FEDERAL COURT OF AUSTRALIA MacLean v MacLean [2017] FCA 194 File number(s): QUD 100 of 2017 Judge(s): GREENWOOD J Date of judgment: 1 March 2017 Date of publication of reasons: 3 March 2017 Catchwords: CORPORATIONS – consideration of an application to appoint Receivers and Managers to the second defendant having regard to circumstances said to constitute matters falling within s 232 of the Corporations Act 2001 (Cth) giving rise to a power in the Court to make an order under s 233 of that Act Legislation: Corporations Act 2001 (Cth), ss 231, 232 and 233 Cases cited: Catalano v Managing Australia Destinations Pty Ltd (2014) 314 ALR 62 Dynasty Pty Ltd v Coombs (1995) 59 FCR 122 Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692 Re George Raymond Pty Ltd; Salter v Gilbertson (2000) 18 ACLC 85 Shelton v National Roads and Motorists' Association Ltd (2005) 51 ACSR 278 Szencorp Pty Ltd v Clean Energy Council Ltd (2009) 69 ACSR 365 Turnbull v NRMA Ltd (2004) 50 ACSR 44 Wayde v New South Wales Rugby League (1994) 180 CLR 459 Date of hearing: 1 March 2017 Date of last submissions: 1 March 2017 Registry: Queensland Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 51 Counsel for the Plaintiffs: Mr C Jennings Solicitor for the Plaintiffs: Nyst Legal Counsel for the Defendants: Mr M Alexander Solicitor for the Defendants: Grants Law Firm ORDERS QUD 100 of 2017 BETWEEN: BENJAMIN JOHN MACLEAN (and others named in the Schedule) First Plaintiff AND: COLIN ROBERT MACLEAN (and another named in the Schedule) First Defendant JUDGE: GREENWOOD J DATE OF ORDER: 1 MARCH 2017 UPON THE PLAINTIFFS, by their counsel, giving the usual undertaking as to damages and further undertaking that they will not convene an extraordinary general meeting ("EGM") of members of the second defendant to be held on 17 March 2017, or dispose of their respective shares in the second defendant or otherwise call an EGM of members of the second defendant to remove the first defendant as a director of the second defendant or appoint other directors to the second defendant until further order, THE COURT ORDERS THAT: 1. Tracy Lee Knight and Damien Lee Hou Lau of Bentleys ("the Receivers") be appointed, jointly and severally and without security, as receivers of the property and undertaking of the second defendant. 2. The Receivers have the powers of a receiver and manager, with the powers set out in s 420 of the Corporations Act 2001 (Cth). 3. The remuneration of the Receivers and their staff be calculated from the date of this order until further order, or otherwise agreed between the parties and the Receivers, in accordance with the scale contained in the Receivers' consent to appointment, or as determined by the Court. 4. The Receivers, from the date of this order, be authorised to draw amounts on account of their proper remuneration and disbursements from the income the subject of the receivership every two months. 5. Every four months or such longer period as the Court shall allow, the Receivers shall bring into Court a bill of costs in the usual form for their remuneration and disbursements earned or incurred for the preceding period for which no bill has been provided, including the amounts claimed in respect of disbursements. 6. The receivership and managership is to continue until otherwise ordered. 7. The proceedings be transferred to the Family Court of Australia, Brisbane Registry to be heard together with proceedings in the Family Court of Australia filed on 28 February 2017 by the defendants and Paradise Motor Homes Investments Pty Ltd against the plaintiffs and Paradise RV Sales and Service Pty Ltd, being Case No. BRC 1999 / 2017, pursuant to s 5(5) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth). 8. The Receivers are directed that any decision or proposed decision to alter or change the remuneration payable to the first defendant or the first defendant's position as a director of the second defendant not be implemented without first obtaining the approval of the Court. 9. Costs of the hearing on 1 March 2017 be reserved. 10. Pursuant to s 23 and s 37P of the Federal Court of Australia Act 1976 (Cth), rule 1.32 and rule 1.36 of the Federal Court Rules 2011, these orders and the reasons for judgment in support of these orders are made and published from Chambers. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT GREENWOOD J: 1 These proceedings are concerned with an interlocutory application for the appointment of Ms Tracy Knight and Mr Damien Lau of Bentleys Corporate Recovery Pty Ltd as receiver and manager of the second defendant, Paradise Motor Homes Pty Ltd ("PMH"). Each of the proposed appointees has consented to their appointment. Each of them is a registered liquidator. A curriculum vitae for each appointee together with a schedule of hourly rates is an exhibit ("BN8") to the affidavit of Mr Brendan Joseph Nyst filed on 28 February 2017. 2 The applicants for the order are Mr Benjamin John MacLean, Ms Elizabeth Anne MacLean and Mr Michael William MacLean. Ms Elizabeth MacLean is the wife of the first defendant in the principal proceeding, Mr Colin Robert MacLean. Mr Benjamin MacLean and Mr Michael MacLean are the children of Elizabeth and Colin MacLean. The applicants apply on the footing that they are shareholders in PMH. They say they each hold 25% of the shares in PMH and Colin MacLean holds 25% of the shares. That result is said to derive from a Shareholders Agreement made between Colin, Elizabeth, Michael and Benjamin MacLean dated 28 October 2016. 3 Mr Colin MacLean asserts that the agreement of 28 October 2016 was signed by him in circumstances which will entitle him to an order setting aside the agreement. I will return to the factual matters later in these reasons. For present purposes, it is enough to note that on the face of the Shareholders Agreement, each of the four parties to the agreement agreed that the share capital in the company comprised of 550,000 issued ordinary shares would be held as to 137,500 shares by each of them thus conferring upon each of them a 25% interest in the company. The shares rank equally: clauses 4.1 and 4.2, Annexure "MM7" to the affidavit of Michael William MacLean sworn 23 February 2017. 4 Thus, the applicants say they have standing for the purposes of s 231 of the Corporations Act 2001 (Cth) (the "Act") in seeking an order under s 233 of that Act for the purposes of s 232 of that Act. Notwithstanding that Mr Colin MacLean asserts that the Shareholders Agreement is susceptible of an order for revocation on the basis of contended facts, s 232 provides that for the purposes of Part 2F.1 of the Act, a person to whom a share in the company has been transmitted by operation of law "is taken to be a member of the company". Each of the applicants is to be taken to be members of the company by operation of law having regard to the Shareholders Agreement. 5 The applicants contend that the company's affairs are being conducted contrary to the interests of the members as a whole or in a way which is oppressive to or unfairly prejudicial to them as members of the company: s 232(a), (d) and (e). The applicants say that having regard to those facts, an interim order is necessary in order to preserve the orderly conduct of the company's affairs pending the determination of the proceedings or earlier order. Section 232 provides that if the facts make good the elements of s 232(a), (d) and (e), as contended, the Court may make an order under s 233 of the Act. Section 233 provides that the Court may make "any order under this section that it considers appropriate in relation to the company" including an order contemplated by s 233(1)(a) to (j). The scope of the orders that might be made under s 233(1)(a) to (j) is very broad. In any event, the enumerated possible orders do not constrain the scope of an order the Court might make either finally or on an interim basis in the relevant circumstances. Section 233(1)(c) contemplates an order regulating the conduct of the company's affairs in the future and s 233(1)(h) contemplates an order for the appointment of a receiver or a receiver and manager of any or all of the company's property. 6 It is not necessary to expose in these reasons the legal principles which govern the question of whether the company's affairs are being conducted contrary to the interests of the members as a whole or whether the conduct of the company's affairs is oppressive to, or unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in their capacity as members or in any other capacity. There is now no doubt that the conduct of the company's affairs in a way "contrary to the interests of the members as a whole" (s 232(d)) is an entirely separate ground from s 232(e): Turnbull v NRMA Ltd (2004) 50 ACSR 44 at 49-52; Shelton v National Roads and Motorists' Association Ltd (2005) 51 ACSR 278 at 285; and Szencorp Pty Ltd v Clean Energy Council Ltd (2009) 69 ACSR 365 at 378 [59]. 