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Forsyth v Big Gold Corporation Ltd[2017] QSC 277

Forsyth v Big Gold Corporation Ltd[2017] QSC 277

SUPREME COURT OF QUEENSLAND

CITATION:

Forsyth & Ors v Big Gold Corporation Ltd & Ors [2017] QSC 277

PARTIES:

ALEXANDER CAMERON FORSYTH

(first plaintiff)

DAMIAN JOHN WATERS

(second plaintiff)

DAMIAN JOHN WATERS AND JACQUELINE

MICHAELA WATERS AS TRUSTEES FOR THE

WATERS SUPER FUND ABN 65 686 260 160

(third plaintiff)

v

BIG GOLD CORPORATION LTD

(HONG KONG COMPANY NUMBER 1690683)

(first defendant)

HUMANITERRA HOLDINGS LTD

(HONG KONG COMPANY NUMBER 1770920)

(second defendant)

INPOWERED PTY LTD ACN 130 062 538

(third defendant)

EMPROVE HOLDINGS PTY LTD ACN 130 063 900

(fourth defendant)

AMBITIOUS VENTURES PTY LTD ACN 152 931 756

(fifth defendant)

DENNIS KIM

(sixth defendant)

ANN-MARIE LOVEL

(seventh defendant)

JAMES ANDREW LOVEL

(eighth defendant)

ANDREW DAVID GRGURIC

(ninth defendant)

PETER DELANEY

(tenth defendant)

FILE NO/S:

No 9817 of 2016

DIVISION:

Trial Division 

PROCEEDING:

Application 

DELIVERED ON:

23 November 2017

DELIVERED AT:

Brisbane

HEARING DATE:

16 November 2017

JUDGE:

Davis J

ORDER:

