Duncan-Strelec v Tate [2009] NSWSC 112

New South Wales Supreme Court

CITATION : Duncan-Strelec v Tate [2009] NSWSC 112

HEARING DATE(S) : 27/02/09 JURISDICTION : Equity Division

JUDGMENT OF : Young CJ in Eq

EX TEMPORE JUDGMENT DATE : 27 February 2009

DECISION : Orders by consent that leave be granted to the plaintiffs to issue a writ of sequestration over the property of the third defendant and that two sequestrators be appointed.

CATCHWORDS : PROCEDURE [740]- Contempt- Number of sequestrators required for writ of sequestration- Two suffices.

LEGISLATION CITED : Civil Procedure Act 2005, ss 56-60

CASES CITED : Moncur v McDougall (Young J, 17/4/1986, unreported)

Amanda Duncan-Strelec (P1) David Strelec (P2) PARTIES : Dunlec Pty Ltd (P3) Thomas Richard Tate (D1) Ruth Tate (D2) Wamego Pty Ltd (D3)

FILE NUMBER(S) : SC 6428/06

A P Coleman (P) COUNSEL : No appearance for D1 and D2 B Connell (D3)

SOLICITORS : Kemp Strang (P) PMF Legal (D3)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

YOUNG CJ in EQ

Friday 27 February 2009

6428/06 - DUNCAN-STRELEC v TATE JUDGMENT 1 HIS HONOUR: This is a very odd application to have the third defendant dealt with for contempt of court. I gave reasons on 24 October 2008, [2008] NSWSC 1145, as to why the plaintiffs were entitled to a declaration that the third defendant was in contempt of court. The basal problem was that consent orders were made by McDougall J in January 2007 which restrained the third defendant from, inter alia, mortgaging particular property, but then provided that notwithstanding that order the first and second defendants could do certain things and seemed to envisage, in order 5, that the injunction could be discharged if order 3 was complied with. 2 It would appear that order 3 was complied with and it would appear that the third defendant took the view that the injunction had automatically been discharged. However, on 24 October 2008, although represented by senior counsel, the third defendant never said that. Accordingly, I had to hold that on the material before me the third defendant was in contempt and the plaintiffs were entitled to a declaration to that effect. 3 The matter was then stood over to today for the question of penalty. The directions I made I thought would have given the hint that if the third defendant wished to say that it was in fact what appeared to be the case, then its representatives would give evidence to that effect and there would also be a motion, as anticipated by McDougall J's order 5, to discharge the injunction. 4 That hasn't happened. The previous senior counsel and solicitors appear to have passed from the scene and Mr Connell, who appeared this morning for the third defendant, said his instructions were to consent to a writ of sequestration. It appears from what Mr Connell told me that the original proceedings are moving on in this court or some other court and that his side is content that sequestrators hold the land in question pending the final determination. 5 Now, that in no way ameliorates the contempt that has been committed and that will need to be dealt with. However, the court must, in accordance with sections 56 and following of the Civil Procedure Act 2005, take into account the commercial realities of the situation and they appear to me to be that what is really happening at the moment is that the status quo is being maintained and that the probabilities are that, in due course, this matter will be finally dealt with either by some sort of apology or by discharging the order or otherwise and it is only appropriate then to make a final determination as to how serious it was. 6 Mr Coleman, who appears for the plaintiffs, has been extremely helpful and has provided me with the authorities on dealing with writs of sequestration, which very rarely issue these days, and I am very appreciative of that. He asks that the declaration of contempt now be formally made. For the reasons I have just given, I doubt the wisdom of doing that at the moment, but in due course this may have to happen and may be appropriate that it happen. 7 The law as set out in Daniell's Chancery Practice and other authorities (see, eg, my decision in Moncur v McDougall (17 April 1986, unreported) BC8601100) is that five sequestrators must be appointed if there is to be a writ of sequestration and that what happens is that the five sequestrators gather in all the property of the company in contempt and they then hold that property without access by the contemnor until the contempt is purged, usually by the company doing the thing it was ordered to do in the first place. 8 Now, it is a little difficult to marry that with the present situation because what has happened is that the third defendant has mortgaged the property. There is no material before me to show whether it is commercially practicable for it to discharge that mortgage. In one sense the act has been done once and for all. However, as the parties have more or less agreed that the two sequestrators, being insolvency practitioner chartered accountants, would be appropriate to hold the land then that may be as good a way of dealing with the case commercially and practically as any other. 9 Mr Coleman has drawn my attention to the fact that not only is the land mortgaged to the Bank of Queensland, apart from the mortgage involved in the present case, there are also caveats lodged by other people and they may be affected by the sequestration. However, it does not seem to do any harm because there is liberty to apply. So that if they are not content for really a holding process to take place then they can do something about it. 10 The law, as I have said, is that five sequestrators are needed. Despite Mr Coleman's and my research, we have not found any raison d'etre for that rule. It does seem to me that in the 21st Century where one does have professional insolvency practitioners who are used to this sort of exercise that it is just a waste of money to have five sequestrators, that the court should no longer insist on this rule, and that certainly two sequestrators, should for the future, be considered to be sufficient. 11 Thus, I only think it proper at this stage to make orders 3, 4, 5, 6, 7, 8, 11 and 12 in the form of order which I have initialled and which will be placed with the papers and I will formally stand the matter over to 4 May 2010 at 9.15am before the Registrar with liberty to restore on three days' notice. So that hopefully, when the main problems are solved between the parties, this matter can then be finalised with as little extra cost to them as possible. However, if events turn out that there needs to be a full hearing on penalty then that can occur at a suitable time, but if nothing happens then the matter will be listed in the Registrar's list on 4 May 2010.