Velissaris v Maryvell Investments Pty Ltd

REASONS FOR JUDGMENT 1 The application that is before me today is an application for two interlocutory orders. The first is leave to commence the proceeding against the first respondent, a corporation in liquidation. The application is made pursuant to s 471B of the Corporations Act 2001 (Cth) ("the Corporations Act"). The other order sought is an interlocutory injunction, restraining the first respondent and its liquidator, the second respondent, from effecting any settlement of the contract of sale made on 14 November 2007 in respect of a property at 333-335 Sydney Road, Brunswick. 2 It appears that the liquidator sold the property as an asset of the corporation in order to satisfy the corporation's creditors. The applicant, the director of the corporation, has claimed that the property is in fact an asset of the family trust of which he and members of his family are the beneficiaries. In his substantive application, the applicant alleges that the corporation and the liquidator have engaged in misleading and deceptive conduct in contravention of s 52 of the Trade Practices Act 1974 (Cth) ("the Trade Practices Act") and also have engaged in unconscionable conduct in contravention of s 51AA of the Trade Practices Act. The applicant also relies on a common law duty of care and a duty of the liquidator to act diligently and with reasonable care in relation to the subject property, in respect of which he also relies on s 180(1) of the Corporations Act, which imposes duties of diligence and care on officers of the corporation. 3 The only evidentiary material before the Court is the affidavit of the applicant, which was only served yesterday. The settlement of the contract of sale is due, so I am informed, on Friday, the day after tomorrow. Counsel for the liquidator has placed before me a chronology of events that indicates that this is one of a number of applications made by the applicant and applications made by the liquidator against the applicant in order to secure possession of the property. If the chronology is correct, then the applicant has already made an application to the High Court for an order restraining the conduct of the auction on 14 November 2007, which Hayne J dismissed on 1 November 2007, and a further application to the Supreme Court of Victoria, which Cummins J dismissed on 9 November 2007. 4 The applicant makes a number of allegations against the liquidator, including an allegation of inadequate publicity for the sale; an allegation that the auction was not a public auction, because it was conducted inside the property, security guards were present and would not permit the applicant to enter; an allegation that the property was sold at an undervalue; and even an allegation that the liquidator sold the property to someone with whom he was connected. I should say that there is nothing in the way of evidence to support the last-mentioned allegation which is no more than supposition on the part of the applicant. The applicant does not even know the identity of the purchaser, the liquidator having refused to disclose the identity of the purchaser to the applicant. 5 The applicant says that, if he had been allowed to have the property inspected by his valuer, he would have been in a position to use it as security to borrow sufficient money to pay out the liquidator. He says that he is prepared to give the usual undertaking in damages that would involve him in compensating both the liquidator and the purchaser, in the event that he were to lose the proceeding. 6 The fundamental difficulty that stands in the way of the applicant being successful in obtaining the second order that he seeks, to restrain the settlement of the sale, is that any such order necessarily would affect the interests of the purchaser. Because the applicant does not know the identity of the purchaser, the purchaser is not a party to the proceeding, and no notice has been given to the purchaser that an order is sought that would affect the purchaser's interests. In the circumstances, whatever might be said about the strength of the applicant's case otherwise, it is the absence of the purchaser from the proceeding that seems overwhelmingly to stand in the way of the applicant obtaining the order that he seeks. It tilts the balance of convenience so far against the applicant that, even if he were able to make out a serious question to be tried, he would not be able to succeed in obtaining that interlocutory injunction. 7 Accordingly, I propose to dismiss the application. Insofar as there is an application for leave to proceed against the corporation, I propose to adjourn that, along with the balance of the proceeding, to be placed in the Court's corporations list so as to be managed by a judge in that list. 8 The Court orders that: