5G Developments Pty Ltd (in liq) v Massie, in the matter of 5G Developments Pty Ltd (in liq)

• Jurisdiction: Australia Federal only
• Judgment Date: 13 July 2021
• Neutral Citation: [2021] FCA 791
• Court: Federal Court
• Date: 13 July 2021

Federal Court of Australia

5G Developments Pty Ltd (in liq) v Massie, in the matter of 5G Developments Pty Ltd (in liq) [2021] FCA 791

File number(s):	NSD 1536 of 2019
Judgment of:	STEWART J
Date of judgment:	13 July 2021
Catchwords:	CORPORATIONS – insolvency – application pursuant to ss 90-15 and 90-20 of Sch 2 to the Corporations Act 2001 (Cth) to set aside adjudication of proof of debt by a special purpose liquidator – application by a director of the corporation in liquidation – onus on the application – nature of review of the adjudication – de novo hearing – whether financial statements were impermissibly altered – timing of a payment that purportedly discharged a debt – whether joint ventures existed to develop properties ; CONTRACTS – guarantee – whether guarantor was a principal debtor or guarantor pursuant to variations of the agreement
Legislation:	Corporations Act 2001 (Cth) Sch 2, ss 90-15, 90-20 Evidence Act 1995 (Cth) s 64(3) Federal Court (Corporations) Rules 2000 (Cth) rr 4.2, 14.1 Limitation Act 1969 (NSW) s 14
Cases cited:	Friend v Brooker [2009] HCA 21; 239 CLR 129 Hooper v Lock (in liq) [2016] FCA 298 Israel v Foreshore Properties Pty Ltd (1980) 30 ALR 631 Marsland v Gamble [2002] WASC 213 Re Azmac Pty Ltd (in liq) [2020] NSWSC 204; 146 ACSR 113 Re Bluechip Development Corporation (Cairns) Pty Ltd (in liq) (recs and mgrs apptd) [2013] FCA 1281 Re DH International Pty Ltd (in liq) [2017] NSWSC 870; 121 ACSR 585 Re Galaxy Media Pty Ltd [2001] NSWSC 917; 39 ACSR 483 Re Hayes (Liquidator) v 5G Developments Pty Ltd [2019] FCA 1541 Re Jay-O-Bees Pty Ltd (in liq) [2004] NSWSC 818; 50 ASCR 565 Re Young in his capacity as liquidator of Great Wall Resources Pty Ltd (in liq); Capocchiano v Young [2013] NSWSC 879 Sands Contracting Pty Ltd v Cant [2021] FCA 638 Sunbird Plaza Pty Ltd v Maloney [1988] HCA 11; 166 CLR 245 Tanning Research Laboratories Inc v O’Brien [1990] HCA 8; 169 CLR 332 Westpac Banking Corp v Totterdell (1998) 20 WAR 150
Date of hearing:	29–30 October, 2 November 2020
Date of last submissions:	25 November 2020
Registry:	New South Wales
Division:	General Division
National Practice Area:	Commercial and Corporations
Sub-area:	Corporations and Corporate Insolvency
Number of Paragraphs:	215
Counsel for the Applicants:	First applicant appeared in person and with leave on behalf of the other applicants (R Marshall SC and N Olson – written submissions)
Solicitor for the Applicants:	MistryFallahi Lawyers & Business Advisors (solicitors withdrew before the hearing)
Counsel for the First Respondent:	H Somerville
Solicitor for the First Respondent:	TurksLegal
Counsel for the Second Respondent:	C Harris SC and E Keynes
Solicitor for the Second Respondent:	Colin Biggers & Paisley

ORDERS

		NSD 1536 of 2019
BETWEEN:	5G DEVELOPMENTS PTY LTD (FORMERLY KNOWN AS DENHAM WYNDHAM PTY LTD) (IN LIQ) (and another named in the Schedule) First Plaintiff
AND:	HUGH HAMON ROBERT MASSIE (and others named in the Schedule First Defendant
AND BETWEEN:	SPV28 PTY LTD Cross-Claimant
AND:	5G DEVELOPMENTS PTY LTD (FORMERLY KNOWN AS DENHAM WYNDHAM PTY LTD) (IN LIQ) (and others named in the Schedule) First Cross-Respondent
AND BETWEEN:	SAPSFORD FINANCIAL SERVICES PTY LTD (and another named in the Schedule) First Cross-Claimant
AND:	5G DEVELOPMENTS PTY LTD (FORMERLY KNOWN AS DENHAM WYNDHAM PTY LTD) (IN LIQ) (and others named in the Schedule) First Cross Respondent
IN THE INTERLOCUTORY APPLICATION
BETWEEN:	HUGH HAMON ROBERT MASSIE (and others named in the Schedule) First Applicant
AND:	GLENN LIVINGSTONE IN HIS CAPACITYAS SPECIAL PURPOSE LIQUIDATOR OF 5G DEVELOPMENTS PTY LTD (FORMERLY KNOWN AS DENHAM WYNDHAM PTY LTD) (IN LIQUIDATION) (and others named in the Schedule) First Respondent

order made by:	STEWART J
DATE OF ORDER:	13 JULY 2021

THE COURT ORDERS THAT:

1. The interlocutory process filed on 24 February 2020 be dismissed.

2. The parties file and serve written submissions of no more than three pages as follows:

   1. in support of any costs order they contend for, within 7 days of these orders; and

   2. in answer to any such submissions of any other party, within 7 days thereafter.

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

REASONS FOR JUDGMENT

STEWART J:

Introduction

1. This interlocutory application was filed as part of a larger dispute between 5G Developments Pty Ltd (in liquidation) (formerly known as Denham Wyndham Pty Ltd (DW)), the liquidator of 5G Developments (Alan Hayes), Hugh Massie and companies associated with Mr Massie. In the main proceeding, 5G Developments and Mr Hayes seek, among other things and against a number of defendants, orders in relation to: (a) a number of uncommercial transactions, insolvent transactions and voidable transactions within the meaning of those phrases as set out in the Corporations Act 2001 (Cth); and (b) breaches of director’s duties against Mr Massie, who is the first defendant in the main proceeding.

2. The genesis of the interlocutory application is orders that I made on 20 September 2019, for the reasons given in Re Hayes (Liquidator) v 5G Developments Pty Ltd [2019] FCA 1541, appointing Glenn Livingstone of KPMG as special purpose liquidator of 5G Developments pursuant to s 90-15 of Sch 2 of the Corporations Act (the Insolvency Practice Schedule). Mr Livingstone was appointed for the following limited purposes: (1) to receive service of a proof of debt by Denham Constructions Pty Ltd (in liquidation) (DC), and (2) to assess, to take any and all steps necessary to determine, and to determine whether 5G Developments ought to admit the proof of debt or to reject it. That arose because Mr Hayes was liquidator of DC and 5G Developments so he was not in a position to assess any proof of debt by DC in 5G Developments. I was satisfied that there was sufficient basis to the claim to justify the appointment of a special purpose liquidator but I expressly made no further findings on it.

3. On 8 October 2019, Mr Hayes as liquidator of DC submitted a proof of debt to Mr Livingstone as special purpose liquidator of 5G Developments for $25,877,154.06, which comprised various loans and interest, the details of which I deal with below.

4. On 17 December 2019, Mr Livingstone delivered his special purpose liquidator report adjudicating on DC’s proof of debt. In summary, Mr Livingstone partially admitted the claim in the amount of $12,256,028.74. Mr Livingstone rejected the balance of the claim, which was an interest amount only, because he took a different view on the interest amount being provable in the liquidation of 5G Developments. Mr Livingstone...