McDermott and McDermott and Ors
[2015] FamCA 87
•18 February 2015
FAMILY COURT OF AUSTRALIA
| MCDERMOTT & MCDERMOTT AND ORS | [2015] FamCA 87 |
| FAMILY LAW – PROPERTY – Receiver and liquidator – Examination by receiver and liquidator of public officer of the subject companies – Where declaration sought by the receiver as to entitlement to certain items of personalty being alleged property of the subject companies – Where appropriate that declarations as sought by the receiver and liquidator be made. |
| APPLICANT: | Ms McDermott |
| 1st RESPONDENT: | Mr McDermott |
| 2nd RESPONDENT: | B Pty Ltd |
| INTERVENOR: | Mr M |
| FILE NUMBER: | SYC | 70 | of | 2014 |
| DATE DELIVERED: | 18 February 2015 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Foster J |
| HEARING DATE: | 18 December 2014 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Eldershaw |
| SOLICITOR FOR THE APPLICANT: | Campbell Paton & Taylor |
| COUNSEL FOR THE 1ST RESPONDENT: | Mr Rosic |
| SOLICITOR FOR THE 1ST RESPONDENT: | Hancock Alldis & Roskov |
| COUNSEL FOR THE INTERVENOR: | Mr Miller SC |
| SOLICITOR FOR THE INTERVENOR: | Colin Biggers & Paisley |
Orders
That the Japanese motor vehicle (Rego number …, VIN …) be repossessed and delivered up to the liquidator of the company or his nominated agents.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Mc Dermott & McDermott has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT PARRAMATTA |
FILE NUMBER: SYC 70 of 2014
| Ms McDermott |
Applicant
And
| Mr McDermott |
First Respondent
And
| B Pty Ltd |
Second Respondent
And
| Mr M |
Intervener
REASONS FOR JUDGMENT
The background to these proceedings is set out in reasons for judgment delivered on 14 April 2014. It is sufficient to say that there has been a history on the part of the husband of sharp financial practices, non-disclosure and lack of cooperation with the subsequently appointed receiver and liquidator to the parties’ corporate entities.
On 18 March 2014 orders were made in the following terms, noting that the orders were sought by the wife and not opposed by the husband:
1. That within seven days from the date of these orders the Husband shall provide to the Wife’s solicitors the following information and do the following things in relation to any work from 1 July 2013 to date that the Husband has undertaken on his own behalf, on behalf of [B] Pty Ltd (“the company”) or on behalf of any other entity that is of a similar nature or type of work to the work undertaken by the company in the normal course of its business:
a. A list of particularising all such work undertaken including the name of the person or entity for whom the work was undertaken, the dates between which the work was undertaken, the amount of money paid or to be paid for all such work and particulars of the financial institution and account into which the money was or was intended to be paid;
b. A list of all amounts of money which remain to be paid and direct the person or entity responsible for payment to make those payments into the company’s account at the National Australia Bank are being account …20 (“the NAB account”);
c. Pay into the NAB account all the money presently held by him or under his control with respect to the work particularised by him in the list provided pursuant to (a) above less money paid from funds held by him or under his control properly expended in the usual course of business of the company.
2. That within seven days from this date the Husband and Wife authorise and direct the appropriate officer of the National Australia Bank to permit the Husband and the Wife to operate the NAB account independently of each other for the purposes of the usual course of business of the company and do all things necessary to facilitate each of them having internet banking access to the said account.
3. That the Husband and Wife shall pending further order facilitate all income received by the company in the usual course of business being paid into the NAB account from which payments in the ordinary course of business or pursuant to these orders shall be made.
4. That pending further order the Wife shall have the conduct of and manage on a day-to-day basis the farming enterprise conducted at the [D Street, E Town], New South Wales property and the Wife shall be restrained from conducting the said farming enterprise other than in the ordinary course of business and through the company.
5. That pending further order the Husband shall have the conduct of and manage on a day-to-day basis the [construction] enterprise conducted during the course of the marriage by the company and the Husband shall be restrained from conducting the said [construction] enterprise other than in the ordinary course of business and through the company.
6. That pending further order the Husband is restrained on his own behalf or on behalf of any other entity save for the company from undertaking any work of the type or nature of the work that has been at any time prior to the date of these orders undertaken or engaged in by the company in the ordinary course of its business.
7. That pending further order the Husband is at liberty to draw from the company’s NAB account $2660 per week gross with such sum to cover his general living expenses and a contribution by him to one half of the cost of the governess employed by the parties for the children of the marriage with the characterisation of those drawings reserved to trial or as agreed by the parties.
8. That pending further order the Wife is at liberty to draw from the company’s NAB account the sum of $2660 per week gross with such sum to cover her general household living expenses and a contribution by her to one half of the cost of the governess employed by the parties for the children of the marriage with such sum to be reduced by an amount equivalent to any child support assessment liability in respect of which the Husband is assessed from time to time and is paid by him when due and payable with the characterisation of those drawings reserved to trial or as agreed by the parties.
9. That both the Husband and Wife shall be at liberty to draw from the company’s NAB account sums not exceeding $100,000 in total for each of them with such sums to be paid exclusively for their legal fees in these proceedings and that there shall be no drawings in excess of that sum without leave of the Court or the parties agreement in writing,
10. That the Husband and Wife shall authorise and direct Mr [F] of [G & F], Accountants to provide to the Wife’s nominated accountant such documents as he or she may reasonably request and to answer any reasonable enquiries made about the accounts of the business or the party’s personal taxation affairs as made by the Wife’s nominated accountant with the costs of [G & F], Accountants in relation to such requests and the costs of the Wife’s nominated accountant to be paid by the company.
11. That the Husband and Wife shall authorise and direct [Mr F] of [G & F], Accountants to provide to the Wife’s solicitors such documents as they may reasonably request in writing and to answer any reasonable enquiries made about the accounts of the business and the parties personal taxation affairs made by the wife’s solicitors with the costs of [G & F], Accountants in relation to such requests to be paid by the company and the Wife shall ensure that a copy of such request is provided to the Husband’s solicitors.
12. That pending further order and save and except for any items of property agreed in writing by the parties to be sold each of the parties is restrained from selling, transferring or otherwise disposing of or mortgaging, charging or encumbering or further mortgaging, charging or encumbering any property of the company or the partnership, or any property held in their sole name is or jointly with each other or with any other person or entity otherwise than in the ordinary course of business without first giving the other party seven days’ notice in writing of their intention to do so.
13. That on not less than a calendar monthly basis, and in the event of disagreement as to the date on or before the third Friday of each month, the parties shall disclose by exchange any relevant documents in respect of any transaction that has taken place in the ordinary course of operation of the separate business enterprises managed by each of them in the company in the preceding calendar month.
14. That in the event that the Husband incurs any debt or authorises any expenditure on behalf of the company or the farming partnership to a value in excess of $25,000, the Husband must provide to the Wife not less than 48 hours’ notice of his intention to do so save and except in urgent circumstances involving the replacement or urgent repair of plant and machinery that is on site.
15. That in the event that the Wife incurs any debt or authorises any expenditure on behalf of the company or the farming partnership to a value in excess of $5000 the Wife must provide to the Husband not less than 48 hours’ notice of her intention to do so save and except in urgent circumstances involving the replacement or urgent repair of plant, machinery or other equipment that is required for the ongoing operation of the farming partnership.
16. That in the event that the Husband has since 1 July 2013 sold or otherwise disposed of any plant, equipment or machinery owned by him or in which the company had any interest whatsoever then he must promptly but no later than 28 days from the date of these orders provide to the Wife:
a. A list of items sold and all documents instruments and writings in relation to wall such sales; and
b. In the event that sale proceeds were not paid into the NAB account pay within 28 days from this date such sale proceeds received by him into the NAB account and do all necessary things to direct the purchaser of any items sold for which any amount remains unpaid to make remaining payments for the purchase into the NAB account.
17. That the Husband is hereby restrained from attending at or upon the property at [D Street, E Town], New South Wales without giving to the Wife not less than 72 hours prior notice of his intention to do so and on any such attendance the Husband shall be accompanied by [Mr H] and no other person or persons except as provided for in these orders or with the written consent of the Wife.
18. That the Husband is restrained from flying in or through the air space over the [D Street, E Town], New South Wales property except with the consent in writing of the Wife.
19. That, save as hereinafter provided, the Husband is hereby restrained from removing any chattels, equipment and machinery from the property at [D Street, E Town], New South Wales without the written consent of the Wife.
20. That upon the Husband giving not less than 72 hours’ notice to the Wife he shall be at liberty to arrange for a suitably qualified mechanic to attend at the [D Street] property to inspect and attend to rendering airworthy the … plane thereon and that thereafter upon giving to the Wife not less than 72 hours’ notice the Husband shall be at liberty to attend at the said property provided always that he is accompanied by Mr [H] to collect the … plane and remove it from the said property and for the purposes of this order the Husband’s notice to the Wife shall be in writing which shall include SMS or email communication.
21. That the Husband and Wife shall keep in good order and repair and shall be restrained from causing any damage (or further damage) to any building or a construction on the [D Street] property (including but not limited to the homestead) or the [I Town] property and any plant or equipment of the company or partnership “including vehicles” and any other property in their respective possession.
22. That the Wife is restrained from allowing any other person, save for herself to operate the [utility vehicle] or [4WD] motor vehicles in her possession unless those persons are properly licensed to do so in the State of New South Wales and/or any other state or territory of Australia and the Husband shall ensure that the said vehicles are at all times registered and insured.
23. That within one calendar month from the date of these orders the solicitors for the Husband and Wife shall on the parties instructions confer for the purpose of endeavouring to reach agreement as to the value of assets, liabilities, financial resources and superannuation entitlements of the parties and if there is no agreement as to the valuation of any such items then a single expert witness shall be appointed to determine the value of any disputed item and the Husband shall nominate three single expert’s to prepare written valuation reports as to the market value of:
a. The real estate held by the parties, whether solely, jointly, with any other person or entity or whether held by any entity in which the parties have a proprietary interest;
b. The plant, equipment motor vehicles and machinery of the company including the partnership and otherwise the enterprises of the parties or as may be held in their names whether solely or jointly with any other person or entity;
c. The livestock of the company, including the partnership and otherwise the enterprises of the parties or as may be held in their names whether solely or jointly or with any other person or entity;
d. The furniture, furnishings and effects of the parties;
e. The interests of the parties in the company including the partnership.
24. That within 14 days from the Husband nominating three valuers as provided for hearing the Wife shall select one of the nominated valuers for such purposes.
25. That within a further 14 days from the Wife selecting a valuer or valuers as provided for herein the parties shall instruct their solicitors to forward an agreed joint letter of instruction to the single expert to be appointed and the parties are granted liberty to relist the matter on seven days notice to the Court and to the other party in respect of any issue arising in relation to the joint letter of instruction to the single expert to be appointed.
26. That the parties shall pay in the first instance in equal shares for the payment of the reasonable fees and disbursements of any single expert appointed pursuant to these orders with the ultimate liability for such reasonable fees and disbursements reserved to trial or agreement between the parties.
27. That for the purposes of the appointment of the single experts and the tasks to be undertaken by the appointed single experts:
a. The Wife shall provide to any single expert appointed, in a timely manner, copies of all documents in her possession, custody or control as may be requested by that single expert with copies of such documents to be provided to the Husband’s solicitors;
b. That the Husband shall provide to any single expert appointed, in a timely manner, copies of all documents in his possession, custody or control as may be requested by that single expert with copies of such documents to be provided to the Wife’s solicitors;
c. That each party shall make available for inspection by any appointed single expert all items that are to be valued pursuant to these orders and each party shall provide access to each item without restriction for the purposes of such inspection by the single expert;
d. That at all times all instructions to any single expert appointed shall be in writing and issued jointly on behalf of both parties.
28. That for the purposes of any written notice to be provided by either of the parties to the other then such notice shall be in writing with such writing to include SMS or email communication or correspondence or email communication between the parties respective solicitors.
29. That otherwise interim applications before the Court are dismissed.
30. That these proceedings be adjourned to a listing before the Docket Registrar on Thursday 29 May 2014 at 9:30 am and on such a listing the Docket Registrar make such other further orders or directions as may be appropriate for the matter to proceed to a Conciliation Conference at a time when there remains no outstanding valuation issue between the parties.