  1. The orders made on 12 October 2016 be varied as set out in paragraphs 2 and 3 below.
  2. In respect of the real property situated at 35/226 Varsity Parade, Varsity Lakes, in the State of Queensland (title reference 50696517) (the 35/226 Varsity Parade Property):
    1. (a)
      the Fourth Defendant be authorised to:
    1. (i)
      appoint, and within 14 days of this order shall appoint, real estate agents to sell by private treaty the 35/226 Varsity Parade Property at a price not less than $280,000 or such lesser price as agreed in writing by the Plaintiffs and the Fourth and Eighth Defendants; 
    2. (ii)
      appoint, if the Fourth Defendant has not entered into a binding contract for the sale of the 35/226 Varsity Parade Property within 60 days of the date of listing the property for sale, and forthwith shall appoint, real estate agents to sell the property by public auction, on a 30-day cash unconditional contract, with a reserve set at $260,000 (or as agreed by the Plaintiffs and the Fourth and Eighth Defendants in writing), with the auction to be held within 90 days of the date of listing the property for sale pursuant to paragraph (i) above;
    3. (iii)
      negotiate the amount of the sale commission and marketing costs in respect of the sale of the 35/226 Varsity Parade Property with the real estate agents appointed to conduct the sale or auction in accordance with paragraph (i) or (ii) above as the case may be, however the total commission and marketing costs payable to the real estate agents upon a sale shall not exceed a sum of $30,000 without the written consent of the Plaintiffs or further order of the Court;
    4. (iv)
      do all things reasonably necessary on its part in relation to negotiating, entering and completing a contract for the sale of the 35/226 Varsity Parade Property;
    1. (b)
      the Plaintiff shall, before the date of completion of a sale pursuant to paragraph (a)(i) or (a)(ii) above, remove Caveat Number 717538579 or any other caveat lodged by the Plaintiffs or a related party over the title to that property, and otherwise ensure that the Fourth Defendant can give good title at completion;
    1. (c)
      at completion of the sale of the 35/226 Varsity Parade Property, the proceeds from the sale shall be disbursed as follows:
    1. (i)
      in payment of real estate agents’ sales commissions and marketing costs on the sale in a sum not exceeding $30,000 plus GST;
    2. (ii)
      an amount not exceeding $2,000 plus GST in payment of reasonable conveyancing costs on the sale; and
    3. (iii)
      The balance of the proceeds be paid into the trust account of McCullough Robertson Lawyers, to be dealt with in accordance with these orders.
  3. In respect of the real property situated at 70/251 Varsity Parade, Varsity Lakes, in the State of Queensland (title reference 50529984) (the 70/251 Varsity Parade Property):
  1. (a)
    the Fourth Defendant be authorised to:
  1. (i)
    appoint, real estate agents to sell by private treaty the 70/251 Varsity Parade Property at a price not less than $385,000 or such lesser price as agreed in writing by the Plaintiffs and the Fourth and Eighth Defendants; 
  2. (ii)
    appoint, if the Fourth Defendant has not entered into a binding contract for the sale of the 70/251 Varsity Parade Property within 60 days of the date of listing the property for sale, and forthwith shall appoint, real estate agents to sell the property by public auction, on a 30-day cash unconditional contract, with a reserve set at $365,000 (or as agreed by the Plaintiffs and the Fourth and Eighth Defendants in writing), with the auction to be held within 90 days of the date of listing the property for sale pursuant to paragraph (i) above;
  3. (iii)
    negotiate the amount of the sale commission and marketing costs in respect of the sale of the 70/251 Varsity Parade Property with the real estate agents appointed to conduct the sale or auction in accordance with paragraph (i) or (ii) above as the case may be, however the total commission and marketing costs payable to the real estate agents upon a sale shall not exceed a sum of $30,000 without the written consent of the Plaintiffs or further order of the Court;
  1. (iv)
    do all things reasonably necessary on its part in relation to negotiating, entering and completing a contract for the sale of the 70/251 Varsity Parade Property;
  1. (b)
    the Plaintiff shall, before the date of completion of a sale pursuant to paragraph (a)(i) or (a)(ii) above, remove Caveat Number 717538584 or any other caveat lodged by the Plaintiffs or a related party over the title to that property, and otherwise ensure that the Fourth Defendant can give good title at completion;
  2. (c)
    at completion of the sale of the 70/251 Varsity Parade Property, the proceeds from the sale shall be disbursed as follows:
    1. in discharge of Mortgage Number 715228389
    2. in payment of real estate agents’ sales commissions and marketing costs on the sale in a sum not exceeding $30,000 plus GST;
    3. an amount not exceeding $2,000 plus GST in payment of reasonable conveyancing costs on the sale; and
    4. The balance of the proceeds be paid into the trust account of McCullough Robertson Lawyers, to be dealt with in accordance with these orders.
  1. The sum of $31,347.89 presently held in the trust account of McCullough Robertson, consequent upon the sale of properties authorised by the orders of the Chief Justice made on 2 August 2017, be dealt with as follows:
    1. the sum of $17,961.30 be paid to McCullough Robertson in payment of fees and disbursements in representing behalf of the Third, Fourth, Fifth and Eighth Defendants to date; and
    2. the balance of $13,386.59 be paid to McCullough Robertson in part payment of the fees and disbursements incurred in representing the Third, Fourth, Fifth and Eighth Defendants at the mediation of the claim, once incurred.
  2. The proceeds off the sale of the 35/226 Varsity Parade Property and the 70/251 Varsity Parade Property be dealt with as follows:
    1. the sum of $19,613.41 be paid to McCullough Robertson in final payment of the fees and disbursements incurred in representing the Third, Fourth, Fifth and Eighth Defendants at the mediation of the claims once incurred;
    2. the sum of $150,000 be paid to McCullough Robertson in payment of fees and disbursements incurred in representing the Third, Fourth, Fifth and Eighth Defendants from the conclusion of the mediation (if unsuccessful) to the end of the first day of trial; and
    3. the balance be held pending further order.
  3. Each party’s costs of the application be their costs in the cause.
  4. The Plaintiffs and the Third, Fourth, Fifth and Eighth Defendants have liberty to apply.

CATCHWORDS:

EQUITY – EQUITABLE REMEDIES – INJUNCTIONS – INTERLOCUTORY INJUNCTIONS – INJUNCTIONS TO PRESERVE STATUS QUO OR PROPERTY PENDING DETERMINATION OF RIGHTS – MAREVA INJUNCTION – RELEVANT CONSIDERATIONS – application to vary freezing orders – where the plaintiffs make a proprietary claim to property held by the defendants – where the defendants seek release of property to fund defence of claim – where that release requires the sale of property held by the defendants – where a Mareva-type freezing order is presently in place – whether the order should be varied to allow for sale of the property

PROCEDURE – CIVIL PROCEDURE IN STATE AND TERRITORY COURTS – DETENTION, INSPECTION AND PRESERVATION – FREEZING ORDERS – application to vary freezing orders – where the plaintiffs make a proprietary claim to property held by the defendants – where the defendants seek release of property to fund defence of claim – where that release requires the sale of property held by the defendants – where a Mareva-type freezing order is presently in place – whether the order should be varied to allow for sale of the property

