Pratley & Pratley (No 4)
[2022] FedCFamC1F 483
•27 June 2022
Federal Circuit and Family Court of Australia
(DIVISION 1)
Pratley & Pratley (No 4) [2022] FedCFamC1F 483
File number(s): CAC 298 of 2019 Judgment of: BAUMANN J Date of judgment: 27 June 2022 Catchwords: FAMILY LAW – REVIEW OF REGISTRAR’S DECISION – Consent Orders made Legislation: Corporations Act2001 (Cth)
Federal Circuit and Family Court of Australia (Family Law) Rules2021 (Cth)
Division: Division 1 First Instance Number of paragraphs: 7 Date of hearing: 27 June 2022 Place: Brisbane Counsel for the Applicant: Mr Selfridge Solicitor for the Applicant: Farrar Gesini Dunn Counsel for the Respondent: Mr Howard Solicitor for the Respondent: Hijazi Curran Cameron Lawyers ORDERS
CAC 298 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR PRATLEY
Applicant
AND: MS PRATLEY
Respondent
order made by:
BAUMANN J
DATE OF ORDER:
27 JUNE 2022
THE COURT ORDERS BY CONSENT UNTIL FURTHER ORDER:
1.That the wife’s Application in a Proceeding filed 17 January 2022 be dismissed.
2.That Orders 4 to 7 of the Orders made by the Honourable Justice Gill on 26 August 2020 be discharged.
Mr G
3.That the parties take steps to immediately discharge Mr G as the selling agent for the sale of the business known and trading as C Business (ABN …) (“the business”).
4.That each party be at liberty to make an application about any fees claimed by Mr G for work undertaken or said to be undertaken by him in selling the business.
Appointment of liquidator
5.That pursuant to Section 472 of the Corporations Act 2001 (Cth), Mr L of N Firm (“the liquidator”) is hereby appointed to wind up the company, B Pty Ltd (ACNM …) (“the company”) trading as C Business (ABN …) (“the business”).
6.That for the purpose of Order 5, the parties shall:
(a)instruct the liquidator, in a joint letter of instructions from the parties’ legal representatives, to:
(i)effect the sale of the business, which for the sake of clarity includes:
A.any plant and equipment of the business;
B.the rent roll of the business; and
C.any goodwill of the Business;
(the process hereafter referred to as “the business sale”).
(ii)following the sale of the business, wind up the company (that process hereafter referred to as “the wind up”);
(iii)calculate the taxation liability of either party personally arising from the wind up;
(iv)by virtue of this Order, the parties authorise the liquidator to contact B Pty Ltd’s accountant (or another accountant as nominated by the liquidator, “the accountant”) and seek information required by the liquidator for the purpose of calculating the taxation liability.
(v)comply with any reasonable requests of the liquidator in a timely and helpful manner, including providing any necessary available information or documentation requested by the liquidator, and signing any document reasonably required to give effect to these Orders within three (3) business days of being requested to do so by the liquidator.
7.That for the purpose of the business sale, the following shall apply:
(a)The liquidator shall consider the appointment of a selling agent for the sale of the business and any such agent appointed shall not be Mr G of K Valuers. Prior to making a decision about whether to appoint a selling agent, the liquidator may take into account any submissions made by both parties;
(b)The liquidator shall keep the parties informed about the business sale, in writing to the parties’ legal representatives, including the following:
(i)Any selling agent appointed by the liquidator;
(ii)Any solicitor appointed by the liquidator to act on the business sale;
(iii)The listing price of the business, if any;
(iv)Any offers received by the liquidator; and
(v)Any offers accepted by the liquidator.
(c)The liquidator shall market the business for sale for a reasonable period of time, prior to invoking Clause 58.1 of the Franchise Agreement dated 1 January 2020 entered into by the company, which is the first right of refusal clause;
(d)Either party be at liberty to provide information and/or documents to the liquidator for the purpose of facilitating the business sale, provided such information and/or document is provided to the other party at the same time as it is provided to the liquidator;
(e)The parties are to cause the proceeds of sale of the business to be paid as follows:
(i)To pay all of the costs of the business sale;
(ii)To pay the balance (“the sale balance”) into a controlled monies account in the joint names of the parties, such account to be managed by the wife’s solicitors.
