Agresta v Trustee of the property of F Agresta a Bankrupt
[2015] FCA 46
•5 February 2015
FEDERAL COURT OF AUSTRALIA
Agresta v Trustee of the property of F Agresta a Bankrupt [2015] FCA 46
Citation: Agresta v Trustee of the property of F Agresta a Bankrupt [2015] FCA 46 Parties: FERDINANDO AGRESTA v THE TRUSTEE OF THE PROPERTY OF F. AGRESTA A BANKRUPT, JOHN DOLLISSON AND ERICA DOLLISSON/GRIFFITHS, JOHN BATISTE, BLAISE AGRESTA, AMBER AGRESTA and JOEL AGRESTA File number: NSD 751 of 2014 Judge: GLEESON J Date of judgment: 5 February 2015 Catchwords: BANKRUPTCY AND INSOLVENCY – application to review trustee’s decisions to reject proofs of debt – whether alleged debts were provable – whether parties’ conduct evinced intention to create legal relations – whether consideration given for guarantee of loan – trustee’s decisions confirmed – Bankruptcy Act 1966 (Cth), s 104(1), (2) Legislation: Bankruptcy Act 1966 (Cth), ss 82(1), 102(1), 104(1), 104(2), 104(3), 109(1)(a), Pt X
Conveyancing Act 1919 (NSW), s 38
Evidence Act 1995 (Cth), ss 59, 81, Dictionary
Limitation Act 1969 (NSW), ss 14, 23, 54Cases cited: Austral-Asia Freight Pty Ltd v Turner [2013] FCCA 298
Brambles Holdings v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153
Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95
Fazio v Fazio [2012] WASCA 72
Jones (as Trustee of the Bankrupt Estate of Graham) v Deputy Commissioner of Taxation (1998) 157 ALR 349
Lyford v Carey (1985) 3 ACLC 515
Payne; ex parte Levi (unreported, Sup Ct, WA, Toohey J, 23 September 1986)
Re Rogers; ex parte CMV Parts Distribution Pty Ltd (1989) 20 FCR 561
Singh v Khatri & Griffin [2011] FMCA 804
Something Better Pty Ltd v Pyramid Building Society (in liq) [1996] 2 VR 352Date of hearing: 25 November 2014 Date of last submissions: 9 December 2014 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 84 Counsel for the Applicant: The applicant appeared in person Counsel for the First Respondent: Mr DM Flaherty
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 751 of 2014
BETWEEN: FERDINANDO AGRESTA
ApplicantAND: THE TRUSTEE OF THE PROPERTY OF F. AGRESTA A BANKRUPT
First RespondentJOHN DOLLISSON AND ERICA DOLLISSON/GRIFFITHS
Second RespondentJOHN BATISTE
Third RespondentBLAISE AGRESTA
Fourth RespondentAMBER AGRESTA
Fifth RespondentJOEL AGRESTA
Sixth Respondent
JUDGE:
GLEESON J
DATE OF ORDER:
5 FEBRUARY 2015
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The decision of the first respondent made on 24 June 2014 to reject the proof of debt of the first-named second respondent be confirmed.
2.The decision of the first respondent made on 24 June 2014 to reject the proof of debt of the third respondent be confirmed.
3.The decision of the first respondent made on 24 June 2014 to reject the proof of debt of the fourth respondent be confirmed.
4.The decision of the first respondent made on 24 June 2014 to reject the proof of debt of the fifth respondent be confirmed.
5.The decision of the first respondent made on 24 June 2014 to reject the proof of debt of the sixth respondent be confirmed.
6.The costs of the application be paid from the estate of the applicant bankrupt in accordance with s 109(1)(a) of the Bankruptcy Act 1966 (Cth).
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 751 of 2014
BETWEEN: FERDINANDO AGRESTA
ApplicantAND: THE TRUSTEE OF THE PROPERTY OF F. AGRESTA A BANKRUPT
First RespondentJOHN DOLLISSON AND ERICA DOLLISSON/GRIFFITHS
Second RespondentJOHN BATISTE
Third RespondentBLAISE AGRESTA
Fourth RespondentAMBER AGRESTA
Fifth RespondentJOEL AGRESTA
Sixth Respondent
JUDGE:
GLEESON J
DATE:
5 FEBRUARY 2015
PLACE:
SYDNEY
REASONS FOR JUDGMENT
This is an application by the applicant bankrupt for review of five decisions of the first respondent (“trustee”) rejecting proofs of debt lodged by the first-named second respondent and each of the third to sixth respondents. The applicant has standing under s 104(1) of the Bankruptcy Act 1966 (“Bankruptcy Act”).
The applicant seeks orders to the effect that:
1.The time for appealing against the decisions to reject the proofs of debt be extended pursuant to s 104(3) of the Bankruptcy Act;
2.The trustee’s decisions be reversed or varied pursuant to ss 104(1) and 104(2) of the Bankruptcy Act.
For the reasons below, the time for making the application should be extended and the trustee’s decisions confirmed.
Background to application
The applicant was made a bankrupt on 28 June 2010.
On 25 March 2014, the Official Trustee in Bankruptcy was appointed trustee of the applicant’s bankrupt estate.
Between 20 and 29 April 2014, the five relevant proofs of debt were submitted to the trustee.