Uniform Civil Procedure Rules 1999, r 260A

A v C [1981] QB 956, cited

Agip (Africa) Ltd v Jackson [1990] Ch 265, cited

Australian Receivables Ltd v Tekitu Pty Ltd [2008] NSWSC 433, cited

Badman v Drake [2008] NSWSC 968, cited

Black v S Freedman & Co (1910) 12 CLR 105, cited

Forsyth & Ors v Big Gold Corporation Ltd & Ors

(Unreported, Supreme Court of Queensland, Holmes CJ, 12 October 2016)

Harrison Partners Constructions Pty Ltd v Jevena Pty Ltd [2006] NSWSC 317, cited

Mareva Compania Naviera SA v International Bulkcarriers SA [1980] 1 All ER 213; [1975] 2 Lloyd’s Rep 509, cited

McCleary v Bullabidgee Pty Ltd [2008] NSWSC 534, cited

Nippon Yusen Kaisha v Karageorgis [1975] 3 All ER 282, cited

Reliance Financial Services v Lemery Holdings Pty Ltd [2006] NSWSC 1079, cited

Sze Tu v Lowe [2014] NSWCA 462; (2014) 89 NSWLR 317, cited

Virgtel v Zabusky [2008] QSC 316, cited

COUNSEL:

J W Peden for the plaintiffs

M Trim for the third, fourth, fifth and eighth defendants

SOLICITORS:

Colin Biggers & Paisley Pty Ltd for the plaintiffs

McCullough Robertson Lawyers for the third, fourth, fifth and eighth defendants

  1. [1]
    This is an application by the third, fourth, fifth and eighth defendants (referred to generally as “the defendants”) to vary orders made by the Chief Justice on 12 October 2016 (the original orders) restraining them from dealing with certain real property.
  2. [2]
    The original orders, relevantly here, were as follows:

“1. The Third, Fourth, Fifth and Eighth Defendants must not, subject to further order of this Court:

(a)  In any way deal with, encumber, charge or diminish the value of the following real properties: 

  1. (i)
    the property known as Lot 8 on SP 151075, located at 251 Varsity Parade, Varsity Lakes, Queensland;
  2. (ii)
    the property known as Lot 10 on SP 151075, located at 251 Varsity Parade, Varsity Lakes, Queensland; 
  3. (iii)
    the property known as Lot 70 on SP 151076, located at 251 Varsity Parade, Varsity Lakes, Queensland;
  4. (iv)
    the property known as Lot 77 on SP 151076, located at 251 Varsity Parade, Varsity Lakes, Queensland;
  5. (v)
    the property known as Lot 35 on SP 180454, located at 226 Varsity Parade, Varsity Lakes, Queensland;
  6. (vi)
    the property known as Lot 41 on SP 180454, located at 226 Varsity Parade, Varsity Lakes, Queensland;
  7. (vii)
    the property known as Lot 2801 on SP 194235, located at 56 Scarborough Street, Southport;”
  1. [3]
    The property described as “56 Scarborough Street, Southport” is described in some of the material as “Suite 2801/5 Lawson Street, Southport”.  The parties agree that the two addresses in fact relate to the same property. 
  2. [4]
    The original orders also restrained the third, fourth, fifth and eighth defendants from dealing with securities and cash.  However, the sum of $160,190 could be released to pay certain expenses on the properties, meet some of the eighth defendant’s legal expenses in relation to the action and pay other sums, including an amount of up to $9000 to meet the eighth defendant’s living expenses.
  3. [5]
    The original orders were then varied by further orders of the Chief Justice made on 2 August 2017 (the August 2017 orders).  By the August 2017 orders, the defendants were permitted to sell one of the properties the subject of restraint[1] and apply the net proceeds in various specified ways, including paying the defendants’ legal expenses.  Provision was also made for payment of an allowance for the eighth defendant’s living expenses.
  4. [6]
    The sum of $31,347.89 remains in the defendants’ solicitors trust account as a consequence of the sale of the property released under the terms of the August 2017 orders.[2]
  5. [7]
    The present application seeks release of two further properties from the original orders.[3]
  6. [8]
    The net proceeds of sale of the two properties is likely to be about $470,000.[4]  The defendants seek to have that money applied to their legal expenses of defending the plaintiffs’ claim.  
  1. [9]
    A barrister expert in matters of costs, Mr Graham Robinson (Mr Robinson), prepared a report estimating the costs of the defendants in defending the proceeding up to and including the first day of trial at $492,385 excluding GST on a solicitor and client basis.  
  2. [10]
    The present application seeks authority for the proceeds of sale of the two properties to be applied to the costs of defending the action.
  3. [11]
    The plaintiff resists the application on three bases:
    1. (i)
      That any discretion ought to be exercised against making the order;
    2. (ii)
      If the properties are sold and money released then the amount released should not be as much as claimed by the defendants;
    3. (iii)
      Any release of funds ought to be staged.

The legal principles

  1. [12]
    In the landmark decision of Mareva Compania Naviera SA v International Bulkcarriers SA,[5] the Court of Appeal of England and Wales recognised a jurisdiction to grant an injunction to prevent a defendant from removing assets from the jurisdiction.  Of course, Mareva injunctions are now commonplace.  However, equity has long recognised the jurisdiction to grant an injunction to preserve a specific fund or property which is the subject matter of the proceedings.[6]  In those cases, there is a proprietary claim by the plaintiff to the property restrained.  The distinction between those two remedies is of some significance here.
  2. [13]
    The authorities show that when a court considers release of property held by a defendant to fund the defendant’s defence of a plaintiff’s claim, the discretion is exercised having regard to different considerations depending on whether the plaintiff’s claim to the assets restrained is proprietary in nature, or whether the assets are merely being preserved for the purposes of execution of a judgment sought to be obtained.  Perhaps it is obvious that there would be different considerations, because in the case of a Mareva injunction the defendant is seeking to have his own property released, but in the case of property the subject of a proprietary claim, the defendant is seeking to have released property, which is arguably the property of the plaintiff, and to have that property applied to the defendant’s legal costs.
  3. [14]
    However, Mr Peden, who appeared for the plaintiffs, conceded that even where the property restrained is the subject of a proprietary claim in the proceedings, there is still a discretion to release the property from restraint for the purposes of payment towards the defendant’s legal costs.  That concession is, in my view, properly made.[7] 
  4. [15]
    Where the plaintiff seeks to restrain assets generally in aid of future execution the starting point is a presumption that assets will be released for the purposes of funding the defendant’s defence.[8]  However, where the injunction seeks to preserve a plaintiff’s claim to proprietary interests in the property restrained, there is no such presumption and the discretion is less likely to be exercised against the plaintiff.[9]

The plaintiffs’ case

  1. [16]
    The plaintiffs’ case is that the seventh defendant is a fraudster.  It is alleged that she, assisted by the sixth and ninth defendants, promoted a scheme with a view to having persons invest large sums of money in the first defendant.  Of course significant returns were promised.
  2. [17]
    Each of the plaintiffs, induced they say by various representations, paid large sums of money to the first defendant.  Contrary to what was represented, the money was distributed to various entities related to the seventh defendant.
  3. [18]
    Relevantly to the present application, $1,800,000 passed through companies controlled by the seventh defendant and through to the third, fourth and fifth defendants.
  4. [19]
    The eight defendant is a solicitor.  He is a director of the third, fourth and fifth defendants.
  5. [20]
    In an affidavit before me,[10] the eighth defendant admits receipt of $1,800,000,[11] which the plaintiffs say is from money paid by the plaintiffs.[12] The eighth defendant explains in his affidavit that the money ($1,800,000) was then used, relevantly here, to purchase the properties now restrained.[13] The properties are all held by the fourth defendant.
  6. [21]
    The plaintiffs claim beneficial ownership of the real property in two ways.  Firstly, they say they establish the claim without the necessity to prove knowledge by Mr Lovel that the funds were fraudulently acquired,[14] if they can trace the funds to the restrained assets.  It is well established that where the holder takes traceable property as a volunteer, knowledge of the fraud needn’t be proved in the holder to establish that the holder holds the property on trust.[15] In the alternative (if the property cannot be traced) the plaintiffs allege that Mr Lovel, and therefore the fourth defendant, knew that the funds had been improperly obtained and therefore the fourth defendant holds the properties on trust for the plaintiffs.[16] It is necessary for the plaintiffs to put the case in the alternative as they have because the funds may have become intermingled with other funds somewhere between the payment by the plaintiffs to the first defendant and the ultimate receipt of the funds by Mr Lovel’s companies.  If that is the case then there may be difficulties with that part of the case which is dependent upon proof of tracing.

What is the appropriate approach here?

