FEDERAL COURT OF AUSTRALIA Melhelm Pty Ltd, in the matter of Boka Beverages Pty Ltd (in liquidation) v Boka Beverages Pty Ltd (in liquidation) (No 3) [2020] FCA 850 File number: NSD 2400 of 2018 Judge: GLEESON J Date of judgment: 18 June 2020 Catchwords: PRACTICE AND PROCEDURE – application to vary Orders of 2 August 2019 pursuant to r 39.05(h) of the Federal Court Rules 2011 and to expand special purpose liquidators' powers to investigate and pursue possible claims – application granted Legislation: Insolvency Practice Schedule (Corporations), being Sch 2 to the Corporations Act 2001 (Cth) s 90-15, s 588FE Federal Court Rules 2011 r 39.05(h) Cases cited: Melhelm Pty Ltd, in the matter of Boka Beverages Pty Ltd (in liquidation) v Boka Beverages Pty Ltd (in liquidation) [2019] FCA 1184l (2019) 138 ACSR 95 Date of hearing: Determined on the papers Date of last submissions: 22 May 2020 (Applicant) Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 21 Counsel for the Applicant: D Krochmalik Solicitor for the Applicant: Stacks Law Firm Solicitor for the Respondents: Lancaster Law & Mediation ORDERS NSD 2400 of 2018 IN THE MATTER OF BOKA BEVERAGES PTY LTD (IN LIQUIDATION) (ACN 600 149 871) BETWEEN: TRENT ANDREW DEVINE AND ANDREW JOHN SPRING AS SPECIAL PURPOSE LIQUIDATORS OF BOKA BEVERAGES PTY LTD (IN LIQUIDATION ) (ACN 600 149 871) Applicant AND: BOKA BEVERAGES PTY LTD (IN LIQUIDATION) (ACN 600 149 871) First Respondent DANIEL IVAN CVITANOVIC IN HIS CAPACITY AS JOINT AND SEVERAL LIQUIDATOR OF BOKA BEVERAGES PTY LTD (IN LIQUIDATION) (ACN 600 149 871) Second Respondent NICHOLAS CRAIG MALANOS IN HIS CAPACITY AS JOINT AND SEVERAL LIQUIDATOR OF BOKA BEVERAGES PTY LTD (IN LIQUIDATION) (ACN 600 149 871) Third Respondent JUDGE: GLEESON J DATE OF ORDER: 18 JUNE 2020 THE COURT ORDERS THAT: 1. Order 1 of the Orders made on 2 August 2019 be varied by: (a) pursuant to r 39.05(h) of the Federal Court Rules 2011, deleting, in subparagraph 1(b)(ii), the words "Boka Holding Pty Ltd" and replacing them with the words "Boka Holdings (Aust) Pty Ltd". (b) pursuant to s 90-15 of the Insolvency Practice Schedule (Corporations), being Sch 2 to the Corporations Act 2001 (Cth), including, after subparagraph 1(b)(iv), the following subparagraphs: (i) whether transactions between the first respondent and Cro Developments Pty Limited, were voidable transactions within the meaning of a s 588FE of the Act; and (ii) whether transactions between the first respondent and Boka Holdings (Aust) Pty Ltd, Cro Developments Pty Limited and Marko Franovic, give rise to any other claims by, or on behalf of, or for the benefit of the first respondent. 2. The applicant's costs of the application be costs in the winding up of the first respondent. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT GLEESON J: 1 By interlocutory process filed on 29 April 2020, Trent Andrew Devine and Andrew John Spring in their capacity as special purpose liquidators (SPLs) of Boka Beverages Pty Ltd (In Liquidation) (Boka) applied to vary orders of the Court made on 2 August 2019 (2 August 2019 orders) to correct an accidental slip and expand the ambit of their powers. 2 The reasons for the SPLs are Melhelm Pty Ltd, in the matter of Boka Beverages Pty Ltd (in liquidation) [2019] FCA 1184; (2019) 138 ACSR 95 (earlier reasons). 3 Order 4 of the 2 August 2019 orders expressly granted leave to the SPLs to apply to extend the purposes for which the SPLs are appointed or the powers that the SPLs are entitled to exercise. 4 The SPLs' application was supported by two affidavits affirmed by Mr Devine, on 28 April 2020 and 7 May 2020 and by written submissions. 5 The general purpose liquidators of Boka (GPLs) do not oppose the orders sought although, by letter from their solicitors dated 1 May 2020, they raised concerns about the evidence in support of the SPLs' application. Correction of reference to Boka Holdings Pty Ltd 6 Order 1(b)(ii) of the 2 August 2019 orders permitted the SPLs to investigate whether transactions between the company and "Boka Holdings Pty Ltd" were voidable transactions within the meaning of s 588FE of the Corporations Act 2001 (Cth). 7 Paragraph [37] of the earlier reasons refers to Boka Holdings (Aust) Pty Ltd (defined in the reasons as "Boka Holdings"). Nowhere in the earlier reasons is any reference made to the entity "Boka Holdings Pty Ltd" and a company search shows that the latter company appears to have no connection with the affairs of Boka or Mr Franovic. Boka Holdings (Aust) Pty Ltd is clearly an entity connected with Boka as Mr Franovic is (and was at the relevant times) the sole director and shareholder of that entity. 