Case: GIS Electrical Pty Ltd v Melsom [2002] WASCA 302 ; (2002) 172 FLR 218
Outcome: referred to
My Chambers indicated to Burness that I did not want any further written submissions or further affidavit material from him in response to the defendants at this stage in the proceeding. By a subsequent letter dated 4 January 2006, my associate drew the parties' attention to Burns Philp Investments Pty Ltd v Dickens (1993) 11 ACLC 525; GIS Electrical Pty Ltd v Melsom [2002] WASCA 302 ; (2002) 172 FLR 218 at 228; and Re Glowbind Pty Ltd (in Liq); Takchi v Parbery [2003] NSWSC 1190 ; (2003) 181 FLR 208 and invited their submissions on these cases, as well as costs, including the position of RAM Parts. 43 With respect to the first two factors, the complainant must show more than inadvertent error or misjudgement on the liquidator's part. This is because s 536 does not provide a procedure for challenging a liquidator's decisions generally. Rather, the section "is concerned with aspects of the conduct of liquidators which are liable to attract sanctions or control for what might be broadly described as disciplinary reasons": GIS Electrical Pty Ltd v Melsom [2002] WASCA 302 ; (2002) 172 FLR 218 at 228 (" GIS Electrical ") per Steytler J with whom Templeman and Miller JJ agreed; also Glowblind at 217. This is seen in the language directing the Court's attention to whether the liquidator has "faithfully" performed his or her duties. 46 First, save for costs, the defendants no longer have a proprietary or pecuniary interest in the outcome of the application to set aside the warrant. This factor weighs against conducting an inquiry: see GIS Electrical at 233. Moreover, the factor has particular force in this case because the defendants voluntarily settled all remaining disputes concerning the property seized under the warrant. This can be contrasted to the facts of GIS Electrical where the complainant (who alleged overpayment of liquidator's fees) had no stake in an inquiry because a secured creditor would have recovered any returned fees ahead of the complainant. Here, the defendants have no stake in the outcome of an inquiry because of their own actions. 47 In weighing this factor, it is irrelevant that the defendants concluded the settlements as a matter of practical expedience. Parties entering into settlements may have many different reasons for agreeing to settle a dispute that is before the Court and in the ordinary case the Court will not inquire into them. As to the defendants' allegation that they were "bullied" into settlement, it must be borne in mind that the compromise that led to the consent orders of 10 October 2005 was concluded by the parties' legal representatives. At various times, all the defendants have had the benefit of legal representation. If indeed any defendant wanted to apply to set aside an agreement reached with Burness on any proper ground, then that defendant would be required to make such application in a separate proceeding. 48 The Court is no longer in a position to remedy any prejudice allegedly suffered by the defendants as a result of the warrant. When they filed their application, Edwards affirmed that: " [I] t is unfair and prejudicial to Ann Langdon; Max Latimer; Robert McDermott and Murray Dewar to have the onus of proving ownership in circumstances when they have to give evidence where the Liquidator will seek to cause those persons to incriminate themselves where there is no basis for the Warrant in the first place." As they have now settled the disputes concerning the vehicles, the defendants will no longer be asked to prove ownership of the vehicles. Paradoxically, the defendants would only be subject to cross-examination on these issues if the defendants' application were to proceed to trial. 49 The Court may consider delay by a complainant as a factor weighing against further inquiry: see GIS Electrical at 233. Delay is of particular importance in this case. Even if I were to accept that McDermott and Latimer were at some stages unable to challenge the warrant on account of their financial hardship and McDermott's bankruptcy, this does not excuse the extremely lengthy delay. The defendants, including McDermott and Latimer, were able to contest the plaintiff's application to dispose of the vehicles. For example, McDermott, Latimer and Langdon filed a statement of facts and contentions on 29 October 2004 in connection with the plaintiff's application addressing many of the same issues that they raise now in support of the defendants' application to set aside the warrant. There is nothing in the material that they have now filed in the Court that would indicate that they could not also have challenged the warrant at that time. It is apparent that legal proceedings of this kind were contemplated by McDermott, Latimer and Martinek in December 2003 and January 2004. The fact that at a late stage in the history of the proceeding the defendants received advice from senior counsel that led them to make the defendants' application does not provide a sufficient explanation for the delay to justify the inquiry they seek. 50 Furthermore, the defendants have provided no reasonable explanation for the delay by McDonald, Giuffre(y) or Martinek, all of whom join in the application to set aside the warrant. There is no evidence that the financial state of McDonald, Giuffre(y) or Martinek was such as to disable them from making such an application at an earlier date. As already noted, McDonald, Giuffre(y) and Martinek filed affidavits seeking to explain why they agreed to compromise their claims and, in essence, claiming that they were very reluctant to settle with Burness. None of their accounts would provide an adequate excuse for the extraordinary delay in making the application to set aside the warrant. Overall, even if their respective accounts were accepted for present purposes, the defendants have not provided a reasonable excuse for their collective delay. 51 It is difficult to overemphasize the defendants' delay. Their application was not filed until over 20 months after the warrant was served. In that time, there had been extensive litigation concerning the disposal of property seized under the warrant. This litigation had proceeded to hearing where the defendants were represented by senior counsel. Nevertheless, the defendants did not file their application until over a month after this hearing started. In these circumstances, I find there was no reasonable excuse for this delay.