Bell v Cribb

[2013] WASC 32

BELL -v- CRIBB [2013] WASC 32

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2013] WASC 32
Case No:	CIV:1697/2012	Heard:	15 & 17 JANUARY 2013
Coram:	BEECH J	Delivered:	8/02/13
No of pages:	22	Judgment Part:	1 of 1
Result:	Defendant's summary judgment applications on counterclaim partially successful, partially unsuccessful and partially adjourned Other applications adjourned
Category:	B
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Parties:	CARL WILLIAM BELL ALLCERT HOLDINGS PTY LTD AS TRUSTEE FOR THE W J TRUST TRADING AS TWIN STAR RESOURCES NEIL RAYMOND CRIBB AS LIQUIDATOR OF COSTANOZA PTY LTD (IN LIQ) WATER CORPORATION COSTANOZA PTY LTD (IN LIQ) MAURICE JAMES CUTTS ALLCERT HOLDIGNS PTY LTD AS TRUSTEE FOR THE W J TRUST TRADING AS TWIN STAR RESOURCES ACCEPT ENTERPRIDES PTY LTD
Catchwords:	Practice and procedure Summary judgment Application for summary judgment on counterclaim Effect of bankruptcy of a party Whether any arguable defence to counterclaims Turns on own facts
Legislation:	Bankruptcy Act 1966 (Cth), s 60(2) Corporations Act 2001 (Cth), s 588FB Rules of the Supreme Court 1971 (WA), O 4 r 3, O 12 r 1
Case References:	Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552 Anderson v Effexseven (1998) 10 ANZ Ins Cas 61-424 Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256 Bell v Cribb [2012] WASCA 234 Bell v Cribb [No 2] [2013] WASCA 6 Cribb v Bell [2012] WASC 346 Donyette Pty Ltd v Top Lodge Nominees Pty Ltd [No 2] [2011] WASC 141 Duckworth v Water Corporation [2012] WASC 30 Eastern Metropolitan Regional Council v Four Seasons Construction Pty Ltd [2000] WASC 178; (2000) 22 WAR 372 Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 Prow Pty Ltd v Commissioner of Police [2012] WASC 363 Re Hoffman [2004] WASCA 238 Re Lofthouse [2001] FCA 25; (2001) 107 FCR 151

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION : BELL -v- CRIBB [2013] WASC 32 CORAM : BEECH J HEARD : 15 & 17 JANUARY 2013 DELIVERED : 8 FEBRUARY 2013 FILE NO/S : CIV 1697 of 2012 BETWEEN : CARL WILLIAM BELL

First Plaintiff

ALLCERT HOLDINGS PTY LTD AS TRUSTEE FOR THE W J TRUST TRADING AS TWIN STAR RESOURCES
Second Plaintiff

AND

NEIL RAYMOND CRIBB AS LIQUIDATOR OF COSTANOZA PTY LTD (IN LIQ)
First Defendant

WATER CORPORATION
Second Defendant

COSTANOZA PTY LTD (IN LIQ)
Third Defendant

MAURICE JAMES CUTTS
Fourth Defendant

(BY ORIGINAL ACTION)

(Page 2)

NEIL RAYMOND CRIBB AS LIQUIDATOR OF COSTANOZA PTY LTD (IN LIQ)
First Plaintiff (by counterclaim)

COSTANOZA PTY LTD (IN LIQ)
Second Plaintiff (by counterclaim)

AND

CARL WILLIAM BELL
First Defendant (by counterclaim)

ALLCERT HOLDIGNS PTY LTD AS TRUSTEE FOR THE W J TRUST TRADING AS TWIN STAR RESOURCES
Second Defendant (by counterclaim)

ACCEPT ENTERPRIDES PTY LTD
Third Defendant (by counterclaim)

(BY COUNTERCLAIM)

Catchwords:

Practice and procedure - Summary judgment - Application for summary judgment on counterclaim - Effect of bankruptcy of a party - Whether any arguable defence to counterclaims - Turns on own facts

Legislation:

Bankruptcy Act 1966 (Cth), s 60(2)

Corporations Act 2001 (Cth), s 588FB
Rules of the Supreme Court 1971 (WA), O 4 r 3, O 12 r 1

Result:

Defendant's summary judgment applications on counterclaim partially successful, partially unsuccessful and partially adjourned

Other applications adjourned

(Page 3)

Category: B

Representation:

Original Action

Counsel:

First Plaintiff : In person
Second Plaintiff : No appearance
First Defendant : Mr K L Christensen
Second Defendant : No appearance
Third Defendant : Mr K L Christensen
Fourth Defendant : No appearance

Solicitors:

First Plaintiff : In person
Second Plaintiff : No appearance
First Defendant : Gadens Lawyers
Second Defendant : No appearance
Third Defendant : Gadens Lawyers
Fourth Defendant : No appearance

Counterclaim

Counsel:

First Plaintiff (by counterclaim) : Mr K L Christensen
Second Plaintiff (by counterclaim) : Mr K L Christensen
First Defendant (by counterclaim) : In person
Second Defendant (by counterclaim) : No appearance
Third Defendant (by counterclaim) : No appearance

Solicitors:

First Plaintiff (by counterclaim) : Gadens Lawyers
Second Plaintiff (by counterclaim) : Gadens Lawyers
First Defendant (by counterclaim) : In person
Second Defendant (by counterclaim) : No appearance
Third Defendant (by counterclaim) : No appearance

(Page 4)

Case(s) referred to in judgment(s):

Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552
Anderson v Effexseven (1998) 10 ANZ Ins Cas 61-424
Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256
Bell v Cribb [2012] WASCA 234
Bell v Cribb [No 2] [2013] WASCA 6
Cribb v Bell [2012] WASC 346
Donyette Pty Ltd v Top Lodge Nominees Pty Ltd [No 2] [2011] WASC 141
Duckworth v Water Corporation [2012] WASC 30
Eastern Metropolitan Regional Council v Four Seasons Construction Pty Ltd [2000] WASC 178; (2000) 22 WAR 372
Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87
Prow Pty Ltd v Commissioner of Police [2012] WASC 363
Re Hoffman [2004] WASCA 238
Re Lofthouse [2001] FCA 25; (2001) 107 FCR 151


(Page 5)

BEECH J:

Introduction

1 In the action the plaintiffs claim to own a number of vehicles and other assets that they complain were wrongly taken by the first defendant. By counterclaim, the first defendant claims to be entitled to a transfer of a number of those vehicles, and other vehicles. The first defendant (the Liquidator), the liquidator of the third defendant, Costanoza Pty Ltd, counterclaims orders setting aside transactions by which the plaintiffs or Accept Pty Ltd became owners of various vehicles, claiming that they involved uncommercial transactions when Costanoza was insolvent.

2 There are two applications the subject of these reasons.

3 The Liquidator has applied for leave to sell the assets listed in attachment NC8 to his affidavit of 28 September 2012. Those assets include a number of vehicles which were registered in the name of Allcert Holdings Pty Ltd, the second plaintiff in this action. It also includes vehicles in the name of Accept Pty Ltd. The list also includes a number of other items of property including parts, tools and other equipment.

4 There are issues between the parties about the ownership of a number of the assets on the list, including some which were registered in the name of the first plaintiff, Mr Bell, and the second plaintiff Allcert.

5 The Liquidator has also applied for summary judgment on the plaintiffs' claim, and on the Liquidator's counterclaim.

6 At the hearing of the application on 15 January 2013 it belatedly emerged that Mr Bell had been made bankrupt earlier that morning. That has had significant consequences for these applications, preventing some from being determined at this stage.

7 It is convenient to outline the parties' respective claims of entitlements to the assets, and the procedural history, before turning to the merits of the applications.

Mr Bell's case

8 Mr Bell's case, in summary, is that:

(1) in January 2008 Mr Bell lent the sum of $550,000 to Mr Maurice Cutts. Mr Cutts was the sole director of Costanoza;

(Page 6)

(2) in late September 2011 Mr Bell and Mr Cutts had discussions leading to an agreement that Mr Cutts would procure Costanoza to transfer some equipment to Allcert (as Mr Bell's nominee) provided that Costanoza confirmed its solvency, in satisfaction of Mr Cutts' debt to Mr Bell (the Repayment Arrangement);

(3) in late September 2011 Costanoza resolved that it was solvent and resolved to transfer a number of items of property to Mr Bell, or his nominee in satisfaction of the debt owed by Mr Cutts to Mr Bell;

(4) in furtherance of that, Mr Cutts signed a letter on behalf of Costanoza dated 30 September 2011 recording that property was to be transferred to the Transilk Trust (of which Allcert was the trustee);

(5) in March 2012 representatives of the Liquidator were told by Mr Bell and others at the premises where he was conducting Allcert's business that that business was not connected to Costanoza or Mr Cutts. Nevertheless, the Liquidator seized all of the property of the plaintiff's business including vehicles, equipment and chattels; and

(6) the writ and statement of claim seek the return of various property referred to as the impounded items.

