Bassoak Pty Ltd (recs and
mgrs apptd) v Rellgrove Pty Ltd
In Bassoak Pty Ltd (recs and mgrs apptd) v
Rellgrove Pty Ltd, the Supreme Court considered the circumstances where the
Court would issue a warrant in relation to the books or the property of the
Mr Vouris was appointed provisional liquidator
of Rellgrove Pty Limited on 5 December 2005 and, subsequently, liquidator on 12
According to ASIC's records, Mr Anstee was
the sole director. Mr Anstee had
been declared bankrupt on 28 July 2005.
Pursuant to s 206B(3) of the Corporations Act, Mr Anstee was
disqualified from managing corporations.
Despite requests by the liquidator, Mr
Anstee had failed to submit a report as to affairs. The liquidator had notified ASIC of the failure to provide
Mr Anstee had provided the liquidator with
statements that were not supported by the investigations of the liquidator.
Rellgrove was the registered proprietor of
a property known as 'Hopewood'.
The mortgagee had exercised its power of sale over Hopewood and that
property had been sold prior to auction by private sale to a company associated
with relatives of Mr Anstee.
Investigations by the liquidator had also
revealed that antique furniture worth more than $200,000.00 had been purchased
by Rellgrove and that some, if not all, of the items were located at Hopewood.
Declarations and Penalties
The liquidator sought declarations of contravention
of s.530A and s.530B for failure to deliver up books and property of the
Austin J, considered that, given the
comprehensive statutory provision in relation to the penal consequences of
contravention, it was not clear that the Court had inherent jurisdiction over
officers of a company in liquidation or to which a provisional liquidator had
been appointed, to impose a discretionary penalty in civil proceedings.
Importantly, his Honour thought that,
because a declaration of contravention was a serious step, he expected a claim
for declarations of contravention to be pleaded rather than as part of an
Conditions for the issue of a warrant
under s 530C
Under s.530C(1), where a company is being
wound up the court may issue a warrant on the application of a liquidator if it
is satisfied either that:
the 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; or
a person has concealed, destroyed or
removed books of the company or is about to do
Austin J, determined that the wording of
subs (1)(i) requires the Court to be satisfied that concealment or removal of
the property of the company has already occurred if it intends to issue a
His Honour found on the evidence that the
furniture of the company was not being concealed or that anyone else had
already concealed or removed that property of the company. Accordingly, a warrant for the property
would not be issued.
Issuing a warrant for the books of
Rellgrove was considered to be different, because subs(1)(ii) only requires the
Court to be satisfied that the person is about to
conceal or remove the books.
His Honour, found the following evidence
relevant to issuing a warrant for the books of the company.
The director was an undischarged
bankrupt and, as such, disqualified from managing corporations;
The director had not submitted a
report as to affairs as required by the liquidator;
The director had said that all records
are in storage and that he would deliver them to the liquidator but he has not
The director had made an incorrect
statement that a document recording a change in directorship had been sent to a
The director had not produced
documentation for the alleged trust of the company's land or for the claim that
the company ceased trading in 2002, and the latter claim seems contrary to
The director had not replied to
correspondence from the liquidator.
The court's discretion to issue a
warrant after the conditions have been satisfied
After the conditions for the exercise of
the Court's power to issue a warrant have been established, the Court then has
a discretion whether to issue the warrant.
His Honour adopted the observations in Cvitanovic
v Kenna & Brown Pty Ltd (1995) 18 ACSR 387 at
389, that the warrant procedure is available only where it is necessary to take
an extreme step in order to administer the company.
It was determined on the relevant evidence
that this was an extreme case such as to justify issuing a warrant for the
books of the company.
His Honour in issuing the warrant adopted
various conditions conveniently summarised in the Cvitanovic case.
Due to the serious nature of a declaration
of contravention of s.530A and s.530B, the Court will only entertain such
orders if it is commenced by pleadings in order to permit the offending company
officer to plead their defence.
It is impractical to seek a warrant to
search for and seize a company's property because the opportunity to seize the
property has passed. This is
because the Court will only issue the warrant if the property has already been
concealed or has already been removed out of the reach of the liquidator.
A warrant to search for and seize the books
of a company is of more utility because it is prospective. The evidence need only show that the
books are about to be concealed, destroyed or
Mark Groben, Solicitor,
Gadens Lawyers, Sydney.