Covino, Re A.M. Donnelly, Ex Parte M.C.

[1986] FCA 288

CATCHWORDS

BANKRUPTCY - Power to order taking accounts in respect of

partnership involving bankrupt - Bankrupt partner under

flctitlous name - Effect of lncorporation of company with shares

In fictitious name - Referral of sollcitor's conduct to Law

Society and Prothonotary of State Supreme Court.

Bankruptcy Act 1966, s.30

partnership Act 1892 (NSW) s . 3 3

In re Wordsworth (1889) 5 WN(NSW) 96

Keppie v. Law society of the A.C.T. (1983) 62 A.C.T.R. 9

Obacelo Pty Ltd v . Taveraft Pty Ltd (unreported, Wilcox J.,

13/6/86)

Coklssioner of Australlan Federal Police	v.	Curran (1984) 55
A.L.R. 697

' I

W.1054 of 1983

Burchett J.

Sydney

9 July 1986

-

I

2 .

THE COURT DECLARES THAT:

(1) The interest p u r p o r t i n g t o b e t h a t of "Walter Jay Smi th"

i n t h e p a r t n e r s h i p b e t w e e n t h e p e r s o n u s i n g t h a t name

and t h e first r e s p o n d e n t c a r r y l n g o n b u s l n e s s a t Minto

i n t h e S t a t e of N e w South Wales i n t h e name of " F a i r

Dlnkum T y r e S e r v i c e " is a n asset of t h e b a n k r u p t es ta te

of t h e t h i r d r e s p o n d e n t .

T h e i s s u e d s h a r e i n t h e s e c o n d r e s p o n d e n t s t a n d i n g i n

t h e name of "Walter J a y S m i t h " 1s a n a s se t of t h e

bankrup t e s t a t e of t h e t h i r d r e s p o n d e n t .

T h e I s s u e d s h a r e i n t h e s e c o n d r e s p o n d e n t s t a n d l n g i n

t h e name of "Angela Smith" is a n asset o f t h e b a n k r u p t

e s t a t e o f t h e t h i r d r e s p o n d e n t .

The sum of $43,610.32 paid by Messrs. Ca ldwe l l &

Associates, S o l i c i t o r s , t o t h e f irst re sponden t on or

a b o u t 2 7 t h J u n e , 1 9 8 4 is a n asset of t h e b a n k r u p t e s t a t e

o f t h e t h i r d r e s p o n d e n t .

The sum of $ 9 , 5 0 0 d e p o s i t e d t o t h e credl t of t h e a c c o u n t

of Walter Smith and J. P h i l l s t r a d i n g a s F a i r Dinkum

T y r e S e r v i c e b y Messrs. Caldwell & A s s o c i a t e s ,

S o l i c i t o r s , a t t h e Commonwealth Trading Bank,

Campbel l town is an asset o f t h e b a n k r u p t e s t a t e of t h e

t h l r d r e s p o n d e n t .

THE COURT ORDERS:

(1) T h a t t h e R e g i s t r a r make a n i n q u i r y a n d t a k e a n a c c o u n t

o f t h e s h a r e of t h e b a n k r u p t e s t a t e of t h e t h i r d

r e s p o n d e n t i n t h e p r o f i t s a n d t h e assets of t h e s a i d

p a r t n e r s h i p .

T h a t t h e first re sponden t pay t o t h e a p p l i c a n t s u c h sum

as may be a s c e r t a i n e d u p o n s u c h i n q u i r y a n d a c c o u n t as

t h e s h a r e of t h e b a n k r u p t e s t a t e of t h e t h i r d r e s p o n d e n t

i n t h e p r o f i t s o f t h e said p a r t n e r s h i p .

The windlng up of t h e s a l d p a r t n e r s h i p a n d t h e

d i s t r i b u t i o n t o t h e a p p l i c a n t o f s u c h sum a s may b e

a s c e r t a i n e d b y t h e R e g i s t r a r as t h e s h a r e of t h e

b a n k r u p t es ta te o f t h e t h i r d r e s p o n d e n t i n t h e assets of

t h e said p a r t n e r s h i p .

( a ) The f lrst r e s p o n d e n t b y h i m s e l f , h l s s e r v a n t s a n d

a g e n t s b e r e s t r a i n e d from t a k i n g a n y s t e p t o s e l l ,

d i s p o s e o f , d e l l v e r u p or p a r t w i t h p o s s e s s l o n o f

a n y t y r e r e t r e a d l n g m a c h i n e r y , e q u i p m e n t or o t h e r

asset o f t h e b u s i n e s s known as " F a i r Dinkum Tyre

S e r v i c e " , b e t h a t s t e p a s t e p t a k e n or a t t e m p t e d

I N THE FEDERAL COURT OF AUSTRALIA )

GENERAL	D I V I S I Q N	1	I
L

BANKRUPTCY D I S P R I C T O F THE STATE OF )

NEW SOUTH WALES' R'ND THE AUSTRALIAN ) NO. W.1054 Of 1983

TERRITOlRY	CAPITAL	1
- RE:

ANGELO MICHAEL COVINO

and MELITA COVINO

B a n k r u p t s

EX PARTE:

MAX CHRISTOPHER

DONNELLY

A p p l i c a n t

J O H N P H I L I S

F i r s t R e s p o n d e n t

FAIRDINKUM TYRE

SERVICE PTY LIMITED

Second R e s p o n d e n t

ANGELO MICHAEL COVINO

; . T h i r d R e s p o n d e n t

MELITA COVINO

l

F o u r t h R e s p o n d e n t i

c

MINUTE OF ORDER OF THE COURT

c Judge Maklng O r d e r : B u r c h e t t J.

Date of O r d e r : 15 J u l y 1 9 8 6

Where Made : Sydney

..