9 This summary is drawn primarily from Mr Bell's affidavit of 14 June 2012 and the statement of claim endorsed on the writ. That affidavit and the writ were prepared at a time when the plaintiffs were legally represented. Since 12 July 2012 that has not been the case. The affidavit of 14 June 2012 was filed in support of an application by the plaintiffs for an interlocutory mandatory injunction for the return of various items of property.

10 On 6 November 2012 Mr Bell filed a further affidavit in opposition to the application for leave to sell. The affidavit:

(a) complains that he has been forced to submit the affidavit by the defendant's application and the court's decisions;

(b) asserts that the items in list 1 and list 2 (annexed to the affidavit) belong to him, Allcert and Accept, and not to Costanoza;

(Page 7)

(c) makes an argumentative assertion about the conduct of and position adopted by the Liquidator;

(d) seeks relief from the court regarding the property on list 1 and list 2, claiming it should be returned to the plaintiffs on condition that Mr Bell:


(i) undertakes not to sell or dispose of the property until all court proceedings are concluded;

(ii) guarantees to maintain the equipment in good serviceable condition; and

(iii) undertakes to keep the property within Western Australia and return it if he is unsuccessful in the proceedings; and


(e) asserts that the court has no authority to make any order for sale.

11 The Liquidator objects to the whole of Mr Bell's affidavit of 6 November 2012, on the ground that its contents are argumentative, opinion without foundation, secondary evidence of documentation or otherwise unintelligible. There is merit in the objections. The affidavit sworn on 2 November 2012 and filed 6 November 2012 does not contain admissible evidence. For example, the unsubstantiated assertion of ownership in par 7 is not evidence. However, I have taken it to be a statement of the position of the plaintiffs, and in the nature of submissions.

12 Mr Bell filed a further affidavit affirmed 10 December 2012. That affidavit:

(a) asserts that many of the assets the subject of the proceedings have been disposed of and are subject to a criminal investigation;

(b) asserts a belief that the Liquidator is responsible for the theft of items;

(c) asserts that the decision to put Costanoza into liquidation was unlawful;

(d) requests the court to order the Liquidator to stop any sale or disposal of any item in dispute; and

(Page 8)

(e) asserts that affidavits filed by the plaintiffs in this proceeding, and by the defendant in COR 48 of 2012 are relied on in these applications.

13 The Liquidator objects to the contents of this affidavit on substantially the same grounds as the objection to the affidavit of 6 November 2012. Again, I uphold the objection. The affidavit does not contain admissible evidence. I treat the affidavit as a statement of the plaintiffs' position and in the nature of submissions.

14 Mr Bell also relies upon a further affidavit he affirmed on 14 January 2013. That affidavit makes a series of assertions about the illegality and unconstitutionality of some of the things which have already occurred. It also contains assertions of fraudulent and illegal conduct on the part of the Liquidator. No facts are contained relating to those assertions. I uphold the Liquidator's objection to this affidavit. Again, I treat the affidavit as a further statement of the plaintiff's position.

The Liquidator's case

15 The Liquidator's case may be summarised as follows:

(1) the assets in question were seized from premises at Wedgefield that were licensed by Costanoza;

(2) none of the documents relied on by the plaintiffs were part of Costanoza's books and records;

(3) there is no evidence that Costanoza, as distinct from Mr Cutts, owed any money to Allcert or to Mr Bell;

(4) Costanoza was insolvent from about June 2009 or by September 2009, and, alternatively, by no later than 29 September 2011, it became insolvent by entering into the Repayment Arrangement and by reason of the transfers of vehicles referred to below;

(5) from 27 October 2011 to 18 December 2011, Costanoza transferred various vehicles (the Allcert Vehicles) to Allcert;

(6) on 18 November 2011 Costanoza transferred vehicles (the Accept Vehicles) to Accept;

(7) Costanoza received no consideration for these transfers from Allcert, Accept, or Mr Bell;

(Page 9)

(8) by reason of these matters, the transfers of vehicles were uncommercial transactions under s 588FB of the Corporations Act 2001 (Cth) in that Costanoza received no benefit from the transfer and suffered detriment by losing ownership of the vehicles the subject of the transfers for no consideration;

(9) if, which is denied, the Allcert Vehicles and the Accept Vehicles were transferred as part of the Repayment Arrangement relied on by the plaintiffs, those transfers constitute uncommercial transactions under s 588FB;

(10) from February 2010 to August 2011, Costanoza paid $46,200 to Mr Martin Miller as payment for the purchase of certain vehicles (the Miller Vehicles);

(11) on instructions from Mr Cutts, Mr Miller transferred the Miller Vehicles to Allcert Holdings on dates in November and December 2011;

(12) Allcert Holdings did not provide any considerations for the transfer of the Miller Vehicles to Costanoza;

(13) consequently, Allcert holds the Miller Vehicles on trust for Costanoza;

(14) alternatively, the gift by Costanoza of the purchase price for the Miller Vehicles, is an uncommercial transaction in that Costanoza received no benefit and suffered detriment by losing the purchase price or the ownership of the Miller Vehicles;

(15) Costanoza entered hire purchase agreements with G & A Lombardi Pty Ltd to finance certain vehicles (the Lombardi Vehicles);

(16) under the finance agreement, Costanoza made all necessary payments so that it was entitled to ownership of the Lombardi Vehicles;

(17) on 11 January 2012 on instructions from Mr Cutts, the Lombardi Vehicles were transferred to Allcert;

(18) Allcert did not provide any consideration;

(Page 10)

(19) consequently, the Lombardi Vehicles were held on trust or the transaction involving the transfer of the vehicle to Allcert is an uncommercial transaction; and

(20) in summary, by his counterclaim, the Liquidator claims relief in relation to the Allcert Vehicles, the Accept Vehicles, the Miller Vehicles and the Lombardi Vehicles.

16 Next, I outline briefly the history of these proceedings, and the related proceedings in COR 48 of 2012.

Procedural history

17 The plaintiffs commenced these proceedings by writ filed 24 April 2012.

18 Pursuant to the orders of Master Sanderson of 5 April 2012, the Liquidator issued a summons for the examination of Mr Bell under s 596B of the Corporations Act.

19 The examination summons was returnable on 8 June 2012. On that day Mr Bell appeared before a registrar of the court. He refused to take an oath or affirmation, or to answer questions. The examination was adjourned sine die.

20 The Liquidator then made an application for the issue of an arrest warrant. That application was adjourned.

21 In June 2012 the plaintiffs applied for an order that the Liquidator give possession of various items to the plaintiffs.

22 That application was dismissed on 12 July 2012.

23 In dismissing the plaintiffs' application on 12 July 2012 I put some emphasis on the fact that Mr Bell had refused to take an oath or affirmation or answer questions at the examination. In essence, I accepted the Liquidator's submission that he should not be ordered to return the equipment sought by the plaintiffs until the Liquidator had exercised his powers of examination in order to investigate the matters the subject of the application.

24 The examination summons was relisted for 23 August 2012 before the registrar. Mr Bell challenged the authority of the registrar and refused to take the oath or affirmation (ts 21 - 24).

(Page 11)

25 Later on 23 August 2012, I adjourned the Liquidator's application for an arrest warrant, and the hearing of the examination summons, to 10 September 2012 before me.

26 Mr Bell did not appear on 10 September 2012. He contacted the Liquidator's solicitor and my associate, in the lead up to 10 September, advising that:

(a) he had received notice of the examination on 10 September 2012 only a few days earlier;

(b) he was in the country and would not be able to attend on 10 September;

(c) he wishes to obtain further information before attending the examination; and

(d) he wanted the hearing adjourned.

27 Consequently, the examination and the Liquidator's application for an arrest warrant were adjourned to 18 September 2012.

28 On 18 September 2012 Mr Bell handed up a document entitled 'Notification of Constitutional issue to be raised in the Supreme Court of Western Australia on 18th of September 2012 in accordance with section 78B of the Judiciary Act'. I treated that document as an application to set aside the examination summons.

29 On 21 September 2012 I published reasons dismissing Mr Bell's application to set aside the examination summons: Cribb v Bell [2012] WASC 346. On that day, the examination was adjourned to 26 September 2012 to enable Mr Bell to consider my reasons.

