Plaintiff v First Defendant

2 In the proposed interlocutory process, Mr Velissaris seeks to make applications under ss 482 and 420A of the Corporations Act 2001 (Cth) to terminate the liquidator and to sue for loss and damage. I have determined for a number of reasons that leave should not be given.

3 First, Mr Velissaris seeks through the proposed interlocutory process to re-agitate issues that have been already been concluded in proceedings before Gordon J in Velissaris v Maryvell Investments Pty Ltd (In Liquidation)(No 2)[2] and Robson J in Re Maryvell Investments Pty Ltd (In Liquidation).[3] Those issues concerned the conduct of the first defendant ("the liquidator") in the sale of the property at 333 Sydney Rd Brunswick ("the property"). In short compass, Mr Velissaris complained that the liquidator sold the property at an undervalue and acted in breach of his duties in relation to the sale. In both cases there was a final judgment on the merits. The judgments are binding on Mr Velissaris and have given rise to estoppel by res judicata or issue estoppel. The effect of the estoppel is that Mr Velissaris cannot now re-litigate or re-open the question of the liquidator's conduct in relation to the sale of the property. That matter has been finally determined.[4]

4 In Velissaris v Maryvell Investments Pty Ltd (In Liquidation)(No 2) Gordon J set out the relevant background facts in some detail.

5 Mr Velissaris was a director and shareholder of Maryvell Investments Pty Ltd ('the company"), which was placed into liquidation on 19 June 2006 and the liquidator was appointed liquidator. The company acted as trustee of the Maryvell Family Trust of which Mr Velissaris is a beneficiary. On 14 November 2007 the liquidator, in the performance of his duties as liquidator of the company, sold the property by auction for $1.6m with settlement to be effected within 30 days ("the first contract of sale"). Before settlement of the property was effected, Mr Velissaris instituted proceedings in the Federal Court seeking an injunction to stop the liquidator from effecting settlement and seeking damages against the liquidator by reason of his conduct in entering into the first contract of sale. He complained that the property was sold for less than its market value and that the term of the contract should have been longer than 30 days. The injunction was heard and refused but settlement did not proceed in any event because the purchaser was not in a position to settle. The purchaser alleged that Mr Velissaris had interfered in its financing process. The liquidator re-advertised the property for sale by private treaty. The highest offer was $1.6m which the liquidator accepted ("the second contract of sale"). Prior to the second contract of sale, the liquidator's solicitors wrote to Mr Velissaris inviting him to discontinue the proceedings. Mr Velissaris did not do so. Instead he complained about the second contract of sale as well. His complaint again was that the property was sold for less than its market value and that the term of the contract should have been longer than 30 days. In support of his contention, Mr Velissaris referred to s 420A of the Corporations Act 2001 (Cth) ("the Act") which provides as follows:

420A Controller's duty of care in exercising power of sale

(1) In exercising a power of sale in respect of property of a corporation, a controller must take all reasonable care to sell the property for:

(a) if, when it is sold, it has a market value - not less than that market value; or

(b) otherwise - the best price that is reasonably obtainable, having regard to the circumstances existing when the property is sold.

(2) Nothing in subsection (1) limits the generality of anything in section 180, 181, 182, 183 or 184.

1"> 6 Gordon J dismissed the proceeding. Her Honour reasoned as follows:

[14] As the express words of the section [420A] make clear, it imposes a statutory duty on a "controller" in relation to the property of a corporation. A "controller" is defined in s 9 of the Corporations Act. The definition does not include a liquidator. However, that is not necessarily fatal to Mr Velissaris' claim because, as counsel for the Defendants properly accepted, a liquidator, as an officer of the company within the meaning of s 9 of the Corporations Act, must exercise his powers and discharge his duties subject to the statutory duties imposed on him by ss 180 to 184 of the Corporations Act.

[15] As I have noted, Mr Velissaris' complaints are that the property was sold for less than its market value and, secondly, that the term of the sale contract should not have been 30 days. In my view, these contentions are not shown to have any reasonable prospects of success. There have been two separate sales of the property by the liquidator. On each occasion, a licensed real estate agent was engaged by the liquidator to sell the property. The procedures adopted were transparent. The price obtained on each sale was $1.6 million. There is no suggestion that those sales were not at arm's length. 30 days is an acceptable settlement period for sale of the property.

7 The judgment reflects in paragraph 16 that Mr Velissaris had made reference to comparable sales higher than $1.6m in support of his complaint as well as the fact that he was willing to offer to purchase the property for in excess of $1.6m. Her Honour held as follows:

[16] Accordingly, Mr Velissaris' reference to what he described as comparable sales higher than $1.6 million, are not to the point. Both the fact of those arm's length sales of the property and the circumstances in which they were effected provide sufficient independent evidence of the market value of the property. Finally, Mr Velissaris' assertion that he was willing to offer to purchase the property for in excess of $1.6 million does not assist him. On 7 April 2008, the liquidator swore an affidavit which was filed in this court. Exhibited to that affidavit was correspondence passing between the liquidator and Mr Velissaris over a considerable period of time about the property. That correspondence demonstrates that at no time did Mr Velissaris make an offer to purchase the property which would have been capable of acceptance by the liquidator.

