FEDERAL COURT OF AUSTRALIA Macquarie University v Macquarie University Union Limited [2007] FCA 743 MACQUARIE UNIVERSITY AND ANOR v MACQUARIE UNIVERSITY UNION LIMITED (ABN 91 085 197 600)(PROVISIONAL LIQUIDATOR APPOINTED) NSD 784 OF 2007 LINDGREN J 17 MAY 2007 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 784 OF 2007 BETWEEN: MACQUARIE UNIVERSITY First Plaintiff ROBERT TONGUE Second Plaintiff AND: MACQUARIE UNIVERSITY UNION LIMITED (ABN 91 085 197 600) (PROVISIONAL LIQUIDATOR APPOINTED) Defendant JUDGE: LINDGREN J DATE OF ORDER: 4 MAY 2007 WHERE MADE: SYDNEY UPON THE FIRST APPLICANT BY ITS COUNSEL GIVING THE USUAL UNDERTAKINGS AS TO DAMAGES, THE COURT ORDERS THAT: 1. The originating process and interlocutory process be filed in Court returnable instanter. 2. Trevor Mark Pogroske be appointed as official liquidator provisionally of the defendant. 3. The provisional liquidator be given all the powers of a liquidator under s 477 of the Corporations Act 2001. 4. A sealed copy of the orders made today be served on the defendant by facsimile transmission to its office by 5.00 pm today. 5. The originating process, interlocutory process and affidavits of Alfonso Alvaro Maccioni, Katrina Carrol Jacobson and Robert Tongue be served together with a copy of these orders by 9.30 am on 7 May 2007. 6. The proceeding be returnable before the Court at 9.30 am on 8 May 2007. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 784 OF 2007 BETWEEN: MACQUARIE UNIVERSITY First Plaintiff ROBERT TONGUE Second Plaintiff AND: MACQUARIE UNIVERSITY UNION LIMITED (ABN 91 085 197 600) (PROVISIONAL LIQUIDATOR APPOINTED) Defendant JUDGE: LINDGREN J DATE: 17 MAY 2007 PLACE: SYDNEY REASONS FOR JUDGMENT INTRODUCTION 1 Late on Friday 4 May 2007, as Corporations Duty Judge, I appointed Trevor Mark Pogroske as official liquidator provisionally of the defendant, Macquarie University Union Limited ("MUU"). I did so for the following reasons. 2 By the originating process, the plaintiffs sought an order that MUU be wound up on the just and equitable and oppression grounds, and an order that Mr Pogroske be appointed liquidator. The originating process was filed in Court on 4 May 2007, as was the interlocutory process seeking the appointment of Mr Pogroske as provisional liquidator. 3 By the interlocutory process, the plaintiffs sought, in the alternative, an order restraining MUU from operating all its bank accounts except in the ordinary course of its business, and an order restraining MUU from making payments to Macquarie University Students' Council Incorporated ("MUSC") or to MUU's directors or to any person or entity related to those directors. 4 The basis of the application is that certain directors of MUU have brought about a change in the signatories to its bank account, from which they have transferred sizeable amounts of money into the bank account of MUSC in unusual circumstances recounted below. 5 I was persuaded that the appointment of a provisional liquidator was more appropriate than the granting of injunctive relief, because it seemed to me to be important that the powers of a provisional liquidator be brought to bear on the situation. In particular, I have in mind the power to inspect MUU's books and to recover its money. I made an order that Mr Pogroske have all the powers of a liquidator under s 477 of Corporations Act 2001 (Cth) ("the Act"): see s 472(3) of the Act. 6 The evidence that was before the Court on the application consisted of the following affidavits: · Affidavit of Robert Tongue sworn 4 May 2007 · Affidavit of Katrina Carrol Jacobson sworn 4 May 2007 · Affidavit of Alfonso Alvaro Maccioni sworn 3 May 2007 As well, there was before the Court a consent to be appointed as liquidator and/or provisional liquidator signed by Mr Pogroske, as required by the Federal Court (Corporations) Rules 2000 (Cth): see rr 5.5, 6.1 and Form 8. DRAMATIS PERSONAE 7 The second plaintiff and one of the deponents, Robert Tongue , is the Deputy Director, Office of Financial Services, of the first plaintiff ("the University"). Mr Tongue is also a director of MUU. 8 MUU is a company limited by guarantee. According to an ASIC Historical Company Extract in evidence, MUU has 13 directors. MUU operates and owns one child care centre, manages two other child care centres, operates a food and beverage business, including licensed premises, and operates an entertainment department, a retail organisation and an academic dress service. 9 MUU is the sole shareholder in Venues at Macquarie Pty Limited ("Venues at Macquarie"), which operates a catering business and a function centre. 10 Mr Tongue and another director, Dr Marilyn Dodkin, are "Appointed Board Members", being appointed by the Council of the University. 11 Ms Jacobson is a chartered accountant and has been employed as the financial controller of MUU since November 2005. Her role includes preparing financial reports and statements, including profit and loss statements and balance sheets, attending to tax and legal compliance obligations, supervision of payroll, and payment of suppliers. 