On 24 June 2014, after the trustee sought additional information about the alleged debts, the proofs of debt were rejected. The debts claimed in the proofs of debt are:
For the first-named second respondent (“Mr Dollisson”), a debt of $570,000 pursuant to a guarantee made in June 2003;
For the third respondent (“Mr Batiste”), a debt of $65,000 incurred in the period 2005 to 2009 and comprising “repayable cash advances over a number of years minimum advance $1000”;
For the fourth respondent (“Mr Blaise Agresta”), a debt of $38,219.27 incurred in the period 2000 to 5 July 2010 and comprising “repayable cash advances and items purchased for F. Agresta”;
For the fifth respondent (“Ms Agresta”), a debt of $12,000 incurred in the period 2008 to March 2010 and comprising “repayable cash loans”;
For the sixth respondent (“Mr Joel Agresta”), a debt of $15,740 incurred during the period May 2006 to November 2008 and comprising “repayable cash loans”.
By s 104(3) of the Bankruptcy Act, the application for review was required to be made by 15 July 2014 unless the Court extends the time for making the application. In this case, the application was made on 23 July 2014. The trustee does not oppose an extension of the time for making the application.
The applicant was informed that the proofs of debt were rejected on 2 July 2014. On 4 July 2014, the applicant was informed of the time for making an application under s 104(3).
The applicant’s evidence is that, between 3 and 18 July 2014, he was occupied with other litigation. Having regard to the shortness of the delay in lodging the application, the absence of any prejudice to the trustee and the fact that the applicant is self-represented, in my view, the time for making the application should be extended.
Parties to the application
The applicant appeared at the hearing in person. The trustee was represented by Mr Flaherty of counsel.
There was no evidence that any of the second to sixth respondents were served with the application.
None of them filed notices of appearance. None of them gave any evidence in support of the application and none appeared at the hearing of the application.
Evidence
Applicant’s evidence
In support of the application, the applicant sought to rely on two affidavits sworn by him on 23 July 2014 and 15 September 2014.
The trustee objected to paragraph 21 of the 23 July 2014 affidavit, which recounts conversations between the applicant and each of the second to sixth respondents shortly before the application was filed, including on the ground that it was inadmissible hearsay evidence. The applicant sought to rely on the evidence on the basis that it included admissions by him that he gave a guarantee to each of the second to sixth respondents. Part of the evidence includes statements by the applicant to each of the second to sixth respondents to the effect of “I owe you money”. At the hearing, I indicated that I would rule on the admissibility of this evidence in these reasons.
The Dictionary to the Evidence Act 1995 (Cth) (“Evidence Act”) defines “admission” to mean:
a previous representation that is:
(a)made by a person who is or becomes a party to a proceeding (including a defendant in a criminal proceeding); and
(b)adverse to the person’s interest in the outcome of the proceeding.
The applicant’s statements are not admissions within the meaning of the Evidence Act because they are not adverse to his interest in the outcome of the application. To the contrary, the applicant seeks to rely upon them to support his claim that he owes the second to sixth respondents money. This evidence is inadmissible hearsay within s 59 of the Evidence Act. Accordingly, paragraph 21 is rejected.
The first two sentences of each of paragraphs 43, 48 and 54 of the 23 July 2014 affidavit, asserting that the applicant owed the fourth, fifth and sixth respondents money and did not repay any of that money, are allowed. However, they are self-serving assertions of the matters in issue in the proceedings and I give them little weight in the absence of contemporaneous records of the facts asserted, particularly the existence of the alleged debts. The last sentence of each of these paragraphs, which records the applicant’s opinion as to the legal enforceability of the alleged debts and that they are capable of being quantified is irrelevant. Each of those sentences is rejected.
Annexed to the 15 September 2014 affidavit are six documents entitled “Consent Order”. The applicant said that he did not rely on the “Consent Orders” to prove “that they gave the money to [him]”. The applicant said that they were tendered as evidence that he had acknowledged the alleged debts. To the extent that the applicant’s acknowledgements of debt are relevant to this case, they are inadmissible hearsay. Accordingly, the tender of those documents was rejected.
Also annexed to the 15 September 2014 affidavit are deeds made in September 2014 between the applicant and various of the second to sixth respondents. The deed signed by the applicant and Mr Dollisson provides relevantly:
RECITALS:
A.John Dollisson and Erica Dollisson (“the Lender”) provided to Phoenix Commercial Enterprises Pty Ltd (“Phoenix”) the amount of two hundred and fifty thousand dollars $250,000 (the “Sum”).
B.In consideration of the Lender providing the Sum to Phoenix, Mr Agresta agreed to provide to John Dollisson and to Erica Dollisson a continuing guarantee for the payment to the Lender of:
(1)the Sum; and
(2)an additional amount for interest on the Sum, calculated at the rate of ten per centum (10%) per annum on any part of the Sum not paid to the Lender
(collectively the “Repayment Amount”) until the Repayment Amount is paid to the Lender.
OPERATIVE PART:
1.On or about 5 June 2002, the Lender provided the Sum to Phoenix.
2.Mr Agresta acknowledges:
(1)that the Sum was received by Phoenix; and
(2)Phoenix did not pay to the Lender the Repayment Amount; and
(3)the continuing guarantee to John Dollisson for payment of the Repayment amount.
