Guss, Marilla Suzanne v Geelong Building Society (in liq)
[1998] FCA 1153
•14 SEPTEMBER 1998
| IN THE FEDERAL COURT OF AUSTRALIA | |
| VICTORIA DISTRICT REGISTRY | VG 7537 of 1998 |
BETWEEN: | MARILLA SUZANNE GUSS |
AND: | GEELONG BUILDING SOCIETY (IN LIQUIDATION) |
JUDGE: | RYAN J |
DATE: | 14 SEPTEMBER 1998 |
PLACE: | MELBOURNE |
REASONS FOR JUDGMENT
There is before the Court an application by Marilla Suzanne Guss (“the debtor”) to set aside a bankruptcy notice served on her on behalf of the Geelong Building Society (in Liquidation) (“the Society”). That bankruptcy notice was served on 6 July 1998. The Society was the registered mortgagee under a mortgage dated 26 October 1998 over a property situated at 3722 Nepean Highway, Portsea (“the property”). The registered proprietors and mortgagors of the property were the debtor’s parents, Joseph Guss and Sandra McInnes Guss. The Society instituted two separate actions in the Supreme Court of Victoria in 1991. The first (“the possession proceeding”) number 11639 of 1991 against Joseph and Sandra Guss was to recover possession of the property. The second (“the guarantee proceeding”) against Joseph and Sandra Guss and the debtor’s brother, Antony David Guss, number 12893 of 1991, was by way of action on a guarantee, apparently, of repayment of moneys due to the Society.
The debtor and her brother claim that their parents held the property on trust for their two children, and by action number 8386 of 1994 (“the trust proceeding”) sought orders against the Society. There were counterclaims by the defendants against the plaintiffs in each of the trust proceeding, the possession proceeding and the guarantee proceeding. On 24 November 1994 the three proceedings were settled and composite terms of settlement were entered into by the parties to each of the three actions. The terms of settlement provided, amongst other things, that the Society recover possession of the property, that there be judgment for the Society in the trust proceeding and that the debtor and her brother, by 31 May 1995, pay the Society’s costs to be taxed as between party and party, and that:
(a)each of the Guss Parents and the Guss Children agrees to deliver up possession of the Property to GBS in the following manner, namely by 12.00 noon on 16 January 1995, they must:
(i)deliver to the Liquidator of GBS all keys to the Property including all keys to the buildings on the Property;
(ii)vacate the Property;
(iii)take all steps necessary to enable GBS to enter upon and take possession of the Property;
(b)from 1 January 1995 the Guss Parents and the Guss Children will permit:
(i)the Liquidator of GBS and his agents to have access to the Property for the purposes of marketing the Property;
(ii)the Liquidator of GBS and his agents to erect signage on the Property;
(iii)twice weekly inspections by the Liquidator of GBS and/or by the estate agent nominated by him for the purpose of marketing the Property;
(iv)allow reasonable access to valuers and estate agents to the Property for the purpose of marketing the Property;
...
(e)it is agreed that R T Edgar & Co (estate agents) shall be appointed to the marketing team in respect of the Property.
