Perry & Wharton

[2020] FamCA 998

FAMILY COURT OF AUSTRALIA

Perry & Wharton [2020] FamCA 998

File number(s):

MLC 14290 of 2019

Judgment of:

MACMILLAN J

Date of judgment:

7 December 2020

Catchwords:

FAMILY LAW – PROPERTY – Sale – where the wife seeks an order for the sale of a real property – where the husband has not participated in the proceedings – where the property is in the name of the company controlled by the husband – where the company was placed into liquidation and the liquidator commenced proceedings in the County Court of Victoria – where the County Court made orders declaring that the property was held on trust for the husband by the company – where the liquidator is owed his fees and has incurred legal expenses in the County Court proceedings – where the liquidator and the company have both been joined in these proceedings – where the liquidator is not opposed to the sale of the property however wants to have control of the sale – where the wife has more interest in the outcome than the liquidator – where the monies from the sale of the property will be held on trust and will satisfy any amount owed to the liquidator – where the wife is ordered to have conduct of the sale – where the wife is ordered to have sole occupation of the property to the exclusion of the husband pending sale

Legislation:

Corporations Act 2001 (Cth)

Family Law Act 1975 (Cth)

Number of paragraphs:

18

Date of hearing:

20 November 2020

Place:

Melbourne

Counsel for the Applicant:

Mr Fuller

Solicitor for the Applicant:

Philip Gary Henenberg

Solicitor for the First Respondent:

No Appearance

Counsel for the Second Respondent:

Mr Ravech

Solicitor for the Second Respondent:

Spigler & Schwarcz Solicitors

Counsel for the Third Respondent:

Mr Ravech

Solicitor for the Third Respondent:

Spigler & Schwarcz Solicitors

ORDERS

MLC 14290 of 2019

BETWEEN:

MS PERRY

Applicant

AND:

MR WHARTON

First Respondent

G PTY LTD (IN LIQUIDATION) (ACN ...)

Second Respondent

MR MEYER (IN HIS CAPACITY AS LIQUIDATOR OF G PTY LTD)

Third Respondent

ORDER MADE BY:	MACMILLAN J
DATE OF ORDER:	7 DECEMBER 2020

THE COURT ORDERS THAT:

1.The husband, the wife and the second and third respondents do all acts and things and sign all necessary documents to place the real property situated at F Street, Suburb B in the State of Victoria more particularly described in certificate of title volume … folio … (“Suburb B Property”) on the market for sale (“the sale”) as follows:

(a)The selling agent be such agent as selected by the applicant;

(b)And the mode of the sale be by auction unless otherwise recommended by the selling agent in writing.

2.The applicant shall have sole conduct of the sale including but not limited to:

(a)Liaising and communicating with the sale agent;

(b)Considering and accepting offers from prospective purchasers;

(c)Engaging, instructing and communicating with a conveyancer to perform the conveyancing for the Sale;

3.For the purposes of the preceding order:

(a)Pursuant to s 114(1) of the Family Law Act 1975 (Cth):

(i)The applicant shall have sole use and occupation of the Suburb B property; and

(ii)The first respondent is restrained by injunction from accessing, attending, or interfering in any way with the Suburb B property or causing any other person to do these things.

(b)The applicant is at liberty to forthwith cause a locksmith to change the locks at the Suburb B property.

4.At settlement of the Sale, the applicant shall cause the proceeds to be distributed as follows:

(a)Firstly to discharge funds owing to any registered mortgagee;

(b)Secondly, to meet the costs commissions and expenses of the Sale; and

(c)The balance to be held on trust by the applicant’s solicitor in a controlled monies account pending further order.

5.The applicant and the third respondent shall cause the removal of any caveats in their favour at least 14 days prior to settlement of the Sale.

6.The applicant shall be at liberty to produce a copy of these orders to the conveyancer engaged for the Sale, the selling agent, and any prospective purchasers.

Costs

7.The question of costs incidental to the Application of Cost filed 21 October 2020 be reserved for determination in Chambers.

8.By 4.00pm on 14 December 2020 the applicant file and serve any written submissions in support of any application for costs arising out or incidental to the wife’s Application in a Case filed 21 October 2020.

9.By 4.00pm on 21 December 2020 the second and third respondents file and serve any written submissions in reply to an application for costs,

10.Any submissions as to costs should be limited to 10 pages.

11.The Wife’s Application in a Case filed 21 October 2020 be dismissed save and except as to any application for costs.

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

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 17.02 Family Law Rules 2004 (Cth).

