By Interlocutory Process filed on 8 March 2017 and made returnable on 10 March 2017 by leave, the Applicant, Mr David Sampson, as court-appointed liquidator of Australasian Barrister Chambers Pty Ltd ("Company"), and as the receiver appointed by the Court of certain property comprising a suite on level 6 Culwulla Chambers and associated storage areas, seeks an order that the respondents, ABCD Corporation Pty Ltd ("ABCD") and Mr Derek Minus, forthwith deliver up to Mr Sampson's solicitors all certificates of title in their possession, power or control for all of the relevant property.
It appears implicit, in the manner in which this matter has developed, that those certificates of title are in the possession of ABCD or Mr Minus, because ABCD and Mr Minus suggest that orders be made that provide for the delivery of the certificates of title in their possession, power or control to their solicitors. I should assume that ABCD, its principal, who I understand to be a barrister and an officer of the Court, and those representing them, would not have put forward such orders if they had no content, in the sense that the relevant certificates of title were not in the possession of ABCD or Mr Minus so that the step contemplated by them could not be performed.
Ames v Trustees of the Birkenhead Docks [2017] NSWSC 245 | Case summary | Zoe
I will first address, as a matter of principle, why the orders sought by Mr Sampson should be made. I will then address, for completeness, why the competing orders proposed by ABCD and Mr Minus should not be made. The application has proceeded in a somewhat unconventional way, so far as Mr Marshall, who appears for Mr Sampson, has read the evidence on which Mr Sampson relies. I then invited Mr Ipp, who appears for ABCD and Mr Minus, to read the evidence on which ABCD and Mr Minus relied, and Mr Ipp raised the alternative orders proposed by ABCD and Mr Minus. Discussion of those orders in turn exposed the real issues in this application, which can be determined having regard to Mr Ipp's submissions, and well established authority, without the need to hear submissions from Mr Marshall.
By way of background, the evidence led on behalf of Mr Sampson, by his solicitor, Mr Dale, refers to his appointment as official liquidator to the Company, and to his subsequently having been appointed as receiver of the relevant property by the Court, with a power of sale over that property. Mr Dale refers to the history of his appointment as liquidator, the relationship between the Company as custodian on behalf of ABCD, in its capacity as trustee for the Minasian Superannuation Fund, and to the Company's right to indemnity under the deed of that fund. Mr Dale also refers to outstanding liabilities of the Company, including amounts owed to the Owners, Strata Plan 21574 in relation to unpaid strata levies and amounts which Mr Minus claims to be owed to him in respect of legal services provided to the Company, the claims for which are under consideration by Mr Sampson as liquidator.
Mr Dale also refers to a judgment given in Local Court proceedings in respect of unpaid strata levies against the Company and in favour of the Owners, Strata Plan 21574; to Mr Sampson's attempt to enforce the Company's right of indemnity under the deed, so as to sell the property and recoup the relevant amounts from ABCD; and to the appointment of Mr Sampson as receiver to the property by Brereton J, on 25 October 2016, that appointment having been stayed to 6 December 2016 to allow the Respondents an opportunity to pay out the debts, expenses and costs owing by the Company. Mr Dale also refers to the fact that, on 6 December 2016, Brereton J declined to extend that stay, such that the receiver's appointment and the power of sale conferred on the receiver in respect of the property then took effect.
Mr Dale also refers to subsequent steps involved in a sale of the property, including dealings both with a potential purchaser and with Mr Minus and a company associated with him in respect of offers to purchase the property, and to the decision reached by Mr Sampson that the sale of the property to the potential purchaser, rather than to the entity associated with Mr Minus, was appropriate, having regard to unresolved questions concerning the financial capacity of that entity to complete the transactions. Mr Dale's evidence is that the receiver has entered a contract for sale of land in relation to the property which had a date for completion of 28 February 2017 and did not presently have custody of certificates of title in relation to the property, and that attempts to obtain replacement certificates of title from Land and Property Information have been frustrated by caveats lodged over the property by Mr Minus or entities associated with him.