It is a further provision of the terms of settlement that there should be judgment in favour of the Society in the guarantee proceeding in the sum of $1,210,092.32, together with costs to be taxed as between solicitor and client. That judgment was entered and the Society’s costs were subsequently taxed after review at $236,051.50. The Society’s costs of the trust proceedings were finally taxed after a review at $21,087.90. On 5 February 1995, as contemplated by the terms of settlement, the Society sold the property by public auction for $1,650.000. Settlement took place on 5 April 1995 and the net proceeds from the sale, after agent’s commission and adjustments, were $1,335,725.50. On the debtor’s calculations, after paying the amount of $1,210,092.32 due under the terms of settlement, and solicitor’s conveyancing costs on the sale, a surplus remained of $59,471.91. That figure was arrived at as follows:
·Settlement proceeds $1,335,724.50
·Less respondent’s solicitors
claim for conveyancing fees in
relation to the sale of the property $10,144.60
____________
$1,325,579.90
Less: Amount payable under Terms of
Settlement in respect to the
Guarantee proceedings $1,210,092.32Add: Interest @ 13.2% x 128 days
to 5/4/95 (date of settlement
of sale of the property) $56,015.67____________
$1,266,107.99
____________
SURPLUS $59,471.91
The amount claimed in the bankruptcy notice served on the debtor is $21,564.02, representing the total amount of the Society’s taxed costs in the trust proceeding. The debtor claims that the surplus on the sale is more than sufficient to satisfy that liability for costs and the Society is not entitled to recourse to that surplus to satisfy, in part, the much greater liability for costs of the guarantors pursuant to the settlement of the guarantee proceedings.
That claim was adverted to in the first day of the hearing of this matter, but no authority was cited in support of the proposition that the debtor was entitled to have her liability for costs discharged in priority to that of the guarantors. Nor was I referred to any authority in support of the proposition that there was some duty on the Society to marshal the competing claims on the surplus of the proceeds of sale in a way calculated to advantage the debtor. No further argument has been pressed on that question today and I do not consider that it sustains any cross-claim or counterclaim against the Society. The debtor principally contends that the property was sold at an undervalue in breach of the duty owed by the Society as mortgagee to those, including the debtor, beneficially entitled to an estate in fee simple in the property, being herself and her two brothers. The evidence in support of that contention is summarised in the following paragraphs of an affidavit sworn by the debtor on 22 July 1998:
18.The property as described above is a cliff top property at Portsea in a prime position adjacent to the Portsea Village approximately one acre on two titles. Now produced to me and marked with the letters “MAG-4” is a copy of the sale brochure prepared by the respondent or its agents in relation to the sale on 5 February 1995. In the summer of 1995 there were several prime cliff top properties offered for sale. I refer in particular to “Mandura” at 3820 Nepean Highway, Portsea, “Illyuka” at Point King Road, Portsea and “Sheldon” at Kildrummie Court, Portsea. Now produced and shown to me and marked with the letters “MSG-5” are copies of the sale brochures for those properties.
19.“Mandura” was sold at auction for $2,350,000.00. “Sheldon” was sold for $1,350,000.00 and “Ilyuka” was sold for in excess of $5,000,000. “Sheldon” was a much smaller property, older and in not such a good position. “Ilyuka” was bigger property in excess of 2 acres. “Mandura” comprised approximately half the amount of land of the property. Another smaller property “Wanda” three doors down from the property was sold at auction in the spring of 1994 for $1,650,000.00.
20.I am informed by the said Joseph Guss and verily believe that:
(i)from information given to him by R T Edgar & Co Pty Ltd (“R T Edgar) and I verily believe the conjunctive agents in respect to the property and the conjunctive agent for the other properties I have mentioned above, in view of the interest in all of the abovementioned properties and the fact that in the main the prospective buyers for each of the abovementioned properties were common or substantially so and the fact that the “Mandura” property was similarly situated but on the other side of the Portsea Pier that they strongly recommended that the auction of the property be held on 22 January 1995 shortly after the auction of “Mandura”.
(ii)he accordingly asked Mr Edge, the representative of the respondent handling this matter that the auction of the property be held on 22 January 1995 after the “Mandura” auction accordingly and he told me and I verily believe that Mr Warwick Anderson of R T Edgar recommended the same to him and to the respondent’s other appointed agents, Sutherlands.
(iii)he was informed by Mr Edge that he rejected that proposal and that he (Mr Edge) knew best in respect to marketing of properties.
(iv)he was informed by the said Mr Anderson of R T Edgar and I verily believe that although his firm carried out most of the inspections and marketing of the property that Mr Edge or Sutherlands would not listen to advice from him in respect to the sale and marketing of the property including on the day of the auction. R T Edgar is and was at all material times the principal agent in Portsea handling such properties as the premises and I believe is the most experienced real estate firm in relation to such properties.
