Bonenti v Jaltrend Pty Ltd [1996] QSC 43

IN THE SUPREME COURT OF QUEENSLAND Brisbane Before the Hon. Justice Mackenzie [Bonenti v. Jaltrend P/L] BETWEEN PETER GREGORY BONENTI as trustee of the Bonenti Family Trust JALTREND PTY LTD (ACN 010 678 985) as trustee of the Jaltrend Trust JUDGMENT - MACKENZIE J. - CHAMBERS Judgment delivered 22/03/1996 No. 408 of 1995 Applicant Respondent CATCHWORDS: RECEIVERS - discharge and removal - allegation that the conduct of the receiver is hruming the business - whether the receiver should b.£ removed. Counsel: Solicitors: Hearing date: C. Newton for applicant defendant. J. Sweeney for respondent defendant. P. Hackett for receivers. Reaburn & Associates for applicant. Michell Sillar Nicholsons for respondent. Thompson King Connolly for receivers. 11 March 1996 -- 1 of 4 -- IN THE SUPREME COURT OF QUEENSLAND Brisbane Before the Hon. Mr Justice Mackenzie [Bonenti v. Jaltrend P/L] BETWEEN PETER GREGORY BONENTI as trustee of the Bonenti Family Trust JALTREND PTY LTD (ACN 010 678 985) as trustee of the Jaltrend Trust JUDGMENT - MACKENZIE J. - CHAMBERS Judgment Delivered 22 March 1996 No. 408 of 1995 Applicant Respondent This is an application to discharge court appointed receivers. The parties were involved in a joint venture agreement to conduct leasehold licensed premises called The Avenue Restaurant and Saloon in Surfers Paradise. The business operates as a night-club. The defendant company has held the lease since 9 February 1995. In April 1994 there was a dispute between the parties as to whether the plaintiff was participating properly in the management of the business. The defendant gave notice to show cause under the agreement a consequence of which was that a right to buy out the other party's interest would arise if the contention was correct. During the currency of the dispute the ownership of the defendant changed. In January 1995 a previous majority shareholder sold his shares to Western Australian interests whose dealings with the plaintiff have concentrated on the issue of who has the right to purchase the other party's interest in the business. -- 2 of 4 -- 2 The defendant had continued to conduct the business and had its manager as nominee under the licensing legislation from early 1995. In March 1995 the present proceedings were commenced by the plaintiff and an application for appointment of receivers was refused in June 1995 by Thomas J. There was also an unsuccessful application for summary judgment for specific performance of a right asserted by the plaintiff to buy out the defendant under the joint venture agreement based on a notice of default and notice of termination under the agreement. The submission by the applicant is that the appointment of the receivers threatens the survival of the business. It is submitted that the business is not profitable enough in the hands of the receivers to pay fees and expenses. One of the precipitating factors in the present proceedings is that the receivers have claimed substantial fees and expenses and, while there is not currently power to do so in terms of the order of appointment, has indicated a willingness to sell the assets, if necessary, to attempt to recover the fees and expenses if such power is given. An underlying problem in the matter is that until the hearing the plaintiff had not responded to a request to provide some of the funds to the receivers to discharge certain arrears of expenses including arrears of rental and licensing fees. At the hearing Mr Sweeney indicated that the plaintiff was prepared to pay twenty-five percent of the outstanding sum although this is not supported by any evidence. That accords with his proportion in the joint venture, if it still exists. One other underlying matter is that there is no satisfactory safeguard offered to the receivers in respect of their fees. There is correspondence touching on the subject but as Mr Hackett for the receivers points out, the receivers are left in a vulnerable situation with what is currently offered. The basis upon which it is submitted that the receivers should be removed is that the appointment has damaged the business. There is some evidence that trade has decreased and that the receivers have ceased to cater for the lunch trade which further exacerbates the situation. Another complaint is that the receivers dismissed Mr Paranthoiene, the managing director of the -- 3 of 4 -- 3 defendant, who had been managing the business for $1000 per week. It is submitted that the cost of managing the business is higher under the receiver and higher than the sum estimated when the application for a receiver was made. While it seems to be conceded that the costs are higher partly because of matters which are out of the ordinary, it is submitted that because one of the other underlying disputes is the sufficiency of accounts which were kept while the matter was under the management of Mr Paranthoiene, who appears to be the person who would take over the management of the business if the receiver were to be removed, the additional cost is not disproportionate to the protection that management by the receivers provides to the parties. It was offered that the respondent defendant would not dispose of the assets of the business and would give an unfettered right to inspect the computer-generated business records of the business to the plaintiffs legal advisers. It appears that one of the reasons for granting the application for appointment of the receivers was a dispute about what had been provided in the past and in the circumstances, it was submitted, such an offer is not of any great assistance. Having regard to the background to the matter referred to above, the inadequacy of provision made for the receivers' fees to be secured and the offer, albeit belated, by the plaintiff to make contributions at the level of twenty-five percent to the expenses, I am satisfied that no sufficient ground for removing the receivers has been established and that the status quo in that regard should be preserved. Accordingly the application is refused with costs to be taxed. Mr Hackett submitted that it may be appropriate to insert at this stage a power for the receivers to sell the business. This was not included in the order, appointing the receivers as has been noted above. It is in my view more appropriate that if such a power becomes necessary it should be made on material which addresses the situation then prevailing, and focussed on the specific circumstances as they then exist. I therefore do not propose to make any order in that regard in these proceedings. -- 4 of 4 --