Jamieson Louttit as official liquidator of Eco Village Resort Developments Limited (in liquidation) v Golding
[2012] NSWSC 1633
•21 December 2012
Supreme Court
New South Wales
Medium Neutral Citation: Jamieson Louttit as official liquidator of Eco Village Resort Developments Limited (in liquidation) v Golding [2012] NSWSC 1633 Hearing dates: 17/12/2012 Decision date: 21 December 2012 Jurisdiction: Common Law Before: Garling J Decision: (1) Order that the plaintiff be granted possession of the property known as Jasper's Village, 175 Mt Seaview Road, Mount Seaview, New South Wales, being the whole of the land contained in Certificates of Title Folio Identifiers 58/754417 and 59/754417.
(2) Order that leave be granted for the plaintiffs to issue a writ of possession forthwith.
(3) Defendants to pay the plaintiff's costs.
Catchwords: REAL PROPERTY - claim by receiver for possession - general principles -occupation of acquired land - licences - whether a general loan agreement constitutes a licence to occupy premises. CORPORATIONS - receivers, controllers and managers - duties and liabilities - powers - appointment Legislation Cited: Corporations Act 2001 Category: Principal judgment Parties: Jamieson Louttit (P)
Bradley Boyt Golding (D1)
T Johnson-Henkes (D2)Representation: Counsel:
A Kaufmann (P)
In person (D2)
Solicitors:
Gadens Lawyers (P)
File Number(s): 2012/370250
JUDGMENT
On 28 November 2012, Jamieson Louttit, who is the official liquidator of Eco Village Resort Developments Limited, a company in liquidation, commenced proceedings by a summons filed in Court on that day seeking orders, amongst other things, for possession of property and an order that leave be granted to issue a writ of possession forthwith.
Because the proceedings had some urgency about them, the Duty Judge ordered that the summons be returnable before the Court on 3 December 2012. On that day, each of the defendants, namely Mr Bradley Golding and Ms Theresa Johnson-Henkes, filed a notice of appearance. At their request, in order to enable them to obtain legal advice, the proceedings were adjourned for hearing to 17 December 2012.
On 17 December 2012, for the reasons which I delivered orally, I declined to further adjourn the proceedings at the request of the defendants.
I proceeded to hear the application for relief set out in paragraphs 3, 4 and 5 of the liquidator's summons.
Those orders were as follows:
"3. An order that the plaintiffs be granted possession of the property.
4. An order that leave be granted for the plaintiffs to issue a writ of possession forthwith.
5. Costs"
The property referred to is the land known as "Jasper's Village" which is located at Mt Seaview in New South Wales. It is unnecessary in the course of these reasons for this judgment to describe the various title details.
Factual Background
Eco Village Resort Developments Limited ("the Company") became registered as the proprietor of Jasper's Village on 5 March 2009. At the same time, it granted a mortgage over each of the lots which comprised Jasper's Village to the Commonwealth Bank of Australia.
On 18 April 2012, the Company entered into an agreement with World Wide Wilderness Holidays Pty Ltd ("World Wide), and Australian Wilderness Tours Pty Ltd ("AWT") to operate a retreat at Jasper's Village by way of a holiday resort. The resort had a number of names at that point such as "Jasper Peak Holiday Retreat" and also "Mt Seaview Resort".
The background to that licence recited that the company had agreed to sell the resort business and the resort to World Wide and AWT, who had agreed to purchase the resort.
The licence to operate the business granted to World Wide and AWT, control over the operations of the resort including "resort management, bookings, marketing, repairs and maintenance, guest services and accounting". The licence was agreed to continue to operate until the settlement of the purchase of the property by AWT or an associated entity, or else within three months of the date of the licence if a sale had not occurred.
The licence seems to have been renewed in identical terms on 25 May 2012.
On 15 May 2012, the company entered into a contract for the sale of the land which comprised Jasper's Village to AWT for a price of $800,000 of which $40,000 was to be paid by way of a deposit. The contract for sale provided for completion on 29 June 2012.
The standard form of contract included the following clauses:
"17. Possession
17.1 Normally the vendor must give the purchaser vacant possession of the property on completion.
17.2 The vendor does not have to give vacant possession if -
17.2.1 This contract says that the sale is subject to existing tenancies; and
17.2.2 The contract discloses the provisions of the tenancy (for example, by attaching a copy of the lease and any relevant memorandum or variation)."
The contract did not provide that the sale was subject to any existing tenancies, nor did it disclose the provision of the tenancies. The vendor was obliged to give vacant possession on settlement of the contract.
