D Pty Ltd and Ors & Sadler and Ors - [2016] FamCAFC 187

FAMILY COURT OF AUSTRALIA

D PTY LTD AND ORS & SADLER AND ORS

[2016] FamCAFC 187

FAMILY LAW – APPEAL – PROPERTY – APPOINTMENT OF RECEIVERS – Where receivers were appointed pursuant to s 80(1)(k) of the Family Law Act 1975 (Cth) to the property and income of three trusts to realise the parties’ interests in the trusts for the purpose of property settlement – Whether the primary judge misapprehended the effect of the appointment – Where the trusts owned units in other trusts – Where the trustee company of the trusts was a guarantor of a mortgage – Where the redemption process could have been triggered without appointing receivers – Where the appointment of receivers was a breach of the mortgage – Whether one of the appointed receivers lacks independence – Appeal allowed – Re-exercise of discretion – Application for appointment of receivers dismissed.

FAMILY LAW – APPEAL – LEAVE TO APPEAL – Whether the order appointing receivers is an interlocutory order and leave to appeal is required – Application of Medlow & Medlow (2016) FLC 93-692 – Leave to appeal granted.

Family Law Act 1975 (Cth) ss 79, 80(1)(k), 94AA
Corporations Act 2001 (Cth) ss 9, 60, 418, 420, 436DA, 448, 532(2)

Family Law Regulations 1984 (Cth) reg 15A
Family Law Rules 2004 (Cth) r 17.02

Advance Housing Pty Ltd (in liq) v Newcastle Classic Developments Pty Ltd (1994) 14 ACSR 230
Dimov v Dimov (1971) 17 FLR 462
Gronow v Gronow (1979) 144 CLR 513
Hall v Nominal Defendant (1966) 117 CLR 423
House v The King (1936) 55 CLR 499
Jones v Jones (1968) 10 FLR 493
Medlow & Medlow (2016) FLC 93-692

R v Ross-Jones & Anor, Ex Parte Beaumont (1979) 141 CLR 504
Re Club Superstores Australia Pty Ltd (in liq) (1993) 10 ACSR 730
ReNational Safety Council of Australia (1990) 15 ACLR 355

Sir Raymond Walton, Kerr on the Law and Practice as to Receivers and Administrators (Sweet & Maxwell, 17^th ed, 1989)
Andrew R Keay, McPherson: The Law of Company Liquidation (LBC Information Services, 4^th ed, 1999)

1ST APPELLANT:

D Pty Ltd as Trustee of the D Unit Trust

2ND APPELLANT:

C Pty Ltd

3RD APPELLANT:

E Pty Ltd as Trustee of the E Unit Trust

4TH APPELLANT:

F Pty Ltd

5TH APPELLANT:

G Pty Ltd as Trustee for G Investments Unit Trust

1ST RESPONDENT:

Ms Sadler

2ND RESPONDENT:

Mr Sadler

3RD RESPONDENT:

B Pty Ltd

4TH RESPONDENT:

Mr Miller

5TH RESPONDENT:

Mr AA as Trustee of the Bankrupt Estate of Mr Sadler

6TH RESPONDENTS:

Mr Fuller and Mr Martini as Receivers & Managers Appointed

FILE NUMBER:

NCC

1976

2012

APPEAL NUMBER:

124

2016

DATE DELIVERED:

21 September 2016

PLACE DELIVERED:

Sydney

PLACE HEARD:

Sydney

JUDGMENT OF:

Ryan, Aldridge & Hannam JJ

HEARING DATE:

29 August 2016

LOWER COURT JURISDICTION:

Family Court of Australia

LOWER COURT JUDGMENT DATE:

21 July 2016

LOWER COURT MNC:

[2016] FamCA 604

REPRESENTATION

COUNSEL FOR THE APPELLANTS:

Mr M Pesman…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Keep reading for free

Create a free CaseChat account to read D Pty Ltd and Ors & Sadler and Ors and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2016] FamCAFC 187
Decision Date: 21 September 2016

CaseChat Overview and Summary

The appeal involved D Pty Ltd and others versus Sadler and others, heard in the Family Court of Australia. The dispute centered around the appointment of receivers to three trusts to realise the interests of the parties for property settlement purposes. The primary judge's decision to appoint the receivers was contested, with issues raised regarding whether the appointment was necessary, if the receivers were independent, and whether the primary judge had misapprehended the effect of the appointment.

