Bevans Illawarra Pty Limited v Carlindi Pty Ltd
[2005] FCA 273
•16 MARCH 2005
FEDERAL COURT OF AUSTRALIA
Bevans Illawarra Pty Limited v Carlindi Pty Ltd [2005] FCA 273
BEVANS ILLAWARRA PTY LIMITED v CARLINDI PTY LTD AND ORS
NSD 1910 of 2004ALLSOP J
16 MARCH 2005
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD 1910 of 2004
BETWEEN:
BEVANS ILLAWARRA PTY LIMITED
APPLICANTAND:
CARLINDI PTY LIMITED
FIRST RESPONDENTMARNIE DEL BEAUCHAMP
SECOND RESPONDENTSTEPHEN LEIGH BEAUCHAMP
THIRD RESPONDENTPROPERTY IMAGES PTY LIMITED T/AS RAY WHITE REAL ESTATE KIAMA
FOURTH RESPONDENTJUDGE:
ALLSOP J
DATE OF ORDER:
16 MARCH 2005
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The proceedings be adjourned to 4.30 pm, Thursday, 17 March 2005 for the making of formal orders.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD 1910 of 2004
BETWEEN:
BEVANS ILLAWARRA PTY LIMITED
APPLICANTAND:
CARLINDI PTY LIMITED
FIRST RESPONDENTMARNIE DEL BEAUCHAMP
SECOND RESPONDENTSTEPHEN LEIGH BEAUCHAMP
THIRD RESPONDENTPROPERTY IMAGES PTY LIMITED T/AS RAY WHITE REAL ESTATE KIAMA
FOURTH RESPONDENT
JUDGE:
ALLSOP J
DATE:
16 MARCH 2005
PLACE:
SYDNEY
REASONS FOR JUDGMENT
Application is made by the applicant for leave to continue against the first respondent in these proceedings. Like application is made by the fourth respondent. The third respondent makes an application to be granted that leave sought by the applicant and the fourth respondent if otherwise given but essentially opposes the grant of that leave. I have been assisted by Mr Sperber who appears for the first respondent, the company to which administrators have been appointed.
The first respondent is a company, the sole shareholder of which is the second respondent. These proceedings have been on foot since December 2004. They involve allegations of breach of the Trade Practices Act 1974 (Cth) in part through relevant codes governing franchise arrangements, alleged breaches of contract and alleged breaches of fiduciary obligation. There are claims in the initiating documents by way of a statement of claim for a constructive trust and a secured position by reason of the operation of a remedial constructive trust.
The proceedings involve what is said to be a wrongful sale of a real estate business in the south coast of New South Wales around Kiama from the first respondent at the instigation of the second respondent to the fourth respondent. I interpose here that the third respondent is the estranged spouse of the second respondent.
There is some reference to the second respondent having gone into bankruptcy or going into bankruptcy. There is no evidence that that has yet occurred. In early March 2005, in effect at the insistence of the second respondent, an administrator was appointed under the Corporations Act 2001 (Cth). Mr Malanos, the administrator for the first respondent, says the second respondent indicated a view that the company was insolvent.
On the evidence before me of the affairs of the company it is not carrying on business and certainly, if it has a liability to the applicant, assets will not exceed the liabilities. There is at least one substantial third party creditor, that is the Australian Tax Office. The former solicitors for the first respondent and the solicitors for the second respondent are creditors in a modest amount of some thousands of dollars, as are its former accountants. Mr Malanos' evidence is that he is still attempting to get to the bottom of the affairs of the company. There was some cross-examination of Mr Malanos to the intended aim of ascertaining whether Mr Malanos had a close or working relationship with the current shareholder of the company. With the greatest of respect to Mr Malanos I was not entirely impressed with the frankness with which he answered some of these questions, however, it is not clear to me what basis there was, if any, of a relationship between Mr Malanos and the second respondent, and those who are associated with her.
Mr Malanos says that he has to report to creditors next week. This case is set down for hearing next Monday. It was set down before me and set down for some five to six days. By reason of commitments I have to other parties who have a greater claim on my time, I informed the parties at the beginning of last week that I would, unless I could find another Judge in Sydney or an interstate Judge to deal with the matter, vacate those dates. At the moment there is certainly no Judge available in Sydney and I have not heard from any interstate Judge as to an ability to sit on a five to six day case starting next Monday. The likelihood is that the matter will be vacated next week although that is not certain. I propose to make a decision about that no later than 3 o'clock tomorrow afternoon.