30 On 26 September 2012, on Mr Bell's application, the examination was adjourned to 18 October 2012.

31 On 28 September 2012 the Liquidator filed the application for leave to sell which was made returnable on 18 October 2012.

32 On 18 October 2012, Mr Bell applied for a stay of the examination, and a stay of the Liquidator's application to sell the assets.

33 In relation to the examination, I made an order adjourning the examination to 15 November 2012. I made it clear that the purpose of that examination was to give Mr Bell an opportunity to attempt to obtain a

(Page 12)

stay of the examination by an order of the Court of Appeal, and that absent an order staying the examination; it would proceed on 15 November 2012 (ts 38, ts 40 - 42).

34 I adjourned the Liquidator's application to 15 November 2012, and made directions for affidavits and submissions to be filed by Mr Bell.

35 On 13 November 2012 Newnes JA dismissed Mr Bell's application for a stay of the examination: Bell v Cribb [2012] WASCA 234.

36 On 15 November 2012 Mr Bell applied for a stay or further adjournment of the examination. I refused that application. After some time the examination of Mr Bell proceeded on 15 November 2012 in that Mr Bell answered questions on oath (although not in the witness box).

37 Neither party has sought to rely in these applications on what Mr Bell said in the course of his examination. In his submissions on these applications, Mr Bell denied that there was any valid examination, but that submission is not germane to the present applications.

38 On 20 December 2012, the Court of Appeal dismissed Mr Bell's application for a review of the decision of Newnes JA: Bell v Cribb [No 2] [2013] WASCA 6.

39 Since 12 July 2012, the plaintiffs have not taken any step to progress these proceedings. That may be viewed as consistent with a general understanding, based on what occurred on 12 July 2012, that these proceedings should await the examination process.

40 On 20 November 2012 there was a directions hearing in relation to the applications the subject of these reasons. Directions were made for the filing and serving of the application for summary judgment, and of affidavits and submissions in relation to it. At that hearing, Mr Bell made some complaints to the effect that the Liquidator held documents belonging to him, or to one of his companies, and which had not been returned. On this occasion, as occurred at many other directions hearings, the court pointed out the distinction between evidence and statements from the bar table, and pointed to the need for evidence to support any applications (ts 113 - 114, 116). Orders were made (among others) that:

(1) by 27 November 2012 the Liquidator make available to Mr Bell any documents which the Liquidator considers belong to either of the plaintiffs; and

(Page 13)

(2) by 11 December 2012 Mr Bell make any application for the return of documents that he claims belong to him, accompanied by a supporting affidavit.

41 On or about 30 November 2012 Accept was served with the Liquidator's defence and counterclaim. Accept has not entered an appearance.

42 By chamber summons of 28 November 2012 the Liquidator has applied for summary judgment on the plaintiffs' claims, and on the Liquidator's counterclaims. Further, the Liquidator applies for judgment in default of appearance against Accept.

43 Mr Bell did not file any formal application for the return of documents, or any supporting affidavits. He sent to the court a one page document entitled 'Missing Items 30 November 2012', containing a list of items. He did not file any affidavit in relation to that.

44 The Liquidator's applications were listed for hearing on 15 January 2013.

45 Oral submissions were made in relation to those applications during the morning on 15 January 2013. After the luncheon adjournment, counsel for the Liquidator informed the court that he understood that Mr Bell had been made bankrupt earlier that day. Mr Bell's submissions in opposition to the Liquidator's applications having been completed, the applications were adjourned to 17 January 2013. The primary purpose of the adjournment was to enable the Liquidator to ascertain whether, as was understood, Mr Bell had been made bankrupt and, if so, to consider the consequences of that for these applications.

46 On 16 January 2013 the Liquidator filed an affidavit of Ms Stephanie Osborn. That affidavit said, in substance, that, after protestations of invalidity of the proceedings in the Federal Magistrates Court from Mr Bell, Mr Bell had been made bankrupt on 15 January 2013, and attached a copy of the sequestration order.

47 At the hearing on 17 January 2013, the Liquidator submitted that, in light of Mr Bell's bankruptcy, his counterclaims relating to the Lombardi vehicles and the Miller vehicles should be determined, and that his application relating to his other counterclaims and other applications should be adjourned sine die. As will appear, I agree with that approach respecting the effect of Mr Bell's bankruptcy.