With that background, it seems to me that the legal issues in respect of this application are resolved by well-established authority, as confirmed and applied by recent appellate and other decisions of Australian courts. In Meagher, Gummow and Lehane's Equity: Doctrines and Remedies 5th edition, the learned authors observe at [29-120] that:
"Any interference with a receiver appointed by the court in the conduct of the receivership, and any interference with the possession of that receiver, is a contempt of court, unless the leave of the court is first obtained."
I will return to the significance of that proposition in dealing with the short minutes of order proposed by ABCD and Mr Minus later in this judgment. The learned authors also refer to the observation in several cases that the appointment of a receiver itself operates as an injunction for delivery of property within the receiver's control to the receiver, and note that that proposition reflects the proposition that a receiver's possession, or right to possession, attracts the same sanction as if interference with it had been prohibited by injunction. The learned authors note a need for qualification of that statement on the basis that it is not only the parties to the relevant action but also third parties who are obliged not to interfere with the receiver's possession of the property allocated to his or her control.
In Professor O'Donovan's looseleaf text, Company Receivers and Administrators [23.960], Professor O'Donovan outlines the proper approach for a receiver to compel delivery of property that is the subject of receivership to the receiver. Professor O'Donovan notes that the Court order appointing a receiver would generally describe the property entrusted to the receiver, as it does here, by identifying that the property at Culwulla Chambers is placed under Mr Sampson's control. Professor O'Donovan notes that the receiver should, in the first instance, request the parties in possession of such property to comply with a direction to deliver the property to them, as it appears has occurred here in respect of the certificates of title. Professor O'Donovan notes that, if the parties in possession of that property do not comply with such a direction, the receivers should, he suggests, report the refusal to the party having the conduct of the suit so that necessary steps can be taken to enforce the order. That observation reflects an approach by which steps in respect of, in particular, contempt, would be brought by the parties to the proceedings, rather than the receiver. It does not seem to me that those principles prevent, in an appropriate case, the receiver who has been appointed by the Court approaching the Court for steps to seek the Court's assistance in respect of the performance of his duties.
It is well established that the Court has power to direct that a party deliver documents to a receiver appointed by the Court. Such orders have been made, for example, in Kirk v Wirrie Nominees Pty Ltd (1995) ATPR 1-446 and in Hall (as receiver and manager of Homan Industries Pty Ltd) v Homan (Supreme Court of Queensland, McKenzie J, unreported, 4 April 2000). Neither of those decisions involved an extended discussion of the Court's power to make such an order. It seems to me that the Court's power to make such an order is found in its inherent jurisdiction, as an incident of its power to appoint a court-appointed receiver, and to give that power efficacy. It is scarcely conceivable that the Court could, for example, appoint a court-appointed receiver, grant the court-appointed receiver the right to control, or a power of sale, of that property, and then stand idly by while a person in control of the property frustrated the orders that the court had made. Another way of approaching that proposition is that the court's power, in this respect, is an incident of the administration of justice, in respect of the appointment of a court-appointed receiver.
An additional complexity raised in this matter is that ABCD and Mr Minus submit that the order that should be made is that they deliver the certificates of title in their possession, power or control for the relevant properties to their solicitors forthwith. The effect of such an order would, first, be that the certificates of title that are, implicitly, now personally in the possession of ABCD or Mr Minus would then be held by an agent for ABCD or Mr Minus, subject to instructions of ABCD or Mr Minus. Mr Ipp submits that those solicitors are officers of the Court. While that is the case, it appears that Mr Minus is a barrister, and also an officer of the Court, and is bound by the same professional duties as his solicitors. There is, I pause to note, it seems to me, a fundamental difficulty with the order proposed by ABCD and Mr Minus, which I assume was not appreciated when it was proposed. That difficulty is that, so far as the certificates of title were delivered to ABCD's and Mr Minus' solicitors and they then maintained possession of them, contrary to the right of Mr Sampson to possession of them as a court-appointed receiver, then ABCD's and Mr Minus' solicitors would also potentially be involved in a contempt of court for the reasons noted below.
