Spandri v Deme Pty Ltd

These are my reasons for making orders and directions today appointing a Receiver and Manager (Receiver) to the assets and business of the first defendant, Deme Pty Ltd (Deme), a construction company.

Emilio De Michelis (deceased) was, until his death on 8 June 2021, the sole director and shareholder of Deme.

The plaintiff in these proceedings, Mariangela Spandri, claims to have been the deceased’s de facto partner since 1994.

The second to eighth defendants are the siblings and nieces and nephews of the deceased (relative defendants).

The plaintiff and the relative defendants believe that the deceased died intestate leaving an estate comprising, amongst other things, real property and company shares, including his share in Deme. They also have competing claims for letters of administration to be granted to them and for beneficial entitlement to the deceased’s estate.

As a consequence of the deceased’s death, Deme has no director. Deme is, however, a party to a number of contracts concerning ongoing projects in Smithfield, Fairfield and Campbelltown and a joint venture agreement and contract for sale in relation to land comprising folio reference 01/1267546 (Lasso Road property).

The proceedings were commenced by the plaintiff on an urgent basis on 14 July 2021 seeking the appointment of Schon Gregory Condon as a Receiver to the assets of Deme or, alternatively, for Mr Condon, to be appointed as a liquidator. The urgency of the application arises because the Lasso Road property contract for sale is due to complete within the next few weeks. The proceedings were stood over for a week to enable the plaintiff and the relative defendants to discuss whether some accommodation could be reached pending the determination of their competing claims.

At the hearing on 21 July 2021, the parties proposed consent orders that provided for Mr Condon to be appointed as the Receiver of Deme’s existing business and its interest in the Lasso Road property joint venture and contract for sale.

The application is made pursuant to s 67 of the Supreme Court Act which provides that the Court may, at any stage of the proceedings, on terms, appoint a receiver by interlocutory order in any case in which it appears to the Court to be just and convenient so to do. I am satisfied that this is a case where it is just and convenient to appoint Mr Condon as the Receiver on the terms proposed by the revised short minutes of order received by my chambers on 21 July 2021.

The evidence before the Court makes clear that there is no governing mechanism of Deme which means that it is currently unable to function. The circumstances are such that Deme’s property and assets need to be taken into the control and put into the hands of an appropriate person who can deal with the immediate issue of Deme’s interest in the Lasso Road property joint venture and contract for sale until the other issues in the proceedings can be determined. The orders provide for the Receiver to have a supervisory role in carrying on Deme’s existing business and the powers to do what is necessary and convenient to avoid Deme breaching its obligations under the Lasso Road property joint venture and contract for sale, including the power to transfer, sell or assign its interest in the joint venture and contract for sale or, alternatively, complete Deme’s obligations under it.

The appointment of a Receiver will go towards ensuring that Deme is not subjected to the costs of any breach of contract in relation to the Lasso Road property and that the company is properly managed until the issue of who is granted letters of administration is resolved, if only on an interim basis.

There is evidence that Mr Condon consents to being appointed to act as Receiver of Deme and is not aware of any conflict of interest or duty. He is a registered liquidator and his costs and expenses will be paid from the assets of Deme, which I was informed includes some real property assets. The plaintiff has also proffered the usual undertaking as to damages in relation to Mr Condon’s appointment.

At the hearing, I raised with the parties that the plaintiff would need to amend her originating process to incorporate her claim for letters of administration as the application for the appointment of Mr Condon as a Receiver was an interlocutory measure to facilitate the determination of some claim for final relief. The parties have dealt with this issue by amending the orders sought to provide for the plaintiff to file and serve an amended Summons seeking a grant of letters of administration and orders in relation to the beneficial entitlement to deceased’s estate by 13 August 2021. The amended orders also provide for the relative defendants to file and serve a Cross Summons by 7 September 2021.

For these reasons, I made the following orders.