Porte and Rahma and Ors (No. 2)

[2009] FamCA 796

FAMILY COURT OF AUSTRALIA

PORTE & RAHMA AND ORS (NO. 2) [2009] FamCA 796

FAMILY LAW  -  PROPERTY  -  application by liquidator to set aside final property orders  -  application by third party creditor for priority  -  application for sole use and occupation of real property registered in name of company in liquidation and in respect of which receivers and managers appointed

Family Law Act 1975 (Cth)
Corporations Act 2001 (Cth)

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

FIRST RESPONDENT: Mr Rahma

SECOND RESPONDENT: Ms Rahma

FIRST INTERVENOR:	ASK Funding Limited
SECOND INTERVENOR	S Corporation Pty Ltd (Receivers & Managers Appointed) (In Liquidation)

FILE NUMBER: MLC 8719 of 2007

DATE DELIVERED: 10 August 2009

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Brown J

HEARING DATE: 10 August 2009

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Heydon & O’Loghlen

THE FIRST RESPONDENT: In person

THE SECOND RESPONDENT: In person

SOLICITOR FOR THE FIRST INTERVENOR: Westminster Lawyers

COUNSEL FOR THE SECOND INTERVENOR: Mr. G. Atkinson

SOLICITOR FOR THE SECOND INTERVENOR Forte Family Lawyers

Orders

1. That S Corporation Pty. Ltd. (Receivers & Managers appointed) (In Liquidation) have leave to intervene in the proceedings. 

2. That the first respondent have leave to withdraw the response filed on 7 August, 2009 and leave to file an amended response this day. 

3. That all extant applications be otherwise adjourned to 10:00 am. on 17 August, 2009. 

4. That the reasons for judgment this day be transcribed and copies made available to the parties.

5. That pursuant to Rule 19.50 of the Family Law Rules 2004 this matter reasonably required the attendance of counsel and solicitors appearing as 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 FOR S CORPORATION (IN LIQUIDATION)
Applicant

And

MR RAHMA

First Respondent

And

MS RAHMA

Second Respondent

And

ASK FUNDING LIMITED

First Intervenor

And

S CORPORATION PTY. LTD. (Receivers & Managers Appointed) (In Liquidation)
Second Intervenor

REASONS FOR JUDGMENT

1. This matter came before me last week on the application of the liquidator of S Corporation Pty. Ltd., who sought to set aside final property orders made between the husband, wife and S Corporation on 15 May, 2008.  In a judgment delivered on 3 August, 2009 I summarised the effect of the orders of 15 May, 2008.  I also summarised all applications and responses then before the court.

2. At the heart of the scheme created by the orders of 15 May, 2008 was the sale by the husband of a property in R, then valued at some $3 million.  The parties and S Corporation envisaged the repayment of all debt of the parties and S Corporation from the proceeds of sale of that property and the orders provided for the disposition of the balance, and other property.  For reasons which are in dispute, the R property was not sold by the husband.  The Bendigo Bank took possession of the property, which was sold on 30 May, 2009 for $2.025 million, significantly less than the value on which the parties had agreed a year earlier. 

3. The liquidator was appointed by the Supreme Court of Queensland on the application of a creditor, being a firm employed (presumably by S Corporation) to draw plans for the redevelopment of the R property.  The orders of May, 2008 assumed those plans would be sold with the property. 

4. After the bank took possession of the R property, it allowed the wife to remain in residence pursuant to a licence which is to expire on 14 August, 2009.  The purchaser is entitled to vacant possession later this month.  In a response filed last week, the wife sought that she and the children be able to move into a property in C, which is presently occupied by the husband.  The judgment delivered on 3 August, 2009 summarises the husband’s response to that application;  suffice to say he opposes it.  The C property is registered in the name of S Corporation, as trustee of a trust.  Pursuant to the final orders, S Corporation was to transfer it to the husband.

5. In the course of the proceedings last week the husband advised that the bank had appointed a receiver and manager and tendered a document noting such an appointment in April 2009.  It may be that there is a reference to this in an annexure to the affidavit of the liquidator filed with his initiating application, but I do not recall it.  It was the husband’s submission that neither he nor the court should have anything to do with the liquidator, once a receiver and manager was appointed, but that is an over-simplification. 

6. Today counsel has appeared for S Corporation (In Liquidation) (Receiver and Manager appointed) and I will be granting leave to intervene. Section 420 of the Corporations Act2001 (Cth) provides that a receiver of property of a corporation has power to do everything necessary to the attainment of the objectives for which he or she is appointed. Routinely this would involve a receiver taking possession of assets, including the registered security under which the receiver was appointed. A receiver is obliged to analyse the company’s financial position with a view to repaying the secured creditor; to the extent necessary, the receiver will realise some or all of the assets of the company in order to repay to the secured creditor the debt outstanding or as much of that debt as can be paid. A receiver has a range of other powers pursuant to s.420(2) of the Corporations Act. 

7. The liquidator was appointed by the Supreme Court of Queensland and has obligations to that court and obligations under the Corporations Act.  Pursuant to s.477 a liquidator will inspect the company’s books and records, investigate the circumstances of its failure, take possession of its assets and distribute the proceeds of asset realisations and recoveries amongst creditors.  He or she has an obligation to report to the regulatory authorities conclusions about the cause of the company’s failure and any suspected offences committed.

8. A liquidator’s powers, and, indeed, a liquidation, are subject to any receivership and to that extent the liquidation has a secondary status.  The appointment of a liquidator does not prohibit the appointment of a receiver or vice versa.

9. The applications of the liquidator and a third party creditor and the responses of the husband and wife have been adjourned to Monday, 17 August.  The purpose of the hearing today was to deal with aspects of the husband and wife’s applications (some of which were adverted to in the liquidator’s initial application) relating to use and possession of the C property, pending determination of all outstanding matters. 

10. The husband and wife each appear without legal representation.  The wife became very distressed earlier today, collapsed, and an ambulance was called.  I understand she received some treatment from members of the ambulance service, who remained in court for a short time after the case resumed.  She was adamant that she wanted the matter to proceed.  Notwithstanding that advice, she looked and sounded very distressed.  Although the husband has been and remains very critical of his former wife and the mother of their children, he has been concerned about her state today and keen to do what he could to find a temporary solution to the problem in which they are embroiled. 

11. Having now read the affidavit sworn by the receiver, it would be foolish for the court to allow the parties to proceed on the basis that the wife could be granted sole use and occupation of the C property by an order of this court today.  The receiver has required the husband to vacate the C property or pay rent;  to date he has refused to do either.  The husband and wife may be able to negotiate a short term solution with the receiver.  However, knowing of its interest and role, and the steps it has taken to obtain vacant possession of the C property, the court could not make an order which resulted in the wife going into possession of that property. 

12. In my judgment the only order the court can make today is an order allowing intervention by the receivers and managers and orders providing for the filing of any additional material on which a party seeks to rely at the hearing on 17 August.

13. I should add that this morning the husband filed an amended response, replacing the response which was filed with leave on 3August.  He filed another affidavit on 7 August which goes to a number of matters, including his dealings with the bank and the litigation funder, his disagreements with the wife and their respective financial positions.  That evidence will be considered when the case is next before the court. 

14. I appreciate that the husband and wife are both very distressed by events and some of that distress may be displaced onto the receiver, to whom they attribute responsibility (as agent for the bank) of their misfortune.  I stress the importance of courteous dealings between all parties.

I certify that the preceding
14  paragraphs
are a true copy of the reasons for
judgment herein of the
Honourable Justice Brown AM.

Dated the           day of            2009.

…………………………………………
Associate.