Davis-Jacenko v Roxy’s Bootcamp Pty Limited

1. [1]

   For the purposes of exposing my central considerations to the parties, I will now give brief reasons for the orders I intend to make. While I will give more detailed reasons in due course, the necessity to give a much more limited form of my reasons has arisen because of the urgency of this matter which has been pressed upon me by the parties.

2. [2]

   The plaintiff, Roxy Davis-Jacenko, is the 50% shareholder of the defendant, Roxy's Bootcamp Pty Limited ACN 674 872 872 (Company). Ms Davis-Jacenko applies for the appointment of provisional liquidators to the Company.

3. [3]

   Tleis Investments Group Pty Ltd as trustee for the Tleis Trust and Salameh Investments Pty Ltd as trustee for the Salameh Family Trust are each 25% shareholders of the Company. Youssef Tleis is the principal person associated with Tleis Investments. Kassim Alaouie is associated with Salameh Investments, which is owned and controlled by his wife, Amani Salameh.

4. [4]

   The Company, Tleis Investments and Salameh Investments seek interlocutory orders that Ms Davis-Jacenko restore their access to various email and social media accounts, provide passwords to them and deliver to their solicitor the SAC Hermes Birkin 30 Bag (Veau Togo 8L Beton) (Hermes Birkin bag) and a 2024 Women's Rolex Datejust 36mm Blue Dial Fluted Bezel watch (Rolex watch).

5. [5]

   The competing interlocutory applications arise in the extraordinary circumstances of the rapid creation and almost equally rapid deterioration in the relationships between Ms Davis-Jacenko, Youssef Tleis and Kassim Alaouie over a business venture involving the promoting of training courses offered by Ms Davis-Jacenko to the public using a highly questionable promotions scheme.

6. [6]

   It is not appropriate on an interlocutory application for a court to conduct a preliminary trial to resolve contested questions of fact or conflicting evidence of events and I have not done so. In adopting this approach, I have applied longstanding authorities on the issue.

7. [7]

   In Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618; [1968] HCA 1, Kitto, Taylor, Menzies and Owen JJ at 622-633 said:

8. [8]

   In Shercliff v Engadine Acceptance Corporation Pty Ltd [1978] 1 NSWLR 729, the Court of Appeal of this court comprising Mahoney JA (with whom Glass and Samuels JJA agreed) at 733 said:

9. [9]

   This approach was referred to by the Full Court of the Federal Court of Australia in Warner-Lambert Company LLC v Apotex Pty Ltd [2014] FCAFC 59; (2014) 311 ALR 632 by Allsop CJ, Jagot and Nicholas JJ at [72].

10. [10]

    Based on these authorities, I have adopted this approach to the conflicts in evidence.

11. [11]

    The crucial further factual matters are:

    1. (1)

       On 9 February 2024, the Company was registered with three directors – Ms Davis-Jacenko, Mr Tleis and Mr Alaouie.

    2. (2)

       Title to the house located at 12 Dodson Avenue, Cronulla, New South Wales (Cronulla property) is held by Mr Tleis and Mr Alaouie in equal shares as tenants in common. The Cronulla property was acquired by Mr Tleis and Mr Alaouie for $3,360,000. There is a mortgage registered on the title to the Cronulla property in favour of Commonwealth Bank of Australia. The current outstanding loan balance is $4,999,526.13.

    3. (3)

       On 14 February 2024, Ali Reda of AR Property Valuations valued the Cronulla property at $10 million.

    4. (4)

       On 5 March 2024, the Shareholders Agreement was entered into by the Company, Salameh Investments, Tleis Investments, Mr Alaouie, Ms Davis-Jacenko and Mr Tleis.

    5. (5)

       On 5 March 2024, the Promotions Agreement was entered into by the Company, Ms Davis-Jacenko, Salameh Investments, Tleis Investments, Mr Alaouie and Mr Tleis.

    6. (6)

       Although not annexed to the Promotions Agreement signed, Ms Davis-Jacenko, Mr Tleis and Mr Alaouie were all aware of the "Roxy's Brand Bootcamp Promotion Terms & Conditions (“Conditions of Entry”)" which received permits in the Australian Capital Territory and New South Wales.

    7. (7)

       In summary, the Promotion involved the following elements:

    8. (8)

       On 5 March 2024, the Company took out an insurance policy with respect to the Promotion which has an indemnity limit of $7 million, commencing on 8 March 2024 (Insurance Policy).

    9. (9)

       On 8 March 2024, Ms Davis-Jacenko engaged in extensive media publicity on television, radio and online concerning the terms of the Promotion.

    10. (10)

        On 15 April 2024, Ms Davis-Jacenko ceased to engage in the Promotion and took steps to freeze the bank account of the Company.

    11. (11)

        On 19 April 2024, Ms Davis-Jacenko resigned as a director of the Company.

    12. (12)

        On 9 May 2024, Mr Alaouie resigned as a director of the Company. Since then, the only director of the Company has been Mr Tleis.