!

3.

t o b e t a k e n f o r h i m s e l f , f o r a n y p a r t n e r s h i p

c a r r y l n g o n b u s i n e s s i n t h e name "k 'a l r Uinkum Tyre

S e r v i c e " o r f o r t h e company known as F a l r Dinkum

T y r e S e r v i c e P t y . L i m i t e d .

( b ) The flrst r e s p o n d e n t b y h i m s e l f , h i s s e r v a n t s and

agen t s be r e s t r a i n e d from t a k i n g a n y s t ep t o pay

or a t t e m p t t o pay any sum of money compr i s ing any

p a r t of t h e p r o c e e d s o f s a l e of a n y t y r e

r e t r e a d l n g m a c h i n e r y or equipment o r o t h e r asset

t h e o f b u s i n e s s known as " F a l r Dlnkum Tyre

S e r v i c e " o r a n y o t h e r money whlch 1s t h e money of

t h e s a i d b u s l n e s s o r a n y p a r t n e r s h i p o r company

c a r r y l n g on b u s l n e s s i n t h a t name t o any pe r son .

( c ) The f irst r e s p o n d e n t b y h i m s e l f , h i s s e r v a n t s a n d

a g e n t s p a y f o r t h w i t h t o t h e a p p l i c a n t u p o n i t s

r e c e i p t b y h l m a n y sum of m o n e y c o m p r i s i n g a n y

p a r t t h e p r o c e e d s o f of s a l e a n y o f t y r e

r e t r e a d i n g m a c h i n e r y or equipment o r o t h e r asset

t h e o f b u s i n e s s known a s " F a l r D i n k u m Tyre

S e r v l c e " or a n y o t h e r money whlch is t h e money of

t h e s a l d b u s l n e s s or a n y p a r t n e r s h i p o r company

c a r r y l n g o n b u s i n e s s i n t h a t name.

( 5 ) T h a t t h e t h i r d r e s p o n d e n t p a y t o t h e a p p l l c a n t t h e sum

of $43,610.32.

T h h t ( 6 ) f i r s t t h e a n d t h i r d r e s p o n d e n t s t h e p a y t o

a p p l i c a n t t h e s u m of $9,500.

(7) T h a t t h e f l r s t a n d t h i r d r e s p o n d e n t s p a y t h e a p p l i c a n t ' s

costs , i n c l u d i n g a n y r e s e r v e d costs.

( 8 ) T h a t l i b e r t y b e r e s e r v e d t o t h e a p p l i c a n t t o seek

f u r t h e r re l ie f .

THE COURT DIRECTS THAT:

T h e a p p l l c a t i o n r e l a t i n g to Gandeza P ty . L imi ted da ted

23 August 1985 b e l l s t e d f o r m e n t i o n b e f o r e m e a t 9-30

A . M . o n 2 4 J u l y 1 9 8 6 f o r t h e f i x i n g o f a d a t e f o r a

h e a r i n g a n d f o r d l r e c t l o n s , t h e a p p l i c a n t t o n o t i f y t h e

s o l l c l t o r f o r Gandeza P ty . L imi ted of t h i s d i r e c t i o n b y

5-00 P.M. on Thursday, 1 6 J u l y n e x t .

NOTE: S e t t l e m e n t a n d e n t r y of o r d e r s is d e a l t w i t h by Order 36

of t h e F e d e r a l C o u r t R u l e s .

IN THE FEDERAL COURT OF AUSTRALIA 1

! GENERAL DIVISION

No. W.1054 of 1983

-

- RE :

ANGELO MICHAEL COVINO

and MELITA COVINO

EX PARTE:

MAX CHRISTOPHER

DONNELLY

A p p l i c a n t

J O H N P H I L I S

R e s p o n d e n t

FAIRDINKUM TYRE

S E R V I C E PTY L I M I T E D

Second R e s p o n d e n t

ANGELO MICHAEL COVINO

T h l r d R e s p o n d e n t

MELITA	COVINO
F o u r t h R e s p o n d e n t

REAS	ONS	FOR	JUDGMENT
-

BURCHETT J.

The evidence l n t h i s case t e l l s a ra ther s q u a l i d t a l e of

f r a u d . The r e s p o n d e n t s , A n g e l 0 Michael C o v i n o and Melita C o v i n o

are husband and w l f e , and bo th are b a n k r u p t . The a p p l i c a n t , who

2.

!

is the LrusLee UT Lheir respecLive esLaLes, seeks a number of

orders on the footing that Mr Covino, during a period commencing

when his banruptcy was lmpendlng and continuing after it, in

t

LI

L. concert with the respondent John Phllls, constructed a false Identity, in the name Walter Jay Smith, as a camouflage for his property and busiriess interests.

In 1982 Mr and Mrs Covino were defendants to a claim

for almost three hundred thousand dollars brought as a commercial

cause in the Supreme Court of New South Wales. They recelved

advlce that their defences could not succeed. A letter to Mr

Covino from hls then solicitor (who was not the solicitor now

acting for hlm)	dated	1	March 1982 contained the following
amazing advice:

“It wlll now be obvious to you that you and

your wife will susta.in judgment against you, on the personal guarantee actlons. That wlll inevltably lead to your Bankruptcy. In the tlme available to you we reiterate that you ought liquidate all your assets and apply the

proceeds where they can not be traced. Whilst this is a matter for your own decislon we would suggest that -consideration even be given to re-locatlng yourselves and to a large extent new identltles will be needed to be assumed, as ~f you do not you-r whereabouts

could be traced by the Offlcial Recelver or

Judgment Creditor through electoral role

(sic), registration car licence and

searches .”

