Ogilvie v Salfa Pty Ltd

[2008] NSWSC 578

CITATION:	Ogilvie v Salfa Pty Ltd [2008] NSWSC 578
HEARING DATE(S):	29 May and 6 June 2008
JUDGMENT DATE :	6 June 2008
JURISDICTION:	Equity
JUDGMENT OF:	Hamilton J
DECISION:	Orders made for carrying out order for specific performance.
CATCHWORDS:	PROCEDURE [728] – Contempt, attachment and sequestration – Attachment and committal – As a method of enforcing orders of court – Orders other than for payment of money – Judgment against company – Committal or sequestration of property of officer – Whether company able or unable to comply with judgment.
LEGISLATION CITED:	Uniform Civil Procedure Rules r 36.1
CATEGORY:	Procedural and other rulings
CASES CITED:	ANS Nominees Pty Limited v Beverly Manufacturing Co Pty Limited [1979] 2 NSWLR 875
PARTIES:	Robert Bonnar Ogilvie (P1) Sheelagh Donna Ogilvie (P2) Salfa Pty Limited (D) Andrew Bagg (Respondent 1) James Joseph Ferry (Respondent 2) Philip Harold Mudge (Respondent 3)
FILE NUMBER(S):	SC 3719/07
COUNSEL:	S B Docker (Ps) No appearance (D & R1 & 3) M J Dawson (R2)
SOLICITORS:	Masu Lawyers Pty Limited (Ps) NOT Lawyers (D & R2) No appearance (R1 & 3)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

HAMILTON J

FRIDAY, 6 JUNE 2008

3719/07 ROBERT BONNAR OGILVIE & ANOR v SALFA PTY LIMITED

JUDGMENT

1 HIS HONOUR: In these proceedings an order for specific performance has been made against the defendant, Salfa Pty Limited. The order has not been carried out. There are difficulties in it being carried out at the moment. The directors of the company have disagreed, as the evidence shows, and the company is at the moment paralysed. Indeed, the company does not appear in these proceedings.

2 This is a motion for orders to effect the carrying out of the order for specific performance. The response to the motion by the plaintiffs is made by Dr Ferry, one of the directors, who was joined as a respondent to the motion. Dr Ferry has other significance in the situation in that he is the plaintiff for winding up of the company. The winding up proceedings are before this Court on Tuesday next, 10 June 2008, and evidence has been given before me that Dr Ferry intends to proceed with those winding up proceedings on that day and that there is not likely to be any opposition to the winding up proceedings from the other directors.

3 There is evidence, furthermore, that the company is insolvent. An application was at one stage, before the defendant company became paralysed, made for the order for specific performance to be set aside, but that motion has been dismissed. The plaintiffs’ present motion is for precise orders to be made as to what the defendant should do to carry out the order. For reasons that will become apparent when I say a little more about the defendant’s circumstances, the plaintiffs ask that the order should be made that those things be done in, say, three months’ time.

4 The making of those orders is bitterly opposed by Mr M J Dawson of counsel on behalf of Dr Ferry. He says that the making of those orders is the precursor for contempt proceedings being brought against Dr Ferry on he ground of his being complicit in the orders not being carried out. He also says that it is impossible that the orders be carried out and that the Court will not make futile orders.

5 I should say two things about these matters. I am not one to make orders of this Court that I believe will be futile. That is very bad practice. However, it is far from obvious to me that these orders will be futile, despite the insolvency of the defendant company. One thing that stands in the way at the moment of orders being carried out is that the unit property, which is the subject of the order for specific performance, along with other units in the same development, is the subject of a single mortgage to one mortgagee. That mortgagee is now a company of Dr Ferry, which has purchased the mortgage from the original financier.

6 The evidence appears to show that it is quite possible that the remaining units could be sold for a sum greater than the total amount of some $8 million owing under that mortgage. If a sale took place, for it to be completed the mortgage would have to be discharged and that would remove the mortgage over the property that is the subject of the specific performance order. That impediment to completion would be removed.

7 The defendant company is, as I have indicated, at present paralysed, but that situation may come to an end as soon as Tuesday, when it is quite likely that the company will be wound up and a liquidator appointed, who can effectively act for the company.

8 As I have said, I am not one to make futile orders. But I do not regard it as a foregone conclusion that the course of action that would be followed by the liquidator concerning these properties would be a course of action under which non compliance with the winding up order would be inevitable. In those circumstances, it seems to me, prima facie, that the appropriate course is for this specific order as to what is to be done to complete the transaction the subject of the specific performance order to be made.

9 Mr Dawson has referred me to various authority, including the decision of Needham J in ANS Nominees Pty Limited v Beverly Manufacturing Co Pty Limited [1979] 2 NSWLR 875, to the effect that where a company is insolvent or wound up, persons associated with the company will not be punished for contempt of Court by reason of the company’s non compliance with orders. However, as Mr Dawson himself concedes, this matter is at a stage anterior to that and I do not regard those authorities as applicable in this situation. Nor do I regard it as inevitable, as Mr Dawson in effect puts to me, that, if I make this order, whether or not it is complied with, it is inevitable that an application to punish for contempt will be made against Dr Ferry.

10 The likelihood of success of such an application cannot be foretold, as it is quite unclear in what circumstances it would be brought. It seems to me very unlikely that, if the company simply remains unable, through lack of funds or otherwise, to discharge the mortgage and obtain the certificate of title, Dr Ferry would be implicated in a contempt of Court by the company. Neither is it impossible that the order for specific performance may be carried out. Nor does it seem to me inevitable that Dr Ferry be proceeded against for contempt of Court if the orders now sought are made, much less that he would be likely to be found guilty of a contempt of Court.

11 It seems to me appropriate in the all the circumstances that the order be made that the actions be carried out in three months’ time, so that the liquidator, when appointed, can consider what steps he ought to take. It seems to me that there remains a considerable path ahead of this specific performance order before its final fate is known. I think it will assist the ultimate resolution of the matter, rather than hinder it, if I take the next logical step and make the orders that are applied for. It can be seen in due course what occurs after that.

12 The plaintiff seeks orders for costs of the motion against both the defendant and against Dr Ferry, who has been the active contradictor. It undoubtedly should have an order for costs of the motion against the defendant. However, there was no prayer for costs against Dr Ferry.

13 Whilst probably an order of costs could be made against Dr Ferry through the power conferred on the Court by the Uniform Civil Procedure Rules r 36.1, I do not think it appropriate to order costs against a respondent to a motion not otherwise a party to the proceedings where there was no prayer for costs of the motion against that party and that has continued to be the situation right up until the moment when the application for an order for costs was asked for. I refuse to make an order for costs against Dr Ferry.

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