Barilla & Barilla (No 2)

Case [2023] FedCFamC1F 277

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Barilla & Barilla (No 2) [2023] FedCFamC1F 277

File number: CAC 1604 of 2018
Judgment of: GILL J
Date of judgment: 19 April 2023

Catchwords:

FAMILY LAW – PRACTICE AND PROCEDURE – PROPERTY – Where the interests of the liquidator are directly impacted by the property proceedings – Liquidator seeking to withdraw from proceedings and seek relief in another jurisdiction – Where the court has jurisdiction for the relief sought by the liquidator – Where the wife seeks an anti-suit injunction to prevent liquidator pursuing relief in another jurisdiction – Consideration of whether liquidator conducting litigation in another jurisdiction is oppressive and vexatious.

Legislation:

Corporations Act 2001 (Cth)

Family Law Act 1975 (Cth) s 79

Federal Circuit and Family Court of Australia (Family Law Rules) 2021 (Cth) rr 3.01, 6.01–6.04, 6.06, 6.08, 7.06
Cases cited:

Barnes v Addy (1874) L.R. 9 Ch. App. 244

CSR Limited v Cigna Insurance Australia Pty Ltd (1997) 189 CLR 345

Lederer & Hunt (2007) FLC 93-311

Pates & Pates [2018] FamCAFC 171
Division: Division 1 First Instance
Number of paragraphs: 84
Date of hearing: 5 April 2023
Place: Canberra
Counsel for the Applicant: Mr Howard
Solicitor for the Applicant: Farrar Gesini Dunn
Solicitor for the Respondent: Litigant In Person
Counsel for the Interested Party: Mr Haddock
Solicitor for the Interested Party: Parker Coles Curtis

ORDERS

CAC 1604 of 2018

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN:

MS BARILLA

Applicant
AND:

MR BARILLA

Respondent

MR MARRIOTT AS LIQUIDATOR OF B PTY LTD (IN LIQUIDATION)

Interested Party

order made by:

GILL J

DATE OF ORDER:

19 APRIL 2023

THE COURT ORDERS THAT:

1.In the event that he intends to prosecute a claim against the husband, wife or to seek a remedy with respect to the property at C Street, Suburb D, NSW, Mr Marriott, the liquidator of B Pty Ltd (“the liquidator”) shall within 28 days of these orders file a response setting out the relief sought and identifying whether the relief is sought in debt and/or equity. 

2.Should the liquidator fail to file in accordance with the above order he is taken not to pursue relief against the husband, wife or a remedy with respect to Suburb D and is discharged from these proceedings as a party. 

3.The liquidator is hereby restrained by injunction from commencing or continuing a claim in debt or equity against the husband, wife or in relation to Suburb D connected with the liquidation of B Pty Ltd.

4.Whether or not a party, the liquidator has leave to apply in relation to the above orders.

5.The proceedings are adjourned to a date to be fixed following the expiration of 28 days for further trial directions.

6.That within 30 days of the date of final hearing dates being allocated, unless otherwise agreed between the parties in writing, the wife and husband do all things necessary to obtain an updated valuation for Suburb D, from E Company, or such other valuer…

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Details
AGLC
Barilla & Barilla (No 2) [2023] FedCFamC1F 277
Case
[2023] FedCFamC1F 277
Decision Date

CaseChat Overview and Summary

The matter of Barilla & Barilla (No 2) involved a liquidator who was a party to a family law proceeding. The liquidator was seeking to have the wife’s relief against him dismissed and to be released from the proceedings. The wife, on the other hand, sought for the liquidator to provide a response and certain particulars. The court was required to decide on the legal issues regarding the liquidator's participation in the proceedings and whether the liquidator should be discharged from the proceedings or remain subject to an anti-suit injunction.

The court considered the liquidator's position that his investigations were ongoing and that it was not viable for the creditors of the company to remain in the Family Law proceedings. However, the liquidator had identified that there were claims against the wife and husband, and that the primary assets of the company were in the form of loans made to the wife and husband. The court found that if the liquidator was to seek relief against the parties and remain in the proceedings, it was appropriate for the liquidator to file a response identifying the relief sought and whether it was in equity or in debt. The court also noted that the issue of the filing of affidavits did not arise unless or until a response was filed.

The court directed the liquidator to file a response, and if the liquidator failed to file a response in accordance with the direction, the liquidator would be discharged from the proceedings on the basis that he sought no relief from the court. However, the liquidator would remain subject to the anti-suit injunction. On filing or failing to file a response by the liquidator, the matter would be listed to give trial directions and consideration to whether, in light of the filing or non-filing of a response, a trial date should be allocated. The court also made orders for the parties to file undertakings as to disclosure and specific orders for disclosure directed to the husband. Orders were also made for the updating of the valuation of the Suburb D property.