7 As to s 232(e), it is enough to observe that "oppression", at a minimum, imports "unfairness": Wayde v New South Wales Rugby League (1994) 180 CLR 459, Brennan J at 472-473. It is common ground in the authorities that one no longer looks at the word "oppressive" in isolation but rather asks whether, objectively in the eyes of a commercial bystander, there has been unfairness, namely, conduct that is so unfair that reasonable directors who consider the matter would not have thought the decision fair: Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692 at 704; Dynasty Pty Ltd v Coombs (1995) 59 FCR 122 at 130. Unfairness imports an objective assessment: Catalano v Managing Australia Destinations Pty Ltd (2014) 314 ALR 62. 8 Moreover, the content of fairness in an oppression application will depend upon the context. It is also well accepted that where the shareholders in a tightly held company who are also directors are unable to engage with one another with the result that the company's affairs can no longer be conducted in the interests of the members as a whole, s 232(a) and (d) are engaged. That separate ground is engaged in these proceedings on the face of the applicants' material. 9 The following observation should also be noted: "Where the court is called upon to decide an allegation of oppression in the context of a family company, the court may need to do this with the appreciation that dealings between family members are often informal, that loans within a family may not necessarily be made on a commercial basis, and that certainly family members may assume or be given a position of dominance over others": Ford, Austin and Ramsay's Principles of Corporations Law, 16th Edition, p 748, [10.450]; Re George Raymond Pty Ltd; Salter v Gilbertson (2000) 18 ACLC 85 at 92-93. 10 As these reasons reflect, I have taken into account all of these considerations. 11 It is now necessary to turn to aspects of the facts which form the basis upon which the applicants urge the immediate appointment of a receiver to assume the conduct and management of the undertaking pending the determination of the proceedings. In the principal proceeding, the applicants/plaintiffs seek a declaration that the affairs of the company are being conducted by Mr Colin MacLean in a manner that is contrary to the interests of members as a whole and/or in a way which is oppressive to, unfairly prejudicial to, or unfairly discriminatory against each of the three applicants: para 5 of the application filed on 24 February 2017. They also seek an order requiring Mr Colin MacLean to appoint each of them as directors of the company and orders regulating the conduct of the affairs of the company in the future: para 6. In the alternative, they seek an order that they purchase Mr Colin MacLean's shares in the company "at their fair value": para 7. By way of interim relief, they seek the appointment of a receiver in aid of the final relief so as to preserve the orderly conduct of the company pending the determination of the proceedings. 12 The application is supported by an affidavit of Mr Michael MacLean filed on 24 February 2017; an affidavit of Ms Elizabeth MacLean on 27 February 2017; an affidavit of Mr Benjamin MacLean filed on 28 February 2017; and two affidavits of Mr Brendan Nyst filed on 28 February 2017. 13 The background facts, largely based on the affidavit of Michael MacLean although taking into account all of the evidence, are these. 14 Mr Michael MacLean is the sole director of Paradise RV Sales and Service Pty Ltd ("PRV") and the sole director and shareholder of MacLean Retail Pty Ltd which is the sole shareholder of PRV. Mr Michael MacLean is a 25% shareholder of PMH. PMH has 550,000 issued ordinary shares and, as mentioned earlier, each of Elizabeth, Colin, Michael and Benjamin hold 25% of those fully paid issued shares. From 28 October 2016, Mr Colin MacLean was and remains the sole director of PMH. 15 PMH and PRV operate a business of manufacturing and selling new luxury motor home vehicles and providing associated services from common premises. The applicants assert that notwithstanding Mr Colin MacLean's position as sole director of PMH, he is incapable of being involved in the business undertaking of that company and thus Benjamin, Michael and Elizabeth have been responsible for the day to day management of both PMH and PRV. They say, in the affidavits, that Mr Colin MacLean has taken steps suggesting that he seeks to take control of the business or operations of PMH and in so doing is causing disruption to the business undertaking of the company contrary to the interests of PMH members as a whole. 16 Since the incorporation of PMH and PRV, Elizabeth, Benjamin and Michael have been involved in the operations of the business and since at least 2008 they have been responsible for the day to day management of the business. Until recently, Mr Colin MacLean has not been involved, consistently, in the management of the business. He has sought to do so only over the past few months. 17 The business operated by PMH and PRV is substantial. 18 In the last financial year, PMH had a turnover of more than $11 million and PRV's turnover was more than $5 million. The operations of PMH and PRV, known as the "Paradise Group" overlap. Both companies operate from leased premises at 245 Brisbane Road, Biggera Waters, in Queensland. PMH enters into all contracts with customers for the sale and purchase of new motor home vehicles. PMH acts as an agent for PRV. All motor dealer licences are held by PRV. Approximately 42 people work in the business through consultancy arrangements with Quatro Consulting Pty Ltd ("Quatro") and another four people work for the business through PMH directly. Another three people work for PRV directly. PMH holds all but one of the commercial leases in respect of the leased premises used by the Paradise Group. PMH has financial facilities established with Bare Capital Ltd. Under those facilities, PMH has access to up to $750,000 and the facility is drawn down to $288,000. The Loan Agreement is guaranteed by Mr Colin MacLean and secured with a fixed and floating charge over PMH. 19 PRV performs warranty work on vehicles under contracts in the name of PMH. The main suppliers are Mercedes-Benz Australia Pacific Pty Ltd and IVECO Trucks Australia Ltd. These companies provide the chassis for the motor home vehicles. PMH performs all building works and fit-out works to complete the motor home vehicles for sale. PMH sells those vehicles as agent for the dealer principal, PRV. 20 PMH has bank accounts with National Australia Bank. PMH currently has approximately $500,000 in cash at bank as far as Mr Michael MacLean is aware and PRV currently has approximately $550,000 in cash at bank. 21 The motor home industry is said to be very competitive. Mr Michael MacLean says that in his experience the business success of PMH and PRV relies to a significant extent upon the ability of its directors or managers to efficiently communicate and transact with suppliers for large parts such as vehicle chassis and other components. Thus, it is necessary that the directors or managers have the ability to negotiate favourable terms and manage timeframes with suppliers for the construction and supply of vehicles. Mr Michael MacLean says that he, Elizabeth and Benjamin, are the managers of the Paradise Group. The business success of PMH and PRV is largely attributable to the strength of the relationships they have developed with suppliers over time. 22 Elizabeth, Michael and Benjamin have had a strained relationship with Colin MacLean for some time. Michael MacLean says that he has observed Colin MacLean becoming increasingly erratic in his behaviour over the last few years. He says that his father has not been closely involved in the day to day management of the business for some time, at least to the same extent as Elizabeth, Benjamin and Michael. They say that Colin MacLean has over the past few years (and only on a few occasions) attempted to become involved in the management of the company. However, this has been for short periods of time only. During these periods, his intervention has often been the cause of disruption in the business. Michael MacLean says that he has observed Colin MacLean being "overly aggressive and hostile" towards those who work for the business as well as customers. Michael MacLean recalls that one customer brought the police to the premises when collecting their motor vehicle after an intimidating encounter with Colin MacLean on a previous visit. Michael MacLean says that Colin MacLean has been aggressive and hostile towards Elizabeth, himself and Benjamin. He says that Colin MacLean has assaulted Elizabeth MacLean and that conduct is now the subject of criminal charges. Colin MacLean's conduct towards Elizabeth MacLean has been "particularly concerning" to Michael MacLean. In June 2016, Michael and Benjamin MacLean met with Colin MacLean as a result of which Colin MacLean agreed to a request that he not further engage with the business at least in terms of the day to day management. In June 2016, an agreement was reached which did not come to fruition until October 2016, in the form of the Shareholders Agreement. 