FEDERAL COURT OF AUSTRALIA LKM Capital Limited (Receivers and Managers Appointed) v Koops [2010] FCA 1070 Citation: LKM Capital Limited (Receivers and Managers Appointed) v Koops [2010] FCA 1070 Parties: LKM CAPITAL LIMITED (RECEIVERS AND MANAGERS APPOINTED) (ACN 091 379 930) and SANDHURST TRUSTEES LIMITED (ACN 004 030 737) v ROLF KOOPS File number: NSD 1216 of 2010 Judge: STONE J Date of judgment: 20 September 2010 Legislation: Corporations Act 2001 (Cth) ss 180, 181, 182, 1323 Cases cited: Australian Securities and Investments Commission v Koops [2010] FCA 20 Date of hearing: 20 September 2010 Place: Sydney Division: GENERAL DIVISION Category: No catchwords Number of paragraphs: 12 Counsel for the Plaintiffs: M J Steele Solicitor for the Plaintiffs: Baker & McKenzie Counsel for the Defendant: P M Wood Solicitor for the Defendant: Heckenberg & Koops Lawyers IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1216 of 2010 BETWEEN: LKM CAPITAL LIMITED (RECEIVERS AND MANAGERS APPOINTED) (ACN 091 379 930) First Plaintiff SANDHURST TRUSTEES LIMITED (ACN 004 030 737) Second Plaintiff AND: ROLF KOOPS Defendant JUDGE: STONE J DATE OF ORDER: 20 SEPTEMBER 2010 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The application is dismissed. 2. The plaintiffs pay the defendant's costs of this application as agreed and taxed. Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1216 of 2010 BETWEEN: LKM CAPITAL LIMITED (RECEIVERS AND MANAGERS APPOINTED) (ACN 091 379 930) First Plaintiff SANDHURST TRUSTEES LIMITED (ACN 004 030 737) Second Plaintiff AND: ROLF KOOPS Defendant JUDGE: STONE J DATE: 20 SEPTEMBER 2010 PLACE: SYDNEY REASONS FOR JUDGMENT 1 The plaintiffs in this matter seek orders under s 1323 of the Corporations Act 2001 (Cth), requiring that the defendant, Mr Koops, deliver up to the New South Wales Registry of this Court his passport and that he be restrained from leaving Australia without the consent of the Court. Although the application filed on 16 September 2010 does not mention a definite end date for the orders sought, at the hearing the plaintiffs limited their requests to the period ending 28 October 2010. On 25 January 2010, in separate proceedings, initiated by the Australian Securities and Investments Commission (ASIC) against Mr Koops, I made orders similar to those now sought by the plaintiffs. My reasons for those orders are set out in Australian Securities and Investments Commission v Koops [2010] FCA 20. Those orders lapsed today on ASIC's interlocutory application being dismissed with the consent of the parties. 2 The background to the present application is set out in the submissions of the plaintiffs and may be briefly summarised. The first plaintiff (LKM Capital Limited), of which the defendant has been a director since its incorporation on 31 January 2000, has as its principal business the raising of funds for property and other investments through the public issue of debentures. The second plaintiff is a trustee for the debenture holders of LKM, pursuant to a trust deed dated 3 February 2000. It is also a secured creditor of the first plaintiff pursuant to a deed of charge, dated 9 May 2000. In exercise of its rights under the deed of charge, the second plaintiff appointed receivers and managers to the first plaintiff in August 2008. 3 Between 18 and 20 May 2009, the receivers conducted public examinations of Mr Koops in the Supreme Court of New South Wales and on 19 January 2010, they commenced proceedings in that Court. The statement of claim makes a number of allegations, including that Mr Koops engaged in misleading and deceptive conduct and breached his director's duties under ss 180 – 182 of the Act. At the hearing of this application, counsel for the plaintiffs made persuasive submissions in support of the proposition that a prima facie case to be answered had arisen in the Supreme Court proceedings. I do not propose to discuss that issue as I have concluded that even assuming the plaintiffs to be correct on this point, I am not otherwise satisfied that orders, under s 1323, should be made. 4 On 15 September 2010, the receiver filed an examination summons and notice to produce, in respect of Mr Koops, in the Supreme Court of New South Wales. The return date for the examination summons is 21 October 2010. The plaintiffs have made the present application to secure Mr Koops' attendance at the examination. They have allowed a one week period, following the examination, to determine if they wish to apply for an extension of the orders that the Court is requested to make. In relation to s 1323, in addition to the fact that a civil proceeding has been commenced, I must also be satisfied that the orders are necessary or desirable to protect the interests of an aggrieved person or persons. This involves my being satisfied that the orders are required to secure the attendance of Mr Koops at the further examination. 5 In his affidavit affirmed and filed on 20 September 2010, Mr Koops does not deny that he intends to leave the country. In fact, his intention to do so is clear from his comment in paragraph 9 of his affidavit, referring to the difficulty he has had in obtaining employment in Australia and his desire to take up a position which had been offered by a company, Back Row Productions, in the United Kingdom. However, this intention is not inconsistent with Mr Koops intending to return to undergo the scheduled examination. Indeed, in paragraph 12 of his affidavit he is explicit on the point: I am committed to defending the LKM Supreme Court proceedings or settling them, and any other proceedings arising from my directorship of LKM, and otherwise responding appropriately to any process including attendance on any examination. I understand that a failure to attend an examination, pursuant to s 596A of the Corporations Act 2001 is a contempt of court. 