In conclusion, the court directed the liquidator to file a response, and if the liquidator failed to do so, the liquidator would be discharged from the proceedings. However, the liquidator would remain subject to the anti-suit injunction. The court also made orders for the parties to file undertakings as to disclosure, specific orders for disclosure directed to the husband, and orders for the updating of the valuation of the Suburb D property.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

The liquidator seeks to have the wife’s relief against him dismissed and to be released from the proceedings.THE EVIDENCEThe circumstances of withdrawal by the liquidator The liquidator first appeared on 3 August 2022, at which time he advised of a need to complete his investigations, a process then estimated at 3 months. This was updated on 26 October 2022, when a further six months was identified as necessary, seeking at the same time that the final hearing be heard not before July 2023. On that day, the trial date of 26 October 2022 was vacated. Despite requests from the wife, the liquidator has not identified his claim, if there is to be one, against the wife. This occurs in the further context, as set out above, that the liquidator has asserted that the creditors of B Pty Ltd are owed approximately $490,000, and that the primary assets of B Pty Ltd are in the form of loans made to the wife and husband. The liquidator’s stated position is that his investigations are ongoing, and that he does not as yet “have a definitive position about the quantum of what claims may exist against the Wife and the [Suburb D] Property.”[1] He has also stated that he has reached a view that remaining in the Family Law proceedings is not viable for the creditors of the company, and that in any event to do so results in “the potential delay to the parties due to the substantial further work to be done to settle on a quantum of claim.”[2] Each of these explanations anticipates a claim against the parties. Specifically, the liquidator says at [27] that:[1] Affidavit of Mr Marriott filed 3 April 2023, paragraph 22. [2] Affidavit of Mr Marriott filed 3 April 2023, paragraph 15.4.Other Responses to the Wife’s Affidavit filed 28 February 202327. Paragraph 18: The ongoing nature of my investigations and uncertainty around them is one of the reasons why I filed a Notice of Discontinuance and why I seek to be removed as a party to the proceedings. At the time I filed a Notice of Discontinuance I had in my mind that my continued participation in these proceedings would yield no benefit to the Parties or the Company’s creditors and that I could progress my investigations and claims more cost effectively for the Parties in another forum. I formed that view only after it became apparent that all opportunities to reach a commercial settlement with the Parties had evaporated.[3][3] Affidavit of Mr Marriott filed 3 April 2023, paragraph 27. That is, the discontinuance in this forum is in contemplation of taking action in another forum. That action will necessarily involve a claim that impinges upon the Suburb D property, given the liquidator’s acceptance at [8] and [9], as set out below, that the claims all lead to that property:8. In brief, in my Report I note that my investigations are ongoing but have caused me to believe that the Company may have claims against:8.1. the property at [C Street, Suburb D NSW] ([Suburb D] property) under the principle of equitable tracing;8.2. the Husband and the Wife and/or the Suburb D property under the first and/or second limb of Barnes v Addy; and8.3 both the Husband and the Wife for the value of their unpaid loan accounts. 9. It is apparent from my investigations that the only source of funds from which the settlement of any such claims could arise would be the Suburb D Property.[4] [4] Affidavit of Mr Marriott filed 3 April 2023, paragraphs 8–9.

Decision

Reasons for decision

The wife seeks both that the liquidator file a Response, and give certain particulars. If the liquidator is to seek relief against the parties and remain in the proceedings it is appropriate that the liquidator file a Response identifying the relief and in particular whether the relief is sought in equity or in debt. The balance of the particularisation sought by the wife does not arise until the Response is filed. Similarly, the issue of the filing of affidavits does not arise unless or until a Response is filed. Directions will be given for the filing of a Response, in default of which it will be taken that the liquidator does not pursue relief in this jurisdiction and he will be discharged from the proceedings as a party, but remain subject to an anti-suit injunction to prevent litigation in another forum. In the event that the liquidator files a Response, the matter will be brought back in order to make trial directions and to fix (if possible) a trial date.CONCLUSION The liquidator will be subject to an anti-suit injunction, but will be at liberty to apply to the court in relation to such. The liquidator will be required to file a Response. Failure to file a Response in accordance with the direction will result in the discharge of the liquidator from the proceedings on the basis that he seeks no relief from the court. He will however remain subject to the anti-suit injunction. On filing, or failing to file a response by the liquidator the matter will be listed to give trial directions and consideration to whether, in light of the filing or non-filing of a Response a trial date should be allocated. Orders will be made for the parties to file undertakings as to disclosure, and specific orders for disclosure will be directed to the husband. Orders will be made for the updating of the valuation of the Suburb D property.

Ratio Decidendi

Legal Principle Established

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