12 The other deponent mentioned, Alfonso Alvaro Maccioni, is the "MUU Employee Elected Board Member", as defined in the Constitution of MUU. Alfonso Alvaro Maccioni is the Chief Operating Officer of MUU – a position in which he has been employed since 5 May 2003. He has responsibility for the day-to-day operations of MUU, except for finance and marketing. 13 Victor Ma is an executive director of MUU and is its President. As well, he is a councillor of MUSC. It appears that Mr Ma and other directors who support him wish to transfer clubs and societies, their functions and associated funding, from MUU to MUSC. 14 The Chief Executive Officer of MUU is Anthony Matis who is more involved in longterm strategies than day-to-day operations. EVIDENCE 15 Most of the evidence relevant to the application for the appointment of a provisional liquidator is found in the affidavit of Ms Jacobson. 16 According to Ms Jacobson, MUU and its subsidiary, Venues at Macquarie, operate a number of bank accounts including five with the National Australia Bank ("NAB") at Macquarie University, term deposits at Unicom Credit Union, and a St George Bank account. Since the commencement of her employment by MUU in November 2005, Ms Jacobson has been a signatory of the following bank accounts. In the case of the Unicom Credit Union and St George Bank accounts, she and Mr Matis are the only signatories. In relation to the NAB accounts, Messrs Matis and Maccioni and Ms Jacobson were, until recent events, signatories. Other signatories are executive directors of MUU, namely, Mr Ma, David Wong, Chi Cheung Wong, and one or other of Csiu Kei Cheung or Sia Chung Chiang (Ms Jacobson could not remember which of these last two is the actual signatory). 17 Since the commencement of her employment, Ms Jacobson has attended to all electronic banking for MUU, and is the only person in MUU's internal organisation who has a keypad which allows for electronic banking, and who knows the password. 18 At about 4.00pm on 27 April 2007, Ms Jacobson received a telephone call from Emma Eveleigh, the personal assistant to Mr Matis. She said that Mr Ma and some other members of the board of MUU were in the NAB branch. 19 When Ms Jacobson accessed the NAB accounts online on Monday 30 April 2007, she saw two anomalies. 20 First, an amount of $55,000 had been withdrawn from the account of Venues at Macquarie and transferred electronically to another NAB account on 27 April 2007. 21 The other anomaly related to the Banksia Cottage Childcare Centre account which is only ever used for the purposes of the operations of that Centre. Ms Jacobson saw that on 27 April 2007, $40,000 had been transferred from that account into the same NAB account number as that into which the $55,000 from the Venues at Macquarie account had been paid. 22 Ms Jacobson has annexed to her affidavit NAB Online Statement Reports for Venues at Macquarie and Banksia Cottage Childcare Centre which show that $55,000 and $40,000, respectively, were transferred out of those accounts into an account numbered 2241-509294101. 23 Upon perusing the bank statements and noting the anomalies, Ms Jacobson telephoned Ms Billie Jean Sia, who is MUU's account manager at the NAB at its head office in Sydney. In response to Ms Jacobson's inquiry, Ms Sia told her that NAB account number 2241-509294101 was the account of MUSC. Later Ms Sia informed Ms Jacobson that Mr Ma and another person with a Chinese name had effected the withdrawals. 24 On 1 May 2007, Ms Jacobson sent Ms Sia of NAB an email and received a reply on the same day to the effect that no further information could be provided by NAB to Ms Jacobson because she was no longer an authorised signatory on the account. The email informed Ms Jacobson that the NAB branch at Macquarie University had received instructions on 30 April 2007 to remove her as an authorised signatory from all of the MUU accounts. 25 Ms Jacobson states that she recalls that some time back in January 2007, at a time when the only signatories on the NAB accounts were herself, Mr Maccioni, Mr Matis and Mr Ma, Mr Ma had her sign a document adding signatories to the account. 26 On Monday 30 April 2007, Ms Jacobson telephoned Mr Matis and informed him about the withdrawals of $55,000 and $40,000. He said that that was the first he had heard of the matter. 27 Later, when Ms Jacobson told Mr Matis that Mr Ma and the person with the Chinese name had effected the transfers, Mr Matis said that he would send "the Executive" an email directing them to refund the money they had taken. 28 On Tuesday 1 May 2007, Ms Jacobson sent an email to Mr Ma, Kyle Kutasi, Frankie Cheung, Ethan Li, Calvin Wong and Sai-Chung Chiang, asking, in the absence that day of Anthony Matis, that the funds be returned immediately. 