FEDERAL COURT OF AUSTRALIA SK Foods LP v SK Foods Australia Pty Ltd, in the matter of SK Foods Australia Pty Ltd [2012] FCA 736 Citation: SK Foods LP v SK Foods Australia Pty Ltd, in the matter of SK Foods Australia Pty Ltd [2012] FCA 736 Parties: SK FOODS LP, A CALIFORNIA LIMITED PARTNERSHIP (UNDER CHAPTER 11) and BRADLEY D. SHARP AS TRUSTEE IN BANKRUPTCY OF SK FOODS LP v SK FOODS AUSTRALIA PTY LTD (IN LIQUIDATION) ACN 009 245 735, CEDENCO JV AUSTRALIA PTY LTD (IN LIQUIDATION) ACN 075 836 010, SS FARMS AUSTRALIA PTY LTD (IN LIQUIDATION) ACN 107 746 716, JOHN SHEAHAN AND IAN RUSSELL LOCK AS JOINT AND SEVERAL LIQUIDATORS OF SK FOODS AUSTRALIA PTY LTD (IN LIQUIDATION) ACN 009 245 735, SKPM CORPORATION, FREDERICK SCOTT SALYER AS TRUSTEE OF THE SCOTT SALYER REVOCABLE TRUST, MONTEREY PENINSULA FARMING LLC, FAST FALCON LLC and SS FARMS LLC File number: NSD 262 of 2012 Judge: EMMETT J Date of judgment: 4 June 2012 Date of hearing: 4 June 2012 Place: SYDNEY Division: GENERAL DIVISION Category: No catchwords Number of paragraphs: 5 Counsel for the plaintiffs: G Lucarelli Solicitor for the plaintiffs: Duncan Cotterill Counsel for the first to fourth defendants: KJ Williams Solicitor for the first to fourth defendants: DMAW Lawyers Counsel for the fifth to ninth defendants: The fifth to ninth defendants did not appear IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 262 of 2012 BETWEEN: SK FOODS LP, A CALIFORNIA LIMITED PARTNERSHIP (UNDER CHAPTER 11) First Plaintiff BRADLEY D. SHARP AS TRUSTEE IN BANKRUPTCY OF SK FOODS LP Second Plaintiff AND: SK FOODS AUSTRALIA PTY LTD (IN LIQUIDATION) ACN 009 245 735 First Defendant CEDENCO JV AUSTRALIA PTY LTD (IN LIQUIDATION) ACN 075 836 010 Second Defendant SS FARMS AUSTRALIA PTY LTD (IN LIQUIDATION) ACN 107 746 716 Third Defendant JOHN SHEAHAN AND IAN RUSSELL LOCK AS JOINT AND SEVERAL LIQUIDATORS OF SK FOODS AUSTRALIA PTY LTD (IN LIQUIDATION) ACN 009 245 735 Fourth Defendants SKPM CORPORATION Fifth Defendant FREDERICK SCOTT SALYER AS TRUSTEE OF THE SCOTT SALYER REVOCABLE TRUST Sixth Defendant MONTEREY PENINSULA FARMING LLC Seventh Defendant FAST FALCON LLC Eighth Defendant SS FARMS LLC Ninth Defendant JUDGE: EMMETT J DATE OF ORDER: 4 JUNE 2012 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The interlocutory application dated 16 March 2012 filed by the fifth, sixth, seventh, eighth and ninth defendants (Salyer Parties) seeking security for costs (Security for Costs Application) be dismissed. 2. The Salyer Parties pay the plaintiffs' costs of the Security for Costs Application, with such costs to be payable forthwith and to be assessed on an indemnity basis. 3. The interlocutory application filed on 20 March 2012 seeking summary dismissal of the SS Farms sales proceeds claim (Summary Dismissal Application) be dismissed. 4. The Salyer Parties pay the plaintiffs' costs of the Summary Dismissal Application, with such costs to be payable forthwith and to be assessed on an indemnity basis. 5. By 4pm on 15 June 2012, the fourth defendants (Liquidators) are to either: 5.1 Pay a dividend on the plaintiffs' proof of debt dated 17 May 2010 in an amount of $8,537,532 (such payment to be without prejudice to the plaintiffs' claims in proceeding NSD 2334 of 2011), or 5.2 Serve written notice on the plaintiffs reversing the Liquidators' decision to partially admit the plaintiffs' proof of debt dated 17 May 2010 in an amount of $8,537,532, which notice is to include reasons (Reversal Decision). 6. In the event that a Reversal Decision is served in accordance with order 5(2): 6.1 The plaintiffs be given leave, until 4pm on 22 June 2012, to file and serve on the Liquidators a second further amended originating process, amended to include an appeal from the Liquidators' Reversal Decision (Intercompany Debt Appeal); 6.2 By 4pm on 29 June 2012, the Liquidators file and serve an affidavit complying with Corporations Regulation 14.1(5) setting out the basis upon which the Reversal Decision was made and annexing or exhibiting a copy of all relevant documents as are not already annexed to any affidavit filed in the proceeding or in proceeding NSD 2280 of 2011. 