(v)5 February 1995 was a very wet day and in fact the heavy rain and wind caused the auction to be delayed and in view of the small attendance occasioned by the weather, he urged Mr Edge that the auction be postponed which suggestion was rejected. The auctions of the abovementioned properties that I have referred to above were all held in extremely good weather.
(vi)Prior to the holding of the auction, Mr Edge approached him and indicated that there were one or more developers present who had asked if terms other than cash could be given. He advised Mr Edge that we obviously wanted the best price for the property and if it was thought that this would achieve a better price, same might be offered. Mr Edge subsequently advised him that terms would not be offered. The property was then put to auction and sold for $1,650,000.00 (as advised to him by Mr Sutherland, the auctioneer to the only genuine bidder).
(vii)He was informed by the said Mr Anderson of R T Edgar and verily believes that the price for a half acre allotment in the position of the premises based on previous sales was at least $1,000,000.00 and up to $1,250,000.00. As such if the premises had been sold as two allotments (there were two titles one per allotment), the premises could have brought at least $2,000,000.00 and possibly $2,500,000.00 based on this advice. No attempt was made by the respondent to sell the property in this way. He has personal knowledge of the sale of approximately half acre allotments within the above valuation range having attended auctions of similar properties in Portsea prior to the sale by the respondent of the property.
The hearsay aspects of that evidence have been cured by an affidavit by Joseph Guss sworn on 10 September 1998. Mr Guss’s affidavit of that date also contains these paragraphs:
9.From information given to me by the said Warwick Anderson of R T Edgar the conjunctive agents in respect to the premises and I verily believe the conjunctive agent for the other properties I have mentioned above, in view of the interest in all of the abovementioned properties and the fact that in the main the prospective buyers for each of the abovementioned properties were common or substantially so and the fact that the “Mandura” property was similarly situated but on the other side of the Portsea Pier that they strongly recommended that the auction of the premises be held on 22 January shortly after the auction of “Mandura”. I accordingly asked Mr Edge, the representative of the respondent handling this matter that the auction of the premises be held on 22 January after the “Mandura” auction accordingly and verily believe that the said Warwick Anderson recommended the same to him also and the respondents other appointed agents in conjunction G D Sutherland and Co Pty Ltd (“Sutherlands”). I was informed by Mr Edge that he rejected that proposal and that he knew best in respect to marketing of properties.
10.I am informed by the said Warwick Anderson and verily believe that although his firm carried out most of the inspections and marketing of the property that Mr Edge or Sutherlands would not listen to advice from him in respect to the sale and marketing of the property including on the day of the auction. R T Edgar is and was at all material times the principal agent in Portsea handling such properties as the premises and I believe is one of the most experienced real estate firms in relation to such properties.
11a.5 February 1995 was a very wet day and in fact the heavy rain and wind caused the auction to be delayed and in view of the small attendance occasioned by the weather, I urged Mr Edge that the auction be postponed. The auctions of the abovementioned properties that I have referred to above were all held in extremely good weather.
b.Prior to the holding of the auction, Mr Edge approached me and indicated that there were one or more developers present who had asked if terms other than cash could be given. I advised Mr Edge that we obviously wanted the best price for the property and if it was thought that this would achieve a better price, same might be offered. He subsequently advised me that terms would not be offered. The property was then put to auction and sold for $1,650,000.00.
12.I am informed by the said Warwick Anderson and verily believes that the price for a half acre allotment in the position of the premises based on previous sales was at least $1,000,000.00 and up to $1,250,000.00. As such if the premises had been sold as two allotments (they having been on two titles one per allotment), the premises could have brought at least $2,000,000.00 and possibly $2,500,000.00 based on this advice. No attempt was made by the respondent to sell the property in this way. I have personal knowledge of the sale of approximately half acre allotments within the above valuation range having attended auctions of similar properties in Portsea prior to the sale by the respondent of the property.