On 31 May 2012, this Court ordered that the company be wound up under the Corporations Act 2001 and that Mr Louttit be appointed the liquidator of the company.
On 13 June 2012, Mr Ralph Clissold, on behalf of AWT, sent an email to the first defendant Mr Golding which included the following:
"I have talked to my solicitor, Bruce, and other relevant parties and unfortunately there has been a firm decision made that you and Tess [a reference to the second defendant Theresa Johnson-Henkes] and everyone else involved with EVRD of the past, must vacate the resort premises by no later than 30 June 2012. As I am the license holder and will be the owner, legally, I must have vacant possession of the premises without any involvement whatsoever of past associates of EVRD."
On 14 June 2012, Ms Amelia Koka, an employee of the liquidator, sent an email to Mr Golding and to Mr Clissold at AWT, which was in the following terms:
"Jamieson Louttit is the liquidator of the registered proprietor of the property, 'Eco Village Resort Developments Ltd (in liquidation)'. The liquidator has not consented to anyone to reside on the property. We are currently in the process of assessing tenancy and licensing issues.
We are awaiting supporting documentation from a number of parties and we are not in a position to neither accept nor deny anyone's position at this stage."
On 26 July 2012, the liquidator wrote to Mr Golding. The letter was in the following terms:
"As you are aware, I was appointed official liquidator of the company pursuant to a court order on 31 May 2012.
I refer to your recent telephone conversation with Amelia Koka of this office today in relation to your occupancy at the property.
As discussed, there is currently a contract of sale due to complete on 27 July 2012 between the company and Australian Wilderness Tours Pty Ltd ('the purchaser').
Should the purchaser complete the contract of sale on 27 July 2012, we will require you to vacate the property immediately to allow us to provide vacant possession to the purchaser. Should you not vacate the property as requested we will be in breach of the contract of sale and the company will be liable for compensation to the purchaser.
Should the purchaser be unable to complete, we will be terminating the contract of sale. I note that the purchaser has also an alleged 'licensing agreement' that was executed prior to my appointed, to operate his business from the property. Whilst I have not adopted and/or novated this 'licensing agreement' we will be requesting Australian Wilderness Tours Pty Ltd to vacate the property immediately should the contract of sale not transpire.
Also I confirm that should the aforementioned contract of sale not complete, I will be placing the property on the market and offering it for sale. This process normally takes between six to twelve weeks. During this time I am happy for you to occupy the property to maintain its security.
Once a new offer for sale is accepted and settlement is scheduled, you will be required to vacate the property."
Email correspondence ensued between Mr Golding and employees of the liquidator concerning the way in which the property was, or was not, being adequately managed and income being accounted for. None of that email correspondence contained any suggestion from Mr Golding that he challenged the contents of the letter of 26 July 2012.
On 1 August 2012, the liquidator again wrote to Mr Golding. He informed Mr Golding that AWT had entered into a licensing agreement with the company prior to his appointment and that he did not wish to engage anyone to maintain the land at that point in time. His letter concluded with this paragraph:
"In anticipation of completing the sale of the property, I request for you to vacate the property within seven days of this letter to allow for vacant possession of the purchaser."
Clearly the defendants did not vacate the property. On 6 September 2012, the liquidator again wrote to Mr Golding and said:
"As you are aware, I was appointed official liquidator of the company pursuant to a court order on 31 May 2012.
I refer to my letter dated 1 August 2012 in relation to your occupation of the property of which you have ignored my request.
I again request that you vacate the property within seven days of this letter. Failure to do so will result in me initiating possession proceedings against you without further notice."
On 14 September 2012, Mr Golding sent an email to the liquidator. The email acknowledged receipt of the liquidator's correspondence requiring that Mr Golding vacate the property. He protested that he could not vacate within the required seven day period. He also noted that he had sent a copy of a proof of debt to the liquidator.
On 17 September 2012, the liquidator wrote to Mr Golding acknowledging receipt of the email of 14 September 2012 and saying:
"As previously explained to you, I require vacant possession when offering the property for sale. As such, as per my previous requests, please vacate the property within seven days.
I note that the creditors of the company have no authority to instruct any persons to act and/or be employed by the company."
