Davidson v Official Receiver (No 2) - [2024] FedCFamC2G 429

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Davidson v Official Receiver (No 2) [2024] FedCFamC2G 429

File number: MLG 319 of 2020

Judgment of: JUDGE RILEY

Date of judgment: 15 May 2024

Catchwords: BANKRUPTCY – application under s.139ZS of the Bankruptcy Act 1966 to set aside a notice under s.139ZQ of the Act – whether payments void under s.120 of the Act – value of consideration – significance of the payments from the bankrupt having been disbursed to third parties prior to the commencement of the bankruptcy – whether incorrect figure in the s.139ZQ notice requires it to be set aside.

Legislation: Bankruptcy Act 1966 ss. 15(5), 120, 127, 139ZS, 139ZQ

Cases cited: Anscor Pty Ltd v Clout (Trustee) (2004) 135 FCR 469; [2004] FCAFC 71
Associated Alloys Pty Limited v ACN 001 452 106 Pty Ltd [The Associated Alloys Case] (2000) 202 CLR 588; (2000) 202 CLR 588; (2000) 171 ALR 568; (2000) 74 ALJR 862; (2000) 21(9) Leg Rep 9; (2000) 18 ACLC 509; (2000) 46 ATR 91; (2000) Aust Contract R 90-114
Brady v Stapleton (1952) 88 CLR 322; [1952] ALR 989; (1952) 26 ALJR 428
Clout v Anscor Pty Ltd [2003] FCA 326
Ex Parte James (1874) LR 9 Ch App 609 [1874-80] All ER Rep 388; (1874) 30 LT 773; (1874) 22 WR 937
McBain v Parsons [2000] FCA 935
Parsons v McBain (2001) 109 FCR 120; (2001) 192 ALR 772; [2001] FCA 376
Re O'Halloran [2002] FCA 1305
Roufeil v Tarrant Enterprises Pty Ltd (2023) 299 FCR 204; [2023] FCAFC 142
SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362; (2017) 91 ALJR 936; (2017) 347 ALR 405; [2017] HCA 34
Taylor v Owners – Strata Plan No 11564 (2014) 253 CLR 531; (2014) 88 ALJR 473; (2014) 306 ALR 547; [2014] HCA 9
Tsakirakis v Official Receiver (2013) 276 FLR 66; [2013] FCCA 106
Vale v Sutherland (2009) 237 CLR 638; (2009) 83 ALJR 940; (2009) 258 ALR 1; [2009] HCA 26
Westpac Banking Corporation v The Bell Group Ltd (in liq) (No 3) (2012) 44 WAR 1; (2012) 270 FLR 1; (2012) 89 ACSR 1; [2012] WASCA 157
White (Trustee), in the matter of Vlahos (Bankrupt) v Ljubicic [2017] FCA 717

Division Division 2 General Federal Law

Number of paragraphs: 137

Dates of hearing: 4 and 5 March 2024

Place: Melbourne

Counsel for the Applicant: Michael Gronow KC and Peter Agardy

Solicitor for the Applicant: Comlaw Barristers and Solicitors

Counsel for the First Respondent: Georgina Costello KC and Bridget Slocum

Solicitor for the First Respondent: Colin Biggers & Paisley

Counsel for the Second Respondent: Michael Galvin KC and Chris Fenwick

Solicitors for the Second Respondent: Nicholas O’Donohue and Co
ORDERS

MLG 319 of 2020

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)

IN THE MATTER OF WILLIAM STEPHEN VLAHOS, BANKRUPT

BETWEEN:
SAM DAVIDSON
Applicant

AND:
OFFICAL RECEIVER
First Respondent

PHILIP NEWMAN AS TRUSTEE OF THE BANKRUPT ESTATE OF WILLIAM STEPHEN VLAHOS
Second Respondent

ORDER MADE BY:

JUDGE RILEY

DATE OF ORDER:

15 MAY 2024

THE COURT ORDERS THAT:
1.The matter be adjourned to 21 May 2024 at 10am for hearing on the formulation of orders.

Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)
.

REASONS FOR JUDGMENT
JUDGE RILEY:
INTRODUCTION

This is an application under s.139ZS of the Bankruptcy Act 1966 (“the Act”) for the court to set aside a notice issued by the Official Receiver to the applicant under s.139ZQ of the Act and related matters.
The applicant is Mr Sam Davidson. The first respondent is the Official Receiver. The second respondent is Mr Philip Newman as the trustee of the bankrupt estate of William Stephen Vlahos.
Mr Vlahos claimed to run a horse race betting scheme. Mr Davidson ran a horse race betting syndicate. Various individuals and syndicates, including Mr Davidson on behalf of his syndicate, transferred money to Mr Vlahos on the understanding that Mr Vlahos would use the money to place bets on horse races. The trustee claimed that Mr Vlahos was running a Ponzi scheme. Mr Davidson said that it was not initially a Ponzi scheme. That was because, initially, Mr Vlahos placed some bets and paid out some winnings. However, he later ceased to place any bets at all. Mr Davidson accepted that, by that time, it had become a Ponzi scheme. Mr Vlahos paid out some money to Mr Davidson. Mr Davidson claimed that he, in turn, paid out most of the money he received from Mr Vlahos to other participants in Mr Davidson’s syndicate.
Contrary to Mr Vlahos’s claims, except at the very beginning, the money he paid out was not winnings, but monies paid to him by other participants in his scheme. Mr Vlahos was sentenced to a term of imprisonment for obtaining a financial advantage by deception.
The trustee claims that the payments Mr Vlahos made to Mr Davidson, supposedly as winnings, are void under s.120 of the Act.
The trustee issued a notice under s.139ZQ of the Act to Mr Davidson requiring him to pay to the trustee the amount of the payments he had received from Mr Vlahos, less the amounts Mr Davidson had paid to Mr Vlahos. Mr Davidson filed the present application under s.139ZS of the Act seeking orders that the s.139ZQ notice be set aside.
Subsection 120(1) of the Act provides that:
A transfer of property by a person who later becomes a bankrupt (the transferor) to another person (the transferee) is void against the trustee in the transferor's bankruptcy if:
(a)the transfer took place in the period beginning 5 years before the commencement of the bankruptcy and ending on the date of the bankruptcy; and
(b)the transferee gave no consideration for the transfer or gave consideration of less value than the market value of the property.
There was no dispute that the relevant payments were made within the five years before the commencement of the bankruptcy. The bankruptcy commenced on 16 December 2013. The payments the trustee says are void all occurred after 16 December 2008.
The dispute was largely about consideration. The trustee accepted that Mr Davidson gave some consideration for the payments he received. More particularly, it was common ground that Mr Davidson paid Mr Vlahos $1,879,116.49. It was also common ground Mr Vlahos paid Mr Davidson a total of $3,857,669 in multiple payments. However, the trustee also said, and Mr Davidson disputed, that additional payments totalling $9,420,000 that were paid to Mr Davidson by Noble Edict Pty Ltd, a company associated with Mr Vlahos, were in fact paid by Mr Vlahos to Mr Davidson.
The total amount of the payments to Mr Davidson that the trustee said were void was $3,857,669 plus $9,420,000 which equals $13,277,669. However, the trustee accepted that the figure of $1,879,116.49 ought to be deducted from that sum under s.120(4) of the Act. That provision is as follows:
The trustee must pay to the transferee an amount equal to the value of any consideration that the transferee gave for a transfer that is void against the trustee.
Consequently, the total sum that the trustee claimed was $11,398,552.51.
Subsection 139ZQ(1) of the Act provides that:
If a person has received any money or property as a result of a transaction that is void against the trustee of a bankrupt under Division 3, the Official Receiver:
…
(b) if a registered trustee is the trustee--on application by the trustee;
may require the person, by written notice given to the person, to pay to the trustee an amount equal to whichever of the following is applicable:
…
(d) … the money or the value of the property received.
Subsection 139ZQ(2) of the Act provides that:
The notice must set out the facts and circumstances because of which the Official Receiver considers that the transaction is void against the trustee.
Subsection 139ZS(1) of the Act provides that:
If the Court, on application by a person to whom a notice has been given under section 139ZQ …, is satisfied that this Subdivision does not apply to the person on the basis of the alleged facts and circumstances set out in the notice, the Court may make an order setting aside the notice.
Mr Davidson filed an amended application on 15 February 2023. At the hearing, he withdrew paragraphs 3, 4 and 4A of the amended application. Ultimately, Mr Davidson sought the following:
1 A declaration pursuant to section 30(1) of the Bankruptcy Act 1966 (Act) that subdivision J of Division 48 of part VI of the Act does not apply to the Applicant on the basis of the alleged facts and circumstances set out in the notice dated 6 December 2019 given by the First respondent to the Applicant pursuant to section 139ZQ of the Act (Notice).
2 An order pursuant to section 139ZS of the Act that the Notice be set aside.
…
5 Further or alternatively, pursuant to s 15(5) of the Act, the Court review the act of the First Respondent in giving the Notice to the Applicant.
…
If not for the application under s.15(5) of the Act, the Official Receiver would have submitted to any order made by the court. As the matter stands, the Official Receiver did not wish to be heard on the matters raised by Mr Davidson, other than the point under s.15(5) of the Act.
LIST OF AGREED FACTS
The parties filed a list of agreed facts which was as follows:
1 William Stephen Vlahos (Bankrupt) became bankrupt on 16 December 2013 when his debtor’s petition was accepted by the Official Receiver.
2 Philip Newman and Clyde Peter White were initially appointed joint and several trustees of the estate of the Bankrupt. Mr White resigned as trustee on 8 June 2018 and since that date Mr Newman has been the sole trustee (Trustee).
3 Pursuant to subsection 115(2) of the Bankruptcy Act 1966 (Cth) ('the Act'), the bankruptcy has relation back to, and is deemed to have commenced on 16 December 2013, on which the Debtor committed an act of bankruptcy, namely presenting his debtor's petition to the Official Receiver.
4 Prior to his bankruptcy the Bankrupt was involved in organising a gambling scheme known as ‘The Edge’, pursuant to which he pooled money on behalf of a number of members, including syndicates and sub-syndicates of members, for the purported purpose of wagering on horse races. The general nature of the scheme that the Bankrupt established is briefly summarised in White (Trustee); In the matter of Vlahos (a bankrupt) v Ljubicic [2017] FCA 717 at [4].¹
5 The Applicant, Sam Davidson, became an investor in The Edge in about January 2005.
6 Between about 14 January 2005 and about 2 September 2013 the Applicant transferred a total of $1,879,116.49 to the Bankrupt, as set out in the attached Schedule A, to bet on racehorses.
7 Between 1 January 2008 and 31 December 2013, on Friday nights or Saturday mornings, the Bankrupt sent emails to scheme members attaching ‘ratings sheets’ which purported to detail ‘bet sizes’ to be bet by the Bankrupt on specified horses if odds at or exceeding ‘rated prices’ for those horses could be obtained.
8 The day after the race meetings the Bankrupt sent emails to scheme members attaching ‘betting sheets’ detailing what purported to be an account of the previous day’s betting.
9 The betting sheets falsely reported The Edge’s betting to members by overstating or fabricating, variously, the bets placed, the odds obtained and the profits made.
10 The Bankrupt pleaded guilty to charges of obtaining financial advantage by deception in respect of The Edge and as a result on 17 December 2021, the Bankrupt was sentenced to a term of imprisonment.²
11 Between about 3 July 2009 and about 10 April 2012 the Bankrupt transferred to the Applicant sums totalling $3,857,669, being the total of transfers numbered i to ix inclusive as set out in the attached Schedule B, which amounts were paid from the Bankrupt’s bank account (Vlahos Account).
12An Australian company named Noble Edict Pty Ltd (Noble Edict) was incorporated and registered on 2 November 2007.
13 Between 2 November 2007 and 20 March 2012, Joanne Vlahos, the wife of the Bankrupt, was the sole director of Noble Edict.
14 Between 19 March 2012 and 16 December 2013, the Bankrupt, was the sole director and secretary of Noble Edict.
15 On 19 June 2012 the Bankrupt opened a bank account with National Australia Bank Ltd in the name of Noble Edict as trustee for the Noble Edict Investment Trust, with BSB 083-155 and account number 12-691-1188 (Noble Edict Account).
16 Between about 11 July 2012 and about 23 May 2013 (Period), the amounts particularised in paragraphs x to xxv in the attached Schedule B, totalling $9,420,000, were electronically transferred to the Applicant from the Noble Edict Account as set out in Schedule B.
17 Noble Edict went into liquidation on 6 May 2014. Laurence Andrew Fitzgerald and Stephen Robert Dixon were appointed liquidators.
18       Noble Edict was deregistered on 18 September 2017.
19 On 6 December 2019 the Official Receiver, on the application of the Trustee, issued a notice to the Applicant under section 139ZQ of the Act (Notice).
20 The application by the Trustee to the Official Receiver to issue the Notice was made on 14 November 2019.
21 The amount of the claim made in the notice was $12,507,025.84. Since the Notice was issued, the Trustee has confirmed additional transfers made by the Applicant to the Bankrupt (not accounted for in the notice), being the transfers numbered 3,7,8 and 10 in the attached Schedule A totalling $1,108,473.33, as a result of which the Trustee has reduced his claim to $11,398,552.51, calculated as follows:
(a)       funds transferred by the Bankrupt to the Applicant $3,857,669; plus
(b)       funds transferred by Noble Edict to the Applicant $9,420,000; less
(c)       funds transferred by the Applicant to the Bankrupt $1,879,116.49.
FN 1: Janezic v Official Receiver & Anor and Davidson v Official Receiver & Anor [2020] FCCA 1153 at [2] and undisturbed on appeal.
FN 2:    DPP v Vlahos [2021] VCC 2074 at [1].
SCHEDULE A
[payments by Mr Davidson to Mr Vlahos]