3.No amendment, variation or waiver of any part of this Deed is effective unless it is in writing signed by John Dollisson and Mr Agresta.
The applicant submitted that the September 2014 deeds “acknowledge a contingent liability and thereby a provable debt by s 82(1)” of the Bankruptcy Act. He submitted that “the effect of each deed is acknowledgement of a confirmation of a course of action which, by s 54 of the [Limitation Act 1969 (NSW) (“Limitation Act”)] extends the limitation period”.
Section 54(1) of the Limitation Act provides:
Where, after a limitation period fixed by or under this Act for a cause of action commences to run but before the expiration of the limitation period, a person against whom (either solely or with other persons) the cause of action lies confirms the cause of action, the time during which the limitation period runs before the date of the confirmation does not count in the reckoning of the limitation period for an action on the cause of action by a person having the benefit of the confirmation against a person bound by the confirmation.
The application of s 54(1) depends upon the identification of a limitation period fixed by or under the Limitation Act for a cause of action and the identification of an act amounting to confirmation of that cause of action before the limitation period expires.
For the reasons given below, I have concluded that the applicant was not subject to any of the debts or liabilities identified in the five proofs of debt at the date of his bankruptcy. It follows that the applicant cannot obtain any benefit under s 54(1) of the Limitation Act, because there is no relevant cause of action for which a limitation period can be extended.
The September 2014 deeds are not capable of evidencing the existence of the alleged debts. I had understood the applicant to acknowledge that this was the case at the hearing of the application but in his written submissions in reply the applicant said “Confirmation of a debt does not create a debt as the debt already exists, however confirmation does prove a debt which [is] what the Applicant has to do in these proceedings” (paragraph 2.16). The applicant’s submission that confirmation proves a debt is wrong because confirmation is inadmissible evidence of a previous representation within the meaning of s 59 of the Evidence Act (not being an admission within s 81 of that Act). In those circumstances, the tender of the September 2014 deeds is rejected.
Trustee’s evidence
The trustee relied upon five affidavits sworn by Stephen Abraham, an authorised delegate of the first respondent.
Relevant law
Court’s jurisdiction
Section 104 of the Bankruptcy Act provides relevantly:
(1)A creditor, or the bankrupt, may apply to the Court for review of a decision of the trustee under subsection 102(1), (3) or (4) in respect of a proof of debt.
(2)The Court may, upon the application, confirm, reverse or vary the decision of the trustee.
(3)Subject to the power of the Court to extend the time, an application under this section to review a decision shall not be heard by the Court unless it was made within 21 days from the date on which the decision was made.
Power to make decision under review
Section 102(1) of the Bankruptcy Act provides:
(1) The trustee shall examine each proof of debt and the grounds of the debt sought to be proved and, subject to the power of the Court to extend the time, shall, not later than 14 days after the expiration of the period specified in the notice of intention to declare a dividend as the period within which creditors may lodge their proofs of debt, either:
(a) admit the proof of debt in whole;
(b) admit it in part and reject it in part;
(c) reject it in whole; or
(d) require further evidence in support of it.
Provable debts
Section 82 of the Bankruptcy Act concerns debts provable in bankruptcy. It provides relevantly:
(1)Subject to this Division, all debts and liabilities, present or future, certain or contingent, to which a bankrupt was subject at the date of the bankruptcy, or to which he or she may become subject before his or her discharge by reason of an obligation incurred before the date of the bankruptcy, are provable in his or her bankruptcy.
A debt is provable if there is a legally enforceable obligation upon which the debt is founded, being an obligation incurred before the date of bankruptcy: Jones (as Trustee of the Bankrupt Estate of Graham) v Deputy Commissioner of Taxation (1998) 157 ALR 349 at [354]; Lyford v Carey (1985) 3 ACLC 515 at 518.
In Something Better Pty Ltd v Pyramid Building Society (in liq) [1996] 2 VR 352, the Supreme Court of Victoria Court of Appeal considered the meaning of s 82 in the form then modified for the purposes of compositions made under Part X of the Bankruptcy Act (which modifications are no longer applicable). At 370, Tadgell JA said:
Future and contingent debts and liabilities are ... nowhere defined in the Bankruptcy Act and I do not think that they can properly be treated as terms of art. There are more ways than one of describing a debt or a liability which is payable or to be discharged in futuro and a debt or liability which is payable or to be satisfied upon a contingency. Moreover, the contingencies to which a liability may be subject are so various that the adjective “contingent”, when applied to it, is likely to be of imprecise connotation. It is to be remembered also that the statutory specification of provable debts, which is now contained in s 82 of the Bankruptcy Act, was one achieved by degrees over a long period of time. Lord Halsbury LC in Hardy v Fothergill (1888) 13 App. Cas. 351 at 355-6, referred to the engagement of the legislature for over 40 years up to 1869:
‘...in the effort to exhaust every conceivable possibility of liability under which a bankrupt might be, to make it provable in bankruptcy against his estate and relieve the bankrupt for the future from any liability in respect thereof.’...