On 22 September 2012, Mr Golding sent a letter to the liquidator which included the following:
"I wish to advise that on Friday 21 September, I had a meeting with my solicitor with regard to my financial involvement with Eco Village Resort Developments. Along with other advice, he has recommended with respect to my occupancy of the property at Mt Seaview that I write to you and make the following undertaking:
With regard to my current occupancy of the above property, and in the event that you reach a settlement for the above property with a party with which I am not connected, I undertake to vacate the property within seven days to guarantee the new owner vacant possession.
I trust this undertaking will satisfy any legal requirements that are necessary for you to dispose of the property and allow me to also pursue whatever entitlements that I have deriving from agreement between myself and EVRD."
This was responded to on 25 September 2012 by the liquidator. The letter said:
"As previously explained to you, I require vacant possession when offering the property for sale. As such, as per my previous requests (of which was as early as 1 August 2012) please vacate the property within seven days.
Failure to do so will leave me with no alternative than to initiate proceedings against you without further notice."
Mr Golding did not vacate the property. On 8 October 2012, the liquidator wrote noting the failure of Mr Golding to vacate the property, and asserting that his continued occupation of the property constituted trespass. The letter included the following:
"Please be advised that all locks on all buildings, gates and entrances will be changed on 22 October 2012 without further notice. I require all personal belongings to be removed from the property prior to this date.
Any personal items at the property after this date will be considered abandoned goods and I will dispose of them as such. The cost of removing and disposing of any items will be payable by you.
...
Any further access to the property on or after 22 October 2012 will constitute a trespass. I will report this matter to the police and/or approach the court for restraining orders."
A follow up letter was sent on 19 October 2012 by the liquidator to Mr Golding which largely repeated the matters in the earlier letters.
On 22 October 2012, Messrs Donovan Oates Hannaford, Lawyers, wrote to the liquidator on behalf of Mr Golding. That letter included the following:
"Our client resides at the property under a licence agreement which, we are instructed, entailed him making certain contributions to the maintenance and upkeep of the property in exchange for his exclusive occupation of a number of the units. We are instructed that he currently occupies units 43, 44 and 45.
Our client has provided to us your letter of 19 October 2012 whereby you assert that he will be trespassing if he remains on the premises after 3pm today. Our client rejects the assertion of trespass and will resist any attempts to either change locks or remove him from the premises.
In addition to our client's right to reside at the premises, he is a secured creditor of the company and has instructed us to lodge a caveat in respect of the equitable charge."
Gadens Lawyers, who acted for the liquidator, responded to that letter on 23 October 2012. Gadens pointed out that Mr Golding was not a secured creditor of the company and that his proof of debt would be adjudicated upon in due course. Gadens also pointed out that the liquidator was unaware of any licence agreement between the company and Mr Golding and asked for a copy of the agreement. The letter went on to say:
"Your client's occupation of the property is holding up completion of an exchange contract for the sale of the property."
No response was received to that letter.
No proceedings have been commenced by or on behalf of Mr Golding to establish his entitlement to occupy the property, nor has he lodged any caveat over the property as he threatened to do.
The proof of debt lodged by Mr Golding claimed that the company was indebted to him for $35,000 resulting from two loans, the first made on 8 June 2011 for $20,000 and the second on 26 October 2011 for $15,000. It was said that these loans were "investments", they were supported by an interim loan agreement entered into on 8 June 2011.
The agreement noted that Mr Golding wanted to "engage with" the development of the Jasper Village area as an eco-village and lifestyle resort "... as a member of the Japser's Community Group".
The deed recited that there was a proposal to develop the Jasper's Village area as a resort, including developing a membership program for people to reside on selected locations of the property, under licence, with licences to operate business or provide good or services relating to the project.
Upon the basis of the statements of intention, the company invited:
"Intending members to provide loan monies to the company as listed in the schedule on the following conditions."
The conditions referred to the payment of interest and an offer by the company "... to secure the loan monies by way of an equitable interest in [one of the lots on] Mt Seaview Road, Mt Seaview, and notified by registered caveat".
The deed also recited that it was the intention, in due course once the project was underway, for the loan to be converted from a commercial loan to membership/licence fees.
Settlement of contract
I have previously noted that the company entered into a contract with AWT to sell the property to it.
On 19 November 2012, the lawyers for the liquidator wrote to the lawyers for AWT, the purchaser on the contract and noted that the liquidator was willing to accept the purchase price of $780,000. The lawyers required payment of some outstanding operating costs deriving from the operating lease and concluded its letter in the following terms:
"We are instructed that at no time has our client provided any indication as to when settlement can take place.
As you are aware, Brad Golding and his wife Tess Golding, are currently occupying the property.
