Sunnyville Pty Ltd v Australia Development and Investment Group Pty Ltd
[2006] QSC 249
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- Notable Unreported Decision
- Sunnyville Pty Ltd v Australia Development and Investment Group Pty Ltd[2006] QSC 249
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Sunnyville Pty Ltd v Australia Development and Investment Group Pty Ltd[2006] QSC 249
Sunnyville Pty Ltd v Australia Development and Investment Group Pty Ltd[2006] QSC 249
SUPREME COURT OF QUEENSLAND
PARTIES: | |
FILE NO/S: | |
Trial Division | |
PROCEEDING: | Application |
ORIGINATING COURT: | Supreme Court of Queensland |
DELIVERED ON: | 31 August 2006 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 21 August 2006 |
JUDGE: | Lyons J |
ORDER: |
|
CATCHWORDS: | EQUITY – GENERAL PRINCIPLES – RULES AND MAXIMS OF EQUITY – EQUITABLE CHARGES AND LIENS – MONEY EXPENDED OR BENEFIT CONFERRED ON PROPERTY OF ANOTHER – Declarations sought that an equitable lien exists over monies paid for the sale of real property – Priority of liquidator’s equitable lien to secure costs, charges and expenses reasonably incurred – competing interests CORPORATIONS – WINDING UP – CONDUCT AND INCIDENTS OF WINDING UP – PROCEEDINGS BY OR AGAINST THE COMPANY – LEAVE TO PROCEED – WHEN LEAVE GRANTED – Leave granted to proceed under s 471B of the Corporations Act 2001 TAXES AND DUTIES – GOODS AND SERVICES TAX - Liquidator’s personal liability for GST A New Tax System (Goods and Services Tax) Act 1999 (Cth), Division 147 Bunny Industries Limited v FSW Enterprises Pty Ltd [1982] Qd R 712 |
COUNSEL: | R G Bain QC for the applicant C Wilkins for the applicant D J S Jackson QC for the first respondent L Stephens for the first respondent D S Piggot for the second respondent No appearance for the third respondent |
SOLICITORS: | Hall Lawyers for the applicant Asahi Lawyers for the first respondent Truman Hoyle Lawyers |
LYONS J:
Background
[1] ADIG (Australia Development & Investment Group) Pty Ltd (in liquidation) (“ADIG”) is the registered proprietor of the indefeasible title to Lot 1 on RP 212639 County of Ward, Parish of Gilston contained in title reference 17100071 (“Lot 1”).
[2] Millennium World Pty Ltd (in liquidation) (“Millennium”) is registered the proprietor of the indefeasible title to Lot 169 on RP 41923 County of Ward, Parish of Gilston contained in title reference 14035208 (“Lot 169”).
[3] Sunnyville Pty Ltd (“Sunnyville”) is a company which entered into contracts to purchase both properties from both registered proprietors as vendors dated 26 October 2005.
[4] JNJ Investments Australia Pty Ltd (“JNJ”) is a company of which Mr James Yoong Sun Kwak is a director and which on 11 November 2005 purchased Lot 1 and Lot 169 in the circumstances described below..
[5] On 16 June 2005, Lot 169 had been mortgaged to Perpetual Trustees Limited (“Perpetual”).
[6] On 15 July 2005, Lot 169 had been further mortgaged to Limited Pty Ltd (“Limited”).
[7] On 23 August 2005, Lot 1 had been mortgaged to Limited.
[8] On 22 September 2005, another mortgage over Lot 169 and another mortgage over Lot 1 were each transferred to Limited.
[9] On 26 September 2005, Perpetual appointed itself controller of Millennium. The appointment was as mortgagee in possession of Lot 169, not as receiver.
[10] On 3 October 2005, Sunnyville lodged settlement notices over Lot 1 and Lot 169 in relation to contemplated contracts to purchase the land.
[11] On 24 October 2005, Limited appointed itself controller of ADIG. The appointment was as mortgagee in possession of Lot 1 and Lot 169, not as receiver.
