Federal Court of Australia

Hodgson (Liquidator), in the matter of Advanced Traffic Management (WA) Pty Ltd (in liq) [2024] FCA 1504

ORDERS

THE COURT ORDERS AND DIRECTS THAT:

1.    The applicants are justified in having treated the personal property listed in Schedule 1 to these orders as unclaimed property (Unclaimed Property).

2.    The applicants are justified in having stored the Unclaimed Property whilst investigating its ownership.

3.    In circumstances where the applicants have written to each of Robbe Bryce, ATM Asphalt Pty Ltd (In Liquidation), Rioli Management Services Pty Ltd, Clune Group Pty Ltd (In Liquidation), and Allfam Holdings Pty Ltd (In Liquidation) (Relevant Parties) and have to date received no substantive response from any person claiming an interest in the Unclaimed Property, the applicants are justified in treating the Unclaimed Property as property of Advanced Traffic Management Pty Ltd (In Liquidation) (ACN 107 481 756) (Company)

4.    Within 14 days of the date of these orders the applicants must write to each of the Relevant Parties at their last known address providing them with a copy of these orders and notifying them of the applicants' intention to sell the Unclaimed Property.

5.    Subject to orders 3 and 4, the applicants would be justified in:

(a)    not earlier than 30 days from the date of these orders, selling the Unclaimed Property at auction;

(b)    holding any sale proceeds from the Unclaimed Property in a separate account, and applying those funds:

(i)    towards payment of the applicants' costs in connection with identifying and attempting to locate the owner(s) of the Unclaimed Property;

(ii)    towards payment of the applicants' costs of realising the Unclaimed Property;

(iii)    towards any claim in respect of the Unclaimed Property which in the opinion of the applicants is a valid claim; and

(iv)    after a period of three months from the sale, distributing the balance of the sale proceeds in the ordinary course of the liquidation of the Company.

6.    The applicants' costs of this proceeding be paid out of the assets of the Company as an expense in the liquidation of the Company.

7.    Subject to further order, pursuant to s 37AF(1)(b) of the Federal Court of Australia Act 1976 (Cth), on the ground stated in s 37AG(1)(a) of the Act, being that the order is necessary to prevent prejudice to the proper administration of justice (having regard to the nature of certain confidential information), the affidavit of David Hodgson filed 10 December 2024 marked by the applicants as confidential be marked 'confidential' on the electronic court file, and not be published or accessed by any party.

8.    There be liberty to any person affected by these orders to apply to Court for further orders.

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

Schedule 1

REASONS FOR JUDGMENT

BANKS-SMITH J:

1    This application was heard earlier today in the Court's Corporations List and I made orders at that time. These are my reasons for doing so.

Background

2    By orders of this Court made 22 August 2023, Advanced Traffic Management (WA) Pty Ltd (in liquidation) (Company) was wound up in insolvency and Mr David Hodgson and Mr Andrew Hewitt were appointed joint and several liquidators.

3    In Hodgson (Liquidator) v Bryce, in the matter of Advanced Traffic Management (WA) Pty Ltd [2024] FCA 260 I made orders facilitating the issue of warrants for search and seizure so that the liquidators could ascertain the whereabouts of certain property of the Company and secure it. The purpose of the orders was to also assist the liquidators in ascertaining whether certain property was in fact the property of the Company. I was satisfied at the time that the warrants should issue having regard to the apparent concealment of property of the Company by its director, Mr Robbe Bryce.

This application

4    This is a further application relating to the liquidation. The liquidators now seek directions pursuant to s 90-15 of the Insolvency Practice Schedule (Corporations), being Schedule 2 to the Corporations Act 2001 (Cth) (IPS). The directions relate to the proposed treatment of certain items of personal property in the possession of the Company

5    The difficulty faced by the liquidators is that it is unclear whether the property is owned by the Company. The liquidators have already made numerous attempts to ascertain who owns the property and have also provided opportunities for persons to claim it. In the meantime, storage costs are being incurred.

6    The liquidators seek orders that they are justified in proceeding by advertising an auction of the property, proceeding to sell the property at auction, then applying the net proceeds of the auction towards costs and expenses, including to any other verified claimants, and otherwise by distribution in the ordinary course of the winding up of the company.

Evidence and suppression order

7    The application was heard ex parte. ASIC was informed of the hearing. In support of the application, Mr Hodgson filed two affidavits, the second of which addressed a request for a suppression order as to information relating to the anticipated auction process and price guides. I accept that disclosure of such information prior to any realisation of the property would not be in the interests of creditors and accordingly a targeted suppression order is appropriate.