The court was required to determine if the primary judge had misapprehended the effect of the appointment of receivers and whether one of the receivers lacked independence. The court considered whether the appointment of receivers was a breach of the mortgage and if there was a serious possibility of conflict or reasonable apprehension that the receivers would be impeded or inhibited from acting impartially. The court examined the relationships and interests of the receiver in relation to the trusts and the parties involved. The court noted that the receiver had no relevant relationship with the trusts or the associated companies, and thus there was no conflict of interest or reasonable apprehension of bias.

The court found that the primary judge had misapprehended the effect of the appointment of receivers and that one of the receivers did not lack independence. The appeal was allowed, and the orders appointing receivers were set aside. The application for the appointment of receivers was dismissed. The court granted leave to appeal and directed that any party seeking a costs order must file and serve submissions within 28 days, with respondents to an application for a costs order required to file and serve any submissions in reply within a further 28 days.

Orders

Orders of the court

The record of the proceedings be amended so that the name of the second appellant be C Pty Limited.

Leave to appeal is granted to the appellants.

The appeal be allowed and Orders 1 to 10 made by Cleary J on 21 July 2016 be set aside.

The Application in a Case filed on 18 May 2016 be dismissed insofar as it sought the appointment of receivers.

Direct that any party seeking a costs order file and serve any submissions as to costs within 28 days. Any respondents to an application for a costs order are to file and serve any submissions in reply within a further 28 days.

Note: The form of the order is subject to the entry of the order in the Court’s records.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

A similar provision applies to administrators (s 448C) of the Corporations Act. Administrators must also provide a declaration of relevant interests (s 436DA) of that Act. That phrase is defined by s 9 of that Act to have the meaning given by s 60 which states:Declaration of relevant relationshipsAdministrator(1) In this Act, a declaration of relevant relationships, in relation to an administrator of a company under administration, means a written declaration:(a) stating whether any of the following:(i) the administrator;(ii) if the administrator’s firm (if any) is a partnership--a partner in that partnership;(iii)if the administrator’s firm (if any) is a body corporate--that body corporate or an associate of that body corporate;has, or has had within the preceding 24 months, a relationship with:(iv) the company; or(v) an associate of the company; or(vi) a former liquidator, or former provisional liquidator, of the company; or(vii) a person who is entitled to enforce a security interest in the whole, or substantially the whole, of the company’s property (including any PPSA retention of title property); and(b) if so, stating the administrator’s reasons for believing that none of the relevant relationships result in the administrator having a conflict of interest or duty. The focus of each of these sections is on the relationship between the proposed appointee and the corporation to which he or she is to be appointed. There is no suggestion that Mr Martini has any relationship with the three trusts or B Pty Ltd. Nothing in these provisions supports the contention that he suffers from a lack of independence. Nonetheless, “the guiding principle in the appointment by the court of a liquidator is that he or she must be independent and must be seen to be independent”: Andrew R Keay, McPherson: The Law of Company Liquidation (LBC Information Services, 4th ed, 1999) p.281; ReNational Safety Council of Australia (supra) at 360. A court appointed receiver is in exactly the same position. However, for an appointment to be refused or a liquidator removed there must be “some realistic prospect of embarrassment or a serious possibility of conflict” (Re Club Superstores Australia Pty Ltd (in liq) (1993) 10 ACSR 730 at 735 per Thomas J). In dealing with the prior involvement of a liquidator who had some earlier involvement with the company in liquidation, Santow J said in Advance Housing Pty Ltd (in liq) v Newcastle Classic Developments Pty Ltd (1994) 14 ACSR 230 at 234:In my judgment, the correct balance is struck by permitting a liquidator to act as such even if there be a prior involvement with the company in liquidation, provided that involvement is not likely to impede or inhibit the liquidator from acting impartially in the interests of all creditors or be such as would give rise to a reasonable apprehension on the part of a creditor that the liquidator might be so impeded or inhibited. Here, the identified involvement is not with any of the companies or trusts associated with the parties but rather with companies owned by the receiver and the wife’s solicitor. It is not at all clear why that association would cause the receiver to have a conflict of interest in dealing with the interests of the trusts the subject of the appointment and the wife and husband on the one hand and the appellants on the other. We do not see that there is a serious possibility of conflict or that there is a reasonable apprehension that the receivers would be impeded or inhibited from acting impartially.