  1. [22]
    Mr Trim, who appeared for the defendants, submitted that because of the bases upon which the original orders were obtained the appropriate approach is for me to regard the claim as a non-proprietary claim.  Therefore, he submitted that in the exercise of discretion the starting point should be a presumption that money should be released to the defendants to fund the defendants’ defence.
  2. [23]
    Mr Trim submits that the Chief Justice, when making the original orders, exercised the jurisdiction identified in Mareva and did not purport to grant an injunction in support of a proprietary claim.
  3. [24]
    The Uniform Civil Procedure Rules 1999 (the UCPR) by Part 2 Division 2, provide for the making of “freezing orders”.  The term “freezing order” has the meaning given by r 260A.  Rule 260A provides as follows:

260A Freezing order 

  1. (1)
    The court may make an order (a freezing order) for the purpose of preventing the frustration or inhibition of the court's process by seeking to meet a danger that a judgment or prospective judgment of the court will be wholly or partly unsatisfied.  
  2. (2)
    A freezing order may be an order restraining a respondent from removing any assets located in or outside Australia or from disposing of, dealing with, or diminishing the value of, those assets.”
  1. [25]
    A “freezing order” as defined under the UCPR is of the nature of a Mareva injunction.
  2. [26]
    The application for the freezing orders was made under r 260A of the UCPR.[17]
  1. [27]
    However: 
    1. (i)
      the statement of claim has always alleged that the plaintiffs have a proprietary interest in the real property;
    2. (ii)
      the original orders specifically restrain the real property;
    3. (iii)
      the plaintiffs still maintain their claim to a proprietary interest in the real property.
  2. [28]
    The Chief Justice clearly had power to make the orders in reliance upon r 260A.  Given the nature of the claim her Honour also had jurisdiction to make the orders preserving the assets in exercise of the general equitable jurisdiction to preserve the fund the subject of the litigation.
  3. [29]
    In my view, the question is not so much an identification of the jurisdiction exercised by the Chief Justice but rather what is critical, is the right being enforced by the plaintiffs. 

If the plaintiffs are seeking to maintain a proprietary interest in the property restrained, then it is obviously a serious discretionary consideration that the defendants are seeking to have released to them and disbursed for their benefit property which could ultimately be found to be owned by the plaintiffs.  

  1. [30]
    The plaintiffs’ claim is clearly a proprietary one.  That is so even if the plaintiffs are unable to prove their tracing case.  The case based on proof of the eighth defendant’s knowledge of his mother’s (the seventh defendant) wrongdoing is still a proprietary claim.  I intend to approach the exercise of discretion on that basis.

Mr Robinson’s evidence

  1. [31]
    Mr Robinson swore an affidavit and exhibited his report.  The functions of Mr Robinson were described by him in his report as:

“I have been briefed… to provide a report to this Honourable Court on the costs likely to be incurred from the date of this report [9 November 2017] in preparing for trial up to and including the first day of the trial.”[18]

  1. [32]
    Mr Robinson analysed the various steps to be undertaken in the litigation and then summarised his conclusions as follows.  

Description

Disbursements

$

Professional Fees

$

1.  Disclosure

  • Inter partes
  • Non-party

 

 

16,930.00

18,225.00

2.  Conferences with lay witnesses

 

48,800.00

3.  Preparation of lay witnesses’ statements

 

30,930.00

4.  Pre-trial conference with lay witnesses

71,550.00

23,220.00

5. Pre-trial conference with forensic accountant 

21,200.00

7,740.00

6.  Forensic accountant’s fees

56,700.00

 

7.  Mediation

Counsel and solicitor

Mediator

 

18,000.00

9,000.00

 

6,000.00

8.  Interlocutory hearings and applications

21,675.00

23,865.00

9.  Advice on evidence

17,500.00

 

10.  Preparation for trial

57,250.00

 

11.  Other matters

450.00

25,800.00

12.  First day of trial

13,250.00

4,300.00

Sub Total  

286,575.00

205,810.00

TOTAL

 

$492,385.00

  1. [33]
    Mr Robinson was cross-examined before me.  Mr Robinson’s expertise was properly conceded by Mr Peden, who appeared for the plaintiffs, and I naturally accepted Mr Robinson as an honest witness.  Mr Peden took Mr Robinson to various items of expense within his report and suggested that some allowances were excessive.  In his report, Mr Robinson expressed opinions as to costs yet to be incurred.  In that exercise, Mr Robinson was necessarily required to make estimates as to the professional time to be taken in completing various tasks.  Of course, Mr Robinson’s estimates may ultimately be proven to be incorrect; some might be excessive, and others might be found to be conservative.  However, I am prepared to accept that, based on the underlying assumptions in the report, a figure in the vicinity of $492,385 is a reasonable estimate of the costs of the defendants in preparing for trial and conducting the first day of the trial.  
  1. [34]
    The eighth defendant was also cross-examined.  Mr Peden established that the eighth defendant, himself a legal practitioner, did have some litigation experience.  Mr Peden did not, in my view, establish that the eighth defendant could conduct the defence of himself and the third, fourth and fifth defendants and do justice to the case.  

