FEDERAL COURT OF AUSTRALIA

Martin v Individual Homes Pty Limited (in liq) ACN 008 495 761

[2000] FCA 1073

ANTHONY GILBERT MARTIN AND SUE DOLORES MARTIN v INDIVIDUAL HOMES PTY LIMITED (IN LIQUIDATION) ACN 008 495 761 AND MALLESONS STEPHEN JAQUES SOLICITORS

A 49 OF 2000

MOORE, MATHEWS AND EMMETT JJ

19 JULY 2000

SYDNEY (BY VIDEOLINK WITH CANBERRA AND DARWIN)

THE COURT ORDERS THAT:

1.      The notice of motion filed on 14 July 2000 in matter A 49 of 2000 is dismissed.

2.      The appellants pay the costs of the respondents of the application.

THE COURT DIRECTS THAT:

1.      The appeal be listed in the next callover for appeals in the Australian Capital Territory.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

MOORE J:

1                     On 4 July 2000 a notice of motion was filed in the Registry of the Supreme Court of the ACT in matter SC 404 of 1999.  The applicants were Anthony Gilbert Martin and Sue Dolores Martin.  A range of orders were sought, some concerned the status of the liquidator of Individual Homes Pty Limited (in liquidation) (“the Company”) in relation to a property at 8 Grund Street, Kambah in the ACT (“the Property”), some concerned the role of solicitors acting for the liquidator and some concerned the validity of a writ of possession for the Property and related documentation including a notice to vacate.

2                     Orders were also sought staying various orders of both the Supreme Court and the Federal Court concerning the Property.  The notice of motion was heard and determined by Miles CJ on 12 July 2000.  His Honour dismissed the application.  A notice of appeal was filed by the Martins in the ACT Registry of the Federal Court on 14 July 2000 appealing against the dismissal of the notice of motion.  In addition a further notice of motion was filed by the Martins seeking inter alia that the writ of possession be stayed pending the determination of the appeal.

3                     This Full Court has been constituted to deal with the notice of motion filed with the notice of appeal.  These proceedings arise against a background of numerous proceedings brought by the Martins resisting or challenging the appointment of the liquidator of the company and the assertion by the liquidator of a right to possession of the Property.

4                     Matter SC 404 of 1999, being the proceedings in which the notice of motion determined by Miles CJ was filed, was an application by the Company for an order for possession which was determined by Higgins J on 16 December 1999.   His Honour made an order giving the company leave to enter judgment for possession of the Property, that has occurred.  An appeal against that order was dismissed by a Full Court of this Court on 18 May 2000.

5                     An application has been made by the Martins to the High Court for leave to appeal against the decision of the Full Court. Subject to any decision of the High Court to the contrary, the judgment of Higgins J has settled the legal issue of the right asserted by the liquidator on behalf of the Company to possession of the Property.  The Martins accept this is the position.

6                     We are presently only dealing with the question of whether the order for possession or the writ issued to satisfy the order and its execution should be stayed pending the hearing of this appeal.  It is proposed that this writ be executed tomorrow.  The approach of the Martins in support of a stay order has in substance three aspects though they are related.  The first is to argue that the issue of the writ is attended by procedural irregularities.   The second is to argue that the application for special leave has some prospects of success and on that basis the order for possession should not be enforced until the application has been determined by the High Court.  The third is to argue that the balance of convenience points in one direction only, namely the preservation of the subject matter of the litigation, the possession of the Property.  They should not be effectively evicted from the Property which is their matrimonial home.

7                     Nothing has been put today which indicates that procedural steps that have been taken since the decision of the Full Court on 18 May 2000 to enforce the judgment of Higgins J are in any way irregular.  The challenge to the writ of possession involved an allegation that the affidavit in support of this issue was misleading, a reference in the writ to the Company as a judgment creditor was inappropriate and the writ could not issue on the application of Mallesons Stephen Jaques.  None of these points have substance.  It was also submitted that the writ was not of a character that could issue having regard to related documents served on the Martins including one entitled,warrant for possession.  However, as Miles CJ observed, these latter documents were not required to be issued and do not have a bearing on the character of the writ itself.

8                     To the extent that we are being invited to stay the order for possession arising from the judgment of Higgins J or its execution  until the application for leave to appeal to the High Court against the decision of the Full Court of 18 May has been determined, nothing of substance was pointed to by the Martins that suggest they have any prospects of success in their special leave application.

9                     There is an obvious prejudice to the Martins if they are effectively evicted from the Property.  However, that prejudice cannot sustain an order staying the legal effect of the order for possession and its execution in the absence of any demonstrated arguable legal foundation for impugning the order for possession or the writ of possession issued to enforce it.

10                  For these reasons the application for an order staying the order for possession or its execution should be dismissed and the appellants ordered to pay the costs of the application.  The appeal itself should be listed in the next call-over for the appeals in the Territory.  I would so order.

11                  I have assumed most favourably to the Martins that any appeal from the judgment of Miles CJ does not require leave to appeal.  If it did it would not alter the conclusions just expressed.  I am aware generally of what Emmett J proposes to say about matter A 44 of 1999 and I agree with those observations.

Associate:

Dated:              3 August 2000

REASONS FOR JUDGMENT

MATHEWS J:

12                  I agree with the orders proposed by the presiding judge and with his reasons for those orders.

Associate:

Dated:              3 August 2000

REASONS FOR JUDGMENT

EMMETT J:

13                  I also agree but I wish to add something in relation to the reliance by the applicants on proceedings A 44 of 1999. 

14                  In Mr Martin's affidavit of 6 July 2000, filed in support of the application before Miles CJ, it was said that the applicants believe that the balance of convenience is with their having continued possession of their matrimonial home until the reserved judgment in the appeal in action A 44 of 1999 is handed down.  In the body of the affidavit the basis for that is said to be that the appeal asked for the winding up of the plaintiff to be terminated.  It further asked to set aside certain orders that had been made by Higgins J in proceedings SC 182 of 1999 in the Supreme Court of the Australian Capital Territory.

15                  Complaint was made in the affidavit that senior counsel for the plaintiff had misled the court as to the possible impact that the result of the appeal could have on these proceedings.  We were taken to the transcript of proceedings before the Full Court on 18 May 2000.  In the course of argument, Wilcox J asked senior counsel whether there was any relationship between the outstanding appeal and the matter that that court was called upon to consider.  Senior counsel submitted that there was no such relationship.  Later on in the course of argument Wilcox J observed that if the Full Court in A 44 of 1999 gave a judgment which resulted in the staying or termination of the winding up that could mean that the liquidator would no longer have control of the affairs of the plaintiff.   The presumption would be that control of the plaintiff would then pass back to the directors, being the applicants, and that they would no longer seek possession on behalf of the plaintiff.  Thus, it was said on behalf of the applicants before us, the balance of convenience lies with maintaining the status quo lest the Full Court in A 44 of 1999 orders the termination or stay of the winding up. 

16                  The notice of appeal in that proceeding seeks, amongst other things, an order that the winding up be permanently stayed or terminated.  That appeal was brought from orders consisting of answers to several questions, one question was whether the winding up of the plaintiff of 4 May 1994 should be terminated under section 482 of the Corporations Law.  Justice Higgins on 27 May 1999 answered that question, "No".  In his reasons for that ruling Higgins J said (paragraphs 37 and 38):

“Section 482 of the Law does permit the Court to terminate a winding up.  The plaintiffs suggest that the only creditors or contributories are themselves and family members and the banks who held security over the property.  If the only unsatisfied creditors were the plaintiffs or, indeed, consenting members of their family, there might be some force in the contention that the winding up had ceased to serve any useful purpose. 

As the defendants correctly submit the onus is on the plaintiffs to show that there are no other affected parties.  No such evidence is adduced.  That the banks remain ‘interested’, for example, is not excluded.  Accordingly, I cannot conclude that no useful purpose relevant to the winding up would be served by the first defendant as liquidator obtaining possession of the land with a view to sale.”

17                  When asked in the course of argument today what is the ground upon which the court would be asked to stay or terminate the winding up, Mr Martin indicated that the debt to the applicant for the winding up order, was obtained by fraud.  That question was explored before Miles J in the hearing of Mr Martin’s opposition to the winding up.

18                  The applicant for the winding up order was Commonwealth Bank of Australia (“the Bank”) which applied by application dated 4 March 1993 for an order that the plaintiff be wound up under section 460(1) of the Corporations Law.  The grounds were that the plaintiff was unable to pay its debts, or alternatively, that it was just and equitable that the plaintiff be wound up.

19                  Miles CJ, in the course of his reasons for making the winding up order said (page 6):

“In short, the factual basis of the company's resistance to the application appears to be as follows.  In December 1983 a predecessor of the applicant, the Commonwealth Trading Bank of Australia, advanced some $95,000 to the company, repayment of which was secured by mortgage of a farm at Tarago.  When approximately $120,000 was owing on that mortgage, the property was sold with the approval of the applicant and the proceeds accepted by the applicant in full discharge of the company's liability to it. 

According to the general effect of the affidavit sworn by Mr Martin on 4 November 1983 the company ‘signed’ the mortgage…in circumstances amounting to fraud on the part of the applicant.  How those circumstances permit a conclusion that the applicant was guilty of fraud is, however, not apparent to me.  I have to conclude that, whilst there is an allegation of fraud, no prima facie case is made out on the evidence and no arguable case emerges on the hypotheses established by the affidavit material.”

20                  His Honour found that the Bank was at the time of service of the notice of demand, a creditor of the plaintiff to whom the sum of $193,993.60 was owing at that date.  His Honour further found that the plaintiff had failed to pay the sum demanded or to secure or compound for it to the reasonable satisfaction of the applicant for three weeks after service of demand.  His Honour was satisfied that the indebtedness of the plaintiff at the date of his judgment was no less than it was at the date of the service of the demand and that the failure to pay the sum demanded, or to secure a compound for it, continued.  His Honour therefore concluded that the plaintiff was unable to pay its debts and for that reason made the winding up order.

21                  We have been taken to no evidence at all to support any allegation that any indebtedness of the plaintiff to the Bank was obtained through fraud.  In the circumstances there does not seem to be any prospect at all that Mr and Mrs Martin will be successful in any appeal from a decision refusing to order a stay or termination of the winding up.  No material has been advanced before us to suggest there is any prospect at all of any such order being made.  For those reasons I do not consider that the pendency of the reserved decision in A 44 of 1999 has any bearing on the matter that is before us.  For that reason I agree with the orders proposed by the presiding judge.

Associate:

Dated:              3 August 2000