ABCD and Mr Minus propose that approach on the basis that they intend to bring an application for an interlocutory injunction to restrain the sale of the property, and seek to have that matter listed for hearing before the Corporations Duty Judge late next week, on 16 March 2017. Plainly, such an application could and should be approached with expedition, particularly in circumstances where the time for completion of the sale has already passed. I accept, of course, that if a prima facie case or a serious question requiring further investigation is established as to ABCD's and Mr Minus' claim, then the Court would readily grant leave for it to be pursued against a court-appointed receiver. However, so far as that claim is genuine, and urgent, it seems to me that it could be accommodated without further delay. I offered ABCD and Mr Minus the opportunity to have that claim dealt with later today, but they declined that offer on the basis that they seek further time to prepare evidence in support of the application.
In any event, the foreshadowed claim by ABCD and Mr Minus does not provide any basis for declining an order requiring delivery of the certificate of title to Mr Sampson, or to make the alternative order proposed by ABCD and Mr Minus permitting the certificates of title to be held by their solicitors. In Griffith v Griffith (1751) 2 Ves Sen 401; 28 ER 256, the Lord Chancellor observed, simply enough, that: "if a receiver is appointed, and the owner of the estate is in possession of part of the premises, application should be made to the court, that the owner should deliver possession to the receiver." In Ames v Trustees of the Birkenhead Docks (1855) 20 Beav 332 at 353; 52 ER 630 at 638, Sir John Romilly observed that:
"There is no question that this Court will not permit a receiver, appointed by its authority, and who is therefore its officer, to be interfered with or dispossessed of the property he is directed to receive, by anyone, although the order appointing him may be perfectly erroneous; this Court requires and insists that application should be made to the Court, for permission to take possession of any property of which the receiver has either taken or is directed to take possession, and it is an idle distinction (which could not be maintained if it were attempted...) that this rule only applies to property actually in the hands of a receiver. … no person will be permitted, without the sanction or authority of the Court, to intercept or prevent payment to the receiver of the debts, rents or the tolls, which he has not actually received but which he has been appointed to receive...".
That proposition was in turn applied in Australia in Re Solomon; Ex parte Reid (1986) 10 FCR 423 and extended to the corresponding provisions in bankruptcy in Penning v Steel Tube Supplies Pty Ltd (1988) 18 FCR 568, where the Full Court of the Federal Court of Australia held that a debate as to the validity of the appointment of the trustee in bankruptcy provided no basis for the bankrupt to decline to deliver property that was within the trustee in bankruptcy's control to him. The same approach was adopted by the Federal Magistrates Court in Lane v McConochie [2006] FMCA 376.
It is therefore wholly beside the point that ABCD and Mr Minus may wish to challenge the sale of the relevant property. That does not provide any basis on which they are not required to deliver property that is properly within the receiver's control, including the certificates of title to property within his control, to him. They are, of course, free to seek leave to bring proceedings against the receiver, including proceedings for injunctive relief. As I noted above, they have been offered the opportunity to commence and have those proceedings dealt with today, although that course has not been taken up. Quite apart from the fact that this approach is established by authority, it seems to me that it is not open to ABCD and Mr Minus, without obtaining the leave of the Court to bring such proceedings, without any determination of the merits of the application, without obtaining an interlocutory injunction, and without offering an undertaking as to damages so as to protect the receiver and creditors from the risk of loss, to obtain the same practical result as an interlocutory injunction granted by the Court to restrain the sale, by simply declining to put the receiver in possession of the certificates of title that are properly within his control.
For all these reasons, I decline to make orders in the form proposed by ABCD and Mr Minus and I will make orders in the form proposed by Mr Sampson. It will, of course, be a question for Mr Sampson whether he considers it proper to proceed to a sale of the property, in circumstances that he is on notice of the proposed claim. That may depend on the speed with which ABCD and Mr Minus bring that claim, and I will hear them as to whether they wish to have the Court make directions as to the manner in which that claim should be brought. As I understand it, from correspondence on which Mr Sampson relies, he accepts that, if he proceeds to a sale of the property in circumstances where a dispute exists as to the sale process, then ABCD and Mr Minus will have whatever rights they have in respect of damages.
