In the matter of Courtenay House Trading Group Pty Ltd [2017] NSWSC 1792

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Courtenay House Trading Group Pty Ltd [2017] NSWSC 1792 Hearing dates: 21 August 2017 Date of orders: 21 August 2017 Decision date: 21 August 2017 Jurisdiction: Equity - Corporations List Before: Brereton J Decision: Liquidator to file summons for directions, but plaintiff's application will remain on foot Category: Procedural and other rulings Parties: Kyle Lester Sheridan (plaintiff) Courtenay House Capital Trading Group Pty Ltd (first defendant) Courtenay House Pty Ltd (second defendant) John McInerney (third defendant) Said Jahani (fourth defendant) Representation: Counsel: KL Sheridan (in person) (plaintiff) VE Whittaker (first to fourth defendants)

Solicitors: Colin Biggers & Paisley Lawyers (first to fourth defendants) File Number(s): 2017/151478

Judgment (EX TEMPORE) 1. The plaintiff Lord Kyle Lester, Sheridan represents entities which claim to have invested $10.6 million in the defendant companies, which are now in liquidation. As to $7.8 million, the liquidators have confirmed that those funds have been received and appear to have been retained in one of the company's two main accounts, being an NAB account. The liquidators have identified that there are two main accounts, a Westpac account in which more than $21 million is retained, and the NAB account in which some $28 million was held. The funds are now held in separate bank accounts controlled by the liquidators, and have been invested to earn a commercial bank term deposit interest rate. 2. The liquidators have formed a preliminary view that the Westpac account was the company's general account, and that the funds in the NAB account appear to have resulted from a special investment opportunity, called the Brexit Investment, in which the plaintiff appears to have invested $7.8 million. 3. The plaintiff seeks, in effect, orders requiring the liquidator to repay immediately that sum of $7.8 million. In order to obtain such relief, the plaintiff would also require leave to proceed against the company in liquidation, given that it is now the subject of winding up by order of the Court. The liquidators point to the circumstance that there are many other creditors, including persons who have contributed to the Westpac account and the NAB account. A question arises as to whether the funds ultimately held in the NAB account should be returned exclusively to the Brexit Investors, or whether other creditors of the companies have claims in respect of them. Such questions not uncommonly arise in liquidations of this kind – including, in particular, as to whether one fund (such as the NAB account) is to be treated separately, or pooled with other funds of the company. There may well be very strong grounds as to why the Brexit funds should not be pooled and why they should be dealt with separately, but other creditors who wish to maintain a claim against those funds are entitled to be heard on that question. 4. A fundamental purpose and characteristic of a winding up is to enable the claims of all creditors to be considered in a relatively economical manner, without each of them having to bring a separate proceeding against the company to recover the moneys that that creditor claims to be due to it. The plaintiff's funds are protected, in that the liquidators have acknowledged they have been received and are held, and are presently invested and earning interest. If it transpires, as the plaintiff contends, that the plaintiff is entitled to have them returned intact, then the plaintiff's position will be entirely protected. But, as it seems to me, an opportunity must be afforded to others – who may have claims that the funds should be pooled with the other assets of the company – to advance those claims and have them determined. 5. In order to enable that to happen, the liquidators propose to bring before the Court a summons for directions and, in due course, to have representatives approached – presumably of the general creditors and the Brexit creditors – so that those issues may properly be argued and resolved by the Court. 6. It is entirely understandable that the plaintiff, who appears indisputably to have a very substantial amount of money tied up in this catastrophe, would want to retrieve it expeditiously; but the size of a creditor's claim does not entitle that creditor to have the interests of other creditors disregarded or subordinated. It seems to me that the only sensible and practical way, in which this matter can proceed, consistent with law and justice to all involved, is via summons for directions as the liquidator proposes. However, as counsel for the liquidator has more or less anticipated, in order to ensure that the summons for directions proceeds as expeditiously as possible, I do not propose to dismiss the plaintiff's application; it will remain on foot so that, should the liquidator's summons for directions not proceed as expeditiously as it should, the plaintiff's application can be further considered.