Pty Ltd
24. Symich records indicating payments to Link’s benefit.
25. Symich records indicating a loan ostensibly to Link, repaid by Symich, was a loan made for Pymble’s benefit.
26. Reply to demand on Link for $2,312,485.72
Mr Mitchell Ball and Mr Domenico Calabretta
27. Correspondence to Messrs Ball and Calabretta seeking documentation relating to their appointment as receivers and managers, and their reply.
28. Records of allegation that Messrs Ball and Calabretta were appointed ‘as a result of a fallout’.
Pymble NSW Project Pty Ltd
29. Symich books and records indicating payments by Symich to Pymble’s benefit.
30. Reply to demand on Pymble for $1,926,564.
Sargon CT Pty Ltd
31. Loan agreement between Symich and Sargon CT Pty Ltd.
32. Instrument assigning ‘Sargon Debt’ to Pymble NSW Project Pty Ltd on or about 16 December 2021.
33. Record of Sargon Debt payment by Pymble NSW Project Pty Ltd.
Utech Pty Ltd
34. Contract and variation agreement Symich and Utech Pty Ltd for work at Picton.
35. Payment claims 1 and 2 by Utech Pty Ltd for work on ‘Project’ at Picton.
36. Payment schedules and objections from Symich to Utech Pty Ltd for work on ‘Project’ at Picton:
36.1 For ‘Claim No 1’;
36.2 For ‘Claim No 2’;
36.3 For ‘Claim No 3’, between 20 December 2021 and 7 February 2022.
Wisdom Business Consultants Pty Ltd
37. Email correspondence between Chifley Advisory and Andrew Stark:
37.1 between 1 December 2021 and 7 February 2022 inclusive;
37.2 between 31 May 2023 and 7 June 2023 inclusive.