Our client must obtain vacant possession of the property (at least) with respect to Brad Golding and Tess Golding in order to complete the contract for sale. Accordingly, we are instructed to approach the court urgently seeking an order for possession of the property.
Once our client has obtained an order for possession of the property and an eviction date, our client will be in a position to complete the contract."
The lawyers for AWT responded to that letter on the same date. The response included the following:
"Our client has instructed us to accept the purchase price of $780,000 in respect of the property.
...
Please confirm that the above is acceptable. Also could you please indicate an approximate date for when settlement with vacant possession will be made and confirm whether our client will continue to have the licence to operate until the sale is completed."
On 27 September 2012, there was a telephone conversation between the lawyers for the liquidator and the purchaser. The effect of that telephone conversation was that the purchaser's solicitor indicated that his client was ready to complete the contract and had the funds available to settle.
The case for the defendants
As I have recorded earlier, when the matter was initially before the Court on 3 December 2012, I granted an adjournment for two weeks in order to enable the defendants to obtain such legal assistance as they were able. I also noted that it would be necessary when the matter returned for the defendants to adduce all evidence upon which they wished to rely setting out their substantive defence to the claims made by the liquidator.
When the matter returned to Court on 17 December 2012, Ms Johnson-Henkes, who has appeared on behalf of herself and Mr Golding, made a further application for an adjournment of the proceedings. For the reasons which I delivered orally on that day, I rejected that application.
Right to Occupation
It is necessary to examine the substance of the defendants' claim to be entitled to continue in occupation. This is best derived from an affidavit of Ms Johnson-Henkes, which is dated 11 December 2012.
It seems from that affidavit the defendants rely upon the following matters as entitling them to continue in possession and denying to the liquidator the orders which he seeks. The issues are as follows:
(a) The contract of sale is "...faulty, in that it fails to take into account the already existing 'interim loan agreement', which in fact is not a loan agreement and ... is essentially an occupancy licence made by EVRD on 8 June 2011 ...";
(b) The validity of the contract of sale is questioned in that "...it appears not to be [at] arms length";
(c) The purchaser is in truth a "past director" who, has dealings with the company, the effect of which have not been considered;
(d) The agreement upon which the liquidator is relying, in particular the contract for sale, was "... obviously made while the company was insolvent";
(e) The liquidator had not fulfilled its undertaking to terminate the sale to AWT if it was not completed by 27 July 2012, and offer the property on the open market for sale, with the consequence that the defendants "...and other unsecured creditors have been denied their interest in purchasing the property, due to the failure of the plaintiff to fulfil its undertaking to place the property on the open market".
As well, the defendants sought to argue that the "sudden rush" to conclude the contract for sale would benefit only the parties involved in the sale contract to the exclusion and disadvantage of the defendants and unsecured creditors. As well, the defendants said that they were preparing, together with other unsecured creditors, a proposal for the purchase of the company and its assets.
An analysis of these bases argued in opposition to the orders being sought needs to commence with an understanding of the interim loan agreement which it is said gives rise to a licence to occupy the premises.
The relevant operative clauses are as follows:
"12. The company invites the intending member to provide loan monies to the company as listed in the schedule on the following conditions.
13. The company offers to pay interest on the loan monies at the primary rate listed in the schedule until such time [as] the loan monies convert to membership/licence fees.
...
The company offers to secure the loan monies by way of an equitable interest in [an identified lot] Mt Seaview Road, Mt Seaview, and notified by registered caveat.
16. In addition to the above, the company undertakes to issue licences in an order of priority based on the commencement date listed in the schedule to this agreement."
It is manifest from the interim loan agreement, that there is no specific clause which purports to constitute the loan agreement as licence to occupy premises, nor is there any specific clause which provides for any terms or conditions upon which the land is to be occupied from which a licence to occupy might be inferred.
At its highest, the interim loan agreement provides that the company may in due course enter into one or more licences with one or more intending members. That does not, of itself, constitute a licence to occupy.
Even if it did, then by his conduct, after becoming the liquidator, by reason of the letters which he has written to the defendants, the liquidator has made plain his intention to disclaim, or terminate, any licence agreement and to remove from the defendants their right to occupy the land.
