Abdulnour, Elias v Daly, Christopher Thomas
[1996] FCA 137
•1 MARCH 1996
CATCHWORDS
CORPORATIONS - application to remove statutory liquidator - refusal of application for adjournment - issues decided in earlier Supreme Court proceedings - whether abuse of process
Corporations Law
Hughes v National Trustees and Agency Company of Australasia [1978] VR 257
Elias Abdulnour v Christopher Thomas Daly
(No. VG 3315 of 1995)
Judge: Heerey J
Date: 1 March 1996
Place: Melbourne
IN THE FEDERAL COURT OF AUSTRALIA )
)
VICTORIA DISTRICT REGISTRY ) No. VG 3315 of 1995
)
GENERAL DIVISION )
IN THE MATTER of ANAROC PTY LTD (In liquidation)
ACN 051 234 167
ELIAS ABDULNOUR
Applicant
- and -
CHRISTOPHER THOMAS DALY
Respondent
JUDGE: Heerey J
DATE: 1 March 1996
PLACE: Melbourne
MINUTE OF ORDERS
The Court orders that:
The application to adjourn the proceedings be dismissed.
The application be dismissed with costs including reserved costs, such costs to include the costs of the respondent's notice of motion dated 26 February 1996.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules
IN THE FEDERAL COURT OF AUSTRALIA )
)
VICTORIA DISTRICT REGISTRY ) No. VG 3315 of 1995
)
GENERAL DIVISION )
B E T W E E N:
ELIAS ABDULNOUR
Applicant
- and -
CHRISTOPHER THOMAS DALY
Respondent
JUDGE: Heerey J
DATE: 1 March 1996
PLACE: Melbourne
REASONS FOR JUDGMENT
An application has been made by the applicant, Mr Elias Abdulnour, to adjourn this proceeding. The initial application was filed on 16 June 1995 and seeks the removal of Mr Christopher Thomas Daly as a liquidator of Anaroc Proprietary Limited.
In support of his application for adjournment Mr Abdulnour said from the bar table that he no longer had a solicitor and that last night his solicitor had "decided not to continue" with the case. I should add that Mr Settle, counsel instructed by Tress, Cocks and Maddox, appeared this morning and said his instructions had been withdrawn. Mr Kendall of counsel who appeared for the respondent said that he wished to cross-examine Mr Abdulnour. I told Mr Abdulnour that if he wished to have what he said accepted as sworn evidence he would have to be subject to cross-examination. He declined to go into the witness box.
The company was ordered to be wound up on 29 September 1993. The liquidation is almost completed. The Australian Securities Commission have indicated that it has no objection to the completion of the winding up.
The liquidator has funds in hand of approximately $4000. He has a balance outstanding to him of fees and disbursements of $25,710.40.
The National Australia Bank is a secured creditor of the company with a fixed and floating charge over all its assets and is owed some $70,000. The unsecured creditors total $280,788.33 as at 26 January 1994.
Mr Abdulnour was formerly a director of the company. The grounds of his application are stated in his affidavit in support as follows:
(1) the continued failure and refusal by the respondent to take action to recover moneys owed by Raydan Restaurant Enterprises Proprietary Limited ("Raydan") to Anaroc in respect of a building project carried out by Anaroc for Raydan at Sofia's Restaurant at 857-862 Burke Road, East Hawthorn ("Sofia's Restaurant");
(2) the continued failure, refusal and delay by the respondent in enforcing a claim under an insurance policy taken out by Anaroc with CIC Insurance Proprietary Limited in respect of an accident during the building project at Sofia's Restaurant; and
(3) the excessive costs and expenses charged by the respondent in the conduct of the liquidation of Anaroc.
The affidavit goes on to assert that a substantial majority of unsecured creditors, amounting to allegedly some 77 per cent, support the application.
Mr Abdulnour was made bankrupt by a sequestration order on 2 July 1991. On 12 May 1994 Mr Arthur Hazouri, who was an unsecured creditor of the company in an amount of approximately $13,000, instituted an appeal in the Supreme Court of Victoria against three decisions of the respondent as liquidator. Those decisions were described in the notice of appeal as:
(1)The decision of the respondent that the arbitration proceedings between Anaroc Pty Limited and Raydan Restaurant Enterprises Proprietary Limited have been compromised;
(2)The omission and/or refusal of the respondent to pursue a claim for compensation against the company's insurer and/or the supervising engineer in respect of loss suffered by the company; and
(3)The refusal of the liquidator to make available for inspection pursuant to regulation 5.6.02 of the Corporations Regulations the books kept under section 531 of the Corporations Law and Regulation 5.6.01 of the Corporations Regulations.