Deposit Number Date Amount

1 14 January 2005 $2,100.00

2 7 March 2005 $100.00

3 14 April 2006 $1,930.33

4 2 October 2006 $5,000.00

5 3 October 2006 $5,000.00

6 4 October 2006 $699.16

7 17 December 2008 $608,943.00

8 2 April 2009 $297,600.00

9 28 September 2009 $557,477.00

10 1 April 2011 $200,000.00

11 27 June 2011 $195,267.00

12 2 September 2013 $5,000.00

Total $1,879,116.49

SCHEDULE B
[payments by Mr Vlahos or Noble Edict to Mr Davidson]

Transfer Number Date Method Amount

i. 3 July 2009 Cheque 000035 816,129.00

ii. 4 January 2010 Cheque 000138 68,458.00

iii. 6 August 2010 Cheque 000306 650,000.00

iv. 21 September 2010 EFT 188,014.00

v. 4 October 2010 Cheque 000323 98,669.00

vi. 14 January 2011 Cheque 000424 298,495.00

vii. 6 October 2011 Cheque 000604 387,904.00

viii. 17 January 2012 Cheque 000591 450,000.00

ix. 10 April 2012 Cheque 000677 900,000.00

x. 11 July 2012 EFT from Noble Edict 1,150,000. 00

xi. 9 October 2012 EFT from Noble Edict 870,000.00

xii. 11 October 2012 EFT from Noble Edict 500,000.00

xiii. 11 October 2012 EFT from Noble Edict 500,000.00

xiv. 25 January 2013 EFT from Noble Edict 1,000,000.00

xv. 29 January 2013 EFT from Noble Edict 1,000,000.00

xvi. 1 February 2013 EFT from Noble Edict 978,000.00

xvii. 5 February 2013 EFT from Noble Edict 550,000.00

xviii. 13 February 2013 EFT from Noble Edict 150,000.00

xix. 15 February 2013 EFT from Noble Edict 250,000.00

xx. 1 March 2013 EFT from Noble Edict 500,000.00

xxi. 8 March 2013 EFT from Noble Edict 322,000.00

xxii. 5 April 2013 EFT from Noble Edict 500,000.00

xxiii. 15 April 2013 EFT from Noble Edict 300,000.00

xxiv. 29 April 2013 EFT from Noble Edict 400,000.00

xxv. 23 May 2013 EFT from Noble Edict 450,000.00

Total 13,277,669.00

ISSUES IN DISPUTE

The parties also filed a list of issues in dispute, although the trustee said that most of them were irrelevant. It was as follows:
Issues of fact
1Did the Applicant become a syndicate leader in ‘The Edge’ Horse Race betting scheme conducted by the Bankrupt:
(a)       in about November 2008, or
(b)       at any other and if so which time?
2Did the Bankrupt tell the Applicant that he would bet the money he received from the Applicant on racehorses as part of ‘The Edge’ betting scheme and distribute the winnings to the Applicant on behalf of his syndicate members including the Applicant, and if so, did the Applicant agree to this?
3 Did the Applicant believe at all relevant times from 2008 to July 2013 that ‘The Edge’ was a genuine betting scheme?
4        Did the Applicant withdraw from ‘The Edge’ in about July 2013?
5Did the Applicant know that there had been deception on the part of the bankrupt about the nature and operation of ‘The Edge’ horse race betting scheme prior to his withdrawal from The Edge in or about July 2013.
6Has the Applicant ever received a claim or demand from the liquidator of Noble Edict Pty Ltd in relation to the monies paid by Noble Edict Pty Ltd to the Applicant in the 2012-2013 period?
7 Did the Applicant receive the sums totalling $9,420,000 paid to him by Noble Edict Pty Ltd from Noble Edict, or were those payments were made by the Bankrupt via Noble Edict?
8 Did the Bankrupt, at all material times, exercise exclusive control of the Noble Edict Account?
9 Did the Bankrupt, during the Period (as defined in the List of Agreed Facts), operate the Noble Edict Account such that he would transfer payments from the Vlahos Account to the Noble Edict Account, before drawing an equivalent sum to make payments to scheme members shortly thereafter as particularised in Schedule A?
10 Of the sums received by the Applicant from the Bankrupt and from Noble Edict in the period 2008-2013 has the Applicant distributed to members of his syndicate:
(a)       sums totalling $11,871,000;
(b)       or some other and if so what amount?
11 Were those distributions made by the Applicant to syndicate members before he withdrew from The Edge betting scheme in or about July 2013?
12 If the Bankrupt had placed all of the bets reported in the betting sheets would the Applicant on behalf of his syndicate:
(a)       have been entitled to $86,850,000, or
(b)       some other and if so what sum (Unpaid Winnings)?
13 Does the amount of the Unpaid Winnings exceed the amount of the Trustee’s Claim against the Applicant?
14 At the time the Trustee applied to the Official Receiver to issue the Notice, did the Trustee know that the Applicant had distributed to other members of his syndicate most of the money he had received from the Bankrupt and from Noble Edict?
15 Does terminology relevant to this matter have the meanings given in the attached Schedule B?
16 Did the Trustee make enquiries with the various betting companies as listed and defined in Schedule B and obtain from them the Bankrupt's betting statements?
Issues of law
17 Is the Applicant a transferee under section 120 of the Bankruptcy Act 1966 (Cth) (BA)?
18 Is the Bankrupt a transferor under section 120 of the BA for all or any of the monies transferred to the Applicant as listed in Schedule B to the List of Agreed Facts?
19 Is the capacity in which the Applicant acted in receiving the subject money (including as ‘syndicate leader’) relevant to his status as ‘transferee’ under section 120 of the BA?
20 Does section 120 of the BA apply to innocent recipients of funds from The Edge, which was substantially a Ponzi scheme?
21 Whether section 120 of the BA permits the Trustee to recover money from the Applicant where the property, namely the money he received from the Bankrupt, is no longer in the Applicant’s hands.
22 Whether the use to which the Applicant has put the money (whether distribution or dissipation or otherwise) is irrelevant because section 139ZQ provides an administrative mechanism for the recovery, in personam, of transfers void against the Trustee, the money or the value of the property being recoverable as a debt under section 139ZQ(8) of the BA.
23 Whether, to the extent that the transfers of money by the Bankrupt to the Applicant exceeded the transfers of money by the Applicant to the Bankrupt, that those transfers were not made by the Bankrupt in discharge of any obligation or for consideration (including as ‘Unpaid Winnings’) but instead according to a notional calculation of profit based on a fiction that the Edge was profitable.
24 Was there ‘consideration’ provided by the Applicant for any transfers of property from the Bankrupt to him within the meaning of section 120 of BA, and if so, was it adequate for the purposes or, and to defeat any claim under, s 120 of BA?
25 Is the Applicant entitled to set off against the Trustee’s claim the Unpaid Winnings?
26 Does the rule in Ex Parte James (1874) LR 9 Ch App 609 preclude the Trustee from pursuing all or part of his claim against the Applicant?
27       Were there sufficient grounds for the Official Receiver to issue the Notice?
MATERIAL RELIED UPON

