Bob Jane Corporation Pty Ltd v ACN 149 801 141 Pty Ltd
[2016] FCA 533
•17 May 2016
FEDERAL COURT OF AUSTRALIA
Bob Jane Corporation Pty Ltd v ACN 149 801 141 Pty Ltd [2016] FCA 533
File number: VID 418 of 2011 Judge: MOSHINSKY J Date of judgment: 17 May 2016 Catchwords: PRACTICE AND PROCEDURE – execution – unsuccessful public auction of property – application by judgment creditor for conduct of a second auction without reserve price Legislation: Federal Court of Australia Act 1976 (Cth), s 37M(1)
Federal Court Rules 2011, rule 41.10
Supreme Court (General Civil Procedure) Rules 2015 (Vic)
Cases cited: JG KingPty Ltd v Kim Ngan Thi Do [2012] VSC 545
Wu v Ma [2011] VSC 208
Date of hearing: 10 May 2016 Date of last submissions: 13 May 2016 Registry: Victoria Division: General Division National Practice Area: Intellectual Property Sub-area: Trade Marks Category: Catchwords Number of paragraphs: 30 Counsel for the Applicant: IG Waller with AD Nash Solicitor for the Applicant: Clayton Utz Counsel for the Fourth Respondent: JG Levine Solicitors for the Fourth Respondent: Templeton Fox Rothschild Counsel for the First to Third and Fifth to Seventh Respondents: The First to Third and Fifth to Seventh Respondents did not appear ORDERS
VID 418 of 2011 BETWEEN: BOB JANE CORPORATION PTY LTD (ACN 005 870 431)
Applicant
AND: ACN 149 801 141 PTY LTD (FORMERLY KINGS CHEAPEST TYRES PTY LTD, WEBTYRE.NET PTY LTD, BOB JANE GLOBAL TYRE CORPORATION (AUSTRALIA) PTY LTD) (ACN 149 801 141)
First Respondent
BOB JANE SOUTHERN MOTORS PTY LTD (FORMERLY BOB JANE NETWORKING PLUS PTY LTD, WEBTYRE.NET VICTORIA PTY LTD, BOB JANE CHINA CORPORATION (AUSTRALIA) PTY LTD) (ACN 149 001 383)
Second Respondent
CALDER PARK PROMOTIONS PTY LTD (IN LIQ) (ACN 138 012 021) (and others named in the Schedule)
Third Respondent
JUDGE:
MOSHINSKY J
DATE OF ORDER:
17 MAY 2016
THE COURT ORDERS THAT:
1.In connection with the execution of Warrant of Seizure and Sale AW160003322, the property located at 1 Holden Road, Diggers Rest (the Property) be sold by the Sheriff by public auction for the best price reasonably obtainable without a reserve price, provided that such sale is made conditional upon and subject to the approval of the Court on application by the Sheriff.
2.Within 14 days of any sale of the Property, the Sheriff file an application seeking the Court’s approval for the sale, with such application to be served on the fourth respondent, the applicant and the proposed purchaser.
3.The costs of the application by the Sheriff referred to in paragraph 2 be added to those payable under the Warrant referred to in paragraph 1 above.
4.The fourth respondent pay the applicant’s costs of the interlocutory application filed 19 February 2016. These costs be payable forthwith. The applicant have liberty to apply for a lump sum costs order.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
MOSHINSKY J:
Introduction
By interlocutory application filed 19 February 2016, the applicant seeks orders that are designed to permit the Sheriff, in executing Warrant of Seizure and Sale AW160003322 (the Current Warrant), to conduct an auction of the property located at 1 Holden Road, Diggers Rest (the Property) without setting a reserve price. The orders sought by the applicant are that:
(a)the Property be sold by the Sheriff by public auction for the best price reasonably obtainable without a reserve price, provided that such sale is made conditional upon and subject to the approval of the Court on application by the Sheriff;
(b)within 14 days of any sale of the Property, the Sheriff file an application seeking the Court's approval for the sale, with such application to be served on the fourth respondent (Mr Jane), the applicant and the proposed purchaser;
(c)the costs of the application by the Sheriff be added to those payable under the Current Warrant.
The interlocutory application was set down for hearing on 10 May 2016. Mr Jane had notice of the hearing date, but did not appear at the hearing. I proceeded with the hearing, but indicated that I would give Mr Jane a short period of time in which to file a written submission in opposition to the application. The applicant’s oral submissions at the hearing covered essentially the same ground as its written submission dated 4 May 2016, which had been filed and served before the hearing. By email from my Associate to Mr Jane’s solicitors, I gave Mr Jane until 4.00 pm on 11 May in which to file a written submission in opposition to the application. Mr Jane filed a written submission and then the applicant, with leave, filed a written submission in reply.
For the reasons that follow, I will make the orders sought by the applicant as set out in paragraph [1] above.
Facts
The applicant has filed several affidavits in support of the application. No affidavits have been filed in opposition to the application. The key events may be summarised as follows.
The original trial of this proceeding, concerning claims of trade mark infringement, contraventions of the Australian Consumer Law and passing off, was not defended by the respondents. The Court gave judgment for the applicant in November 2013 and ordered that the respondents pay the applicant’s costs of the proceeding up to 2 February 2012 on a party-party basis, and thereafter on an indemnity basis (the Main Costs Order).
In contrast to his lack of participation in the proceeding up to and including the original trial, Mr Jane did participate in relation to taxation of the Main Costs Order. The matter went to full taxation, during which Mr Jane raised many objections. The end result was that by 15 July 2015, a total of $601,082.32 in costs was payable by Mr Jane to the applicant (the Main Costs). On 16 October 2015, a further order was made that Mr Jane pay the applicant’s costs of the taxation, fixed in the amount of $232,630.00 (the Taxation Costs). In addition, on 1 December 2015, the Court ordered that Mr Jane pay the applicant’s costs of a contempt application, fixed at $20,934.61 (the Contempt Costs).
Despite a number of demands, the amounts referred to above have not been paid.
It appears that the Property is Mr Jane’s only asset of substance.
Mr Jane’s failure to pay the Main Costs and the Taxation Costs led to the applicant seeking and obtaining warrants of seizure and sale in respect of the Property (the Previous Warrants).
On 26 November 2015, Mr Jane swore an affidavit in which he said that he was making attempts to find funds to satisfy the Main Costs; a similar statement was made by Mr Jane’s counsel at a hearing on 27 November 2015. Despite those statements, the costs referred to above remain outstanding.
On 10 December 2015, the Sheriff conducted an auction of the Property pursuant to the Previous Warrants (the Previous Auction). The Sheriff conducted the Previous Auction on the basis of an October 2015 valuation that valued the Property at $3.5m (the Official Valuation) and with a reserve price of $1.9m. The Property was passed in at the Previous Auction due to the bidding not reaching the reserve price.
On 3 February 2016, the Current Warrant was obtained. This is for a total of $854,646.93 for the Main Costs, the Taxation Costs and the Contempt Costs, together with interest and execution costs. Mr Jane had until 21 March 2016 to pay the amounts the subject of the Current Warrant, but did not do so.
The certificate of title for the Property indicates that, as at 22 February 2016, the Property is the subject of:
(a)a mortgage in favour of Hargraves Secured Investments Ltd (in respect of which there is approximately $1.2m owing);
(b)a caveat in favour of Alinta AE Ltd (claiming an interest as lessee in respect of an electricity substation located on the Property);
(c)a caveat in favour of Mr Jane’s third ex-wife, Laree Jane (asserting an “equitable estate in fee simple”, which caveat and claimed interest is disputed by the applicant); and
(d)a caveat in favour of DSG Legal Pty Ltd and GDG Legal Pty Ltd, former solicitors of Mr Jane (asserting “an equitable estate as chargee”, which caveat and claimed interest is also disputed by the applicant).
Before the Previous Auction, the caveators asserted claims of around $1.1m; it appears to be common ground that such of those claims as are made out will be a burden undertaken by any successful purchaser of the Property.
As noted above, at the time of the Previous Auction, the Official Valuation of the Property was $3.5m. The applicant has now obtained a second valuation (made without the benefit of access to the Property) that puts the figure at $2.08m. Mr Jane in his submissions submits that the Court should rely on the Official Valuation. The applicant in its reply submissions indicates that it is content to proceed on that basis.
The Sheriff has advised the applicant that it is not unusual for there to be no bids at the first auction of a property under a warrant of seizure and sale, but that, following a ‘no reserve’ order, a lot more interest is generated in the property and prospective purchasers are more inclined to bid.
Applicable rules and principles
Rule 41.10 of the Federal Court Rules 2011 is headed ‘Execution generally’ and relevantly provides:
(1)A party who wants to enforce a judgment or order of the Court may apply to the Court to make an order, to issue any writ, or to take any other step that can be taken in the Supreme Court of the State or Territory in which the judgment or order has been made as if the judgment or order was a judgment or order of that Supreme Court.
(2)An order made under subrule (1) authorises the Sheriff, when executing the orders of the Court, to act in the same manner as a similar officer of the Supreme Court of the State or Territory in which the order is being executed is entitled to act.
The relevant Supreme Court in this case is the Supreme Court of Victoria and the relevant rules are the Supreme Court (General Civil Procedure) Rules 2015 (Vic). In those Rules, Order 66 deals with enforcement of judgment and orders, Order 68 deals with warrants of execution generally, and Order 69 deals with warrants of seizure and sale. Rule 66.15 of those Rules provides as follows:
66.15 Order in aid of enforcement
(1)The Court may make such order as it thinks fit in aid of the enforcement of a warrant of execution and for that purpose may make an order that any person, whether or not a party—
(a)attend before the Court to be examined;
(b)do or abstain from doing any act.
(2)An application for an order under paragraph (1) may be made by the sheriff or other person to whom a warrant of execution is directed.
Regard should also be had to the inherent powers of this Court over its own process (including execution), and the general powers in Ch 1, Pt 1, Div 1.3 of the Rules. The latter are expressed in broad terms and include:
(a)rule 1.32, whereby the Court may make any order that the Court considers appropriate in the interests of justice;
(b)rule 1.34, whereby the Court may dispense with compliance with any of the Rules;
(c)rule 1.35, whereby the Court may make an order that is inconsistent with the Rules (and in that event the order will prevail).
It is also relevant to note that, as provided in s 37M(1) of the Federal Court of Australia Act 1976 (Cth), the overarching purpose of the civil practice and procedure provisions is to facilitate the just resolution of disputes according to law, and as quickly, inexpensively and efficiently as possible.
Although doubt was expressed by Mukhtar AsJ (who was without the benefit of submissions) as to the power of the Supreme Court to make a ‘no reserve’ order on an application by a judgment creditor as distinct from the Sheriff (see Wu v Ma [2011] VSC 208 at [11]-[14]), the Supreme Court has been prepared to make such an order on the application of a judgment creditor: see JG KingPty Ltd v Kim Ngan Thi Do [2012] VSC 545. In the latter case, the Court imposed a condition that any sale be subject to Court approval.
Application of principles to the present case
Mr Jane submits that it would be unfair not to place a reserve price, representing a fair price, on the Property. He submits that it would be a convoluted process to require the parties to appear before the Court on a purchase price that was clearly inadequate. Mr Jane submits that if a reserve price is not set, the applicant could use its position to obtain an unfair advantage and purchase the property at a gross undervalue, and that if the orders are made in the proposed terms then there should be a prohibition upon the applicant and its directors and shareholders, and related parties, from purchasing the Property.
For the reasons set out below, I consider it appropriate to make an order for a ‘no reserve’ auction as sought by the applicant. As the applicant accepts, the order should require the Sheriff to seek the best price reasonably obtainable, and any sale of the Property is to be conditional upon and subject to the approval of the Court.
First, the evidence indicates that a sale on a ‘no reserve’ basis offers a better prospect of sale of the Property than an auction with a reserve price.
Second, it is now almost two and a half years since the applicant succeeded at trial and was awarded its costs. Mr Jane’s challenge to the taxation of the Main Costs resulted in taxation costs of $232,630.00, representing almost 40% of the Main Costs themselves. It appears that, throughout the process of the applicant’s attempts to recover its costs, Mr Jane and his solicitors from time to time (including his present solicitors) have not tried to engage with the applicant in relation to the amounts outstanding or even responded to correspondence from the applicant’s solicitors in relation to those amounts.
Third, on the basis of the Official Valuation, it appears that Mr Jane’s equity in the Property is likely to satisfy the amounts which are the subject of the Current Warrant.
Fourth, Mr Jane has not filed any evidence to demonstrate any prejudice from an order in the form sought by the applicant (including the condition that any sale be subject to Court approval).
In view of the condition that any sale be subject to Court approval, I do not consider it necessary or appropriate to provide that the applicant and related persons are prohibited from purchasing the Property.
For these reasons, I will make the orders sought by the applicant as set out in paragraph [1] above.
The applicant seeks its costs of the interlocutory application on an indemnity basis. I think there should be an order for costs in favour on the applicant, on the basis that costs follow the event, but that these costs should be on a party-party basis. The conduct of Mr Jane in relation to the interlocutory application does not enliven any of the usual bases for an indemnity costs order.
I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moshinsky. Associate:
Dated: 17 May 2016
SCHEDULE OF PARTIES
VID 418 of 2011 Fourth Respondent:
ROBERT FREDERICK JANE
Fifth Respondent:
DENNIS PETER RIGON
Sixth Respondent:
BOB JANE GLOBAL TYRE CORPORATION (HONG KONG) LIMITED
Seventh Respondent:
ACN 154 904 604 PTY LTD (FORMERLY BOB JANE SOUTHERN MOTORS PTY LTD) (ACN 154 904 604)
0
2
3