The appeal was heard by Hayne J. On 21 July 1994 his Honour dismissed the appeal. The first decision complained of in the Supreme Court proceeding which, on its face, bears at least some connection with the first ground relied on in the present proceeding, concerned an arbitration between the company and Raydan. Before the winding-up commenced arbitration proceedings had been in train and the arbitration hearing was due to take place in October 1993. It was alleged that the arbitration proceedings had been settled. There were two versions of a written settlement agreement, one providing for a payment of $235,000 and the other for a payment of $365,000.
Shortly after the commencement of the liquidation, and as a result of some court proceedings, the liquidator gained control of the proceeds of a cheque for $200,000 which had been received in part-payment of the terms of settlement. The complaint before Hayne J was to the effect that the liquidator should have treated the settlement as void, or unenforceable, and revived the arbitration proceedings. The liquidator had obtained advice from solicitors and counsel to the effect that the settlement agreement, for whichever amount, was valid and enforceable. His Honour carefully reviewed the circumstances that the liquidator had taken into account and also considered the argument that the settlement was void as a "disposition" under s 468 of the Corporations Law.
His Honour rejected the disposition argument and concluded that the liquidator was entitled to reach the decision he did having regard to the circumstances and, in particular, the lack of any satisfactory and acceptable indemnity for his costs. I say satisfactory and acceptable because there was some evidence of an anonymous "backer" who claimed to be prepared to finance the arbitration subject to some unacceptable conditions. His Honour also pointed out that if the arbitration proceedings were to be revived the $200,000 would have to be returned, and in the likely event that the National Australia Bank considered this reduction of the assets available not being to its advantage, it could appoint a receiver and manager.
The period for appeal expired. An application to extend the time was made before Beach J. In a reserved judgment on 7 September 1994, his Honour dismissed that application.
His Honour considered the prospects of success on the appeal, which was of course a relevant consideration: see Hughes v National Trustees and Agency Company of Australasia [1978] VR 257. He found that the prospects of success were "remote". An application for leave to appeal against Beach J's decision was brought to the Full Court. On 7 October 1994 that application was dismissed.
As I have said, the appeal heard by Hayne J and the subsequent applications to Beach J and the Full Court were brought in the name of Mr Hazouri, a creditor of the company. Mr Hazouri was summoned by subpoena and gave evidence before me. I am quite satisfied on his evidence that the reality was that he was bringing the appeals on behalf of Mr Abdulnour who was not discharged from his bankruptcy until July 1994. The position of Mr Hazouri excites some sympathy. He was asked by Mr Abdulnour and Mr Abdulnour's solicitor, Mr Glover, to bring the appeals and was assured of success. In the result Mr Hazouri is now liable for the costs of the proceedings before Hayne J, which have been taxed at $13,000, and the costs of the proceedings before Beach J and the Full Court which were recently taxed at $12,741.90. Mr Hazouri is in no position to pay that money and his home must be at some risk.
In considering this application for an adjournment I have to consider, amongst other things, where there is a realistic prospect of success and whether this is a genuine proceeding. I am satisfied that the first ground asserted in the present proceedings is quite hopeless. It is an attempt to re-litigate questions which were fully determined in the Supreme Court and is an abuse of process.
As to the second ground relied on, that is, the failure to pursue the claim against CIC Insurance, the evidence shows that there is no prospect of obtaining any funding of that litigation from creditors and, of course, the liquidator is not obliged to fund it out of his own pocket.
Finally, the complaint about the liquidator's fees and charges does not contain any evidence beyond the bare assertion that they are excessive. In any case, if there is complaint about a liquidator's charges that can be dealt with under s 473(6) of the Corporations Law and does not provide a proper basis in itself for the removal of the liquidator.
The failure of Mr Abdulnour to repay what, at the very least, might be thought to be a debt of honour to Mr Hazouri for some $25,000 and the late withdrawal of his (Mr Abdulnour's) practitioners, which, seeing that they were actively engaged in filing affidavits up until two weeks ago I can only infer was due to his failure to put them in funds, indicates that Mr Abdulnour is not likely to have any assets.
If this matter were to proceed the liquidator would have to fund the costs personally with no prospects of recovery from Mr Abdulnour. I do not think that is a fair burden to place on him. So the application for adjournment is refused.
Mr Abdulnour does not wish to proceed with the application today so the application will be dismissed with costs including reserved costs.
The costs will include the costs of the notice of motion.
I certify that this and the preceding six (6) pages are a true copy of the reasons for judgment of his Honour Justice Heerey.
Dated:
Associate
Appearances
Counsel for the applicant: In person
Solicitor for the applicant: In person
Counsel for the respondent: Mr R Kendall
Solicitor for the respondent: Home Wilkinson & Lowry
Date of hearing: 1 March 1996
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