Two weeks ago, on 7 November 2011, Davies J of the Victorian Supreme Court handed down an interesting decision in SC Capital Pty Ltd & Anor v Primebrokers Securities Ltd (in liq) [2011] VSC 565. Effectively, it answers the question raised in the title of this post in the affirmative.

An appeal had been lodged from the judgment and orders of an Associate Judge given on 31 August 2009. The receivers for Primebrokers (appointed by the ANZ Banking Group Ltd (ANZ)) had served statutory demands upon the plaintiffs. The plaintiffs (SC Capital Pty Ltd and Cablerand Pty Ltd) had successfully applied to the Associate Judge under s 459G of the Corporations Act 2001 (Cth) (the Act) for orders setting aside the statutory demands. The grounds for their application to set aside included – (1) that the receivers had not been validly appointed and therefore had no legal right to serve the demands on behalf of Primebrokers, and (2) that the plaintiffs had an offsetting claim against the ANZ, the appointor of the receivers for wrongful conduct. His Honour held that the claim was not offsetting within the meaning of s 459H as it was not against Primebrokers. However his Honour did find on the evidence before him that the receivers were not validly appointed. The statutory demands were set aside on that ground.

The receivers appealed that decision. Interestingly, the ANZ also appealed that decision, even though the ANZ was not a party to. and did not appear, in the applications before the Associate Justice. ANZ sought to rely on r 77.06 of the Supreme Court Rules which provides at (1) that “any person affected” by a judgement or orders may appeal decisions of an Associate Justice to a judge of the Court.

The plaintiffs also applied to have various consent orders made on 16 July 2010 set aside, including orders granting special leave to Primebrokers and ANZ to rely on additional evidence. Her Honour explained that those orders had been made in the context of the broader litigation on foot between the parties. In general terms, the receivers seek a declaration as to their valid appointment, a broader group of which the plaintiffs are part, referred to as the “Chimaera parties” had sued ANZ, the receivers, and two other mortgagees in possession appointed by ANZ of certain of Primebrokers properties. The Chimaera parties seek damages for alleged wrongful conduct, including the invalid appointment of the receivers. The trial of all of these proceedings commenced on 24 October 2011. Interestingly, as I am about to announce in a separate post, it has been reported today that those principal proceedings were the subject of a settlement reached yesterday.

This case was a discrete hearing before Davies J of an application the plaintiffs filed to set aside the consent orders previously made, and for the dismissal of ANZ’s notices of appeal. This application raised four principal issues for determination –

(1) Whether ANZ had standing under r 77.06(1) of the SCR to bring the appeals as a “person affect” by the “judgment and orders” of the Associate Justice;

(2) Whether leave to ANZ to intervene in the appeals should be set aside because ANZ does not satisfy the test for intervention;

(3) Whether the orders granting special leave to rely on additional evidence should be maintained, and

(4) Whether the Court should entertain the application to set aside the orders of 16 July 2010.

(1) “Person affected” – Senior counsel for the plaintiffs argued inter alia that the order setting aside the statutory demands had no relevant legal effect on ANZ because the application did not finally determine any rights of the parties, and that therefore ANZ was not a “person affected” by the judgment and orders. However Davies J took the view that the relevant question was whether ANZ had a direct interest in the matters in controversy in the s 459G application, as distinct from an interest that is indirect or consequential (see [7]). Her Honour held it was manifest that ANZ had a direct interest as the matters in controversy are ANZ’s rights and liabilities. The Associate Justice had considered ANZ’s alleged “wrongful conduct. He had determined that ANZ had not validly appointed the receivers to Primebrokers’ property. This was to be re-agitated upon the receivers’ appeal, which would again involve the determination of ANZ’s rights and liabilities as the foundation for the orders. Moreover, the orders setting aside the statutory demands directly impacted ANZ’s rights as appointor of the receivers and as chargee (see [8]).

(2) Leave to intervene – The plaintiffs sought revocation of leave to ANZ to intervene, relying on Levy v The State of Victoria [1997] HCA 31; (1996-1997) 189 CLR 579. Her Honour was not sympathetic to their arguments (see [10-12]).

On the remaining two issues, her Honour upheld the order granting special leave to lead additional evidence, and did entertain the application.

News has broken today of a settlement reached in the broader litigation between the parties, outline above. That will be the subject of a separate post to which I will now turn.