IT IS NOTED THAT:
A. The Husband has on 17 March 2014 advised the Court that he has exchanged contracts to purchase an apartment at [J Town], Queensland at a purchase price of $910,000 with the intention that no monies accumulated during the course of the marriage or to date will be used in the purchase and that the Husband will be borrowing the whole of the purchase price and that it is intended that of the sum of $2660 to be drawn by the Husband from the companies NAB account it is inclusive of mortgage expenses in relation to that property in the lieu of rent.
B. The Wife has today advised the Court that it is her proposal to cause the sale of a portion of the [livestock] presently on the [D Street, E Town], New South Wales property at an appropriate time following recent rains.
C. These proceedings are suitable for private mediation having regard to the nature of the pool of assets and the financial issues for determination and reserves the question of referral for mediation for further consideration in due course.
D. The Court has been informed by the parties that final draft financial statements and tax returns for the company and draft personal tax returns for each of the parties will be available for consideration by the parties within seven days from this date.
E. To the extent of the operation of any of the orders herein would be inconsistent with the terms of the provisional AVO made on 9 January 2014 in the [E Town] Local Court as between the parties, then the terms of these orders shall prevail.
Thereafter on 9 May 2014 on the ex parte application of the wife further orders were made in the following terms:
1. That the Husband and the Manager of the ANZ Bank [I Town] Queensland and its servants, agents and nominees be restrained from transferring monies or making payments from the ANZ accounts held in the name of [Mr McDermott] being ANZ account …52 and in the names of [Mr McDermott] and [Mr R], being ANZ account …43 to any person or entity other than to the National Australia Bank account being held in the name of [B] Pty Ltd, being account ...20.
2. A sealed copy of the orders made today be served on the manager ANZ Bank [I Town] Queensland by fax or email and that the solicitor for the Wife have leave to forthwith notify the Manager of the said Bank of the terms of these orders by telephone before the close of business today.
3. Otherwise any rules preventing the Court from dealing with this matter ex parte be dispensed with.
On 28 May 2014 relevantly further orders were made in the following terms:
3. The Wife do all acts and things necessary to repair, initially at her expense, the … aeroplane located at the [D Street] property at [E Town] in New South Wales and thereafter to sell the aircraft for its fair market value and on completion of that sale to pay the net sale proceeds to the National Australia Bank Ltd in reduction of the parties’ and the company [B] Pty Ltd’s indebtedness to that bank.
4. The Husband do all acts and things necessary to enable the Wife to comply with Order 3 otherwise that in relation to the costs of repair which must in the first instance be met by her.
5. Pursuant to Rule 6.03 of the Family Law Rules 2004 [B] Pty Ltd (ACN …) be added as a party to these proceedings.
6. That [Mr M] of [M] Advisory … be appointed as Receiver and manager of the income and property of [B] Pty Ltd.
7. Pursuant to section 420B of the Corporations Act 2001 the Receiver shall conduct and manage the business known as [B] Pty Ltd.
8. In exercising any of his duties under these orders, the Receiver shall have all the powers ordinarily available to him pursuant to section 420 of the Corporations Act 2001.
9. That the Receiver’s remuneration be paid firstly by [B] Pty Ltd and in default of sufficient funds being available from the said company by the Husband and Wife jointly and such remuneration be calculated in accordance with the standard rates effective from time to time of the Receiver [Mr M].
10. There be no security given by the Receiver.
11. The Receiver is required to provide to the Court and to each of the parties an interim report at the expiration of two months from the date of these orders as to the financial circumstances of [B] Pty Ltd with such report to include any recommendation that in the opinion of the receiver is appropriate as to the ongoing conduct of the business or its liquidation or winding up.
12. The Husband and Wife do all necessary things and sign all necessary documents so as to cooperate with the Receiver and shall provide such documents, financial records, bank statements/books, tax records and any other financial document as required by the Receiver within 24 hours of a request by the Receiver and provide any other information sought by the Receiver which relates to the income, property or liabilities of [B] Pty Ltd.