Mellish LJ in Re Hide; Ex parte Llynvi Coal and Iron Co (1871) LR 7 Ch App 28 at 33, referring to the 1869 Act, regarded it as ‘quite plain that the object of these sections is that the bankrupt shall be absolutely relieved from any liability under any contract he has ever entered into’. Section 82, in unmodified form, is to be given a similarly wide signification with a view to providing for the result, as James LJ put it in Ex parte Llynvi Coal and Iron Co., at 32 that:
‘... the bankrupt is to be a freed man - freed not only from debts, but from contracts, liabilities, engagements and contingencies of every kind.’
Contractual relations
In Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95, the plurality set out the following principles concerning the creation of contractual relations (footnotes omitted):
[24] “It is of the essence of contract, regarded as a class of obligations, that there is a voluntary assumption of a legally enforceable duty.”: Australian Woollen Mills Pty Ltd v The Commonwealth [1954] HCA 20; (1954) 92 CLR 424 at 457 per Dixon CJ, Williams, Webb, Fullagar and Kitto JJ. To be a legally enforceable duty there must, of course, be identifiable parties to the arrangement, the terms of the arrangement must be certain, and, unless recorded as a deed, there must generally be real consideration for the agreement. Yet “[t]he circumstances may show that [the parties] did not intend, or cannot be regarded as having intended, to subject their agreement to the adjudication of the courts”: South Australia v The Commonwealth [1962] HCA 10; (1962) 108 CLR 130 at 154 per Windeyer J.
[25] Because the inquiry about this last aspect may take account of the subject-matter of the agreement, the status of the parties to it, their relationship to one another, and other surrounding circumstances, not only is there obvious difficulty in formulating rules intended to prescribe the kinds of cases in which an intention to create contractual relations should, or should not, be found to exist, it would be wrong to do so. Because the search for the “intention to create contractual relations” requires an objective assessment of the state of affairs between the parties (as distinct from the identification of any uncommunicated subjective reservation or intention that either may harbour) the circumstances which might properly be taken into account in deciding whether there was the relevant intention are so varied as to preclude the formation of any prescriptive rules. Although the word “intention” is used in this context, it is used in the same sense as it is used in other contractual contexts. It describes what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened. It is not a search for the uncommunicated subjective motives or intentions of the parties.
[26] In this context of intention to create legal relations there is frequent reference to “presumptions”. It is said that it may be presumed that there are some “family arrangements” which are not intended to give rise to legal obligations and it was said in this case that it should not be presumed that there was an intention to create legal relations because it was a matter concerning the engagement of a minister of religion. For our part, we doubt the utility of using the language of presumptions in this context. At best, the use of that language does no more than invite attention to identifying the party who bears the onus of proof. In this case, where issue was joined about the existence of a legally binding contract between the parties, there could be no doubt that it was for the appellant to demonstrate that there was such a contract. Reference to presumptions may serve only to distract attention from that more basic and important proposition.
In Fazio v Fazio [2012] WASCA 72, Murphy JA, Pullin and Newnes JJA agreeing, set out the following relevant principles:
a.(at [189]) A contract may be inferred from the acts and conduct of parties, as well as or in the absence of their words: Integrated Computer Services Pty Ltd v Digital Equipment Corporation (Aust) Pty Ltd (1988) 5 BPR 11,110 at 11,117; Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523; Lighting by Design (Aust) Pty Ltd v Cannington Nominees Pty Ltd [2008] WASCA 23; (2008) 35 WAR 520 at [21], [90] and [204]. The parties’ dealings with each other are relevant both ‘for what was said and not said’: Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833; (2001) 117 FCR 424 at [369];
b.(at [190]) The question is whether the parties’ conduct, viewed objectively, reveals a tacit understanding or agreement, or a manifestation of mutual assent, which evinces an intention to create legal relations: Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) and (No 10) [2008] WASC 239; [2009] WASC 107; (2008) 39 WAR 1 at [2659]; Lighting by Design v Cannington at [204]; Branir Pty Ltd v Owston Nominees (No 2) at [369];
c.(at [192]) In relation to the admissibility of subsequent conduct, the general principle is that subsequent conduct is not to be used as an aid in the construction of an instrument or written agreement: The Administration of the Territory of Papua and New Guinea v Daera Guba [1973] HCA 59; (1973) 130 CLR 353, 446 per Gibbs J, citing James Miller & Partners Ltd v Whitworth Street Estates (Manchester) Ltd [1970] AC 583, 603; Agricultural & Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 238 CLR 570 [35].
In amplification of principle (b) above, at [191] the Court referred to the following formulation of the question for determination (Brambles Holdings v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153 at [81] per Heydon JA):
In the light of the above cases, it is relevant to ask: in all the circumstances can an agreement be inferred? Has mutual assent been manifested? What would a reasonable person in the position of [one party] and a reasonable person in the position of the [other party] think as to whether there was a concluded bargain?
Cases cited by the applicant
The applicant referred to two decisions of the Federal Magistrates Court (now the Federal Circuit Court) in which the trustee’s decision to reject a proof of debt was reversed, namely Singh v Khatri & Griffin [2011] FMCA 804 (“Singh”) and Austral-Asia Freight Pty Ltd v Turner [2013] FCCA 298 (“Austral-Asia”).
