C Pty Ltd (in Liquidation) and Karbines & Ors

[2009] FamCA 962

FAMILY COURT OF AUSTRALIA

C PTY LTD (IN LIQUIDATION) & KARBINES AND ORS [2009] FamCA 962

FAMILY LAW – PROPERTY

APPLICANT: C Pty Ltd (In liquidation)

1^ST RESPONDENT: Mr Karbines

2^ND RESPONDENT: Ms Karbines

3^RD RESPONDENT J Karbines

FILE NUMBER: MLF 2479 of 2005

DATE DELIVERED: 25 August 2009

PLACE DELIVERED: Adelaide

PLACE HEARD: Adelaide

JUDGMENT OF: Strickland J

HEARING DATE: 25 August 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Thomas

SOLICITOR FOR THE APPLICANT: Norman Waterhouse

COUNSEL FOR THE 1^ST RESPONDENT: Mr D Berman

SOLICITOR FOR THE 1^ST RESPONDENT: Patrick Cash & Associates

COUNSEL FOR THE 2^ND RESPONDENT: Mr A Jordan

SOLICITOR FOR THE 2^ND RESPONDENT: Maddens Lawyers

COUNSEL FOR THE 3^RD RESPONDENT: Mr R Richards

SOLICITOR FOR THE 3^RD RESPONDENT: Gall Standfield & Smith

Orders

1. That paragraphs 3, 4, 5 and 6 of the Response filed by the 3^rd respondent on 23 August 2009 be dismissed.

2. That to give effect to paragraph 5 of the order made by Dawe J on 19 December 2008 within 21 days of the date hereof the husband and the wife provide vacant possession of the Queensland property to the intervenor C Pty Ltd (in liquidation).

3. That by 4:00pm on 15 September 2009 the 3^rd respondent file and serve a statement of financial circumstances.

4. That paragraph 5 of the order made on 13 August 2009 be dismissed.

5. That further consideration of the Application in a Case filed by the intervenor C Pty Ltd (in liquidation) on 20 May 2009 be adjourned to 2:15pm on 17 September 2009.

6. That the question of the intervenor’s costs thrown away on 13 August 2009 be further reserved to the adjourned hearing date.

7. That the question of the costs of the intervenor and the wife of and incidental to today be reserved to the adjourned hearing date.

IT IS NOTED that publication of this judgment under the pseudonym C Pty Ltd (In Liquidation) & Karbines & Ors is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT ADELAIDE

FILE NUMBER:  MLF2479 of 2005

C PTY LTD (IN LIQUIDATION)

Applicant

And

MR KARBINES

1^st Respondent

MS KARBINES

2^nd Respondent

J KARBINES

3^rd Respondent

EX TEMPORE REASONS

1. The application that is listed before me today is the application filed by the liquidator of C Proprietary Limited on 20 May 2009, which is an application for enforcement.  In very general terms, the liquidator seeks possession of a property in Queensland for the purposes of then being able to sell that property to meet an order made by Dawe J in these proceedings.  The effect of that order is that the amount of approximately $65,000 should be paid to the liquidator, and the method by which that is to be achieved is her Honour made a declaration of trust to that extent in the subject property and then ordered that if the amount was not paid, that the property be sold.

2. The relevant orders made by Dawe J were those of 2 May 2008 and 19 December 2008.  There is no dispute that the amount of approximately $65,000 has not been paid and the delay in bringing the application, perhaps not entirely, but appears to have been primarily as a result of the circumstance of the third respondent to these proceedings attempting to negotiate an outcome with the liquidator which would avoid the sale of the property.  However, when those negotiations came to nothing, the liquidator brought the application I have just referred to.

3. Now, initially with that application, the now third respondent to these proceedings was not named as a party.  However, the application and supporting affidavit were served on J Karbines, who is the mother of the husband, and there is an affidavit of service on file which indicates that service was effected on 25 May 2009. There is also an acknowledgment of service signed by her on that date.  I note that on the last occasion this matter was before me, her counsel Mr Richards advised that his instructions were that J Karbines had not received this application. I pointed out to Mr Richards that there was an affidavit of service on file and he then said that he would need to take further instructions about that.  I note that that matter has not been pursued today.  I proceed on the basis that the affidavit is accurate and the service took place on 25 May 2009. 

