Investigating appointors on the cheap

Investigating whether their appointors were themselves validly appointed has created quite the conundrum for David Ingram and David Ross, Hall Chadwick alumni who struck out to launch I&R Advisory in December 2021.

In the Federal Court on Monday judge Yaseen Shariff was told that in their capacities as liquidators of MCA Tag No.1 Pty Ltd (MCA) Ingram and Ross are doing everything they can to minimise expenses and costs whilst complying with their statutory duties.

Their light touch approach is the court heard, the appropriate course in circumstances where the applicant in the proceedings is seeking to have Ingram and Ross removed and a replacement appointed.

Simultaneously the court heard that Ingram and Ross are investigating the circumstances of the appointment of the two directors whose resolution to voluntarily wind up MCA on May 1 led to their own appointments.

Undertaking efficient investigations doesn’t come cheap however, so minimising fees while trying to establish whether they’re entitled to any is sure to test the incumbent’s’ interpretation of “reasonably incurred”.

The Federal Court proceedings were commenced on May 14 by Hakki Hassan, the sole director of MCA Tag No.1 Pty Ltd according to ASIC records for the company.

Described in court documents as a “professional director” Hassan wants Ingram and Ross removed on the basis that they were invalidly appointed by invalidly appointed directors. He wants his own nominee, John Morgan of BCR Advisory installed.

Related proceedings in the NSW Supreme Court, detailed in Andrew John Fleming âe” The Estate of the Late Concetta Italiano [2024] NSWSC 630 however add complexity.

The judgment, delivered by Justice Kate Williams last week, details how in April lawyer Andrew Fleming was appointed on an interim basis as the administrator ad litem to represent the deceased estate of the the Late Concetta Italiano.

The deceased was the sole unit holder in the Boulevard Property Trust (the BP Trust) and the trust deed identifies MCA Tag No. 1 Pty Ltd as the trustee. Among the trust assets is a service station in western Sydney valued at $4.3 million.

Justice Williams also recounts how the NSW Supreme Court made orders in July last year restraining MCA Tag’s former director sole director and sole shareholder David Conway from dealing with any of the trust assets “or dealing with the shares in MCA until further order”.

Those orders also restrained MCA Tag from “making any further loans, advances or distributions from any account operated on behalf of the BP Trust, including specified bank accounts held with the Bank of Queensland and St George Bank”.

Ms Conchetta died on September 2, 2023. On September 22 a mortgage was executed with the Commonwealth Bank of Australia (CBA) taking security over the title of the property upon which the service station resides.

Also despite the restraining orders, the four shares in MCA Tag became 100 shares and earlier this 48 shares each were issued to Juan Pablo Reyes Franco and David Andreas Rodriguez who were appointed directors of MCA.

After obtaining a Declaration of Solvency from Deloitte partner David Mansfield on April 22 indicating that MCA had realisable assets of $5.51 million and would deliver a $560,000 surplus after payments of liabilities the newly appointed directors resolved to voluntarily wind up the company and appoint Ingram and Ross as liquidators.

These are among the circumstances Ingram and Ross must investigate whilst limiting fees and expenses and simultaneously defending the application seeking their removal.

Complicating matters further however is the apparent existence of two signed deeds for the BP Property Trust.

In her judgment Justice Williams anticipated that Fleming would apply to intervene in the Federal Court proceedings with a view to having himself as estate administrator appointed as trustee of the trust.

One deed contains a clause allowing for the termination of a trustee in circumstances where “the trustee enters into compulsory or voluntary liquidation (except for the purposes of amalgamation or reconstruction), or has an administrator, receiver, official manager, or receiver and manager appointed to any part of its assets”.

The other deed, which Hassan is relying on in his Federal Court application, does not.

The application to remove Ingram and Ross returns for hearing on June 18 but judicial advice provided to Fleming by Justice Williams on My 24 suggests that much could happen behind the scenes before then.

Ingram and Ross will be hoping that whatever those machinations involve, it is doesn’t come at a cost.