FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Barilla & Barilla (No 7) [2023] FedCFamC1F 1021
File number(s): CAC 1604 of 2018 Judgment of: GILL J Date of judgment: 30 November 2023 Catchwords: FAMILY LAW – PROPERTY – where the liquidator seeks approval of debt settlement compromise under s 477 Corporations Act 2001 – where some creditors opposed the compromise – approval granted
FAMILY LAW – PROPERTY – application by the liquidator for direction under s 90-15 Schedule 2 – Insolvency Practice Schedule (Corporations) 2016 – application approved – costs of liquidator included in costs of winding up companyLegislation: Corporations Act 2001 (Cth)
Family Law Act 1975 (Cth)
Insolvency Practice Schedule (Corporations) 2016 (Cth)
Cases cited: Elderslie Finance Corp Ltd v Newpage Pty Ltd (No 6) (2007) 160 FCR 434
Krejci, in the matter of Union Standard International Group Pty Ltd (No 8) [2023] FCA 1054
Re GVE Hampton Pty Ltd (In Liqu) [2022] VSC 539
Re McDermott and Potts (in their capacities as joint and several liquidators of Lonnex Pty Ltd (in liq)) (ACN 097 786 751) [2019] VSCA 23
Re One Tel (2014) 99 ACSR 247
Division: Division 1 First Instance Number of paragraphs: 37 Date of hearing: 22 November 2023 Place: Canberra Solicitor for the Applicant: Ms Fox, Farrar Gesini Dunn Solicitor for the Respondent: Litigant in Person Counsel for the Intervener: Mr Blank Solicitor for the Intervener: 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 (LIQUIDATOR FOR B PTY LTD)
Intervener
ORDER MADE BY:
GILL J
DATE OF ORDER:
30 NOVEMBER 2023
Amended pursuant to rule 10.13 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) on 8 December 2023
THE COURT ORDERS THAT:
1.Pursuant to section 477(2A) of the Corporations Act 2001, the Liquidator of B Pty Ltd (In Liquidation) ACN … (“the Company”), as an Intervening Party in these proceedings, is authorised to compromise debts due to the Company by Mr Barilla, Ms Barilla and as against the property otherwise known as C Street, Suburb D, NSW, (“the Suburb D Property”), those debts being greater than $100,000, on such commercial terms as he sees fit.
2.Pursuant to section 477(2B) of the Corporations Act 2001, the Liquidator of B Pty Ltd (In Liquidation) ACN … (“the Company”), as an Intervening Party in these proceedings, is authorised to enter into a Deed of Settlement and Release with any or all of Mr Barilla, Ms Barilla and the Suburb D Property on such terms as he sees fit.
3.Pursuant to section 90-15 of Schedule 2 to the Corporations Act 2001, the Liquidator of B Pty Ltd (In Liquidation) ACN (“the Company”), as an Intervening Party in these proceedings, is justified in settling his claims against Mr Barilla, Ms Barilla and the Suburb D Property.
4.Pursuant to section 90-15 of Schedule 2 of the Corporations Act 2001, the proper…
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- Barilla & Barilla (No 7) [2023] FedCFamC1F 1021
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- [2023] FedCFamC1F 1021
- Decision Date
CaseChat Overview and Summary
The court had to decide on two key legal issues. First, whether to approve the liquidator's proposed debt settlement compromise with Mr Barilla, Ms Barilla, and the property known as the Suburb D Property. Second, whether to grant the liquidator's application for a direction under the Insolvency Practice Schedule (Corporations) 2016, specifically concerning the inclusion of the liquidator's litigation costs as part of the winding-up costs. The court was also required to consider whether joinder of the liquidator to the proceedings was appropriate and necessary.
In granting the liquidator's applications, the court found that the proposed debt settlement compromise was in the best interest of the creditors. The court acknowledged that the assets of the parties were the primary source of potential returns to creditors. The court also ruled that the liquidator's litigation costs should be included as part of the winding-up costs. The court considered the joinder of the liquidator necessary and proper to secure the creditors' position. Approvals and directions were issued under the relevant sections of the Corporations Act 2001 and the Insolvency Practice Schedule (Corporations) 2016.
The court ordered the liquidator to be authorised to compromise debts due to the company and to enter into a deed of settlement and release with the relevant parties. It also directed that the liquidator's costs be considered as costs of the winding up. The wife was ordered to pay the liquidator a specified sum in full satisfaction of his claims, with provisions for the sale of the Suburb D Property if the sum was not paid by the specified deadlines. The court further outlined procedures for the distribution of sale proceeds and imposed restrictions on the wife's occupancy and encumbrance of the Suburb D Property. The liquidator was granted leave to report to creditors and was discharged from the proceedings, except for enforcement purposes.
Orders
Orders of the court
CAC 1604 of 2018
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN:
MS BARILLA
Applicant
AND:
MR BARILLA
Respondent
MR MARRIOTT (LIQUIDATOR FOR B PTY LTD)
Intervener
ORDER MADE BY:
GILL J
DATE OF ORDER:
30 NOVEMBER 2023
Amended pursuant to rule 10.13 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) on 8 December 2023
THE COURT ORDERS THAT:
1. Pursuant to section 477(2A) of the Corporations Act 2001, the Liquidator of B Pty Ltd (In Liquidation) ACN … (“the Company”), as an Intervening Party in these proceedings, is authorised to compromise debts due to the Company by Mr Barilla, Ms Barilla and as against the property otherwise known as C Street, Suburb D, NSW, (“the Suburb D Property”), those debts being greater than $100,000, on such commercial terms as he sees fit.