Exercising the discretion

  1. [35]
    The two properties sought to be released from the original orders should be sold.  The plaintiffs do not resist their sale. 
  2. [36]
    As I have already said, the discretion should be approached on the basis that the plaintiffs’ claim is a proprietary one.  I therefore do not start from the assumption that funds should be realised and released to fund the legal expenses of defending the claim.  I have taken all the circumstances into account and below I mention what seem to me to be the more important factors.
  3. [37]
    In relation to the claim that the eighth defendant had knowledge of his mother’s (the seventh defendant) wrongdoing, very serious allegations are made against the eighth defendant.  These allegations, if proved, would have an obvious adverse impact upon the eighth defendant’s reputation and may also have professional consequences.
  4. [38]
    It is difficult to assess at this stage the strength of the plaintiffs’ case against the defendants, as the tracing claim is subject to at least some suggestion that the funds may have been commingled at some point, and the alternate claim depends upon proof of the eighth defendant’s knowledge of the seventh defendant’s wrongdoing.  However, it seems uncontentious that the plaintiffs invested large sums of money with the first defendant and, at least on the material before me, there is a good case that the funds were misappropriated.
  5. [39]
    The properties if sold would, on current estimates, net a little over $1,000,000.[19]   Mr Robinson’s best estimate of costs is an amount which is almost one-half of the net value of assets which might, in the end, be found to be the property of the plaintiffs.  
  1. [40]
    I do not accept that the eighth defendant cannot assist with the preparation for trial of the third, fourth, fifth and eighth defendants.  Some of the work will require expertise which the eighth defendant does not possess.  However, a good deal of the work should be able to be done by him with advice from his solicitor.
  2. [41]
    Mr Robinson’s calculations are performed on an assumption that two counsel will be briefed.  This may have to be rethought.  If there is difficulty in funding the defence, it may be that a senior junior appearing alone is appropriate.
  3. [42]
    It also seems to me that the eighth defendant should be expected to contribute something to the defence especially in circumstances where his practice is being conducted rent free from one of the properties over which the plaintiffs have alleged a proprietary claim.[20]  The plaintiffs may well legitimately complain that they are not only being asked to allow their own property (as they claim) to be realised to fund the defence of their claim, but they are also subsidising the eighth defendant’s legal practice.
  4. [43]
    I consider that some money ought be released to the third, fourth, fifth and eighth defendants to help meet future costs of defending the action.  That should be staged in that there should be a sum released to fund the mediation and some for costs up to and including the first day of trial.  In settling the figure to be released for costs to trial (and the first day), I have not attempted to calculate what sum is needed by the defendants to fund the defence.  Rather, I have struck a figure which is in my view reasonable, taking into account all the circumstances and competing interests.  It is up to the defendants to determine how they will defend the claim and how the defence is to be funded.
  5. [44]
    The estimate for the mediation is $33,000.  There is $31,347.89 held in trust.  However, the costs of the third, fourth, fifth and eighth defendants of the current application are$17,961.30.[21]  There should be an order that the $17,961.30 be paid to the solicitors, leaving $13,386.59.  The further sum of $19,613.41 should be released to fund the mediation costs of the third, fourth, fifth and eighth defendants.
  1. [45]
    Taking into account all of the circumstances, it seems to me to be a reasonable balancing of the interests of the parties to order the further release of $150,000 towards the expenses of the third, fourth, fifth and eighth defendants to be incurred in the period from the end of the mediation (if unsuccessful) until, and including, the first day of trial.  
  2. [46]
    The order of the Court is as follows:

(1)  The orders made on 12 October 2016 be varied as set out in paragraphs 2 and 3 below.