4. I will not deal with the entire history of this matter, but the application was adjourned at the request of the husband when it first came before me.  He indicated he wanted time to file responding documents, but he had a difficulty in that he was intending to travel overseas for business, and thus I adjourned it to 2 July 2009 and gave the husband the time that he actually sought to file answering documents.  I note that the husband failed to comply with the order for the filing of answering documents and, indeed, he has still failed to comply.  He has not filed a response to this application.

5. The further hearing of this application became complicated as a result of the husband filing applications for extensions of time to appeal against the relevant orders made by Dawe J. Thus, the application for enforcement was adjourned whilst those applications were addressed and, in short compass, ultimately, on 13 August 2009, I dismissed those applications filed by the husband and that enabled this application of 20 May 2009 to proceed before me.  However, on 13 August 2009, a notice of address for service was filed on behalf of the now third respondent, J Karbines, indicating solicitors in Queensland were representing her, and Mr Richards of counsel appeared on instructions from those solicitors on behalf of Mrs J Karbines on 13 August 2009.  He sought an adjournment on her behalf to file answering documents to the application of 20 May.

6. I granted that application and the matter was adjourned to today.  Today, Mr Berman initially appeared on behalf of the husband, but only as a matter of courtesy.  After clarifying his position with his instructing solicitor, he informed me that the husband did not wish to be heard on the application of 20 May 2009, nor indeed on the response that has now been filed by J Karbines on 21 August 2009, and on that basis Mr Berman sought leave to withdraw and I granted that leave.  Just to continue that history, on 21 August 2009 the third respondent did file a response to the application together with two supporting affidavits, one of herself and one of her current solicitor.

7. In that response, the third respondent sought, firstly, that the application of the intervener be dismissed and in the alternative, that it be adjourned.  Now, Mr Boehm has indicated he does not proceed with the application for dismissal today, but does proceed with the application for adjournment.  That was put on two bases. Firstly, the order sought was that the application be adjourned pending final determination of the husband’s appeal.  Now what that was about was there was a suggestion that the husband was intending to file an application for reinstatement of an appeal which has been deemed abandoned. The third respondent’s position was that, if that appeal was successful, and the matter sent for retrial, then she would join in that retrial and pursue her claim in relation to this property in Queensland.  Secondly, if the husband’s application to reinstate the appeal was unsuccessful, then the third respondent wanted time to file a s 79A application.

8. There is not yet any application for reinstatement of the appeal filed by the husband. Thus that only leaves one option for the third respondent and that is, as I say, to seek to proceed pursuant to s 79A.  The application is for an adjournment of three months.  Mr Boehm tells me that his solicitor needs time to obtain and assess certain documents which have now been identified and then seek counsel’s opinion. 

9. The application to adjourn is opposed both by the intervener and by the wife, who is a respondent to the intervener’s application. 

10. Mr Boehm said that his instructions are precisely in accordance with the affidavits filed by his client, namely that the third respondent says that she was given to understand by Burr J early in these proceedings that the particular property which is now sought to be sold was not in the equation – I think was the phrase – and she relied on that. As a result she had not until recently sought independent legal advice.  She says that she was not told that she should do that, but recently her son suggested it.  She has now instructed solicitors and those solicitors need time to properly advise her.

11. Mr Thomas’ client opposes the application.  He has put to me the history of this matter from his client’s point of view and has referred me to the transcript of hearings when the third respondent was present before Dawe J, namely on 30 April 2007 and 4 May 2007. Mr Jordan for the wife has told me what, indeed, was happening at that time to put that into context, and thus I will come back to that when I address Mr Jordan’s submissions.  The crux of the matter though is that both the liquidator and the wife say that the third respondent has been involved in this matter from its inception.  She has been well aware of the issues.  She has been well aware of the orders that have been made by Dawe J and indeed that is obvious from the fact that she, as from November 2008, sought to negotiate directly with the liquidator a result to prevent the sale of the property in Queensland.

12. It seems that the third respondent is saying that she contributed money to the purchase price of the subject property, and that she has an equitable interest, but she says that that has not been into account and that is a denial of natural justice. That will be basis of her foreshadowed s 79A application.  Now, there are a number of problems with that, but before I come to the detail of that, Mr Thomas has submitted that, even if the third respondent is able to establish an equitable interest, that would have no impact or effect upon the entitlement to the liquidator.  Thus, in terms of the application of the liquidator, the application for adjournment and the foreshadowed application pursuant to s 79A would be an exercise in futility, in that it cannot impact upon the interest of the liquidator and his ability to enforce that order.

13. I accept that submission, given of course that the liquidator’s interest is limited to an amount of $65,000 and this property is worth, as I understand it, in excess of $400,000.  And I should say the property has always been and continues to be registered in the joint names of the husband and the wife.

14. To repeat, both Mr Thomas and Mr Jordan have taken me to the history of this matter to indicate the actual involvement of the third respondent, not only in the proceedings, but in the businesses which were the subject of the proceedings and, in particular, in the company of which there is now a liquidator appointed, namely C Pty Ltd. Indeed, the third respondent was a director of C Pty Ltd with the husband and the wife and that is apparent from an affidavit of Mr Cooper sworn on 3 May 2007. There is an ASIC search annexed to that affidavit which confirms that.

15. Mr Thomas also puts to me that the liquidator has not pursued but would be able to pursue a claim against the third respondent for breach of fiduciary duty, in the same way that that claim was pursued against the husband and the wife and which led to the orders made by Dawe J.  Thus the point is that the third respondent is as much involved in that issue as the husband and the wife.

16. I note that Mr Thomas has taken me to various paragraphs of the reasons for judgment delivered by Dawe J on 19 December 2008, in particular paragraphs 13, 122, 120, 242, 248 and 327, where her Honour records the involvement of the third respondent in the proceedings and in the businesses. And the point of that is there is nothing new here.  It is not the case that the third respondent has suddenly been apprised of the issue and she needs to address it.  As Mr Jordan has referred me to, the third respondent was present on the first day of the trial, namely 30 April 2007 and she has been intimately involved in the matter since then and she has been intimately involved in the businesses and the companies which operated the various businesses, both before that time and subsequently.  Thus for her to suggest that in her affidavit that she really did not know what she needed to do and she has only now realised she needs to seek independent representation is frankly, in my view, a load of nonsense. It is not borne out at all from the evidence that was before Dawe J and now before me in relation to this topic.  As Mr Jordan has pointed out and to repeat, the third respondent was present on day one of the trial on 30 April 2007.  Before that, she was the general manager of the company when it was operating in the United Kingdom and before the Queensland property was purchased.  She was not only a director of C Pty Ltd but she has been a director of a number of other companies in the Karbines group and Mr Jordan tells me that she remains a director of at least one, and maybe more, of those companies.  She was an agent of C Pty Ltd in Queensland using the Queensland property as a base, an office, or a warehouse.

17. More importantly though, on the first day of trial the husband – Mr Jordan tells me – made assertions that the Queensland property was beneficially owned by the mother, despite it being registered in the name of the husband and the wife.  That assertion was made in the presence of the mother.  She was sitting in the courtroom.  The husband also told her Honour that he was going to call the mother as a witness.  As a result, she was asked to leave the courtroom and she did so.  Mr Jordan tells me, and it is apparent from the documents, that later in that first week of the trial, his client brought an application to sell real estate, including the Queensland property. That was served upon the mother and she attended on 4 May 2009 before Dawe J when that application was heard.  Thus she was well aware of the issue in relation to the Queensland property right from day one.  That application for sale was unsuccessful, but that does not impact upon the force of the submission that is being made.  In the final analysis, the trial had to be adjourned because of the involvement of the liquidator and the husband did not call his mother as a witness and indeed the husband changed his submission from the mother being the beneficial owner of the property to the money provided by the mother being a loan to C Pty Ltd.

