Federal Court of Australia Act 1976 (Cth), s 31A(2)

Trade Practices Act 1974 (Cth) ss 51AA, 52

Velissaris v Maryvell Investments Pty Ltd (in liq) [2007] FCA 2095

SZDCJ v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 1500; (2005) 212 ALR 581

GEORGE CON VELISSARIS v MARYVELL INVESTMENTS (in liquidation) ACN 080 327 073 and LAURENCE A FITZGERALD (as liquidator of Maryvell Investments Pty Ltd)

MARYVELL INVESTMENTS (IN LIQUIDATION) ACN 080 327 073

LAURENCE A FITZGERALD (AS LIQUIDATOR OF MARYVELL INVESTMENTS PTY LTD)

2. Pursuant to O 46 r 7A of the Federal Court Rules, no further proceeding concerning Maryvell Investments Pty Ltd (ACN 080 327 073) or the property situated at 333-335 Sydney Road Brunswick in the State of Victoria be accepted for filing from the Plaintiff, except with the leave of the Court.

3. The Plaintiff pay the Defendant's costs of the proceeding, to be taxed in default of agreement.

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

MARYVELL INVESTMENTS (IN LIQUIDATION) ACN 080 327 073

LAURENCE A FITZGERALD (AS LIQUIDATOR OF MARYVELL INVESTMENTS PTY LTD)

1 On 11 December 2007 the Plaintiff, Mr Velissaris, filed these proceedings against Maryvell Investments Pty Ltd (in liquidation) ("Maryvell"), and Laurence A. Fitzgerald, the liquidator of Maryvell ("the liquidator"). These proceedings were supported by an affidavit sworn by Mr Velissaris dated 11 December 2007, and arise out of the sale by the liquidator of 333-335 Sydney Road, Brunswick ("the property"). On 14 November 2007, the liquidator sold the property as an asset of Maryvell by auction to a Mr Richard Aidini with settlement to be affected within 30 days ("the First Contract of Sale"). The sale price was $1.6 million.

2 In relation to that First Contract of Sale, Mr Velissaris alleges that Maryvell and the liquidator engaged in misleading and deceptive conduct in contravention of s 52 of the Trade Practices Act 1974 (Cth) ("the TPA"), and engaged in unconscionable conduct in contravention of s 51AA of the TPA. Mr Velissaris also claimed damages at common law, under the TPA and under the Corporations Act 2001 (Cth) ("the Corporations Act") arising out of the Defendant's conduct and out of the liquidator's purported failure "to act diligently and with reasonable care in relation to the sale of the ... property as required at common law and pursuant to s 180 (1)" of the Corporations Act.

3 On 12 December 2007, Gray J heard an application by Mr Velissaris for an injunction to restrain the liquidator from effecting any settlement of the First Contract of Sale. Gray J refused to grant an injunction and the matter was fixed for directions: Velissaris v Maryvell Investments Pty Ltd (in liq) [2007] FCA 2095.

4 On 12 February 2008, Goldberg J made orders requiring Mr Velissaris to file and serve a statement of claim by 4 March 2008 and fixed Mr Velissaris' application pursuant to s 471B of the Corporations Act for leave to proceed against Maryvell (a company then in liquidation), for hearing on 15 April 2008. Mr Velissaris did not appear at that directions hearing.

5 Subsequently, Mr Velissaris was given no less than two extensions of time in which to file and serve his statement of claim. He failed to comply. By notice of motion he now seeks further time in which to file and serve his statement of claim. That application is not surprising because it comes a short period of time after the liquidator moved the court for orders that the proceeding be dismissed pursuant to O 20 r 5 of the Federal Court Rules. Yesterday, Mr Velissaris filed a further affidavit in support of his motion and in opposition to the Defendants' motion.

6 The Defendants also seek an order pursuant to O 21 r 2 that Mr Velissaris not, without the leave of the court, institute any proceedings against the Defendants, and any proceeding instituted by Mr Velissaris against the Defendants not be continued by him without the leave of the court. During the hearing of the matter the Defendants applied for leave to amend their notice of motion to add an alternative ground to read:

Alternatively, that pursuant to order 46 rule 7(a) the applicant not institute any proceedings against the Defendants or either of them relating to liquidation of the First Defendant except with the leave of the court.

I will deal with each of these applications in turn.

7 As noted, the liquidator seeks an order pursuant to O 20 r 5 of the Federal Court Rules that the proceeding be dismissed on the grounds that the proceeding generally is frivolous or vexatious (O 20 r 5 (1)(a)), or an abuse of the process of the court (O 20 r 5(1)(b)). In my view, it was also open to the Defendants to seek judgment against the Plaintiff on the basis that the prosecuting party has no reasonable prospect of success: s 31A(2) of the Federal Court of Australia Act 1976 (Cth) ("the Federal Court Act").