Accordingly, I am not satisfied there is any licence or agreement in existence which legally justifies the defendants' occupation of Jaspers Village. I am fortified in that conclusion by the conduct of Mr Golding both directly and through his solicitors in these respects:
(a) his clear and unequivocal recognition of the need to provide vacant possession upon settlement of any sale in the first of the solicitor's letters;
(b) the absence of any production of any written licence agreement when called upon to give a copy to the liquidator which followed a very late assertion by Mr Golding of such an agreement; and
(c) the absence of any steps being taken to lodge a caveat to commence proceedings to establish the existence of a right to occupy and the complete absence of any evidence in the present proceedings before me which is capable of establishing any legal basis for the occupation of Jaspers Village, let alone a business which takes priority over the liquidator's legal entitlements.
Other claims of the defendants
A number of the bases which the defendants rely upon to oppose the orders sought relate to complaints about the contract for sale. I will deal with these complaints individually.
The first is, that the contract ought to have taken, but failed to take, into account the interim loan agreement. The short answer to this complaint is that it did not have to. The loan agreement noted the terms upon which moneys were lent to the company. Those loans were not secured by any legal interest in the land. Had the defendants lodged a caveat, which of course does not comprise itself a registrable interest in land, and they did not, the company may have needed to have addressed this, if it wished to, in the contract. However, the contract was not "faulty" because of any lack of reference to the loan agreement.
Secondly, it said, by way of complaint by the defendants, that the contract does not appear to be at arms length. This is combined with the suggestion of invalidity because the purchaser was, in truth, a past director with previous dealings with the company. Whatever might have been the position when the contract was initially entered into by the company, the current position is that the obligations under the contract are those of the liquidator. He has affirmed the contract. There is no suggestion that he is not operating at arms length from the purchaser. This is not a basis for opposing the orders sought.
Thirdly, the defendants claim that the contract for sale was made while the company was insolvent. There are two short answers to this. The first is that there is no evidence before the court upon which a finding of insolvency of the company could be made as at the date the contract was entered into. The second is that the contract has been affirmed by the liquidator. It is now his contract for sale. His involvement means even if the company were insolvent at the time the contract was entered into, that fact has no ongoing relevance.
Finally, the defendants complain that the liquidator has not acted in accordance with statements which he made in his letter of 26 July 2012 and is denying to the unsecured creditors their opportunity to purchase the property. There are a number of answers to this complaint. Firstly, the statements of the liquidator in 26 July were statements of intention only and not legally enforceable promises. Secondly, the defendants did not advance in the evidence that they had acted upon those statements to their detriment and therefore the liquidator should be precluded from departing from them. Their correspondence advances no such contention. Thirdly, there is nothing about the conduct of the liquidator which has precluded the unsecured creditors from making any offer to purchase the property.
It is clear that the property has been for sale at least since the liquidator's appointment, which is now over six months ago. The unsecured creditors, including the defendants, who had adequate time to approach the liquidator, could make an offer to purchase the property or else conduct negotiations with that aim in mind. There is no evidence that they have done so.
Conclusion
It follows from this necessarily brief summary that the defendants have not made out, on the evidence in this case, any legal or other basis which would preclude the court from making the orders sought. On the contrary, the plaintiff liquidator has convincingly discharged his onus of establishing,
(a) his legal right in entitlement to possession of the property,
(b) the absence of any right for the defendants to reside on or occupy any part of the land called Jasper's Village, and
(c) the need for the court to make the orders sought expeditiously.
I make the following orders:
(1) I order that the plaintiff be granted possession of the property known as Jasper's Village, 175 Mt Seaview Road, Mount Seaview, New South Wales, being the whole of the land contained in Certificates of Title Folio Identifiers 58/754417 and 59/754417.
(2) I order that leave be granted for the plaintiffs to issue a writ of possession forthwith.
In accordance with the court's conventional approach, costs ought to follow the event. I see no reason why that should not occur. Accordingly, I order the defendants to pay the plaintiff's costs.
I should add a note about an event which occurred after judgment was reserved. Mr Eric Bastin, usually called Mr Rick Bastin, contacted my Associate on 16 December 2012 indicating that he wished to file evidence and make submissions in the proceedings. As Mr Bastin was not a party to the proceedings and therefore had no right to be heard, he was informed that if he wished to be heard he would need to file a notice of motion with supporting affidavits which sought orders that he be joined as a party to the proceedings.
Mr Bastin has not brought any notice of motion seeking to be joined as a party. Notwithstanding this, he forwarded to my associate a large number of documents and material. This was both irregular and improper. I have, in considering this case and formulating my reasons for judgment, not read or in any way had regard to any of that material. To do so would have been contrary to the principles of proper fairness and accordingly that material has been disregarded.
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Decision last updated: 05 February 2013
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