13.In the premises, the premises has been sold at under value. Further in the premises I verily believe that the property should have brought in the range of at least $2,000,000.00 to $2,500,000.00 if marketed correctly by the respondent with a consequent loss as opposed to the $1,650,000.00 obtained of at least $350,000.00 and in the range up to $850,000.00. I intend to bring proceedings against the respondent for damages for breach of its duty of care for the loss suffered as a result. The reason why I have not done so until now is that the taxation of costs, and the reviews thereof were only concluded on 17 March 1998 and there have been considerations of appeals in respect thereto and my involvement in other proceedings dealing with the same issues and the necessity to obtain advice in respect thereto. There is also the question of what I believe to have been excessive amounts paid by the respondent to the various rating authorities to be resolved in respect to which the respondent also owes a duty of care. I verily believe that in particular in respect land tax the respondent took no steps to mitigate with the result that substantial penalties have been imposed in the sum of I am informed by the office of State Revenue and verily believe up to $100,000.00 which could have been avoided if the respondent took proper steps to mitigate. I was informed by the Office of State Revenue and verily believe that they demanded payment of outstanding Land Tax from the respondent prior to the imposition of penalties which pursuant to the Land Tax Act the respondent was required to pay and as a result of the refusal by the respondent to do so substantial penalties of approximately $100,000.00 were then imposed. The respondent did nothing to mitigate the imposition of such penalties.
The debtor also relies on an affidavit sworn 10 September 1998 by David Frederick Gilder, a sworn valuer with experience of property values on the Mornington Peninsula. Mr Gilder’s opinion that the property could have brought between $2 million and $2.5 million if marketed to the best advantage is expressed in these paragraphs:
8.In my opinion the most ideal time and date for the conduct of the said auction would have been on 22 January 1995 immediately following the auction of a property known as “Mandurah” in Point Nepean Road, Portsea on the western side of the Portsea Pier. While “Mandurah” was a property recently constructed and also had spectacular views it was only approximately half of the land area of the Property and both “Mandurah” and the Property would have appealed to a similar range of buyers. The auction of “Mandurah” was held on a beautiful day with a large crowd and several bidders and in my opinion the euphoria created by that auction would possibly have had a beneficial effect on the auction of the property if it had been held soon after or on the same day, even if the marketing time for the Property had been brought back from 5 February 1995 to 22 January 1995, to accommodate it.
9.“Mandurah” sold for $2,625,000 on 22 January 1995. Other relevant sales in 1994 and 1995 are set out at page 8 of Exhibit “DGE-1” to the said affidavit of David Gordon Ellis (Ellis valuation report).
10.The auction of the Property held on 5 February 1995 was held on a day of inclement weather and the weather was particularly inclement shortly before the auction. A much smaller crowd was present at the auction of the property than the auction of the other January sales listed in the Ellis Valuation report and I discerned only two bidders at the auction of the Property.
The marketing of the property and the marketing brochure should have indicated that not only was the property divided into two allotments on two titles but offered the property for sale as two allotments.
Also no terms were offered, even terms over a 12 or 24 month period at ruling rates of interest at the time in my opinion would have materially assisted in obtaining a higher price.
11.Based on the sales listed in the Ellis Valuation report, and after considering the attributes of the property with its cliff top position offering spectacular views of the Portsea front beaches and Port Phillip Bay, the position adjacent to the Portsea village and the fact that it was on two titles with re-development potential I assessed the value of the property at between $2,000,000 and $2,500,000 in January and February of 1995 and expected that it should bring that sum if properly marketed. If the two titles were sold separately based on the value of an approx. half acre allotment suitable for redevelopment the total value could easily have been $2,500,000 or approximately $1,250,000 per allotment.
