Sanirise Pty Ltd & Ors v Vouris, John [1995] FCA 1150

IN THE FEDERAL COURT OF AUSTRALIA ) NEW SOUTH WALES DISTRICT REGISTRY ) No. G 3185 of 1995 GENERAL DIVISION ) Between: SANIRISE PTY LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT) (ACN 003 773 322) CHRISTINE KELLY and FRANK NEJAD Applicants And: JOHN VOURIS Respondent REASONS FOR JUDGMENT EINFELD J SYDNEY 24 NOVEMBER 1995 Sanirise Pty Limited, which is subject to a deed of company arrangement, and its directors Christine Kelly and Fariborz Moshfeghi-Nejad (known as Frank Nejad), filed a motion on 21 November which was made returnable this morning by special order. The motion seeks certain orders concerning, first, the respondent's positions as former administrator of the company and present administrator under a deed of company arrangement and, second, goods and assets said to have originally been the property of the company. Because it was brought on urgently and having heard the argument outlined, I treated the motion as a motion for an injunction to stop a proposed auction sale by the respondent of a number of the goods and assets of the company on Monday next at 12 noon. In fact, towards the end of the argument, the applicants produced a second notice of motion which actually sought in express terms an injunction against the auction sale.

Disputation between these parties has been going on for a very considerable time and has developed a great degree of animus and emotionalism which may or may not be justified. Then on 30 June 1995, the parties entered into a settlement of part of their dispute. That agreement gave the respondent a conditional right to put up for auction sale without reserve all or most of the remaining plant and goods of the company. This is what is presently proposed for the auction on Monday. The purpose of the sale is to enable the respondent first to recover his fees and legal costs and then to apply any surplus to the benefit of creditors. The respondent's claim is that all or some of the conditions set forth in the agreement have been broken thus triggering the mechanism to permit the sale to go ahead. The assertions made by the respondent in this regard were strenuously denied by the applicants who claimed from the bar table that the respondent already has all the funds needed to pay himself and his lawyers and relevant creditors. The affidavit filed by Mr Nejad in purported support of his motion does not, in fact, support the motion at all. The only thing it does is to provide some evidence, not all of it in admissible form, suggesting that the respondent himself may be in breach of some of the terms of the agreement entered into on 30 June. It does not deny that the applicants are in breach. I have had no opportunity to examine the correctness of either side's argument in the matter, most of which is unsupported by evidence, but have considered the injunction on the basis of whether an arguable case has been made out for the relief and then if the balance of convenience would favour the making of the injunction. I must in this regard record that, at my request, and regardless of the result of the present motion, the respondent has offered and I have accepted an undertaking that until midnight on Wednesday 29 November, he will not dispose of or dissipate any assets from the auction sale if it is allowed to go ahead. In that event I am enabled to adjourn until next week any application which the applicants wish to make that the proceeds of the sale on Monday should be quarantined for a longer period in order to enable the dispute to be crystallised and litigation to be conducted in an appropriate way constituted by an appropriate proceeding. Without deciding the matter either way, I have come to the conclusion that even if an arguable case has been made out for an injunction against the sale, the balance of convenience does not favour its pronouncement because the real dispute between the parties is financial and can be measured in damages if desired. On the basis of that conclusion and the respondent's undertaking, I decline the application for an injunction to cancel or postpone the auction sale on Monday. I direct that the applicants file and serve by not later than 4 pm on Monday 27 November a motion or application to seek the quarantining or restrictive handling of the proceeds of Monday's auction sale in a way that preserves them until the Court can resolve the substantive dispute between these parties. With the filing of that application must also be filed an affidavit setting out the evidence upon which the applicants wish to rely in support of such an order. The respondent will file and serve any affidavits in reply by not later than 4 pm on Tuesday 28 November and I fix for 9.30 am on Wednesday 29 November the hearing of any such application if filed and supported by affidavit evidence. [After discussion] The respondent seeks the dismissal of the two motions before the Court today. Apart from the immediate return and the immediate hearing of the motion, the only matter in the motion filed on 21 November which I have actually considered today is, in effect, clause 3 which I have treated as an application for an injunction to stop the sale. This relief is specifically sought in paragraphs 1 and 2 of the motion which I gave leave to file in court this morning. Those separate applications, that is, the application in paragraph 3 of the motion filed on 21 November and applications 1 and 2 in the motion filed in court today will be dismissed. The other parts of the motion of 21 November will be stood over to 9.30am on Wednesday morning 29 November for mention and directions and costs will be reserved. The motion handed up today is now effectively disposed of. It will be dismissed. I will consider the question of costs of that motion in conjunction with the costs of the other motion.