2. Pursuant to section 477(2B) of the Corporations Act 2001, the Liquidator of B Pty Ltd (In Liquidation) ACN … (“the Company”), as an Intervening Party in these proceedings, is authorised to enter into a Deed of Settlement and Release with any or all of Mr Barilla, Ms Barilla and the Suburb D Property on such terms as he sees fit.
3. Pursuant to section 90-15 of Schedule 2 to the Corporations Act 2001, the Liquidator of B Pty Ltd (In Liquidation) ACN (“the Company”), as an Intervening Party in these proceedings, is justified in settling his claims against Mr Barilla, Ms Barilla and the Suburb D Property.
4. Pursuant to section 90-15 of Schedule 2 of the Corporations Act 2001, the proper costs and expenses of the Liquidator of B Pty Ltd (In Liquidation) ACN (“the Company”), as an Intervening Party in these proceedings, be considered costs of the winding up and paid out of the assets of the Company.
5. The Wife shall pay to the Intervening Party the all-inclusive sum of $170,000 ("the Settlement Sum") in full satisfaction of the Intervening Party’s claims against the Husband and the Wife and the Suburb D Property, including for the repayment of the Loans.
6. The Wife hereby grants a charge to the Intervening Party over the Suburb D property as security for payment of the Settlement Sum and will do all things necessary within 14 days of these orders being made to execute a deed of charge reflecting this interest in favour of the liquidator.
7. That within 42 days of the date of the final determination of these proceedings (whether by orders after final hearing, consent orders between the Husband and Wife or otherwise (“Final Orders”) ("the Due Date"), and provided such Final Orders are not stayed for any reason, the Wife shall pay to the Intervening Party the Settlement Sum.
8. That in the event that the Wife is unable to pay the Settlement Sum by the Due Date, the Wife shall do all acts and things and sign all documents necessary to effect the completion of a sale of the real property contained in Certificate of Title … being Lot … in Deposited Plan … and known as C Street, Suburb D in the state of New South Wales ("the Suburb D Property") within 3 months of the Due Date ("the Second Due Date") on such terms as Ordered by the Court ("the Sale"):
9. That in the event that the Settlement Sum has not been paid by the Second Due Date, upon the settlement of the Sale, the Intervening Party will be paid, in addition to the Settlement Sum, interest on the Settlement Sum or the amount outstanding from time to time at the rate prescribed by the Family Law Rules to be calculated from the Second Due Date to the date of payment.
10. Following the sale pursuant to Order 12 8, the Wife shall do all things necessary to irrevocably instruct any person engaged to effect the sale ("the Conveyancer”) to cause proceeds of the sale of the Suburb D Property to be distributed in the following order and priority:
(a) Firstly, to pay all costs, commissions and expenses of the Sale;
(b) Secondly, to pay the usual rates adjustments;
(c) Thirdly, to pay the costs of the repairs necessary to obtain a Building Information Certificate for the Suburb D Property;
(d) Fourthly, to pay to the Intervening Party the Settlement Sum together with any interest that has accrued pursuant to Order 9; and
(e) Finally, the net proceeds to be held in the conveyancer's trust account and then paid to the Husband and Wife in such proportions as Ordered by this Court.
11. That pending the sale of the Suburb D Property, the following applies:
(a) Apart from the charge in Order10 6 above, neither party will mortgage, encumber or otherwise offer the Suburb D Property for security;
(b) The Wife have sole occupation of the Suburb D Property, and upon her vacating she and the Husband are restrained from resuming occupation of the Suburb D Property.
12. Order 1 of the Orders dated 11 May 2023 is discharged.
13. The Applicant Wife is restrained from making an application for the Intervening Party to pay her costs in these proceedings.
14. The Intervening Party is restrained from making an application for the Wife to pay his costs in these proceedings and/or in the Public Examination.
15. The Intervening Party is granted leave to refer to these Proceedings to the extent necessary to report to creditors the resolution of these proceedings and to meet any other statutory obligations he may have.
16. That all Applications by the Intervening Party in these proceedings are withdrawn and dismissed without any order as to costs.
17. That within 14 days of the date of these Orders, the Intervening Party do all things necessary, at his own expense, to:
(a) Provide access for the solicitors for the Wife (as a notional creditor in the winding up of the Company), to copies of all records received by the Intervening Party in his role as Liquidator of the Company;
(b) Provide to the solicitors for the Wife a copy of all notices to creditors not previously provided to the Wife.
(c) Obtain Orders in the Federal Court of Australia discharging the Wife from further compliance with the summons issued to her on 26 June 2023 such that the Wife would no longer be subject to the Public Examination.
18. Documents made confidential under Orders dated 22 November 2023 be returned to the Intervening Party following the conclusion of the appeal period for these orders.
19. The Intervening Party is discharged as a party to proceedings, other than for the purposes of enforcement.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
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