[12] Pursuant to the contracts entered into on 26 October 2005 for the sale by the vendors of Lot 1 and Lot 169 to Sunnyville settlement was to occur at 3.00 pm on 11 November 2005. At 2.54 pm on 11 November 2005, Eden Lawyers sent a facsimile to Asahi Lawyers notifying that settlement of the Sunnyville contracts, which had been arranged for that afternoon, would not be proceeding.
[13] On 11 November 2005, JNJ had offered to purchase Lot 1 and Lot 169 for AUS$4.5 Million. The offers were accepted and at 2.00pm on that day bank cheques for this amount was handed over in exchange for release of mortgages and transfer documents in respect of both properties at Hickey Lawyers’ offices. There were no written contacts.
[14] At settlement:
(a) for Lot 1, JNJ paid $2,991,785 to ADIG with approximately $2.7m going to the mortgagee;
(b) for Lot 169, JNJ paid $1,500,059 to Millenium with approximately $1.3m going to the mortgagees;
(c) for Lot 1, JNJ received a transfer executed by the controller;
(d) for Lot 1, JNJ received a release of mortgage No. 708742065;
(e) for Lot 1, JNJ received a release of mortgage No 708916170;
(f) for Lot 169, JNJ received a transfer executed by the controller;
(g) for Lot 169, JNJ received a release of mortgage No 708442513;
(h) for Lot 169, JNJ received a release of mortgage No 708742066;
(i) for Lot 169, JNJ received a release of mortgage No 708827270.
[15] On 14 November 2005 Sunnyville lodged caveats over Lot 1 and Lot 169.
[16] On 18 November 2005 Sunnyville commenced a proceeding, BS 9806/05, claiming specific performance of its contracts.
[17] On 7 February 2006, Fryberg J ordered specific performance of the Sunnyville’s contracts in that proceeding.
[18] On 13 February 2006 JNJ filed an application, BS 1136/06, claiming removal of Sunnyville’s caveats. ADIG and Millennium were parties to that proceeding.
[19] On 10 February 2006 the Federal Court of Australia ordered that ADIG be wound up and appointed Christopher John Palmer as the liquidator.
[20] On 16 March 2006 an order was made that Millennium be wound up.
[21] On 13 June 2006, Mullins J[1] declared that the equitable interest of Sunnyville as purchaser under its contracts is entitled to priority of the equitable interest claimed by JNJ as purchaser who has paid the full purchase prices.
[22] Although the mortgagees executed releases of the mortgages and delivered them to JNJ, as yet the releases of the mortgages have not been registered.
[23] Settlement of the contracts dated 26 October 2005 between Sunnyville and ADIG and Millennium for Lots 1 and 169 is scheduled for 4 September 2006.
Current applications
[24] Sunnyville, by an application filed 21 July 2006 in the proceeding it commenced for specific performance (BS9806/05) and pursuant to the orders previously made, applies for:
(a) leave to proceed against ADIG and Millennium; and
(b) further orders to have its contracts with them specifically performed, including that JNJ deliver the releases of mortgage to Sunnyville.
[25] JNJ, by an application filed 26 July 2006 (BS1136/06), cross applies for:
(a) Leave to proceed against ADIG and Millennium;
(b) A declaration that, as against ADIG and in priority to any lien or charge held by ADIG’s liquidator (Mr Palmer), JNJ holds an equitable lien over Lot 1 securing payment of:
(i) $2,991,785.03; and
(ii) interest on $2,991,785.03 from 11 November 2005 at 12 per cent per annum.
(c) A declaration that, as against Millennium and in priority to any lien or charge held by Millennium’s liquidator (Mr Pascoe), JNJ holds as equitable lien over Lot 169 securing payment of:
(i) $1,500,059.57; and
(ii) interest on $1,500,059.57 from 11 November 2005 at 12 per cent per annum.
