McDermott and McDermott and Ors - [2014] FamCA 615

FAMILY COURT OF AUSTRALIA

MCDERMOTT & MCDERMOTT & ORS

[2014] FamCA 615

FAMILY LAW – PROPERTY SETTLEMENT – Ex parte application by Receiver and Manager previously appointed seeking directions and further orders – Application by Receiver and Manager to be appointed receiver of related corporate entity and partnership conducted by the husband and wife – Where financial circumstances of the two corporate entities and the partnership inextricably intermingled – Where appropriate to appoint receiver as Receiver and Manager of related corporate entity

FAMILY LAW – PROPERTY SETTLEMENT – Ex parte application by Receiver and Manager previously appointed seeking directions and further orders – Application by Receiver and Manager to be appointed receiver of trading partnership conducted by husband and wife – Where it is appropriate to exercise accrued jurisdiction to make appointment pursuant to section 67 of the Supreme Court Act 1970 (NSW) – Receiver appointed to partnership

FAMILY LAW – PROPERTY SETTLEMENT – Ex parte application by Receiver and Manger previously appointed seeking directions and further orders – Where it is appropriate in the circumstances of non-disclosure and non-cooperation with Receiver and for protection of assets for application to proceed ex parte – Where orders accordingly made ex parte

Supreme Court Act 1970 (NSW) s 67

Byrne v Byrne [2011] NSWSC 1437
Cumming v Hennessy [2005] NSWSC 1219
McDermott & McDermott [2014] FamCA 245
Tate v Barry (1928) 28 SR (NSW) 380

APPLICANT:

Ms McDermott

1st RESPONDENT:

Mr McDermott

2nd RESPONDENT:

3rd RESPONDENT:

B Pty Ltd

Mr M

FILE NUMBER:

SYC

2014

DATE DELIVERED:

Orders made on 21 July 2014;
Judgment delivered on 5 August 2014

PLACE DELIVERED:

Parramatta

PLACE HEARD:

Parramatta

JUDGMENT OF:

Foster J

HEARING DATE:

21 July 2014

REPRESENTATION

SOLICITOR FOR THE APPLICANT:

Campbell Paton & Taylor

SOLICITOR FOR THE 1ST RESPONDENT:

Hancock Alldis & Roskov Lawyers & Notaries Public

COUNSEL FOR THE 3RD RESPONDENT: Mr Reynolds

SOLICITOR FOR THE 3RD RESPONDENT:

Colin Biggers & Paisley

Orders

UPON APPLICATION MADE TO THE COURT BY THE COURT APPOINTED RECEIVER, AND UPON LEAVE BEING GRANTED FOR THAT APPLICATION TO BE DEALT WITH EX PARTE, AND UPON READING THE AFFIDAVIT OF MR M SWORN ON 18 JULY 2014 AND FILED ON 21 JULY 2014, IT IS ORDERED THAT:

Leave be granted to the Manager and Receiver (“Receiver”) appointed by the Court to the income and property of B Pty Ltd (“Company”) to file this application in a case returnable instanter.

UPON THE COURT BEING SATISFIED:

(A)That it would be appropriate for the Receiver to apply to the Court to wind up the Company and to appoint him or such other person as the Court considers fit as liquidator of the company;
(B)That it would be appropriate for the Receiver to apply to the Court for him or such other person to be appointed as the Court considers fit without security as receiver and manager of the property, assets and undertaking of Z Pty Ltd together (“Z Pty Ltd”) with such other order necessary to give effect to…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading McDermott and McDermott and Ors

Details

AGLC: McDermott and McDermott and Ors [2014] FamCA 615
Case: [2014] FamCA 615
Decision Date: 21 July 2014

CaseChat Overview and Summary

This matter concerned an application by a Receiver and Manager, previously appointed by the Court to the income and property of B Pty Ltd, seeking directions and further orders. The Receiver sought to be appointed as the receiver of a related corporate entity and a partnership conducted by the husband and wife who were the parties in the substantive proceedings. The application was made ex parte, with leave granted by Foster J.

The primary legal issues before the Court were whether it was appropriate to appoint the Receiver as the receiver and manager of the related corporate entity and the partnership, given the inextricably intermingled financial circumstances of these entities and the partnership. The Court was also required to consider the exercise of accrued jurisdiction to make such an appointment pursuant to section 67 of the *Supreme Court Act 1970* (NSW) in relation to the partnership.

Foster J reasoned that it was appropriate to appoint the Receiver to both the corporate entity and the partnership due to the interconnectedness of their financial affairs. The Court ordered that leave be granted to the Receiver to apply to wind up the Company and appoint himself as liquidator. Mr M was appointed as Receiver and Manager of the income and property of B Pty Ltd, with powers to conduct and manage the business pursuant to section 420 of the *Corporations Act 2001*. The Receiver's remuneration was to be paid firstly by B Pty Ltd, and in default, by the Husband and Wife jointly. The Husband and Wife were ordered to cooperate with the Receiver and provide requested financial documents within 24 hours. Similar orders were made for the appointment of Mr M as Receiver and Manager of "B Pty Ltd" (referring to the partnership). The Court also made orders nunc pro tunc concerning the Receiver's indemnity and lien over the Company's property, and varied previous orders regarding the *Corporations Act* provisions and remuneration. The application was adjourned, and service of the orders on the parties was directed.