The parties all relied on the list of agreed facts filed on 23 October 2023 and the list of issues in dispute filed on 20 November 2023.
In addition, Mr Davidson relied upon:
(a)his amended application filed on 15 February 2023;
(b)his points in response filed on 15 February 2023;
(c)his further particulars filed on 4 August 2023;
(d)his reply to the first respondent’s points of defence filed on 29 March 2023;
(e)his reply to the second respondent’s points of defence filed on 29 March 2023;
(f)his reply to the second respondent’s points of defence filed on 29 March 2023;
(g)his affidavit affirmed on 31 January 2020;
(h)his affidavit affirmed on 22 June 2023;
(i)his affidavit affirmed on 9 February 2024; and
(j)his submissions filed on 22 December 2023;
(k)his submissions in reply filed on 9 February 2024.
The Official Receiver relied upon:
(a)his defence filed on 15 March 2023;
(b)the affidavit sworn by Sharyn Renee Faulker on 1 May 2023;
(c)exhibit 1, being the Official Receiver Practice Statement 7; and
(d)his submissions filed on 21 December 2023.
The trustee relied upon:
(a)his defence filed on 15 March 2023;
(b)his affidavit affirmed on 4 May 2023;
(c)the affidavit affirmed by Brad Graham on 20 December 2023;
(d)the trustee’s affidavit affirmed on 21 December 2023; and
(e)his outline of submissions filed on 22 December 2023.
WHETHER THE PAYMENT OF $3,857,669 IS VOID AGAINST THE TRUSTEE
The trustee submitted that this was a straightforward case involving a simple application of s.120 of the Act. That section relevantly provides, with the relevant people’s names inserted, that a transfer of property by Mr Vlahos to Mr Davidson is void against Mr Vlahos’s trustee in bankruptcy if Mr Davidson gave Mr Vlahos consideration of less than the market value of the property. Mr Davidson transferred to Mr Vlahos $1,879,116.49. Mr Vlahos transferred to Mr Davidson $3,857,669. Therefore, the trustee submitted, the transfer of $3,857,669 from Mr Vlahos to Mr Davidson is void.
In his written submissions, Mr Davidson said that he had provided sufficient consideration in that Mr Davidson had paid money to Mr Vlahos to place bets, and the money Mr Vlahos had paid Mr Davidson in return represented winnings.
The trustee argued that Mr Davidson’s submissions on this point were misconceived, because s.120 of the Act is not concerned with whether the consideration provided is sufficient for the formation of a contract. Section 120 is concerned with market value. Obviously, the market value of $3,857,669 is a lot more than the market value of $1,879,116.49. Also, the money paid by Mr Vlahos to Mr Davidson was not actually winnings, because Mr Vlahos had not actually placed bets.
In oral submissions, Mr Davidson made a different point, which was that the consideration consisted of Mr Vlahos repaying a debt to Mr Davidson. The debt arose, Mr Davidson said, from an agreement between Mr Davidson and Mr Vlahos whereby Mr Davidson would give Mr Vlahos money, Mr Vlahos would use that money to place bets, and Mr Vlahos would give the winnings to Mr Davidson.
In response, the trustee submitted that there was no debt from Mr Vlahos to Mr Davidson because there were no winnings. That is because Mr Vlahos did not use the money provided by Mr Davidson to place bets. The money Mr Vlahos paid Mr Davidson was money provided by other investors in Mr Vlahos’s Ponzi scheme.
It was an agreed fact that Mr Vlahos, in his reports to participants in his betting scheme, overstated or fabricated bets and made false claims about the odds obtained and the profits made. Mr Graham’s unchallenged evidence was that, between April 2004 and December 2013, Mr Vlahos had net gambling losses of $6,401,579.82.
That is all well and good, but that evidence says nothing about the precise bets that Mr Vlahos told Mr Davidson he was going to make, and what the result would have been if Mr Vlahos had placed those bets. It was that amount for which Mr Vlahos was indebted to Mr Davidson.
However, that is immaterial. Section 120 of the Act does not contemplate betting winnings or profitable investments. It deals only with the relative market values of the property transferred between Mr Davidson and Mr Vlahos. It was common ground that what Mr Davidson transferred was $1,879,116.49 and what Mr Vlahos transferred was $3,857,669.
Lindgren J said in AnscorPty Ltd v Clout (Trustee) (2004) 135 FCR 469; [2004] FCAFC 71 at [45]:
… it was common ground that the ‘market value’ of money paid is the nominal value of that money.
That point was presumably common ground in Anscor because it is obviously correct. It is also the case that the value of money, if that might be thought to differ from its market value, is its nominal value.
$3,857,669 exceeds $1,879,116.49 by $1,978,552.51. Therefore, Mr Davidson would have to pay the trustee $1,978,552.51, subject to the additional points discussed below.
WHETHER THE NOBLE EDICT PAYMENTS ARE VOID AGAINST THE TRUSTEE
In addition, Noble Edict made payments to Mr Davidson totalling $9,420,000. The trustee said that these payments were also from Mr Vlahos, although made via Noble Edict, and were void on the same basis as the payments totalling $3,857,669. Mr Davidson said that Noble Edict was a separate legal entity and its payments totalling $9,420,000 to Mr Davidson were not from Mr Vlahos so were not void. Mr Davidson said further that the funds Noble Edict paid to Mr Davidson could not be traced back to Mr Vlahos.
As noted above, there were agreed facts in this proceeding that:
12An Australian company named Noble Edict Pty Ltd (Noble Edict) was incorporated and registered on 2 November 2007.
13 Between 2 November 2007 and 20 March 2012, Joanne Vlahos, the wife of the Bankrupt, was the sole director of Noble Edict.
14 Between 19 March 2012 and 16 December 2013, the Bankrupt, was the sole director and secretary of Noble Edict.
15 On 19 June 2012 the Bankrupt opened a bank account with National Australia Bank Ltd in the name of Noble Edict as trustee for the Noble Edict Investment Trust, with BSB 083-155 and account number 12-691-1188 (Noble Edict Account).
16 Between about 11 July 2012 and about 23 May 2013 (Period), the amounts particularised in paragraphs x to xxv in the attached Schedule B, totalling $9,420,000, were electronically transferred to the Applicant from the Noble Edict Account as set out in Schedule B.
In other words, all of the payments totalling $9,420,000 were made by Noble Edict at times when Mr Vlahos was its sole director and secretary. The trustee also submitted that Mr Vlahos was the sole signatory of the Noble Edict account. However, there was no evidence to that effect tendered in this proceeding, so I disregard that submission. Nevertheless, as the sole director of Noble Edict at material times, Mr Vlahos was ultimately in control of any payments it made.
Mr Davidson did not suggest that Noble Edict, on its own account, had any contractual obligation or other reason to transfer $9,420,000 to him. On the contrary, Mr Davidson said in his affidavit affirmed on 31 January 2020 at paragraph 24 that Mr Vlahos made payments to him totalling $4,750,000 by EFT from Noble Edict. In his precise words, Mr Davidson said:
Through January and March 2013, … Vlahos made payments to my group in total of $4.75 million. The payments were made by EFT, from ‘Noble Edict’…
To similar effect, Mr Davidson said in his affidavit affirmed on 22 June 2023 that:
18.Between 3 January 2008 and 23 July 2010 I received … from [Mr Vlahos] sums totalling $4,559,884 …
19.Between 11 July 2012 and 23 May 2013, I received from a company named Noble Edict Pty Ltd sums totalling $9,420,000, being payments x-xxv set out in paragraph 21 of the [s.139ZQ] Notice.
20.As a syndicate leader, when I received funds from [Mr Vlahos] I distributed requested amounts to syndicate members, including myself.
21.Of the total sum of $13,979,884 that I received from [Mr Vlahos] and from Noble Edict I distributed sums totalling $13,979,884 to syndicate members, including myself …
There would have been no reason for Mr Davidson to distribute the money he received from Noble Edict to his syndicate members if the money he received from Noble Edict was not a payment from Mr Vlahos pursuant to Mr Vlahos’s supposed betting scheme.
Additionally, Mr Davidson said at paragraph 6 of his affidavit affirmed on 9 February 2024 that:
Vlahos did not expressly tell me about Noble Edict. My recollection is that I first noticed this company when I began to receive payments from this entity on 11 July 2022. I sometime thereafter asked Vlahos about the existence of the company, on a date which I cannot now recollect. He told me that he would be operating through the Noble Edict company because he could transfer funds in and out of the company's bank account in greater quantities. I accepted his explanation at that time and made no inquiries about that company.
This statement means that Mr Davidson understood at the relevant times that the payments he received from Noble Edict were payments from Mr Vlahos.
The trustee relied on the decision of Perram J in Federal Commissioner of Taxation v Rozman (2010) 186 FCR 1; (2010) 75 ATR 782; [2010] FCA 324, particularly where his Honour said:
19… The question which arises, therefore, is whether a direction by a private company to a debtor to discharge the debt by payment to a shareholder can be described as being a situation in which “a private company pays an amount to an entity”.
20I have no doubt that it does. As a matter of ordinary English, the verb “to pay” includes amongst its many meanings notions of satisfaction and discharge. Thus, only a pedant would protest that a woman who buys a pair of shoes on a credit card has not paid for them; and this is so notwithstanding that every credit card purchase conceals at least one payment by direction: Visa International Service Association v Reserve Bank of Australia (2003) 131 FCR 300 at [71]-[74] per Tamberlin J. So too, it would be idle to suggest that a man who buys a hat by cheque has not paid for it simply because a cheque is a direction to a financial institution to pay a sum certain to another person: s 10 of the Cheques Act 1986 (Cth).
21In this case it could scarcely be suggested that had Tredex drawn a cheque upon its bankers in favour of Ms Rozman and delivered that cheque to her that it would not have paid her any money because the true flow of funds was from its bankers to hers. Yet, if that be not so, there is no plausible way of distinguishing other kinds of payment by direction. If a direction to pay given by cheque can be a payment why not a direction given by letter, email or telephone call? If a direction given to a bank is a payment, why not a direction given to some other kind of business, such as Fibre or Triton?
22In truth, there is no reason to construe “pay” as requiring a direct flow of money from payer to payee. Only in a world in which the concept of money was confined to cash and coin could such a notion even begin to work, for once it be accepted that that concept includes debts and other choses of action, it becomes nonsensical to speak about money literally moving from the payer to the payee. Ms Rozman's construction of the word “pay” is, therefore, to be rejected. It ignores ordinary usage and it does so for no good reason.
…
Rozman concerned what was, in effect, a third party debt notice, where A owed B $X, and C owed A $X, so A instructed C to pay $X to B. Rozman held, unsurprisingly, that the effect of that arrangement was that A paid B $X. The present case is different, because there is no suggestion that Noble Edict owed anything to Mr Vlahos. Noble Edict was simply interposed between Mr Vlahos and Mr Davidson. Consequently, Rozman is not particularly helpful.
The trustee also relied on the decision of Jackman J (with whom Derrington and Abraham JJ agreed) in Roufeil v Tarrant Enterprises Pty Ltd (2023) 299 FCR 204; [2023] FCAFC 142, where his Honour said:
35 … I respectfully agree with the reasoning of Perram J in Federal Commissioner of Taxation v Rozman, to which I have referred above, that the concept of “payment” or “payment of money” is an ordinary English expression, which takes its meaning from ordinary usage. In my view, it is entirely appropriate to refer to a banking transaction in which value is transferred from one bank account to another as being a payment of money between the two account holders, irrespective of whether the bank account receiving the money is a current account or a loan account or some other kind of account. The mere fact of receipt of that value constitutes the payment of money. That ordinary usage is supported by the authorities to which the Trustee referred.
…
37In my view, it is wrong to say that by invoking a three-party or four-party payment system in making a payment, the payer initiating the process has not paid money to the recipient account holder. Section 120 does not apply only to a “transfer of property” in the strict legal sense. The definition of that expression in s 120(7)(a) expressly includes the “payment of money”, and it is that latter concept in its ordinary and natural meaning on which the Trustee correctly relies.
Tarrant is also different to the present case. Tarrant concerned a sole trader making a payment via his business bank account to his company via its bank account. It was argued that the payment was a payment to the bank, pursuant to banker and customer law, rather than to the company. The “three-party or four-party payment system” Jackman J referred to in Tarrant was the sole trader, his bank, his company, and its bank, which happened to be the same bank as the sole trader’s bank. It was not the sort of three-party arrangement that exists in the present case, where Noble Edict, as a non-bank third party, was interposed between the alleged payer and the alleged payee. Consequently, Tarrant is not particularly helpful either.
The trustee also relied on White v Ljubicic [2017] FCA 717. That case concerned Mr Vlahos’s betting scheme but involved a participant other than Mr Davidson. In Ljubicic, Beach J found that:
6 As to Noble Edict, the bankrupt was the sole director thereof. The bankrupt operated the bank account of that company, such that he would transfer payments from his own bank account into the bank account of Noble Edict, and usually draw an equivalent sum in payments to punting club members.
…
10 The bankrupt transferred the sums numbered 19 to 21 (inclusive) in the table above from an account with NAB in the name of Noble Edict (Noble Edict Account) to the respondent by EFT.
11 The payment of $164,421.70 to the respondent made on 9 January 2013 (numbered 19 in the above table) was made from funds transferred by the bankrupt from the Vlahos Account to the Noble Edict Account. In this respect:
(a) on 8 January 2013, the balance in the Noble Edict Account was $763.02;
(b)between 8 and 10 January 2013, the bankrupt made four payments totalling $7.5 million from the Vlahos Account to the Noble Edict Account; and
(c) from those funds, the bankrupt made several payments to members of the punting club, including the payment of $164,421.70 to the respondent.
12 The payment of $100,000.00 to the respondent made on 15 July 2013 (numbered 20 in the above table) was made from funds transferred by the bankrupt from the Vlahos Account to the Noble Edict Account. In this respect:
(a) on 12 July 2013 the balance in the Noble Edict Account was $71.32;
(b) on 5 July 2013 the bankrupt made three payments totalling $740,000.00 from the Vlahos Account to the Noble Edict Account; and
(c) from those funds, on 15 July 2013, the bankrupt also made 3 payments out of the Noble Edict Account totalling $540,000.00, including the payment of $100,000.00 to the respondent.
13 The payment of $159,360.52 to the respondent made on 12 August 2013 (numbered 21 in the above table) was made from funds transferred by the bankrupt from the Vlahos Account to the Noble Edict Account. In this respect:
(a) on 8 August 2013 the balance in the Noble Edict Account was $1,189.43;
(b) on 9 August 2013 the bankrupt made three payments totalling $1,249,000.00 from the Vlahos Account to the Noble Edict Account;
(c) on 12 August 2013 a credit of $240,000.00 was applied to the Noble Edict Account with the notation “club [X] INCORRECT ACCOUNT REVERSAL CREDIT”, however a corresponding payment of $240,000.00 was made from the Noble Edict Account the following day; and
(d) on 12 August 2013, the bankrupt also made two payments out of the Noble Edict Account totalling $259,360.52, including the payment of $159,360.52 to the respondent.
The relevant orders in Ljubicic were as follows:
1(r)The transfer of the sum of $164,421.70 by Noble Edict Pty Ltd from funds held on trust for Vlahos to the bank account of the Respondent on 9 January 2013 is void as against the Applicants pursuant to section 120 of the Act.
1(s) The transfer of the sum of $100,000.00 by Noble Edict Pty Ltd from funds held on trust for Vlahos to the bank account of the Respondent on 15 July 2013 is void as against the Applicants pursuant to section 120 of the Act.
1(t) The transfer of the sum of $159,360.52 by Noble Edict Pty Ltd from funds held on trust for Vlahos to the bank account of the Respondent on 12 August 2013 is void as against the Applicants pursuant to section 120 of the Act.
Mr Davidson emphasised that Ljubicic was an undefended summary judgment application, so the defences run in the present case did not need to be considered in Ljubicic. Moreover, it appears that there was evidence in Ljubicic that was not tendered in the present proceeding. For example, there was no direct evidence in the present case that Mr Vlahos personally controlled the Noble Edict bank account, or that the funds in the Noble Edict bank account were held on trust for Mr Vlahos. Consequently, Ljubicic is not particularly helpful.
Mr Davidson relied on Associated Alloys Pty Limited v ACN 001 452 106 Pty Ltd (2000) 202 CLR 588; (2000) 74 ALJR 862; (2000) 21(9) Leg Rep 9; (2000) 18 ACLC 509; (2000) 46 ATR 91; (2000) Aust Contract R 90-114 (2000) 171 ALR 568, specifically as follows:
Evidence of receipt of “the proceeds”
53 It was for the seller to make out its case. In the end, this appeal turns on a critical gap in the evidence. Bryson J observed that if the seller had any remedies they arose under the proceeds sub-clause. His Honour considered the evidence and said (88):
“[The buyer] has done nothing to identify any part of the proceeds as relating to the steel in [the invoices], and has done nothing to set aside and hold any part of the proceeds in trust for [the seller] ...
[T]here is no basis on the evidence on which any particular one of the [steel products], whether they have been delivered to [the third party] or are still in [the buyer's] hands, can be identified as having been produced from the goods in any one of the [invoices]. Nor is there any basis for carrying out any process of apportionment; if such a process were appropriate, the evidence would not enable it to be done.”
… However, in the context of the further findings quoted above, it is not possible to identify, as conceded in this Court by counsel for the seller, whether any payments made by the third party to the buyer were related, within the meaning of the proceeds sub-clause, to the steel supplied by the seller under any particular invoice. Thus whilst the proceeds sub-clause operates in each case as an agreement to constitute a trust of future-acquired property, the seller has not demonstrated receipt of the future-acquired property by the buyer. In tum, therefore, it cannot be concluded that any trust in favour of the seller was constituted under the proceeds sub-clause.
54 This lacuna in the evidence is fatal to the claim for the equitable relief made by the seller. It is not disputed that the steel supplied by the seller under the invoices has been used in the buyer's manufacturing process to produce the Steel Products. Further, as at the time of judgment of Bryson J, the buyer had received part, but not complete, payment from the third party for the Steel Products (89). However, the question remains whether the buyer has received those payments: (a) as trustee for the seller, in the event that the payments received were “proceeds”; or (b) for its own benefit, in the event that the payments received were not “proceeds”. Neither the declarations sought, nor the remedy of equitable tracing against the buyer, nor any liability of the buyer to account as trustee will arise if the payments received were not “proceeds” within the meaning of the proceeds sub-clause. The burden of proving that a trust was constituted by the proceeds sub-clause, in respect of each of the Invoices, lay on the seller. This appeal may be contrasted with the position that would have resulted if the buyer had, hypothetically, received all payments from the third party with respect to the Steel Products. If this had occurred (which has not been contended by any of the parties) the inference may have to have been drawn that the buyer had received the “proceeds”' from the third party, in respect of each of the invoices.
55.The proceedings were constituted by summons and heard promptly. However, the procedure adopted meant that the issues did not appear as would have been the case had there been pleadings. If such rigour had been applied it may have been readily identifiable to the parties, perhaps prior to trial, that the seller had failed to prove an essential fact in issue, namely the receipt of “proceeds” by the buyer. Without proof of this threshold fact, no trust relationship can arise under the proceeds sub-clause between the seller and buyer.
FN 88: Associated Alloys (1996) 20 ACSR 205 at 210-21 I; 14 ACLC 952 at 956-957.
FN 89: Associated Alloys (1996) 20 ACSR 205 at 207; 14 ACLC 952 at 954.

In relation to Associated Alloys, Mr Davidson submitted, at Tr.90-91:
Now, in my submission, that is the case here and it’s fatal to any argument that payments from Noble Edict to Mr Davidson were really payments from Mr Vlahos. The funds – there were no identified payments, it all went into the one bank account. Money is coming into the bank account from various sources, no doubt connected with Mr Vlahos, as is said, and money is going out to various recipients, one of whom is Mr Davidson. We don’t know who the others are. You might well surmise that many of them are going to be syndicate members or leaders. We just don’t – we don’t really know. And in particular, I say there’s no evidence that the only thing Noble Edict did was pay money to syndicate members. We don’t know that. We know it paid [money] to lots of different people, including Mr Davidson. That’s all we can say. And it may be that it was also used by Mr Vlahos for personal expenses. Again, we just don’t know.
…
Now, the money, once it went into the account, was Noble Edict’s property, not Mr Vlahos’, and the payment was made by Noble Edict. It is not the case where you can say this was Mr Vlahos’ money which was syphoned through Noble Edict’s bank account in circumstances where he was the sole director of that company because the payments were all mixed up …
The trustee submitted that Associated Alloys was irrelevant, because it concerned a situation where the seller of goods had attempted to establish a trust over the goods, but had not provided the appropriate evidence to do so, and the trustee in the present case was not attempting to establish a trust. The headnote in the Commonwealth Law Reports reads:
A seller sold goods to a buyer on terms under which it retained ownership until the goods were fully paid for. If the buyer used the goods in manufacture or construction, or supplied them to a third party for such use, it was required to hold in trust for the seller such part of the “proceeds” of manufacture or construction as related to the goods supplied under the invoice which was equal in dollar terms to the amount owing to the seller on the invoice at the time of receipt of the proceeds. Before the full amount due under three invoices was paid, the buyer used the goods supplied under those invoices in the manufacture of products for an identified third party. The buyer entered voluntary administration and, subsequently, liquidation. The seller applied for declarations that the buyer held amounts received from the third party on trust for it. …
I accept that Associated Alloys is not relevant in the present case, not least because Associated Alloys concerned the terms of a particular contract, which has no connection to the present case.
However, Mr Davidson also made a broader point, namely, that we do not know whether all of the money that went into Noble Edict’s account came from Mr Vlahos. Nevertheless, we do know that Mr Vlahos told Mr Davidson, when Mr Davidson asked him why he was getting payments from Noble Edict, that Mr Vlahos “would be operating through the Noble Edict company because he could transfer funds in and out of the company's bank account in greater quantities”. In effect, Mr Vlahos told Mr Davidson that he was using Noble Edict as a conduit.
This is not a tracing case, so it is not relevant that, in some cases, the payments were “all mixed up”. Tracing is a process by which a person who had rights over a particular property that has been disposed of is given rights over other property that has transactional links to the original property. There are particular conditions and restrictions that apply to tracing, including mixing. However, the present case is not about tracing. The present case is about whether Mr Vlahos paid Mr Davidson some money.
In answering that question, the court can rely on all the evidence, including Mr Davidson’s own admissions that:
(a)Mr Vlahos told him that, in effect, he would be using Noble Edict as a conduit; and
(b)Mr Davidson treated money he received from Noble Edict as money received from Mr Vlahos, as evidenced by the fact that Mr Davidson paid that money to his own syndicate members.
Additionally, shortly before every payment from Noble Edict to Mr Davidson, Mr Vlahos paid the same amount or somewhat more into Noble Edict’s account. I conclude that the payments from Noble Edict to Mr Davidson were in fact payments from Mr Vlahos, albeit via the conduit of Noble Edict. However, for completeness, I will specifically address each of the Noble Edict payments, using the numbering used by the parties in Schedule B, which is set out above.
Payment x was of $1,150,000 and was on 11 July 2012. CB2090 is part of Mr Vlahos’s bank statement. It shows a debit on 11 July 2012 of $5,000,000 by internet transfer with the notation, “Punting club tran”. CB2143 is part of Noble Edict’s bank statement. It shows that Noble Edict’s bank account was opened on 19 June 2012 and had a zero balance as at that date. The first transaction on that account was a deposit of $5,000,000 on 11 July 2012. The account shows a number of debits from that account on 11 July 2012, including a debit of $1,150,000. That debit is said on the bank statement at CB2143 to have payment ID of 28777040. CB2189 is a bank record showing that the payment of $1,150,000 with payment ID of 28777040 was from Noble Edict’s account, #1188, to Mr Davidson’s account, #8038 on 11 July 2012. The $1,150,000 was clearly paid by Mr Vlahos to Mr Davidson via the Noble Edict account.
Payment xi was of $870,000 and was on 9 October 2012. CB2099 is part of Mr Vlahos’s bank statement. It shows a debit of $870,000 on 9 October 2012 with the notation “Internet transfer internal transfer internal trans”. CB2146 is part of Noble Edict’s bank statement. It had a credit balance of $64,703.50 on that day, and then received a credit of $100,000 and then a credit of $870,000. The credit of $870,000 had the notation “Internet transfer internal transfer internal trans”. It then shows a debit to that account of $870,000 on 9 October 2012 with the notation “Internet transfer” and the payment ID of 31028574. CB2190 is a bank record showing that the payment of $870,000 with payment ID of 31028574 was from Noble Edict’s account, #1188, to Mr Davidson’s account, #8038 on 9 October 2012. The $870,000 was clearly paid by Mr Vlahos to Mr Davidson via the Noble Edict account.
Payment xii was of $500,000 and was on 11 October 2012. CB2100 is part of Mr Vlahos’s bank statement. It shows a debit of $1,000,000 on 11 October 2012 with the notation “Internet transfer internal transfer internal trans”. CB2146 is part of Noble Edict’s bank statement. It had a credit balance of $23,601.63 on that day, and then received a number of credits and then a credit of $1,000,000. The last-mentioned credit had the notation “Internet transfer internal transfer internal trans”. It then shows two debits to that account of $500,000 each on 11 October 2012 with the notation “Internet transfer” and the payment IDs of 31104038 and 31105879. CB2191 is a bank record showing that the payment of $500,000 with payment ID of 31104038 was from Noble Edict’s account, #1188, to Mr Davidson’s account, #8038 on 11 October 2012. The $500,000 was clearly paid by Mr Vlahos to Mr Davidson via the Noble Edict account.
Payment xiii was of $500,000 and was on 11 October 2012. It was the second of the two $500,000 payments from Noble Edict’s account on 11 October 2012. CB2192 is a bank record showing that the payment of $500,000 with payment ID of 31105879 was from Noble Edict’s account, #1188, to Mr Davidson’s account, #8038 on 11 October 2012. The $500,000 was clearly paid by Mr Vlahos to Mr Davidson via the Noble Edict account.
Payment xiv was of $1,000,000 and was on 25 January 2013. CB2112 is part of Mr Vlahos’s bank statement. It shows a debit of $1,700,000 on 25 January 2013 with the notation “internal transfer”. CB2151 is part of Noble Edict’s bank statement. It had a credit balance of $460,153 on 25 January 2013, and then received two credits totalling $572,000 and then a credit of $1,700,000. The last-mentioned credit had the notation “Internet transfer internal transfer internal transfe”. It then shows three debits and then a debit of $1,143,841.66 with the notation “Internet transfer Sam Davidson” and with the payment ID of 33855566 on 25 January 2013. CB2194 is a domestic payment report showing that, of the $1,143,841.66, $1,000,000 was paid from Noble Edict’s account, #1188, to Mr Davidson’s account, #8038 on 25 January 2013. The $1,000,000 was clearly paid by Mr Vlahos to Mr Davidson via the Noble Edict account.
Payment xv was of $1,000,000 and was on 29 January 2013. CB2112 is part of Mr Vlahos’s bank statement. It shows a debit of $1,000,000 with the notation “Internet Transfer Transfers Transfers”. CB2151 is part of Noble Edict’s bank statement. It had a credit balance of $65,026.67 on 29 January 2013, and then received two credits, the second of which was of $1,000,000. The second credit had the notation “Internet Transfer Transfers Transfers s”. It then shows two debits, the second of which was of $1,000,000 with the notation “Internet transfer Sam Davidson” and with the payment ID of 33900691. CB2195 is a domestic payment report showing that $1,000,000 was paid from Noble Edict’s account, #1188, to Mr Davidson’s account, #8038, with payment ID 33900691 on 29 January 2013. The $1,000,000 was clearly paid by Mr Vlahos to Mr Davidson via the Noble Edict account.
Payment xvi was of $978,000 and was on 1 February 2013. CB2112 is part of Mr Vlahos’s bank statement. It shows a debit of $350,000 with the notation “Internet Transfer Transfers Transfers” and a debit of $600,000 with the notation “Internet Transfer Bv Funds Transfer Bv Transfer”, both on 1 February 2013. CB2152 is part of Noble Edict’s bank statement. It had a credit balance of $28,692.59 on 1 February 2013. It then received a credit of $350,000, with the notation, “Internet Transfer Transfers Transfers” and a credit of $600,000 with the notation “Internet Transfer Bv Funds Transfer Bv Transfer”, both on 1 February 2013. It then shows a debit of $978,000 with the notation “Internet Transfer Sam Davidson” and the payment ID of 34038426 on 1 February 2013. CB2196 is a domestic payment report showing that the payment on 1 February 2013 of $978,000 with payment ID of 34038426 was from Noble Edict’s account, #1188, to Mr Davidson’s account, #8038.