(d) Orders requiring Sunnyville to complete the contracts of 26 October 2005 by paying the monies to be paid there under in the following order:
(i) First to JNJ; and
(ii) Secondly, and only if JNJ has received payment of all amounts respectively secured by its equitable liens, to the respective vendors ADIG and Millennium; and
(e) Orders that the payments so to be made by JNJ shall be taken to be performance by Sunnyville of its obligations to pay the purchase monies under those contracts.
[26] At the hearing JNJ specifically agreed that it was now uncontroversial that the liquidators of ADIG and Millennium are entitled to a first ranking equitable lien for his reasonable costs, charges and expenses of, and reasonable remuneration for the completion of the sales to Sunnyville in pursuance of the orders for specific performance made by Fryberg J on 7 February 2006. This had been conceded by JNJ on 18 August 2006 in a letter sent to the solicitors for ADIG.
[27] ADIG contests JNJ’s declaration that it holds an equitable lien over Lot 1 or alternatively if there was a lien an order that the liquidators reasonable costs, charges and expenses include the liability to pay $300,000 by way of goods and services tax in respect of the sale to Sunnyville.
[28] There was no appearance by Millennium World Pty Ltd (in Liquidation).
The Hearing of the Applications
Leave to proceed
[29] Section 471B of the Corporation Act 2001 has the effect of staying Sunnyville’s proceeding against each of ADIG and Millennium and also JNJ’s applications. It is therefore necessary for both Sunnyville and JNJ to obtain leave to proceed to obtain the further orders that it seeks.
[30] There is no dispute that the relief that both Sunnyville and JNJ seek cannot be obtained except by court order and that there is a serious claim and real dispute. Accordingly, it follows that leave to proceed should be granted. I note that the liquidator of ADIG neither consents to nor opposes the orders sought in relation for leave to proceed. Millennium, whilst served with both applications, has failed to appear in relation to these applications.
[31] At the hearing it was uncontroversial between all the parties that leave should be granted. I am satisfied that the applicant JNJ, and first respondent Sunnyville, should each have leave to proceed against the second respondent ADIG pursuant to s 471B of the Act. I am further satisfied that JNJ and Sunnyville each have leave to proceed against the third respondent, Millennium, pursuant to s 471B of the Act.
[32] In relation to the other orders sought there was essentially agreement in most respects between the parties as to the form the orders should take. JNJ is prepared to abide the order of the court to deliver the releases to Sunnyville on the basis that it receives the purchase monies under the Sunnyville contracts in satisfaction of its purchaser’s liens. In principle there is no objection to that course by Sunnyville.
[33] The liquidator of ADIG, however, by his affidavit has raised concerns firstly as to the payment of his fees and ADIG’s liability to the Commissioner of Taxation. Importantly ADIG seeks a declaration that JNJ does not hold an equitable lien over the properties. The background to this is that on 10 February 2006 the Federal Court of Australia ordered that ADIG be wound up and appointed Christopher John Palmer as the liquidator. The only assets of ADIG identified to date in the winding up are the interest that it holds in Lot 1, its rights under the contract and the interest that it holds in rent paid by the tenant of the properties since 11 November 2005.
[34] There are therefore two outstanding issues that remained for determination by the court; firstly does JNJ have an equitable lien? And secondly should there be a declaration as requested by the liquidator that the liquidator’s reasonable costs, charges and expenses include the liability to pay $300,000 by way of goods and services tax in respect of the sale to Sunnyville?
Does JNJ have an equitable lien?
[35] The liquidator for ADIG disputes that JNJ holds an equitable lien. A letter from the liquidator’s solicitors dated 16 August 2006 states “Our client disputes that JNJ holds an equitable lien over Lot 1 on RP 212639 title reference 17100071 (property). Any claim that JNJ has against ADIG is in the nature of an unsecured claim, and must be proven in liquidation as required by the Corporations Act 2001 (Cwth)”. The letter further stated that all monies that were to be paid by Sunnyville should be paid to the liquidator.
[36] In relation to the question whether JNJ has an equitable lien I have been referred to an extensive list of authorities. These authorities establish that a purchaser under a contract for sale of real estate has an equitable lien securing repayments of payments made by the purchaser to the vendor in respect of the purchase price except of course where the vendor is entitled under the contract to retain payment.