8    Mr Hodgson's first affidavit is the source of the factual information referred to below.

The relevant property

9    The Company's registered office and principal place of business was an address in Clayton Rd, Bellevue. It shared those premises with other related entities. The Company also leased premises in Edwards St, Bellevue.

10    Gray's Auctioneers have undertaken a stocktake of all personal property located at those addresses, and a schedule of the property (schedule property) (aside from one item that was excluded when ownership was ascertained) is in evidence.

11    The Company's own list of plant and equipment does not include the schedule property, but the liquidators have established that the Company's list was unreliable and contained only motor vehicles. Even so, not all motor vehicles were included. For example, the list did not include a Lamborghini which the liquidators have established was an asset of the Company.

12    The liquidators are placed in a difficult position in that it is possible that some of the schedule property may be property of the Company, but they have been unable to establish this as there is an absence of reliable evidence.

Attempts to ascertain ownership

13    Mr Hodgson deposed to numerous attempts to obtain information from Mr Bryce as to ownership of the schedule property, including through solicitors who appear to have had instructions to act for Mr Bryce at various times. I am satisfied that Mr Bryce has had every opportunity to make and establish any claim to the schedule property, and to provide further information to the liquidators as to its ownership. Furthermore, the proposed orders provide for notice to again be given to Mr Bryce prior to realisation of the schedule property.

14    I am satisfied on the basis of Mr Hodgson's affidavit that the liquidators have otherwise made reasonable inquiries to ascertain ownership of the unclaimed property, including by communications with the other entities with a connection to the Clayton Rd address.

Power to make orders

15    Section 90-15 of the IPS relevantly provides that the Court may make such orders as it thinks fit in relation to the external administration of a company.

16    The relevant principles have been discussed in many cases, but were usefully collected by White J in Lewis (liquidator), in the matter of Concrete Supply Pty Ltd (in liq) [2020] FCA 841 as follows:

[30]    The principles applied by the courts in the exercise of the power under cl 90-15 are, in effect, the same as those which were applied in the exercise of the power under the former s 479(3) (in the case a court-ordered winding up) or under s 511 (in the case of a voluntary winding up) of the Act: In the matter of HIH Casualty and General Insurance Limited (in liquidation and Subject to Schemes of Arrangement) ACN 008 482 291 [2018] NSWSC 1886 at [4]-[5]; Warner (Liquidator), in the matter of Sakr Bros Pty Ltd (in liq) [2019] FCA 547 at [18]. In In the matter of Hawden Property Group Pty Ltd (in liq) (ACN 003 528 345) [2018] NSWSC 481, Gleeson JA noted at [8], that the power under cl 90-15 to 'make such orders as it thinks fit in relation to the external administration of a company' (cl 90-15(1)), including 'an order determining any question arising in the external administration of the company' (cl 90-15(3)(a)), is wider than s 479(3) and accommodates the determination of substantive rights. His Honour noted that the Court would not make a determination of substantive rights without affording potentially affected parties an opportunity to be heard: ibid.

[31]    The established principles indicate:

(a)    the power to give directions is intended to facilitate the performance of the liquidator’s functions and should be interpreted widely to give effect to that intention: Re Octaviar Administration Pty Ltd (in liq) [2017] NSWSC 1556 at [9];

(b)    the power is available to give a liquidator advice as to the proper course of action to be taken in the liquidation: Re Bell at [47]; Re MF Global Australia Ltd (in liq) [2012] NSWSC 994 at [7];

(c)    the Court may give directions that provide guidance on matters of law and the reasonableness of a contemplated exercise of discretion but will usually not do so when the subject of the directions sought relates to the making and implementation of a business or commercial decision and when there is no particular legal issue raised and no attack on the proprietary or reasonableness of the decision: Re MF Global at [7];

(d)    the Court does not interfere with or seek to second guess the liquidator’s judgment unless there is evidence of a lack of good faith, an error of law or principle, or real and substantial grounds for doubting the prudence of the liquidator’s conduct or when the Court considers that the liquidator’s decision is not a proper and reasonable one: Re One.Tel at [36]; Re Bell at [31], [47] and [50]; Re Octaviar at [10];

(e)    the effect of a direction is to sanction a course of conduct on the part of the liquidators so that, providing full disclosure has been made to the Court, the liquidator may adopt the course free from the risk of personal liability for breach of duty: Re Bell at [47]; Re One.Tel at [32]; and

(f)    the directions do not bind third parties, and do not determine substantive matters in dispute between the liquidator and third parties: Re Bell at [47].