8 I am satisfied that the reference to Boka Holdings Pty Ltd in Order 1(b)(ii) was a slip, which should be corrected by an order, pursuant to r 39.05(h) of the Federal Court Rules 2011 (Cth), varying order 1(b)(ii) by deleting the words "Boka Holdings Pty Ltd" and replacing them with the words "Boka Holdings (Aust) Pty Ltd". Expansion of SPLs' powers Possible claim against Cro Developments Pty Limited (Cro) for monies paid by Boka 9 In the report to creditors dated 6 February 2019, before the appointment of the SPLs, the GPLs reported that there was a payment of $300,000 made to Mr Franovic after 27 April 2017 and also other payments to Mr Franovic of $500,000 during the 2017 financial year. 10 These payments were recorded in the earlier reasons at [79]-[80] as potential uncommercial transactions. At [102], I noted: [102] On balance, I am satisfied that the proposed appointment (but on terms more limited than those proposed by the plaintiffs) is beneficial to the winding up and the creditors as a whole for the following reasons: … (2) … the solvency of the company prior to the commencement of the winding up requires further investigation as does the possibility of voidable transactions, particularly the payment of $300,000 to Mr Franovic referred to above. 11 The SPLs have conducted investigations and found no evidence of payments of these amounts by Boka to Mr Franovic personally. Instead, the SPLs' investigations reveal that between 1 October 2015 and 6 June 2018 (shortly before Boka was wound up), Boka made payments totalling $926,000 to Cro. There is evidence that Mr Franovic is (and was at relevant times) the sole director of Cro. 12 The SPLs submitted that, given that the 2 August 2019 orders permitted them to investigate the payments from Boka to related parties in the period prior to its winding up (albeit at a time when it was thought that the payments were received by Mr Franovic), the Court should now expand the ambit of the SPLs' remit to include the related party transactions involving Cro. 13 The SPLs acknowledged that Mr Franovic has made a statutory declaration which relevantly states that the "$300,000 payment made to entities controlled by me were legitimate and non-voidable repayments of loans by Boka at the time when it had no outstanding creditors", with a letter from a firm of accountants seeking to explain the transaction. However, they submit that the SPLs are entitled to test this explanation and pursue such a claim if it is viable. 14 In these circumstances, the SPLs' powers should be extended in the manner proposed, which is consistent with the scope of the powers originally conferred. Other possible claims available to Boka 15 The 2 August 2019 orders state the ambit of the SPLs' powers to investigate and pursue possible claims by reference to particular matters and causes of action. 16 The SPLs have identified two other transactions involving Cro that they seek to investigate further – the transfer of a motor vehicle for $15,400 and the transfer of a forklift for $2,750, in respect of which no money appears to have been received by Boka. 17 One of the matters referred to in the orders is whether the disposals of Boka's plant and equipment after 1 July 2017 were voidable transactions within the meaning of s 588FE. The SPLs consider that it is possible that the two transactions above are not only voidable transactions but may also give rise to claims against Mr Franovic for breach of his duty as a director of Boka and against Cro for being involved in such a breach of duty. 18 For those reasons, the SPLs contend that the list of "matters" in order 1(b) should be expanded to include the possibility of bringing these causes of action in respect of transactions involving Boka, Boka Holdings (Aust) Pty Ltd and Cro. 19 Again, I accept that the SPLs' powers should be extended to confer on them all necessary and appropriate powers, consistent with the original reasons for the appointment of the SPLs, in the light of the new information that has come to hand. Conclusion 20 I will make orders to the effect set out in prayer 1 of the interlocutory process. 21 The SPLs' costs of the application should be costs in the winding up of Boka. I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gleeson. Associate: Dated: 18 June 2020