8 For reasons which follow, the proceedings should be dismissed and the Plaintiff should pay the Defendants' costs, to be taxed in default of agreement. Put simply, I consider that Mr Velissaris' proceeding is an abuse of process, vexatious and frivolous and, in any event, not shown to have any reasonable prospect of success: s 31(2) of the Federal Court Act.

9 The First Contract of Sale, in fact, did not proceed to settlement. A rescission notice was served on the purchaser. After further negotiations, the First Contract of Sale was scheduled to proceed to settlement in late February 2008 with a substituted purchaser. That settlement was further delayed because of a caveat lodged by Mr Velissaris over the property. On 23 January 2008, on the application of the liquidator, Bongiorno J of the Supreme Court of Victoria ordered the removal of the caveat and restrained Mr Velissaris and his family from lodging further caveats on the title to the property: [2008] VSC 19 at [2] - [19]. Those reasons for decision record the history of the various applications made to that court and to the High Court. It is, therefore, unnecessary for me to repeat them.

10 However, it is of significance that in an earlier application before the Supreme Court of Victoria, Dodds-Streeton J, as she then was, determined that Mr Velissaris had no arguable case that he was entitled to possession of the property and refused him leave to sue Maryvell in liquidation. The Court of Appeal declined to intervene and the High Court refused a stay of her Honour's order for possession.

11 Ultimately, settlement of the First Contract of Sale did not proceed because the substituted purchaser was not in a position to settle. A further rescission notice was served. The purchaser unsuccessfully sought an extension of time to complete, which was refused by the liquidator. The defaulting purchaser alleged that Mr Velissaris had interfered in its financing process. The property was then re-advertised for sale by private treaty with a deadline sale date of 3:00pm on 19 March 2008. The highest offer was $1.6 million, which the liquidator accepted. A 10 per cent deposit was paid and settlement is due prior to the end of April ("the Second Contract of Sale").

12 The history of the sale of the property is important. Regardless of the merits of the claims that Mr Velissaris had at the time he filed these proceedings, the liquidator did not settle that contract of sale - the First Contract of Sale. That purchaser defaulted and the liquidator has entered into the Second Contract of Sale. It was, therefore, unsurprising that on 7 March 2008, prior to the Second Contract of Sale, the liquidator's solicitors wrote to Mr Velissaris inviting him to discontinue these proceedings. Mr Velissaris failed to do so.

13 During the hearing, Mr Velissaris submitted to the Court that the substance of his complaint about the conduct of the liquidator arose out of the manner in which he conducted the sale process of the property in respect of both the First and Second Contracts of Sale. There were two complaints; the property was sold for less than its market value and, secondly, that the term of each contract of sale should have not been 30 days but some longer period. In support of his contention, Mr Velissaris referred to s 420A of the Corporations Act. That section provides:

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.

14 As the express words of the section 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.

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.

17 In such circumstances, the current proceeding and any proceeding amended in the manner proposed by Mr Velissaris to include a claim in relation to the Second Contract of Sale has not been shown to have any reasonable prospects of success under s 31A(2) of the Federal Court Act. Moreover, having regard to the number and history of proceedings filed by Mr Velissaris in this court, the High Court and the Supreme Court of Victoria, Mr Velissaris' conduct in these proceedings and, so far as the proceeding is currently framed, the fact that the First Contract of Sale did not settle, the existing proceeding is frivolous, vexatious and an abuse of process of the court.

18 For that additional reason, the proceeding should be dismissed. It is unnecessary to consider Mr Velissaris' application for an extension of time to file and serve a statement of claim; for the reasons I have earlier referred to, any extension of time would be futile because the claim would fail.

19 The liquidator also sought an order pursuant to O 21 r 2 that except with the leave of the court Mr Velissaris not be permitted to institute any proceedings against the Defendants, and any proceeding instituted by him against the Defendants not be continued by him without the leave of the court. I will not make such an order. As I earlier referred to, the liquidator sought leave to amend his notice of motion to seek a direction from the court pursuant to O 46 r 7A.

20 Having regard to the matters I have referred to above, it is appropriate for me to direct that no further proceeding concerning Maryvell or the property be accepted for filing from Mr Velissaris except with the leave of the court: O 46 r 7A of the Federal Court Rules. There are two things I wish to note. First, the court has power to make such a direction: see SZDCJ v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 1500; (2005) 212 ALR 581 at [22]- [28] per Jacobsen J. Secondly, the direction I have made that no further proceeding concerning Maryvell or the property be accepted for filing from Mr Velissaris is subject to the leave of the court being obtained. I emphasise "except with the leave of the court". Such a direction does not preclude a litigant from pursuing a properly formulated claim if one should be presented to the court.

21 For those reasons, the proceeding is dismissed and the Plaintiff will be ordered to pay the Defendant's costs of the proceeding to be taxed in default of agreement. I will also issue a direction pursuant to O 46 r 7A that no further proceeding concerning Maryvell or the property be accepted for filing from Mr Velissaris except with the leave of the court.

I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon.