Re Australasian Barrister Chambers Pty Ltd (in liq)

[2017] NSWCA 117

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:	ABCD Corporation Pty Ltd v Sampson [2017] NSWCA 117
Hearing dates:	22 May 2017
Decision date:	22 May 2017
Before:	Basten JA
Decision:	(1)   Dismiss the notice of motion filed 18 May 2017.  (2)   The applicant must pay the respondent’s costs of the proceedings on the motion.
Catchwords:	PRACTICE AND PROCEDURE – application for stay pending hearing of application for leave to appeal – proposed appeal from interlocutory order refusing interlocutory injunction – contract of sale of strata title – whether receiver complied with obligation to take “all reasonable care” to sell at market value – whether damages an adequate remedy in the case of breach
Legislation Cited:	Corporations Act 2001 (Cth), ss 420, 420A, 423
Category:	Procedural and other rulings
Parties:	ABCD Corporation Pty Ltd (Applicant) David Henry Sampson (First Respondent) Samanpat Pty Ltd as trustee for Relationspace Pty Ltd as trustee for Jambol Super (Second Respondent) Catherine Mary Boland (Third Respondent) Catherine Elizabeth James (Fourth Respondent)
Representation:	Counsel: Mr H W M Stitt (Applicant) Mr R D Marshall SC (First Respondent)   Solicitors: WKA Legal Pty Ltd (Applicant) Gillis Delaney Lawyers (First Respondent)
File Number(s):	2017/149823
Decision under appeal	Court or tribunal: Supreme Court Jurisdiction: Equity Citation: In the matter of Australasian Barrister Chambers Pty Ltd (in liquidation) [2017] NSWSC 597 Date of Decision: 26 April 2017 Before: Black J File Number(s): 2015/326742

Judgment

1. BASTEN JA: This matter involves an application to injunct the sale of a strata property in the Sydney central business district. The brief chronology of the matter is as follows.

2. The company, Australasian Barrister Chambers Pty Limited (In liq), has had a receiver appointed. The receiver obtained, on 6 January 2017, a valuation in relation to the property. The amount of the valuation, which is not of direct relevance to the present application, is in the order of $550,000. On 27 January 2017 the receiver accepted an offer of $618,000 from the owner of premises adjoining the premises which were for sale. The applicant has obtained a higher valuation and says the proposed sale price is below market value. It alleges the receiver failed to comply with his obligation under s 420A(1) of the Corporations Act 2001 (Cth) to take “all reasonable care” to sell at not less than market value. There has been an on-going attempt to prevent that contract settling.

3. On 26 April 2017 there was a hearing before Black J of an application to injunct completion of the sale. On 16 May, Black J handed down a judgment refusing to grant an injunction. [1] A summons seeking leave to appeal was filed immediately and it is in aid of that summons that the present application is made. The judgment of Black J dealt more comprehensively than it is either necessary or possible to deal today with the arguments put before him as to why injunctive relief was not appropriate.

   1. Australasian Barrister Chambers Pty Limited (In liquidation) [2017] NSWSC 597.

4. Part of the argument concerned the likelihood of the applicant establishing that there had been a defect in the process undertaken by the receiver, and thus a breach of s 420A(1)(a) of the Corporations Act. The primary judge was taken to statements by the Full Court of the South Australian Supreme Court in Fortson Pty Ltd v Commonwealth Bank of Australia, [2] in particular in the judgment of Debelle J with which Doyle CJ and Bleby J agreed. It was said that they required a higher standard than that conventionally adopted with respect to the duties of the controller of a corporation’s property.

   2. (2008) 100 SASR 162; [2008] SASC 49.

5. On balance, Black J accepted that there may be an interpretation of s 420A which arguably could result in the proposed sale in this case involving a contravention of the standard set by the section. It is not necessary to consider whether the judge was in error in the way in which he approached that question, as has been argued in this Court. It is sufficient to accept that there was an arguable breach of duty on the part of the receiver in taking the course that he did in accepting the offer. The question is, what flows from that possible contravention.

6. That in turn raises the question whether the primary judge was in error in concluding that damages were an adequate remedy in the event that a breach were to be established at trial. The usual reason for accepting that damages may not be an adequate remedy depends upon the party whose property is sought to be sold losing an opportunity to retain a property which has a value to the owner, beyond a mere monetary value. Although there was some suggestion that the applicant would lose the opportunity to retain the property, there was no satisfactory evidence before this Court as to the power of the applicant to encumber the property if it were able to do so in order to pay out the costs incurred so far in the receivership (being the outstanding debt).

7. In any event the case was not ultimately put on that basis. Rather it was put upon the basis that unless the property were sold after being properly presented in the market, there would be disputes as to whether the sale was at an undervalue. Such disputes would normally be resolved by evidence concerning expert valuation. It was not suggested that that was not an available course, but rather that a sale to the first offeror, after obtaining a valuation, but at a price below that which the applicant claimed was fair market value, was not a sale which complied with s 420A of the Corporations Act. This, it was submitted, is an unusual case because the sale can still take place with proper marketing and at auction or by another appropriate means of sale. The usual battle of experts can therefore be avoided. However, that assumes that this Court is here to supervise the sale process; that is not required by the Corporations Act, either by s 420 or s 420A, or under the general law or, indeed, pursuant to s 423 of the Corporations Act.

8. The submissions were addressed comprehensively by the primary judge. Assuming that damages are an adequate remedy then it is not correct to say that damages can properly be assessed only by reference to market value which has been ascertained by way of an actual sale, properly conducted without breach of duty. Indeed, there is an element of circularity (or perhaps internal inconsistency) in saying that the only appropriate method of obtaining fair market value is an order preventing a defective process occurring. It is not correct to say that because it is possible that the sale may still take place in accordance with the requirements of the section, that therefore it should be injuncted until the court is persuaded that adequate steps to obtain a fair market value have been taken. If that were to happen, then there would be no defect and no need to ascertain market value. What is really sought is a court-regulated sale process. However, the power of sale is to be exercised by the receiver, not the court.

9. In those circumstances I am not persuaded that there is a reasonable basis for concluding that the exercise of discretion by Black J, not only in refusing the injunctive relief, but refusing further interim relief in order to allow his judgment to be reconsidered on appeal, would warrant an order of this Court staying the proposed completion of the sale to allow the application for leave and possible appeal to take place. Accordingly, I dismiss the notice of motion. The applicant must pay the respondent’s costs of the proceeding on the motion.

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Endnotes

Decision last updated: 29 May 2017