7. By 4pm on 18 July 2012, the plaintiffs file, and serve on the Liquidators, Contentions of Fact and Law in relation to all issues in the proceeding. 8. By 4pm on 15 August 2012, the Liquidators file and serve their response to the plaintiffs' Contentions of Fact and Law. 9. The proceeding be listed for directions at 9.30am on Friday, 17 August 2012. 10. The plaintiffs and the Liquidators be granted leave, at the hearing of this proceeding, to rely on any affidavit filed in proceeding NSD 2280 of 2011. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 262 of 2012 BETWEEN: SK FOODS LP, A CALIFORNIA LIMITED PARTNERSHIP (UNDER CHAPTER 11) First Plaintiff BRADLEY D. SHARP AS TRUSTEE IN BANKRUPTCY OF SK FOODS LP Second Plaintiff AND: SK FOODS AUSTRALIA PTY LTD (IN LIQUIDATION) ACN 009 245 735 First Defendant CEDENCO JV AUSTRALIA PTY LTD (IN LIQUIDATION) ACN 075 836 010 Second Defendant SS FARMS AUSTRALIA PTY LTD (IN LIQUIDATION) ACN 107 746 716 Third Defendant JOHN SHEAHAN AND IAN RUSSELL LOCK AS JOINT AND SEVERAL LIQUIDATORS OF SK FOODS AUSTRALIA PTY LTD (IN LIQUIDATION) ACN 009 245 735 Fourth Defendants SKPM CORPORATION Fifth Defendant FREDERICK SCOTT SALYER AS TRUSTEE OF THE SCOTT SALYER REVOCABLE TRUST Sixth Defendant MONTEREY PENINSULA FARMING LLC Seventh Defendant FAST FALCON LLC Eighth Defendant SS FARMS LLC Ninth Defendant JUDGE: EMMETT J DATE: 4 JUNE 2012 PLACE: SYDNEY REASONS FOR JUDGMENT 1 In this proceeding, the plaintiffs, SK Foods LP, a California limited partnership, and Bradley Sharp, as trustee in bankruptcy of SK Foods LP, seek orders against SK Foods Australia Pty Limited (in liquidation) and eight other defendants, including the liquidators of SK Foods Australia Pty Limited, who are the fourth defendants. The proceeding is concerned with the beneficial ownership of issued shares in the capital of SK Foods Australia Pty Limited, and with a proof of debt submitted on behalf of SK Foods LP in the liquidation of SK Foods Australia Pty Limited. 2 The proceeding was commenced on 20 February 2012. It, and related proceedings involving the same or related parties, have been before the Court on a number of occasions for directions and for the purpose of dealing with various interlocutory applications. The most recent originating process in the proceeding is a further amended originating process filed on 29 March 2012. However, in the meantime, the fifth, sixth, seventh, eighth and ninth defendants (the Salyer Interests) filed two interlocutory applications. The first was dated 16 March 2012, and sought security for costs. The second was dated 20 March 2012, and sought summary dismissal of certain claims made in the proceeding. 3 On 30 April 2012, the Court directed that the Salyer Interests file and serve submissions in support of their security for costs application by 11 May 2012. The Salyer Interests were also directed to file and serve submissions in support of the summary dismissal application by 25 May 2012. Both interlocutory applications were listed for hearing before me on 30 May 2012 and today, 4 June 2012. 4 The directions that I gave on 30 April 2012 were not complied with, and, and on 7 May 2012, the solicitors on the record for the Salyer Interests filed notices of ceasing to act. The hearing on 30 May 2012 was vacated by the Court on the basis that the proceeding would come on for hearing on the second day fixed, namely 4 June 2012. In the meantime, on 9 May 2012, the plaintiffs filed an interlocutory application, by which they seek dismissal of the two interlocutory applications to which I have referred, along with orders for costs on an indemnity basis. 5 The plaintiffs' interlocutory application was filed in the expectation that there would be no appearance for the Salyer Interests. When the matter was called on for hearing this morning, there was indeed no appearance for the Salyer Interests. In the circumstances, having regard both to the Salyer Interests' failure to comply with the directions and to their non-appearance, it is appropriate to accede to the plaintiffs' interlocutory application, and I propose to make orders accordingly. I certify that the preceding five (5) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. Associate: Dated: 9 July 2012