23 On 24 October 2016, Colin MacLean was arrested and charged by police with 15 different offences relating to various attacks upon Elizabeth MacLean including breaches of domestic violence orders made against him as well as three assaults occasioning bodily harm, three common assaults and making criminal threats. Colin MacLean was released on bail on 25 October 2016 on the basis that he not contact or approach Elizabeth MacLean, Michael MacLean or Benjamin MacLean and that he not come within 5 kilometres of any of the homes of those three people or their place of work. Mr Colin MacLean's bail undertaking is attached as Annexure "MM6" to the affidavit of Michael MacLean sworn 23 February 2017. 24 On 28 October 2016, the Shareholders Agreement was executed. PMH's lawyer, Mr Tony Bennett, convened a meeting at the request of Colin MacLean. Colin MacLean met Mr Bennett at a different location having regard to the bail undertakings so as to enable Colin MacLean to sign the agreement. The agreement not only provides for a 25% interest in PMH as earlier described but also provides that each shareholder would be appointed a director of the company and that each would receive a director's remuneration of $165,000 annually. 25 By November 2016, discussions were held between Benjamin MacLean and Michael MacLean on the one hand and Bare Capital as to the change in the shareholding and the appointment of directors. Bare Capital suggested that a restructuring of PMH might be desirable and thus the relevant documents ought not to be lodged with ASIC until Bare Capital had had a chance to examine the possibility of a restructure of PMH. 26 In early December 2016, the applicants caused documents to be lodged with ASIC with a transfer of the shares in accordance with the agreement of 28 October 2016. Michael MacLean says that in early December 2016, Mr Michael Samarasinghe of Bare Capital informed Benjamin MacLean that Colin MacLean had said to Bare Capital that he was being kept out of the business against his will and that the applicants were doing a poor job running the business. 27 Before January 2017, the signatories to PMH's bank accounts were Colin MacLean, Benjamin MacLean and Elizabeth MacLean. Benjamin and Elizabeth MacLean were able to operate those accounts in the day to day management of the business which was necessary having regard to Colin MacLean's absence from the business premises and lack of involvement in the management of the business. In January 2017, Colin MacLean took steps to remove Benjamin and Elizabeth as signatories to PMH's bank accounts. Colin MacLean was then the sole signatory to PMH's bank accounts. This was done without any notice to Elizabeth, Michael or Benjamin. Michael MacLean did not discover the removal of Benjamin and Elizabeth as signatories until the applicants attempted to pay expenses of PMH. The applicants then requested Colin MacLean to lodge the appropriate documents with ASIC to record all three applicants as directors of PMH. Colin MacLean took no such step. PMH's lawyer wrote to Colin MacLean making a further request. On 23 January 2017, Bare Capital, at a meeting with Benjamin and Michael, advised that Bare Capital would be calling in its entire loan in the sum of $750,000 due to an ongoing dispute between the shareholders of PMH. Michael MacLean says that Mr Samarasinghe advised the applicants to "take urgent steps to remove [Colin MacLean] as a director of PMH". Michael MacLean immediately took steps to arrange for the repayment of the Bare Capital loan. In the meantime, the applicants could not draw any cheques or make any payments because Colin MacLean was exercising control over PMH's bank accounts. 28 Michael MacLean says that after the meeting with Bare Capital, correspondence was exchanged and discussions took place between PMH's lawyer, Mr Bennett, and the lawyer acting for Colin MacLean, Mr Julian Blanchard. Michael MacLean says that it became clear that Colin MacLean was not intending to honour the terms of the Shareholders Agreement and that he was making false accusations of fraud against Elizabeth MacLean. Michael MacLean says that Colin MacLean was seeking to assert complete control of PMH and also wanted to secure a relaxation in his bail conditions as a precursor to any agreement with the applicants. 