The trustee said that that $950,000 was clearly paid by Mr Vlahos to Mr Davidson via the Noble Edict account. The trustee said that the additional $28,000 paid to Mr Davidson on 1 February 2013 came from the funds already in the Noble Edict account. The trustee conceded that, as matter of tracing, the $28,000 might not be linked to Mr Vlahos directly. However, the trustee said that the Noble Edict account existed for the sole purpose of transferring funds from Mr Vlahos to betting scheme participants.
There was no evidence that the Noble Edict account existed for the sole purpose of transferring funds from Mr Vlahos to betting scheme participants. However, it was certainly used for that purpose. It is also inconceivable that Noble Edict would have paid Mr Davidson $28,000 for any reason other than to facilitate a payment from Mr Vlahos to Mr Davidson. I am satisfied that the whole $78,000 was a payment from Mr Vlahos to Mr Davidson.
Payment xvii was of $550,000 and was on 5 February 2013. CB2113 is part of Mr Vlahos’s bank statement. It shows a debit of $575,000 with the notation “Internet Transfer Transfers Transfers” on 5 February 2013. CB2152 is part of Noble Edict’s bank statement. It had a credit balance of $692.59 on 5 February 2013, and then received a credit of $575,000 with the notation “Internet Transfer Transfers Transfers”. It then shows a debit of $575,000 with the notation “Internet Transfer Sam Davidson” and with the payment ID of 34109422 on 5 February 2013. CB2197 is a domestic payment report showing that $550,000 was paid from Noble Edict’s account, #1188, to Mr Davidson’s account, #8038, with payment ID 33900691 on 5 February 2013. The domestic payment report shows that the additional $25,000 was paid to Megan Stephens. The $550,000 was clearly paid by Mr Vlahos to Mr Davidson via the Noble Edict account.
Payment xviii was of $150,000 and was on 13 February 2013. CB2113 is part of Mr Vlahos’s bank statement. It shows a debit of $150,000 with the notation “Internet Transfer Transfers Transfer”. CB2152 is part of Noble Edict’s bank statement. It had a credit balance of $50,929.59 on 13 February 2013, and then received a credit of $150,000 with the notation “Internet Transfer Transfers Transfer”. It then shows a debit of $150,000 with the notation “Internet Transfer club” and with the payment ID of 34327963. CB2198 is a domestic payment report showing that $150,000 was paid from Noble Edict’s account, #1188, to Mr Davidson’s account, #8038, with payment ID 34327963 on 13 February 2013. The $150,000 was clearly paid by Mr Vlahos to Mr Davidson via the Noble Edict account.
Payment xix was of $250,000 and was on 15 February 2013. CB2113 is part of Mr Vlahos’s bank statement. It shows a debit of $425,000 with the notation “Internet Transfer Transfers Transfer” on 15 February 2013. CB2152 is part of Noble Edict’s bank statement. It had a credit balance of $65,929.59 on 15 February 2013, and then received a credit of $425,000 with the notation “Internet Transfer Transfers Transfer”. It then shows three debits, the third of which was of $250,000 with the notation “Internet transfer” and with the payment ID of 34403296. CB2199 is a domestic payment report showing that $250,000 was paid from Noble Edict’s account, #1188, to Mr Davidson’s account, #8038, with payment ID 34403296 on 15 February 2013. The $250,000 was clearly paid by Mr Vlahos to Mr Davidson via the Noble Edict account.
Payment xx was of $500,000 and was on 1 March 2013. CB2116 is part of Mr Vlahos’s bank statement. It shows a debit on 25 February 2013 of $400,000, a debit on 27 February 2013 of $40,000 and a debit on 1 March of $120,000. CB2152 and CB2153 are parts of Noble Edict’s bank statement. It shows that Noble Edict received:
(a)a credit of $400,000 on 25 February 2013
(b)a credit of $40,000 on 27 February 2013; and
(c)a credit of $120,000 on 1 March 2013.
Those three credits all had the notation “Internet Transfer internal transfer internal transfe”. CB2153 then shows a debit on 1 March 2013 of $500,000 with the notation, “Internet Transfer” and with the payment ID of 34843370. CB2200 is a domestic payment report showing that $500,000 was paid from Noble Edict’s account, #1188, to Mr Davidson’s account, #8038, with payment ID 34843370 on 1 March 2013. The payments into Noble Edict’s account did not match with the payment out, in that there were three payments in and one payment out, and the three payments in were spread over a number of days and the payment out was only on the last of those days. However, these circumstances are not a reason to doubt that the $500,000 was paid by Mr Vlahos to Mr Davidson via the Noble Edict account.
Payment xxi was of $322,000 and was on 8 March 2013. CB2116 is part of Mr Vlahos’s bank statement. It shows a debit of $322,000 with the notation “Internet transfer internal transfer internal transfe”. CB2153 is part of Noble Edict’s bank statement. It shows it received a credit of $322,000 on 8 March 2013 with the notation “Internet transfer internal transfer internal transfe”. It then shows a debit of $322,000 with the notation “Internet transfer” and with the payment ID of 35034947. CB2201 is a domestic payment report showing that $322,000 was paid from Noble Edict’s account, #1188, to Mr Davidson’s account, #8038, with payment ID 35034947 on 8 March 2013. The $322,000 was clearly paid by Mr Vlahos to Mr Davidson via the Noble Edict account.
Payment xxii was of $500,000 and was on 5 April 2013. CB2119 is part of Mr Vlahos’s bank statement. It shows a debit of $500,000 with the notation “Internet transfer club club”. CB2155 is part of Noble Edict’s bank statement. It shows that is received a credit on 5 April 2013 of $500,000, with the notation “Internet transfer club club”. It then shows a debit of $500,000 with the notation “Internet transfer” and with the payment ID of 35776529. CB2202 is a domestic payment report showing that $500,000 was paid from Noble Edict’s account, #1188, to Mr Davidson’s account, #8038, with payment ID 35776529 on 5 April 2013. The $500,000 was clearly paid by Mr Vlahos to Mr Davidson via the Noble Edict account.
Payment xxiii was of $300,000 and was on 15 April 2013. CB2120 is part of Mr Vlahos’s bank statement. It shows the account was in credit of $302,431.97 on that date. There were various credits then a debit of $300,000 with the notation “Internet Transfer transfer”. CB2155 is part of Noble Edict’s bank statement. It had a credit balance of $715,160.28 on 15 April 2013. It then received a credit of $300,000 with the notation “Internet Transfer transfer”. It then had a debit of $300,000 with the notation “Internet transfer” and with the payment ID of 36011595. CB2203 is a domestic payment report showing that $300,000 was paid from Noble Edict’s account, #1188, to Mr Davidson’s account, #8038, with payment ID 36011060 on 15 April 2013. The $300,000 was clearly paid by Mr Vlahos to Mr Davidson via the Noble Edict account.
Payment xxiv was of $400,000 and was on 29 April 2013. CB2121 and CB2122 are parts of Mr Vlahos’s bank statement. They show a payment out of $100,000 on 24 April 2013 with the notation “Internet Transfer int transfer int itransfeintr”, and payments out of $320,000 and $1,300,000 on 29 April 2013 each with the notation “Internet Transfer int transfer int transfer”. CB2156 is part of Noble Edict’s bank statement. It had a credit balance of $280.79 on 23 April 2013, and then received a credit of $100,000 on 24 April 2013 2013 with the notation “Internet Transfer int transfer int itransfeintr” and credits of $320,000 and $1,300,000 on 29 April 2013 There is then a debit of $400,000 on 29 April 2013 with the notation “Internet Transfer” and with the payment ID of 36441106. CB2204 is a domestic payment report showing that $400,000 was paid from Noble Edict’s account, #1188, to Mr Davidson’s account, #8038, with payment ID 36441106 on 29 April 2013. The $400,000 was clearly paid by Mr Vlahos to Mr Davidson via the Noble Edict account.
Payment xxv was of $450,000 and was on 23 May 2013. CB2124 is part of Mr Vlahos’s bank statement. It shows the account was in credit of $170,446.27 on that date. There were several credits totalling more than $500,000 and then a debit of $137,446 and another of $422,000 (total $559,446), both with the notation “Internet Transfer int int”, on 23 May 2013. CB2158 is part of Noble Edict’s bank statement. It shows a number of credits on 23 May 2013, including credits of $137,446 and $422,000. Both credits had the notation “Internet transfer int int”. It then shows two debits on 23 May 2013, the second of which was of $450,000 with the notation “Internet transfer” and with the payment ID of 37190451. CB2205 is a domestic payment report showing that $450,000 was paid from Noble Edict’s account, #1188, to Mr Davidson’s account, #8038, with payment ID 37190451 on 23 May 2013. The $450,000 was clearly paid by Mr Vlahos to Mr Davidson via the Noble Edict account.
On the evidence, I am satisfied that payments x to xxv were paid by Mr Vlahos to Mr Davidson, via Noble Edict. While Noble Edict is a separate legal entity from Mr Vlahos, it is abundantly clear that Mr Vlahos used Noble Edict as a conduit for his payments to Mr Davidson. That is sufficient for present purposes.
THE EFFECT OF MR DAVIDSON DISTRIBUTING FUNDS TO OTHER PEOPLE
Mr Davidson argued that he should not have to pay the amounts he received from Mr Vlahos to the trustee because Mr Davidson distributed any sums he received from Mr Vlahos to his own syndicate members prior to the commencement of Mr Vlahos’s bankruptcy. Mr Davidson received $13,277,669. His own syndicate included himself. He said he kept $932,148 as his own share. That is about 9.3% of the total sum received.

