Chen v Lym International; Chen v Marcolongo (No 2)

[2009] NSWCA 158

New South Wales

Court of Appeal

CITATION:	Chen v Lym International; Chen v Marcolongo (No 2) [2009] NSWCA 158
HEARING DATE(S):	On the papers
JUDGMENT DATE:	22 June 2009
JUDGMENT OF:	Beazley JA at 1
DECISION:	The stay ordered in each of these matters is continued until further order.
CATCHWORDS:	PROCEDURE – trial judge ordered the defendant to transfer property – defendant’s application for stay of judgment pending determination of appeal granted – order made directing the parties to file submissions as to the appointment of a receiver – costs of appointment found to outweigh benefits – appointment not made – order that stay continue
PARTIES:	CA 40118/09 Yu Po Chen (Appellant) Leonilda Marcolongo (First Respondent) Lym International Pty Limited (Second Respondent) CA 40119/09 Yu Po Chen (Appellant) Lym International Pty Limited (First Respondent) Limin Yang (Second Respondent) Yang Liu (Third Respondent) Westpac Banking Corporation Limited (Fourth Respondent)
FILE NUMBER(S):	CA 40118/09; 40119/09
COUNSEL:	CA 40118/09 D Pritchard SC; J Emmett (Appellant) D H Mitchell (First Respondent) T S Hale SC; S A Wells (Second Respondent) CA 40119/09 D Pritchard SC; J Emmett (Appellant) T S Hale SC; S A Wells (First, Second and Third Respondents) C Hilder (Solicitor) (Fourth Respondent)
SOLICITORS:	CA 40118/09 Middletons (Appellant) Dunstan Legal (First Respondent) Unsworth Legal (Second Respondent) CA 40119/09 Middletons (Appellant) Unsworth Legal (First, Second and Third Respondents) Henry Davis York (Fourth Respondent)
LOWER COURT JURISDICTION:	Supreme Court - Equity Division
LOWER COURT FILE NUMBER(S):	SC 5533/06 SC 5049/07
LOWER COURT JUDICIAL OFFICER:	Hamilton J
LOWER COURT DATE OF DECISION:	18 March 2009
LOWER COURT MEDIUM NEUTRAL CITATION:	Lym International Pty Ltd v Che; Marcolongo v Lym International Pty Ltd [2009] NSWSC 182

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CA 40118/09
CA 40119/09

BEAZLEY JA

22 June 2009

Yu Po Chen v Leonilda Marcolongo & Anor

Yu Po Chen v Lym International Pty Limited & Ors

(No 2)

Judgment

1 HER HONOUR: On 26 May 2009, I gave judgment in this matter in which I ordered that there be a continuation of the stay previously ordered in the matter and directed the parties to file submissions as to the appointment of a receiver of the property, pending the determination of the appeal. Those submissions have now been received.

2 Mr Chen, the appellant in each set of proceedings, seeks the appointment of a receiver. The respondents in the first proceedings, Lym International, Ms Yang and Jasmine (the Lym International parties) and the respondent in the second proceedings, Mrs Marcolongo, oppose the appointment of a receiver, given that the court has expedited the appeal, which is set down for hearing on 8 and 9 July 2009. The Lym International parties also oppose the appointment on the basis of the “unlikelihood of selling the units at a price agreeable to the parties prior to the hearing”.

3 Mr Chen seeks the appointment of a receiver on the basis that it is in the interests of all parties that the units be sold as soon as possible. He submitted that whatever the outcome of the appeal, all parties will be in a better position if some or all of the units have been sold. He reminded the Court that the Westpac loan facility expires on 30 November 2009 and that Westpac have advised that it will not renew the loan facility. He submitted that if the Westpac mortgage is unpaid as at 30 November, it is likely that Westpac will exercise its rights under the mortgage and the units will be sold in distressed circumstances, reducing the funds that will be payable to either Mr Chen or Lym International, depending upon who is successful on the appeal. He noted that it would thereby also reduce any funds available to satisfy Mrs Marcolongo’s claim against Lym International.

4 Mrs Marcolongo expressed concern that the costs of a receiver will involve the imposition of another layer of costs in circumstances where there may in any event be a shortfall. She also pointed out that it is likely the appointment of a receiver would inevitably constitute an event of default under the Westpac loan facility. This second submission may have had considerable force, except that Westpac, which is a party to the first proceedings, does not oppose the appointment of a receiver.

5 In support of his submission, Mr Chen filed the consent of three separate persons willing to act as receiver. Those persons also provided details, either of the likely costs of the receivership that is envisaged, or the basis upon which the charges relating to the receivership will be made. It is apparent from that material that the costs of the receivership are likely to exceed $50,000 and may be as high as $120,000. It should also be noted that at least one of the costings was provided on the basis that the properties are in good order and readily saleable. As I understand the position, that may not be entirely the case.

6 Mr Chen acknowledged the force of the argument based on expedition, but remains concerned that delivery of judgment by the Court could extend beyond 30 November 2009, or at least, that by the time judgment is delivered, there may not be sufficient time to attend to the orderly sale of the units before Westpac seeks to act. Mr Chen also pointed out that even if he is unsuccessful on the appeal, the progressive sale of the units will reduce the amount of stamp duty that may be payable on the transfer back to Lym International.

7 Westpac also nominated a person as a receiver. It pointed out that this matter has considerable complexity, and it said that the person it nominated has experience as an insolvency practitioner and, as I understand it, the experience to deal with the matter. It suggested that one or other of the parties may need to indemnify the receiver in relation to any costs incurred in relation to the appointment. The persons nominated by Mr Chen did not indicate that they would seek such an order, but there may be issues of that nature if a receiver is appointed. If that occurs, the reality may be that neither Mr Chen nor the Lym International parties will be in a position to provide any indemnity of substance.

8 In my opinion, the costs of the appointment of a receiver outweigh the benefits of the immediate continuation of the sale of the units. I am also concerned that the interposition of a third party may simply lead to further disputation between the parties. This concern arises from the submission made by the Lym International parties referring to the “unlikelihood of selling the units at a price agreeable to the parties prior to the hearing”. The submission may involve a misunderstanding of the role of the receiver, as the purpose of the appointment would be to place the marketing and sale of the properties in independent hands. Nonetheless, the ability of these parties to mark out areas of conflict, litigious or otherwise, has been notable. (These last comments do not relate to Mrs Marcolongo.) Finally, there may be a question as to whether a receivership could proceed if one or other of the parties is not able to provide an indemnity as discussed above.

9 Accordingly, I continue the stay ordered in each of these matters until further order.

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