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Haltuli Pty Ltd v Park

 

[2005] QSC 262

SUPREME COURT OF QUEENSLAND

PARTIES:

FILE NO/S:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

DELIVERED ON:

16 September 2005

DELIVERED AT:

Brisbane

HEARING DATE:

22 July 2005

JUDGE:

Moynihan J

ORDER:

  1. That the sum of $126,615.00 together with accretions currently held by the First Respondent pursuant to an Order made on 10 June 2004 in the Federal Magistrates Court at Brisbane is the property of the Applicant.
  2. That the Second and Third Respondents pay to the Applicant interest on that sum for the period of 15 April 2004 to 11 June 2004 calculated at 5 percent p.a. for the period of 58 days in the sum of $1,005.98.
  3. That the Respondents pay the Applicants costs to be assessed on a standard basis.

CATCHWORDS:

Trusts Act 1973

Wily v St George Partnership Banking Ltd (1999) 30 ACSR 204

COUNSEL:

Mr D Cooper SC with Mr R Lawson for the applicant

Mr G Porter (Sol) for the second and third respondents

SOLICITORS:

Porter Davies Lawyers for the applicant

G B Porter Lawyer for the second and third respondent

[1] The applicant company seeks a declaration that $126,615 (and any accretions) currently held by the first respondent pursuant to an order of 10 June 2004 made by the Federal Magistrates Court is the applicant’s property or alternatively that the money vest in the applicant pursuant to s 82 of the Trusts Act 1973.

[2] The applicant company entered into a multi site franchise agreement with Mobil Oil Australia Pty Ltd (Mobil) to conduct a number of Mobil service stations in the Brisbane metropolitan area in 1997. The applicant also entered into a mortgage agreement with Mobil Oil Australia Limited which included a fixed and floating charge over its property.

[3] The second and third respondents are directors and shareholders of the applicant and guarantors of the franchise agreement.  They depose that during the time the applicant traded they were engaged in full time management of its business but did not draw all the wages or directors’ fees to which they claim they were entitled.

[4] The franchise agreement required that moneys received by the applicant during the course of operation of the service stations be transferred electronically to Mobil’s bank account by automatic direct debit.

[5] On 13 April 2004 Mobil, acting pursuant to the franchise agreement, attempted a direct debit to the applicant’s account in the sum of $249,320.56.  On 15 April 2004 Mobil gave a notice of dishonour.  On 19 April 2004 a further payment was dishonoured.

[6] On 15 April 2004 a total of $69,394.47 was transferred from a bank account of the applicant to pay debts owed on credit cards personally operated by the second respondent.

[7] In the meantime on 15, 16, 19 April 2004 cheques drawn on the applicant company’s bank accounts in the amount of $64,000 were presented and cashed by the second and third respondent.  During the same period $99,332.40 in cash was collected by the second and third respondents from the service stations.

[8] On 19 April 2004 the solicitors for the applicant instructed by and acting for the second and third respondent sent a facsimile to Mobil making various demands including an extension of time to pay the amounts owing pursuant to the franchise agreement.

[9] After further demands by Mobil were not complied with by the applicants on 20 April 2004 Mobil appointed the receivers and managers.

[10] The second and third respondents depose that the applicant’s accountant advised in April 2004 that the unpaid wages or directors’ fees owing to them totalled $500,742.  Acting on the advice of the applicant’s accountant, they determined to have the applicant pay a proportion of those outstanding moneys, hence the dishonouring of the transfer requests and the transactions I have mentioned.

[11] I turn to the security documents.  The mortgage agreement relevantly defines “secured moneys” as (6 (b) of the applicant’s outline.

[12] The property the subject of a floating charge under the mortgage agreement is “all other property or assets of the mortgagor from time to time which are not Fixed Charge Property”. 

[13] Clause 14.2 of the mortgage agreement deals with the consequences of an event of default:

 

14.2  Consequences of an Event of Default.  Upon an Event of Default occurring, the Secured Moneys shall at the Mortgagee’s election become immediately payable to the Mortgagee as if the time for payment of the same had arrived (irrespective of anything to the contrary elsewhere in this Mortgage, a Collateral Security, the Transaction Documents or a Loan Agreement).  The Mortgagee need not notify the Mortgagor of such election.  If there is an outstanding Obligation of the Mortgagee to the Mortgagor (including any commitment to advance accommodation) the Mortgagee may also decline to meet such Obligation.”

[14] The mortgage agreement identifies events of default in the following terms: 

 

“(a)(non-payment) if the Mortgagor fails to pay or repay on time Secured Moneys which are due and payable to the Mortgagee under this Mortgage, a Collateral Security, the Transaction Documents or a Loan Agreement;

 

(b) (non-performance) if the Mortgagor or any other person (other than the Mortgagee) defaults in the performance of an Obligation on that person’s part under the Mortgage, the Collateral Security, the Transaction Documents or a Loan Agreement;

 

(c) (Receiver) if a Receiver, provisional liquidator, trustee for creditors or in bankruptcy, administrator or an analogous person is appointed over the assets of the mortgagor or a Security holder takes or attempts to take possession of any such assets;

 

(d) (Securities become fixed) if a floating Security given in favour of any Security holder becomes fixed in respect of the whole or part of the Mortgagor’s assets;

 

(e) (Insolvency) if the Mortgagor:

 

(i)   is or states that it is unable to pay debts as they fall due;

(ii)   suspends payment of its debts;”

[15] The floating charge operates as a fixed charge in respect of all the floating charge property if the mortgagor ceases or threatens to cease carrying on business or a receiver is appointed for the whole or a substantial part of the mortgagor’s undertaking property and assets.

[16] On 22 June 2004 the second and third respondents were examined in the Federal Magistrates Court at Brisbane with respect to the withdrawal of funds.  It emerged from their evidence that the applicant was probably insolvent at or prior to 13 June 2004, which is an event of default pursuant to the mortgage agreement on or prior to that date.

[17] Mobil sold the second and third respondent’s home as mortgagee in possession.  They received nothing from the sale nor have they received any money from the receiver.  It may be accepted that the second and third respondents are suffering severe financial hardship as a consequence of these events.

[18] It is submitted for the second and third respondents that they were entitled to the money paid to them between 15 and 19 April and they took it believing that they were entitled to it.  It is further submitted that upon the money being paid to them it ceased to be the applicant’s money and became their money.

[19] The difficulty with this argument seems to me to be that the floating charge had crystalised before the second and third respondents appropriated the money and it was not available for distribution to the general body of unsecured creditors, including the second and third respondents see e.g. Wily v St George Partnership Banking Ltd.[1]

[20] The applicant therefore seems entitled to the substantive relief it seeks; I’ll hear submissions on costs.

Footnotes

[1] (1999) 30 ACSR 204 (FC of Fed Ct)

Close

Editorial Notes

  • Published Case Name:

    Haltuli Pty Ltd v Park & Ors

  • Shortened Case Name:

    Haltuli Pty Ltd v Park

  • MNC:

    [2005] QSC 262

  • Court:

    QSC

  • Judge(s):

    Moynihan J

  • Date:

    16 Sep 2005

  • White Star Case:

    Yes

Litigation History

No Litigation History

Appeal Status

No Status