Kollias v Monzo Pty Limited (In Liquidation) (No.2) [2004] NSWADT 282

CITATION: Kollias v Monzo Pty Limited (In Liquidation) (No.2) [2004] NSWADT 282 DIVISION: Retail Leases Division APPLICANT PARTIES: Golfinos Kollias RESPONDENT Monzo Pty Limited (in Liquidation) FILE NUMBER: 025131, 035009 HEARING DATES: 21/09/2004 SUBMISSIONS CLOSED: 09/21/2004 DATE OF DECISION: 12/03/2004

BEFORE: Montgomery S - Judicial Member APPLICATION: Contempt MATTER FOR DECISION: Principal matter LEGISLATION CITED : Administrative Decisions Tribunal Act 1997 Corporations Act 2001 (Cth) CASES CITED: APPLICANT REPRESENTATION: T Hall, Barrister RESPONDENT D Bowles, Solicitor ORDERS: The application for referral to the Supreme Court pursuant to Section 131 of the Administrative Decisions Tribunal Act 1997 is refused.

REASONS FOR DECISION 1 Mr Golfinos Kollias was the Applicant in proceedings 025131 and the Respondent in proceedings 035009 in the Retail Leases Division of the Tribunal. Monzo Pty Limited ("Monzo") was the Respondent and Applicant respectively to those proceedings. On 14 May 2004 I made orders in the proceedings in favour of Mr Kollias. The orders were in the following terms: 025131 Proceedings: 1. Judgement for the Applicant in these proceedings. 2. Respondent to pay the Applicant the sum of $262,985.50 on or before close of business on 14 May 2004. 3. Respondent is to pay the Applicant interest on the sum referred to at 2, above, from the 12 November 2001 to the date of payment at such rate as is payable on a judgement debt of the District Court in the State of New South Wales. 035009 Proceedings: 4. Application in proceedings no. 035009 is dismissed. Costs: 5. Costs of Mr Kollias to be paid by Monzo Pty Limited in both proceedings on an indemnity basis. 6. With respect to order 5, above, Monzo Pty Limited is given leave to file in the Registry of the Tribunal and serve within 7 days, any application in which it seeks to be heard as to varying the terms of order 5, above. Asset Preservation Orders: - 7. That the company Monzo Pty Limited be restrained until further order from in any way dealing with the proceeds of sale of the property having street address 269 Bay Street, Brighton Le Sands and having folio identifier B/171312, ("the property"). 8. That on or before 21 May 2004, Monzo Pty Limited give an account as to the whereabouts of the proceeds of sale of the property, by filing a notice setting out full particulars of same with the Registry of the Administrative Decisions Tribunal, level 15, 111 Elizabeth Street, Sydney, in the State of New South Wales. 9. In the event that Monzo Pty Limited has dissipated or distributed the proceeds of sale of the property on or before the date and time of service of these orders, that on or before 21 May 2004, Monzo Pty Limited give an account as to the whereabouts of the proceeds of sale of the property, by filing a notice setting out particulars of same with the Registry of the Administrative Decisions Tribunal, level 15, 111 Elizabeth Street, Sydney, in the State of New South Wales. Service:- 10. Mr Kollias is ordered to effect service of these orders by placing a copy of them in a post box in the Sydney Central Business District area for postage by ordinary pre-paid post addressed to premises "1/40 Solander Street, Monterey" in the State of New South Wales, by 2.30 pm, today. 11. In the event of compliance with order 10, above, service of these orders is deemed effective by 4pm on Monday 17 May 2004." 2 Copies of the orders were served on Monzo in accordance with orders 10 and 11. 3 Mr Kollias has alleged that Monzo did not comply with the orders 2, 3, 4,7,8 and 9 of the 14 May 2004 orders. Mr Kollias has further alleged that Monzo has committed a contempt of the Tribunal and he has requested that the Tribunal report the matter to the Supreme Court of New South Wales pursuant to section 131 of the Administrative Decisions Tribunal Act 1997 ("the ADT Act"). 4 On 5 August 2004 Mr Michael Jones of Jones Condon ("the Liquidator") was appointed as official liquidator of Monzo. The Liquidator did not oppose the Tribunal dealing with Mr Kollias' request. 5 On 24 August 2004 a Notice to Show Cause was issued to Monzo giving notice of a hearing to be held before the Tribunal on Tuesday, 21 September 2004 as to why the Tribunal should not exercise its powers to refer the matter to the Supreme Court. Monzo was invited to file any affidavit or other material upon which it proposed to rely but was advised that there was no obligation upon it to file any evidence. 6 Mr Bartalesi of Nescis lawyers, the Solicitors for the former directors of Monzo, filed written submissions. In those submissions Mr Bartalesi raised a number of issues regarding the property known as 269 Bay Street, Brighton Le Sands ("the property") that was the subject of the substantive matter. These issues included: 1. The decision of Justice Palmer of the Supreme Court on 16 April, 2004 in which His Honour held that Mr Kollias had no equitable interest in the property and ordered that Mr Kollias remove the Caveat which he had lodged on the title. 2. The property was sold on 22 April 2004 and the proceeds of sale disbursed pursuant to a Deed of Family Trust. 3. On 29 July 2004 Mr Kollias had obtained Ex-Parte orders before Justice Barrett in the Supreme Court that the Directors of Monzo pay the net proceeds of sale to the Liquidator. On 5 August 2004 Justice Barrett overturned the 29 July 2004 orders on the basis that the proceeds of sale of the property had been disbursed well before the Hearing of the matter by the Tribunal on 14 May, 2004. 4. The property was beneficially owned by the Monzo Family Trust and Monzo Pty was merely the Trustee of that Trust. Monzo was removed as Trustee of the Monzo Family Trust on or about the 30 April 2004. Therefore, Monzo no longer had any power or duty to deal with any of the proceeds of sale when the Tribunal made its orders on 14 May 2004. 7 Mr Bartalesi submitted that Monzo has not breached the asset preservation orders made on 14 May 2004 and that the orders are beyond the power of the Tribunal to make. As Monzo was removed as Trustee on or about 30 April 2004 there was no actual or intended breach of the Tribunal's orders and there is no basis for the Tribunal to report the present matter to the Supreme Court. 8 Mr Bartalesi made no submission with respect to the issue of Monzo's failure to comply with the order that it give an account as to the whereabouts of the proceeds of sale of the property. 9 At the hearing of the Notice to Show Cause Mr Hall appeared as counsel for Mr Kollias and Mr Bowles appeared as agent for the Liquidator. Mr Hall argued that the matter should be referred to the Supreme Court to allow consideration to be given to the actions of the directors of Monzo in hiding behind the corporate veil and only adducing evidence at the last minute. He asserted that Monzo has demonstrated flagrant disregard for the Tribunal's orders and in doing so has made a mockery of the Tribunal and the legislative scheme. 10 Mr Hall further argued that it is in the Tribunal's interests to have the matter referred to the Supreme Court. The Tribunal has no power to enforce its own decisions or to take action where a party fails to comply with its orders. Referral of the matter would contribute to development of the law in regard to this issue. 11 Mr Bowles for the Liquidator argued that referral of the matter would be futile given that Monzo is in liquidation. It is in the process of being wound up and will eventually be deregistered. Section 601AD of the Corporations Act 2001 provides that a company ceases to exist on deregistration. This means that no one could represent Monzo in the proceedings. He contends that the liquidator has power to refer the matter to the Australian Securities and Investments Commission ("ASIC") for investigation and that ASIC is the appropriate body to take action in the circumstances. 12 There is also an issue as to whether leave would need to be obtained from the Supreme Court in relation to the referral. Mr Bowles says that the Corporations Act prevents Mr Kollias commencing or continuing with proceeding unless and until he obtains leave from the Supreme Court to do so. He submitted that it can be inferred that the Supreme Court is aware of the Tribunal proceedings and the orders made by the Tribunal and that in a sense the matter has already been considered by the Supreme Court. Decision and reasons 13 The Tribunal's powers to refer matters to the Supreme Court are found in section 131 of the ADT Act. That section provides: "131 Contempt of Tribunal (1) The Tribunal may report the following matters to the Supreme Court: (a) if a person fails to attend in obedience to a summons after having been served with a summons to attend before the Tribunal as a witness, or (b) if a person fails to produce any document or other thing in the person's custody or control that the person is required by a summons to produce after having been served with a summons to attend before the Tribunal, or (c) if a person refuses to be sworn or to make an affirmation or refuses or otherwise fails to answer any question that is put to the person by the Tribunal after being called or examined as a witness before the Tribunal, or (d) if a person wilfully threatens or insults: (i) a member, assessor or officer of the Tribunal, or (ii) any witness or person summoned to attend before the Tribunal, or (iii) a practising legal practitioner or other person authorised to appear before the Tribunal, or (e) if a person misbehaves himself or herself before the Tribunal, or (f) if a person interrupts the proceedings of the Tribunal, or (g) if a person obstructs or attempts to obstruct the Tribunal, a member of the Tribunal or a person acting with the authority of the Tribunal in the exercise of any lawful function, or (h) if a person publishes, or permits or allows to be published, any evidence given before the Tribunal or any of the contents of a document produced at a hearing that the Tribunal has ordered not to be published, or (i) if a person publishes, or permits or allows to be published, any evidence given before the Tribunal at a hearing held in private or any of the contents of a document produced at a hearing held in private, except to an officer of the Tribunal or as permitted by the Tribunal or by the regulations, or (j) if a person does any other thing that, if the Tribunal were a court of law having power to commit for contempt, would be contempt of that court. (2) If the Tribunal reports a matter to the Supreme Court under subsection (1), the Court may deal with the matter as if it were a contempt of the Court. However, a person is not liable to be punished for contempt under this subsection if the person establishes that there was a reasonable excuse for the act or omission concerned. (3) Subsection (1) (i) does not apply to an officer of the Tribunal in relation to evidence or contents of documents published to other officers or to members of the Tribunal." 