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

REASONS FOR JUDGMENT

MACMILLAN J

1. The Wife's Application in a Case filed 21 October 2020 was listed for a Trial Management Hearing on 27 October 2020. On that date I made orders by consent joining G Pty Ltd (in liquidation) (ACN …28) and Mr Meyer (in his capacity as liquidator of G Pty Ltd) ("the Liquidator") as parties to the proceedings and granted leave pursuant to s 500(2) of the Corporations Act 2001 (Cth) (“Corporations Act”) to the Wife to bring proceedings against G Pty Ltd. Although the Liquidator was represented Mr Schwarcz who appeared on his behalf that day said he had not had sufficient time to prepare and the matter was adjourned for further hearing before me on 20 November 2020. Although I am satisfied that the husband was served with the wife's Application in a case and was aware of the adjourned hearing there was no appearance by or on behalf of the Husband who has taken no part in either the interim or the substantive proceedings.

2. The matter was dealt with on the papers and by submission with both the Wife and the Liquidator making submissions in support of their respective proposals.

   BACKGROUND

3. The Husband is 72 years of age. The Wife is 67 and is retired. They commenced a relationship in 1995 and were married in 2003.

4. In 2003 the Husband purchased the Suburb B Property. The wife deposes that she was not involved in the purchase and was unaware that it was registered in the name of G Pty Ltd. The parties lived in the property until separation on 8 September 2018. It is common ground that the property is now worth approximately $750,000 and although the mortgage has been repaid it has not yet been discharged.

5. On 6 March 2008 the husband executed a declaration of trust on behalf of G Pty Ltd to the effect that the company held the Suburb B Property on trust for him.

6. In March 2015 the Husband placed G Pty Ltd in liquidation and at a meeting of the company's members on 25 March 2015 Mr Meyer was appointed as liquidator for G Pty Ltd.

7. The wife deposes that in May 2015 she was served with an Originating Motion filed by the Liquidator seeking possession of the Suburb B Property. On 7 May 2015 the Liquidator filed an Order 53 Application for possession of the Suburb B Property. The wife’s evidence is that on 7 December 2015 she and the husband attended a hearing in the County Court of Victoria (“the County Court”) during which the declaration of trust was entered into evidence and the Court found that G Pty Ltd held the Suburb B Property on trust for the husband. It is the Liquidators case that he has an equitable lien over the Suburb B Property in relation to his fees and the costs he incurred in initiating and prosecuting the County Court proceedings. His fees are $61,127 and Spigler & Schwarcz fees are $59,154.45, a total of $120,281.45. There is a dispute with respect to the quantum of both the Liquidators fee and the legal fees he has incurred. 

8. On 13 December 2019 the wife filed an Initiating Application seeking orders pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”). It is her case that the Suburb B Property forms part of the asset pool available for division.

9. Although when she filed her Initiating Application she did not seek any interim orders, the wife now seeks orders for the sale of the Suburb B Property with the net proceeds of sale to be held in trust in a controlled monies account pending further order. In addition to having the conduct of the sale of the Suburb B Property the wife seeks orders giving her sole use and occupation of the property to the exclusion of the husband.  Although when the matter came on for hearing the Liquidator did not oppose the sale there was a dispute as to whether he or the Wife should have the conduct of the sale. In his proposed minuted of orders the Liquidator seeks possession of the Suburb B Property for the purposes of its sale by public auction at a reserve price of $750,000 with Mr C of D Realtors as agent for the sale and Spigler & Schwarcz to act as solicitor for the vendors. Although he also proposes that the net proceeds be held in trust pending further order it is his case that those funds should be held in his trust account.

   LEGAL PRINCIPLES

10. Section 477(2)(c) of the Corporations Act 2001 (Cth) (“the Corporations Act”) provides that a Liquidator may sell or otherwise dispose of all or any part of the property of the company. The Liquidator in this case relies upon this provision in support of his case that he should have the conduct of the sale of the Suburb B Property.

11. The wife for her part submits that this Court can make orders directed to the Liquidator with respect to the sale of the property which she says is not the property of G Pty Ltd. The wife relies on alternative heads of power including s 79 together with the general powers in s 80 of the Act, s 114 of the Act together with the powers in Part VIIIAA to bind third parties and finally s 90AC which provides that Part VIII AA of the Act has effect contrary to any other law of the Commonwealth, a State or Territory and or anything in a trust deed or other instrument.

    DISCUSSION

12. Although both parties provided me with authorities in support of their respective cases with respect to whether or not the Liquidator has the power to sell the Suburb B Property, that property being held by G Pty Ltd on trust for the Husband, in my view in circumstances where I am satisfied that this Court has the power to make orders for the sale it is not necessary to determine that issue.

13. The husband is not living at the property and has not sought any orders with respect to the property despite being served with the Wife's Initiating Application. The wife does not want to live there. In these circumstances I am satisfied that it is proper to order a sale. The sale will also realise the funds necessary to pay the Liquidator. To his credit it was not the Liquidators case that this Court does not have the power to make those orders or that the property should not be sold, rather it is his case that given his obligations as Liquidator pursuant to the Corporations Act, he should have the conduct of the sale.

