Supreme Court New South Wales Medium Neutral Citation: Hebbel Constructions Pty Limited v Bitar Pty Limited and Anor [2018] NSWSC 1089 Hearing dates: 19 June 2018 Decision date: 19 June 2018 Jurisdiction: Equity - Corporations List Before: Black J Decision: Liberty to apply is not properly invoked; substantive hearing of the application will not proceed. Catchwords: PRACTICE AND PROCEDURE – application to exercise liberty to apply pursuant to previous order made – where basis to exercise the liberty to apply has not been established – whether liberty to apply is properly invoked. Legislation Cited: - Uniform Civil Procedure Rules 2005 (NSW) r 26.6 Category: Procedural and other rulings Parties: Hebbel Constructions Pty Limited (Plaintiff) Bitar Pty Limited (First Defendant) Hebbel Constructions Pty Ltd & Bitar Pty Ltd (Second Defendant) Representation: Counsel: P Wiggins (Solicitor – Plaintiff) P E King (First Defendant) S Golledge (Court Receiver) Solicitors: Paramonte Legal (Plaintiff) Priest Legal (First Defendant) Yates Beaggi (Court Receiver) File Number(s): 2014/269117 (012) JUDGMENT - EX TEMPORE (Revised 19 June 2018) Whether liberty to restore is properly exercised 1. On 10 May 2018, I heard a Notice of Motion filed on 24 April 2018 by the First Defendant, Bitar Pty Ltd ("Bitar"), which applied for an order under r 26.6 of the Uniform Civil Procedure Rules 2005 (NSW) for the discharge of a Court-appointed receiver of the assets of a partnership of Hebbel Constructions Pty Ltd ("Hebbel") and Bitar and the shares in Bitar Hebbel Constructions Pty Ltd. I dismissed that application, for the reasons set out in my reasons for judgment delivered on 25 May 2018 ([2018] NSWSC 758). In doing so, I observed at paragraph 31 that: "I am not persuaded that, at present, this matter [namely the occupation of unit 11 by Ms Anna Taouk] warrants the removal of the receiver, alone or together with other matters. … I will, however, receive liberty to Bitar to apply, since there may well be cause for complaint, and possibly cause for the receiver's removal, if the present position is permitted to continue for any substantial period without completion of a sale of unit 11 to Ms Taouk, or if she does not promptly complete that sale, to a third party." [emphasis added] 1. It will immediately be noted that my observation that the position as to Ms Taouk's occupancy of unit 11 did not warrant the removal of the receiver, alone or together with other matters, was made less than a month ago, by the judgment delivered on 25 May 2018. 2. By a further judgment delivered on 8 June 2018, I set out the orders which would follow from the judgment and dealt with the question of costs. I gave effect to my observation in paragraph 31 of the judgment by making an order that: "The parties have liberty to apply on two business days' notice in respect of any further complaint arising in respect of any substantial delay by the receiver in completing the sale of unit 11, whether to Ms Anna Taouk or to any third party." 1. It will be noted that that liberty was conditioned by two matters, namely that there exists a further complaint and that it arises in respect of any substantial delay by the receiver in completing the sale of unit 11. The further judgment was delivered, and the consequential orders were made on 8 June 2018, less than two weeks ago. 2. By email dated 14 June 2018, some four business days after I had delivered judgment in respect of orders, and made orders, the solicitors for Bitar referred to the liberty to apply and advised that they were instructed to exercise liberty pursuant to the order and seek to have the matter listed before me. By email sent on the same day, my Associate, at my request, raised the question how there could be a "substantial delay" in the six days since I had made orders on 8 June 2018, but nonetheless indicated dates on which the matter could be listed. If it had otherwise escaped the attention of Bitar and its legal adviser that a substantial delay might not be established by the six days that had passed since orders were made, my Associate's email should have drawn their attention to that question. Nonetheless, Bitar persisted with the listing. 3. Today, Mr King, who appears for Bitar, indicates the matters which he seeks to address, which would re-agitate issues which were dealt with in my earlier judgment. When I invited Mr King to indicate how a substantial delay by the receiver in completing the sale of unit 11 had arisen in the short period since the matter was listed before me and determined by me, he referred to the length of time since the hearing, now six weeks; the length of time since my judgment, now less than a month; and the length of time since my orders, now less than two weeks. He also referred to the length of time since the receiver's first appointment, which I had addressed in my earlier judgment. He embroidered that submission with gratuitous references to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, which has no apparent relationship to this application. 4. It seems to me that, in the circumstances, the basis for Bitar to exercise the liberty to apply has not been established. That liberty to apply was directed, as my earlier judgment and the orders made clear, to any further substantial delay that may arise by the receiver in the sale of unit 11. It did not and does not permit Bitar to re-agitate the matters that I have determined, albeit on an interlocutory basis, absent any change in circumstances. A substantial delay in respect of the sale of unit 11 has not arisen since my earlier judgment; to put that proposition another way, the receiver could not reasonably be expected to have completed a sale of the property in the several weeks that have passed since I delivered that judgment. The liberty to apply would protect Bitar's interests, if a substantial delay in the sale of the property arose, after the time of delivery of my judgment. However, where that has not yet occurred, this application is not properly made, so far as it attempts to re-agitate matters dealt with in the earlier judgment. 