14 This application is based on Monzo's failure to account to the Tribunal in accordance with orders 8 and 9 of the 14 May 2004 orders. Arguably this would be grounds for a report to the Supreme Court pursuant to section 131(1)(j) of the ADT Act. 15 The Corporations Act provides that no proceedings may be commenced or maintained against a company in liquidation without leave of the Supreme Court. There is an issue with respect to whether a report to the Supreme Court would amount to "proceedings" that would require leave of the Supreme Court however in the circumstances I do not need to determine this point because I have found against the application for other reasons. 16 I agree with Mr Bowles that the issues that have been raised by Mr Hall have to some extent already been the subject of consideration by the Supreme Court. Mr Bartalesi provided a copy of Justice Barrett's 5 August 2004 Judgment. At paragraphs 1 to 4 of the judgement his Honour stated: "1 The judgment I delivered on 29 July proceeded on the basis that the net proceeds of sale of the property in Bay Street, Brighton Le Sands, were assets of the first defendant that were diverted from that company in the face of an order for the payment of money made by the Administrative Decisions Tribunal in favour of the plaintiff. That finding was, as is now clear, not correct as to the timing sequence or as to the beneficial ownership of the funds. 2 The funds were in fact funds of a family trust established in 1995, with the first defendant as trustee and the second and third defendants as members of the class of beneficiaries. The assumption that the moneys were beneficially the property of the company was, therefore, misplaced. 3 Likewise, on the explanation I have now been given, it was incorrect for me to regard the disbursement of the funds to the second and third defendants as having taken place after the first defendant had been ordered, by the tribunal, to pay the money to the plaintiff. In fact, the tribunal order occurred after the moneys had been disbursed. 4 My conclusion that company funds were diverted to avoid the claim of the plaintiff under the tribunal order is now shown to have proceeded on the twofold erroneous basis that I have mentioned. Matters, as they are now seen, do not have, in any way, the serious overtone that they appeared to have had when I made the orders that I in fact made. I also now have, in sharper focus, evidence of the history of the disputation between the parties, including the plaintiff's failed attempt to sustain a caveat, and it can be said that there has been delay on the plaintiff's part. 5 I think it is fair to say that the plaintiff had been aware of relevant matters for some two or three months before coming to the court for relief at the end of July." 17 In light of those comments, it seems clear that Justice Barrett made findings of fact in relation to issues that are relevant to the Tribunal's orders. It can be presumed that Justice Barrett was aware of the orders and would not have allowed a clear contempt of the Tribunal to go unnoticed. In the circumstances it would seem to be unlikely that the Supreme Court would give the matter further consideration. In any event, I agree with Mr Bowles that referral of the matter would be futile given that Monzo is in liquidation and will eventually be deregistered. 18 Mr Hall places hope in the possibility that the Supreme Court would want to hear from the former directors of Monzo if the matter were referred and that this would have consequence for those directors. However, the former directors were not joined as a party to the substantive proceedings and are not the subject of the Notice to Show Cause. I see no reason why they should be joined at this time and I decline Mr Hall's invitation to take that approach. 19 I note Mr Hall's arguments concerning the Tribunal's interest in discouraging breaches of its orders. This is an area of concern to all inferior courts and tribunals. Nevertheless, in my view this is not a matter where referral to the Supreme Court is likely to provide any significant answers in relation to that issue. It seems to me that there would be limited benefit to either Mr Kollias or the Tribunal from making the referral sought. 20 While I accept that ASIC is unlikely to give high priority to this matter, it is my view that the appropriate approach is for the liquidator to consider whether referral to ASIC is warranted and to take what he considers to be the appropriate steps. 21 Accordingly, the application for referral to the Supreme Court pursuant to Section 131 of the Administrative Decisions Tribunal Act 1997 is refused.