B Pty Ltd & Anor and Batavia & Anor - [2018] FamCA 858

FAMILY COURT OF AUSTRALIA

B PTY LTD AND ANOR & BATAVIA AND ANOR

[2018] FamCA 858

FAMILY LAW – PROPERTY SETTLEMENT – proceedings between the liquidators of two companies conducted by a bankrupt who was a party to a marriage seek to recover monies retained in a controlled account from the sale of the parties home which was in the wife’s name only in circumstances where the company’s resources were improperly used as if they were the parties’ monies in respect of not only the acquisition of property but also mortgage payments and general expenses such as school fees of the parties together with renovations to the relevant properties – where the liquidators have undertaken a tracing exercise and it is appropriate on the evidence to find that the funds now held from the sale of the last time are directly traceable to earlier properties into which the company funds were improperly put without appropriate loans being set up due by the wife – where the relief sought is appropriate in the circumstances.

Corporations Act 2001 (Cth)
Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)

Calverley v Green [1984] HCA 81; (1984) 155 CLR 242
Ingram v Ingram (1941) VLR 95
Rural Press Limited v ACCC [2003] HCA 75; (2003) 216 CLR 53

FIRST PLAINTIFF:

B Pty Ltd (In Liquidation)

SECOND PLAINTIFF:

C Pty Ltd (In Liquidation) ACN …

FIRST DEFENDANT:

Ms Batavia

SECOND DEFENDANT:

The Trustees of the Property of Mr Batavia, a Bankrupt

FILE NUMBER:

MLC

9174

2017

DATE DELIVERED:

25 October 2018

PLACE DELIVERED:

Melbourne

PLACE HEARD:

Melbourne

JUDGMENT OF:

Cronin J

HEARING DATE:

19 October 2018

REPRESENTATION

COUNSEL FOR THE FIRST AND

SECOND PLAINTIFF:

Mr McKillop

SOLICITOR FOR THE FIRST AND

SECOND PLAINTIFF:

HWL Ebsworth Lawyers

THE FIRST DEFENDANT:

No Appearance

COUNSEL FOR THE SECOND

DEFENDANT:

Mr Fary with Mr Silver

SOLICITOR FOR THE SECOND

DEFENDANT:

Craddock Murray Neumann Lawyers

Orders

IT IS ORDERED THAT

The Application in a Case filed by the First and Second Plaintiffs (“the Plaintiffs”) on 16 October 2018 is granted.

THE COURT DECLARES THAT

The First Plaintiff is entitled to $1,954,281.06 of the proceeds of the sale of D Street, Suburb E, Victoria (“the Property”) on the basis of its interest as beneficial owner of the Property.
The Second Plaintiff is entitled to $143,800.06 of the proceeds of the sale of the Property on the basis of its interest as beneficial owner of the Property.
The First Defendant’s interest in the proceeds of sale of the Property are subject to an equitable charge in favour of:
(a) the First Plaintiff as to $228,325.32;
(b) the Second Plaintiff as to $86,067.48.

IT IS FURTHER ORDERED THAT

The monies in the account BSB … and Account Number #33, held with the National Australia Bank Ltd in the name of Mr F as liquidator of B Pty Ltd (In Liquidation) (“Controlled Monies Account”), be paid as follows:
(a) to the First Plaintiff in the amount of $2,196,732.07; and
(b)…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2018] FamCA 858
Decision Date: 25 October 2018

CaseChat Overview and Summary

In the Supreme Court of Victoria, Justice Cronin considered an application by B Pty Ltd and another (the Plaintiffs) against Batavia and another (the Defendants). The dispute concerned the entitlement to proceeds from the sale of a property located at D Street, Suburb E, Victoria, and the distribution of funds held in a controlled monies account.

The court was required to determine the extent of the Plaintiffs' beneficial ownership interests in the property and the proceeds of its sale, and to establish the nature and priority of the First Defendant's equitable charge over those proceeds. Furthermore, the court needed to ascertain the correct distribution of funds from the controlled monies account, including the satisfaction of the Plaintiffs' claims, interest, and costs, as well as the claims of the Australian Taxation Office.

Justice Cronin granted the Plaintiffs' application, declaring their entitlement to specific amounts from the property sale proceeds based on their beneficial ownership. The court also found that the First Defendant's interest in the proceeds was subject to an equitable charge in favour of each Plaintiff for specified sums. The court then ordered the distribution of funds from the controlled monies account, prioritising payments to the Plaintiffs, followed by the satisfaction of interest and costs awarded against the First Defendant. The remaining balance was to be applied towards the ATO's garnishee notice, subject to other proceedings.

Orders

Orders of the court

IT IS ORDERED THAT

The Application in a Case filed by the First and Second Plaintiffs (“the Plaintiffs”) on 16 October 2018 is granted.

THE COURT DECLARES THAT

The First Plaintiff is entitled to $1,954,281.06 of the proceeds of the sale of D Street, Suburb E, Victoria (“the Property”) on the basis of its interest as beneficial owner of the Property.

The Second Plaintiff is entitled to $143,800.06 of the proceeds of the sale of the Property on the basis of its interest as beneficial owner of the Property.

The First Defendant’s interest in the proceeds of sale of the Property are subject to an equitable charge in favour of:

(a) the First Plaintiff as to $228,325.32;

(b) the Second Plaintiff as to $86,067.48.

IT IS FURTHER ORDERED THAT

The monies in the account BSB … and Account Number #33, held with the National Australia Bank Ltd in the name of Mr F as liquidator of B Pty Ltd (In Liquidation) (“Controlled Monies Account”), be paid as follows:

(a) to the First Plaintiff in the amount of $2,196,732.07; and

(b) to the Second Plaintiff in the amount of $231,355.23.

After the payments referred to in order 5, the balance of the Controlled Monies Account be applied in accordance with orders 9 and 10.

Pursuant to Section 22(1) of the Supreme Court Act 1986 (Vic) a Registrar of this Court is authorised to sign any document required to effect the payments from the Controlled Monies Account as established by an affidavit drawn by the solicitor for the Plaintiffs produced to the Registry should the First Defendant or her former solicitor Mr G fail to do so.

The First Defendant pay interest on the Plaintiffs’ claims as follows:

(a) to the First Plaintiff in the amount of $396,380.12

(b) to the Second Plaintiff in the amount of $41,745.93.

The costs of the First and Second Plaintiffs of the proceeding be paid by the First Defendant, Ms Batavia, including any reserved costs.

10.

The costs referred to in order 9 above be paid or reimbursed out of the balance of the Controlled Monies Account on a pari passu basis.

11.

That subject to the determination of the Orders sought by the Second Defendant in proceedings (P)MLC3497/2017, after the payments referred to in order 10, the Plaintiffs pay the balance of the Controlled Monies Account (if any) to the ATO in respect of its garnishee notice.

12.

There be no order as to costs between the Plaintiffs and the Second Defendant.

13.

The Orders sought by the First Defendant in her Response to Application in a Case filed in proceedings (P)MLC3497/2017 on 15 June 2018 is otherwise dismissed.

Note: The form of the order is subject to the entry of the order in the Court’s records.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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