6 I have no reason to reject this statement formally made in Mr Koops' affidavit as a true statement of his present intention. The fact that it would be both possible, and perhaps tempting, for him to remain overseas and not attend the examination does not inevitably lead to the conclusion that he would act contrary to his present intention and evade his responsibilities. Nor does it mean that there is any guarantee that Mr Koops will actually return to attend his examination. The Court is not in the position to give such a guarantee nor would it be appropriate to do so. 7 In the circumstances before me, the task of the Court is to decide whether the orders sought by the plaintiffs are necessary or desirable to protect the interests of those who are aggrieved persons within the meaning of s 1323(1) and, if so, whether as a matter of discretion, those orders should be made. Given the assurances Mr Koops gives in his affidavit, and given also his apparent co-operation with ASIC as evidenced by ASIC's consent to its interlocutory application being dismissed (see [1] above), I have no reason to suppose that it is necessary or desirable to deprive him of his passport or restrain him from leaving the country. 8 In considering whether I should, as a matter of discretion, make the orders sought by the plaintiffs, I have taken into account Mr Koops employment prospects. In his affidavit he states that he has not worked for nearly 12 months and during that time has been dependent upon friends and relatives for support. 9 The offer of employment with Back Row Productions was the subject of comment in my reasons in ASIC v Koops. Mr Koops had raised his difficulty in obtaining employment and his consequent desire to accept the position offered by Back Row Productions as a basis for opposing ASIC's application. In my reasons at [20]-[21] I said: [20] Mr Koops claims, however, that he has been offered a position in the United Kingdom, as Chief Executive Officer of Backrow Productions UK Limited. According to Mr Koops, Backrow is partially owned by his sister, Liz Koops, and is a substantial enterprise promoting theatre entertainment worldwide. He says the opportunity is available to him because of his knowledge, experience and understanding of the entertainment industry which he has acquired over 20 years of acting as lawyer and advisor to Backrow. Mr Koops states that the position at Backrow Productions is intended to be for one year initially and will be extended for a further two years if successful. The starting date for this role, according to Mr Koops, is 2 February 2010. [21] Mr Koops has not offered any independent evidence of this offer from Backrow or of the alleged starting date. Conspicuous by its absence is any evidence, or indeed any submissions, as to the inflexibility or otherwise of the starting date. Given the family connection it is not unreasonable to suppose the starting date might be postponed, at least for a short time. If the position was only to be available if Mr Koops starts on 2 February one would expect the point to have been clearly made and supported by evidence from the company. In the absence of such evidence I have no reason to believe that the starting date is critical. 10 It would seem that my suppositions were well-founded in that now, nine months later, the position is apparently still open, however, it appears that this may not be the case for much longer. Annexed to Mr Koops' affidavit is a letter dated 14 September 2010 on the letterhead of Back Row Productions. The letter states that the offer to Mr Koops would have to be withdrawn if he were unable to start work with Back Row in London before the end of September 2010. The letter is unsigned, although the names, Garry McQuinn and Liz Koops, appear above the name of Back Row Productions UK Limited. 11 Counsel for the plaintiffs urged me not to attach any significant weight to this letter, pointing out that there was no evidence as to how it was received or why it was unsigned. As the letter is addressed to Mr Koops' email address it is reasonable to infer that it was sent by email, which would also explain the absence of a signature. In any event, the plaintiffs' submission must be considered bearing in mind the urgency with which, on the request of the plaintiffs, the present application has been brought on for hearing. Given that the application was filed only a few days ago, it is not surprising that the evidence in support of Mr Koops' position is less than substantial. It is also not surprising that Mr Koops has sought to redress the gap in the evidence identified in my reasons in ASIC v Koops by annexing a copy of letter from Back Row Productions. No submissions have been made nor has any evidence been given addressing the deficiencies referred to by the plaintiffs however, where the matter has been brought on in such short compass, I attach little significance to this. It is, as I have previously remarked, a very serious matter to deny any Australian citizen the right to travel overseas. It is, however, significantly more serious where to do so would deny a person, whose uncontradicted evidence is that he is unable to find employment in Australia, the opportunity to find gainful employment elsewhere. 12 In the absence of evidence as to the inflexibility of the offer of employment with Back Row Productions in the earlier proceedings, the balance in terms of the exercise of my discretion was in favour of ASIC. Here, the evidence as to the likely withdrawal of the offer while not determinative, is certainly of considerable weight. Given that the ASIC matter has been discontinued and that there is no indication that Mr Koops did not cooperate with ASIC or indeed any evidence that he has not cooperated with the receivers and managers to any significant extent, I am not inclined to exercise my discretion to make the orders sought. Accordingly, the application in this proceeding is dismissed. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Stone. Associate: Dated: 6 October 2010