29 On 29 January 2016, the applicants caused documents to be lodged with ASIC which had the effect of removing Colin MacLean as a director of PMH and appointing Benjamin, Elizabeth and Michael as directors of PMH. Thereafter, Mr Blanchard asserted that the applicants had acted unlawfully in doing so. 30 Michael MacLean says that a representative of NAB told Benjamin MacLean that Colin MacLean had contacted the bank and informed it that the applicants had fraudulently lodged documents with ASIC in an attempt to unlawfully take over PMH. The bank said that as a result, the bank had frozen all of PMH's bank accounts. The applicants were unable to operate the business of PMH as they could not conduct any transaction involving the use of the bank accounts. At about the same time, on 27 January 2017, Quatro wrote to PMH seeking various guarantees, undertakings and securities in order to continue paying the staff of PMH: see "MM16" to Michael MacLean's affidavit. 31 Michael MacLean says that in the meantime the applicants continued to have significant difficulties operating the business because Colin MacLean had refused to allow the applicants to operate PMH's accounts. Michael MacLean says that Mr Blanchard by correspondence to Mr Bennett and Benjamin MacLean requested information about how to use the payroll file and access the business records of PMH. Colin MacLean insisted upon having personal files of the business which are kept confidential, un-encrypted. Michael MacLean says that as a result of Colin MacLean's refusal to give the applicants the authority to access PMH's accounts and otherwise permit them to operate the business, PMH has been placed in a precarious position concerning its commercial reputation and financial position. At 1 February 2017, PMH was indebted to Quatro for an invoice that had not been paid. The monies owing was for the provision of staff to the business. On 1 February 2017, the applicants wrote to Colin MacLean requesting urgent confirmation that the invoice had been paid. If the invoice was not paid on the day as required, the entire arrangement with Bare Capital would have been put at risk as Quatro is part of the Bare Capital Group. On 1 February 2017, PMH received correspondence from Bare Capital demanding payment of the entire loan within five days failing which Bare Capital would take steps to appoint a receiver. 32 On 2 February 2017, the applicants attended a meeting in Southport at the offices of Grants Law Firm. Mr Bennett and Mr Blanchard attended. Mr Blanchard told the applicants that Colin MacLean had advised the NAB that the applicants were fraudulently attempting to take over PMH and that the company's accounts needed to be frozen to protect the bank's interest; the bank had advised Colin MacLean that the accounts would remain frozen until he was appointed the sole director of PMH; Colin MacLean had been approached by Bare Capital and had been told that Bare Capital intended to appoint a receiver "that afternoon unless [Colin MacLean] was reappointed as sole director immediately". 33 The applicants accepted the statements of Mr Blanchard concerning the NAB and Bare Capital. As a result, Elizabeth, Benjamin and Michael resigned as directors of PMH. At the meeting, Mr Blanchard presented forms to them and required each of them to sign the forms which were back-dated to the date on which they became directors. The applicants say they resigned as directors to try and resolve the deadlock with Colin MacLean concerning the conduct of the company's affairs. On the same day, each of the applicants signed a letter acknowledging to the NAB that Colin MacLean was appointed as the sole director of PMH. The applicants say that Colin MacLean, through Mr Blanchard, on 6 February 2017, suggested that unless the Bare Capital facility was significantly reduced, Bare Capital would appoint a receiver. As a result, Michael MacLean made urgent arrangements to reduce the facility by $371,439.16. 34 The applicants say that after the meeting on 2 February 2017, Benjamin MacLean had a telephone conversation with Mr Samarasinghe of Bare Capital in which Mr Samarasinghe said this: Colin MacLean did not have any conversations with Bare Capital to the effect suggested by Mr Blanchard; Colin MacLean had contacted Bare Capital to say that there was a dispute between the directors and that the NAB had unilaterally decided to freeze the accounts until the bank received more information on the dispute; Bare Capital did not have any concerns regarding the applicants' directorships in PMH; Bare Capital "never intended to appoint a receiver" because an agreement had been reached earlier in the relevant day with Colin MacLean (and Mr Bernard Kelly) to extend the loan for an eight week period; Bare Capital was happy with the applicants being directors of PMH; and, Bare Capital was reluctant to deal with Colin MacLean due to his erratic behaviour. 