New South Wales Supreme Court CITATION : ASIC v Sydney Investment House Equities Pty Ltd & Ors [2006] NSWSC 1263 HEARING DATE(S) : 21/11/06 JUDGMENT OF : Gzell J EX TEMPORE JUDGMENT DATE : 11/21/2006 DECISION : Adjournment refused. CATCHWORDS : PROCEDURE - Miscellanous procedural matters - Adjournments - Application for appointment of provisional liquidator of a company and receiver and manager of the assets of a number of trusts - Short service of interlocutory process and supporting affidavit - Defendants sought adjournment on basis of inadequate time to prepare - Facts within the knowledge of an individual defendant who controlled all the corporate defendants - Evidence that moneys raised from investors had found their way into the trusts - Evidence that the individual defendant has caused some corporate defendants to breach asset protection orders - Whether the adjournment should be granted Australian Securities and Investments Commission - Plaintiff/Applicant Sydney Investment House Equities Pty Ltd - 1st Defendant/Respondent Sydney Investment House Capital Ltd - 2nd Defendant/Respondent Edwin James Goulding - 3rd Defendant/Respondent Stephen Geagea - 4th Defendant/Respondent PARTIES : Sydney Investment House Pty Ltd - 5th Defendant/Respondent Sydney Investment House (Newcastle) Pty Ltd- 6th Defendant/Respondent Sydney Investment House (Beaconsfield) Pty Ltd - 7th Defendant/Respondent Melbourne Investment House Pty Ltd - 8th Defendant/Respondent Melbourne Investment House (Hawthorn) Pty Ltd - 9th Defendant/Respondent Melbourne Investment House (Collingwood) Pty Ltd - 10th Defendant/Respondent AJEG Holding Pty Ltd -11th Respondent FILE NUMBER(S) : SC 2941/06 Mr A McInerney - Plaintiff/Applicant COUNSEL : Mr P Walsh - 3rd, 4th, 6th Defendants/Respondents & 11th Respondent Mr P Dowdy - Liquidator SOLICITORS : Kim Turner - Plaintiff/Applicant Ken Cush and Associates - 3rd, 4th, 6th Defendants/Respondent & 11th Respondent IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION GZELL J TUESDAY 21 NOVEMBER 2006 2941/06 AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v SYDNEY INVESTMENT HOUSE EQUITIES PTY LTD & ORS EX TEMPORE JUDGMENT 1 An application is made on behalf of Edwin James Goulding, the third defendant, Stephen Geagea, the fourth defendant, Sydney Investment House (Newcastle) Pty Ltd ("Newcastle"), the sixth defendant and AJEG Holding Pty Ltd ("AJEG"), the eleventh respondent, to adjourn the application of the plaintiff, the Australian Securities and Investments Commission ("ASIC"), the plaintiff, for the appointment of a receiver to a number of trusts or, in the alternative, for an asset protection order with respect to AJEG, the trustee of those trusts. No opposition is raised to the appointment of a provisional liquidator to Newcastle. 2 The matter has been brought on with a degree of urgency and the complaint is made on behalf of the above parties that time has not been made available to them to deal with the material that has been served in support of the application. 3 Mr Goulding and AJEG offer undertakings in support of the application for the adjournment not to cause any of the trusts in question to part with any assets including selling, charging, mortgaging, or otherwise refinancing or further encumbering the same without 24 hours' notice to the provisional liquidator appointed to Sydney Investment House Equities Pty Ltd, the first defendant, Sydney Investment House Capital Ltd, the second defendant, Sydney Investment House Pty Ltd ("House"), the fifth defendant, Sydney Investment House (Beaconsfield) Pty Ltd, the seventh defendant, Melbourne Investment House Pty Ltd, the eighth defendant, Melbourne Investment House (Hawthorn) Pty Ltd ("Hawthorn"), the ninth defendant and Melbourne Investment House (Collingwood) Pty Ltd, the tenth defendant. 4 Further, the above parties do not oppose the appointment of Quentin Olde, the provisional liquidator of the above companies, being appointed receiver of the WSS Unit Trust, the NC13 Hybrid Trust, the NC41 Hybrid Trust and the NC49 Hybrid Trust. 5 Mr Olde opposes the application on two bases. First, he says the Court should have no confidence in anything Mr Goulding says. Secondly, the trusts with respect to which there is no opposition to the appointment of Mr Olde as receiver are trusts which Mr Olde submits have no assets and there is no point in his being appointed receiver of those trusts, except in a global sense of his being appointed to all the trusts. 