Irfan & Amin (No 3)
[2024] FedCFamC1F 712
•24 October 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Irfan & Amin (No 3) [2024] FedCFamC1F 712
File number: MLC 900 of 2021 Judgment of: HARTNETT J Date of judgment: 24 October 2024 Catchwords: FAMILY LAW – PROPERTY – Urgent interim hearing – Where a caveat is lodged over real property – Where settlement cannot proceed without the caveat’s removal –– Orders made for the joinder of the caveator – Orders made for removal of the caveat – Costs ordered. Legislation: Corporations Act 2001 (Cth)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 3.01
Transfer of Land Act1958 (Vic) ss 90, 103
Cases cited: Green & Wall [2019] FamCA 76
Skye & Saidel and Anor [2020] FamCA 18
Division: Division 1 First Instance Number of paragraphs: 30 Date of hearing: 18 October 2024 Place: Melbourne Solicitor for the Applicant: Jones Hardy Solicitor for the First Respondent: Mulbridge Lawyers Solicitor for the Second & Third Respondents: No appearance The Fourth Respondent: Litigant in person Counsel for the Fifth & Sixth Respondents: Mr McKillop Solicitor for the Fifth & Sixth Respondents: K&L Gates ORDERS
MLC 900 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS IRFAN
Applicant
AND: MR AMIN
First Respondent
MR HOLMBERG
Second Respondent
MS HOLMBERG
Third Respondent
MR PANDEV
Fourth RespondentMR O IN HIS CAPACITY AS LIQUIDATOR OF Q PTY LTD (IN LIQUIDATION)
Fifth RespondentQ PTY LTD (IN LIQUIDATION)
Sixth Respondent
ORDER MADE BY:
HARTNETT J
DATE OF ORDER:
18 OCTOBER 2024
THE COURT ORDERS THAT:
1.S Pty Ltd be joined as a party to this proceeding pursuant to rule 3.01 of the Federal Circuit and Family Court of Australia (Family Court) Rules 2021.
2.S Pty Ltd withdraw caveat … no later than 12.00pm noon on 21 October 2024 being the day of settlement for the sale of the property at C Street, Suburb D VIC, at their own cost, so as to allow the sale of the property to proceed.
3.Pursuant to s 90(3) of the Transfer of Land Act 1958 (Vic), the Registrar of Titles for Victoria is directed to remove caveat … lodged in late 2024 on Certificate of Title Vol … Folio … by CC Conveyancing on behalf of S Pty Ltd.
4.S Pty Ltd pay the fifth respondent’s costs of this application to be agreed and failing agreement as determined by the trial judge or by further order.
5.Otherwise the Application in a Proceeding filed 17 October 2024 is dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Irfan & Amin has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
HARTNETT J
INTRODUCTION
Before the Court was an Application in a Proceeding filed by the fifth and sixth respondents on17 October 2024, seeking orders which are in effect those orders as made by the Court on 18 October 2024.
The liquidator, Mr O, and the company Q Pty Ltd (in liquidation) (“the company”) relied on the following material:
(1)Application in a Proceeding filed 17 October 2024;
(2)affidavits of Mr O, filed 11 October 2024 and 17 October 2024;
(3)affidavit of Mr T filed 17 October 2024;
(4)affidavit of service filed 18 October 2024;
(5)written submissions filed 17 October 2024, and;
(6)a proposed minute of order handed up to the Court on 18 October 2024.
No other party to the proceeding filed any material, and each of the other parties either consented to the orders as sought or, as in the case of the second and third respondents, indicated their preparedness to abide by the orders of the Court.
BACKGROUND
The company was incorporated in 1997. Since 1997, the first respondent husband has been the sole director and secretary of the company. He is also the sole shareholder of the company, holding one fully paid ordinary share.
The company operated a business from January 1997 to July 2024. The business was conducted from a property of which the company is the registered proprietor namely C Street Suburb D in the State of Victoria and more particularly described in Certificate of Title Volume … Folio … (“the Suburb D property”). The company may have ceased trading the business in or about December 2023, when orders were made that the first respondent vacate the property.
