Background
In earlier proceedings, Richard Gazzard obtained a judgment of $2,321,675.67 against Anthony Hekeik and related Wormald Malanda entities. No part of the judgment debt had been paid. In May 2024, Gazzard obtained charging orders over 20 units held by Wormald Malanda as trustee of the Anthony Hekeik Trust and the Raymond Hekeik Trust in the Badajoz Property Unit Trust.
The trust was a closely held, loss-making property investment vehicle holding two Ryde properties. Its deed gave existing unit holders pre-emptive rights when units were proposed to be sold. Gazzard and the trustee initially sought transfers of the charged units, but amended their case to seek a judicial sale under s 126 of the Civil Procedure Act 2005 (NSW). The defendants accepted that a sale should occur but disputed the proposed price until the hearing.
The Court’s Holding
Williams J held that the charging orders entitled Gazzard to the relief available to an equitable chargee, including a judicial sale. The Court was satisfied that the sale process had to seek the best price, while respecting the transfer restrictions and pre-emptive rights in the trust deed.
A public auction was unsuitable because the unlisted, closely held units had no likely ready external market and an auction would not comply with the deed. The Court accepted an expert adjusted-book-value valuation of $19,425 per unit, based on the defendants’ accepted $5.75 million valuation of the Ryde properties and the trust’s liabilities. It ordered judicial sale of each 10-unit parcel for $194,250 through the deed’s pre-emption process.
Key Takeaways
- A charging order may support a judicial sale as the remedy available to an equitable chargee under s 126 of the Civil Procedure Act.
- Judicial-sale orders concerning trust units must accommodate valid transfer restrictions and unit-holder pre-emptive rights in the trust deed.
- Where no existing unit holder exercises its pre-emptive right, the units are to be transferred to Gazzard and the judgment debt reduced by the sale price.
Why It Matters
The decision shows how judgment creditors may enforce against units in a private unit trust where a direct market sale is impractical. The Court adapted the judicial-sale process to the trust deed rather than requiring a conventional public auction.
It also underscores that the court will scrutinise valuation evidence and sale mechanics to protect the objective of achieving the best available price for charged property.