In the matter of Phoenix Rising Investments Pty Limited (ACN 123 623 754)

[2015] NSWSC 2096

Supreme Court

New South Wales

Medium Neutral Citation:	In the matter of Phoenix Rising Investments Pty Limited (ACN 123 623 754) [2015] NSWSC 2096
Hearing dates:	23 July 2015
Date of orders:	23 July 2015
Decision date:	23 July 2015
Jurisdiction:	Equity
Before:	Brereton J
Decision:	Orders 22 and 23 of 4 June 2015 be stayed until hearing of interlocutory application.
Catchwords:	PROCEDURE – application for stay – where contended that payment in conformity with orders may render fund non-compliant with (CTH) Superannuation Industry (Supervision) Act 1993 – where no basis to relieve defendants of liability to pay – held, more appropriate to require payment of funds into court – where defendants claim they need time to pay – application for time to pay to be made with appropriate evidence
Legislation Cited:	(CTH) Superannuation Industry (Supervision) Act 1993
Cases Cited:	Grace v Grace [2012] NSWSC 976
Category:	Procedural and other rulings
Parties:	David Alexander Grace (plaintiff) Deborah Sharon Grace (first defendant) Julienne Grace (second defendant) Nevilda Holdings Pty Ltd (third defendant) Nevilda Investments Pty Ltd (fourth defendant) Dutchie Pty Ltd (sixth defendant) Phoenix Rising Investments Pty Ltd (seventh defendant)
Representation:	Counsel: E Eagles (plaintiff) D Raphael (first, second and seventh defendants/applicants)   Solicitors: James Tuite & Associates (plaintiff) Clinch Long Letherbarrow Pty Ltd (first, second & seventh defendants/applicants)
File Number(s):	2006/259566

Judgment (ex tempore)

1. HIS HONOUR: On 9 November 2012, pursuant to reasons for judgment delivered on 23 August 2012 [see Grace v Grace [2012] NSWSC 976], I made orders, inter alia, as follows:

42. Order that an account be taken of all moneys to which the third defendant as trustee of the Nevilda Investment Superannuation Trust [“NISF’] is entitled for the period from 18 January 2007, with the accounting parties to be the first defendant, second defendant and the seventh defendant.

43. Order that the first defendant, the second defendant and the seventh defendant pay to the third defendant the amount found to be due, including interest, on the taking of such account.

2. The order for the taking of accounts was for the taking of accounts on the ordinary basis. It had not been disputed in the substantive hearing that the first, second and seventh defendants were liable to account on the ordinary basis to the third defendant as trustee of the NISF.

3. Directions were made on that and subsequent occasions, over the ensuing couple of years, to give effect to the order for the taking of that account and other accounts. Ultimately, when it came to the taking of accounts, there was no remaining dispute about the account in respect of the NISF, and the parties agreed on the amount and the interest, and that from the date of the order the relevant defendants should be allowed 28 days to pay.

4. Accordingly, on 4 June 2015, I made orders in accordance with short minutes brought in by the parties as follows:

22. Order that the second defendant, or in default by the second defendant, each of the first and second defendants, pay to the third defendant (as trustee of the Nevilda Investments Pty Limited Superannuation Fund, pursuant to the superannuation trust deed dated 30 June 1995) (the NISF), the amounts of

(a) $161,765; and

(b) interest of $108,979

within 28 days of the date of this order, the obligation of the first and second defendants to be joint and several such that the payment by one of them will discharge the liability of all defendants.

23. Order that the seventh defendant, or in default by the seventh defendant the first, second and seventh defendants, pay to the third defendant as trustee of the NISF the amounts of

(a) $124,000; and

(b) Interest of $80,462

within 28 days of the date of this order; the obligation of the first, second and seventh defendants to be joint and several such that the payment by one of them will discharge the liability of all defendants.

5. At the request of the relevant defendants, and with the agreement of the plaintiffs, an additional order was made:

24. The first, second and/or seventh defendant file and serve any application with respect to the NISF within 21 days of the date of this order.

6. By interlocutory process filed on 25 June 2015, the relevant defendants seek a number of orders in respect of the NISF, and in particular that orders 22 and 23 of 4 June 2015 be stayed until the determination of the interlocutory process and thereafter until such time as the third defendant demonstrates compliance with the (CTH) Superannuation Industry (Supervision) Act 1993 in certain respects, or until a ruling is received from the Commissioner of Taxation that payment pursuant to those orders will not be treated as further and additional contributions, and a declaration that Dr Grace and Ms Grace are currently members of the NISF or will be upon compliance with those orders.

7. Essentially, the defendants contend that upon compliance with the orders to which I have referred by making the payments to the trustee of the NISF, the fund will become non-compliant for the purposes of the superannuation industry supervision legislation with – at least potentially – serious adverse taxation and regulatory implications.