(Page 14)

48 I begin with the Liquidator's application for summary judgment.

Summary judgment: general principles

49 The caution with which the power to grant summary judgment is to be exercised is well known. In an application by a defendant, the defendant bears the onus of showing that there is no serious question to be tried on any cause of action raised by the plaintiff: Anderson v Effexseven (1998) 10 ANZ Ins Cas 61-424, 74, 757. The power to order summary judgment should never be exercised unless it is clear there is no real question to be tried: Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87, 99. It is only in the clearest of cases, when there is a high degree of certainty about the ultimate outcome of the proceeding if it went to trial, that summary judgment ought be given: Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552 [57]; Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256 [46].

Uncommercial transactions

50 The following sections of the Corporations Act are relied on by the Liquidator in support of his defence and counterclaim:

588FB Uncommercial transactions

(1) A transaction of a company is an uncommercial transaction of the company if, and only if, it may be expected that a reasonable person in the company's circumstances would not have entered into the transaction, having regard to:


(a) the benefits (if any) to the company of entering into the transaction; and

(b) the detriment to the company of entering into the transaction; and

(c) the respective benefits to other parties to the transaction of entering into it; and

(d) any other relevant matter.


(2) A transaction may be an uncommercial transaction of a company because of subsection (1):

(a) whether or not a creditor of the company is a party to the transaction; and

(b) even if the transaction is given effect to, or is required to be given effect to, because of an order of an Australian court or a direction by an agency.

(Page 15)

588FC Insolvent transactions

A transaction of a company is an insolvent transaction of the company if, and only if, it is an unfair preference given by the company, or an uncommercial transaction of the company, and:

(a) any of the following happens at a time when the company is insolvent:


(i) the transaction is entered into; or

(ii) an act is done, or an omission is made, for the purpose of giving effect to the transaction; or


(b) the company becomes insolvent because of, or because of matters including:

(i) entering into the transaction; or

(ii) a person doing an act, or making an omission, for the purpose of giving effect to the transaction.

…

588FF Courts may make orders about voidable transactions

(1) Where, on the application of a company's liquidator, a court is satisfied that a transaction of the company is voidable because of section 588FE, the court may make one or more of the following orders:


(a) an order directing a person to pay to the company an amount equal to some or all of the money that the company has paid under the transaction;

(b) an order directing a person to transfer to the company property that the company has transferred under the transaction;

(c) an order requiring a person to pay to the company an amount that, in the court's opinion, fairly represents some or all of the benefits that the person has received because of the transaction;

(d) an order requiring a person to transfer to the company property that, in the court's opinion, fairly represents the application of either or both of the following:


(i) money that the company has paid under the transaction;

(Page 16)

(ii) proceeds of property that the company has transferred under the transaction;

...

(h) an order declaring an agreement constituting, forming part of, or relating to, the transaction, or specified provisions of such an agreement, to have been void at and after the time when the agreement was made, or at and after a specified later time;

...

(2) Nothing in subsection (1) limits the generality of anything else in it.

(3) An application under subsection (1) may only be made:


(a) during the period beginning on the relation back day and ending:

(i) 3 years after the relation back day; or

(ii) 12 months after the first appointment of a liquidator in relation to the winding up of the company;

whichever is the later; or


(b) within such longer period as the Court orders on an application under this paragraph made by the liquidator during the paragraph (a) period.

...

51 Section 588FG provides, relevantly, as follows:

(1) A court is not to make under section 588FF an order materially prejudicing a right or interest of a person other than a party to the transaction if it is proved that:

(a) the person received no benefit because of the transaction; or

(b) in relation to each benefit that the person received because of the transaction:


(i) the person received the benefit in good faith; and

(ii) at the time when the person received the benefit:

(Page 17)

(A) the person had no reasonable grounds for suspecting that the company was insolvent at that time or would become insolvent as mentioned in paragraph 588FC(b); and

(B) a reasonable person in the person's circumstances would have had no such grounds for so suspecting.

(2) A court is not to make under section 588FF an order materially prejudicing a right or interest of a person if the transaction is not an unfair loan to the company, or an unreasonable director related transaction of the company, and it is proved that:

(a) the person became a party to the transaction in good faith; and

(b) at the time when the person became such a party:


(i) the person had no reasonable grounds for suspecting that the company was insolvent at that time or would become insolvent as mentioned in paragraph 588FC(b); and

(ii) a reasonable person in the person's circumstances would have had no such grounds for so suspecting; and


(c) the person has provided valuable consideration under the transaction or has changed his, her or its position in reliance on the transaction.