The trustee said that there was insufficient evidence that Mr Davidson distributed most of the funds and, in any event, it was immaterial if he did distribute most of the funds.
Mr Davidson gave unchallenged evidence in his affidavit affirmed on 22 June 2023, which I accept, that:
20.As a syndicate leader, when I received funds from the Bankrupt I distributed requested amounts to syndicate members including myself.
21.Of the total sum of $13,979,884 that I received from [Mr Vlahos] and from Noble Edict I distributed sums totalling $13,979,884 to syndicate members, including myself. Annexed hereto and marked “SD-22” is a schedule setting out the dates and amounts of the distributions.
The schedule marked SD-22 is detailed but does not conveniently state the total amount that Mr Davidson distributed to other syndicate members. However, I accept that he has given sufficient evidence of distributing the funds prior to the commencement of the bankruptcy.
The trustee submitted that it was immaterial whether Mr Davidson received the payments from Mr Vlahos on behalf of others, or as their trustee. For that point, the trustee relied on the first instance decision of Drummond J in Clout v Anscor Pty Ltd [2003] FCA 326 at [92], where his Honour said:
The Anscor respondents submit that all the tracing claims must fail because Anscor did not receive any of the Dexter commission moneys here in question as its own property to do with as it wished, but in its capacity as trustee of the Anscor Discretionary Trust. There is nothing in the wording of s 120 the Bankruptcy Act that I can see which lends any support to the respondents’ submission that the section does not apply to transfers of property by persons who become bankrupt to transferees who are themselves trustees for third party interests. The section operates on transfers of property by persons who become bankrupt which, because of the want of consideration by the recipient of the property, results in the bankrupt’s estate being diminished, to the detriment of the mass of unsecured creditors to an extent that it would not have been diminished, if adequate consideration had been given for the property transferred away. The identity of the transferee or the capacity in which the transferee acts in taking the property at an under value is irrelevant to the legislative intention sought to be achieved by s 120.
Clout was considered on appeal, but the above conclusion was undisturbed. In any event, Mr Davidson did not specifically claim that he had received the money as a trustee. He said that he had distributed it, as he was contractually obliged to do, to his syndicate members, prior to the commencement of the bankruptcy. Clout does not address the question of the effect of the transferee, as a trustee or otherwise, distributing the funds prior to the commencement of the bankruptcy.
The trustee also referred to the explanatory memorandum for the Bankruptcy Amendment Bill 1996, which led to substantial changes to s.120 of the Act. In particular, the trustee noted that the explanatory memorandum said:
23.…The current law provides for a period of ‘relation back’, and makes specific provision in relation to ‘settlements’ of property (section 120), fraudulent transactions (section 121) and preferential payments or transfers to creditors (section 122). The provisions focus largely on the nature of the transaction being impugned, and the intention of the parties to the transaction. The Bill proposes changes to this area of the law to simplify it, and to change the focus of the provisions away from the intention of the parties to particular transactions, to the nature of the transactions and the likely effect on the creditors. To the extent that a person's intention in dealing with property is relevant, as it will be in relation to proposed section 121 …
…
27.There are two obvious difficulties with section 120, the first being the obscure language of the provision and the second, the focus of the section on the type of transaction entered into by the debtor, rather than on the effect or possible effect on creditors of the entry of the person into the transaction concerned. The term ‘settlement’ has an accepted meaning at common law and refers to a disposition of property made with the intention that the person receiving the property should retain it more or less permanently. Some transactions which substantially deplete the assets of the debtor could be held not to be settlements, because of the absence of an intention that the property should be retained by the recipient. ...
28.The Bill proposes the replacement of section 120 with a much simplified provision…
…
84.8It is important to note at this point that the term ‘transfer’ is to be used in the new section 120, and that term will also be used in the new section 121 and the amended section 122. Case law in relation to existing section 120 has established that the term ‘settlement’ carries with it a connotation that the person upon whom the property is settled will retain it, at least for some foreseeable time after receiving it. The word transfer will have its ordinary meaning in the new and revised provisions, except to the extent that it is given an expanded definition by proposed subsections 120(7), 121(9) and 122(8), so that it encompasses a payment of money, or the doing of some act or thing which results in another person becoming the owner of property which did not previously exist… It will be seen that in ordinary parlance, the term transfer does not carry with it any connotation that any property which is transferred is intended to be retained permanently, or at all by the transferee. This will make the new section 120 stricter than the present provision, because of the absence of the test of permanency.
The explanatory memorandum is not the law. In any event, it was clearly directed at money which is readily dissipated. The explanatory memorandum contemplates money being recovered from a transferee, even if the particular money transferred has been spent. The explanatory memorandum, in the passages the trustee referred to, does not say anything about money that the transferee has distributed to third parties pursuant to a contractual obligation prior to the commencement of the bankruptcy.
The trustee argued that, for the amendments to s.120 of the Act, the Parliament contemplated the dissipation of transferred money, and decided that it was immaterial. For that proposition, the trustee referred to the decision of Lindgren J in Anscor Pty Ltd v Clout (Trustee) (2004) 135 FCR 469; [2004] FCAFC 71. That case was an appeal from Clout, mentioned above. The other two members of the Full Court in Anscor agreed with Lindgren J generally, but expressly reserved their position on the operation of s.120 of the Act. In any event, Lindgren J said:
29.The new s 120 effected two changes from the previous s 120 of present relevance. First, the notion of a transfer of property replaced that of a settlement of property. The former s 120(8) provided that in s 120 “settlement of property” included any disposition of property. The word “property” was (and is) defined widely in s 5. The notion was understood to include money: cf Jack v Smail (1905) 2 CLR 684 at 700. But it was established that a “settlement” required a purpose of conferring benefit on the disponee, and therefore contemplated retention by the disponee of the property settled for at least some period, rather than its immediate dissipation or consumption ...
30.Money is easily dissipated or consumed. Accordingly, it was held that “a gift of money which is not hedged about with conditions that it shall be invested and kept in a certain way cannot be called a ‘settlement’”…
31.The notion of a “transfer of property” in the present s 120 does not require retention of the transferred property for any period. Section 120(7) provides expressly that a transfer of property includes a payment of money. Accordingly, any payment of money, even one “not hedged about with conditions that it shall be invested and kept in a certain way” is a transfer of property for the purposes of s 120.
…
43.Seventh, in my opinion, the following propositions in relation to the operation of s 120 should be accepted (some of the authorities cited relate to the Statute of Elizabeth provision (intent to defraud creditors), rather than s 120 (transfers for less than full consideration) or its predecessors (settlements).
…
(d) By contrast, s 139ZQ of the Act (inserted by the Bankruptcy Amendment Act 1991 (Cth) with effect from 1 July 1992) provides for a personal liability, by stipulating that where a person has received money or property as a result of a transaction that is void under Div 3 of Pt VI of the Act (ss 120, 121 and 122 are in Div 3), the person may be required by a notice issued by the Official Receiver, on the application of, relevantly, the trustee in bankruptcy, to pay to the trustee an amount equal to the money or the value of the property received, and that the trustee may recover that amount as a debt in a court of competent jurisdiction.
…
(j) If, at the commencement of the bankruptcy, property the subject of a transfer made void by s 120 exists neither in specie nor in an identifiable substitute form, equitable relief founded in equity’s auxiliary jurisdiction may nonetheless be available to the trustee in bankruptcy. This may occur where, for example, the property, such as money, can be “followed” or “traced” into, other property which is not, however, simply an identifiable substitute for it … In such a case an equitable charge over that other property in favour of the trustee in bankruptcy for the amount of the value of the property, or the amount of money which the debtor/bankrupt transferred plus interest, will often be found to be an appropriate remedy...
That is all well and good. However, the trustee is not seeking to follow the money into the hands of the third parties. Mr Davidson’s syndicate members were not joined as parties to this proceeding, and no order can presently be made against them. The passages from Anscor relied on by the trustee do not expressly say that a trustee can recover from a transferee a voidable payment that was disbursed prior to the commencement of the bankruptcy.
However, the trustee also referred to Clout, at first instance, where Drummond J said at paragraph 90:
Though s 120 declares that an undervalued transfer of property by a person who later becomes bankrupt is void against the trustee in bankruptcy, it is settled law that the courts will treat the transfer as effective to vest the property in the transferee until the transfer is impugned in proceedings brought by the trustee in bankruptcy. It follows from this that, to the extent that Anscor (and PIAM) have dissipated Dexter commission moneys received by them in the two years in question before the trustee commenced the present action, the trustee has no claim under s 120 against Anscor (or PIAM) in respect of those commission moneys. However, if commission moneys already paid away remain “in some derivative form in the hands of [Anscor], title to the property revests in the trustee in bankruptcy and [Anscor] thereafter continues to hold the property as trustee for the trustee in bankruptcy and will be ordered to do all necessary acts to revest the property in the trustee in bankruptcy”: Alvaro at 426. And where Anscor has not retained the Dexter commissions but they have been transformed into the identifiable property of a third party, equity will allow the trustee in bankruptcy to claim the property in its altered form from that third party, so long as the third party cannot rely upon equitable principles protecting a bona fide purchaser for value to answer the trustee’s demand….
That means that the trustee could have recovered the monies from Mr Davidson if they had remained in some derivative form in his hands. However, the monies can only be recovered from third parties if they have been transformed into identifiable property of the third parties, and if the third parties were not bona fide purchasers for value. Most of the money has not remained in some derivative form in Mr Davidson’s hands, and the trustee is not seeking anything from the third parties to whom Mr Davidson distributed the funds.
The trustee also relied on Re O'Halloran [2002] FCA 1305. In that case, Mr O’Halloran sold his house at Carringbah in 1995. He gave the sale proceeds of $640,000 to his wife, Ms O’Halloran, at a time when he was insolvent. Ms O’Halloran used the money to buy a house in her sole name in Cronulla. Mr O’Halloran committed an act of bankruptcy on 24 September 1999 and a sequestration order was made against him shortly afterwards. Allsop J, as his Honour then was, said:
76 The continued use of the phrase “void against the trustee” in ss 120 and 121 after the amendments to the Act in 1996 makes relevant the well-known learning on that phrase. The word “void” means voidable, and, in the case of bankruptcy, the transfer is avoided as and from the date of the accrual of the trustee’s title – the commencement of the bankruptcy (in the case of the operation of the Statute of Elizabeth (13 Elizabeth c.5) and its modern equivalents, the avoidance is prospective from the date of the avoidance) …
77 The transformation of the funds into the form of the [Cronulla] Property raises an issue of remedy. It is important to appreciate that until the avoidance of the transfer (and up to the point of its operation) the [Cronulla] Property was owned by [Ms O’Halloran] – legally and beneficially: …
78 If the property the subject of the transfer was in the hands of [Ms O’Halloran] at the time of the commencement of the bankruptcy, [Ms O’Halloran] will be taken thereafter to hold the property to which the trustee is thenceforth entitled…
79 If, prior to the commencement of the bankruptcy, the property transferred has been paid away or sold, no personal remedy lies against [Ms O’Halloran], even one with notice of a fraud by [Mr O’Halloran]: …. This is so because up to the commencement of the bankruptcy (even after avoidance) [Ms O’Halloran] is taken to have had full right and title to deal with the property.
80 Here, the subject matter of the transfer, the funds totalling $640,000, were paid away immediately to the vendors of the [Cronulla] Property. However, there is no dispute but that the very moneys obtained from the sale of the Caringbah house funded the purchase of the [Cronulla] Property. The [Cronulla] Property is still held by [Ms O’Halloran]. In such circumstances, where the avoidance of the transfer was made, but where the [Cronulla] Property, the transfer of which is avoided, has been identifiably changed in form, equity will give relief, in its auxiliary jurisdiction…
81 If the proceeds of the transfer can be identified in different property (as they can be here), that property can be claimed, at least so far as to represent the funds the subject of the transfer void against the trustee…
82 Given the clarity of, and lack of dispute about, the identification here, it is unnecessary to say anything about the principles by which such identification is made.
83 The applicant claims a declaration that the whole of the [Cronulla] Property is held for the trustee. That assumes that any increase in value in the property since 31 January 1995 is to be for the account and benefit of the trustee. It does not follow at all. From 31 January 1995 to the date of the commencement of the bankruptcy, the [Cronulla] Property was that of [Ms O’Halloran]; notwithstanding avoidance, that still can be seen as the position. From the commencement of the bankruptcy, the identified transformed property is to be taken as held for the benefit of the trustee.
For present purposes, O’Halloran means that the transfer of $640,000 to Ms O’Halloran was void, and the trustee could recover it, pursuant to an equitable remedy, because the $640,000 could be identified in the Cronulla property which was in Ms O’Halloran’s sole name. That is obviously different to the present case, because Mr Davidson has distributed most of the money he received from Mr Vlahos to other people.
The trustee then relied on Westpac Banking Corporation v The Bell Group Ltd (in liq) (No 3) (2012) 44 WAR 1; (2012) 270 FLR 1; (2012) 89 ACSR 1; [2012] WASCA 157. That case concerned s.565 of the Corporations Act 2001 which mirrored s.120 of the Act. In Westpac, the Bell Group, shortly before the commencement of its winding up, transferred securities to various banks. The banks realised the securities and thereby converted them to cash. The liquidator sought orders that the transfers to the banks were void, and sought the recovery of the money.
In Westpac, Lee AJA said:
741… to assist achievement of the purpose of the provisions of the Corporations Act courts should read the provisions of s 565 as contemplating the use of all appropriate remedial orders including those that would be regarded as appropriate in equity …
742That means that where property dealt with in a dealing contrary to s 565 consists of money, the right to obtain remedial orders will not depend upon a continuing ability to identify the object dealt with. To meet the purpose of the Corporations Act it is to be assumed that s 565 contemplates that a court may order that a party at fault account for the use of moneys obtained by reason of a dealing contrary to the provisions of s 565(1).
743By definition, the business of the Banks involved mixing of moneys in an amalgam of funds which led to loss of identity of the property concerned. But in that circumstance an order may be made that the Banks account and make compensation for the use of that money whilst it was held from the liquidator for due distribution in the insolvency.
744Such an order would return the creditors, including unduly preferred creditors, to the position they would have been in but for the dealing in property of an insolvent company in contravention of s 565.
Those passages do not take the position further than O’Halloran, because the banks still had the value of the securities in the form of cash. They had not distributed the cash to third parties.
The trustee then referred to the following passages from the judgment of Drummond AJA in Westpac:
2569If the proceeds do not exist in specie or in some identifiable altered form but, when avoidance occurs, they can be traced into some other asset acquired by the transferee partly with those proceeds and partly with the transferee’s own funds, the trustee may be entitled to an equitable proprietary remedy, such as a charge over the transferee’s assets, to the extent of the traceable proceeds. If however, when avoidance occurs, it is no longer possible to trace the proceeds of the transferee’s disposal of the debtor/bankrupt’s property into some asset of the transferee, the trustee can make no claim on the transferee’s own assets …
2570This is in conformity with the view taken by Full Courts in Offıcial Trustee v Alvaro at [65] and Issitch v Worrell (2000) 172 ALR 586 at [36]. Lindgren J expressed the same view in Anscor v Clout at 480-481. It is also consistent with the position under the Statute of Elizabeth as explained in Brady v Stapleton where, after avoidance by the creditors, the transferee still holds the property transferred by the debtor or some other asset into which that property can be traced.
This again takes the position no further than O’Halloran. On the contrary, it seems to mean that, where funds can be traced to third parties, and cannot be traced to the transferee himself, they cannot be recovered by the trustee.
The trustee then referred to the following passages from the judgment of Carr AJA in Westpac:
3228[Referring to paragraph 43(j) of Anscor] This is entirely consistent with the exposition of principles to be found in a series of decisions starting with Re Ward; Thomas v LG Abbott & Co Ltd (1950) 16 ABC 214. In that case, at 222, Paine J explained that the avoidance provision itself does not give any express right of action to the trustee. Having established, in that case, an undue preference the transaction is avoided against the trustee. The trustee’s rights thereafter “depend upon the nature of the transaction actually avoided”. Re Ward was cited with apparent approval in NA Kratzmann Pty Ltd (in liq) v Tucker (No 2) (1968) 123 CLR 295 at 298-299 by McTiernan, Taylor and Menzies JJ where their Honours also referred to NA Kratzmann Pty Ltd (in liq) v Tucker (No 1) (1966) 123 CLR 257 at 285 where Barwick CJ had explained that those rights “must be derived from the general law which becomes applicable upon the avoidance of the company’s transaction”. Their Honours, after referring to the making of a declaration of the avoidance of a transaction, said this:
But, since the Court undoubtedly has authority to make orders affording relief consequential upon the making of such a declaration, we find it unnecessary to equate the right of a trustee to recover the equivalent of a payment declared to be void with the strict terminology of the common law; it is sufficient to say that in such a case the declaration does not affect the title of the respondent to any specific or identifiable property, that the claim of the trustee is not made with respect to any property to which he asserts title and that the appropriate consequential order in ordinary cases is for payment to the trustee of the amount in question. In other words he has no higher right than that of an unsecured creditor and, if the payee is also bankrupt, the trustee is relegated to proving in his bankruptcy.
…
3231I have read Lee AJA’s draft reasons in relation to the application of s 565 and the significance of its statutory context, namely Pt V of the Corporations Act. I agree with him, respectfully, that we should read s 565 as contemplating the use of all appropriate remedial orders including those that would be regarded as appropriate in equity. If, which I doubt for the reasons given above, Brady v Stapleton may previously have stood in the way of granting relief to the relevant respondents, the relatively new statutory regime of substituted rights, set as it is in the context of Pt V which provides a wide range of remedial orders for post 23 June 1993 transactions strongly suggests that a court should not take a narrow view of the remedies available for transactions occurring before that date, particularly where no third party interests are involved. (emphasis added)
3232The result, as I see it, is that Equity will mould such in personam consequential relief as will restore the trustee or its equivalent to the position it would have been in the absence of the transaction avoided in relation to the payee or assignee concerned. However, this would be subject to the rights of a bona fide purchaser for value without notice (or other like person protected under the statute). For recent examples of these principles being applied: see Offıcial Trustee v Alvaro at 427 and Regal Castings, a decision of the Supreme Court of New Zealand approved by the High Court in Marcolongo. In Regal Castings Tipping J (with whom Blanchard and Wilson JJ agreed on this point) proposed, at [158]-[163], an equitable in personam remedy by way of the imposition of a remedial constructive trust, at the same time being particularly conscious of the need to protect the interests of innocent third parties and not to undermine or subvert “other recognized principles and priorities”. In my opinion the same approach should be taken in this matter but without there being any need to impose a remedial constructive trust. It will be sufficient to award monetary relief to the main respondents by way of equitable compensation.