12.There was to my knowledge and from enquiries I made at the time reasonably strong demand for cliff top properties of the nature of the property in the summer of 1994/1995.
Such knowledge was obtained as I attended most or all of the auctions of the properties set out on page 8 of the Ellis Valuation report and I also discussed the level of demand with the main Estate Agents active in the Portsea/Sorrento area namely Kay & Burton, R T Edgar and Briggs Shaw and in addition I obtained such acknowledgement from enquiries made by interested persons of my own business.
13.I refer to paragraph 13 of the said affidavit of Geoffrey Donald Sutherland and paragraphs 10 and 11 of the said affidavit of Warwick Anderson which seem to infer that there was some encroachment by the house on the west title of the property over on to the east title thereof. I note that neither of the said affidavits includes any evidence or survey report that this was in fact so. Even if it was (which is not on the statements therein contained accepted) it would have been relatively easy to amend the title boundaries to overcome this and from my knowledge and experience in such matters this could have been effected within a relatively short period of time.
14.The property bought by the original purchaser on 5 February 1995 for $1,650,000 sold it for $1,950,000 in the summer of 1997 and the house on the property is being rebuilt by the current owner from inspection in the same position as the previously existing house.
15.Accordingly in my opinion the property could have brought in the vicinity of $2,000,000 to $2,500,000 if properly marketed on a sale as two allotments. The property in my opinion should have been marketed to the highest and best use which was as two allotments in which case up to $2,500,000 could have been expected to be achieved.
Sale of properties of approx. a half acre on the cliff top in the Portsea/Sorrento area were bringing at least $1,000,000 and up to $1,250,000 or more as indicated by the sales set out in the Ellis Valuation report and as confirmed in paragraph 10 of the said affidavit of Warwick Anderson.
The property was already in two titles of approximately a half acre each. These allotments should have been clearly delineated by a licensed surveyor with plans available before and during the auction.
If the house did encroach over the eastern title (which from the affidavits and exhibits thereto referred to in paragraph 6 hereof is not verified) either the titles could have been amended or the respondent as vendor could have agreed to demolish the house prior to settlement of the sale.
The property should have been marketed to its maximum advantage which was a sale of two allotments.
The contention that the property had been sold at an undervalue has been disputed in affidavits filed on behalf of the Society by Geoffrey Donald Sutherland, who, in conjunction with Mr Warwick Anderson of R T Edgar, was the selling agent when the property was sold on 5 February 1995. Mr Sutherland justified that date as appropriate for the sale in these paragraphs in his affidavit sworn 1 September 1998:
8....In or about early December 1994 and before the marketing submission was sent, Warwick Anderson of R T Edgar suggested to me that the Property be auctioned on 22 January 1995 after the “Mandura” auction. However, in subsequent discussions with Mr Anderson in or about early December 1994 and before the marketing submission was sent, Mr Anderson agreed that 5 February 1995 was an appropriate date for the auction. I considered this was an appropriate date as access to the Property and inspections could not commence until on or about 1 January 1995. I believed that access could not be obtained until on or about 1 January 1995 as this was the time that GBS was to obtain vacant possession of the Property. As it turned out the Guss family remained in possession of the Property until about a week before the auction. Given the Property was to be listed on or about 1 January 1995 an auction date of 22 January would not have allowed sufficient time to advertise the Property. I note that on page 4 of the marketing submission it identifies 5 February 1995 as the auction date.
9.As it turned out 5 February 1995 was a good day for the auction as it was possible to take advantage of the strength in the sales of clifftop properties in Portsea which had occurred over January 1995. There is no reason why 22 January 1995 would have been a better date for the auction.