8 Her Honour therefore concluded that the claim in relation to the second contract of sale had no reasonable prospect of success and dismissed the proceeding.

9 Shortly after the dismissal of the Federal Court action, Mr Velissaris filed an interlocutory process in this proceeding for the termination of the liquidation of the company under s 482(1) of the Act, an inquiry into the conduct of the liquidator under s 536 of the Act, a declaration that the liquidator had engaged in serious misconduct and gross negligence in connection with the sale of the property in breach of his duties under the Act and to the Court and an order that the liquidator pay Mr Velissaris and other beneficiaries of the Maryvell Family Trust compensation for all loss and damage suffered by them in consequence of the liquidator's breach of his statutory obligations under ss 180 and 181 of the Act and his duties at common law and in equity. Robson J stayed the action on the grounds that it was an abuse of process for Mr Velissaris to seek to make again the claims that the Federal Court had dismissed and also on the ground that there was no evidence to support his complaints about the sale of the property or the liquidator's conduct.[5]

10 Mr Velissaris, before Robson J, had supported his application with a valuation assessment of the property as at 22 April 2008 prepared for One Stop Finance by Mr Les Cooper, a certified practising valuer. Robson J did not accept that valuation as probative evidence of Mr Velissaris' claim that the property had been sold at an undervalue. It was unverified and, His Honour noted, even if it was proved "there is still no evidence to suggest that [the liquidator] acted improperly in obtaining the advice of an independent valuer and retaining agents to sell the property as he did. The price that the liquidator achieved was consistent with the valuation of Fitzroys, the independent valuer, and the auction in 2007".[6]

11 Mr Velissaris, once again, seeks to raise the precise same matters that were dealt with by Gordon J and Robson J. In his affidavit in support, Mr Velissaris makes the same unfounded, bald assertions about the conduct of the liquidator selling the property at a undervalue and about his offer to buy the property for $3.5m before the second contract of sale. He again exhibits the valuation assessment prepared for One Stop Finance as well as an earlier valuation prepared for Mr Velissaris by Mr Cooper on 10 December 2007.

12 No new issue is raised by Mr Velissaris by the proposed further interlocutory process, although Mr Velissaris argued strenuously that the application was different because he seeks to rely on s 420A of the Act, not s 482 of the Act. Significantly, Gordon J rejected his claim based on s 420A of the Act. That claim has been determined against Mr Velissaris, as has the claim for relief under s 482 of the Act. Those decisions are binding and conclusive on him. It is not open to Mr Velissaris to seek to re-agitate that the liquidator either sold the property at an undervalue or acted improperly or in breach of his statutory and common law duties in the sale of the property effected by the second contract of sale.

13 Secondly, the material before the Court on which he relies for the grant of leave does not demonstrate in any event that his application would have any reasonable prospect of success. Such an application must be supported by evidence that is admissible, relevant and probative. The affidavit of Mr Velissaris of 8 July 2010 and his subsequent affidavits of 25 August 2010 and 8 September 2010 amount to no more than unsubstantiated assertion. In so stating, I have taken into consideration the two property valuations exhibited to Mr Velissaris' affidavit of 8 July 2010. They have not been independently verified nor are the circumstances in which the valuations were procured explained. They do not on their face provide cogent and reliable evidence either that the property was sold at an undervalue or, more particularly, that the liquidator did not sell the property for the best price that was reasonably obtainable at the time, having regard to the circumstances. I have also taken into account the other documents exhibited to his affidavit of 8 September 2010. Those documents do not support the claims made by Mr Velissaris in his affidavit.

14 Thirdly I take into account the previous attempts by Mr Velissaris to pursue his complaints against the liquidator. The prior litigation in the various courts provides further support for the conclusion that Mr Velissaris does not have an arguable case against the defendants.

[1] Re Maryvell Investments Pty Ltd (In Liquidation) [2009] VSC 61 (Unreported, Robson J, 25 February 2009).

[2] [2008] FCA 511 (Unreported, Gordon J, 15 April 2008).

[3] [2009] VSC 61 (Unreported, Robson J, 25 February 2009) [78] - [80].

[4] Blair v Curran [1939] HCA 23; (1939) 62 CLR 464; Burrell v R [2008] HCA 34; (2008) 82 ALJR 1221, 1226 [15].

[5] Re Maryvell Investments Pty Ltd (In Liquidation) [2009] VSC 61 (Unreported, Robson J, 25 February 2009) [65], [66], [69], [75].