35 The applicants say that based on the information given to them by Bare Capital they believe that Colin MacLean has acted dishonestly in order to pressure the applicants into resigning as directors of PMH. They say that they resigned their directorships of PMH in reliance upon the truth of the representations made by Mr Blanchard on 2 February 2017 and had they not been made or had the applicants known the true position as expressed by Bare Capital, they would not have resigned as directors of PMH. 36 Michael MacLean says that Colin MacLean continues to interfere in the conduct and operation of the business. Further, as at 13 February 2017, PMH's administrative staff was having to send urgent correspondence to Colin MacLean's solicitors to arrange available funds on credit cards to pay for vehicle repairs for an upcoming trade show. They say that there is significant delay in responses resulting in significant inefficiencies and that this situation is simply unworkable in either the short term or the long term. Michael MacLean says that Colin MacLean has told IVECO that there has been a gross misappropriation of company funds and that Elizabeth and Benjamin will both be going to jail together with PMH's accountant, Mr Sean Fincham of Altezza Partners. Michael MacLean says that Sean Fincham and Altezza Partners have now refused to work with PMH "after receiving aggressive, threatening and erratic emails from [Colin MacLean] including these baseless allegations of fraud and threats of criminal proceedings". 37 Colin MacLean is unable to communicate directly with the management team at PMH due to his bail undertakings. 38 On 20 February 2017, Colin MacLean wrote to his solicitors who on-forwarded the correspondence to Elizabeth MacLean demanding an understanding of the company's cash flow position and threatening to appoint a receiver. The applicants say that since Colin MacLean has taken control of the banking and finances of PMH, there have been incorrect payments with incorrect account numbers, payments missed altogether, incorrect details given to suppliers, failure to send remittance advices, payments made out of order and general inefficiencies. The applicants say that the uncertainty in the management of PMH is having an adverse effect on PMH's financing arrangements. NAB and Bare Capital are both aware that there is an ongoing dispute between the directors of PMH as a consequence of which the accounts of PMH have been frozen. This continued uncertainty makes it "exceedingly difficult to manage the companies effectively" according to Michael MacLean. 39 The applicants say that they have attempted to maintain continuity of business operations and financing arrangements. However, correspondence with Colin MacLean is often met with accusations of impropriety and threats rather than co-operation. This, they say, has made it difficult, if not impossible, to efficiently manage the business of the company. They say that Benjamin MacLean wrote to Mr Blanchard sending him a draft letter from PMH's lawyer, Mr Bennett, to the NAB, to arrange for invoices to be paid urgently. However, Mr Blanchard suggested that what was being sought to be done was illegal. 40 The applicants say that they are concerned that unless the company appoints a new director, the company's affairs will continue to be mismanaged by Colin MacLean and that Colin MacLean is likely to take steps that are in his best interests rather than the interests of PMH. 41 On 21 February 2017, Nyst Legal wrote to Colin MacLean on behalf of the applicants giving him notice of an extraordinary general meeting of PMH where resolutions would be put to the meeting for: the removal of Colin MacLean as director and secretary of PMH; that Benjamin MacLean be appointed director and secretary of PMH; that PMH immediately inform the NAB of the change in office holders and that Benjamin have sole authority to operate PMH's bank accounts; and that PMH assert control over all of the relevant documents of the company. 42 The applicants also say that PMH is presently awaiting payment of substantial sums due under executed contracts. PMH is expecting to receive approximately $2.4 million in the month of March 2017. The applicants say they are concerned that those funds will be taken or misused by Colin MacLean if the accounts remain under his control. 