14. The Liquidator deposed at paragraph 13 of his affidavit as follows:

    …With a view to enabling the proper costs and charges to be paid, and the balance remitted to the beneficiaries of the trust for whose benefit the Property is held by the Company, I propose, subject to the direction of this Honourable Court, to consign the Property to Mr C, real estate agent, of D Realtors, for sale by public auction with a reserve sale price of $750,000.

15. I have some difficulty understanding the Liquidators resistance to the Wife's Application that she have the conduct of the sale in circumstances where there will be more than sufficient equity to cover his fees and legal costs and it is agreed that the net proceeds of sale will be held in trust until the dispute with respect to their payment is resolved.  The only explanation being that provided by Mr Schwarcz when he appeared on behalf of the Liquidators at the hearing before me on 27 October 2020 during the following exchange:

    Mr Fuller:The Liquidator has no objection per se to the sale, it is my clients desire to have sole conduct of the sale. The Liquidator wants to be able to sell that through the liquidators preferred real estate agent

    ….

    Mr Schwarcz:            From the first minute that this matter came to our attention by previous solicitor, Michelle who acted, we wrote a letter on behalf of the liquidator which was going back nearly a year and a half to two years, we have not objected to the sale of the property. What we do wish to point out, is that the words preferred agent that Mr Fuller used. There is a gentlemen who spent quite a sufficient amount of time and money in trying to sell the property prior to the action in the County Court and be doing the right thing by this particular agent.

    Her Honour:               Can I just say to you I don’t actually think that is determinative is it, there seems to me in circumstances where the costs of whatever happens and there will be a determination ultimately, the wife has an interest in getting the best price she can and that should be in her hands surely…She has no connection to this other agent, why should she?

    Mr Schwarcz:            She instructed the engagement of that agent through her brother Mr Perry.

    Her Honour:               That maybe so…but I have to tell you I am not with you on that, I think that it makes absolute sense that the wife in circumstances where your interest is protected that the wife have the conduct.

    Mr Schwarcz:            First of all the wife has to establish that she has a claim on the property and she has not yet established that claim.

    Her Honour:               This is in the context of property proceedings in which she has brought an application against the husband who does have an interest in the property.

    Mr Schwarcz:            Yes but the property is currently held in the name of G Pty Ltd.

    Her Honour:               On trust for the husband.

    Mr Schwarcz:            Subject to settlement of costs of the liquidator.

    …

    Mr Schwarcz:            That agent has incurred expenses and that agent can then render a bill and it will end up being paid anyway by the parties.

    Her Honour:               That maybe so, maybe not. Mr Fuller application is that his client wants to have conduct of the sale I cannot see what possible objection you can have to that.

    Mr Schwarcz:             Our submissions is that we want to get paid and therefore we want to conduct the sale

    Her Honour:               But you are going to get paid if she conducts the sale she obviously wants to get as much for this property as she can, she has got more skin in the game than you do

    Mr Schwarcz:            Yes but the knife in the knack in this particular matter is that whatever costs are whether it be $100 or $100,000 the wife application is saying the husband pay most of it and why come out of my side of things.

    Mr Fuller:No that is not her application at this stage

    Her Honour:               Even if it were that is a matter for the court

16. Whilst the counsel for the Liquidator submitted that the wife could be confident that this client would conduct the sale in accordance with both his statutory obligations and his obligation to the Court the submissions made by Mr Schwarcz are unlikely, and in my view for good reason, to satisfy the wife that the agent proposed by the Liquidator is necessarily the best agent to sell the property. Even if as the Liquidator submitted the wife initially chose his preferred real estate agent the circumstances in which she did so are not clear and in any event that was now some 5 years ago. It is always open to the wife to choose the same agent if having made enquires she is satisfied that would be the best choice.

17. The husband has not participated in the substantive proceedings and the wife will be pursuing her application for orders pursuant to s 79 of the Act. There are only two assets and the wife not surprisingly wishes to obtain the best price she can. Her interest in the outcome of that sale is much greater that the Liquidators and in all of the circumstances I am satisfied that she should have the conduct of the sale and propose to make orders in the terms she seeks.

18. This includes an order for the sole use of the Suburb B Property to the exclusion of the husband until the sale. The wife deposes that she and the husband separated and she left the Suburb B Property when she learned from her daughter that the Husband had been arrested and charged with sexually assaulting her granddaughter. The husband is currently on bail awaiting trial and the wife has not spoken to him since separation and does not know where he is living. However the wife further deposes that she has been told by her neighbours that they had noticed the husband checking for mail at the property on one occasion. She further deposed that in early 2020 when she arranged for a plumber to do some repairs she noticed that the husband had changed the locks. I am satisfied that the orders the wife seeks will facilitate and are necessary to enable her to sell the property.  

I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Macmillan.

Associate:

Dated:       7 December 2020