Mr Sutherland went on to depose that the auction had been well-attended by about 60 people and that two genuine bidders had been in competition to acquire the property. He denied that the auction had been marred or delayed by inclement weather. He also disputed the suggestion that the property should have been sold in two allotments, deposing in paragraph 13:
...It was not feasible for the Property to be sold in two parts. The Property was contained in two certificates of title. The house on the Property was situated predominantly on the west title. However, the house straddled the centre boundary of the two titles and therefore encroached onto the east title. For the Property to be sold in two parts it would have been necessary for the house or part of it to have been demolished or for the Property to be re-subdivided. It would not have been practical to demolish that part of the house crossing the common title boundary. Further, the house was situated very close to the clifftop. If the house had been demolished council regulations would not have permitted a rebuilt house to be situated as close to the clifftop. A new house would have to be rebuilt further away from the clifftop. As the land sloped downwards from the clifftop end of the west title a rebuilt house situated further away from the clifftop would have had inferior views to the existing house. This counted against demolition of the house. The question of sale of the Property in two parts was thoroughly explored by Sutherlands. In or about early December 1994 I told both Mr Edge and Mr Guss that the Property could not be successfully sold in two parts.
The Society also relied on evidence from another valuer, Mr Ellis, who had been commissioned by the Society to prepare, and did prepare, a report and valuation of the property dated 27 January 1995, which indicated that it then had a current market value of $1.65 million and a realisable value of $1.5 million. The other conjunctional agent involved in the sale of the property, Mr Warwick Anderson of R T Edgar, denied that he ever advised Mr Guss that the property should bring between $2 million and $2.5 million as a single offering. He agreed with Mr Sutherland’s evidence about the selection of 5 February 1995 as the date for the sale, deposing in his affidavit sworn 1 September 1998:
7.R T Edgar was the agent or conjunctional agent for the sales of properties known as “Mandurah”, “Sheldon” and “Ilyuka” located in Portsea. In or about early December 1994 and before the marketing submission was sent, Sutherlands and R T Edgar suggested to Mr Edge that the Property be auctioned in late January 1995. However, it was subsequently agreed between myself, Sutherlands and Mr Edge in discussions occurring in or about early December 1994 and before the marketing submission was sent, that 5 February 1995 was an appropriate date for the auction of the Property. This was an appropriate date as access to the Property and inspections of the Property could not commence until on or about 1 January 1995. At that time I believed this was because GBS was not taking possession of the Property and thus could not provide access to the Property until on or about 1 January 1995. As it turned out the Guss family remained in possession of the Property until about a week before the auction. 5 February 1995 was also an appropriate date given that the initial marketing of the Property would occur through January 1995 which was a suitable period for this to occur. I note that on page 4 of the marketing submission, 5 February 1995 was identified as the auction date.
Before the hearing of this application resumed this morning the debtor and her father instituted an action in the Supreme Court of Victoria in which it is alleged by the statement of claim that the Society had been in breach of a duty of care and good faith owed to the plaintiffs in effecting the sale of the property. The particulars of that alleged breach of duty of care appended to paragraph 7 of that statement of claim are as follows:
(a)failing to market, or properly consider marketing the property for sale as two allotments (in respect of each separate title), rather than as one allotment;
(b)failing to hold the auction on a date most advantageous to the Plaintiffs. (It is contended that 22 January 1998 was a date at which a higher price could have been realised for the property due to other sales which were to be held that day (ie, “Mandura”) and a greater concentration of interested purchasers being in the area at such time);
(c)failing to postpone the auction on 5 February 1995, to a subsequent suitable date, due to the inclement weather prevailing at such time;
(d)continuing to proceed with the auction of the property at a delayed time on 5 February 1995, which was later than such time which was advertised to prospective purchasers in the days leading up to the auction;
(e)continuing to proceed with the auction of the property amidst the then prevailing inclement weather conditions, with only a small number of interested persons present, relative to what would have been a greater attendance had the auction been postponed and conducted in better weather conditions and/or held at the earlier time of 22 January 1995;
(f)failing to offer prospective purchasers terms other than cash on settlement and/or flexibility in respect of those terms relating to completion of the relevant contract of sale; and
(g)concluding the sale of the property at auction for a price which was significantly and/or unreasonably less than its true market value at around the time of such sale. (The true market value of the property at around the time of such sale was in the vicinity of $2,000,000.00 to $2,500,000.00).