13. That the Receiver shall submit accounts to the Husband and Wife on a monthly basis.
14. That the Receiver and either of the parties have liberty to apply to the Court in Chambers to re-list proceedings on short notice in appropriate circumstances.
15. Order 1 made on 9 May 2014 be varied by inserting at the end thereof the following: “save for a payment of one half to each of the Husband and Wife equivalent to the balance of the said account as at 28 May 2014.”
16. A sealed copy of orders made today be served on the Manager ANZ Bank [I Town] Queensland by fax or email as soon as practicable.
17. A sealed copy of the orders made today be served on the Manager National Australia Bank at the branch at which the company normally conducts its account or accounts.
18. That Order 17 and Order 20 made on 18 March 2014 be discharged.
19. That the Husband is hereby restrained from attending at or upon the property at [D Street, E Town], NSW except with the written consent of the Wife with such consent to include email or SMS communication.
Subsequently the appointed receiver made application to the court for certain orders and on 1 August 2014 relevantly orders were made in the following terms:
3. Proceedings be adjourned for interim hearing to 2:15pm on Wednesday 13 August 2014.
7. By consent, an order nunc pro tunc that the orders made on 21 July 2014 by this Honourable Court be amended in accordance with the tracked changes on the copy of the orders of 21 July 2014 attached to the Application in a Case filed on 28 July 2014.
8. Orders made ex parte on 21 July 2014 and as amended today continue until 4:00pm on 13 August 2014.
9. Leave is granted to the parties or any of them to seek to re-list the matter on short notice by application to the Court in chambers in appropriate circumstances.
IT IS NOTED THAT:
A. The Court notes the undertakings in the document initialled by the Court and attached to the Court file in terms of paragraphs 1.1 and 1.2 and 3 of that document and notes the terms of paragraph 2 of that document.
On 21 July 2014 the receiver made an urgent application for ex parte orders and in circumstances set out in reasons for judgment delivered on 5 August 2014 orders were made in the following terms:
1. Leave is granted to the Receiver to issue a subpoena for the production documents to ANZ Bank Group Ltd and to such other organisation or entity as he may be advised without notice to the Applicant and Respondent in those proceedings.
2. Personal service of the subpoena pursuant to Rule 15.22(1) of the Family Court Rules be dispensed with and it be ordered in lieu thereof that service of the subpoena may be effected by delivering a copy of the subpoena together with a copy of this order to a person apparently over the age of 16 in the employ of the ANZ Bank at the ANZ Bank Centre, ANZ Tower, 161 Castlereagh Street, Sydney in the State of New South Wales.
3. Service of the Subpoenas on the parties pursuant to Rule 15.28(1)(b) of the Family Court Rules be dispensed with.
4. Leave is granted to the Receiver to inspect and have photocopy access to all documents produced on subpoena in these proceedings.
Thereafter following further application to the court on 13 and 14 August 2014 the court made the following orders on 13 August 2014 (as amended under the slip rule):
ON THE APPLICATION OF THE WIFE AND THE RECEIVER NOT WISHING TO BE HEARD, AND THE ORDERS NOT BEING OPPOSED BY THE HUSBAND, IT IS ORDERED THAT:
4. That Orders 7, 8 and 9 made 18 March 2014 be stayed.
5. That Order 3 made 28 May 2014 be varied and read as follows:
“3. The wife do all acts and things necessary to repair, initially at her expense, the … aeroplane located at the [D Street] property at [E Town] in New South Wales and thereafter sell the aircraft for its fair market value and on completion of that sale to pay the net proceeds in the following manner and priority:
(a) costs of sale of the aircraft including an agent’s commission of $15,000;
(b) $100,000 to the wife’s solicitors in lieu of the amount due to the wife pursuant to Order 9 made 18 March 2014;
(c) $75,000 to the National Australia Bank Ltd in reduction of the debt secured on [D Street]; and
(d) the balance to be retained by the wife.
6. That Order 11 of the orders made 21 July 2014 be varied and read as follows:
“11. That [Mr M] of [M] Advisory …Sydney be appointed Receiver and manager of the income and property of the Partnership between the Applicant and the First Respondent being the Partnership save and except in relation to the following:
(a) the real property known as “[D Street]”, [E Street] in New South Wales; and
(b) income derived from the farming activities conducted at [D Street]”.
