Mitchell & Anor and Scott & Anor

[2018] FamCA 670

FAMILY COURT OF AUSTRALIA

MITCHELL AND ANOR & SCOTT AND ANOR [2018] FamCA 670

FAMILY LAW – PROPERTY –  Receiver and Manager – Application for variation of order, directions as to remuneration and powers – Orders made as sought.

FAMILY LAW – STAY APPLICATION – Where the wife makes a further stay application for 28 days to enable her to investigate the financial position of an entity –  Where that information can be obtained from the Receiver - Where assets are to be preserved - application dismissed.

Family Law Act 1975 (Cth)
Corporations Act 2001(Cth) s 420(1) and s 420(2)(a)-(w)

Scott & Scott [2018] FamCA 626

APPLICANTS: Receivers Mr Mitchell and C Accountants

FIRST RESPONDENT: Ms Scott

SECOND RESPONDENT: Mr Scott

FILE NUMBER: CRC 105 of 2016

DATE DELIVERED: 31 August 2018

PLACE DELIVERED: Parramatta

PLACE HEARD: Newcastle

JUDGMENT OF: Cleary J

HEARING DATE: 24 August 2018

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Rose

SOLICITOR FOR THE APPLICANT: William James

COUNSEL FOR THE FIRST RESPONDENT: Mr Priestley SC

SOLICITOR FOR THE FIRST RESPONDENT: Fishburn Watson O’Brien

COUNSEL FOR THE SECOND RESPONDENT: Mr Carolan

SOLICITOR FOR THE SECOND RESPONDENT: Green & McKay

Orders

1. That Order 2 of the orders made on 11 May 2018 (“The May orders”) be varied such that the two introductory lines read:

   2.In addition to the powers provided for by s 420(1) and s 420(2)(a)-(w) of the Corporations Act 2001 (Cth) the trustees be empowered to:

   (a)-(g) omitted intentionally.

2. The receivers be entitled to draw such remuneration (as fixed); expenses and indemnity from any of the assets to which they have been appointed as receivers and managers pursuant to the May orders NOTING that the question of how the remuneration of the receivers and the costs of the receivers in this application, is to be borne, as between the husband and wife, remains to be resolved by agreement between themselves or as heard and determined by the Court.

3. The receivers having sought directions of the Court, in the face of disputes between husband and wife, the Court directs that the receivers would be justified in:

   3.1Proceeding with the realisation of the assets of the entities to which they have been appointed pursuant to the May orders;

   3.2Carrying on any business of the entities to which they have been appointed pursuant to the May orders;

   3.3Retaining any person or entity, including BB Partners or Mr L [both of whom are willing to act on a deferred payment basis], suitably qualified to prepare the financial statements and tax returns of the entities to which they have been appointed pursuant to the May orders

   NOTING that if after consultation with each of them, it is apparent to the receivers that the husband and wife cannot agree on a course of action, then the ultimate decision is that of the receivers alone.

   4.        All outstanding applications are otherwise dismissed.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Mitchell and Anor & Scott and Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT NEWCASTLE

FILE NUMBER: CRC 105 of 2016

Mr Mitchell and C Accountants 

Applicants

And

Ms Scott

First Respondent

And

Mr Scott

Second Respondent

REASONS FOR JUDGMENT

Introduction 

1. On 2 August 2018 this Court heard the application of the wife for a stay of orders made 11 May 2018 (“the May orders”).

2. On 20 August 2018 an order was made dismissing the stay application. Reasons were given.

3. What remained to be heard was an Application in a Case brought by the Receivers who had been appointed by the May orders.

4. That application had been filed on 1 August 2018 and listed for mention on the following day (2 August 2018) when the stay application was heard.

5. A direction was given that the receivers’ application could be heard on the day when the orders and reasons in the stay application were delivered.

6. On that day (20 August 2018) counsel for the wife was indisposed. An application by the wife’s solicitor for a short adjournment was granted to 24 August 2018 at 3.45 pm. Oral submissions were made by the receivers and husband on 20 August 2018.Preliminary submissions were made on behalf of the wife.

7. Written submissions, if any, were to be filed and served by 10.00 am on the morning of the adjourned date.

8. Timely submissions were received in a document titled “Wife’s Outline on Orders sought by Receiver and Manager”. There was also an affidavit by Mr CC solicitor for the wife, affirmed 23 August 2018.

9. A third document was received less than 30 minutes prior to the Court event. There was no objection to reliance on that document. Copies were made available to counsel in Court (counsel for the wife appearing by telephone).

Application in a Case of the Receivers

1. The orders sought were:

   a)Rectification of infelicitous introductory wording to the substance of the order.

   b)Orders for receivers to be remunerated.

   c)Receivers not to be limited to any particular asset for the remuneration.

   d)Direction by the Court for realisation of assets.

   e)Direction by the Court for appointment of accountants.

   f)Costs be the costs of the receivership.

   g)Any other order.

Wife’s Proposed Orders 24 August 2018

1. The orders sought were a hybrid of:

   ·A response to the orders sought by the receivers in their Application in a Case of 1 August 2018 (proposed orders 1.1 and 1.3, 3 and 4);

   ·A further application for a stay of the May orders.

2. Submissions by all parties lead to agreement to certain orders being made, substantially as sought by the receivers, with the inclusion of:

   -    A change to the introductory wording of Order 2. The wife had consented to the change, but on condition that her other proposed orders were made. In those circumstances where the accuracy and clarity of the order was enhanced the order was varied over the condition to consent.

   -    Notations identifying that the remuneration paid to the receivers for their work and for the costs of their application made on 1 August 2018 will be borne by the parties as agreed, or as heard and determined by the Court;

   -    A direction for the receivers to appoint accountants as they consider appropriate possibly including those nominated by the husband or by the wife;

   -    A direction for the receivers to realise assets of the entities; carry on any business with the ultimate decision to be that of the receivers after consultation with the husband and wife.

Application by wife for variation of May orders and application for short stay

1. I do not accept the submission that Order 2(f) of the May orders should be discharged.

2. That order is already the subject of appeal as are all other of the May orders.

3. The Full Court will deal with that aspect.

A further Stay

1. The submission for a stay for 28 days was said to be to enable the wife to make investigations into the deterioration of the financial position of K Centre “KC”. [Formal demands have been made by the mortgagee bank].

   “My client needs to find out what’s going on?”

2. Some useful, very recent, information was provided by counsel for the receivers from the bar table by way of counsel reading onto the record an email from an officer of W Bank. Certain payments had been recently made.

3. I accept the submission on behalf of the husband that action to preserve the equity in assets is as urgent, if not more urgent, than on 2 August 2018 when a stay of the orders appointing the receivers was dismissed.[1]

   [1] Reasons for Judgment delivered 20/08/2018, par 21

4. Further, I consider that the wife, and the husband, can properly seek information from the receivers who appear to have acted swiftly. They are the best source of the current financial state of the entities including debt.

5. For those reasons I decline to make an order for a stay of 28 days or at all.

6. Orders are made accordingly.

I certify that the preceding twenty-one (21) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cleary delivered on 31 August 2018.

Associate: 

Date:  31 August 2018