8. It is not necessary at this stage to identify or to discuss any further the merits of that application, but it can be observed, first, that although I apprehend from the correspondence that a notice of intention to appeal from the orders of 4 June 2015 has been filed, no reference was made to any relevant ground of appeal or arguable error in making the orders in the course of submissions on this application for a stay in the meantime; and, as I understand it, no appeal has ever been brought from the relevant orders of November 2012, although an appeal has been brought from other orders of that date. I say that in order to emphasise that, so far as I can tell, there is no basis for relieving the relevant defendants from the obligation to make the payment, although it may be that the consequence of their present application will be to show that some conditions ought to be imposed in order to avoid the fund becoming non-compliant, (although an alternative prospect is that the Court might well take the view that its orders were to be complied with, and the consequences from a regulatory or taxation point of view fell to be worked out according to law thereafter).

9. Before me presently is the defendants' application for an interim stay of orders 22 and 23 of 4 June until the hearing of their interlocutory application, which is likely to be some time in October or November of this year. They contend that there is no prejudice to the plaintiffs in a stay for that period, particularly as, other than themselves, the only member of the superannuation fund – the plaintiff Mr David Grace – could not be eligible at his present age for a superannuation benefit, and because requiring payment in the meantime might have the serious adverse consequences for the fund – and thus ultimately for the members – to which I have adverted. The plaintiff, on the other hand, while accepting that there is no basis for supposing that anyone would become entitled to a benefit in the next several months, points to its need for funds, of which it has little at present, to defend the present application. That said, it does not appear to have had funds of its own to bring the proceedings in which it obtained the present relief, so it is not clear that lack of its own funds would preclude it from defending the application.

10. As it seems to me, in the absence of evidence of hardship to the plaintiff, there is advantage in not requiring the immediate payment of the judgment moneys into the superannuation fund, because of the risks associated with non-compliance if they materialise. On the other hand, there is no apparent reason for relieving the defendants from the obligation to pay the funds in accordance with the orders. That is rather fortified by the circumstance that, first, the defendants have always admitted that they were liable to account to the NISF on the ordinary basis, and, secondly, that the amount for which they were liable to account is the subject of agreement. So it is difficult to see how there can be any legitimate argument about their liability in that respect.

11. In those circumstances, it seems to me that the appropriate course in balancing the relevant considerations is to stay the order requiring payment to the fund, upon terms that the amounts in question be paid into court.

12. The defendants then submitted that they were not presently in a position to pay those moneys, since they were awaiting completion of the sale of a property to produce funds. It seems to me that if the defendants wish to apply for further time to pay, having already been allowed 28 days from the date on which the order was made, then that application ought to be made on proper evidence, and that evidence is not presently before the Court.

13. In those circumstances, I propose simply to stay orders 22 and 23 upon terms that the moneys the subject of those orders be paid into court. If the defendants wish to apply for further time for payment on grounds of hardship, then that ought to be the subject of a separate application made, supported by appropriate evidence.

14. The Court, by consent, orders that:

In respect of the accounting for Etham Avenue:

1. The plaintiff have leave to serve any notice to produce and to file and serve any subpoenae by 30 July 2015;

2. Any such notice to produce or subpoenae be returnable before the Registrar in Equity on 7 August 2015;

3. The plaintiff serve on the second defendant a particularised list of categories, items and other matters upon which the plaintiff proposes to examine the second defendant in relation to the just allowances table on or before 14 August 2015;

4. The plaintiff inform the second defendant of the plaintiff's estimate of time required for the examination of the second defendant in relation to the just allowances table on or before 14 August 2015;

5. The second defendant inform the plaintiff of her estimate of time required for the examination of her in relation to the just allowances table on or before 21 August 2015;

6. The matter be listed before me for directions for the purpose of fixing a date for the examination of the second defendant on 28 August 2015 at 9.45.

In respect of the defendants' interlocutory application filed on 25 June 2015:

7. The third defendant produce documents in response to the notice to produce for inspection dated 25 June 2015 or alternatively file and serve a notice of motion seeking to set aside that notice to produce by 7 August 2015;

8. The plaintiff and third defendant serve their evidence with respect to the interlocutory application by 7 August 2015;

9. The first and second defendant serve their evidence in reply with respect to the interlocutory application and the documents produced under the notice to produce by the later of 21 August 2015 and 14 days after the date upon which the third defendant complies with the notice to produce;

10. The first and second defendants serve written submissions with respect to the interlocutory application filed 25 June 2015 by the later of 28 August 2015 and 7 days after the first and second defendants serve their evidence in reply;

11. The plaintiff and third defendant serve written submissions with respect to the interlocutory application by the later of 11 September 2015 and 14 days after the date upon which the first and second defendants serve their written submissions;

12. The first and second defendants serve written submissions in reply with respect to their interlocutory application by the later of 18 September 2015 and 7 days after the plaintiff and third defendant serve their written submissions;

13. The interlocutory application be listed for hearing before me on 23 October 2015 with a 2 hour estimate.

The Court further orders that

14. Execution of orders 22 and 23 made on 4 June 2015 be stayed upon terms that the defendants liable respectively under those orders pay into court to the credit of these proceedings the sums payable under those orders.

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Decision last updated: 08 September 2016