Public examinations of three private companies associated with Luke Saraceni are set to proceed after the Supreme Court of Western Australia threw out objections over the appointment of administrators in January last year.
Ferrier Hodgson partners were appointed receivers and managers over the three companies after Raine Square financier Bankwest swooped on assets held over the $500 million project in January last year.
Mr Saraceni had made a constitutional objection to the public examination of his companies and assets Seaport Pty Ltd, owner of Warrnambool, Victoria's Bayside City Plaza; Newport Securities, owner of Saracen Estates and the Duckstein Brewery in the Margaret River region; and Mayport Nominees, the owner of retail strata units in Spearwood.
Bankwest, project financier for Raine Square, appointed Ferrier Hodgson after the project developer, Mr Saraceni’s and business partner Hossean Pourzand’s private company, Westgem Investments, missed a loan repayment on December 31, 2010.
Mr Saraceni applied to avoid examination on the basis that the appointment exceeded the legislative power of the Commonwealth and the courts under section 596A of the Corporations Act 201.
Mr Saraceni also argued the appointment of administrators was an abuse of process and a denial of natural justice, claims which are still being determined by the courts, according to Mr Saraceni’s lawyer, Jackson McDonald senior associate Chris Pearce.
The Supreme Court’s Justice McLure found, however, the power of a court to conduct examinations of bankrupts and companies in liquidation was a long-standing practice, predating federation, and from 1858, examination power in Western Australia applied to both court-ordered and voluntary company wind-ups.
“The issues posed for determination by this court wrongly focus on the status of the eligible applicant,” Justice McLure said in the decision.
“The exercise of power by the court to issue summonses for examination … and to conduct an examination … in relation to a corporation in receivership … constitutes an exercise of the judicial power of the Commonwealth and is within the power of the Commonwealth to confer on a court.”
Ferrier Hodgson’s Martin Jones said Mr Saraceni had made a highly technical argument in an attempt to avoid attending the public examinations.
“We welcome the decision as it helps to clear the way for public examinations to ultimately proceed against Luke Saraceni and others, and will enable us to further investigate matters concerning the conduct and management of the companies,” Mr Jones said.
Mr Pearce said Mr Saraceni was currently considering whether to appeal the decision.
A representative from Mr Saraceni's office said he was interstate and could not be reached for comment.