Orders

Orders of the court

1. Leave be granted to the Manager and Receiver (“Receiver”) appointed by the Court to the income and property of B Pty Ltd (“Company”) to file this application in a case returnable instanter.

UPON THE COURT BEING SATISFIED:

(A) That it would be appropriate for the Receiver to apply to the Court to wind up the Company and to appoint him or such other person as the Court considers fit as liquidator of the company;

(B) That it would be appropriate for the Receiver to apply to the Court for him or such other person to be appointed as the Court considers fit without security as receiver and manager of the property, assets and undertaking of B Pty Ltd together (“B Pty Ltd”) with such other order necessary to give effect to same

(C) That it would be appropriate for the receiver to apply to the Court for him or such other person as the Court considers fit to be appointed without security as Receiver and Manager of the property, assets and undertaking of the partnership of the Applicant and Respondent in the substantive proceedings trading as “B Pty Ltd” together with such other order necessary to give effect to same.

THEN THE COURT ORDERS THAT:

2. Leave is granted to the receiver to apply to the Court to wind up the Company and to appoint him liquidator of the company.

B Pty Ltd

3. That Mr M of M Advisory, Sydney be appointed as Receiver and manager of the income and property of B Pty Ltd.

4. Pursuant to section 420 of the Corporations Act 2001 the Receiver shall conduct and manage the business known as B Pty Ltd.

5. 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.

6. That the Receiver’s right to be paid in respect of the matters the subject of the indemnity as defined in the orders made today 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 his remuneration be calculated in accordance with the standard rates effective from time to time of the Receiver Mr M.

7. There be no security given by the Receiver.

8. 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.

9. 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.

10. That the Receiver shall submit accounts to the Husband and Wife on a monthly basis.

“B Pty Ltd”

11. That Mr M of M Advisory, Sydney be appointed as Receiver and manager of the income and property of “B Pty Ltd”.

12. Pursuant to section 420 of the Corporations Act 2001 the Receiver shall conduct and manage the business known as “B Pty Ltd”.

13. 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.

14. That the Receiver’s right to be paid in respect of the matters the subject of the indemnity as defined in the orders made today 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 his remuneration be calculated in accordance with the standard rates effective from time to time of the Receiver Mr M.

15. There be no security given by the Receiver.

16. 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.

17. 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”.

18. That the Receiver shall submit accounts to the Husband and Wife on a monthly basis.

IT IS FURTHER ORDERED THAT:

19. The Husband be ordered to deliver up to the Receiver the following forthwith:

(a) Prime Mover (VIN …, Registration …);

(b) Dolly (VIN …, Registration …);

20. An order nunc pro tunc that the Receiver is entitled to be indemnified out of the Company’s property (other than any security interest within the meaning of the Personal Property Securities Act 2009 and to which that Act applies, other than a transitional security interest within the meaning of that Act (PPSA Security Interest), that is perfected within the meaning of that Act for:

(a) Debt he incurs, in the performance or exercise, or purported performance or exercise, of any of his or her functions and powers as Receiver, for:

(i) Services rendered;

(ii) Goods bought;

(iii) Property hired, leased, used or occupied, including property consisting of goods that is subject to a lease that gives rise to a PPSA Security Interest in the goods;

(iv) The repayment of money borrowed;

(v) Interest in respect of money borrowed;

(vi) Borrowing costs;

(vii) Liability under section 220AAE, 220AAM, 220AAR, 221F (except 221F(12)), 221G (except 221G(4A)), 221YHDC(2), 221YHZD(1) or (1A), 221YN(1) of the former provisions of the Income Tax Assessment Act 1936 or any of the provisions of Subdivision 16-B in Schedule 1 to the Taxation Administration Act 1953;

(b) Any other debts or liabilities incurred, or damages or losses sustained, in good faith and without negligence, by the Receiver in the performance or exercise, or purported performance or exercise, of any of his or her functions or powers as Receiver; and

21. An order nunc pro tunc that the administrator has a lien on the Company’s income and property, with priority over another security interest only in so far as the Indemnity has priority over debts secured by the other security interest, to secure the Indemnity.

22. An order nunc pro tunc that order 7 of the orders made on 28 May 2014 be varied to substitute “420B” of the Corporations Act with “420”.

23. An order nunc pro tunc that order 9 of the orders made on 28 May 2014 be varied to replace the word “remuneration” in the first line with “right to be paid in respect of these matters the subject of the Indemnity as defined in the orders of 21 July 2014” and the word “such” in the third line be replaced with “his”.

24. The Application in a Case is adjourned to Friday 1 August 2014 at 10:00am.

25. The Application in a Case and affidavit in support be served on the Applicant and Respondent together with a sealed copy of the substantive orders made today by no later than the close of business on Monday 28 July 2014.

26. Leave is granted to the Receiver to re-list the present application before the Court on short notice by application to the Court in chambers in appropriate circumstances.

27. The reasons for decision made today are reserved to be published at a later date if required.

28. The costs of today’s application are reserved.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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