    13. (13)

        Ms Davis-Jacenko claims that, as at 13 May 2024, she has incurred expenses of $504,821.35 to be reimbursed by the Company, has received payments of $210,000.00 from the Company and is owed a balance of $294,821.35 by the Company. Amongst the expenses Ms Davis-Jacenko has claimed to have incurred on behalf of the Company are $20,110 for the Hermes Birkin bag and $20,500 for the Rolex watch.

    14. (14)

        The draw of the prizes in the Promotion is scheduled to take place on 7 June 2024 at the offices of Plexus in Melbourne, Victoria. After the draw, the Company is required to announce the winners on 8 June 2024 by phone and email, as well as by publication on the website www.roxysbootcamp.com by 11 June 2024. The first prize winner will then be invited to play the game, being the chance to win the Cronulla property, on 29 June 2024.

    15. (15)

        Mr Tleis and Mr Alaouie have each expressed the view that they wish to continue with the Promotion and award all of the prizes in accordance with the Terms & Conditions.

    16. (16)

        Since 22 May 2024, Yazbeck Law has held $250,000 in trust for the Company on terms that they are "funds to be held for first prize payout".

    17. (17)

        On 27 May 2024, the Company entered into the First Prize Deed with Mr Tleis and Mr Alaouie in an attempt to change the terms on which the proceeds of the Insurance Policy and the Cronulla property might be dealt with. These provisions appear to be clear variations to what had been agreed between the parties to the Promotions Agreement, yet they were not agreed by Ms Davis-Jacenko.

    18. (18)

        On 3 June 2024, the Company entered into a Deed of Undertaking with Mr Tleis and Mr Alaouie regarding the making of loans by each of them to the Company to enable any shortfall of funds for business activity statements or income tax to be paid, although this only operates in circumstances where a liquidator is not appointed.

LEGAL PRINCIPLES

1. [12]

   Section 472 of the Corporations Act 2001 (Cth) provides:

2. [13]

   The authorities on the appointment of a provisional liquidator were summarised in Australian Securities and Investments Commission v Oceanic Asset Management Pty Ltd, In The Matter of Oceanic Asset Management Pty Ltd (2015) 108 ACSR 367; [2015] FCA 966, by Barker J at [67]-[69] saying:

3. [14]

   The principles stated in Deputy Commissioner of Taxation v A & S Services Pty Ltd [2017] FCA 437, by Davies J at [4] are to a similar effect:

4. [15]

   As one of the relevant considerations in deciding to appoint a provisional liquidator is whether there is a reasonable prospect that a winding up order will be made, it is also relevant for me to consider the principles in relation to the making of winding up orders on the just and equitable ground. These were also summarised in A & S Services, by Davies J at [5] saying:

5. [16]

   Further guidance on the “just and equitable” ground for winding up a company is to be found in Australian Securities & Investments Commission v Austimber Pty Ltd [1999] FCA 566; (1999) 17 ACLC 893, where Merkel J said at [5]:

CONSIDERATION

1. [17]

   I consider this to be a paradigm case in which the court should intervene to preserve the status quo by exercising the discretion to order the appointment of provisional liquidators to the Company. The extraordinary state the Company has reached necessitates the serious and drastic intrusion of external controllers into its affairs.

2. [18]

   In my view, this is an appropriate case in which I should appoint provisional liquidators to the Company for the following reasons:

   1. (1)

      It is highly likely that an order would be made to wind up the Company on the basis that it is just and equitable to do so. Based on my examination of the conduct and management of the affairs of the Company since it was registered, I am satisfied that there is a basis on which the conclusion would be reached that there is a justifiable lack of confidence in that conduct and management. Those matters are demonstrated by each of the following:

   2. (2)

      On 7 May 2024, Mr Tleis and Mr Alaouie resolved that in their opinion the Company was likely to become insolvent at some future time and resolved to appoint administrators to the Company.

   3. (3)

      On 11 May 2024, Mr Tleis agreed to the halting of all sales of the Roxy's Bootcamp courses on the website.

   4. (4)

      It appears to me that Ms Davis-Jacenko, Mr Tleis and Mr Alaouie have each ceased to act in the interests of the Company as opposed to their own personal interests.

   5. (5)

      It is the stated intention of Ms Davis-Jacenko, Mr Tleis and Mr Alaouie for the Company to cease operations within the near future.

   6. (6)

      There are significant doubts over the solvency of the Company due to the fact that there are no books and records of the Company which contain a reliable basis upon which its financial position, including its assets and liabilities, can be established. The Company only has approximately $3,000 in its bank account at the present time, with a prospective liability for Goods and Services Tax of $18,000.

   7. (7)

      There is no evidence before me as to the respective financial positions of Mr Tleis and Mr Alaouie to establish whether they are each in a position to provide the Company with funds to meet the estimated taxation liabilities of the Company, as promised in the Deed of Undertaking made between them and the Company.

