Contis Investments Pty Limited v Dinach Holdings Pty Limited [1996] ACTSC 70 (12 July 1996)

SUPREME COURT OF THE ACT

CONTIS INVESTMENTS PTY LIMITED v. DINACH HOLDINGS PTY LIMITED
No. SC 526 of 1996
Number of pages - 2
Partnership - Receivers

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
HOGAN J

CATCHWORDS

Partnership - proposed dissolution - appointment of receiver.

Receivers - appointment for sale of land - partners entitled to bid - whether reserve price should be fixed by court or by receiver.

Partnership Act 1963, s40(1)(e)

HEARING

CANBERRA, 10 July 1996
12:7:1996

Counsel for the Plaintiff: Mr R Refshauge

Instructing solicitors: Deacons Graham and James

Counsel for the Defendant: Mr L J Aitken

Instructing solicitors: Snedden Hall and Gallop

ORDER

THE COURT ORDERS THAT:
1. William Balfour Rangott of 77 Denison Street, Deakin in the Australian Capital Territory, be appointed receiver of the property being Block 5 Section 25 Division of Belconnen (the Communications Building).

2. Within eight (8) weeks from the date of this order, the receiver submit the Communications Building to sale by public auction on the following terms and conditions:
(i) the parties be at liberty to bid at the auction;

(ii) the auctioneer be chosen within two (2) weeks by the receiver after
consultation with the parties;
(iii) the receiver is to decide whether or not to set a reserve price, a
if set, at what price.

3. The net proceeds of the auction be applied forthwith to discharge or

reduce Bills Matured Account No. 2907 1008 0795 of the Jamison Centre ACT Branch of Commonwealth Bank of Australia.

4. The motions be adjourned to 19 July 1996 with liberty to relist earlier by consent of the parties and Tantessa Pty Limited.

5. Costs reserved.

6. Liberty to the parties and to the receiver to apply on two (2) days notice.

DECISION

HOGAN J The plaintiff and the defendant in this suit, commenced by originating summons on 28 June 1996, are partners. The summons seeks orders under the Partnership Act 1963 dissolving the partnership pursuant to s40(1)(e), winding up its business, appointing a receiver, and consequential orders. The significant assets of the partnership are the unexpired residue of two Crown Leases at Belconnen. On one allotment is a building known as the Communications Building. On the other there are conducted the Belconnen Markets.

2. By notice of motion dated 4 July 1996 the plaintiff seeks orders that a receiver be appointed of those two assets, with directions to sell them by public auction and invest the proceeds until further order of the Court.

3. So far as the Communications Building is concerned, the parties have agreed on the terms of an order for sale, except for the question whether a reserve be fixed for the auction. At the hearing of the notice of motion, I decided this contested question. These are my reasons for that decision.

4. The proposed receiver is a partner in a firm of chartered accountants, and an Official Liquidator registered under the Corporations Law.

5. That building was submitted to auction on 15 February 1996. There were discussions between the plaintiff and the defendant about a reserve price. The parties do not agree about who was responsible for the setting of a reserve at $3,500,000.00. The highest bid was made by the plaintiff in the sum of $2,900,000.00, and the property was not sold. The terms agreed by the parties include a provision that the parties are to be at liberty to bid. It is, I think, likely that the plaintiff will bid at an auction by the receiver, and possible that it may be the only bidder.

6. In those circumstances, I do not think that I should either fix a reserve price, or direct that the sale proceed without reserve. In my view, the better person to make those decisions is the receiver. I do not have sufficient information, or indeed the skill or experience, to enable me to judge whether in the circumstances it is prudent to allow the sale to proceed without any reserve. If I did set the reserve price, it would then be known to the parties, who are entitled to bid. Would that be prudent, or fair to other bidders? I do not know. If the plaintiff wishes to bid at the auction, it, and any other bidder, will be aware whether a reserve has been set, but they will not know at what figure it has been set. If a reserve is set, but not reached at the auction, liberty is reserved to the receiver to apply at short notice for such directions as he thinks appropriate in his expert commercial judgment.

7. I have therefore amended the short minutes of consent orders handed up on 10 July 1996, by deleting from paragraph 2(iii) the words "without reserve", and inserting the words "The receiver is to decide whether or not to set a reserve price, and if set, at what price". I have also amended paragraph 6 to make it clear that the receiver is to have liberty to apply at short notice. With those amendments, I have made orders 1 to 6 inclusive, as set out in those short minutes.