In Singh, the essential issue was identified as whether alleged vendor finance for the purchase by the (bankrupt) son of pharmacies from his father created an obligation in the son (present or future) to repay money to the father. The judge noted that the case was largely one of credit and the outcome would follow his determination on the reliability and general credibility of the father and son. It was contended on behalf of the father that it probably did not matter whether the relevant loan agreements were enforceable because the sums claimed by the father represented unpaid balances due in respect of contracts for the sale of the various pharmacies. On that basis alone, they were contended to constitute a provable debt. Thus, the real issue was whether the transactions were genuine.
The Court accepted the evidence of father and son, and thus concluded that the alleged transactions had occurred. The Court concluded that, even if the loan agreements were not enforceable for want of form, the underlying transactions were genuine so that the bankrupt son remained liable to his father in respect of unpaid purchase monies pursuant to each pharmacy sale contract.
In Austral-Asia, the disputed proof of debt was based on an alleged personal guarantee given by the bankrupt to pay the debts owing to the applicant. The trustee rejected the proof of debt because there was no signed personal guarantee from the bankrupt. The Court found that certain email correspondence, construed in the light of surrounding circumstances, sufficiently evidenced the asserted guarantee.
Issues for determination
The function of the Court under s 104(1) is to determine, in the light of the material before it, whether the alleged debts should be admitted to proof: Re Rogers; ex parte CMV Parts Distribution Pty Ltd (1989) 20 FCR 561 at 562-563, citing Payne; ex parte Levi (unreported, Sup Ct, WA, Toohey J, 23 September 1986).
In his oral submissions, the applicant identified as the relevant question in each case whether the parties’ conduct, viewed objectively, reveals a tacit understanding or agreement, or a manifestation of mutual assent, which evinces an intention to create legal relations. I agree with that characterisation of the relevant issue for each of the proofs of debt, except for the proof of debt lodged by Mr Dollisson. As appears below, in the latter case, it is necessary to consider the parties to the alleged guarantee and whether there was consideration for the guarantee.
In his written submissions in reply, the applicant submitted that “[t]he question before this Court is not whether the obligation [sic] was incurred by the bankrupt before the date of bankruptcy but whether the debts/liabilities are provable.” This is an incorrect statement of the issues for determination which, as the applicant recognised at the hearing of the matter, did indeed concern whether any obligations were incurred.
Factual findings
Alleged liability to the Dollissons
Mr Dollisson (the first-named second respondent) is a longstanding business associate of the applicant. In June 2002, following a request by the applicant to Mr Dollisson to borrow about $250,000 for an unspecified time at an unspecified rate of interest, the applicant caused a company called Phoenix Commercial Enterprises Pty Ltd (“Phoenix”) to execute a document entitled “Deed of Loan”. The “deed” is dated 3 June 2002. The counterparties to the deed are the second respondents (“the Dollissons”). In correspondence to the Australian Financial Security Authority (“AFSA”) in 2014, Mr Dollisson said that the second-named second respondent (“Mrs Dollisson”) is his ex-wife. In the deed, Phoenix acknowledged receipt of the sum of $250,000 from the Dollissons.
Although expressed as a deed, the signatures of the Dollissons are not witnessed, as required by s 38 of the Conveyancing Act 1919 (NSW) (“Conveyancing Act”).
As security for the loan, by deed also dated 3 June 2002, Phoenix purported to charge certain property to the second respondents to secure payment of the loan. This deed is also not executed in accordance with s 38 of the Conveyancing Act.
On 5 June 2002, Mrs Dollisson purchased five bank cheques in the following amounts payable to the following payees:
$50,000 payable to B & Z Pupkovski
$50,000 payable to A Trpezanovski
$50,000 payable to S Ognenovski
$55,000 payable to P Capobianco
$25,000 payable to Phoenix
The applicant’s evidence is that the cheques were given to him (presumably on behalf of Phoenix) by Mrs Dollisson. The applicant has also made a statutory declaration to the following effect:
1.On or about 5 June 2002 I had a conversation with John and Erica Dollisson during which words to the following effect were said:
I said: Regarding the money borrowed under the Deed can you make the payment by cheque as follows:
A separate cheque for $50,000 to each of B & I Pupkovski; A Trpezanovski; S Ognevovski; and P Capobianco and a cheque to Phoenix for $25,000.
John Dollisson said: Yes, no problems.
2.On or about 5 June 2002, I was handed, five (5) cheques that had been made out as I had requested as set out in paragraph [1] above, by Erica Dollisson.
I am satisfied, on the balance of probabilities, that on about 5 June 2002, the Dollissons lent $250,000 to Phoenix on the terms recorded in the “Deed of Loan”.
The applicant’s evidence is that, at an unstated time, he provided a written guarantee to the Dollissons for the amount due and payable to them by Phoenix. A copy of the alleged guarantee is annexed to the applicant’s first affidavit (“purported deed of guarantee”). It is dated 16 June 2003. It appears to have been signed by the applicant and the second respondents. It provides relevantly:
RECITALS
A.By Deed dated 3 June 2002, a copy of which is annexed, (“Deed”) the Lender agreed to lend to Phoenix Commercial Enterprises Pty Ltd (ACN 068 374 032) (“Phoenix”) two hundred and fifty thousand dollars ($250,000) (“Sum”),
B.By Deed Phoenix acknowledged receipt of the Sum and covenanted to pay on 30 August 2002 (“Repayment Date”) to the Lender the Sum or that part of the Sum that is unpaid and a further amount of twenty thousand dollars ($20,000) (collectively the “Repayment Amount”),
C.By the Deed if Phoenix did not pay to the Lender the Repayment Amount by the Repayment Date, then Phoenix was to pay to the Lender an additional amount calculated at the rate of ten (10) per centum per annum on that part of the Repayment Amount that is unpaid on the Repayment Date,
D.By the date of this Deed Phoenix paid no amount to the Lender.