The Liquidator's application for defendant's summary judgment

52 The Liquidator accepts, rightly in my opinion, that the effect of Mr Bell's bankruptcy is that the Liquidator cannot presently proceed with his application for defendant's summary judgment. Section 60(2) of the Bankruptcy Act 1966 (Cth) provides as follows:

An action commenced by a person who subsequently becomes a bankrupt is, upon his or her becoming a bankrupt, stayed until the trustee makes election, in writing, to prosecute or discontinue the action.

53 The effect of s 60(2) is that a claim by a bankrupt is stayed even if the bankrupt concerned is 'only one of several plaintiffs, whose claim was separate from those of other plaintiffs, although raising common questions of law and fact': Re Lofthouse [2001] FCA 25; (2001) 107 FCR 151 [16].
(Page 18)

Some of the cases following Re Lofthouse in this respect were collected by Edelman J in Duckworth v Water Corporation [2012] WASC 30 [40].

54 Consequently, I will order that the action be stayed until the trustee in Mr Bell's bankruptcy, after receipt of proper notice, makes an election in writing to prosecute or discontinue the action pursuant to s 60(3) of the Bankruptcy Act.

The Allcert Vehicles and the Accept Vehicles

55 The Allcert Vehicles and the Accept Vehicles were, on the plaintiffs' case, all part of the subject of the Repayment Arrangement. On the plaintiffs' case, Mr Bell was a party to the Repayment Arrangement which was in terms that Costanoza would transfer the vehicles or other property to Mr Bell or his nominee.

56 Ultimately, in the course of submissions on 17 January 2013, counsel for the Liquidator accepted that Mr Bell's trustee in bankruptcy had a right to be heard in relation to the Allcert Vehicles and the Accept Vehicles. I think that is the position. That is because, although those vehicles are in the names of those companies, it may be that, pursuant to the Repayment Arrangement or otherwise, Mr Bell's trustee in bankruptcy claims some entitlement in relation to those vehicles.

57 For those reasons, the Liquidator proposed, and I ordered, that the Liquidator's application for summary judgment in relation to the Allcert Vehicles and the application for default judgment in relation to the Accept Vehicles be adjourned sine die.

The Miller Vehicles

58 There is no evidence that the Miller Vehicles or the Lombardi Vehicles were part of the Repayment Arrangement, or that otherwise Mr Bell has any rights in relation to them. Consequently, Mr Bell's bankruptcy is no impediment to the determination of the applications in these respects.

59 The Liquidator's case is that the Miller Vehicles were purchased by Costanoza from Mr Miller, paid for by Costanoza, and that blank transfers were provided by Mr Miller to Mr Cutts on the understanding that the vehicles were to be transferred to Costanoza.

60 There was unchallenged evidence that monthly repayments for the Miller Vehicles were paid from Costanoza's bank account. However, in my view, the evidence does not establish, to the standard of certainty

(Page 19)

required for summary judgment, that Costanoza entered the agreement referred to in the draft affidavit of Mr Miller that is annexed to Ms Xue's affidavit sworn 18 December 2012. In his draft affidavit, Mr Miller says that he sold the vehicles to Mr Cutts. He does not say, in terms, that he sold them to Costanoza.

61 Counsel for the Liquidator submits that a presumption arises from the fact that Costanoza made the monthly repayments for the vehicles. I do not accept that any presumption arises in this context. The question of the legal person or entity who was purchaser under the agreement with Mr Miller is a question of fact and is not the domain of any legal presumptions. Further, in my view, the evidence is not sufficiently clear to sustain a conclusion, for the purposes of summary judgment, that Costanoza was the purchaser.

62 If Costanoza were not the purchaser, the fact that its funds were used to pay the purchase price may give rise to rights on the part of Costanoza. However, that would not sustain the relief sought in the counterclaim.

63 For these reasons I would not give summary judgment in relation to the Miller Vehicles.

The Lombardi Vehicles

64 The unchallenged evidence of Mr Gilchrist contained in his affidavit sworn 11 January 2012 is that:

(a) Costanoza and Lombardi entered into a hire purchase agreement in respect of the Lombardi Vehicles;

(b) Costanoza paid the monthly instalments pursuant to the hire purchase agreement (see also Mr Edmondson's affidavit of 19 December 2012);

(c) the purchasers' obligations under the hire purchase agreement were fully satisfied (see also Mr Edmondson's affidavit of 28 November 2012); and

(d) Mr Cutts directed that the vehicles be transferred to Allcert.

