Collie v Merlaw Nominees (in liq)

[2003] VSC 148

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

PRACTICE COURT

No. 5565 of 2000

GEOFFREY MALCOLM COLLIE	Plaintiff
v
MERLAW NOMINEES PTY LTD (IN LIQUIDATION) (ACN 005 575 075)  AND DAMIEN JOHN NOLAN	Defendants

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JUDGE:	COLDREY J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	12 MAY 2003
DATE OF JUDGMENT:	15 MAY 2003
CASE MAY BE CITED AS:	COLLIE v MERLAW NOMINEES & ANOR
MEDIUM NEUTRAL CITATION:	[2003] VSC 148

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Application for discharge of restraining order – Factual circumstances canvassed – Application refused.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	D. Hyde	Howie & Maher
For the First Defendant	Mr R.S. Randall	D.E. Phillips
For the Second Defendant	Mr C. Harrison	Voitin Walker Davis

HIS HONOUR:

1. Application on summons was made by the second defendant, Mr Damien Nolan, that he be released from the restrictions placed on him by order 7 of orders made by Justice Warren on 9 March 2001.  That order followed upon a judgment of Justice Byrne in this matter which resulted in the pronouncement of final orders on 24 November 1999.  In the judgment of Byrne J the first defendant, Merlaw Nominees Pty Ltd was ordered to pay the plaintiff, Geoffrey Collie, $92,000 together with damages by way of interest of $105,000 (I have rounded off the figures).  Additionally, the first defendant was ordered to pay the plaintiff's costs.

1. In a separate proceeding, instituted by the plaintiff before Justice Warren, and involving the same parties, her Honour found in favour of the plaintiff.  The orders made by Justice Warren indemnified the firstnamed defendant from the assets of the Prudent Trust of which the second defendant, Nolan, was trustee.  Order 7 was in these terms:

"Until further order, the Secondnamed Defendant is restrained from dealing with or disposing of any of the assets or property of the Prudent Trust, or taking any action whatsoever as trustee of the Prudent Trust."

1. The assets of the Prudent Trust included a property at 16-18 Walmer Street, Kew. It was subsequently sold and, pursuant to Terms of Settlement entered into between the plaintiff and the second defendant in November 2001, surplus funds, initially held by MBF Investments Pty Ltd, were paid into this Court pursuant to s.69 of the Trustee Act 1958. That amount was in the order of $1m.

1. On 19 March 2002, Justice Pagone ordered the payment of $198,000, (being the sum arrived at by Byrne J, but not including any costs component) from the funds in court. 

1. As at the present time there is an amount owing by the second defendant for costs ordered by Byrne J and the issue of the reserved costs in the judgment of Pagone J has yet to be resolved. 

1. Subsequently, in December 2002, in an action before Master Bruce, the second defendant sought to tax the costs of the solicitors Cornwall Stodart, who acted for MBF Investments Pty Ltd, (the first mortgagees of the Kew property).  As a result, the amount of $82,000 was refunded to the second defendant by the solicitors.  Subsequently, a further amount of $40,000 was paid by those solicitors and a further $20,000 is foreshadowed.  It is asserted by the plaintiff that this represents proceeds from the sale of the Kew property and consequently the total amount should be paid into the Court.  Indeed, in correspondence from the plaintiff's solicitors, (Messrs Howie & Maher), the proposition is advanced that the placing of this money in the trust account of the second defendant's solicitors, (Nicholas O'Donohue), is in breach of Order 7 of Justice Warren.

1. Subsequently, the plaintiff appealed to the Court of Appeal against the judgment of Byrne J and the second defendant appealed against the judgment of Warren J.  On 24 April 2003, both appeals were dismissed.  However, it is common ground that the time for an application by either party for special leave to appeal to the High Court, has not yet expired. 

1. In further correspondence from the plaintiff's solicitor, the assertion is made that the amount to which the plaintiffs potentially entitled from the funds in court is some $700,000.  This amount is disputed by the second defendant who places the figure between $195,000 and $410,000.  Accordingly, it is asserted by the second defendant that there are ample funds in court to cover the plaintiff's entitlements.  Consequently, it is submitted that the injunction put in place by Justice Warren should be dissolved.  The submissions were couched in terms of restoring the second defendant's rights as the litigant and it was put that, in all the circumstances, (including the surplus in court), it was unjust that the second defendant remained fettered. 

1. In arguing that this application should be rejected, the plaintiff's counsel submitted that it was not clear whether the funds in court would amply cover the plaintiff's costs and entitlement.  It was submitted that the order of Justice Warren should remain in force until all of the outstanding matters were resolved.  These included any appeals and the taxation of any cost orders.  Further, it was submitted that, given the dispute as to the characterisation of the $100, 000 plus reposing in the trust account of Nicholas O'Donohue, it would be inappropriate to make an order which would, in effect, enable the second defendant to deal freely with those funds.

1. Counsel for the liquidator of Merlaw Nominees Pty Ltd, also opposed this application, pointing to (inter alia) the unresolved situation of the Nicholas O'Donohue funds, and the issue of the Liquidator's potential claims on portion of the funds in court.  It was also put that the secondnamed defendant's application for equitable relief was sullied by a failure to disclose to the Liquidator the moneys in the Nicholas O'Donohue trust account.  This assertion was disputed and it is unnecessary to make any finding about it.

1. On all of the material I have concluded that despite the quantum of money in court, the exact amounts to be drawn from it are yet to be crystallised.  Moreover, there is the issue of the nature of the money deposited in the solicitor's trust account.  In particular, whether, assuming it constitutes money that should be part of the funds in court, its utilisation will prove to be necessary for the payment of future costs.

1. It is possible that these matters may be resolved in the relatively near future, (even given the litigious history of this matter).  In the meantime, it seems to me that the status quo should be preserved.  Accordingly, the application is refused.

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