E.The Guarantor has agreed to guarantee the payment of the entire amount due by Phoenix to the Lender by the Deed.
OPERATIVE PART
1.The Guarantor unconditionally guarantees to the Lender the entire amount due by Phoenix to the Lender.
2.This guarantee is a continuing guarantee and will remain until the earlier of the day the Lender has been paid the entire amount due under the Deed or the Lender and Guarantor agree that this guarantee will not further apply.
As with the earlier “deeds”, the June 2003 deed was not executed in accordance with the requirements of s 38 of the Conveyancing Act. In oral submissions, the applicant referred to the guarantee as a “written contract”, but he did not point to any evidence of consideration flowing from the Dollissons to the applicant for the provision of the guarantee.
A proof of debt was lodged by Mr Dollisson alone. The amount claimed by Mr Dollisson in the proof of debt is $570,000 calculated by reference to the sum of $250,000 plus interest at the rate of 10% per annum from 30 August 2002 to 28 June 2010.
After various correspondence between AFSA and Mr Dollisson, on 20 May 2014, Mr Dollisson wrote an email to Daniel Rappoport, an employee of AFSA, saying:
Daniel,
All I have is a piece of paper following a phone call setting out the amounts to be paid to the 5 parties – that is names and amounts from which the 5 bank cheques were prepared, and you have the Westpac bank confirmation that the 5 cheques were prepared. As this is all we have I asked the Bankrupt for advice and got the Statutory Declaration.
What specific evidence are you looking for?
Regards
John DollissonIn response, Mr Rappoport replied later that day, saying:
Hi John
All we have is 5 bank cheques from Mrs E Dollisson to 5 separate payees, one of which was Phoenix.
There is no evidence that:
a) You have authority to act for Mrs E Dollisson (your ex-spouse) or what the alleged arrangement is between the two of you. Please give us her contact details including a phone number;
a. In any case, even if you did have authority, the Proof of Debt would need to be in her name and signed by her;
b) Phoenix actually borrowed the alleged funds and directed that you and/or Mrs E Dollisson were directed to pay amounts borrowed to the 4 payees not being Phoenix. The purported statutory declaration of the bankrupt is of no weight. Mr Agresta was not a director of the company back in 2002. In any case, the alleged loan agreement has the seal fixed to it but is not witnessed properly under the Corporations Act. Neither is the first version of it. Neither are your or your ex-spouses’ signature’s witnessed [sic]. Similar issues arise from the alleged guarantee and in any case the whole claim is defeated as subsection 38(1) of the Conveyancing Act 1919 (NSW) sets out that every deed, whether or nor not affecting property, shall be signed as well as sealed, and shall be attested by at least one witness not being a party to the deed. In any case, we will contact the former directors at the time to ascertain whether they ever knew of this alleged agreement. Please also give us B & I Pupkovski, A Trpezanovski, S Ognevovski and P Capobianco’s contact details, including phone numbers.
The Official Trustee reserves all rights.
Yours sincerely
Dan Rappoport
Mr Dollisson did not provide any additional information to AFSA.
Alleged debt to Mr Batiste
Mr Batiste is another longstanding associate of the applicant, with whom the applicant has conducted some business. The applicant’s evidence is:
During 2005 I had a conversation with Mr Batiste during which words to the following effect were said:
I said: John I need some money, can you help me out. I will pay you back when I can.
Mr Batiste said: How much are we talking about?
Mr Agresta said: Whatever you can. I would not be asking if I did not really need it.
Mr Batiste said: Yes I know. On the basis that you pay me back, I will do what I can.
In reliance on and as a consequence of the facts set out above, during the period 2005 to June 2010, Mr Batiste gave to me the amount of $65,000.
Mr Batiste’s proof of debt was accompanied by a single bank statement which shows two ATM withdrawals of $1000 on 14 June 2008 and 4 June 2009. Despite a request from AFSA, Mr Batiste did not supply any further information to corroborate the alleged debt.
Alleged debt to Mr Blaise Agresta
Mr Blaise Agresta is the applicant’s eldest son. The applicant’s evidence concerning the alleged debt is:
On or about 24 September 2008 I had a conversation with Blaise during which words to the following effect were said:
I said: Blaise you know that financially I am doing it tough. I need some financial assistance. Can you please lend me some money from time to time whenever I ask for it? Obviously, I will repay whatever money you provide to me.
Blaise said: If you really need it and I am able to. Do you have any idea how long you will need me to provide money to you?
I said: No, I do not know for how long. I hope that this mess will not last forever and yes, I do need the money otherwise, I would not be asking.
Blaise said: Just let me know how much.
On 24 September 2008, and further to the conversation and oral agreement set out…above, I said words to the following effect to Blaise: “Can you give me $400 on the basis as we discussed?”
Following that conversation Blaise gave to me $400.
For the period 24 September 2008 to 20 April 2010, I periodically had conversations with Blaise during which words to the following effect were said:
Can you give me some money? In reliance on and as a consequence of the facts set out…above, Blaise gave me cash.
And:
I do not recall when I commenced to lease the storage facility at Kennards Brookvale but do recall that I had a conversation with Blaise during which words to the following effect were said:
I said: Blaise I need a credit card to hire the storage facility from Kennards at Brookvale. Can I give them your credit card details and I will pay you back.
Blaise said: Yes
I used Blaise’s credit card to pay the storage facility fees at Kennards.
Mr Blaise Agresta’s proof of debt identifies a debt of $38,219.27 incurred in the period 2000 to 5 July 2010 and comprising “repayable cash advances and items purchased for F. Agresta”.
In support of his proof of debt, Mr Blaise Agresta supplied the trustee with the following documents:
a.A schedule of debts comprising cash advances and payments to Kennards, Skorin and Custom Light including amounts said to be interest and “cash advance charges” totalling $38,219.27;
b.Bank statements said to evidence each of the payments listed in the schedule. (The bank statements are partly redacted and do not identify the owner of the relevant account, as was pointed out to Mr Blaise Agresta by an officer of AFSA in an email dated 14 May 2014).
On 15 May 2014, Mr Blaise Agresta made a statutory declaration in which he recounted a conversation on or about 24 September 2008 to the same effect as that deposed to by the applicant and which attached further copies of the bank statements, demonstrating that he was the owner of the account.
Alleged debt to Ms Agresta
Ms Agresta is the applicant’s daughter. The applicant’s evidence concerning the alleged debt is:
During 2008, there was a conversation between myself and Amber during which words to the following effect were said:
I said: Amber can you lend some money to me. I will pay you back whenever I can
Amber said: I will always help you par.
In reliance on and as a consequence of [the above conversation] during the period 2008 to March 2010, Amber gave to me the amount of $12,000. I acknowledge receipt of the $12,000 from Amber.
By an email to an AFSA officer dated 11 May 2014, Ms Agresta recounted a conversation to similar effect. In addition, Ms Agresta claims that she said:
If you need some money just ask and if I have it I will give it to you. As for giving it back to me you can do that whenever you can.
Ms Agresta’s proof of debt was accompanied by a letter from Ms Agresta which stated:
You are aware that I am in Berlin, Germany. I do not have immediate access to all of my financial records and therefore am unable to justify the full amount ($12,000) that I provided to Mr F. Agresta. The only record I have on hand is a bank statement, copy attached. I withdrew the amount of $540 to provide the cash to Mr F. Agresta as repayable cash loans.
The bank statement records the following cash withdrawals on the following dates at the following locations:
2 February 2010 $50 Whitlam Square
3 February 2010 $100 Surry Hills
8 February 2010 $50 Wynyard
17 February 2010 $200 Mosman
18 February 2010 $140 Whitlam Square
On 5 May 2014, Ms Agresta was asked to provide a statutory declaration setting out specified details concerning the alleged debt.
By email dated 14 May 2014, Ms Agresta amended her proof of debt to claim $540.00.
Alleged debt to Mr Joel Agresta
Mr Joel Agresta is the applicant’s youngest son. The applicant’s evidence concerning the alleged debt is:
During early 2006, I had a conversation with Joel during which words to the following effect were said:
I said: Joel can you lend some money to me. I will pay you back whenever I can
Joel said: Absolutely.
In reliance on and as a consequence of [the above conversation], during the period May 2006 to November 2008, Joel gave to me the amount of $15,740 by way of small denominations, less than $90, in cash.
Attached to Mr Joel Agresta’s proof of debt was a letter from him which stated:
As to the money provided by me to Mr F. Agresta, all the money was in small denominations, less than $90. I provided the money generally on a weekly basis and a few days after I received my wages which were paid to me in cash. I provided the cash in the period May 2006 to November 2008.
On 14 May 2014, Mr Joel Agresta made a statutory declaration in which he stated:
1.During early 2006, there was a conversation between myself and Mr Ferdinando Agresta … during which words to the following effect were said:
Mr Agresta said: Can you lend me some money? I will pay you back when I can.
I said: How much are we talking about?
Mr Agresta said: Whatever you can.
I said: On the basis that you pay me back, I will do what I can.
2.On a number of occasions during May 2006 to November 2008, I gave to Mr Agresta cash based on the oral agreement set out in paragraph 1 above.
Mr Joel Agresta also provided to the trustee in support of his proof of debt a PAYG summary for the year ended 30 June 2008.
Should the trustee’s decisions be reversed or varied?
Mr Dollisson’s proof of debt
The applicant submits that “[n]otwithstanding whether there is some deficiency in the Deed or Guarantee [sic] I consider that the debt by me to the second respondent remains and is legally enforceable…and is capable of being quantified”. The applicant appeared to acknowledge that the guarantee was not effective as a deed by his oral submissions concerning the possible limitation periods applicable to an action on the guarantee, including references to ss 14 and 23 of the Limitation Act.
The trustee was correct to reject the proof of debt from Mr Dollisson because all of the evidence indicates that any relevant debt was due to the Dollissons jointly. Mr Dollisson said that he was acting on behalf of his ex-wife in lodging the proof of debt, but he never provided any evidence of his authority to do so.
Further, the proof of debt was based upon the claim that the applicant was liable to the Dollissons as guarantor of the debt owed to them by Phoenix. The evidence is that the purported guarantee was given in June 2003, a year after the loan. Unless a contract of guarantee is under seal, it must be supported by consideration from the creditor (the Dollissons): O’Donovan J and Phillips J, Modern Contract of Guarantee (Lawbook Co., subscription service) at [2.1000] (update 55). In this case, there is no evidence of consideration. The usual form of consideration is the entry into the principal transaction, but this form of consideration does not apply here because the purported guarantee post-dated the principal transaction (by a year). A guarantee given only for past consideration will fail: O’Donovan and Phillips at [2.1200] (update 51).
Accordingly, the evidence does not support a conclusion that there was a legally enforceable contract of guarantee between the applicant and either Mr Dollisson or the Dollissons jointly.
If the guarantee is to be effective as a deed, it must comply with the relevant statutory requirements in respect of its execution: O’Donovan and Phillips at [2.1500]. The purported deed of guarantee does not comply. Accordingly, it is not effective as a deed.
It follows that the decision to reject Mr Dollisson’s proof of debt must be confirmed.
Alleged debt to Mr Batiste
I am not satisfied on the balance of probabilities that the applicant incurred a debt or liability to Mr Batiste of $65,000 or any amount for the following reasons:
a.There is no evidence to corroborate the claims of the applicant and Mr Batiste that the alleged amounts were in fact advanced to the applicant;
b.There is no evidence that either the applicant or Mr Batiste kept any record of amounts allegedly advanced. I would expect to see a record of cash loans, if the alleged amounts were advanced, and if the parties intended the applicant to be under a legal obligation to repay them;
c.There is no evidence linking any particular advance of money to any particular expenditure by the applicant, or any evidence of the applicant accounting to Mr Batiste for his use of the alleged advances;
d.There is no evidence of Mr Batiste’s financial capacity to make the alleged loans.
Accordingly, in my view, the decision to reject Mr Batiste’s proof of debt should be confirmed.
Alleged debt to Mr Blaise Agresta
I am not satisfied on the balance of probabilities that the applicant incurred a debt or liability to Mr Blaise Agresta of $38,219.27 or any amount for the following reasons:
a.There is no evidence to corroborate the claims of the applicant and Mr Blaise Agresta that the alleged amounts were in fact advanced to the applicant;
b.Although Mr Blaise Agresta has produced bank statements said to support the advances, there is no evidence that either he or the applicant kept a contemporaneous record of amounts advanced. I would expect to see a contemporaneous record of cash loans, or at least records from time to time of the amount owing, if the parties intended Mr Agresta to be under a legal obligation to repay the advances;
c.There is no documentary evidence to support the claim that the applicant incurred liabilities to Kennards Brookvale, which were paid by Mr Blaise Agresta;
d.There is no evidence linking any particular advance of money to any particular expenditure by the applicant;
e.There is no evidence of Mr Blaise Agresta’s financial capacity to make the alleged loans.
Accordingly, in my view, the decision to reject Mr Blaise Agresta’s proof of debt should be confirmed.
Alleged debt to Ms Agresta
I am not satisfied on the balance of probabilities that the applicant incurred a debt or liability to Ms Agresta of $12,000 or any amount for the following reasons:
a.There is no evidence to corroborate the claims of the applicant and Ms Agresta that the alleged amounts were in fact advanced to the applicant;
b.There is no evidence that either the applicant or Ms Agresta kept any record of amounts allegedly advanced. I would expect to see a record of cash loans, if the parties intended Mr Agresta to be under a legal obligation to repay them;
c.The conversation which the applicant claims gave rise to a binding agreement between him and Ms Agresta, being a conversation between father and child, does not include any express statement that they intended to create legal relations between them;
d.There is no evidence linking any particular advance of money to any particular expenditure by the applicant;
e.There is no evidence of Ms Agresta’s financial capacity to make the alleged loans.
Accordingly, in my view, the decision to reject Ms Agresta’s proof of debt should be confirmed.
Alleged debt to Mr Joel Agresta
For similar reasons, I am not satisfied on the balance of probabilities that the applicant incurred a debt or liability to Mr Joel Agresta of $15,740. To be precise:
a.There is no evidence to corroborate the claims of the applicant and Mr Joel Agresta that the alleged amounts were in fact advanced to the applicant;
b.There is no evidence that either the applicant or Mr Joel Agresta kept any record of amounts allegedly advanced. I would expect to see a record of cash loans if the parties intended the applicant to be under a legal obligation to repay them;
c.The conversation which the applicant claims gave rise to a binding agreement between him and Mr Joel Agresta, being a conversation between father and child, does not include any express statement that they intended to create legal relations between them;
d.There is no evidence linking any particular advance of money to any particular expenditure by the applicant;
e.There is no evidence of Mr Joel Agresta’s financial capacity to make the alleged loans, particularly having regard to the evidence of his very low income in one of the relevant income years.
Accordingly, in my view, the decision to reject Mr Joel Agresta’s proof of debt should be confirmed.
I certify that the preceding eighty-four (84) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gleeson.
Associate:
Dated: 5 February 2015
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