43 On the hearing of the application for the interlocutory order, Mr Alexander of counsel appeared for Colin MacLean and PMH. Colin MacLean was given leave to rely upon an affidavit sworn on 1 March 2017. In that affidavit, Colin MacLean disputes all of the contentions of the applicants. Everything is put in issue. Colin MacLean says he has concerns about certain payments which have been made and he has concerns about the finances of the company. He sets out conduct which he describes as "obstructing conduct" on the part of the applicants. He also describes circumstances relating to his signing of the Shareholders Agreement. He says that he was pressured into signing the agreement by Mr Bennett. He says that he signed it at a time when he was very emotional and suffering from significant financial stress. He seeks to set it aside. 44 Whatever the merits of the factual matters might be, findings will ultimately be made about these events at the trial of the action. For present purposes, there is simply no doubt that there is a significant embedded dispute between the applicants and Colin MacLean which strongly suggests, on a prima facie basis, that the affairs of PMH are being conducted in a manner contrary to the interests of the members as a whole. Underlying the difficulties in the conduct of the company's affairs is a matrimonial dispute between Elizabeth and Colin MacLean. No doubt, the Family Court of Australia will, in due course, make property adjustment orders in the exercise of the jurisdiction of that Court. 45 My present concern is not with the matrimonial dispute or the family circumstances which have led to the dispute between the applicants on the one hand and Colin MacLean on the other hand. My concern is whether a prima facie case has been made out that the affairs of the company are being conducted in a way contrary to the interests of the members "as a whole". I am satisfied that that is plainly so. 46 I invited the parties to identify whether any steps might be taken to entrust the conduct of the company's affairs to an arms-length independent person so as to enable the company to continue to engage with its suppliers, staff, buyers of the vehicles, PMH's bankers and Bare Capital without the necessity of appointing a receiver with powers of management. Colin MacLean suggests that what is required is injunction orders relating to the conduct of the company. However, those orders will necessarily engage the Court in constant supervision of the performance of a sequence of steps involving dealings with the groups I have just mentioned when questions will arise about interruptions to those arrangements for one reason or another due to the conduct of one or more persons. 47 It is plain that the conduct of the company's affairs needs to be entrusted to persons independent of the applicants and Colin MacLean pending the trial of the action or earlier order. I am satisfied that a prima facie case is made out for the appointment of a receiver. The powers of management need to be conferred upon the receiver. The receiver might choose to appoint the applicants to conduct the management of the undertaking in terms of dealing with suppliers, supervising staff, supervising assembly and production of vehicles and dealing with customers. The receivers will take responsibility for dealing with PMH's banker, Bare Capital, and otherwise authorising financial transactions. 48 The order for the appointment of the receivers will be made on the basis of the undertakings proffered by the applicants as recited in the order. 49 Mr Alexander for Colin MacLean is concerned that Colin MacLean's source of income will come to an end. He derives an annual income of either $163,000 or $165,000 in his position as director. On the applicants' case, Colin MacLean is a director (and, of course, they say that they were also to be appointed directors under the terms of the Shareholders Agreement), and is entitled to the annual remuneration reflected in the agreement. The orders will provide that no change is to be made in the remuneration arrangements in relation to Colin MacLean without an order of the Court. 50 The parties agree that the proceedings should be cross-vested to the Family Court of Australia and orders to that effect will be made. 51 The costs will be reserved. I certify that the preceding fifty-one (51) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. Associate: Dated: 3 March 2017 SCHEDULE OF PARTIES QUD 100 of 20177 Plaintiffs Second Plaintiff: ELIZABETH ANNE MACLEAN Third Plaintiff: MICHAEL WILLIAM MACLEAN Defendants Second Defendant: PARADISE MOTOR HOMES PTY LTD ACN 127 510 329