(f)The accountant’s costs and the liquidator’s costs be met from residual funds in B Pty Ltd and any shortfall to be met from the sale balance.
Costs
8.That the parties’ respective costs in relation to the hearing before Senior Judicial Registrar Evans on 29 April 2022 and the hearing before the Honourable Justice Baumann today be reserved.
IT IS NOTED:
A.That Order 7(a) was not made with consent.
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 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Pratley & Pratley has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BAUMANN J:
On 3 May 2022 Senior Judicial Registrar Evans was seized of a dispute between the parties that, in some ways, was a further extension of an Order made by Gill J on 26 August 2020. The matter comes to me today by way of review which is, under the Federal Circuit and Family Court of Australia (Family Law) Rules2021 (Cth), a hearing de novo. After indicating to the parties some preliminary views, to the parties’ credit, and with the assistance no doubt of Counsel and their legal advisors, the parties have reached a consent order save for one provision which I have now ruled on. Importantly, the context for the decision today begins, as I say, with the Order made by Gill J.
It is apparent on all the material which I have read in this matter that a rent roll business is operated by an entity called B Pty Ltd which trades as C Business (“B Pty Ltd”). The effect of Orders, which I am told were made after a defended hearing before Gill J, is that under Order 2 the parties were to forthwith do and sign all things necessary to effect the sale of the business trading as C Business. Further conditions to the sale of that business were included in the Order and, in particular, at Order 4(a) the parties were to engage Mr G of K Valuers as the selling agent to conduct the business sale.
The evidence before the Court is the business has not been sold. The parties make allegations as against each other about the lack of effect of the marketing and/or sale of the business. There is also now, as was not seemingly before Gill J or Senior Judicial Registrar Evans, a suggestion that a new franchise agreement that was entered into by the husband as the sole director and/or controller of B Pty Ltd in substitution for an earlier franchise agreement entered into in which, the wife was aware of on 9 June 2010, provides a first right of refusal to the franchisor or an entity associated with that person, Mr FF. Be that as it may, it is clear that the intent of the Orders of Gill J were to reduce the pool to, in respect of this major asset, a cash sum after allowing for debts, tax and the like. Importantly in my view, Order 6 made by his Honour provided for a Mr L of N Firm to be appointed as a liquidator. By inference, the liquidator was appointed to wind up the company B Pty Ltd in accordance with the powers available to a liquidator under the Corporations Act2001 (Cth).
The disputing proposal between the parties at the commencement of today was that the husband sought to appoint a person as a trustee with power to sell the business, while the wife sought to have appointed in substitution for Mr G another selling agent, Mr GG. A difficulty may have been identified with the wife’s preferred agent in that Mr GG does not appear to hold a licence to sell property in the Australian Capital Territory. Whether that is an impediment and whether, as Mr GG says, that can be achieved by acting in association with a person soon to be licenced, I do not have to decide.
What has been agreed, sensibly in my view, is that the liquidator who has been in place now since the Orders of August 2020 awaiting the sale of the business actually be engaged to sell the business. There are some costs associated with such an exercise. Whether those costs are more or less than might have been obtained if Mr G had done what he was ordered to do, I do not know.
Having now adopted that position, a dispute arose as to the extent to which the liquidator, who holds no doubt a fiduciary duty, as a matter of law to those entitled to the proceeds of liquidation but also a duty to this Court that appointed him as liquidator how his discretion in any liquidation ought be shaped by involvement of the parties. In circumstances where I am satisfied on the evidence that there has been some dispute between the husband and wife about the sale of the entity and that the wife feels, rightly or not, it is hard to say, that she has been excluded from any way of managing the effect of a sale or an under value sale, I am on balance satisfied that her rights, as well as those of the husband, are protected by incorporating as a further clause in the agreed clauses Order 7.1 such that the liquidator shall consider the appointment of a selling agent for the sale of the business and any such agent appointed shall not be Mr G of K Valuers. Prior to making a decision about whether to appoint a selling agent, the liquidator may take into account any submission made by either party.
It will be a matter for the parties whether they wish to make a submission to the liquidator. There are more than sufficient remedies as against the liquidator and/or to seek further intervention by the Court if either party has a basis for believing that the liquidator is not meeting his fiduciary duty.
I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Baumann. Associate:
Dated: 13 July 2022
0
0
2