65 The evidence is that Allcert did not provide any consideration to Costanoza for these vehicles (see Mr Edmondson's affidavit of 19 December 2012).

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66 Mr Bell submitted that there was a Rental Agreement between Costanoza and Lombardi, so that Costanoza was not entitled to ownership of the vehicles. That is unsupported by and inconsistent with the evidence. The submission must be rejected.

67 In my view, on the facts as I have summarised them, and on the evidence as a whole, the conclusion is overwhelming that the transfer of the vehicles from Lombardi to Allcert at the request of Mr Cutts is an uncommercial transaction. Costanoza was unconditionally entitled to become the owner of the vehicles. Mr Cutts, on behalf of Costanoza, gave away Costanoza's rights. Costanoza received nothing in return.

68 Having regard to those matters, and taking into account all of the evidence respecting these vehicles, I am satisfied that a reasonable person in Costanoza's circumstances would not have directed Lombardi to transfer these vehicles to Allcert, and that the contrary is not reasonably arguable.

69 In my view the evidence overwhelmingly establishes that by no later than September 2011, Costanoza was insolvent. The evidence is accurately summarised in par 56 of the Liquidator's written submissions of December 2012.

70 There is no evidence to give rise to any arguable defence on the part of Allcert under s 588FG.

71 For these reasons I would grant summary judgment to the Liquidator in respect of the Lombardi Vehicles.

72 On 17 January 2013 I ordered that any application for leave to file a further affidavit in opposition to the Liquidator's applications, including any proposed affidavit, be filed by 31 January 2013.

73 Allcert cannot file an affidavit except through a solicitor. That is the effect of O 4 r 3(2) and O 12 r 1(2) of the Rules of the Supreme Court 1971 (WA). Authority establishes the following:

(1) the prohibitions in O 4 r 3(2) and O 12 r 1(2) include the taking of any step and filing of any document in a proceeding;

(2) the court has no power to dispense with the prohibitions in these Rules; and

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(3) the court does have power to permit a person leave to appear to speak on behalf of a company, but this does not avoid the prohibition on taking any step, including filing any document.

74 See Eastern Metropolitan Regional Council v Four Seasons Construction Pty Ltd [2000] WASC 178; (2000) 22 WAR 372; Re Hoffman [2004] WASCA 238; Donyette Pty Ltd v Top Lodge Nominees Pty Ltd [No 2] [2011] WASC 141 [36]; Prow Pty Ltd v Commissioner of Police [2012] WASC 363 [20] - [23].

75 Prior to learning of the bankruptcy of Mr Bell, the Liquidator did not make any formal objection in respect of these matters. However, on 15 January 2013, and thereafter, the Liquidator points to the effect of these Rules. Further, the Liquidator submits that s 206B(3) of the Corporations Act provides that a person is disqualified from managing corporations if he or she is an undischarged bankrupt under the law of Australia.

76 On 1 February 2013, Mr Bell filed an affidavit, affirmed by him on 31 January 2013, on his own behalf and purportedly on behalf of Allcert and Accept. For the reasons just given, the affidavit is not filed on behalf of the companies, because an affidavit on behalf of a company can be filed only by a solicitor. In any event, Mr Bell's affidavit does not contain any admissible evidence relating to the Liquidator's applications. Rather it relates, or appears to relate, to Mr Bell's assertion that the Liquidator wrongfully seized assets belonging to Mr Bell and his companies. Insofar as, in this affidavit, Mr Bell seeks further time to prepare further affidavits in opposition to the Liquidator's applications, I would decline to permit further time. In my view, there has been ample opportunity for Mr Bell to prepare any affidavits or applications on which he may wish to rely.

Conclusion

77 For these reasons:

(1) the plaintiffs' action is stayed under s 60(2) of the Bankruptcy Act until the trustee in Mr Bell's bankruptcy, after receipt of proper notice, makes an election in writing to prosecute or discontinue the action;

(2) I would grant summary judgment to the Liquidator in respect of the Lombardi Vehicles;

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(3) I would dismiss the Liquidator's application in respect of the Miller Vehicles; and

(4) I would otherwise adjourn the applications sine die.

78 I will hear from the parties in respect of costs.