Porte and Rahma and Ors

[2010] FamCA 63

FAMILY COURT OF AUSTRALIA

PORTE & RAHMA AND ORS [2010] FamCA 63

FAMILY LAW – PRACTICE AND PROCEDURE – Case management 

APPLICANT: Mr Porte as Liquidator of S Corporation Pty Ltd (In liquidation)

FIRST RESPONDENT:   Mr Rahma

SECOND RESPONDENT:   Ms Rahma

FIRST INTERVENOR:	Ask Funding Ltd
SECOND INTERVENOR:	S Corporation Pty Ltd (In liquidation)

FILE NUMBER: MLC 8719 of 2007

DATE DELIVERED: 18 January 2010

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Mushin J

HEARING DATE: 18 January 2010

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Rozner

SOLICITOR FOR THE APPLICANT:	Heydon & O'Loghlen
SOLICITOR FOR THE FIRST	In person
RESPONDENT:
SOLICITOR FOR THE SECOND	In person
RESPONDENT:
COUNSEL FOR THE FIRST	Ms Umbers
INTERVENOR:
SOLICITOR FOR THE FIRST	Westminister Lawyers
INTERVENOR:
COUNSEL FOR THE SECOND	Ms Campbell
INTERVENOR:
SOLICITOR FOR THE SECOND	Forte Family Lawyers
INTERVENOR:

Orders

IT IS ORDERED THAT

1. The further hearing of the Application in a Case filed on behalf of Ask Funding Limited on 28 July 2009 and any response thereto be referred to Registrar Sikiotis for the making of such orders and directions as may be appropriate.

2. The hearing date of the liquidator’s application pursuant to s.79A of the Family Law Act 1975 of 12 April 2009 be vacated and all other applications be referred to the Registrar in accordance paragraph 1 hereof.

3. In the event that the application referred to in paragraph 1 hereof has not been determined either by consent or withdrawal by 4:00pm on Monday 25 January 2010 Registrar Sikiotis forthwith refer it back into Court before Mushin J for determination.

4. Liberty be reserved to all parties to apply for any order for costs relevant hereto and generally.

IT IS CERTIFIED

1. Pursuant to Rule 19.50 of the Family Law Rules 2004 this matter reasonably required the attendance of counsel.

IT IS NOTED that publication of this judgment under the pseudonym Porte & Rahma and Ors is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 8719 of 2007

MR PORTE AS LIQUIDATOR OF S CORPORATION PTY LTD ( IN LIQUIDATION)

Applicant

And

MR RAHMA 

First Respondent

And

MS RAHMA
Second Respondent

And

ASK FUNDING LIMITED
First Intervenor

And

S CORPORATION PTY LTD ( IN LIQUIDATION)

Second Intervenor

REASONS FOR JUDGMENT

1. On 15 May 2008 orders were made between the husband and wife pursuant to the provisions of section 79 of the Family Law Act 1975, finalising applications for alteration of property interests as a result of the breakdown of their marriage.  Those orders dealt with the disposition of several pieces of real estate.  On 28 July 2009, Ask Funding Limited, which was a litigation funder of the husband and the wife in those proceedings, made application to the Court. 

2. The application was made against the husband and the wife as 2^nd and 3^rd respondents, but primarily against Mr Porte, who had previously been appointed as liquidator of S Corporation Pty Limited which at the time of the making of this application was in liquidation.  S Corporation was a corporate entity relevant to the original proceedings.  The appointment of Mr Porte as liquidator had been on the application of a third party creditor of S Corporation.  In addition to that, receivers have been represented before me today on the issue which I am about to set out. 

3. The primary substantive application before the court is brought by the liquidator, pursuant to the provisions of section 79A of the Act, asserting that the orders of May 2008, pursuant to section 79, to which I have already referred, should be set aside on the basis that they were impracticable. The liquidation is progressing and my impression is that it will be at least some months before it is finalised. By way of indication, counsel for the liquidator has informed me today that it is expected that there will be a surplus on the liquidation of somewhere in the vicinity of $400,000, but in light of the complications in the proceedings, that is no more than an indication.

4. Ask Funding Limited is an unsecured creditor of the husband and the wife in respect of funding for the original substantive litigation.  It is asserted and as far as I know not opposed, that the liability of the husband and the wife to Ask is well in excess of $300,000 and is increasing by virtue of accumulating interest. 

5. The proceedings came before Brown J on 19 August 2009 on which date her Honour suspended the consent orders of May 2008 "to the extent necessary to give effect to these orders".  The husband was required to vacate a property at C and the receivers were required to advance to the husband, as a cost and expense of the receivership, the sum of $500 to assist him with accommodation.  The wife was required to vacate a property at R, which I think is the former matrimonial home, and take certain steps to give effect to that.

6. The receivers were expected to receive monthly rent from a third property at B and were required to advance to the husband and the wife certain moneys from those receipts.  Those last payments expire upon the expiration of a licence, which the receiver gave to the wife, to occupy the C property.  That licence expires in the next month or thereabouts. Her Honour made certain other machinery orders which are not presently relevant.  She also referred the present application, to which I now turn, to me for hearing this day. 

7. The essence of the application by Ask Funding Limited is to effectively create a priority for payment in the liquidation of S Corporation.  It seeks that final orders, to be made in these proceedings, include a payment to Ask in the sum of $331,687.37 plus interest and that that payment "be made prior to the distribution of any funds to the husband or the wife or unsecured creditors of the husband or the wife or [S Corporation] Pty Limited."  It also seeks an order for costs.  Leave to Ask to intervene, as sought in that application, has already been granted.  

8. In discussion, in particular with counsel for Ask Funding Limited today, I have expressed grave reservations as to this Court's jurisdiction and power to consider that application.  As a result of that discussion, counsel for Ask Funding Limited has sought and obtained, by agreement, a short adjournment of the application in order to obtain final instructions with respect to the disposition of the application.  In the event that it is sought to argue it, I will fix a further date.

9. In the event that it is withdrawn, it will have been concluded, subject to any application for costs.  I have expressed the view that paragraph 16 of the orders made by Brown J do not, in any way, limit the legislative requirement of the receiver paying any surplus from the receivership to the liquidator to enable the liquidation to be completed.  Further, Court note C of that order is in the following terms:

   That the question of disbursement of any surplus of funds in the hands of the receivers upon repayment of all debts and associated costs due to the bank and/or the receivers, shall be determined consequent upon the outcome of the dispute between the liquidator and Ask Funding Limited, pursuant to paragraph 16 hereof.

10. I have also expressed the view that, in particular, that being a note, rather than an order, does not create any legal obligation, and in any event its very wording does not operate as any sort of injunctive relief.  Accordingly, in my view, the only potential encumbrance to the receiver paying any surplus to the liquidator, as I have previously referred, may flow from the application of Ask Funding Limited remaining extant, rather than as a result of any order of the Court.

11. For that reason, it is appropriate that that application be disposed of, either by way of hearing or withdrawal at the earliest possible time.  Counsel has indicated that she will advise a Registrar of the Court of the course to be taken by her client within a few days.  At that point, if any other party, and in particular the husband or the wife, seeks any relief with regard to any relevant matter, they may make such application as they deem appropriate.

12. However, I have indicated that an application along similar lines to that made by the present applicant may contain problems and relief may be better sought elsewhere.  I will vacate the hearing date of 12 April 2010, and otherwise refer all applications to the registrar for the making of such directions and orders as are appropriate. 

I certify that the preceding twelve (12) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Mushin

Associate: 

Date:  5 February 2010