6A. Subject to Order 10(a), the Court is asked to note that the wife has and may retain possession of items 26, 35, 25, 33, 39, 40 and 12 in the Schedule annexed to the affidavit of [Mr M] sworn 31 July 2014.
6B. The Court is asked to note that the wife intends to pay out the finance debt on Item 12 in 6A above upon receipt of the proceeds of sale of the … aeroplane.
7. That Order 12 of the orders made 21 July 2014 be varied and read as follows:
“12. The Receiver shall conduct and manage the business of the Partnership save and except for the farming activities occurring at “[D Street]”, [E Town] in New South Wales.”
8. That Order 4 made 18 March 2014 be varied to read as follows:
“4. That pending further order the Wife shall have the conduct of and mange on a day to day basis the farming enterprise conducted at the [D Street, E Town] New South Wales property and the wife shall be restrained from conducting the said farming enterprise other than in the ordinary course of business”.
9. That the wife be permitted to retain for her exclusive use all income derived by her in relation to the farming activities conducted by her at [D Street, E Town] in New South Wales.
10. Pending further order, the Receiver shall:
a. not dispose of any assets of [B] Pty Ltd (“the Partnership”) without first providing the husband and wife with 7 days written notice of the asset(s) to be sold, method of sale and anticipated sale price;
b. not take any steps to place on the market for sale the property known and situate at [S Street, I Town] in Queensland without first providing the husband and wife with 28 days written notice of the proposed method of sale and anticipated sale price;
c. use his best endeavours to ensure that any income of the Partnership from its activities in the business of plant and equipment hire is paid to the Partnership or for its benefit; and
d. permit the wife to do all acts and things to give effect to Order 2 above.
11. That the husband forthwith do all acts and things and execute all documents as requested of him by the wife for the purpose of completing the sale and transfer of the … aircraft including but not limited to signing a “F027 form” for the purpose of complying with the requirement of the Civil Aviation and Safety Authority.
12. For the purpose of giving effect to Order 1 made 9 May 2014 and Order 15 made 28 May 2014:
a. by not later than midday on 21 August 2014, the husband forthwith do all acts and things and execute all documents as requested of him by the wife for the purpose of transferring one half of the balance as at 28 May 2014 of an ANZ Bank Account standing in his name to the wife; and
b. a sealed copy of these orders be served on the Manager ANZ Bank [I Town] Queensland by fax or email as soon as practicable.
13. Pursuant to s106A of the Family Law Act 1975 (Cth), in the event that the husband has refused or neglected to execute a deed or instrument in accordance with these orders, then a Registrar of the Family Court of Australia at Parramatta is appointed to execute the deed or instrument in his name and do all acts and things necessary to give validity and operation to the deed or instrument and the husband shall bear the cost of such application.
14. Each party has liberty to relist on 24 hours notice.
ON THE APPLICATION OF THE RECEIVER OF [B] PTY LTD, BY CONSENT IT IS ORDERED THAT:
15. [B] Pty Ltd (ACN …) (Receiver & Manager Appointed) be wound up pursuant to section 461 of the Corporations Act 2001 (Cth).
16. [Mr M] be appointed as liquidator of [B] Pty Ltd (ACN …).
17. It is declared that the appointment of Mr M as Receiver & Manager of [B] Pty Ltd (ACN …) has completed.
18. The appointment of [Mr M] as Receiver & Manager of [B] Pty Ltd (ACN …) is terminated.
19. The orders above shall not affect such rights that have accrued to [Mr M] at common law and by operation of the orders made on 28 May 2014 (including order 9) and 21 July 2014 (including orders 20 and 21).
Orders were made on 14 August 2014 as follows:
1. The orders made ex parte on 21 July 2014 as amended on 1 August 2014 be continued nunc pro tunc pending further order.
2. The costs of the Receiver and the Wife for today are reserved.
On 24 November 2014 the receiver and liquidator made a further application to the court for orders facilitating the carrying out of his responsibilities in those capacities.
The application in a case as subsequently amended by a further amended application in a case filed in court on 18 December 2014 was heard on that day.
