Brett Grimley Sales Pty Ltd v Petrovic

[2013] VCC 62

IN THE COUNTY COURT OF VICTORIA Revised
Not Restricted

AT MELBOURNE

CIVIL DIVISION

COMMERCIAL LIST
GENERAL DIVISION

Case No. CI-09-03107

BRETT GRIMLEY SALES PTY LTD (ACN 006 222 046)	Plaintiffs
v
VESNA PETROVIC	First Defendant
v
GORAN PETROVIC	Second Defendant

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JUDGE:	Her Honour Judge Kennedy
WHERE HELD:	Melbourne
DATE OF HEARING:	12, 13, 14, 18 & 19 February 2013
DATE OF JUDGMENT:	1 March, 2013
CASE MAY BE CITED AS:	Brett Grimley Sales Pty Ltd v Petrovic & Anor
MEDIUM NEUTRAL CITATION:	[2013] VCC 62

REASONS FOR JUDGMENT

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Catchwords: Commercial law – whether transfer of funds is a voidable transaction pursuant to s172 Property Law Act1958 (Vic) – funds paid at direction of former de facto in context of relationship breakdown – no alienation in respect of part of transfer – intention to defraud in relation to $52,900.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr S. Waldren	Lewenberg & Lewenberg
For the Second Defendant	Mr A. Kirby	Katz Lawyers

HER HONOUR:

1. In this case, the plaintiff alleges that a transfer of $360,000 by the first defendant to the second defendant on 7 January 2008 is a voidable transaction for the purposes of s172(1) of the Property Law Act1958 (Vic).
2. The plaintiff  seeks various relief including declarations and damages against the second defendant (it has already obtained a judgment in default of appearance against the first defendant).
3. The plaintiff is the former employer of the first defendant. As will be seen below, the first defendant has been convicted of several counts of theft which occurred over the course of her employment.
4. The second defendant is the son of the first defendant (the mother). He alleges that the transfer occurred consequent to the breakdown of the relationship between his de facto parents and sale of the family home.  This was in circumstances where his father had directed that his share in the proceeds of that home be paid to him.
5. Section 172(1) reads as follows:

172         Voluntary conveyances to defraud creditors

(1) Save as provided in this section, every alienation of property made, whether before or after the commencement of this Act, with intent to defraud creditors, shall be voidable, at the instance of any person thereby prejudiced (emphasis added).
…

6. Counsel for the son submitted that no “alienation” had occurred and, further, that the transfer was not made with the requisite “intent to defraud creditors”.
7. No other issues were identified by either Counsel. In particular, although the plaintiff initially relied on the decision in Black v S Freedman & Company,[1] for a separate cause of action (to the effect that the plaintiff was entitled to reclaim the moneys into the hands of a volunteer), this claim was abandoned on the first day of trial.

[1] (1910) 12 CLR 105.

8. It is accordingly necessary to resolve two issues:

·     Whether an “alienation” occurred;

·     Whether any alienation was made “with intent to defraud creditors.”

Witnesses

9. Witnesses called for the plaintiff were Mr Brett William Grimley, the director of the plaintiff, his wife, Mrs Cherie Grimley and the plaintiff’s solicitor, Ms Kirenjit Cheema.
10.  Witnesses called for the defendant were Mr Goran Petrovic (the son), Mr Dragan Petrovic (the father), and Ms Vesna Petrovic (the mother).
11.  Mr Grimley was clearly aggrieved by the actions of the mother. His evidence was also, on occasions, argumentative.
12.  More significantly, neither Mr Grimley nor his wife (who gave little evidence of substance) were in a position to provide direct evidence as to the Petrovic family dynamic.
13. The mother presented as an intelligent person, but was not an impressive witness. She is a convicted thief, but maintains that she never stole anything. Her evidence was also emotional and argumentative.
14.  This, however, does not mean that all her evidence, particularly as to family relationships, can be discounted. Instead, I have considered whether to accept her evidence in the light of all the evidence in the case, especially any objective evidence.
15. The father and son presented as straightforward witnesses, although there were gaps in their memories consistent with the effluxion of time.   

Evidence/ Findings of Fact
De facto relationship between mother and father

16. The evidence of both parents was that they commenced a de facto relationship living together when they were young in the early 1980s (the mother was 19 in 1982, while the father was seven years older).
17. The mother took the father’s name after they started having children, although they never married. 
18. The couple brought no assets of any substance to the relationship.
19. The mother engaged in various jobs, including in accounts, and apart from a period of time off work for the birth of a son, and later a daughter, continued to work.
20. The father, very early on, was involved in a car accident and suffered serious injuries. He was thereafter on a pension, although he also did some work, including driving and delivery work as well as work in the Thredbo tunnel (for some 4-5 months).  
21. The father also looked after the children, taking them to school and other activities, while his wife was at work. He also helped with household duties.
22. The father’s evidence was that, although there was not one bank account, he would provide cash to the mother from his pension and other casual jobs while the mother looked after the finances. The mother also confirmed that they “put things together” in terms of finances.
23. In about 1990 the couple purchased a property at Reservoir. The evidence of both father and mother was that the father paid the deposit which he valued at around $6,000 to $7,000, and they took out a loan for the remainder of the purchase price.
24. The evidence of the mother was that, although the property was put in her name, they had an agreement which was that the property was “…ours. We go fifty-fifty.” The evidence of the father was also that from the time they purchased their first house, they put all their money together but “[i]f something happen in life … separation or something –  always go half-half.”
25. The father’s evidence was also that he undertook renovations on the Reservoir property through his own labour and that of his friends. The mother corroborated this.  
26. The Reservoir property was subsequently sold and the “small profit” used to fund the purchase of another property in Fairfield.
27. The couple then purchased 20 Station Street, Fairfield in July 1998 for an amount of $134,000,[2] borrowing from the ANZ bank to do so. 

[2] Exhibit 4, Transfer of Land dated July 1998.

28. An ANZ home loan account in the mother’s name (013-298 4427-67647) shows a loan drawdown of $116,024.65 in July 1998.
29. The evidence of both parents was that the father contributed to the deposit amount. The mother identified this as an amount of $4,662 credited to the mother’s home loan account in July 1998.[3]

[3] Exhibit 3, ANZ Bank Statement for the mother’s Home Loan Account (013-298 4427-67647)  evidences a “Drawdown Fee Payment” in the amount of $4,662 on 31 July 1008.

30. The evidence of both was that the “half-half” arrangement continued to apply to this Fairfield property as with the Reservoir property.   
31. Following the purchase, the couple organised extensive renovations to the Fairfield property which was initially described as almost unliveable. A series of photographs were produced which support that extensive renovations were undertaken, including restumping, plastering, a new kitchen extension, and a granny flat.
32.  The evidence of each of the mother, father, and son was that these extensive renovations were undertaken by the father with assistance from friends.
33. The evidence was unclear as to how the materials for these renovations were funded. The husband said that a second mortgage was taken in an amount of some $50,000. The wife also said that there was another loan for this amount with the ANZ.
34. There is another ANZ statement of account entitled “Supplementary Loan” (013-275 4497-63809) which shows an initial loan drawdown of $65,000 in October, 2000.
35. The mother denied that this loan drawdown was used for renovations (and suggested there was another loan account). However, I prefer and accept the husband’s evidence on this. This is particularly so given no other separate ANZ loan was produced on subpoena to the ANZ.
36. The father also alleges that he continued to contribute to the repayments on the mortgage, including from his odd jobs, by giving his wife cash such that they paid the mortgage “together”. The mother also said that “me and Dragan” made the mortgage payments.
37. Although the bank documents do not show many “one-off” payments, this is not inconsistent with the father paying cash to the family “pool” so as to assist mortgage payments as described by both.

Employment with Brett Grimley

38. The evidence of Mr Grimley was that the plaintiff employed the mother as an office manager in the business from February 2000. Her salary was initially $40,000 which had increased to around $50,000 plus super by February 2008.   
39. The mother also alleges that the two had an affair during the course of her employment, which is denied by Mr Grimley. However, whatever the precise nature of the relationship, it was a close and emotional one. Thus, Mr Grimley himself accepts that he came to regard the mother “as a member of his extended family”.[4]

[4] Exhibit 5, Affidavit of Brett Grimley dated 3 July 2009, at paragraph 5. 

40. From a very early stage, in 2001, Mr Grimley alleges that the mother undertook a number of unauthorised transactions. 
41. In oral evidence he described three broad categories of unauthorised transactions. 
42. The first category related to scenarios wherein Mr Grimley would sign a cheque that was ultimately deposited into accounts in the name of the mother, or which benefitted the mother. In many cases these cheques were blank and also involved the production of false invoices. This modus operandi was used in relation to a substantial number of transactions totalling an amount of $95,888.56 (and coloured in “blue” in a table prepared by the plaintiff’s Counsel – see Exhibit R and Exhibit S).
43. The second category concerned internet transfers from the company’s account to accounts associated with the mother which were not authorised. This practice was used in relation to transactions with a value of $24,093.58 (coloured pink in the table).
44. The final category concerned unauthorised personal expenditure on the company Diner’s Club credit card. This method was used in relation to transactions with a value of $14,031.79 (coloured green in the table).
45. Mr Grimley’s evidence was therefore that the unauthorised transactions amounted to a total of $134,013.93 as set out in table 1 to the Further Amended Statement of Claim dated 14 February 2013 (the “FASOC”).
46.  This amount was subject to revision during the course of the trial and was complicated given the mother appeared to have been given extensive control over the accounts of both the company and Mr Grimley personally. Mr Grimley also conceded that there were occasions the mother paid for things on her own credit card and was told to “reimburse herself”.
47. However, Mr Grimley maintained his evidence to the effect that the mother conducted the unauthorised transactions set out in table 1 between 12 December, 2001 and 14 November, 2007 (which was not the subject of any detailed challenge).  I also accept that, given the production of false invoices, conscious steps were taken by the mother to conceal the unauthorised transactions from the plaintiff.

Breakdown of the relationship between the parents

48. The relationship between the parents started breaking down although the precise time for this is not clear. 
49. Mr Grimley learnt about this strain in late 2005 / early 2006 when the mother told him that she wanted to “get away from” her husband.[5]

[5] Exhibit 5, Affidavit of Brett Grimley dated 3 July 2009, at paragraph 7.

50.  The evidence of the father was that this occurred in circumstances where he learnt of a mortgage drawdown by his wife. Thus, he believed that the mortgage should have been around $100,000. However, one time when the mother was away he saw the amount of the mortgage was in fact some $200,000. When he confronted the mother about this on her return she told him she had used equity on the house to give it to Brett Grimley. This was the end of the relationship for him such that he said she could either sell the house or keep it but if she kept it she had to put half in the children’s name. The break up then took awhile because they were waiting for their daughter to turn 18 and after that the mother decided to sell the house. 
51. The mother’s evidence was that the couple were unhappy for awhile such that she was spending a lot of money on personal items and trips and in fact took an extra $100,000 “and something” (including fees) in  late 2004 which she added to the home loan. This was constituted by money she took to “help Brett” (in an amount of $70,000) and also for herself. However, she admitted that Brett paid her back the $70,000, which money she also spent on herself. Her evidence was that the father was “not happy” when he found out about the money redrawn from the mortgage. However, the couple decided to wait for their daughter to finish her year 12 until they would move out. She described that their son was also overseas but that when he finally did come home, they sat down and told the children of the break up.   
52. The evidence of the son was that, after being overseas for soccer for some time, he returned home in May 2007.  At that time he recalled his parents having an argument and his father telling him that he was going to separate from his mother. 
53. I accept that the relationship between the couple broke down, and that the Fairfield property was subsequently sold following this break down.  However, the bank documents did not substantiate a withdrawal of the amount of $100,000 as both parents suggested. Rather, as the mother accepted under cross examination, they portray standardised deposits and withdrawals with the only significant withdrawal occurring in March 2005. At this time, there was a $152,556.41 withdrawal from account 63809 and a simultaneous closing down of account 67647 with a deposit of $99,400. This thereby established a net withdrawal of only $53,156.41 in March 2005.   
54. The explanations of the mother about this were unsatisfactory.  Although she originally claimed to have added the $100,000 to the home loan in 2004, she later said that she did not take the $100,000 “in one go”, but rather spent it on personal items and trips over time. She also claimed that there was “another loan” in existence although no such records were produced on subpoena or otherwise.
55.  I therefore do not accept that the mother used some $100,000 for her own benefit to the exclusion of her husband. Such a statement was not supported by objective evidence and is contrary to the bank statements produced. I do however accept, consistent with that evidence, that she withdrew the amount of $53,156.41 for her own use, and without her husband’s knowledge,  in March, 2005.

Proceeds of Fairfield

56. It is not disputed that the Fairfield property was subsequently placed on the market. Mr Grimley said that the mother told him she was selling the Fairfield property in about mid 2007.[6]

[6] Exhibit 5, Affidavit of Brett Grimley dated 3 July 2009, at paragraph 7.

57. The mother’s evidence was that the property then went to auction (in spring) in October/November. It was subsequently transferred by transfer of land dated 29 December 2007 for $790,000.  
58. Both parties accept that the net proceeds of Fairfield amounted to $561,043.71 which was deposited in the ANZ bank account of the mother on 28 December, 2007.[7]

[7] Exhibit V(4), ANZ Bank Statement of Vesna Petrovic (5125-90198) dated 31 December 2007.

59. The evidence of the father was that he asked the mother to put his half share into his son’s account because he was going to look for a house for him. He also told his son that he would need to look after his sister and that both she and he were to have a roof if needed (which conversation was also corroborated by the son, who currently lives with the father). This “half” was calculated at $330,000 on the basis that the mother’s unilateral withdrawal of $100,000 should be put  back into the “pool”, (namely, $561,000 plus $100,000 = $660,000, rounded off).
60.  However, the mother also provided an extra $30,000 loan to the son as a loan for the son’s deposit which the father claimed was paid back to the mother by the father’s girlfriend. This was said to be done “between bank accounts,” although no evidence was led to substantiate such a repayment and the “girlfriend” herself was not called. 
61. The total transferred was therefore $360,000.
62. The evidence of the mother was similar, namely, that the arrangements discussed at the end of the relationship were that they were going to go “fifty-fifty” and that given the mortgage had been increased, she said that when they sold the house she would repay the extra she took for herself.  When the proceeds came through, the father asked her to put his share into the son’s account. 
63. The mother also lent the son $30,000 extra for the purchase costs of his apartment. Her evidence was also that the $30,000 was paid back from the father “a couple of months later”.
64. The mother’s bank statement therefore shows a withdrawal of an amount of $360,000 from her ANZ account,[8] on 7 January, 2008 (the relevant “first” transfer), while the ANZ bank account in the name of the son shows an amount of $360,000 being deposited on the same day.[9]

[8] Exhibit V(5), ANZ Bank Statement of Vesna Petrovic (5125-90198) dated 31 January 2008.

[9] Exhibit V(6), ANZ Bank Statement of Goran Petrovic (5193-64724) dated 31 January 2008.

65.  Between receipt of the proceeds on 28 December and 11 January, a series of withdrawals are then made from the mother’s ANZ account, such that most of the remaining proceeds of Fairfield are drawn upon (with only $33,907.44 remaining as at 11 January). Although some of these transactions appear to relate to the payment of “debts” as the mother claimed, these transactions include a cash withdrawal of $100,000 on 11 January. This latter transaction will be referred to further below.
66. The son thereafter became registered proprietor of 16/693 Malvern Road Toorak using the $360,000,[10] (this is described as the “second transfer” by the plaintiff).

Termination of employment

[10] See withdrawal of $306,408.06 from son’s ANZ Bank Account (5193-64724) on 11 February 2008 (Exhibit V(6), ANZ Bank Statement of Goran Petrovic dated 31 January 2008).

67. Mr Grimley’s evidence was that he had no suspicions about the mother over the period from February 2000 to March 2008, however, he had become concerned that the revenue appeared less than the sales figures would justify, and that the overhead expenses appeared to be higher than he believed had been incurred. He mentioned this to the mother in early 2007 and told her that he was engaging a bookkeeper to identify the reason for this, though he did not suspect the mother to have contributed to this issue.
68. Mr Grimley’s evidence was that the mother then communicated her intention to resign in November, 2007. Upon the giving of notice, Mr Grimley asked her to stay on and they then came to an agreement that she would stay on for a little while. She thereafter continued to work for him and was working one day a week up to  late February, 2008,  when he first put allegations of theft to her.
69. The evidence of the mother was that she gave notice in November, 2007 because she had found another job with Prime Creative. The mother also said that she wanted to “get rid of” the father and Mr Grimley (with whom she had had an affair). Mr Grimley did not want her to leave but she said she was leaving. She finished up on 22 December, though she came back in mid January to help out which was her last day at work. She also continued however to help out on Fridays. 

67. In terms of the bookkeeper, the mother admitted that a bookkeeper, Ms Cairns, worked in the business in 2007, “from home” and that she had had some contact with her. However, when asked as to what Ms Cairns’ role precisely was, her demeanour became evasive. Thus, she  continually repeated “I don’t know. You would need to ask Brett.”  She also denied being concerned that someone was looking over her shoulder, stating she had a  “green accounting journal”. Her evidence was that this journal substantiated that the amounts taken were for reimbursements. However, this journal has not been produced; the mother maintaining that she left it with the plaintiff.
68. Mr Grimley’s evidence was that he discovered some transactions which made him suspicious, and then called the mother into the office in late February, 2008. The discovered thefts were then put to the mother by a solicitor, Mr Lewenberg. 
69. The mother’s evidence was that this meeting took place at the end of February / March and that Mr Grimley asked her to repay $30,000 (though Mr Grimley did not recall this).
70. Following this meeting, the mother departed permanently and did not work for the plaintiff again.  

Court proceedings

74. On 7 July 2009 these proceedings were issued. 
75.  A freezing order was then made on 10 July 2009, which freezing order continues to this day.
76. However, in the meantime, the mother was charged with criminal offences.
77. The mother was originally charged pursuant to Presentment X03513654 wherein it was alleged that the mother had committed 71 counts of theft; 88 counts of obtaining by deception; and 1 count of falsification of documents.
78. This original presentment was later divided into two “sub” presentments containing a smaller number of counts.
79. Presentment X03513654.4 (Presentment 654.4), contained 6 counts of theft (between 2002 and July 2007) covering  thefts involving cheques.
80. Presentment X03513654 (Presentment 654), contained 22 counts of theft (between 2003 and January 2007) which concerned internet transfers. 
81. The charges the subject of presentment 654 went to trial with the result that the mother sustained 2 convictions pursuant to a jury verdict in November, 2010 (charges numbered 18 and 19 relating to 2 transactions in January 2005 and January 2006).
82. The mother pleaded guilty to the 6 charges the subject of Presentment 654.4 (relating to 21 transactions between October 2002 and July 2007). According to her evidence she did this because she had “had enough” and continues to maintain that she was not guilty.
83. However, by order of 24 November, 2011 Judge Shelton sentenced the mother to 6 months imprisonment on charges 18 and 19 in relation to presentment 654. He also directed that the sentence be wholly suspended for 2 years.
84. By order of 24 November, Judge Shelton also sentenced the mother to a total effective sentence of 2 years imprisonment suspended for 2 years in relation to the counts the subject of presentment 654.4.
85. His Honour also made a compensation order on both presentments in the amount of $42,365.13 as an aggregate order.
86. The civil proceeding had been delayed pending the outcome of these criminal proceedings. However, a judgment in default of appearance was entered against the mother in an amount of $132,991.49 plus costs and interest on 20 April, 2012.  The evidence of the mother was that she had no money to defend the civil proceeding by this stage.

Other evidence/car

87. The plaintiff also sought to lead evidence surrounding the further transfer of $100,000 from the mother’s share of the proceeds on 11 January, 2008  as referred to already. 
88. The mother’s evidence was that she gave her son $10,000 and also lent her son just over $60,000 to purchase an Audi car which amount has been repaid by “various things” he had done for her. Under cross examination she confirmed that this money came from the amount of $100,000 withdrawn by card entry of 11 January, 2008.
89. The son confirmed that his mother loaned him a portion of the purchase price money for the car (which he believed was around $60,000 although he could not really recall) and which had been repaid over time.  
90. I allowed this evidence to be led subject to objection and indicated that I would formally rule on its admission as part of these reasons.
91. Although no allegation was made that this transfer was itself a voidable transaction, this evidence is relevant pursuant to s55 of the Evidence Act 2008 (Vic).
92. Thus, it forms part of the context in which the proceeds of the Fairfield house were disbursed. Critically, it  shows that, notwithstanding the receipt of a considerable amount of money representing a significant asset gained over many years, the mother has chosen to effectively dissipate those proceeds completely within the space of some 2 weeks.
93. It remains, then, to consider the two issues in this case. 

Alienation

94. The son submitted that the plaintiff could only seek relief in relation to that part of the net proceeds of Fairfield that could rightly be said to belong to the mother. Thus, it was submitted that the first transfer was, properly, proceeds truly belonging to the father by reason of  a constructive trust.
95. The court is faced with the somewhat unusual circumstances where both spouses actually agree on their true share, but where a third party seeks to challenge the result.  
96. However, the short answer to the issue of alienation is that the clear intention of both parties was to hold any property on a “50/50” basis. In such circumstances, the parties appear to have intended to create a trust at least insofar as the proceeds were divided equally.
97. However, if it were necessary to determine, I would also be satisfied that a constructive trust is established.
98. In Baumgartner v Baumgartner,[11] the High Court recognised that, where there is a joint relationship with joint contributions (financial and otherwise) equity may intervene by imposing a constructive trust if the registered proprietor unconscionably attempts to deny the other party’s interest.

[11] (1987) 164 CLR 137.

99. In their joint judgment, Mason CJ, Wilson and Deane JJ state,[12]

[12] Baumgartner v Baumgartner (1987) 164 CLR 137 [149] – [150].

Equity favours equality and, in circumstances where the parties have lived together for years and have pooled their resources and their efforts to create a joint home, there is much to be said for the view that they should share the beneficial ownership equally as tenants-in-common, subject to adjustment to avoid any injustice which would result if account were not taken of the disparity between the worth of their individual contributions either financially or in kind.
…
The court should, where possible, strive to give effect to the notion of practical equality, rather than pursue complicated factual inquiries which will result in relatively insignificant differences in contributions and consequential beneficial interest.

100.Given the evidence already summarised, above, I am satisfied of the following matters:

·that the mother and father were in a long term de facto relationship for some 25 years living as husband and wife and using a common name;

·that they brought no assets to the relationship;

·that there were two children of the relationship who lived with the couple as a family unit;

·that they agreed between themselves that properties were owned equally even though the title was only in the name of the mother;

·the mother was the primary breadwinner but the father made substantial non-financial care-giving contributions to the family as well as making financial contributions (from his pension and casual employment).

101.The plaintiff challenged the existence of a trust and stressed a number of matters including:

·That there was a lack of evidence as to the extent of the father’s financial contribution;

·the parties had separate bank accounts;

·friends assisted the father in the renovation.

102. However, there was evidence from both parents (which was not challenged) that the father contributed to the deposit for Reservoir and also contributed his labour and connections in renovating this property. The small profit on this property was then used in part to fund the purchase of the Fairfield property.

103. The father also contributed to the deposit for Fairfield (an amount of $4,662 is shown in the bank account) and made contributions to paying the Fairfield mortgage by contributing to the family budget.  He also undertook substantial renovations to this property which has apparently contributed to a substantial increase in the capital value of the property (from $134,000 to $790,000). He further made non financial contributions as a primary caregiver, looking after the 2 children of the relationship, which enabled the mother to work full-time.

104.Although, then, the father may not have made as much direct financial contribution, the evidence suggests that he was an equal partner.

105. The lack of separate bank accounts is also not determinative,[13] in my view, particularly where family resources were clearly pooled as occurred in this case.

[13] Parij v Parij (1997) 72 SASRJ 153, 165.

106. Finally, although friends assisted with the renovation, I accept that this was by arrangement with the father who also completed an enormous amount of work in renovating the Fairfield property from being almost “unliveable” to being an attractive family home.

107. In the light of all of the evidence I am therefore satisfied that it is  appropriate to impose a constructive trust over 50% of the true proceeds of the property to prevent the registered proprietor (the mother) from unconscionably attempting  to deny the father’s interest.

108. It remains to consider whether some “adjustments” should be made as referred to in Baumgartner.

109. The first adjustment concerns the alleged extra $100,000 adjustment on the basis of the mother’s mortgage redraw. For reasons given already, I do not consider that a redraw in this amount is established; rather an amount of only $53,156.41 is established. In those circumstances, only this amount is to be added to the “pool” of $561,043.71 giving a total figure of $614, 200.12.

110. Secondly, the amount transferred to the father also included a further amount of $30,000 constituted by the alleged “loan” to the son.  However, there is again, no documentary evidence substantiating the making of this loan, nor that it was repaid. In such circumstances, I do not accept that this amount should properly have been included in the amount transferred.

111. I am therefore satisfied that the total amount which should have been payable to the father was an amount of $307,100.06 ($614,200.12 divided by two). It follows that, although the plaintiff is unable to recover an amount of $307,100 which belonged to the father, an amount of $52,900 too much ($360,000 less $307,100) was transferred to the father beyond his entitlements.

112. However, in order to recover this amount, the plaintiff must show the requisite intent.

Requisite intention
Principles

113. In Marcolongo v Chen & Anor,[14] a majority of the High Court (French CJ, Gummow, Crennan and Bell JJ) rejected a submission that an equivalent provision to s172 required an actual intent in the sense of an animus shown by an awareness that the transaction would have an effect on the ability of creditors to recover. Instead, the reference to “defraud” included the existence of an intention to hinder, delay or defeat creditors.[15]

[14] [2011] 242 CLR 546.

[15] Marcolongo v Chen & Anor [2011] 242 CLR 546 [31], [35] and [56].

114.Their honours also determined that the intent need not be the predominant or sole intent.[16]

[16] Marcolongo v Chen & Anor [2011] 242 CLR 546 [57].

115. The plaintiff bears the burden of proof in showing the requisite intent, although the evidentiary burden of proof may shift where facts concerning the settlement are within the knowledge of the settler and the settlee.[17]

[17] Groeneveld Australia Pty Ltd v Nolten Vastgoed BV [2011] VSC 18 [74].

116. The High Court also stated that a provision such as this should receive liberal construction in effecting the purpose of suppressing fraud.[18] However, I accept that, pursuant to s140 (2)(c) of the Evidence Act, I am also to take into account the gravity of the matter alleged.

[18] Marcolongo v Chen & Anor [2011] 242 CLR 546 [20].

Application

117. The mother maintained that the entire amount of $360,000 was an appropriate amount to transfer, and denied stealing any money in any event.

118. However, given the difficulties with her evidence, the question of intent must be determined in the light of all the evidence in this case.

119. The mother has been convicted of 8 counts of theft comprising 23 transactions over the period October 2002 to July 2007. Moreover, the evidence before this court suggests that the mother conducted some 164 transactions between December 2001 and November 2007 in circumstances where she also took conscious steps to conceal these transactions from the plaintiff.

120. It is true that no allegation had been put to the mother prior to the making of the transfer in January, 2008. However, the mother must have been aware that she had taken amounts of some significance such that there was a risk of action being taken to recover all, or some, of these amounts.

121. There are other matters that I also consider relevant as follows:

·The expression of the wish to resign in November, 2007 is consistent with a consciousness of guilt, particularly given there had been a new bookkeeper employee placed into the office. The giving of notice in November also occurs immediately prior to the transfer in January, 2008;

·that the explanation for the calculations relating to the proceeds, at least insofar as $52,900 was concerned, was unsatisfactory and without objective foundation;

·The transfer has had the effect of substantially reducing the assets available to the mother’s creditors. This was  in a context wherein all of the mother’s equity was disposed of swiftly, including by way of a further substantial advance to her son.  This, despite the fact that the mother was then newly separated and aged in her mid 40s, and where no satisfactory explanation was advanced as to why she would divest herself so completely of assets.

123. When consideration is given to all of the matters, above, I am satisfied that the transfer was, to the extent of $52,900, made with an intention to hinder, delay or defeat creditors pursuant to s172.

Conclusion

124. The first transfer is voidable to the extent it includes an amount of $52,900 and should be set aside.

125. I will hear from the parties as to the appropriate form of final orders.