By s 40(1)(g) of the Bankruptcy Act 1966 the debtor is required to satisfy the Court:
...that he or she has a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counter-claim, set-off or cross demand that he or she could not have set up in the action or proceeding in which the judgment or order was obtained.
It is not disputed in the present case that the counterclaim, set-off or cross demand which the debtor now seeks to set up could not have been set up in the trust proceedings in which the order for costs on which the bankruptcy notice is based was obtained. The onus imposed on the debtor by s 40(1)(g) is to establish a prima facie case, that is, that there is a fair chance of success in making out a bona fide counterclaim, set-off or cross demand; see Re Brink; Ex parte Commercial Banking Co of Sydney Ltd (1980) 30 ALR 433 at 438 and Eastick v Australia and New Zealand Banking Group Ltd (1981) 53 FLR 91 at 95.
On a review of the extensive affidavit material in this case I am not satisfied that the debtor has established a genuine prima facie case that the property was sold at an undervalue or that to conclude a sale on 5 February 1995 was unreasonable. Indeed, Mr Gilder, the valuer on whom the debtor relies, has deposed:
12.There was to my knowledge and from enquiries I made at the time reasonably strong demand for cliff top properties of the nature of the property in the summer of 1994/1995.
Apart from the fortuitous advent of inclement weather on the date selected for the auction sale, nothing has been pointed to as indicating that the sale was not reasonably conducted in such a way as to attract that reasonably strong demand. The price secured was consistent with contemporaneous valuations and can also be seen with hindsight to be consistent with movements in the market and the use made of the property since the subject sale. Counsel for the debtor has been unable to refer me to any authority suggesting that it would be unreasonable for a mortgagee in circumstances like the present not to postpone a widely advertised sale or not to offer extended terms for payment of the price which it was prepared to accept for the mortgaged property. Similarly, there is apparently no authority indicating that it would be unreasonable in such circumstances for a mortgagee not to offer the property as two separate allotments and not to have first demolished the apparently substantial dwelling which was standing on it.
Reference was made on the first day of the hearing of this matter to further alleged breaches of duty owed by the Society to the debtor. It was first said that the Society had paid more to free the property from statutory charges for rates and land taxes than the rating and taxing authorities were entitled to recover. It was also suggested that the amount retained from the proceeds of sale in respect of the conveyancing costs charged by the solicitor for the Society was excessive. However, no detailed evidence was directed to the matters on behalf of the debtor. When the hearing resumed today Counsel for the debtor did not press further argument on either of these two further alleged breaches of duty, although it was indicated that neither was abandoned.
In my view the debtor has failed to make out the requisite prima facie case in respect of either of these matters, considered separately or in conjunction with the allegation that the property had been sold at an undervalue. For these reasons I consider that the debtor has not discharged the onus which she sustains under s 40(1)(g). Her application must therefore be dismissed with costs. I shall extend the time for compliance with the bankruptcy notice for a further seven days and I shall order that, in the event that a sequestration order is made on the basis of the bankruptcy notice, the Society’s costs of the application to set aside the bankruptcy notice be recovered as part of the petitioning creditor’s costs in relation to such petition.
| I certify that this and the preceding thirteen (13) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Ryan. |
Associate:
Dated: 14 September 1998
| Counsel for the Applicant: | Mr P J Hayes |
| Solicitor for the Applicant: | Joseph Guss |
| Counsel for the Respondent: | Mr S Gardiner |
| Solicitor for the Respondent: | Minter Ellison |
| Date of Hearing: | 2 and 14 September 1998 |
| Date of Judgment: | 14 September 1998 |
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