Yarranova Pty Ltd v Shaw (No 2)

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FEDERAL COURT OF AUSTRALIA

Yarranova Pty Ltd v Shaw (No 2) [2014] FCA 616

Citation: Yarranova Pty Ltd v Shaw (No 2) [2014] FCA 616
Parties: YARRANOVA PTY LTD (ACN 077 517 616) and NEWQUAY STAGE 2 PTY LTD (ACN 086 482 644) v JOHN RASHLEIGH SHAW
File number: VID 1371 of 2013
Judge: GORDON J
Date of judgment: 11 June 2014
Legislation: Bankruptcy Act 1966 (Cth)
Federal Court of Australia Act 1976 (Cth)
Cases cited: Adamopoulos v Olympic Airways SA (1990) 95 ALR 525
Ahern v Deputy Commissioner of Taxation (Qld) (1987) 76 ALR 137
Aon Risk Services Australia Limited v Australia National University (2009) 239 CLR 175
Bayne v Baillieu; Bayne v Riggall (1908) 6 CLR 382
Davidova v Murphy [2009] FCA 601
Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337
Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management Marketing Pty Ltd (2013) 303 ALR 199
Killoran v Duncan, in the matter of Killoran [1999] FCA 1574
Maxwell-Smith v S & E Hall Pty Limited, in the matter of Maxwell-Smith (2006) 233 ALR 81
Re Excel Finance Corporation (Receiver and Manager Appointed); Worthley v Australian Securities Commission (1993) 41 FCR 346
Sandell v Porter (1966) 115 CLR 666
Shaw v MAB Corporation Pty Ltd [2013] FCA 1231
Shaw v MAB Corporation Pty Ltd [2014] FCA 62
Shaw v MAB Corporation Pty Ltd (No 2) [2014] FCA 88
Shaw v Yarranova Pty Ltd [2014] FCA 557
Totev v Sfar (2006) 230 ALR 236
Williams v Spautz (1992) 174 CLR 509
Xu v Wan Ze Property Development (Aust) Pty Ltd (in liquidation) [2014] FCA 61
Yarranova Pty Ltd v Shaw [2014] FCA 403
Date of hearing: 30 May 2014
Date of last submissions: 30 May 2014
Place: Melbourne
Division: GENERAL DIVISION
Category: No catchwords
Number of paragraphs: 101
Counsel for the Applicants: Mr P Fary
Solicitor for the Applicants: Arnold Bloch Leibler
The Respondent: The Respondent appeared in person

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

GENERAL DIVISION

VID 1371 of 2013
BETWEEN:

YARRANOVA PTY LTD (ACN 077 517 616)
First Applicant

NEWQUAY STAGE 2 PTY LTD (ACN 086 482 644)
Second Applicant
AND:

JOHN RASHLEIGH SHAW
Respondent

JUDGE:

GORDON J

DATE OF ORDER:

11 JUNE 2014

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:

1.A sequestration order be made against the estate of John Rashleigh Shaw.

2.The applicants’ costs, including reserved costs, be taxed and paid from the estate of John Rashleigh Shaw in accordance with the Bankruptcy Act1966 (Cth).

3.The court notes that the date of the act of bankruptcy is 25 October 2013.

Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011 (Cth).


IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

GENERAL DIVISION

VID 1371 of 2013
BETWEEN:

YARRANOVA PTY LTD (ACN 077 517 616)
First Applicant

NEWQUAY STAGE 2 PTY LTD (ACN 086 482 644)
Second Applicant
AND:

JOHN RASHLEIGH SHAW
Respondent

JUDGE:

GORDON J

DATE:

11 JUNE 2014

PLACE:

MELBOURNE

REASONS FOR…

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Details
Case
[2014] FCA 616
Decision Date

CaseChat Overview and Summary

In the case of Yarranova Pty Ltd v Shaw, the Federal Court was called upon to consider an application for a sequestration order against Mr. John Rashleigh Shaw, initiated by the applicant creditors. The applicant creditors sought to establish that Mr. Shaw had committed an act of bankruptcy and that there were no grounds to dismiss the petition. Mr. Shaw opposed the application, raising several grounds for opposition, including allegations of bias, the validity of certain court orders, and claims that the application for sequestration was an abuse of process.

The court was tasked with determining whether Mr. Shaw's various applications and grounds of opposition had merit. This included examining whether the applicant creditors' actions constituted an abuse of process, assessing the validity of orders made in relation to a Notice to Produce, and considering the impact of an appeal pending in the Supreme Court of Victoria. Additionally, the court needed to evaluate the reasonableness of an adjournment request and the necessity of a fresh Notice to Produce.

In rendering its decision, the court found that Mr. Shaw's applications were without substance and did not justify setting aside the applicant creditors' application for a sequestration order. The court concluded that the statutory requirements for making a sequestration order were met, as Mr. Shaw had indeed committed an act of bankruptcy and had not demonstrated any reason to dismiss the petition. The court also noted that Mr. Shaw had not shown any evidence of his solvency or proposed a plan to pay his creditors within a reasonable time. Consequently, the court found no grounds to dismiss the petition and ordered the sequestration of Mr. Shaw's estate.

The court made a sequestration order against the estate of John Rashleigh Shaw, and ordered that the applicant creditors' costs, including reserved costs, be taxed and paid from Mr. Shaw's estate in accordance with the Bankruptcy Act 1966 (Cth). The court also noted that the act of bankruptcy occurred on 25 October 2013.

Orders

Orders of the court

1. A sequestration order be made against the estate of John Rashleigh Shaw.

2. The applicants’ costs, including reserved costs, be taxed and paid from the estate of John Rashleigh Shaw in accordance with the Bankruptcy Act 1966 (Cth).

3. The court notes that the date of the act of bankruptcy is 25 October 2013.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011 (Cth).

Background

Background to the litigation

These reasons for judgment concern the applicant creditors’ application for a sequestration order. That application was vehemently opposed by Mr Shaw. It will be necessary to deal with Mr Shaw’s various applications and grounds of opposition. They may be addressed under the following headings:1.Apprehended bias application;2.Application for orders made on 24 April 2014 in relation to a Notice to Produce to be set aside;3.Application for an adjournment of the hearing pending the outcome of an appeal from the orders of Vickery J in the Supreme Court of Victoria of 7 May 2014;4.A fresh Notice to Produce;5.Application to go behind the judgment which supports the applicant creditors’ application for a sequestration order; and6.Whether the applicant creditors’ application for a sequestration order was an abuse of process. 2. FACTS As noted earlier, there is a long history between these parties. For present purposes, it is sufficient to refer to the following facts and matters. On 12 April 2000, an apartment known as Lot 1002, CPT464 and ST166 The Boyd, New Quay, Docklands (the Apartment) was sold by Yarranova Pty Ltd (Yarranova) (as nominee for MAB Docklands Pty Ltd), to Mr Shaw under a contract of sale (the Contract). On 13 December 2000, Yarranova assigned the benefit of its interest under the Contract to NewQuay Pty Ltd (NewQuay) as nominee for MAB Docklands Pty Ltd (Assignment). Mr Shaw was given written notice of the assignment from Yarranova to NewQuay on 15 February 2002. The certificate of title for the Apartment was issued to NewQuay on 28 June 2002. In July 2002, NewQuay called on Mr Shaw to complete the Contract by paying the balance of the purchase price. Mr Shaw refused to do so because, he alleged, the works were incomplete. As Mr Shaw would not complete, in August 2003, NewQuay served a notice of default and rescission on him. In October 2003, Mr Shaw lodged a caveat over the Apartment, and on 1 December 2003, Mr Shaw brought a claim in the Supreme Court of Victoria seeking specific performance of the Contract. Justice Bell determined that Mr Shaw had no right to refuse to make the final payment, that the Contract had been validly rescinded and that Mr Shaw had forfeited his deposit. On 8 March 2006, Bell J made orders that the proceeding be dismissed and that there be judgment for the applicant creditors in their counterclaim for the removal of the caveat. Mr Shaw was ordered to pay the applicant creditors’ costs of the claim and counterclaim. On 17 March 2006, Mr Shaw appealed from the orders of Bell J. Mr Shaw also applied for a stay of Bell J’s orders, which was granted on 26 May 2006, subject to an undertaking as to damages and payment of security. Mr Shaw’s appeal from the orders of Bell J was dismissed by the Court of Appeal (Warren CJ, Eames & Neave JJA) on 15 December 2006. On 20 April 2007, the Court of Appeal ordered an inquiry as to damages sustained by the applicant creditors by reason of the stay that was ordered on 26 May 2006.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

If, however, there were a prima facie case of abuse of process (and I do not consider that there is), the remedy is discretionary and, in all the circumstances and in the exercise of that discretion I do not consider that would not be appropriate to set aside the notice.5. APPLICATION FOR A SEQUESTRATION ORDER The statutory requirements for making a sequestration order have been established. Mr Shaw has committed an act of bankruptcy. He owes significant amounts to the applicant creditors. Mr Shaw has not sought to establish his solvency. He has not sought to explain how he is able to pay the creditors within a reasonable period of time. There is not “some other reason” to dismiss the petition. 6. ORDERS There will be a sequestration order be made against the estate of John Rashleigh Shaw. The applicants’ costs, including reserved costs, are to be taxed and paid from the estate of John Rashleigh Shaw in accordance with the Bankruptcy Act. The Court notes that the date of the act of bankruptcy is 25 October 2013.