[37] The decision of Rose v Watson[2] establishes the principle very clearly. As Lord Cranworth stated:[3]
“There can be no doubt, I apprehend, that when a purchaser has paid his purchase money, though he has not got conveyance, the vendor becomes a trustee for him of the legal estate, and he is in equity considered as the owner of the estate. When, instead of paying the whole of his purchase money, he pays a part of it, it would seem to follow, as a necessary corollary, that to the extent to which he has paid his purchase-money, to that extent the vendor is trustee for him; in other words he acquires a lien, exactly in the same way as if upon the payment of part of the purchase-money the vendor has executed a mortgage to him of the estate to that extent.”
[38] The nature of an equitable lien was discussed by Gibbs CJ in the decision of Hewett v Court in these terms:[4]
“Equitable lien does not depend either upon contract or upon possession. It arises by operation of law, under a doctrine of equity ‘as part of a scheme of equitable adjustment of mutual rights and obligations’….. The lien of a purchaser for the purchase money that he has paid to the vendor on a sale that has gone off through no fault of the purchaser may perhaps rest on the converse principle that he who has agreed to convey the property in return for a purchase price will not be allowed to keep the price if he fails to make the conveyance.”
[39] In Hewett v Court Deane J set out three requirements for the existence of an equitable lien as follows:[5]
“It is adequate for present purposes that I identity what I consider to be the circumstances which are sufficient for the implication, independently of agreement, of an equitable lien between parties in a contractual relationship. Those circumstances have been indicated in what has been said above. They are (i) that there be an actual or potential indebtedness on the part of the party who is the owner of the property to the other party arising from a payment or promise of payment either of consideration in relation to the acquisition of property or an expense incurred in relation to it (see Middleton v Mangay;[6] Whitbread & Co Ltd. v Watt;[7] Combe v Lord Swaythling[8]); (ii) that that property (or arguably property including that property: see Pollock, loc. cit) be specifically identified and appropriated to the performance of the contract (see per Lord Hanworth MR, In re Wait); and (iii) that the relationship between the actual or potential indebtedness and the identified and appropriated property be such that the owner would be acting unconscientiously or unfairly if he were to dispose of the property (or, if it be appropriate, more than a particular portion thereof) to a stranger without the consent of the other party or without the actual or potential liability being discharged.”
[40] On the basis of these authorities JNJ submits it has an entitlement to an equitable lien. The liquidator for ADIG however submits that there is no equitable lien and relies on several grounds. The first ground is that a purchaser’s lien does not arise in favour of JNJ because JNJ contributed to the failure of the sale to it. In particular it is submitted that reliance should be in placed on the words “through no fault of the purchaser” of Gibbs CJ in Hewett v Court[9] and accordingly the claim of an equitable lien is defeated due to fault on the part of JNJ.
[41] It is clear that even if a contract for the sale of real estate is invalid that fact is insufficient to defeat the right of a vendee in possession to a lien for the amount he has paid for the purchase price.[10]
[42] In addition there has not been any repudiatory behaviour by JNJ in relation to the purchase. There is no evidence on the facts of the current case that JNJ in fact contributed to the failure of the sale. It is clear that JNJ wished to proceed with the purchase and the decision of Mullins J makes it clear that there was a great deal of confusion about the status of the contracts between Sunnyville and ADIG and Millennium on 11 November 2005. There would appear to have been a specific discussion between the relevant parties on 11 November 2005 as to whether the contracts to sell to Sunnyville were in fact void because both ADIG and Millennium were both externally administered.