On 18 September 2024, Orders were made in the Federal Court of Australia on the application of the creditor Deputy Commissioner of Taxation, following a failure by the company to comply with a statutory demand for the sum of $465,775.53. Those Orders were, relevantly that:
(1)Q Pty Ltd be wound up in insolvency under the provisions of the Corporations Act 2001 (Cth).
(2)Mr O, as a registered liquidator, be appointed liquidator of the company.
Subsequently, Mr O and the company were joined to this proceeding by interim order made by consent on 15 October 2024, together with further orders staying the operation of Orders 1 and 2 of Orders made 9 December 2022, and Order 8 of Orders made 21 November 2023. Those orders had the effect of requiring the first respondent husband and/or applicant wife to cause the company to sell the Suburb D property and make distributions of the proceeds of sale to the applicant, her solicitors, and mortgagees or caveators who claimed to be creditors of the company.
The Suburb D property was sold by way of a contract of sale exchanged late 2024, being after the appointment of Mr O as the liquidator of the company. The sale of the property was due to be completed the following month. The sale price as contained in the contract of sale as signed by the first respondent husband was for $1,875,000.
The orders made 15 October 2024 had also permitted Mr O to complete the sale of the property and required him to pay the net proceeds of sale (after payment of all agent commissions, advertising expenses and legal expenses of the sale) into his lawyers K&L Gates trust account, subject to further order or agreement in writing between the parties.
Mr O is yet to determine whether the parties that are to receive a distribution from the net sale proceeds pursuant to the orders of the Court made 21 November 2023 and 9 December 2022 are creditors of the company.
The Suburb D property was subject to several encumbrances including, relevantly:
(1)a caveat lodged on behalf of the applicant;
(2)a caveat lodged on behalf of Mr Pandev (the fourth respondent);
(3)a caveat lodged on behalf of Mr Holmberg (the second respondent) and Ms Holmberg (the third respondent);
(4)a caveat lodged on behalf of U Pty Ltd;
(5)a caveat lodged on behalf of S Pty Ltd; and
(6)a caveat lodged on behalf of Mr O as the liquidator of the company (the fifth respondent).
Prior to the hearing of the Application in a Proceeding on 18 October 2024, Mr O had arranged for the removal, by consent, of five of the six caveats lodged on the title either at or before settlement of the sale of the Suburb D property. The remaining caveat, number … lodged on 4 September 2024, was that lodged on behalf of S Pty Ltd, an accounting firm who may have done work for the company, and for the first respondent in a personal capacity, noting the claim is said to be secured by a charging clause in their retainer with the company.
Mr O first sought the voluntary removal of the caveat by S Pty Ltd to effect settlement of the sale of the Suburb D property on the basis that:
(1)The proceeds of sale will be paid into the trust account of Mr O’s lawyers, thereby preserving the value of the property for S Pty Ltd to claim against and thereby avoiding prejudice.
(2)S Pty Ltd's claim will be investigated by Mr O.
(3)If the claim of S Pty Ltd cannot be agreed with Mr O, then S Pty Ltd will be entitled to seek to establish its claim as a secured creditor in the Court.
S Pty Ltd did not remove the caveat and whilst indicating to Mr O that they had sought legal advice, no response to his request to remove the caveat was forthcoming. It became necessary for the Application in a Proceeding to be filed to ensure settlement of the sale.
I am satisfied that S Pty Ltd and the Registrar of Titles was served with the Application and materials in support.
On 17 October 2024 at 12.41pm, the solicitor for Mr O sent a letter to the Registrar of Titles, enclosing, amongst other documents, copies of the Application in a Proceeding filed 17 October 2024, and the affidavit of Mr O affirmed on 17 October 2024. Further, on 17 October 2024 at 12.56pm, Mr T received a response from a representative of the Registrar of Titles, advising that if the Court orders the registrar to reject or remove caveat …, Mr T would need to lodge an application under s 103 of the Transfer of Land Act 1958 (Vic) for the registrar to implement that order.