   8. (8)

      There is an urgent need to protect the public interest in advance of the draw of the prizes in the Promotion on 7 June 2024, by placing independent liquidators in control of the Company in circumstances where the Promotion has been publicised on multiple occasions using highly questionable statements as to the truth of what was being offered (such as "giving away a $10 million house"), the public has acquired Roxy's Bootcamp training courses in reliance on those statements and there are significant doubts over whether the draw can be conducted without access to customer information, which has been withheld by Ms Davis-Jacenko until the present time, and whether those prizes will in fact be awarded by the Company.

   9. (9)

      The proposal made by Mr Tleis and Mr Alaouie in the First Prize Deed to deal with the Cronulla property, appears to be in clear breach of the Promotions Agreement and is also fully dependent on the Insurance Policy responding to a claim made on it. It is unclear whether the Insurance Policy will respond to any claim made on it in circumstances where it is a condition precedent in it that the prize for drawing two winning symbols in the game must not exceed $7 million and the Cronulla property has been valued at $10 million. If any claim on the Insurance Policy by the Company is denied, there is no evidence before me to suggest how any unencumbered title to the Cronulla property could be given if the first prize in the Promotion was won.

3. [19]

   It was put to me by the defendants that the $250,000 presently held in the trust account of Yazbeck Law to be paid to the winner of the first prize under the Promotion may be at risk if provisional liquidators were appointed to the Company, but I do not consider that to be of any serious risk when officers of the court hold that amount in trust for the Company on express terms that it is "funds to be held for first prize payout". It appears to me that it will be available to the provisional liquidators only for that purpose as well.

4. [20]

   It was also submitted to me by the defendants that I should take into account the reputational damage that will be suffered by Mr Tleis and Mr Alaouie if provisional liquidators are appointed. I do not consider that matter to be of any real weight in my discretion in circumstances where there has already been significant reputational damage suffered by Ms Davis-Jacenko, Mr Tleis and Mr Alaouie simply by reason of their involvement in the Promotion. On any view, the Promotion has attracted significant adverse publicity for all those involved in it, particularly surrounding the terms in which it was announced and described as a "giveaway of a $10 million house". This has led to online commentary which has been extremely derogatory about the Promotion itself and those involved in it. It has been frequently described as a "scam".

5. [21]

   Ms Davis-Jacenko submitted that Mr Tleis, as the sole director of the Company, is acting in clear conflict of interest. I do not place much weight on that consideration in light of the fact that the obligations contained in the Shareholders Agreement need to be read alongside the obligations contained in the Promotions Agreement, having been entered on the same day. It was clear from the Promotions Agreement that all the parties had agreed that there would be transactions between the Company and its directors. In the case of Ms Davis-Jacenko, she was selling the Hermes Birkin bag and a Rolex watch to the Company at agreed prices. In the case of Mr Tleis and Mr Alaouie, they were selling the Cronulla property to the Company at an agreed price. It was clearly disclosed to each of the shareholders and directors of the Company that these transactions were occurring on the terms as set out in the Promotions Agreement. I do not consider that Mr Tleis is prevented from acting as a director of the Company simply because he is one of the owners of the Cronulla property and has dealings with the Company in relation to it.

6. [22]

   In light of the conclusions I have reached, it is not necessary for me to make any of the interlocutory orders sought by the Company, Salameh Investments and Tleis Investments or deal with the other parts of the interlocutory process filed by Ms Jacenko.

7. [23]

   I note that Andrew Blundell and Simon Cathro of Cathro & Partners Pty Ltd consent to their appointment as joint and several provisional liquidators of the Company.

UNDERTAKINGS

1. [24]

   I note the respective undertakings of Ms Davis-Jacenko and Mr Tleis to the court in the following form:

   1. (1)

      The undertaking of Ms Davis-Jacenko:

   2. (2)

      The undertaking of Mr Youssef Tleis that until further order of the court, he will not use any data or information provided by Ms Davis-Jacenko to him pursuant to her undertaking noted in (1)(a) other than for the purpose of collating, preparing and providing the relevant data in a form to Plexus as necessary to conduct a draw of the Roxy’s Brand Bootcamp Promotion (collectively Undertakings).

ORDERS

1. [25]

   For these reasons, and noting the Undertakings, I make the following orders:

   1. (1)

      Order pursuant to s 472(2) of the Corporations Act 2001 (Cth) that Andrew Blundell and Simon John Cathro of Cathro & Partners Pty Ltd be appointed jointly and severally as provisional liquidators of Roxy's Bootcamp Pty Ltd ACN 674 872 872 until the making of a winding up order or otherwise until further order.

   2. (2)

      Order that the interlocutory process filed 24 May 2024 otherwise be dismissed.

   3. (3)

      Order that the interlocutory process filed 27 May 2024 be dismissed.

   4. (4)

      The costs of the proceedings be costs in the cause.

   5. (5)

      These orders are to be entered forthwith.

   6. (6)

      The originating process filed 24 May 2024 and the interlocutory process filed 29 May 2024 be adjourned to 24 June 2024 in the Corporations Directions List.

   7. (7)

      Liberty to apply on two business days' notice specifying the relief sought.