Apostolou v VA Corporation Aust Pty Ltd (No 3)

[2010] FCA 247

FEDERAL COURT OF AUSTRALIA

Apostolou v VA Corporation Aust Pty Ltd (No 3) [2010] FCA 247

Citation:		Apostolou v VA Corporation Aust Pty Ltd (No 3) [2010] FCA 247
Parties:		VASILIKI APOSTOLOU (AS TRUSTEE OF THE VASILIOU FAMILY TRUST) and ANDREW VASILIOU (AS TRUSTEE OF THE VA UNIT TRUST) v VA CORPORATION OF AUST PTY LTD, DAVID CHARLES QUIN AND CLYDE PETER WHITE (AS JOINT LIQUIDATORS OF VA CORPORATION OF AUST PTY LTD), PERPETUAL TRUSTEE COMPANY LIMITED, CHALLENGER MANAGED INVESTMENTS LIMITED and REGISTRAR OF TITLES
File number:		VID 124 of 2008
Judge:		FINKELSTEIN J
Date of judgment:		18 March 2010
Date of hearing:	9 March 2010
Place:	Melbourne
Division:	GENERAL
Category:	No Catchwords
Number of paragraphs:	11
Appearing for the applicants:	Mr A Vasiliou (in person)
Counsel for the 4th and 5th Respondents:			Mr D Williams
Solicitor for the 4th and 5th Respondents:			Norton Rose

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION	VID124 of 2008

BETWEEN:	VASILIKI APOSTOLOU (AS TRUSTEE OF THE VASILIOU FAMILY TRUST) and ANDREW VASILIOU (AS TRUSTEE OF THE VA UNIT TRUST) Applicants
AND:	VA CORPORATION OF AUST PTY LTD, DAVID CHARLES QUIN AND CLYDE PETER WHITE (AS JOINT LIQUIDATORS OF VA CORPORATION OF AUST PTY LTD), PERPETUAL TRUSTEE COMPANY LIMITED, CHALLENGER MANAGED INVESTMENTS LIMITED and REGISTRAR OF TITLES Respondents

JUDGE:	FINKELSTEIN J
DATE:	18 MARCH 2010
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

1. On 11 February 2010 the applicants’ claims against the mortgagee of the property at 181-185 St Kilda Road, St Kilda and the former liquidators of VA Corporation of Aust. Pty Ltd was dismissed.  One matter left outstanding was the disposition of approximately $1,364,647.61 being the balance of the proceeds of the sale of the St Kilda Road property after $1,433,197.00 was disbursed to VA Corporation.  $850,000.00 was originally retained by the mortgagee in an interest-bearing account in anticipation of future legal costs and the balance of $514,647.33 was paid into court. 

2. The applicants seek an order that the balance of the proceeds be paid to them or, perhaps more correctly, to VA Corporation.  There is some urgency to their application.  A debt of approximately $10,502.40 for local taxes is owed to the Glen Eira City Council.  It seems the debt has been outstanding for some time and the Council has moved to sell the property that is security for the payment of the debt. 

3. The application for payment is opposed by the mortgagee as it contends that in equity and by reason of its mortgage it is entitled to retain enough of the proceeds of sale to indemnify it in respect of future claims the applicants might bring in connection with the mortgaged property.  The mortgagee claims a lien over the funds for that purpose. 

4. As a result of a direction by me, the mortgagee has quantified what it says are its anticipated future costs.  The amount in question is $557,050.00.  The balance held by the mortgagee as at 15 March 2010 was $617,026.15, with approximately $16,000 plus GST in legal fees to be debited at the end of March 2010. That leaves approximately $43,376.15 to which the mortgagee makes no claim and which it is content might be paid to VA Corporation. 

5. The former liquidators have not made any claim on the funds in the possession of the mortgagee.  That is, I do not understand the former liquidators to be arguing that the sum of approximately $43,376.15 which the mortgagee does not claim should not be paid to VA Corporation. 

6. With respect to the money in court, the former liquidators claim that the money should be kept until the fees and expenses they incurred in the course of the winding up of VA Corporation are assessed and paid.  They have already received part payment by order made on 29 August 2008 but there has been no final assessment of their entitlement.  In addition, the former liquidators may also incur legal costs in relation to actions that the applicants may bring.  One such action is the prosecution of the recently filed appeal against the dismissal of the applicants’ claim.

7. Of the money paid into court, $41,300 represents an amount which was in court to cover a claim by John Matthies & Co, solicitors.  That claim was dismissed.  However, the former liquidators contend that their lien extends to all of the funds from the sale of the trust estate, subject to any prior claim that may be made by the mortgagee.

8. At this point I only have a very rough assessment of costs from each of the mortgagee and former liquidators.  The assessment is not sufficiently detailed for me to determine whether the funds which they say should be retained are more than what would truly be required to cover any potential costs orders the applicants may be ordered to pay.

9. In due course those assessments will have to be substantiated so that I will be in a position to properly rule on the parties’ respective claims.  Until the quantum of the amounts retained in anticipation of future costs is justified by appropriate evidence, I will not rule on the claimed entitlement to the funds.  On the other hand, nor will I order that the funds be paid to the applicants or to VA Corporation, although this may be the ultimate outcome if the anticipated future costs cannot be substantiated. 

10. As to the $43,376.15 surplus held by the mortgagee, I will rule in the near future whether this amount ought to be paid to VA Corporation.  I have heard oral submissions from the mortgagee and the applicants on this matter.  The former liquidators should file any submissions they wish to make by 9.00am on Monday 22 March 2010.  The applicants should file any reply they wish to make by 9am on Wednesday 24 March 2010. 

11. The parties should let me know in the meantime how long they need to file appropriate material substantiating their anticipated future costs. 

I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein.

Associate:

Dated:        18 March 2010