[43] The decision of Mullins J also sets out that both ADIG and Millennium in fact wanted to get out of their contract with Sunnyville. There is also an assertion discussed in the decision that Sunnyville by its solicitor caused JNJ to believe that Sunnyville would not pursue its contracts which had been signed by ADIG and Millennium and that Sunnyville created an environment that resulted in JNJ believing “it was an open market” and that JNJ was entitled to compete with Sunnyville in endeavouring to settle its purchases before Sunnyville settled. In the end Sunnyville prevailed in the action before Mullins J in relation to priorities. I am not satisfied that JNJ in fact contributed to the failure of the sale or could have been said to have repudiated the contract to purchase the property in any way. JNJ were bona fide purchasers, ready, willing and able to proceed with the purchase and indeed paid the money and received the executed transfers. The sale went off because a party with a stronger claim to the properties has successfully pursued that claim with the result that JNJ cannot register the transfers of the Lots to it. That is not the fault of JNJ.
[44] The liquidator for ADIG further submits that there is no equitable lien because the sale to JNJ was never specifically enforceable by JNJ and places reliance on the decisions in Stern v McArthur[11] and Bunny Industries Limited v FSW Enterprises Pty Ltd.[12] I am not satisfied that the absence of a right to specific performance will necessarily defeat the lien. Gibbs CJ in Hewett v Court stated:[13]
“Although the principles which apply to a purchaser’s lien are related to those which apply to a vendor’s lien, in my opinion a lien is available to a purchaser although the contract is not specifically enforceable. Indeed it may be because the contract cannot be specifically enforced (eg by reason of want of title) that the purchaser wishes to assert a lien for the purchase price which he has paid. It has been consistently held that a purchaser may have a lien although the contract is not specifically enforceable; see Middleton v Magnay;[14] Barker v Cox;[15] Levy v Stogdon.[16] Those decisions should in my opinion be followed. I therefore need not decide whether the contract in the present case was specifically enforceable, since a lien was in any case created.”
This was further endorsed by Deane J in Hewett v Court[17] who also specifically rejected the requirement that specific performance was a pre-requisite for an equitable lien.
[45] The liquidator further submits that there is no equitable lien as JNJ does not come to the court with clean hands because the equity it now claims arises directly from its conduct which was found by Mullins J to have been undertaken in reckless disregard of the rights of Sunnyville. I am not satisfied however that the comments made in that decision in relation to an action as between Sunnyville and JNJ in relation to competing priorities is sufficient to form the basis for a claim, as between JNJ and ADIG, that JNJ comes with an absence of clean hands.
[46] Furthermore ADIG was also clearly trying to avoid the contract with Sunnyville. The decision of Mullins J clearly sets out that the steps taken by JNJ to settle were done in co-operation with ADIG and Millennium in order to defeat the priority that Sunnyville enjoyed. In the end ADIG agreed to the sale with JNJ and took the funds. It is clear from the facts that JNJ paid the contract money of some $3 million in full to ADIG for Lot 1 and ADIG was able to apply the money coming to it and was much advantaged by the sale.
[47] Furthermore I can find no basis for the proposition by the liquidator for ADIG that JNJ’s acceptance of the risk that the interest of Sunnyville in the property could eventually prevail amounted to an implied agreement with ADIG to exclude the operation of the equitable doctrine that would otherwise give rise to an equitable lien.
[48] Ultimately, I am satisfied that this case comes within the principle stated by Gibbs CJ in Hewett v Court. I am also satisfied that all of the requirements for an equitable lien as set out by Deane J in that case have been satisfied. JNJ is entitled to a refund of the monies it paid to ADIG and Millennium because the consideration for those payments has failed. JNJ paid the monies in question specifically and only for the acquisition of the title to Lots 1 and 169. Lot 1 and 169 were specifically identified and appropriated to the performance of the obligations of ADIG and Millennium. Transfers to the titles of those Lots were delivered to JNJ in exchange for the monies. Only the postponement of JNJ’s equitable interest, as purchaser of those lots, to that of Sunnyville disentitles JNJ to the lands. Furthermore ADIG and Millennium would be acting unconscientiously or unfairly in seeking to retain purchase monies paid by Sunnyville without applying them to discharge their respective liabilities to JNJ.