5. In these circumstances, it seems to me that the liberty to apply is not properly invoked, and I should not proceed to a substantive hearing of the application. Costs 1. I have found that this application is outside the scope of the liberty to apply and should not be permitted to go to a further hearing. Mr Wiggins, who appears for Hebbel, seeks an order that Bitar pay Hebbel's costs (although, as it emerged, only on an ordinary and not an indemnity basis). Mr Wiggins also seeks an order that Bitar pay the receiver's costs of the application. Mr Golledge, who appears for the receiver, indicates that the receiver takes no position as to the question of costs, where he already has an indemnity against the assets of the partnership to which he has been appointed as receiver. The question whether Bitar pay the costs of the application affects the partners in the partnership, Bitar and Hebbel, rather than the receiver. 2. Hebbel relies on a letter dated 18 June 2018 from its solicitors to the solicitors for Bitar, which encloses correspondence relating to the sale of unit 11. Mr Wiggins points out that some of that correspondence was sent in his firm's capacity as solicitor for Ms Taouk, a matter which I addressed in dealing with Mr King's objection to the tender of that correspondence on the basis that a conflict of interest affected that firm. That letter of 18 June was sent after Bitar's application to relist the matter had been made on 14 June 2018. The correspondence annexed to that letter indicated that there had been correspondence as to the potential sale of unit 11 by the receiver to Ms Taouk since at least 23 May 2018. On 15 June 2018, the receiver's solicitors conveyed what was described as a final counter-offer by the receiver for the sale of the unit to Ms Taouk, which could be accepted by delivery of a contract by Ms Taouk together with a five percent deposit by 18 June 2018 and indicating that, if the receiver had not received a signed contract by that time, he would proceed with the sale of unit 11 by public auction. Also on 15 June 2018, the solicitors acting for Ms Taouk indicated she rejected that offer and advised of her request – which appears to have been superfluous where the receiver had already made his position clear – that unit 11 be listed for public auction as soon as practicable. In those circumstances, it must have been clear to Bitar by 18 June 2018 that negotiations with Ms Taouk had come to an end, at least unless either the receiver or Ms Taouk significantly changed their position, and there would be a sale of the unit by public auction. 3. Mr King in turn tenders a valuation of the property, and correspondence with the valuer, in order to support the submission that an earlier valuation of the property was higher than the price which Ms Taouk had been prepared to pay. Mr King also expands on earlier submissions, now made several times, initially in respect of the substantive hearing before me, then in respect of the leave application, and now in respect to costs, in respect of the receiver's conduct. 4. It seems to me that the position as to costs is ultimately straightforward. This application was brought in circumstances that, as I have held, a further substantial delay in the sale of unit 11 had not arisen since my recent judgment and orders. That ought to have been apparent from the objective facts. That is a sufficient basis to indicate that the relisting of the matter was not properly or reasonably sought. That position is reinforced by the fact that, at least from Monday 18 June, Bitar knew that negotiations between Ms Taouk and the receiver had had broken down and a sale of unit 11 by public auction was proposed. In that situation, all that Bitar could have sought from this application, where the receiver had already committed to proceeding to public auction of unit 11, was to re-agitate the matters addressed in my earlier judgment, particularly the removal of the receiver, and that emphasises the inappropriate character of the application. 5. An order should be made for the payment of the receiver's costs, on an indemnity basis, for the reasons noted in my earlier judgment as to costs, since otherwise Hebbel would be required to pay a portion of those costs. Although the matters to which I have referred above may have supported an indemnity costs order in favour of Hebbel, Mr King fairly made clear, and Mr Wiggins fairly accepted, that such an order had not been sought by Hebbel, which had only sought an order for indemnity costs in respect of the costs incurred by the receiver. In those circumstances, it would plainly not be appropriate to make an order for indemnity costs in favour of Hebbel where that had not been sought. Accordingly, I make the following orders as to costs: 1. Bitar Pty Ltd is to pay Daniel Frisken's costs of and incidental to the re-listing of the matter at the request of its solicitors, by their email dated 14 June 2018, on an indemnity basis. 2. Bitar Pty Ltd is to pay Hebbel Constructions Pty Ltd's costs of and incidental to the relisting of the matter on the ordinary basis. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 16 July 2018