The wife for her part did not wish to be heard in relation to the receiver and liquidator’s application. The husband did not file a response to the receiver and liquidator’s application as previously ordered but was granted leave to file a response to the application in a case and affidavit on the day. The husband’s position was that the application by the receiver and liquidator be dismissed.
Ultimately the issue for determination related to the orders sought by the receiver and liquidator for the delivery up of certain items of personalty to him in that capacity.
The receiver and liquidator sought leave to cross examine the husband who at all times was the relevant officer of the company is the subject of the receiver and liquidator’s appointment.
During the course of the husband’s cross examination a number of issues as to particular items of personalty fell away. Ultimately the remaining items of personalty the subject of the receiver’s application came down to a Japanese motor vehicle and a motorbike.
As to these items of personalty the receiver and liquidator sought the following orders:
a)That the [Japanese motor vehicle] (Rego number …, VIN …) be repossessed and delivered up to the liquidator of the company or his nominated agents; and
b)That the [Motor bike] (VIN: … the …) and [Japanese motor vehicle] (Rego number …, VIN …), described more fully in the schedule to the application in a case, be sold by the applicant and the proceeds be distributed 65 per cent to [B] Pty Ltd and 35 per cent to the partnership conducted by the applicant wife and the respondent husband known as [B] Pty Ltd or as the court otherwise determines to be fit and proper.
The applicant receiver liquidator relied on the following documents:
a)The affidavit of Mr M, the receiver and liquidator filed on 24 November 2014;
a)The affidavit of Ms T filed on 24 November 2014;
b)The affidavit of Mr M, the receiver and liquidator filed on 8 December 2014;
c)The affidavit of Mr U filed with leave on 18 December 2014.
When cross examined by the counsel for the receiver and liquidator on 13 and 14 August 2014, the husband Mr McDermott gave an undertaking to the court that he would assist the receiver and liquidator in the delivering up of the subject motorbike and Japanese motor vehicle.
Orders made on 18 March 2014 were to the effect that the business conducted by the company be conducted through the company in the ordinary course of business and not by the husband or any other entity. Notwithstanding the orders, the receiver and liquidator concludes that the husband has used a corporate entity, Z Pty Ltd to conduct some of the business formally conducted by the company and the partnership and consequently funds of the company and the partnership were directed by the husband to be channelled through Z Pty Ltd into the ANZ account.
On 9 May 2014 an order was made that the husband and the ANZ Banking Group be restrained from transferring money out of ANZ bank account …52.
Notwithstanding the orders, between 9 May 2014 and 15 August 2014 funds totalling $383,457 were transferred out of the account. The receiver estimates that of those funds $249,247 were funds of the company B Pty Ltd and the balance of $134,210 related to the funds of the partnership.
The receiver and liquidator complains that there are a number of assets of the company in the partnership that have not been able to be located.
Two assets were purchased by the husband using funds removed from the ANZ account. Those assets are the subject Japanese motor vehicle and motorbike. The receiver and liquidator is of the opinion having reviewed relevant bank deposits into the ANZ account that the motorbike was acquired with funds belonging to the company as to 65 per cent and the partnership as to 35 per cent.
In previous evidence before this court the husband gave sworn evidence that these assets were purchased with either company or partnership funds (T: 14.08.2014 pp 222-226). The husband through the former accountant of the company and partnership informed the receiver and liquidator that the acquisition of the motorcycle had been debited against the shareholders loan account of the husband and wife in the draft financial statements of the company. The receiver and liquidator found no evidence to support the treatments of the motorcycle in the financial statements of the company in the manner as suggested by the former accountant.
On 25 September 2014 the receiver and liquidator gave notice to the husband of his intention to sell the motorbike at an anticipated gross sale price of $20,000 inclusive of GST. The husband responded the same day to the receiver and liquidator objecting to the sale of the motorbike as “it is a personal item not a partnership or company asset”. The receiver and liquidator responded to the husband on 26 September 2014, drawing the husband’s attention to his sworn evidence on 13 and 14 August 2014 and informing the husband that it was clear that funds used to purchase the motorbike came from funds of the company or partnership. The husband’s contention that the motorbike was his personal asset was rejected by the receiver and liquidator.
The receiver and liquidator has possession of the subject motorbike and seeks an order that he be at liberty to sell same.