Prior to the hearing on 18 October 2024, the solicitor for Mr O and the company spoke with Mr V, of S Pty Ltd, who confirmed that service of all material documents had been affected upon S Pty Ltd and that S Pty Ltd were aware of the application and the proceeding being before the Court on 18 October 2024. Service of the application and supporting material of Mr O and Mr T had been affected upon Mr V and his solicitor, Mr AA, of BB Lawyers on 17 October 2024, with further service of the sealed outline of submissions, proposed form of order and copies of the decisions of Green & Wall [2019] FamCA 76 and Skye & Saideland Anor [2020] FamCA 18 at 6.47pm on 17 October 2024.
CONSIDERATION
Any debt, and its quantum as claimed, that may be owed by the company to S Pty Ltd, is not known by Mr O. The S Pty Ltd charge is as contained in an asserted agreement with the company dated 12 September 2023. The caveat lodged by S Pty Ltd is in those circumstances not an unusual charge on the Suburb D property.
The Court is satisfied that once settlement of the sale is completed in late 2024, the solicitors for Mr O will hold the proceeds in their trust account in accordance with the orders made by the Court on 15 October 2024. To the extent that any of the caveators identified in the affidavit of Mr O filed 17 October 2024, paragraph 9, are secured creditors of the company, their priority will be retained as secured creditors in accordance with the priority of their interest in the property. Accordingly, S Pty Ltd will not be prejudiced by the removal of its caveat.
S Pty Ltd will be required to be joined to the proceeding pursuant to r 3.01 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
The Court has power under its accrued jurisdiction to order a party to remove a caveat and to order the Registrar of Titles in the State of Victoria to remove a caveat pursuant to s 90(3) of the Transfer of Land Act 1958 (Vic).[1]
[1] Green & Wall [2019] FamCA 76 at [22]-[26] and Skye & Saidel and Anor [2020] FamCA 18 at [47]-[53].
To proceed with settlement in late 2024, a clear title to the property must be passed from the vendor to the purchasers. If the caveats or any one of them are not removed, the company will default in respect of the settlement of the sale, and there will be a risk the sale will be lost; alternatively, that default costs will be incurred including damages payable to the purchaser.
In contrast, if the caveats are removed, the position of S Pty Ltd will be preserved, since the net proceeds of the sale of the property are to be paid into the trust account of K&L Gates pending further investigations into the financial affairs of the company; Mr O will preserve S Pty Ltd’s priority as a secured creditor in accordance with the priority of their interest in the property; and S Pty Ltd will thereafter have an opportunity to establish its claim to the net proceeds of sale and their priority (that is in dispute) if there is any disagreement with the liquidator in respect of those matters, including by application to the Court if required. That is, even assuming that S Pty Ltd does have a claim on the serious question to be tried, namely that it has the estate or interest which it claims in the land in question, the balance of convenience strongly favours the removal of the caveat lodged by or on behalf of S Pty Ltd on the title to the Suburb D property.
The order sought to be directed to the Registrar of Titles shall be made and is not opposed by the Registrar. It is necessary if S Pty Ltd fails to remove its caveat despite the order of the Court. By the order directed to the Registrar the settlement of the sale can still proceed.
COSTS
On 17 October 2024, the applicant filed a Response to an Application in a Proceeding. She consented to the orders as sought by the fifth and sixth respondents. The applicant sought an order that S Pty Ltd pay her costs incurred on the application. Whilst the applicant’s solicitor appeared on the hearing of the application, he did not press for any order for the payment of costs to the applicant. That was appropriate.
The party that has incurred costs to be claimed from S Pty Ltd in the bringing of the application is the fifth respondent. That party sought an order for costs against the now joined party S Pty Ltd.
This is a matter where the usual rule that each party pay their own costs should not apply.
Mr O has incurred costs that were unnecessary to incur on the facts of this case. Attempts by him prior to the filing of the application to avoid the further expenditure of costs were not responded to and the removal of the caveat by S Pty Ltd as requested by him, has now been achieved by Court order.
S Pty Ltd failed to participate in the proceeding and has been entirely unsuccessful. S Pty Ltd was on notice that a costs order would be sought against it.
A costs order shall accordingly be made against S Pty Ltd as sought by Mr O.
I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Hartnett. Associate:
Dated: 24 October 2024
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