6 ASIC opposes the application for the adjournment on a number of grounds. First, the undertaking is proposed to be given by Mr Goulding who is neither a director nor shareholder of AJEG, the trustee of the asset holding trusts, Alcorn Hybrid Trust, the Goulding Family Trust and the Discretionary Property Trust. 7 Secondly, ASIC submits that Mr Goulding has caused breaches of earlier orders of the Court to be made. The evidence demonstrates that on 7 September 2006, after the making on 4 September 2006 of orders restraining House from dealing with any of its assets, it entered into a contract to sell a property at Coogee. 8 The second case of a breach of the Court orders relates to a property of Hawthorn. The contract for sale in that case was entered into on 15 September 2006. It was submitted on behalf of the above parties that this was a matter of little moment because yesterday consent orders were made entitling Hawthorn to carry into execution and complete that agreement. Nonetheless, a breach of the orders occurred. 9 The third instance of a breach of Court orders relates to the order made on 1 November 2006 limiting payments in the ordinary course of business by Newcastle. Included in the payments made is an amount of $5,000 paid to the Goulding Family Trust. There would appear to be no basis upon which that amount might be characterised as a payment in the ordinary course of Newcastle's business. 10 The next basis of opposition to the adjournment is that there are two transactions pending in relation to one or other of the three trusts that I have mentioned. One was due for settlement on 18 November 2006. That is a contract for the purchase of a property at Maleny in Queensland entered into by House as trustee of the Goulding Family Trust. There is in evidence a letter of 16 November 2006 that states that AJEG ought to have entered into the contract, it having become the replacement trustee of the Goulding Family Trust. It does not seem to me, however, that the substitution of a new trustee avoids the problem. The settlement date on that contract has been extended to 23 November 2006. It was submitted that urgent clarification is required, otherwise the provisional liquidator is in an invidious position, part of the deposit of $55,000, in the sum of $44,000, has been provided by Newcastle. It is feared that, ultimately, the proceeds of sale of the property will find their way to the Goulding Family Trust. 11 It was submitted that the evidence reveals that the sale of the Coogee property was undertaken on behalf of one of the three trusts I have mentioned, House as trustee of the Discretionary Property Trust. Settlement is due in that matter on Monday 27 November 2006. 12 It was submitted on behalf of the above persons that there is an absence of evidence of the disposal of assets; an absence of a need for urgency; the undertakings are broad; and the balance of convenience favours an adjournment to give the above parties the opportunity to be heard on the application. 13 In my view, there is an urgent need for intervention with respect to the trusts that I have indicated that justifies the bringing of this application on such short notice. Notwithstanding the difficulty under which the above parties suffer, the matters that have been raised are within the knowledge of Mr Goulding, who is the mind behind each of the companies. I am of the view that the balance of convenience necessitates that the application be heard today. 14 I have been invited by counsel for the above parties to include in these reasons, before dismissing the application for an adjournment, reference to par 26 of the affidavit of Ben Walker Seccombe sworn on 21 November 2006. The paragraph is as follows: "I am informed by Ed Goulding, and verily believe, that the Third, Fourth and Eleventh Defendants (and the beneficiaries of the trusts of which the Eleventh Defendant is trustee) will be prejudiced insofar as an order restraining the Defendants in the manner sought in the interlocutory process will; (a) constitute an irremediable default under the terms of a loan facility guaranteed and entered into by these parties in relation to assets owned by the trusts; (b) prevent the trusts from meeting their obligations under those respective loans; and (c) result in the mortgagees of the properties entering into possession." 15 In my view, those are matters that go to a defence to the application by ASIC for the appointment of a receiver to the trusts. They do not influence my decision with respect to refusing the application for the adjournment. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.