The receiver and liquidator took possession of the Japanese car on about 22 August 2014. The car was towed to V Auctions Queensland. On 11 September 2014 the husband, it appears in the company with a Ms W, without permission from the receiver and liquidator facilitated the removal of the car from the premises of the auction house. The husband had on the previous day attended at the auction house premises and sought to remove the vehicle. It was explained to him that without authority from the receiver and liquidator the vehicle could not be provided to him. The vehicle has been reported as stolen.
The receiver and liquidator has notified his insurer of a claim in relation to the vehicle and has also submitted a claim against the auction house for the loss of the vehicle.
The actions of the husband it appears are clearly in breach of his undertakings previously given to the court.
On 29 August 2014 solicitors representing Ms W wrote to the receiver and liquidator annexing purported receipts relating to payments made by her for the purchase of the vehicle from the husband in the period between 26 March 2014 and 19 July 2014. On 20 August 2014 Ms W procured the registration of the vehicle into her name after the husband provided her with the necessary disposal slip. A demand was made for the return of the vehicle to Ms W.
By letter dated 3 September 2014 the solicitors for the liquidator informed Ms W solicitors of the following:
a)That the funds used by the husband to purchase the vehicle were company funds;
b)That in his evidence on oath on 14 August 2014 the husband gave evidence that the vehicle was purchased using funds from his ANZ account, that the funds in that account were sourced either from the company or the partnership, that the vehicle was stored in the apartment complex where Ms W resided, the vehicle was not used by her, the vehicle would be made available for delivery to the receiver and liquidator;
c)On 15 August 2014 an employee of the receiver and liquidator spoke with Ms W who advised that the vehicle had been provided to her by the husband and that she had paid no consideration for the vehicle.
d)On 18 August 2014 an employee of the receiver and liquidator again spoke with Ms W in relation to her making an offer to purchase the vehicle. On the same day she sent to the employee of the receiver and liquidator an offer to purchase the vehicle for $15,000. It appears from that communication that the offer to purchase at that price was influenced by her assertion that the husband still owed her $6,000 that she had loaned to him. The offer to purchase from Ms W was confirmed with her by an employee of the receiver and liquidator by email on 19 August 2014.
In oral evidence on 18 December 2014 the husband conceded that Ms W had loaned him certain funds and that he had given her his undertaking that the car would be hers if he couldn’t pay the funds back.
The husband acknowledged that he knew that the car had been repossessed by the receiver and liquidator. The husband further acknowledged that he facilitated Ms W removing the car from the auction yard.
Surprisingly the husband had no knowledge of the correspondence and communication between the office of the receiver and liquidator and Ms W in the period prior to the husband facilitating removal of the car.
More surprisingly the husband asserted that he had forgotten that he had written purported receipts for various loan payments received by him from Ms W and his undertaking to her that if he could not repay the loans she would get the car. In effect he pledged a company asset for the repayment of his personal debt.
As to the motor vehicle the husband in his affidavit filed on 18 December 2014 asserts that he purchased the vehicle using $22,000 from the ANZ bank account referred to above and $6,600 borrowed from Ms W.
Notwithstanding his oral evidence on 18 December 2014 the husband in his affidavit of the same date asserts an agreement that Ms W would purchase the vehicle from him by way of instalments. This of course being the third version of events as to the vehicle proffered by the husband.
The oral examination of the husband in the course of these proceedings has clearly revealed a lack of candour in his evidence, his failure to provide timely information to the receiver and liquidator, sharp practices by him in his dealings with the receiver and liquidator and a cavalier attitude from him as to compliance with court orders and his obligation to be truthful to this court.
Unless supported by objective documents there must be grave reservations in accepting any evidence proffered by the husband.
The source of funds for the purchase of the motorbike and the motor vehicle has been identified by the receiver and liquidator.
It is clear that at all times the motor vehicle was an asset of the company and/or partnership and that the receiver and liquidator was entitled to possession of that vehicle for the purpose of exercising his functions in those capacities.
Orders will be made as sought by the receiver and liquidator.
I certify that the preceding forty-one (41) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 18 February 2015.
Associate:
Date: 18 February 2015
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