(2) In respect of the real property situated at 35/226 Varsity Parade, Varsity Lakes, in the State of Queensland (title reference 50696517) (the 35/226 Varsity Parade Property):

(a)  the Fourth Defendant be authorised to:

  1. (i)
    appoint, and within 14 days of this order shall appoint, real estate agents to sell by private treaty the 35/226 Varsity Parade Property at a price not less than $280,000 or such lesser price as agreed in writing by the Plaintiffs and the Fourth and Eighth Defendants; 
  2. (ii)
    appoint, if the Fourth Defendant has not entered into a binding contract for the sale of the 35/226 Varsity Parade Property within 60 days of the date of listing the property for sale, and forthwith shall appoint, real estate agents to sell the property by public auction, on a 30-day cash unconditional contract, with a reserve set at $260,000 (or as agreed by the Plaintiffs and the Fourth and Eighth Defendants in writing), with the auction to be held within 90 days of the date of listing the property for sale pursuant to paragraph (i) above;
  3. (iii)
    negotiate the amount of the sale commission and marketing costs in respect of the sale of the 35/226 Varsity Parade Property with the real estate agents appointed to conduct the sale or auction in accordance with paragraph (i) or (ii) above as the case may be, however the total commission and marketing costs payable to the real estate agents upon a sale shall not exceed a sum of $30,000 without the written consent of the Plaintiffs or further order of the Court;
  1. (iv)
    do all things reasonably necessary on its part in relation to negotiating, entering and completing a contract for the sale of the 35/226 Varsity Parade Property;
  1. (b)
    the Plaintiff shall, before the date of completion of a sale pursuant to paragraph (a)(i) or (a)(ii) above, remove Caveat Number 717538579 or any other caveat lodged by the Plaintiffs or a related party over the title to that property, and otherwise ensure that the Fourth Defendant can give good title at completion;
  2. (c)
    at completion of the sale of the 35/226 Varsity Parade Property, the proceeds from the sale shall be disbursed as follows:
    1. in payment of real estate agents’ sales commissions and marketing costs on the sale in a sum not exceeding $30,000 plus GST;
    2. an amount not exceeding $2,000 plus GST in payment of reasonable conveyancing costs on the sale; and
    3. The balance of the proceeds be paid into the trust account of McCullough Robertson Lawyers, to be dealt with in accordance with these orders.

(3) In respect of the real property situated at 70/251 Varsity Parade, Varsity Lakes, in the State of Queensland (title reference 50529984) (the 70/251 Varsity Parade Property):

(a)  the Fourth Defendant be authorised to:

  1. (i)
    appoint, real estate agents to sell by private treaty the 70/251 Varsity Parade Property at a price not less than $385,000 or such lesser price as agreed in writing by the Plaintiffs and the Fourth and Eighth Defendants; 
  2. (ii)
    appoint, if the Fourth Defendant has not entered into a binding contract for the sale of the 70/251 Varsity Parade Property within 60 days of the date of listing the property for sale, and forthwith shall appoint, real estate agents to sell the property by public auction, on a 30-day cash unconditional contract, with a reserve set at $365,000 (or as agreed by the Plaintiffs and the Fourth and Eighth Defendants in writing), with the auction to be held within 90 days of the date of listing the property for sale pursuant to paragraph (i) above;
  1. (iii)
    negotiate the amount of the sale commission and marketing costs in respect of the sale of the 70/251Varsity Parade Property with the real estate agents appointed to conduct the sale or auction in accordance with paragraph (i) or (ii) above as the case may be, however the total commission and marketing costs payable to the real estate agents upon a sale shall not exceed a sum of $30,000 without the written consent of the Plaintiffs or further order of the Court;
  2. (iv)
    do all things reasonably necessary on its part in relation to negotiating, entering and completing a contract for the sale of the 70/251 Varsity Parade Property;
  1. (b)
    the Plaintiff shall, before the date of completion of a sale pursuant to paragraph (a)(i) or (a)(ii) above, remove Caveat Number 717538584 or any other caveat lodged by the Plaintiffs or a related party over the title to that property, and otherwise ensure that the Fourth Defendant can give good title at completion;
  2. (c)
    at completion of the sale of the 70/251 Varsity Parade Property, the proceeds from the sale shall be disbursed as follows:
    1. in discharge of Mortgage Number 715228389
    2. in payment of real estate agents’ sales commissions and marketing costs on the sale in a sum not exceeding $30,000 plus GST;
    3. an amount not exceeding $2,000 plus GST in payment of reasonable conveyancing costs on the sale; and
    4. The balance of the proceeds be paid into the trust account of McCullough Robertson Lawyers, to be dealt with in accordance with these orders.