17    A similar summary was more recently adopted by Downes J in Park, in the matter of Queensland Nickel Pty Ltd (in liq) (No 3) [2022] FCA 1301 at [119].

18    Similar directions to those made in this application have been made in the context of both receiverships and administrations: see, for example, Re Arcabi Pty Ltd (Receivers & Managers Appointed) (in liq); Ex parte Theobald & Herbert in their capacities as Receivers & Managers of Arcabi Pty Ltd (Receivers & Managers Appointed) (in liq) [2014] WASC 310; and In the matter of International Art Holdings Pty Ltd (admin apptd); International Art Holdings Pty Ltd (admin apptd) & ors v Adams & ors [2011] NSWSC 164.

19    Other options that might be considered by insolvency practitioners dealing with unclaimed property were addressed in those cases. In particular, in Arcabi Master Sanderson addressed in detail options that might be available to a receiver. Relevantly, he noted some of the cumbersome aspects of utilisation of the Disposal of Uncollected Goods Act 1971 (WA) (DUGA) (at [114]-[117]). I respectfully endorse the comments of Master Sanderson in that regard and note that in any event, the DUGA does not limit the operation of other legislation. In International Art Holdings Ward J observed that it would not be in the interests of creditors for unclaimed artworks to be disclaimed (at [119]).

20    In this case, similarly to the position in Arcabi, the directions sought offer protection to parties that are similar to those protections potentially offered under the DUGA, but in the case of the DUGA by a more complex and inefficient process. And, similarly to the position in International Art Holdings, a disclaimer of the property would limit any recovery to the creditors. Furthermore, ownership by the Company would need to be clear.

21    I note that directions have been made in other cases allowing administrators to deal with and sell unclaimed property, including Carson, in the matter of Hastie Group Limited (No 3) [2012] FCA 719; and In the matter of  Renovation Boys Pty Ltd (admins apptd) Renovation Boys Pty Ltd (Administrators Appointed) [2014] NSWSC 340.

22    In light of the detailed reasons in both Arcabi and International Art Holdings, it is not necessary to further set out the principles. I simply add that I am not aware of any reason why a liquidator cannot proceed to obtain similar relief to that granted in those cases. The circumstances of this liquidation justify the approach to this Court by the liquidators to seek the relevant directions.

23    I am satisfied that the issues raised by the application in relation to the schedule property are the kinds of issues that may properly be addressed by the Court under s 90-15 of the IPS in order to facilitate the performance of the liquidators' functions and obligations. The application raises matters of law, such as the right and ability of the liquidators to deal with the schedule property. It does not purport to justify what might be considered only a business or commercial decision.

24    In granting the relief sought, matters I have taken into account include:

(a)    the schedule property constitutes chattels in the possession of the Company;

(b)    the liquidators have taken reasonable steps over a period of time to ascertain whether the Company owns the schedule property,

(c)    it is possible that the Company does in fact own the schedule property;

(d)    the liquidators have taken reasonable steps to ascertain whether there are any genuine claims of ownership of the schedule property by the parties most likely to have such a claim, being Mr Bryce and the related entities of the Company that shared occupancy of the Clayton Road premises;

(e)    as at the date of this application, no claim has been made by any third party to the schedule property;

(f)    while Mr Bryce has made certain claims (via his solicitors) as to ownership of unspecified assets at the Clayton Road and Edwards Street premises, he has not specified any particular assets that he says that he owns and has not pursued any claim;

(g)    it is not in the interests of creditors for the schedule property to continue to be stored indefinitely at a cost to the Company;

(h)    the directions proposed by the liquidators provide for a further and final opportunity for Mr Bryce, the related parties and any other third parties, to put forward a claim for ownership of the schedule property;

(i)    the liquidators only propose to proceed with and complete the sale, and to treat the proceeds as assets in the liquidation if no genuine claim is made in the interim; and

(j)    the liquidators propose to provide copies of any orders made by the Court to Mr Bryce and the related parties and there will be liberty to apply for further orders granted to any interested party.

25    For those reasons, I made orders substantially in the form sought by the liquidators, with the proposed suppression order modified to comply with the requirements of s 37AF and s 37AG of the Federal Court of Australia Act 1976 (Cth).

Associate:

Dated:    19 December 2024