New South Wales Supreme Court CITATION : George Georges v Gregg Thomson [2008] NSWSC 248 This decision has been amended. Please see the end of the judgment for a list of the amendments. HEARING DATE(S) : 6 March 2008 JUDGMENT OF : Hammerschlag J EX TEMPORE JUDGMENT DATE : 6 March 2008 DECISION : Direction that liquidators justifed in selling co-licensed land and orders appointing trustees for sale of co-owned land. CATCHWORDS : CORPORATIONS - Company under winding up co-owns certain land and licences certain other land to growers - Directions pursuant to s 479(3) of the Corporations Act 2001 (Cth) that liquidator justified in selling licensed land and orders pursuant to s 66G of the Conveyancing Act 1919 for trustee sale of co-owned land LEGISLATION CITED : Corporations Act 2001 (Cth) Conveyancing Act 1919 (NSW) Ngatoa v Ford (1990) 19 NSWLR 72 CASES CITED : Williams v Legg (1993) 29 NSWLR 687 Hogan v Baseden (1997) 8 BPR 15,723 Re GB Nathan & Co Pty Ltd (in liq) (1991) 24 NSWLR 674 George Georges and Peter Damien McCluskey in their capacities as liquidators of Radiata Plantations Ltd (ACN 085 235 347) (in liquidation) PARTIES : Radiata Plantations Ltd (ACN 085 235 347) (in liquidation) Gregg Thomson FILE NUMBER(S) : SC 5323/2007 COUNSEL : P. Kulevski (Plaintiffs) SOLICITORS : Blake Dawson Waldron (Plaintiffs) - 5 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION EQUITY LIST HAMMERSCHLAG J 6 MARCH 2008 5323/2007 GEORGE GEORGES and PETER DAMIEN MCCLUSKEY in their capacities as liquidators of RADIATA PLANTATIONS LTD (ACN 085 235 347) (IN LIQUIDATION) –V- GREGG THOMSON JUDGMENT 1 HIS HONOUR: The second plaintiff company ("the Company") was placed in liquidation on 2 February 2006 and the first plaintiffs, Messrs Georges and McClusky were appointed liquidators ("the liquidators"). The Company was incorporated to acquire land to be utilised as pine tree plantations. 2 In 2004 it bought land known as the Harrington Plantations from the Harrington Group Limited. The land is at Hai Welyki, Lithgow, Tumut Heights, Rockley, Vista, Burraga and Lawson ("the plantations") all within the state of New South Wales. It acquired the plantations subject either to the co-ownership interest or licence interest of numerous individuals (sometimes referred to as "growers"). 3 Hai Welyki, Lithgow and Tumut Heights are co-owned by numerous persons who have small shares as tenants in common with the Company. The Company's interest is significantly greater than any other individual. The individuals have interests of between 0.2 and 3%, whereas the Company has 33% of Hai Welyki, 27% of Lithgow, and 85% of Tumut Heights. The remaining plantations, that is Rockley, Vista, Burraga and Lawson are not co-owned. Rather, the Company has licence agreements with 129 licensees. For an annual licence fee the Company granted to each a licence to enter specified land to: "Plant, tend, grow, care for, cultivate, fell, harvest and sell" trees on the land for 25 years with a 5 year option to renew. 4 There were originally 171 such licensees. Now there are 129. 5 These proceedings concern the manner in which the liquidators propose to deal with the plantations having regard to the co-ownership interests in some and the license interests in the others. 6 By originating process dated 29 October 2007, they seek: (a) in relation to the licensed land a direction pursuant to s 479(3) of the Corporations Act 2001 (Cth), that they would be justified in selling it. They also seek an order that the net proceeds be held in a separate interest bearing account pending further order of the Court; and (b) in relation to the co-owned land, orders pursuant to s 66G of the Conveyancing Act 1919 (NSW) that they be appointed trustees for sale together with the usual ancillary orders sought in such cases. 7 The liquidators propose to sell the licensed plantations and ultimately to distribute the proceeds of it to the licensees rateably according to his, her or its share of the value of the trees on them. 8 A similar process is intended, mutatis mutandis, with respect to the sale of the co-owned plantations. 9 The evidence shows the liquidators have written to the interested co-owners and licensees and dispatched to each of them a copy of the originating process. 10 In addition, on 30 November 2007 the Court ordered the liquidators to send by ordinary post letters to the interested persons explaining the liquidators' intentions. Their intentions were also advertised extensively in newspapers across Australia. 11 There has been some, but limited, communication from individual co-owners or licensees. Only two originally took what appears to be an objection to the proposed trustee sale. One sought further information which was provided. The evidence shows he is aware of today's proceedings and has elected not to appear. The other raised matters which were the subject of discussion between him and the liquidators' staff or solicitors. By letter dated 1 February 2008 he was informed of today's hearing and has also not appeared. 12 So far as the co-owned plantations are concerned I am satisfied that this is a proper case in which to grant the orders sought. Except for very special cases co-owners are entitled to orders under s 66G of the Conveyancing Act for a property's sale: Ngatoa v Ford (1990) 19 NSWLR 72; Williams v Legg (1993) 29 NSWLR 687; Hogan v Baseden (1997) 8 BPR 15,723. 13 Far from there being a reason why such an order should not be made, there are good reasons why, in this case, it should. 14 There seems to be little or no prospect of any co-owner achieving any beneficial economic outcome in respect of his, her or its interest other than by way of what the liquidators propose. 15 So far as the licensees are concerned, there is no legal impediment (so far as I can see) to the liquidators selling the licensed land in any event. For similar reasons they are justified in selling those plantations. 16 It was not suggested by Mr Kulevski of counsel who appeared for the liquidators that the land was to be sold free of the licensees' interests (however they may be juridically characterised). 17 However, on 3 December 2007 in a letter to the licensees the following was said on behalf of the liquidators: "It has become apparent from the expressions of interest that I have received to date that in order to maximise the price obtainable for the land I need to be able to sell the land free of any interest you may have under the licence agreement." (emphasis added) 18 I make it clear that the relief which I propose to grant does not result in the plantations being sold free of any interest of any licensee under any subsisting licence agreement. The nature of the licensee's interests after the sale is a matter of law. I have not been called upon to adjudicate on the nature or extent of it. In the end result it may, of course, not matter. 19 The terms and conditions upon which the liquidators may be able to sell the land to any buyer will no doubt be affected by the appreciation of the buyer of the effect on the buyer, of the licensees' interests. 20 As a matter of common sense one might expect, however, that the liquidators' proposal to share the proceeds of sale amongst licensees in exchange for whatever interests they may have in those licences may well be considered by them to be a beneficial outcome. 21 With respect to s 479(3) of the Corporations Act the authorities require the Court, in assessing any proposal, to have regard to the requirement for the liquidators to act for the benefit of creditors. The Court should not second-guess the liquidators' commercial judgment: Re GB Nathan & Co Pty Ltd (in liq) (1991) 24 NSWLR 674. 22 In my view, the course which the liquidators propose to take satisfies the requirement of being for the benefit of creditors. 23 I make orders in the terms of pars 1, 2, 3, 4, 5, 6, 7 and 8 of the originating process. 24 Short Minutes are to be brought in. 25 The exhibits are to be returned. ********** 31/03/2008 - Catchwords omitted - Paragraph(s) Cover page 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.