The evidence discloses that this company, unless its proprietors wish to inject a body of capital into it for the conduct of this litigation, a course of conduct which I doubt will happen, will go into liquidation. The question therefore arises as to what needs to be done prior to then. Mr Malanos has duties, which he must perform, an important element of which is the identification of such aspects of the affairs of the company to enable him to produce a report to creditors.
The first respondent before it went into liquidation was the recipient of a significant amount of money on the sale of the business to the fourth respondent. That money appears to have been disbursed to creditors and in some respects to those associated with the ownership of the company. One would expect the report to creditors to fully deal with all these matters.
My view as to what should happen at the moment is as follows. On the assumption that this matter is not to proceed on Monday, I will for the moment not grant leave to continue but I will keep the matter under close attention, in particular in the light of the conduct of the administration and the contents of the report to creditors. If either it appears that nothing is happening in the conduct of the administration or the company goes into liquidation, I will review the position in the light of each of those circumstances. On the hypothesis that the matter is not to proceed on Monday there is force in what Mr Sperber says, if I may respectfully put it that way, that the administrator should not be taxed by any peripheral issues and should concentrate his efforts on dealing with the administration.
However, as I understand the position the report to creditors will be available next week and if the matter is vacated on Monday the refusal for the moment of the application for leave to proceed and continue against the company will be on the condition that the administrator provide to this Court as soon as it is available and to all parties in these proceedings any report to creditors and if the company is to be put into liquidation that matter is to be brought to the attention of the parties to these proceedings and to the Court. I would otherwise in those circumstances adjourn the notices of motion to a date to be fixed so as to allow Mr Malanos to continue with his tasks, either complete them or get to a point where some greater clarity is available in terms of the nature of the creditors and what has happened to moneys previously disbursed to the company.
If this matter comes back before me, on the next occasion I would expect the administrator to have informed any third party creditor of the position and to be in a position to indicate whether any response has been obtained from those third party creditors as to the position of the company and its continuing affairs concerning litigation.
If the matter proceeds next Monday because an interstate Judge becomes available, the matter is more difficult. The company, of course, is largely the creature of the second respondent. The concerns, however, that ought be imposed on me would be the concerns for the creditors of the company and the position of Mr Malanos to ensure that he is not personally prejudiced in the conduct of the administration.
The considerations that attend Mr Malanos' position, that is, the further conduct of these proceedings as affecting third parties and Mr Malanos, must be weighed in this context against the fact that the claims by the applicant are such as to be entirely intertwined with matters that are led against the second respondent. They are matters which, on the evidence, are, it seems to me, unlikely to be able to be admitted to proof until a resolution of a large number of factual disputes and it strikes me as not being the sort of claim where any liquidator or administrator is likely to be able to deal with the proof in any coherent manner other than through disputed litigation.
For those reasons and given the nearness of the proceedings what I would propose to do would be if there is a Judge available to grant leave to proceed up until Monday inclusive with liberty to the administrators or anyone otherwise on behalf of the unsecured creditors to move the Judge hearing the proceedings for a stay to otherwise operate pursuant to section 440D of the Corporations Act beyond Monday and that application would need, it seems to me, to be supported by real evidence of prejudice to either or both the third party creditors or Mr Malanos.
However, I will not make that order now because that is on a hypothesis that I suspect is not going to occur, but I will know better by 3.00 pm tomorrow. So what I propose to do for the moment is adjourn these proceedings until 4.30 pm tomorrow at which time I will know whether or not, and the parties will know, if the case is proceeding and I will make formal orders depending upon the availability of a Judge. On that occasion, I will make those orders that I first referred to this afternoon as vacation of the date giving the parties a fresh date and standing the subpoenas over. I will either make them in chambers or make them in court.
I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop. Associate:
Dated: 30 March 2005
Counsel for the Applicant: P E King Solicitor for the Applicant: Russell McLelland Brown Counsel for the First Respondent: T Sperber (Slr) Solicitor for the First Respondent: Swaab Attorneys Counsel for the Second Respondent: T W Sherley (Slr) Solicitor for the Second Respondent: Hansons Lawyers Counsel for the Third Respondent: F P Donohoe Solicitor for the Third Respondent: Access Lawyers Counsel for the Fourth Respondent: G Lucarelli Solicitor for the Fourth Respondent: Minter Ellison Date of Hearing: 16 March 2005 Date of Judgment: 16 March 2005
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