29 Kyle Kutasi emailed Ms Jacobson in reply to the effect that the monies would be returned that day. The same day, Mr Ma telephoned Ms Jacobson and advised her that he had arranged for the monies to be restored. In fact, the $40,000 taken from the Banksia Cottage Childcare Centre account was returned, but the $55,000 taken from the Venues at Macquarie account has never been restored. 30 There was further email correspondence in which Ms Jacobson urged that the outstanding money be returned. On 2 May 2007, she emailed the Board of MUU (constituted by the persons referred to in [28] above) advising, among other things, that her removal as signatory to the bank accounts impeded the ability of, relevantly, MUU to function smoothly. She emphasised that she was responsible for paying, not only the MUU payroll, but also all creditors of MUU. 31 On 2 May 2007 at about 3.00pm, Mr Ma telephoned Ms Jacobson advising that he had removed $80,000 from bank accounts and put them into trust with a lawyer. Ms Jacobson said that she needed "the paperwork", and Mr Ma told her that he would give documents to Mr Matis. He assured Ms Jacobson that everything was "above board" and "legal". 32 Ms Jacobson then checked the "intraday transaction information" on the accounts to find that a further $30,000 had been transferred out the MUU account at NAB, and that the sums of $50,000 and $40,000 had been transferred from the Venues at Macquarie account on 2 May 2007. 33 On 2 May 2007 at 9.16pm Ms Jacobson emailed Mr Ma and other members of the Board giving particulars of all the withdrawals which totalled $215,000, and noting that after deduction from that sum of the amount of $40,000 that had been returned on 1 May 2007 into the Banksia Cottage Childcare Centre account, a balance of $175,000 remained unaccounted for. Ms Jacobson advised that if she did not receive paperwork, including formal board minutes, covering the withdrawals, she would be obliged, as financial controller, to inform the appropriate legal authorities. 34 On Thursday 3 May 2007, Mr Ma emailed Ms Jacobson assuring her that everything had been done "properly, with full authorisation". He said that she should not panic, that everything would be explained to the Chief Executive Officer (Mr Matis), and that the paperwork she had requested to see would be shown, not to her, but to him. Mr Ma insisted, however, that he did not answer to Ms Jacobson or to Mr Matis, but to the Board of Directors of MUU. 35 Ms Jacobson tried to contact Mr Matis but could not reach him, so she telephoned Mr Maccioni to bring him up to date. Mr Maccioni said that he would inquire of the NAB what had been going on. He later telephoned Ms Jacobson to say that his inquiry had revealed that he too had been removed as a signatory on the accounts, and that NAB would not give him any information. 36 Ms Jacobson states that she believes that apart from her immediate staff, she is the only person within MUU who knows the details of the St George Bank account, so that it would be difficult for anyone to access in that particular account of MUU. She said that in order to ensure that MUU retains its funds, she moved approximately $400,000 to $500,000 from the NAB accounts into the St George Bank account. She states that she has used approximately $100,000 for day-to-day purposes of MUU. She adds that she believes that only she and Mr Matis are authorised signatories on the Credit Union account, so she does not consider the monies there to be at risk. 37 Mr Matis returned Ms Jacobson's telephone call on 2 May 2007 and informed her that he had just found out that he also was no longer a signatory on the NAB account. 38 The last factual matter to be noted is that I was informed by senior counsel for the plaintiffs that during the course of the hearing before me, the University Council had passed a resolution removing the elected student members of the Board of Directors of MUU pursuant to a power to that end contained in the Constitution of MUU. CONCLUSION 39 There is evidence that the funds of MUU are at risk. There is obviously a deep division between members of its board of directors. Apparently, Mr Ma and other directors who support him have removed as bank account signatories Ms Jacobson, Mr Maccioni and Mr Matis, and have transferred sizeable amounts of MUU's money to MUSC. According to Ms Jacobson's affidavit, this puts at risk the ongoing operations of MUU. 40 Needless to say, I have made no final finding of fact on the present hearing which is interlocutory and ex parte. 41 I was persuaded, however, that on the evidence before the Court a provisional liquidator should be appointed with the coercive powers that such an officer can exercise. 42 For the above reasons, I made orders as sought on 4 May 2007. I certify that the preceding forty-two (42) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. Associate: Dated: 17 May 2007 Counsel for the Plaintiffs: Mr I M Jackman SC and Ms J Shepard Solicitor for the Plaintiffs: Addisons Date of Hearing: 4 May 2007 Date of Judgment: 4 May 2007 Date of Publication of Reasons: 17 May 2007