Interest
[49] JNJ submits that if a declaration is made that there is an equitable lien then it follows that interest should be paid from the date the monies were paid to ADIG and Millennium, namely 11 November 2005 to the date of the settlement of the contracts between Sunnyville and ADIG and Millennium which is scheduled for 4 September 2006. ADIG submits that if JNJ does have an equitable lien such a lien must be limited to the purchase price and that a claim for interest is beyond the scope of the lien. In this regard, counsel places reliance on the dissenting decisions of Wilson and Dawson JJ in Hewitt v Court and the decision of White J in Rizoto Kaihatsu Gumi Limited v Capital and Coastal Limited.[18]
[50] This issue however was determined in Rose v Watson where the Lord Chancellor stated:[19]
“I think that your Lordships will have little difficulty in coming to the conclusion that those sums of money thus paid formed principal sums, in respect of which there became a lien from the time of its payment of them: in consequence of the subsequent failure to perform the contract, and becoming such lien, they bore fruit consequently-that is to say, they entitled the person who is possessed of that lien to claim interest in respect of them.”
[51] This was affirmed in the more recent decision of Elderly Citizens Homes of SA INC v Balnaves[20] where Debelle J, in a case involving six competing equitable claims, stated:[21]
“Moir Management was, therefore, a secured creditor in respect of the purchase moneys it had paid: see Cornwall v Henson;[22] Whitbread & Co Ltd v Watt;[23] Combe v Swaythling;[24] Hewett v Court.[25] The lien extends to the purchase money paid as well as to interest thereon and the costs properly incurred by the purchaser: see Rose v Watson.[26]”
[52] JNJ has claimed interest at 12 per cent on the basis of the affidavit of James Kwak who stated that on 11 November 2005 he arranged for the sum of AUS$4.5 million to be withdrawn from an ELS (Equity Linked Securities) Account which was held with the Korean Exchange Bank in South Korea and transferred into a Westpac Account at Nerang in Queensland. Mr Kwak stated that the ELS Account was an investment account managed by the Korean Exchange Bank for high return investments and that the interest rate applicable has been 12 per cent since 11 November 2005. I am not satisfied that this rate represents the appropriate interest amount and I note that it was conceded at the hearing that an appropriate rate in the circumstances may be 9 per cent. I also note that the draft consent orders reflect an amount of 9 per cent.
[53] I am therefore satisfied that the lien extends to interest at 9 per cent from 11 November 2005 to the date of payment.
The Liquidators Reasonable Costs
[54] The other issue in contention between the parties is the liquidators request for a declaration that the liquidator’s reasonable costs, charges and expense include the liability to pay $300,000 by way of goods and service tax in respect of the sale to Sunnyville. The major concern for the liquidator is that he may have a personal liability for the goods and services tax in respect of the sale pursuant to Division 147 of A New Tax System (Goods and Services Tax) Act 1999 (Cth) (“GST Act”).
[55] This issue was raised late in the proceedings by the liquidator and was not able to be fully explored at the hearing. The liquidator has put in supplementary submissions in relation to this issue and now states either he has the liability and the lien extends to it or alternatively that a fund should be created and preserved just in case he has the liability. Essentially the submission from the liquidator is that ADIG is registered for GST, GST is payable on taxable supplies and the sale to Sunnyville is a taxable supply because it will be a supply made for consideration in the furtherance of an enterprise, connected with Australia and by an entity (either ADIG or its liquidator). It is submitted that the taxable supply will be made at the time Sunnyville settles and that the amount of GST payable will be $300,000.
[56] The assertion by the liquidator is rejected by both JNJ and Sunnyville. Sunnyville states that there is nothing in Division 147 which clearly necessitates that a liquidator is automatically the person who makes the supply in relation to pre-appointment contracts which he merely carries into effect as agent of the company and that there is no clear warrant for the contention that the liquidator will be personally liable to pay GST for the company’s supply.
[57] The liquidator concedes that Division 147 of the GST Act does not in terms state that a liquidator personally makes any taxable supplies in carrying on a company’s enterprise during his or her appointment. The liquidator however points to the Explanatory Memorandum to the GST Act as an indication that the intention of Parliament was to make the liquidator personally liable for GST payable in respect of taxable supplies made during his or her appointment. The liquidator also accepts that this view has in fact been rejected by academic commentators who state that the better view is that the liquidator does not have a personal liability for GST payable on taxable supplies made during his or her appointment because the liquidator is properly treated as an agent of the company in liquidation.