On 10 August 1982 judgment was in fact entered against

Mr and Mrs Covino. That judgment was to lead to the bankruptcy

of Mr and Mrs Covino on 21 November 1983 pursuant to bankruptcy

!

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!	' * &q I
.	.LA ..X f4 'V. P+. .a* ' 3 - .-. - . -1 . . . - .. --. - ._ .- _ _ _ -.

1 .

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3 .	'I:	I_.
I I

notices served 14 May 1 9 8 3 and petitions filed 5 September 1 9 8 3 . - I

l .

By a document consisting of two pages, the first of whlch is ;.

dated 2 4 December 1 9 8 2 though the second bears the date 2 2 I

February 1 9 8 2 , signed by Mr Covino as a director of a company Kagu Pty Ltd, that company, by its dlrectors Mr and Mrs Covlno, purportedly sold "to John Phllls and Walter Smlth all retreading

machines." Curiously, the second page, which is in the form of an lnvolce, has in Its heading the words:

,'

"Sold to John Phllis &

Partner", and does not mention Walter Smith. The price shown is

$10,000. There 1s added the following:

"Conslderation wlll also be given for moneys owing by Kagu. From time to time for truck tyres whxh Kagu will buy from John Philis and Walter Smith."

I take these two vague and ungrammatical sentences to indicate

that it was not proposed that any money would change hands at the time of executlon of the document, but that the prlce of $10,000 would be satisfied by set-off against purchases of truck tyres. Although Melita Covino's name appears on the document, it

I

contains no signature purporting to be hers, a matter of Interest

in vlew of other evidence to be dlscussed. Despite the terms of

the agreement, a receipt issued, also dated 2 4 December 1982 , for $10,000 as received by KagU Pty Limlted from "Fairdinkum Tyre

Service (J. Phllis)". There is, too, in evidence an unexplained

further receipt for $ 2 4 , 0 0 0 dated 3 0 May 1 9 8 3 (or possibly 3 0 .

August 1 9 8 3 - the writing 1s unclear) which refers to J. Phllis

and W. Smith and appears to relate to the same sale.

l

r

I .

l

l 4 .

The evldence is that Mr Covino was a princlpal of a

company, De Angelo's Tyre and Wheel Servlces Pty Limlted, which

conducted a business of retreadlng and selling tyres, and of Kagu

Pty Limited whlch may at some stage have taken over the business

of the former company.	This business had been operating under
his management at least	since 1968, but in January 1983 a new

business name appeared at 48 Blaxland Road, Campbelltown, next

door to the premises originally occupled by De Angelo's Tyre and

Wheel Services Pty Llmited. The new name was Fairdinkum Tyre

Service. That name was registered under the Business Names Act

1962 ( N S W ) , originally as a buslness name of John Phills and

Suzanne Pintley. Suzanne Pintley was Mr Covino's secretary. She

gave evldence, .which . I accept, that she signed documents, including documents relating to this registration, at Mr Covino's

request and on his behalf. As at 15 June 1983, accordlng to a

"Statement of Change in Persons in Relation to whom Business Name

? , . I

is Registered" filed 29 July 1983, this registration was changed

to delete the name of Suzanne Plntley and substitute the name

Walter Jay Smith of 19/20 Rolfe Street, Mascot. A bank account

was opened at Commonwealth Trading Bank of Australia Campbelltown on 14 July 1983 in the names John Philis and Walter Jay Smith, . trading as Fairdinkum Tyre Service. A further document from the

bank's file dated 7 October 1983 records that John Phills and-

Walter Jay Smith constltute "the firm of Fairdmkum Tyre Service

Pty Ltd" (sic), It proceeds:

"we have authorised Angelo Michael Covino,

John Philis and Walter Jay Smith any two to

5.

sign whose siynaLure(s) ls/are aL IOOL hereor

in the name of the said flrm...".

The document purports to be slgned by Mr Covlno as an authorised signatory other than a partner, and by W. Smith and J. Philis as partners.

A further bank account, wlth Commonwealth Savlngs Bank

of Australia at Mascot, was opened in the name of Walter Jay

Smith of 19 Rolfe ctreet, Mascot on 2 8 July 1983. It was

!	operated from time to time between that date and 16 July 1984.
Between 15 July 1983 and 18 June 1984 there was a large number of transactions ln the account with the Commonwealth Trading -Bank of Australia at Campbelltown, to which I have referred, including numerous cheques signed W. Smith and also signed with the signature of Mr Covino or in some cases the signature of John Phills. These transactions reflected a business, actively carried on under the management and control of Mr Covino.
c

. A document entitled "Memorandum and Articles of

Association of Falrdlnkum Tyre Service Pty Ltd" was brought into existence bearlng the date 19 October 1983. The subscribers are shown as Angela Smith of 48 Blaxland Road, Campbelltown (the

address of the Fairdinkum Tyre. Service business, whlch was

however an address at which no such person as Anyela Smlth was

known) and Walter Jay Smith of 19 Rolfe Street Mascot. The

1

6 .

dvcunlerlt purp,url;s L o bear the signatures of these two persons

wltnessed by one Chrlstopher Venter. Mr Venter gave evidence

i

before me that he had, at the request of Mr Covlno, wrltten the slgnature "A. Smith" where that slgnature appears on the Memorandum and the Articles of Associatlon. At the time he did so the document was otherwise blank. Mr Venter was an employee at Falrdinkum Tyre Service.

Apart from Mr Venter, there were two other employees at Falrdinkum Tyre Service who gave evidence, Mr Covino's secretary over a total perlod, lnvolving some breaks, of many years up until May 1983, Mrs Suzanne Plntley, and a ~unior offlce assistant, Elizabeth Buckley, aged eighteen years, who worked

there between September 1983 and May 1984.	None of these three
employees had ever met Walter Jay Smith.	I found all of them

credible wltnesses. MISS Buckley, whose dutles included doing

the banklng, gave evldence that she had seen Mr Covino write the

signature Smith on cheques. She identified his signature on

numerous cheques, and she identified the signature W. Smith as

being the signature which she had seen Mr Covino affix to

cheques. She also ldentified the slgnature of Mr Philis on

cheques. In addition, she identlfied the handwriting of Mr

Covino on a large number of the cheques. The evldence Indicates- that the normal practlce was for a number of cheques in the chequebook to have the slgnature W. Smlth on them as blank

cheques. Mr Covlno would then write out a cheque, and sign it wlth his own signature, so that the cheque would then bear two

7.

signatures. But occasionally an error would occur, and an

i

alteration would follow, necessltatlng further slgnatures. It

was on such occasions that Miss Buckley had seen Mr Covino write

the slgnature W. Smlth. She specifically recalled one of these

occasions, although she was unable to fix the date of it. There

,	were several cheques tendered which could have satisfied her
description of what occurred. The unavallabllity of Mr Smith was
I.
inherently likely to lead to difficulties, and Miss Buckley said
there were queries about hlm from the bank: yet he never
appeared.

Mlss Buckley also gave evidence ldentlfylng a slgnature

"M. Covino" upon certaln cheques drawn on an account at the I

Westpac Bank at Campbelltown in the name M.A. Covino. She,

recalled an occasion when Mr Covino was writing:

"I do remember him one day signing and I did

not see. I lust knew he was writing. Then

he gave me this cheque and sald 'Rush down to

the bank and get that'."

She said: . -

"I remember looking at It and thinking 'M.

Covino - that is a bit strange', because'he always slgned A . Covino."

The effect of her evidence, as I understood it, was that she had

not actually seen the signature	M.	Covino affixed, but	she had	j
I

seen Mr Covino wrlting on the cheque, which he had then given to

1 1

her to take urgently to the bank, and whlch she had noticed was	i
I

signed M. Covino. She also, in the course of her duties, lodged ~

deposits into the M.A. Covino account.

!

I

8.

L

Mr Venter gave evidence concernlng two occasions on whlch a cheque was urgently requlred. He gave Mr Covino a blank

l

cheque form, and then about ten or twenty minutes later recelved

back from Mr Covino, on each of those occasions, the completed

cheque bearing Mr Covlno's slgnature and also the W. Smith

F slgnature. During the period of delay Mr Covlno had remained in

the offlce. In cross-examination, he said:

"I have never met anybody described as Walter

Jay Sml th . "

He was then asked:

"You would therefore have no suspicion in your

mind at all in relatlon to the authentlcity

of that cheque that you gave evidence of

earlier today that you gave to Mr Covino and

got back twenty minutes later, duly signed by

Mnr Smith?"

He replied:

"There is no doubt in my mind that that cheque

was not slgned by Mr Smith."

He was then asked:

"You can enlighten the Court as to who slgned

it?"

and replied: .

"1-did not see Mr Covino sign it, but I recall

giving it blank and getting it back with two

signatures on."

He was asked:

"In fact you never saw Mr Covino sign any cheque with the slgnature Smith - that is correct too is it not? You have never seen him do that?"

He replled:

"1 cannot 100% say that I have."

a

9.

Mr Venter recalled that, on each of these two occasions when he

0

had handed a blank cheque form to Mr Covlno and received It back with the Smlth slgnature on It, Mr Covlno had said somethlng to the effect "that he would get into trouble from Mr Smith for

doing such a thlng, but because of the urgency of the cheque,

that is the reason he had done it."

Mr Venter also gave evidence of being asked by Mr--Covino

on a number of occasions to give Mr Phills the chequebook to take

home. Mr Phllis brought the chequebook back containing a number

of the Smlth signatures.

The evidence of each of the three witnesses to whom I have referred makes it clear that it was Mr Covino who directed and managed the buslness, and that Mr Philis was involved, In a capacity which could be descrlbed as that of a leading hand or foreman, in the rebuilding of truck tyres.

Mrs Pintley gave evidence Identifying a very large

number o f documents, particularly cheques, bearing the W. Smith

signature. In each case, she said that she recognised that

slgnature as writing of Mr Covino. She also identified his

writing on other portions of very many of the cheques. In

addition, she Identified the signature of Mr Phllis, and numerous

L signatures of Mr Covlno In whlch he had signed his own name. She also identlfled the M. Covino signature, to which I referred when

10.

discussing the evldence of Mlss Buckley, as being in the

handwriting of Mr Covlno. She was cross-examlned at considerable

length, and In very great detail, concernlng her identification

of these varlous signatures. . I was left wlth the clear

impression that Mrs Plntley is extremely familiar wlth Mr !

Covlno's handwriting, and that her evidence was rellable. It was

sometimes expressed rather forthrightly. At one polnt in

I

cross-examination she was asked about her identification of what	t
was described as "a shortened signature" on certaln exhlbits, and	i
she answered:	I 1

\ I

"I dld it because I know his handwriting. ne I

could be writlng them upslde down	~n the	I
I

.. toilet, and I would stlll know his I

handwrltlng. I know his handwriting because

I saw It every day. He wrote letters to do I

this and that - whether it 1 s shortened,	i
written slowly or in a hurry, it is all the	i

!	same .	"	/ '
!
!
i

By the last comment I thlnk she meant, not that the writlng looks

r	I
I

the same in every signature, but that she knew	each way he	wrote,	I_
i

and ~t was all the same to her in the sense	that' it was all	I
easlly recognisable as his.	I

t	i
I

.	Mrs Pintley also gave evidence of an occasion in about	!.
I	.

1981, well before the events with which this judgment 1s

particularly concerned, when Mr Covino telephoned a transport

company concerning an advertisement for the posltion of Transport ! Manager, in which he was interested. She said he gave the name I ,

Walter	Smith.	I .
I

i

11.

In the case of Mrs Plntley, having regard to the many

years during which she had worked for Mr Covino, it is I think particularly significant that she had never met Nalter Jay Smlth, and that the person she recognised as "the boss" at Fairdinkum Tyre Service was Angel0 Covlno.

Evidence was led from a handwriting expert, Mr Paul

Westwood. I found Mr Westwood an impressive witness. He has had some seventeen years experience in the examination of suspect

documents, during ten years of which he was the Officer in Charge

of the Document Examination Bureau of the Australian Federal is presently the Chief Document Examiner for the Department of

Pollce. He holds the degree of Bachelor of Laws and has pursued

speciflc studies in document examlnation In varlous institutlons

Immigratlon and Ethnic Affairs, having partlcular responsibilltes

In respect of counterfeit travel documents.

Mr Westwood was asked to examlne the cheques, and

:	various other documents in evidence, bearlng the W. Smith slgnature, and also those bearing the slgnatures identlfied as Mr -
Covino's. He said In cross-examination that It was correct-that
he was of the opinion that the Smith signature was not a genulne I I

i l

signature at all. In chief he had put the matter rather more

i

elaborately. He sald that the Smith signature showed

evolution within a short perlod of tlme, a mere twelve months, I an i

I

i

i

I

. . 12.

I

which sugg~sted to him very strongly that it was not a genulne

i I

slgnature. This was because, although development and change In

I

!

a signature is not uncommon, the development exhibited by the

Smith slgnature, in such a short period, was altogether unusual.	l
/
He demonstrated, by assembling examples of the slgnature in date
i

order, the way in which the signature had changed from an initial

simple and laboured signature to a very much more complex, and . .i

lndeed extremely unusual, signature adorned with unnecessary	i
l

flourishes. He expressed the opinion that when the signatures I

were viewed chronologically it was apparent that all of the Smith. , .

signatures were signed by the same person.

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t	Mr Weswood was also shown two postcards and a letter,
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> almost-entirely wrltten in what appears to be the Greek language

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bearlng Greek postage stamps, but also havlng the Smlth signature affixed to them. It was suggested, as I understand it,

on behalf o$ the respondents that these mlght indicate that Mr

Smith was ln fact a Greek migrant who had returned to Greece, and

was thus unavrallable. On this basis, a letter had been written, ,.

shortly before the hearlng, by the applicant's solicltors to the I

respondents' solicitors requesting informatlon concerning Mr

Smith's pre.semt whereabouts and offering, lf he is in Greece, to

i

obtain his evidence on commission. It was conceded that thls , , _

letter had brought no response, but it was not suggested that :

there had been any repudiation of the contention that Mr .Smith j .

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was a Greek migrant. A translation into English of the documents

I

In Greek was indeed tendered on behalf of the respondents. I

13.

According to the translation, thc lcttcr rcprcsento the writer as I

having arrlved In Greece four weeks before its date,	ie 9th	,
I
I

October	1984,	and as	having found great changes there.	It	:	i
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suggests that the writer had been an Illegal Immlgrant, and had ~

!

bought a factory with the addressee, who is John Philis. The

letter (as translated) also lncludes the following:

"YOU told me over the 'phone that I sign a letter of mine and send to you as they do not

,

. believe I exist. I am sendlng you this

letter with my signature enclosed herewith:

: '	furthermore if you look behlnd the stamps on the envelope you will see my signature there
wlsh everything turns out well." too. . . . . Give my regards to Angelo and I

The letter had commenced:

"Dear frlend and partner John".

l

The letter is signed with the Smlth signature, which has also

been written at least three tlmes on the envelope, both under and

over the stamps. The postcards, too, are slgned with the Smith signature, one belng addressed to John Philis and the other to

. Angelo Covino (spelled Cavino).

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Mr Westwood expressed the vlew that these documents were

contrivances. He did not think that the person who wrote the ! !

signature was the person who produced the Greek writing. Nor dld ,

he think that the	word "John", which appears in Latin	hand	;
l

printing, was wrltten by the writer of the Greek, although it ,

could have been. written by the person who wrote the signature.

ne had had prevlous experience of the devlce of affixing a l

14.

slgnature above and below postage stamps as a means of seeking to

ptabllsh that a document had been prepared abroad.

The Greek letter and postcards are Indeed most curlous

documents. There was no evidence, apart from them, to suggest

that the Smith slgnatures belonged to a Greek. If an Illegal

Immigrant from Greece had wished to melt anonymously into the Australian community, he would have been most unlikely, one would think, to have adopted a name so Inconsistent with the accent and

appearance he would probably have had. In any case, if Walter

Jay Smith was in fact a returned Greek migrant, who had been in communication wlth the respondents after questions had been ralsed as to his existence, it seems improbable that the applicant's offer to -obtain evidence from him in Greece would have met with no response. Mr Smith, mute, is a persuasive witness. Like the absent Baal ( 1 Kings 18) who kindled Elijah's mockery, silent as a stone despite all appeals, he should have answered if he existed. For in that case he had interests to

defend. Nleither Mr Philis nor Mr Covino was called to give evidence before me. The applicant tendered some evidence given

on examination- by Mrs. Covino, which was admitted wlthout

objection, but she was not called by the respondents either.

Mr Westwood was unable to identify the Smith signatures i

and the various signatures purporting to be A. or M. Covino as I	i
I

having been written by the one person. He said they could have i

been written by the one person, and in relation to two different

i

15.

signaturcs purportlng to be A . Covino he drew attention to a

similarlty between the documents concerned whlch appeared to

suggest they were prepared by the same person.	But he dld not
conslder a posltlve opinion could be arrived at.

-

I do not think there is any lnconsistency between the

evldence of Mrs Pintley and the opinlon of Mr Westwood to whlch I have just referred. Mr Westwood was speaking of the conclusions that might be drawn simply from a comparlson of signatures, being in themselves very small samples of handwriting, at least some versions of which on the appllcant's case had been deliberately produced wlth differences between them for purposes of disguise. Mrs Plntley was speaking, not as an expert, but as a secretary of many years standlng lntimately acquainted with the various styles of writing his signature, includlng the Smlth signature and the

M. Covino slgnature, which her evidence indicates Mr Covino had

i.

adopted. I should add that one style of slgnature, whlch

accordlng to other evidence	was used by Mr Covino, was not
recognlzed by Mrs Pintley. It	was elther not used while she was

his secretary, or not sufficiently for her to have become

i familiar with it. I think thls otherwise curious fact conflrms

my view of the nature of her evidence regarding Mr Covino's

signatures, and also confirms her honesty in refusing to identify

what she did not actually recognise, though she could easily have

inferred it was written by Mr Covino. Mrs Plntley receives strong support from the evidence of Mr Venter and Mlss Buckley, to which I have already referred. So far as the Smith signature

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16.

Itself is concezned, both the cxtraordinary invlsibi lity of Mr	I
Smith at the buslness in which he was supposed to have been

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concerned as a partner, and the strong opinlon of Mr Westwood, 1

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provlde addltional	support	for	her evidence. The respondents	i
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obtained leave to have a handwriting expert In Court during the	1
evidence for the appllcant, but dld not call her in their case.	!
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. ,	I have reached	the clear conclusion that the identity of	I
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Walter Jay Smith was a fiction concocted by Mr Covlno in order to ~

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attempt to deceive his creditors and his trustee. It was a mask

behind which was the face of Mr Covino. I have had regard to the

seriousness of such a conclusion, which ought not to be reached

lightly, but I do not think there is any doubt about it.

So far as the signature M. Covino is concerned, this was employed ln respect of the bank account styled M.A. Covino. Mr

Covlno's correct lnltials are A.M. But Mrs Covino's full name is

Melita Covino. The evidence upon examinatlon of Mrs Covlno is

clearly to the effect that th1-s adcount was not hers. Indeed,

what she asserted s.trongly was that she had never had a bank -

-account, that she had never signed any cheques, and that she had

-	never in her entire life been to any bank. Her statements
-confirm the conclusion I should have reached, even without them,
from the other positlve evidence to which I have already
referred, that the signature M. Covino was wrltten by Angelo Covino, and that the bank account in respect of which it was signed was Mr Cov1no's, with his initials reversed. When a Mr

17.

Covino, introduced by Mr Angelo Mlchael Covino’s accountants, arranged an interest bearlng deposlt for one month at the State

Bank Burwood on 24 December 1982, he did so In the name Michael

Angelo Covlno, and signed a specimen signature, which is characterlstlc of the M. Covino signatures, having a very unusual

long final stroke as part of the initial letter. There is

evldence which I accept to show that the source of over $30,000

pald Into the M.A. Covino account at Westpac Campbelltown in late

January 1983 was moneys, received from the same accountants of Mr Covino, whlch had constituted that interest bearing deposit. These facts provide clrcumstantial support for the conclusion

that the M.A. Covino account belonged to Mr Covlno, who simply

reversed the inltials of his given names to disguise the account.

?	The application, as amended, 1s brought by the trustee against John Phills, Fairdinkum Tyre Servlce Pty Ltd, Angelo
Michael Covino and Mellta Covino. It seeks flrstly, a
declaration that the interest purportlng to be that of Walter Jay Smith in the partnership between the person using that name and
i
John Philis, carrying on business at Minto in the State of New South Wales in the name of “Fairdinkum Tyre Servlce“, is an asset
I	of the bank-rupt estate of Angelo Michael Covino. It has not been
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suggested that John Philis was not a real partner so far as his own share in the partnership was concerned; the claim made is

.limited to the interest purportedly held by Walter Jay Smith. In

my view, I should make the declaration which is sought.

Consequently upon that declaration, orders are sought for an

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enquiry to be had and an account to bc takcn in respect of the proflts and assets of the partnership, and for an order that John

Philis pay such sum as may be ascertained, in respect of the

share of the bankrupt estate of Angelo Michael Covlno, and an

order in respect of the winding up of the partnership.

I think it is wlthln my ~urisdiction under s.30 of the

Bankruptcy Act 1966 to make each of these orders, and no submission was put to the contrary. I regard the orders sought as approprlate, in the clrcumstances of thls case, on the basis that the enquiry 1 s to be had before the Registrar and the account 1 s to be taken by him. Similar orders were upheld by the Full Court of the Supreme Court of New South Wales in In Re

Wordsworth (1889) 5 W.N.(N.S.W.) 96.

Further declarations are sought in respect of the issued

shares in Fairdinkum Tyre Service Pty Ltd, to which I have

already referred. It w l l l be recalled those shares are In the names o€ Walter Jay Smith and Angela-Smlth. I should add to what I have recounted that, one week before the date of the Memorandum and Articles of Association, the solicltors whose flrm name appears on them wrote a letter dated 12 October 1983 addressed to :

"The Manager,

Fairdinkum Tyre Service Pty	Ltd,
C/- Mr A. Covino,
4 8 Blaxland Road,

CAM,PBELLTOWN" .

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19.

The letter referred to the formation of the company and to a

recent attendance by Mr Covino at the solicltors' office. It

noted there were to be amendments to the Memorandum and Articles

of Assoclation and sought advice at an early date. No reference

at all is made, either ~n the letter or on the solicitors'

instruction cover, to anyone named Smith; the instructlons :

concerning the formatlon of the company and the amendments to the Memorandum and Articles appear to have come only from Mr Covino. The Memorandum and Articles themselves contain some-handwriting

which was identlfied i n evidence by Mr Venter as being Mr i

Covino's. This handwrlting 1s the name "Walter Jay Smlth"

written under the Smith signature, Mr Venter's own name written as Chris Venter, and the date 19 October 1983. There are also in

evidence a photostat copy of a return of allotment of shares,

lodged 18 January 1984 In respect of Fairdlnkum Tyre Service Pty '	i
Limited, and a Notice in relation to Registered Offlce lodged on the same day, each dated 16 November 1983, and bearing the signature A. Smith purporting to be the signature of Angela
i

Smith. Each of these slgnatures A. Smith appears to me to be in

the same handwriting as the signatures A. Smlth on the Memorandum and Articles, which Mr Venter said he wrote at the request of Mr. 1

Covino. Mr Venter gave evidence that he did sign A. Smlth on :

other documents, at Mr Covino's request, as well	as on the
Memorandum and Articles of Association.

I have no difficulty in concluding	that Angela Smith was	I
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another fraudulent concoction by Mr Covino, that he alone was- I

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20.

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responsible for the arrangement to Incorporate the respondent

Falrdinkum Tyre Service Pty Limited, and that any shares issued

In the names Walter Jay Smith and Angela Smlth are vested in the

applicant as trustee of Mr Covino's estate. I do not thlnk the

mere fact that Mr Covino endowed hls own fictitious persona Walter Jay Smith with a fictitious wlfe enables any Inference to be drawn that the share in the name Angela Smith belonged to Mrs Covino, and is now held by the applicant as trustee of her

estate. Such a view would involve hitching the presumption of 1

advancement to the traces of a fraud In a quite incongruous way.	I
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. I

I appreciate that my conclusion may have consequences i

for the validlty of	the steps taken to incorporate the respondent	I,
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i company (though, as to this, see s.549 of the Companies Code), I

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and I reserve liberty to the applicant to seek further relief In

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respect of .It, ~f so advised. It may be, and the question was ;

i

not explored before me , that neither the buslness carried on by	I ,
I
the partnership, nor any other asset, was ever transferred to the	j

company. In that event, problems relating to the company would 1.

be	academic.	I
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A further problem is raised, by the Application, in respect of a property near Dubbo, known as Blue Star. On i !

10

I .,

February 19'83, a contract was entered into by which a Mr and Mrs

Endacott sold this property	for $44,000 to a purchaser whose name	I
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was inserted in ink into the typed-up contract form as "Walter I '

Smith C/- P.0. Box 429, Campbelltown". Thls is the address of Mr

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21.

Covlno its written on thc postcard purportedly sent to him by V.

I

Smlth from Greece.	The evidence of Mr Gase, who had sole conduct	I
I

of the purchase as	a managing clerk	in the office of the	I
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sollcitors for the purchaser, Messrs O'Reilly and Booth, was that	i
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"initlally the instructions came from Mr Angelo Covino who was to

1.

be the purchaser of that property". After about slx weeks, there	1
I
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was a change of instructions. Mr Gase was told that Mr Smith

wanted to take over the purchase. He never met Mr Smith, his I.

instructions being "to contact Mr Covino as the contact point for

Mr Smlth". It was to Mr Covino that he gave the contract ~

document, receiving It back signed W. Smlth. The deposit of ;

$6,600 was paid to Mr Gase's f?rm by a cheque dated 27 January ,

_-

1983, drawn on the M.A. Covino account at:-WeiTpac Campbelltown, /X-

__ ' , .

slgned with the M. Covipo signature which I have held to be in ,

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the handwritlndf Mr Covino. The receipt issued by the I

solicltors referred to "Covino purchase from Endacott". Further I

sums of $ 4 4 0 , $771.50, and $819 appear to have come during May.

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and June 19,83 from the same source In order to meet respectively	I
;
enquiry fees, stamp duty, and a final balance due on settlement.	! !
The bulk of the moneys required for settlement came from a cheque : dated 30 May 1983 from FGC Insurance for $36,550 payable to Kagu I

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Pty Limlted, which was endorsed to the solicitors by an

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endorsement signed by Mr Covino (Mr and Mrs Covino were the i

: I

dlrectors of Kagu Pty Limited). The source of that cheque was an I

insurance claim by Kagu Pty Limlted (also slgned by Mr Covino) in

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respect of a theft of tyres in January 1983. The proper

I

concluslon is that Mr Covino had provided funds, either his own,	I
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1

22.

or partly his own and partly procured under some arrangement of loan or otherwlse with a company he controlled, in order to purchase an investment property for himself, but had caused the purchase to be made in the name of the fictitious identity he had

adopted. Had Mr Smith been clrcumvention of the rights of creditors would a real person, the attempted

still have failed,

by virtue of the doctrine of resulting trust.

The Blue Star property was resold to a purchaser named Blythe.for $55,000 by a sale completed on 27 June 1984. The authorcty to pay the balance of purchase moneys on settlement directed payment to John Philis as attorney under power of Walter

Smith. He acknowledged in writing receipt of $43,610.32. On

settlement $38,110.32 was paid by a bank cheque payable to Walter Smith, $1,129.25 was paid to the solicitors for the vendor and $9,500 was paid lnto Commonwealth Trading Bank Campbelltown to

the credlt of Walter Smith and John Philis trading as Fairdinkum

Tyre Service. A cheque dated 29 June 1984 €or $5,500,

representing deposit, was made payable to W. Smith. The total of $38,110.32 and $5,500, that is $43,610.32, found Its way Into the account in the name Walter Jay Smith at Mascot referred to early

in this judgment, and was withdrawn as to half of it, the same day, and as to the balance by a series of withdrawals over the ensuing two or three weeks. I infer it was withdrawn by Mr Covino.

The story of the power of attorney is of some interest ln the context of this case. The solicitor who had carriage of

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t h e s a l e , a Mr B a t t e r s b y , g a v e e v i d e n c e t h a t he - d i d n o t meet M r

>,

l S m i t h , b u t s o m e o n e g i v l n g t h e name W a l t e r S m i t h t e l e p h o n e d

i D

l n s t r u c t i o n s t o a c t o n t h e s a l e , a n d t o p r e p a r e a p o w e r o f

a t t o r n e y i n f a v o u r of J o h n P h l l l s . Mr S m i t h s a l d h e w o u l d

!

t e l e p h o n e o n c e a week a b o u t m a t t e r , t h e b u t i n f a c t

communlca t lons wi th Mr B a t t e r s b y t h e r e a f t e r were through John

P h i l l s , t h o u g h a m e s s a g e s l i p w a s o n 9 A p r i l l e f t f o r h i m t o

t e l e p h o n e "Angelo.. . re Contract f o r Sale o f Land a t Dubbo". At

.

t h e time Mr P h l l i s c o l l e c t e d t h e f o r m o f p o w e r o f a t t o r n e y , h e

t o l d M r B a t t e r s b y , b y way o f e x p l a n a t i o n , t h a t M r Smith was i n

M e l b o u r n e . B u t I n f a c t t h e p o w e r o f a t t o r n e y , w h i c h 1s d a t e d 11

A p r i l 1 9 8 4 , w a s w i t n e s s e d b y a j u s t i c e o f t h e p e a c e who g a v e

a c c e p t a b l e e v i d e n c e t h a t s o m e o n e , o f whom h e h a d n o r e c o l l e c t l o n ,

h a d a p p r o a c h e d h i m a t t h e c o u n t e r o f t h e C o u r t o f f i c e a t

Campbelltown t o w i t n e s s t h e d o c u m e n t a n d h a d t h e r e s i g n e d it i n

h l s p r e s e n c e . The s l g n a t u r e was t h e S m i t h s i g n a t u r e .

The b a n k r u p t c y o f M r Covlno had supervened well b e f o r e

t h e s a l e o f t h e B l u e S t a r p r o p e r t y . A c c o r d i n g l y , w h e n t h e

$9 ,500 , p a r t o f t h e s a l e p r i c e , was p a i d i n t o t h e p a r t n e r s h l p

b a n k a c c o u n t , t h e p a r t n e r s h i p , i n wh ich I h a v e f o u n d J o h n

P h i l i s ' s r e a l p a r t n e r was Mr Covino , had been d i sso lved by s.33

o f t h e P a r , t n , e r s h i p A c t 1892 (NSW), ~ I t is a p p r o p r i a t e t o o r d e r

J o h n P h i l l s a n d A n g e l o M i c h a e l C o v i n o t o p a y t h . i s sum t o t h e

a p p l i c a n t a s t r u s t e e o f t h e e s t a t e of Mr Covino. The amount of

$43,610.32 s h o u l d a l s o b e r e p a i d t o h i s t r u s t e e b y M r Covlno.

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24.

I direct that short mlnutes of orders be brought In at l I ,

9-30AM next Tuesday 1 5 July 1986 to reflect my findlngs.	If	i
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particular orders in respect of interest on moneys ordered to be 1

pald are sought, they should be included so that their propriety 1 i can be debated. Unless the undertaking to the Court given by Mr I.

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Phllis is extended, I propose to grant an in-~unction untll final

disposal of the matter to protect partnership assets, and in any	!
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case the short minutes should also make provision for their \

preservation.	The costs should be borne by the	first and third	i
respondents.	i
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Before finishing these reasons, there are two further matters I should mention. In the flrst place, I have referred to	1
a solicitor's letter written to Mr Covino before he had taken any
I

of the steps with which the application is concerned.	I think a	1
i

copy of that letter, with a copy of these reasons, should be	~
referred to the Law Society of New South Wales and .also to the	.
!

Prothonotary of the Supreme Court of New South Wales. I direct

_ .

the Registrar accordingly. I note that in Keppi-e v . Law Society ~

of the A.C.T. (1983) 62 A.C.T.R. 9 at 21 the Full Court of the i

Supreme Court of the Australian Capital Territory expressed the - 1	!
view that the conduct of a solicitor who was not a party to the

proceedings "should be considered by the Law Society".

Similarly, in Obacelo Pty Ltd v . Taveraft Pty Ltd (unreported, 13/6/86) Wilcox J. drew the attention of the Law Society of New

South Wales to the conduct of a solicitor witness. See also

Commlssioner of Australlan Federal Police v. Curran (1984) 55

A.L.R. 697 at 704. \

25.

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The other matter relates to the conduct of	Mr Covino and	I
1

Mr Philis. When I reserved judgment, I invited thelr counsel to

make submissions as to why, if I concluded the appllcant had

proved his case, I should not refer the facts to the Director of 1 '

Public Prosecutions. I have received written submissions, which 1 I

I have consldered. The concluslon to which I have come is that I	l
I
should direct the Registrar, as I do, to forward a copy of these	!
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reasons to the Director.	I l
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I certify that this and the
preceding twenty-four ( 2 4 ) pages are a true copy of the Reasons for Judgment hereln of his Honour Mr. Justice Burchett.

c. L : A h W

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Assoclate

Dated: 9 July 1986.

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