For these reasons, I order that:
By 4pm today, 10 March 2017, the Respondents to this Interlocutory Process deliver up to the solicitors for the Applicant, Gillis Delaney of level 40, 161 Castlereagh Street, Sydney, all certificates of title in their possession power or control for all the land in certificates of title, lots 21, 31, and 34 in strata plan 21574 situated at and known as suite 602, Culwulla Chambers, 67 Castlereagh Street, Sydney, in the State of New South Wales.
These orders be entered forthwith.
[3]
Costs
In Mr Sampson's Interlocutory Process, he originally sought an order that costs of the Interlocutory Process be paid on the indemnity basis. In the orders proposed today, he sought that order, combined with a further order that such costs be payable forthwith. Mr Marshall, who appears for Mr Sampson, seeks to support that order, having regard to the circumstances of the application, which has been necessary by reason of the retention of certificates of title by ABCD or Mr Minus.
Mr Ipp, who appears for ABCD and Mr Minus, responds that the correspondence discloses only two requests for certificates of title to be delivered, and points out that this application was brought on relatively short notice, short service having been sought on Wednesday afternoon and the application having been heard on Friday morning. Mr Ipp submits that there was not sufficient notice to Mr Minus of the consequences of non-delivery of the certificates of title and, had further notice of that matter been given, this application may have taken a different course. I accept that the first letter from Mr Sampson's solicitors dated 2 February 2017 politely requested arrangements to be made for delivery of the certificates of title by ABCD and Mr Minus to Mr Sampson. By a second letter dated 13 February 2017, Mr Sampson's solicitors advised that he had not been provided with the certificates of title or advised of their location and that he had no alternative other than to make an application for replacement certificates of title, and that letter not foreshadow an application to the Court. However, by a third letter dated 28 February 2017, Mr Sampson's solicitors had indicated to ABCD's and Mr Minus' solicitors that he was considering an application to the Court for orders in respect of the caveats that Mr Minus and another entity had placed on the property, as well as the failure of Mr Minus to provide the certificates of title to the property or their location. That did give notice of this Court application, although Mr Sampson's solicitors did not there specifically refer to the particular incidents of his position as receiver appointed by the Court over the relevant property.
It seems to me that there is some force in Mr Ipp's submission that ABCD and Mr Minus could have been given stronger notice of the legal difficulties with the course that ABCD and Mr Minus were taking. Having said that, I also bear in mind that Mr Minus is, it appears, a barrister and an officer of the Court. It seems to me that, before Mr Minus undertook the process of withholding delivery of certificates of title from a receiver appointed by the Court, because of a dispute as to the circumstances of the sale of the property, it would have been prudent and appropriate for him to inform himself as to the rights of a court-appointed receiver and consider whether the action which he proposed to take was lawfully taken. It also seems to me that there was at least a significant degree of imprudence in the approach that ABCD and Mr Minus adopted, so far as it frustrated the performance of the receiver's duties and required this application to be brought. I emphasise that, as I noted in the course of submissions, it would not be appropriate for me to make, and I do not make, any finding that any conduct on the part of either ABCD or Mr Minus amounts to a contempt of Court. Such a finding could only be made in response to a formal charge of contempt, and would need to be determined having regard to the principles applicable to such a charge.
It seems to me that an order for indemnity costs is warranted, given the nature of ABCD's and Mr Minus' conduct, and the fact that even limited inquiry by Mr Minus, including any consultation of the leading texts in the area, would have disclosed the difficulty with the course that he and ABCD adopted. I do not consider that an order for costs forthwith need be made, where the ordinary circumstances in which such an order would be made is where a matter is likely to continue over a considerable time, and there is no suggestion that this matter will not be resolved in the near future.
For these reasons, I make a further order that the Respondents to the Interlocutory Process pay the Applicant/receiver's costs of that Interlocutory Process on the indemnity basis, as agreed or as assessed.
[4]
Amendments
15 March 2017 - Typographical corrections.
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Decision last updated: 15 March 2017