TAFE Commission v Cordoba

1. [1]

   HIS HONOUR: By Notice of Motion filed 31 August 2020, the TAFE Commission (“the applicant”) seeks an order that:

   1. (1)

      it be entitled to $339,898.36 by way of:

   2. (2)

      the proposed second defendant, Tia Cordoba, be paid the balance of the funds, being $119,898.37.

2. [2]

   The first defendant and proposed second defendant are husband and wife. Both consent to the relief sought, that consent is support by the following:

   1. (1)

      the proposed second defendant entered a Deed of Settlement to that effect;

   2. (2)

      the first defendant has filed a submitting appearance; and

   3. (3)

      the proposed second defendant has signed consent order consenting to the relief sought (“the consent order”), which are before the Court.

3. [3]

   There is, therefore, no party resisting the orders the applicant seeks.

Background

1. [4]

   Two affidavits of Ms Betty Sarkinssian, solicitor for the plaintiff, were read in support of the notice of motion, sworn 10 September 2019 (“the 2019 Affidavit”) and the 31 August 2020 (“the 2020 Affidavit”), respectively. Those affidavits set out the background to this application, to which I now turn.

2. [5]

   The first defendant defrauded the applicant of approximately $1.2 million. This Court gave judgment in the applicant’s favour against the first defendant on 12 October 2016. The Court awarded judgment of $1,234,715.50, pre-judgement interest of $204,892.46 and costs.

3. [6]

   Freezing orders over the first defendant’s property have been in place since 9 September 2015. They have the effect of freezing two properties the first defendant and the proposed second defendant owned jointly:

   1. (1)

      32 Keighran Mill Drive, Blair Athol (“the Blair Athol Property”); and

   2. (2)

      5 Pembroke Parade, Wilton (“the Wilton Property”).

4. [7]

   Both of those properties were mortgaged to Commonwealth Bank of Australia Ltd (“CBA”). By agreement with the applicant (who had the benefit of freezing orders), the CBA sold both properties via its mortgagee power of sale and paid the surplus funds into Court.

5. [8]

   After the initial payment into Court, CBA paid $1,386.00 to the applicant (“the Additional Amount”), which amount the applicant holds pending the determination of this motion.

6. [9]

   The applicant maintained it had claims against the proposed second defendant for her benefiting from the first defendant’s fraudulent conduct: claims including unjust enrichment, restitution and moneys had and received.

7. [10]

   The applicant and the proposed second defendant agreed by way of Deed of Settlement, and Consent Orders attached to it, to divide the funds, and the Additional Amount on the terms of the relief sought on the notice of motion and set out in the consent order.

Consideration

1. [11]

   Any deposited funds can only be paid by the authority of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) or by order of the Court: r 41.3 of the UCPR. As Lindsay J said in JKB Holdings Pty Ltd v De La Vega [2013] NSWSC 501 at [8]:

2. [12]

   At [14], Lindsay J said:

3. [13]

   The only entities with a claim on the proceeds of the sale of the two properties, which were derived from sale of the two properties, are:

   1. (1)

      CBA, who paid the funds into Court after it had satisfied its claims from the sale proceeds;

   2. (2)

      the registered proprietors, being the first defendant and proposed second defendant as joint tenants; and

   3. (3)

      the applicant, by the judgment of 12 October 2016 in this Court.

4. [14]

   The Court, therefore, has all of relevant claimants before it.

5. [15]

   It is also convenient to consider Brereton v Edwards (1888) 21 QBD 488 in which the English Court of Appeal, Lord Esher MR, Lindley and Bowen LJJ, unanimously held that a judgment creditor (whether the judgment was in equity or at common law) was to be paid from the funds there held in court. Various comments there confirm why the circumstances of this case also warrant the proposed orders to be made.

6. [16]

   Lord Esher MR said (at 493-496):

7. [17]

   Lord Justice Lindley said (at 497):

8. [18]

   Lord Justice Bowen said (at 498):

9. [19]

   It is also clear that there is no need to appoint liquidators when the funds are already in Court. Lord Esher MR said (at 494):

10. [20]

    Bowen LJ said (at 499-500):

11. [21]

    Brereton v Edwards has been applied in Australia: see Falcone v Mentyn (No 2) (2004) 13 Tas R 384; [2004] TASSC 156 at [7]-[8], [16] and [23]; and Re Kinsela; Ex parte Butterell (1984) 53 ALR 557 at 562-564 (only in relation to the effect of the order).

12. [22]

    In New South Wales specifically, in Re Commonwealth Bank of Australia [2009] NSWSC 81 at [18], Young CJ in Eq observed:

13. [23]

    In this matter there are no rival claims to the funds; all relevant claimants consent to the relief sought. The funds were paid into Court because the CBA wanted to ensure that it was not liable based on its division of payments as between the first defendant, the proposed second defendant and the applicant. As seen by the Deed of Settlement and the Consent Orders, there is no dispute in this regard.

14. [24]

    Further, the agreement as to the funds makes commercial sense as:

    1. (1)

       for the first defendant, he is paying his half of the funds where he owes over $1.4 million to the applicant; and

    2. (2)

       for the proposed second defendant, she is paying an amount out of her half of the funds in consideration for the certainty of the release from the applicant bringing further claims against her.

15. [25]

    There is no specific procedure for how the order is to be made, but an order is required to enable the Court’s Registrar to comply with it: Reliance Financial Services Pty Ltd v Lemery Holdings Pty Ltd [2006] NSWSC 1417.

Conclusion

1. [26]

   For the reasons set out above, I grant the relief sought in the Notice of Motion and make the orders set out in the Consent Order.