Elite Bricklaying Services Pty Ltd v Kelly

[2021] ACTSC 315

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title:

Elite Bricklaying Services Pty Ltd v Kelly

Citation:

[2021] ACTSC 315

Hearing Date:

8 December 2021

DecisionDate:

8 December 2021

Before:

Elkaim ACJ

Decision:

See [21]-[25]

Catchwords:

CIVIL LAW – APPLICATION – Application in proceeding – application to obtain reserve price prior to auction – application for the proceeds of sale be paid into court

Parties:

Elite Bricklaying Services Pty Ltd ( Plaintiff)

Chantel Therese Kelly ( Defendant)

Representation:

Counsel

N Obrart ( Plaintiff)

M Robinson ( Defendant)

Solicitors

Namadgi Legal ( Plaintiff)

Robinson Locke ( Defendant)

File Number:

SC 461 of 2021

ELKAIM ACJ:

1. This matter has come before me as the Duty Judge on the basis that it requires urgent orders. The applicant is the plaintiff in proceedings already in existence. The respondent is the defendant in those proceedings.

1. The plaintiff’s application in proceeding is dated 7 December 2021. It is supported by an affidavit of Ms Allyson Hogan, affirmed on 7 December 2021. The defendant relies on two affidavits of Mr Malcolm Robinson affirmed on 7 and 8 December 2021 respectively.

1. The matter is said to be urgent because three properties at the centre of the dispute between the parties are due to go to auction tomorrow, 9 December 2021 at 2:00pm. The plaintiff and a number of other persons or entities have existing caveats over one or more of the properties. Three of the other caveators are not associated with the plaintiff.

1. The defendant opposed the making of the orders. As a general statement all of the caveators not associated with the plaintiff joined in the opposition. These caveators are DPK Bruce Pty Ltd, Lawson Development (ACT) Pty Ltd and Mr Mohammed Nchouki. The first two companies are said to have family or friendship connections to the defendant or her husband. The connection of Mr Nchouki to the defendant, if any, is unknown.

1. Subject to being established, the claims of the plaintiff and those associated with it, in monetary terms, far exceed those of the other caveators.

1. The essential reasoning behind the application is that the plaintiff is suspicious about two matters concerning the proceeds of any successful sales at the forthcoming auction.

1. Firstly the plaintiff is not convinced that the properties will be sold for their fair market value. The plaintiff believes that if the defendant has ‘nothing to gain’ from the sales she will not be concerned to ensure that the best sums available are obtained at the auction. There is a suggestion of previous sales for an amount below true value.

1. Secondly the plaintiff does not accept any proposed arrangements for the retention of the proceeds of sale pending the resolution of the disputes between the parties.

1. To cater for the first concern, the plaintiff seeks an order that the reserve price of the properties be communicated to its legal representatives. This will enable the legal representatives to give appropriate legal advice.

1. The plaintiff gave four reasons for seeking the disclosure of the reserve price:

(a)The defendant has a history of selling properties at an undervalue.

(b)The usual safeguard of a vendor wishing to achieve a maximum sale price is absent because the defendant is unlikely to receive any benefit from the sale after the payment of all the claims on the properties.

(c)The defendant’s solicitor had recently written to the plaintiff’s solicitor suggesting that the net proceeds of the sales could be less than $60,000.

(d)The defendant’s solicitor had effectively ignored correspondence and stated that the sale value of the properties was not known to him.

1. As to (c) and (d) in the preceding paragraph, I do not think they carry any weight. In fact what is alleged in (c) is an endorsement of the plaintiff’s assertion that the defendant is unlikely to receive any benefit from the sales.

1. In respect of the second concern, the plaintiff suggests the proceeds of sale be paid into court. This is because negotiations to achieve a resolution of this issue have failed and the ACT Court is the place at which the forthcoming substantive litigation is to take place. The plaintiff also said that a proposed deed attempted to change the applicable law to that of Queensland. I do not see this as a valid point as the trust account of the defendant’s solicitor in Queensland would be regulated by the laws of that State.

1. The defendant opposes all of the orders sought. The defendant says that it is the essence of a public auction that the best price available will succeed. As to payment into court, the defendant says it is not necessary and there are suitable safeguards for the monies already in place. The defendant further says that if the moneys are paid into court, that an amount of $60,000 should be retained by the defendant to enable her to meet her legal fees in defending the substantive proceedings.

1. I think, to the extent that I am able to do so on the urgent basis that the orders are sought, that there is a valid concern on the part of the plaintiff as to the defendant’s interest in achieving the best possible price at auction. While theoretically a public auction should strive for that result, and without suggesting any impropriety on the part of the auctioneers who will be conducting this auction, the mere fact of a public auction is not a guarantee of an interference-free sale process.

1. In fact one of the points of opposition made on behalf of DPK Bruce Pty Ltd was that if the reserve price was disclosed the principles of the plaintiff, in particular a Mr Walker, could manipulate the auction process in its favour. If this is possible from the one side of the dispute, then no doubt it is possible from the other side. In order to prevent any improper influence from Mr Walker a restraining order will be included in the orders that I make.

1. In relation to the payment into court, the plaintiff accepted that a payment into a solicitor’s trust account in the ACT was a viable alternative. I do not agree. I think if the funds are to come to the ACT they should be paid into court. More generally, the parties have clearly not been able to reach agreement through a proposed deed and I would not dictate the execution of a deed by a reluctant party.

1. I think the most appropriate course is the payment into court because, as stated by counsel for the plaintiff, it is neutral ground.

1. In relation to the exception of the $60,000, I think the defendant’s suggestion is appropriate. If the defendant’s financial position is as dire as seems to be generally accepted then I think the reserving of monies to allow her to conduct her litigation is reasonable.

1. The plaintiff has provided Short Minutes of Order which I think are suitable with two exceptions. Order 6(e) requires $60,000 to be paid to the defendant from the net proceeds of sale. I think the order should be that the $60,000 be paid to the defendant’s solicitors to be held on account for the defendant’s legal expenses.

1. I have also made an amendment to order 4 to cater for a suggestion by the plaintiff.

1. I accordingly make the orders in the Short Minutes of Order but with the changes outlined above. The final orders have been dated and initialled by me. 

1. In respect of costs, as between the plaintiff and the defendant, costs are reserved.

1. DPK Bruce Pty Ltd, Lawson Development (ACT) Pty Ltd and Mr Mohammed Nchouki all sought their costs of appearing.

1. The plaintiff said that these three caveators were not parties to the litigation, they had been served out of courtesy and they had failed in their opposition to the orders sought. Each of these points is valid, but so too is the submission by the three caveators that their own interests were affected by the orders and they were entitled to be heard.

1. In my view, taking all of these points into account, I think that just balance is achieved by making no order as to costs in respect of DPK Bruce Pty Ltd, Lawson Development (ACT) Pty Ltd and Mr Mohammed Nchouki.

I certify that the preceding twenty-five [25] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Acting Chief Justice Elkaim

Associate:

Date: 13 December 2021