(4) The sum of $31,347.89 presently held in the trust account of McCullough Robertson, consequent upon the sale of properties authorised by the orders of the Chief Justice made on 2 August 2017, be dealt with as follows:

  1. (i)
    the sum of $17,961.30 be paid to McCullough Robertson in payment of fees and disbursements incurred in representing the Third, Fourth, Fifth and Eighth Defendants to date; and
  2. (ii)
    the balance of $13,386.59 be paid to McCullough Robertson in part payment of the fees and disbursements incurred in representing the Third, Fourth, Fifth and Eighth Defendants at the mediation of the claim, once incurred.

(5) The proceeds off the sale of the 35/226 Varsity Parade Property and the 70/251 Varsity Parade Property be dealt with as follows:

  1. (i)
    the sum of $19,613.41 be paid to McCullough Robertson in final payment of the fees and disbursements incurred in representing the Third, Fourth, Fifth and Eighth Defendants at the mediation of the claims once incurred;
  2. (ii)
    the sum of $150,000 be paid to McCullough Robertson in payment of fees and disbursements incurred in representing the Third, Fourth, Fifth and Eighth Defendants from the conclusion of the mediation (if unsuccessful) to the end of the first day of trial; and
  3. (iii)
    the balance be held pending further order.

(6) Each party’s costs of the application be their costs in the cause.

(7) The Plaintiffs and the Third, Fourth, Fifth and Eighth Defendants have liberty to apply.

Footnotes

[1] The residential unit being 10/251 Varsity Parade, Varsity Lakes.

[2] Affidavit of James Andrew Lovel, filed 9 November 2017, CFI 90 at [13].

[3] 35/226 Varsity Parade and 70/251 Varsity Parade.

[4] Affidavit of James Andrew Lovel, filed 9 November 2017, CFI 90 at [28].

[5] [1980] 1 All ER 213; [1975] 2 Lloyd’s Rep 509, actually decided shortly after Nippon Yusen Kaisha v Karageorgis [1975] 3 All ER 282, where the jurisdiction was acknowledged.

[6] As to the distinction between the remedies, see A v C [1981] QB 956 and Reliance Financial Services v Lemery Holdings Pty Ltd [2006] NSWSC 1079.

[7] McCleary v Bullabidgee Pty Ltd [2008] NSWSC 534 at [5] and Badman v Drake [2008] NSWSC 968 at [6].

[8] Harrison Partners Constructions Pty Ltd v Jevena Pty Ltd [2006] NSWSC 317 at [11]–[14], followed in Virgtel v Zabusky [2008] QSC 316 (at [35]).

[9] Australian Receivables Ltd v Tekitu Pty Ltd [2008] NSWSC 433 at [29].

[10] Affidavit of James Andrew Lovel, filed 11 October 2016, CFI 12.

[11] At [33] and [37].

[12] Amended Statement of Claim, CFI 64, at [34], [35], [36], [39], [40] and [42].

[13] Affidavit of James Andrew Lovel, filed 11 October 2016, CFI 12 at [69].

[14] Amended Statement of Claim, CFI 64, at [85] and [88].  

[15] Black v S Freedman & Co (1910) 12 CLR 105 at 110, Agip (Africa) Ltd v Jackson [1990] Ch 265; and recently Sze Tu v Lowe [2014] NSWCA 462; (2014) 89 NSWLR 317.

[16] Amended Statement of Claim, CFI 64, at [89D]-[89I].

[17] Forsyth & Ors v Big Gold Corporation Ltd & Ors (Unreported, Supreme Court of Queensland, Holmes CJ, 12 October 2016).

[18] Exhibit GJR-1 to the Affidavit of Graham John Robinson, filed 9 November 2017, CFI 89 at [1].

[19] Affidavit of James Andrew Lovel, filed 9 November 2017, CFI 90 at [28].  

[20] Lawson Street, Southport. No rent is shown in the profit and loss statement of Byrne and Lovel Pty Ltd: Affidavit of James Andrew Lovel, filed 9 November 2017, CFI 90 exh JAL-13.

[21] Affidavit of James Andrew Lovel, filed 9 November 2017, CFI 90 at [13] and [14].

Close

Editorial Notes

  • Published Case Name:

    Forsyth & Ors v Big Gold Corporation Ltd & Ors

  • Shortened Case Name:

    Forsyth v Big Gold Corporation Ltd

  • MNC:

    [2017] QSC 277

  • Court:

    QSC

  • Judge(s):

    Davis J

  • Date:

    23 Nov 2017

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

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