[58] Whilst accepting that this view may prevail the liquidator is correct is claiming that it does remain vulnerable to a claim. JNJ has not contended that in the event that the liquidator will have a personal GST liability it will not fall within the scope of the liquidators lien for its reasonable costs charges and expenses. It is possible that there may be GST liability and it is difficult to argue with the liquidator’s submission that it would be contrary to the salvage principle to require the liquidator to accept that risk, without recourse to the sale proceeds to meet its remuneration, costs, charges and expense of doing so. There is clearly a dispute between the parties in relation to this issue as to whether GST is payable. It would also appear that the state of the law is unclear and the view of the Deputy Commissioner in relation to the liquidator’s liability is uncertain. The liquidator for ADIG submits that the issue may in fact be of some interest to the Deputy Commissioner of Taxation as it will involve a point of significance for all cases involving representatives of incapacitated entities.
[59] As well as disputing the issue of who it is who actually makes the taxable supply JNJ also submits that the claim does not deal with s 553 of the Corporations Act which makes the possible claim for GST by the Commissioner of Taxation a matter of proof in the winding up. JNJ submits that this section means that the circumstances giving rise to any future claim by the Commissioner occurred before the relevant date, that is, when the winding up order was made. The contract of sale was therefore before the relevant date and the liability to GST was from the date of the contract. Accordingly it submits that a pre-liquidation contract’s GST consequences remain a pre-liquidation matter.
[60] Clearly there are significant issues in dispute which should properly be the subject of an application for directions by the liquidator under s 479 of the Corporations Act on notice to both JNJ and the Commissioner. Alternatively declaratory relief can be sought by the liquidator.
[61] Settlement is scheduled for 4 September 2006 in relation to the contracts dated 26 October 2005. Even if either of the above applications is brought expeditiously they can not be determined prior to 4 September 2006. In the circumstances the liquidator proposes that an order be made preserving a fund which protects the respective claims of the liquidator and JNJ. In the circumstances I am satisfied that the most appropriate way to proceed, to ensure that settlement occurs on 4 September, is for an order to be made generally in the terms suggested by counsel for the liquidator at paragraph 5.4 of his Supplementary Submissions but subject to the proviso mentioned below.
[62] I am prepared to make declarations in accordance with these reasons. I am also prepared to give directions for the preservation of a fund in relation to the liquidator’s potential GST liability on the condition that he promptly institute and expeditiously pursue proceedings for the determination of that question. Otherwise I am prepared to make the orders agreed to by the parties. I propose to invite counsel to prepare a draft order accordingly.
Footnotes
[1] See JNJ Investments Australia Pty Ltd v Sunnyville Pty Ltd [2006] QSC 138
[2] [1864] 10 HLC 1187
[3] Rose v Watson [1864] 10 HLC 1187 at 1192
[4] (1983) 149 CLR 639 at 645
[5] Hewett v Court (1983) 149 CLR 639 at 668
[6] (1864) 2 H & M 237
[7] [1901] 1 Ch 911
[8] [1947] Ch 625
[9] (1983) 149 CLR 639 at 645
[10] Pomeroy’s Equity Jurisprudence (5th Edition) at 1263
[14] (1864) 2 H & M 233
[15] (1876) 4 Ch D 464
[16] [1898] 1 Ch 478
[18] [1998] Q Conv R 60 at 116
[19] [1864] 10 HLC 1187 at 1191-2
[20] (1998) 72 SASR 210
[21] (1998) 72 SASR 210 at 220
[22] [1899] 2 Ch 710 at 714
[23] [1901] 1 Ch 911 at 913-915
[24] [1947] Ch 625
[25] (1983) 149 CLR 639 at 645-54
[26] [1864] 10 HLC 1187