18. In summary, as Mr Jordan has rightly observed, it is a bit rich for the third respondent to simply describe herself as a 70-year-old pensioner, who has now suddenly realised that she needs to do something about this.  I do not accept that for one moment.  Thus, in my view, there is no justification for an adjournment of the application, and I dismiss paragraphs 3, 4, 5 and 6 of the response filed by the third respondent on 21 August 2009.

19. In these circumstances the intervener now pursues his application filed on 20 May 2009 for enforcement.  The third respondent in her response seeks that that application be dismissed so the issue is joined.  Mr Jordan, as I think I recorded before, but I will do so again, supports the orders sought by the intervener. 

20. There was an order made on 2 May 2008 to the effect that if a sum of $65,301 had not been paid to the first intervener by 30 June 2008, the liquidator was entitled to sell the Queensland property by public auction or private treaty, and the order went onto provide how the proceeds of sale should be disbursed.  Then there were orders made on 19 December 2008 by Dawe J, which, in a sense, overtook the order that I have just referred to in that that was a final order for property settlement.  In paragraph 5 of those orders, her Honour noted all previous orders, including, obviously, the order of 2 May 2008 and her Honour, in paragraph 5, went on to order that:

    If the [Queensland] property has not been made the subject of a contract for sale then it is further ordered that that property be sold at a price and manner to be agreed between the parties, being the husband, wife, and first intervener.

    The order went onto provide for how the proceeds of sale should be disbursed.

21. Now, as I say, in my view, and I do not think there is any dissention from this, that order overtakes the earlier order.  Thus there is an order of her Honour made on 19 December 2008, which provides that if there is not a contract for sale on the property then it is to be sold at a price and manner to be agreed.  The evidence is that not only has the $65,000 not been paid, but there is no contract for sale that has been entered into for the property, and the intervener seeks to enforce paragraph 5 insofar as it provides for the property to be sold. 

22. The application that the intervener makes is a lengthy one, but seeks, firstly, that to give effect to paragraph 5 of the order of 19 December 2008, the husband and the wife provide vacant possession of the property, and, in particular, ensure that the husband’s mother has vacated that property. The application then goes on and seeks orders in the event that the property is not vacant within 21 days and seeks orders for possession of the property and orders by way of injunction. Orders are then sought as to the appointment of an agent and the sale of the property. Orders are also sought pursuant to ss 114 and 90AF of the Family Law Act against J Karbines, in the event that she has not vacated the property, and finally orders are sought in relation to the proceeds of sale.

23. Now, the position is this property is owned jointly by the husband and the wife.  The husband’s mother occupies it.  It seems to me that the first step is to make an order for the husband and the wife to provide vacant possession of the property within a certain time frame, and 21 days is, in my view, a reasonable time.  It is premature, in my view, to go any further than that at this point, given that, if that order is complied with and the vacant possession is provided, then the sale can proceed in accordance with her Honour’s order of 19 December 2008, subject to agreement being reached between the husband, the wife and the first intervener as to the price and manner of sale.  As I understand it, that step has not yet been taken. 

24. Mr Boehm simply puts to me that his client seeks dismissal of the application and he does not put any further submission to me. 

25. Mr Jordan, as I say, supports orders being made by way of enforcement.  He has raised an issue about his client, namely the obligation that his client would have, pursuant to such an order, to ensure vacant possession.  In my view that is a matter for his client to assess.  As Mr Thomas has rightly pointed out, the wife and the husband are the joint owners and they are entitled to possession, and the order is appropriately made against them in the first instance.  Thus that is the order I propose to make, and then I propose to adjourn the matter to await the outcome of that exercise, and that will also give the opportunity for Mr Thomas and his instructor to look at a basis for further orders if necessary, and, in particular, orders directly against J Karbines. 

I certify that the preceding 25 paragraphs are a true copy of the reasons for judgment of the Honourable Justice Strickland delivered 25 August 2009.

Associate