The trustee submitted that the last sentence of paragraph 3232 of Westpac was particularly pertinent. However, Westpac did not actually concern third parties. The question in Westpac was whether the liquidator could recover money from the banks when they had taken a transfer of securities which they had then converted to money. The references to third parties were simply to say that different considerations applied when they were involved. Consequently, Westpac cannot be treated as authority on the position of third parties.
Nevertheless, the trustee also noted that Drummond AJA said at paragraph 2543 of Westpac that:
Brady v Stapleton I think establishes that where a creditor or a trustee in bankruptcy, on behalf of the creditors, invokes the Statute of Elizabeth, the transfer by the transferor thereupon becomes retrospectively void ab initio, as against the creditors. The statute would be empty of much of its effect if, on being activated, it could not reach back and avoid the transfer made by the fraudulent transferor one, five or ten years before. But a fraudulent transfer may never be challenged under the Statute. Until avoidance occurs, a transferee (from the debtor) has a lawful, though defeasible title to the property, which it can deal with as it pleases. Avoidance of the original transfer, therefore, does not obliterate everything that may have taken place between the making of the transfer and the invocation of the Statute by the creditors. If the transferee has, in the exercise of his then lawful rights, already sold the property before avoidance occurs, the proceeds of that sale will have been received by him for his own use and not for the use of the transferor/bankrupt. No personal remedy will therefore be available against him. If the transferee has dissipated both the property and the proceeds of its sale before avoidance takes place, the creditors can have no proprietary claim in respect of the property transferred. If, however, when avoidance ab initio occurs, the transferee retains the property or some asset into which the proceeds of its sale are traceable, his previously lawful title is destroyed by the avoidance and that property thereupon becomes once again the property of the transferor/debtor and so becomes available to the creditors.
Paragraph 2543 is against the trustee. It means that, where a transferee, such as Mr Davidson, has exercised his lawful rights, such as by transferring funds to people he was contractually obliged to transfer them to, before the commencement of the bankruptcy, there is no personal remedy against him.
The trustee sought to distinguish paragraph 2543 of Westpac, saying it relied on Brady v Stapleton (1952) 88 CLR 322, which had been overtaken by the 1996 amendments to the Act. The trustee said that a modern exposition of the position was to be found in McBain v Parsons [2000] FCA 935. In that case, two brothers transferred their properties to their respective wives. The wives mortgaged the properties to banks. The husbands became bankrupt.
Heerey J said in McBain:
57 I am satisfied that the criteria of ss 120 and 121 have been established. Indeed that was not really disputed. Since I find that there is no equity of exoneration in respect of the 1992 CWS mortgages and that the common intention constructive trust does not defeat the trustee’s claims, the relief sought by the trustee must be granted.
58 This relief includes a claim for indemnity in respect of all liability incurred by the trustee pursuant to the mortgages to the Commonwealth Bank. The transfers of May 1993 from their inception carried within themselves the “germs of their own destruction”. The respondents never held ownership free from the risk of the transfers becoming void ab initio if bankruptcy occurred, a quality that was inherent in them because they were given by an insolvent debtor (to adopt the language of Barwick CJ in N.A. Kratzmann Pty Ltd (In Liquidation) v Tucker [No 1] (1966) 123 CLR 257 at 283). The respondents have charged property to which, as a result of the operation of the Act, they were not entitled.
Applying McBain to the present case would mean that Mr Davidson would be required to pay the trustee all the money he received from Mr Vlahos, even though Mr Davidson had paid most of it to the members of his syndicate prior to Mr Vlahos’s bankruptcy. However, the trustee acknowledged that McBain is somewhat problematic, because Heerey J referred to the transfers from the husbands to the wives as being void ab initio. They were not. They were voidable.
McBain was appealed, on grounds that concerned whether the wives had equitable interests as to one moiety in each property and equities of exoneration: Parsons v McBain (2001) 109 FCR 120; (2001) 192 ALR 772; [2001] FCA 376. There was no appeal on the void ab initio issue. The appeal was allowed in part, with the result that the wives were entitled to the half of each property that they had been entitled to prior to the transfers by their husbands. The wives got their costs of the appeal and costs of the proceedings at first instance.
In relation to the wives mortgaging the properties, the Full Court of the Federal Court said at paragraph 26 of McBain:
Finally, it should be noted that upon becoming the registered proprietor of the matrimonial home, each appellant mortgaged the property to raise money. The trial judge ordered each appellant to indemnify the trustee in respect of all liability incurred pursuant to that mortgage. It has not been suggested that this order was wrongly made.
It is not entirely clear whether the Full Court considered that the order was correctly made, or whether the Full Court did not deal with the point because it was not specifically challenged on appeal.
In my view, the weight of authority on distribution of funds in the context of s.120 of the Act is as expressed by Allsop J, as his Honour then was, in O’Halloran at paragraph 79, which is as follows:
If, prior to the commencement of the bankruptcy, the property transferred has been paid away or sold, no personal remedy lies against the transferee, even one with notice of a fraud by the transferor: …. This is so because up to the commencement of the bankruptcy (even after avoidance) [Ms O’Halloran] is taken to have had full right and title to deal with the property.
The statement by Drummond AJA, sitting in the Full Court of the Federal Court at paragraph 2543 of Westpac was to basically the same effect and was as follows:
… If the transferee has, in the exercise of his then lawful rights, already sold the property before avoidance occurs, the proceeds of that sale will have been received by him for his own use and not for the use of the transferor/bankrupt. No personal remedy will therefore be available against him. If the transferee has dissipated both the property and the proceeds of its sale before avoidance takes place, the creditors can have no proprietary claim in respect of the property transferred…
Lindgren J’s 11 principles in Anscor are, with respect, not of great weight in the present context, because the other judges of the Full Court of the Federal Court in that case expressly reserved their positions on the point. Drummond J in Clout, being Anscor at first instance, said at paragraph 90:
… to the extent that Anscor (and PIAM) have dissipated Dexter commission moneys received by them in the two years in question before the trustee commenced the present action, the trustee has no claim under s 120 against Anscor (or PIAM) in respect of those commission moneys …
I consider that statement reflects the law. It would mean that, under s.120 of the Act, the trustee could not recover from Mr Davidson monies that he had disbursed to the members of his syndicate prior to the commencement of the bankruptcy of Mr Vlahos.
In any event, the trustee submitted that all the cases he had referred to about dissipation concerned s.120 of the Act and were to some extent irrelevant, because s.139ZQ of the Act provided remedies that s.120 of the Act did not. Subsection 139ZQ(1) of the Act relevantly provides that:
If a person has received any money or property as a result of a transaction that is void against the trustee of a bankrupt under Division 3 [which includes s.120], the Official Receiver:
…
may require the person, by written notice given to the person, to pay to the trustee an amount equal to whichever of the following is applicable:
…
(d) … the money or the value of the property received.
The trustee said that s.139ZQ of the Act did not allow any scope for arguments about distribution of funds. He said that s.139ZQ of the Act simply means that the trustee can recover the amount of a void transaction from the payee.
The trustee also relied on paragraph 22 of the explanatory memorandum for the 1991 amendments to the Act which is as follows:
The Bill will include provision to enable the Official Receiver, on behalf of the Official Trustee and registered trustees to recover property, disposed of by a bankrupt in a transaction to defeat creditors which is void against the trustee, by administrative means, instead of exclusively by litigation. Setting aside void antecedent transactions by litigation can cause difficulties for trustees, and bankrupts can arrange their affairs on occasions confident in the knowledge that no action will be taken to set aside the transaction because of the costs associated with doing so. The new administrative procedures provided for in proposed Subdivision J of Division 4B of Part VI of the Act to be inserted by clause 25 of the Bill are based on provisions of the Income Tax Assessment Act 1936 and will enable more cost effective setting aside of void antecedent transactions and a correspondingly greater return for creditors.
Mr Davidson submitted that it would be unconscionable for the trustee to recover money from Mr Davidson that he had distributed to the members of his syndicate prior to the bankruptcy. For this purpose, Mr Davidson relied on Ex Parte James (1874) LR 9 Ch App 609 at page 614; [1874-80] All ER Rep 388; (1874) 30 LT 773; (1874) 22 WR 937, where it was said that:
With regard to the other point, that the money was voluntarily paid to the trustee under a mistake of law, and not of fact, I think that the principle that money paid under a mistake of law cannot be recovered must not be pressed too far, and there are several cases in which the Court of Chancery has held itself not bound strictly by it. I am of opinion that a trustee in bankruptcy is an officer of the Court. He has inquisitorial powers given him by the Court, and the Court regards him as its officer, and he is to hold money in his hands upon trust for its equitable distribution among the creditors. The Court, then, finding that he has in his hands money which in equity belongs to some one else, ought to set an example to the world by paying it to the person really entitled to it. In my opinion the Court of Bankruptcy ought to be as honest as other people….
It might be unconscionable for the trustee to recover money from Mr Davidson that he had distributed to the members of his syndicate prior to the bankruptcy. However, if s.139ZQ of the Act requires that to occur, then so be it.
Mr Davidson argued that s.139ZQ of the Act could not create a liability greater than that created by s.120 of the Act, or, at least, that is not what the Parliament could have intended: Tr.97.44. With respect, the Parliament could very easily have created a greater liability under s.139ZQ of the Act than exists under s.120 of the Act. The question of the Parliament’s intention is more complicated.
It appeared to be common ground that s.120 of the Act did not create a remedy. It created a power to avoid a transaction, and left it to the courts to fashion a remedy. On the other hand, s.139ZQ of the Act created a remedy. It allowed the Official Receiver, by written notice, to require a person who had received money or property pursuant to a void transaction to pay that money or the value of the property to the trustee.
The trustee said that s.139ZQ of the Act applied according to its express terms, and would require Mr Davidson to pay about $11 million to the trustee, even though he had lawfully distributed about nine million of those dollars to the members of his syndicate prior to the bankruptcy. Mr Davidson argued that the Parliament could not have intended the remedy under s.139ZQ of the Act to be greater than the remedy that the courts had fashioned under s.120 of the Act.
The modern approach to statutory construction was explained in SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362; (2017) 91 ALJR 936; (2017) 347 ALR 405; [2017] HCA 34 at [14] by the plurality as follows:
The starting point for the ascertainment of the meaning of a statutory provision is the text of the statute whilst, at the same time, regard is had to its context and purpose. Context should be regarded at this first stage and not at some later stage and it should be regarded in its widest sense. This is not to deny the importance of the natural and ordinary meaning of a word, namely how it is ordinarily understood in discourse, to the process of construction. Considerations of context and purpose simply recognise that, understood in its statutory, historical or other context, some other meaning of a word may be suggested, and so too, if its ordinary meaning is not consistent with the statutory purpose, that meaning must be rejected.
The interpretation of s.139ZQ of the Act proposed by Mr Davidson could require the court to add some words to the Act, or give some words a meaning other than their obvious meaning. Mr Davidson did not suggest what words might be added or what words might be given a different meaning to their obvious meaning.
In Taylor v Owners – Strata Plan No 11564 (2014) 253 CLR 531; (2014) 88 ALJR 473; (2014) 306 ALR 547; [2014] HCA 9, French CJ, Crennan and Bell JJ overturned a decision that had read additional words into legislation, saying at [38]:
The question whether the court is justified in reading a statutory provision as if it contained additional words or omitted words involves a judgment of matters of degree. That judgment is readily answered in favour of addition or omission in the case of simple, grammatical, drafting errors which if uncorrected would defeat the object of the provision. It is answered against a construction that fills “gaps disclosed in legislation” or makes an insertion which is “too big, or too much at variance with the language in fact used by the legislature”. (citations omitted)
The other two members of the bench, Gageler J, as his Honour then was, and Keane J dissented and would have upheld the reading of words into the legislation, but different words to those read in by the court below. The court below held that the phrase, “the claimant’s gross weekly earnings” should be read as “the claimant’s or the deceased’s gross weekly earnings”. Gageler and Keane JJ read “the claimant’s gross weekly earnings” as meaning “the gross weekly earnings on which the claimant relies”. In any event, Gageler and Keane JJ said at [65], in a frequently cited passage:
Statutory construction involves attribution of legal meaning to statutory text, read in context. “Ordinarily, that meaning (the legal meaning) will correspond with the grammatical meaning ... But not always.” Context sometimes favours an ungrammatical legal meaning. Ungrammatical legal meaning sometimes involves reading statutory text as containing implicit words. Implicit words are sometimes words of limitation. They are sometimes words of extension. But they are always words of explanation. The constructional task remains throughout to expound the meaning of the statutory text, not to divine unexpressed legislative intention or to remedy perceived legislative inattention. Construction is not speculation, and it is not repair. (citations omitted)
In Statutory Interpretation in Australia, 10^th Edition, DC Pearce, LexisNexis, 2024, Professor Pearce said at [2.60]:
Courts must recognise that they are not legislators and if legislation is to be amended the task falls on the legislature not the courts by way of construction of the legislation.
It seems to me that reading “as a result of a transaction that is void against the trustee” in s.139ZQ(1) of the Act as meaning “as a result of a transaction to the extent that is void against the trustee” is what the Parliament actually meant. That meaning is consistent with the weight of authority on the remedies available under s.120 of the Act. It is consistent with the object of s.139ZQ of the Act, as explained in the explanatory memorandum, which was to give a quick and inexpensive administrative mechanism to trustees to recover amounts that they were entitled to under s.120 of the Act, but which they would have otherwise had to have commenced legal proceedings to recover. There is nothing in the explanatory memorandum to suggest that trustees, acting under s.139ZQ of the Act, would be able to recover more than they would have been able to recover under s.120 of the Act.
Subject to the discussion below, this would require Mr Davidson to pay the trustee the amount that he received from Mr Vlahos and retained for his own benefit, less the money that Mr Davidson paid Mr Vlahos on Mr Davidson’s own account. That is, it would only be the money that Mr Davidson paid on his own account, as opposed to on the account of the other members of his syndicate, that could be regarded as consideration for the purposes of s120(4) of the Act.
I appreciate that this would mean that Mr Davidson would have to disgorge funds, while the other members of his syndicate would not. That does not seem fair. It seems to be the result of Mr Davidson being a conduit between Mr Vlahos and Mr Davidson’s other syndicate members. The trustee considered, in these circumstances, that Mr Vlahos did not transfer money to Mr Davidson’s syndicate members under s.120 of the Act. Mr Davidson’s syndicate members were not pursued in this proceeding, so I take that issue no further.
SHOULD THE S.139ZQ NOTICE BE SET ASIDE OR REVIEWED
Mr Davidson seeks that the s.139ZQ notice be set aside under s.139ZS of the Act or reviewed under s.15(5) of the Act.
As noted above, s.139ZS of the Act provides that:
If the Court, on application by a person to whom a notice has been given under section 139ZQ …, is satisfied that this Subdivision does not apply to the person on the basis of the alleged facts and circumstances set out in the notice, the Court may make an order setting aside the notice.
Subsection 15(5) of the Act provides as follows:
The Court may review an act done by an Official Receiver.
Mr Davidson’s challenge to the s.139ZQ notice seems to be on two bases:
(a)were there sufficient grounds to issue the notice; and
(b)should the fact that the Official Receiver was aware of a challenge to the 139ZQ notice have been sufficient to cause the Official Receiver not to issue the notice.
The second point was based on Tsakirakis v Official Receiver (2013) 276 FLR 66; [2013] FCCA 106, a decision of a judge of a predecessor of this court. In oral submissions, Mr Davidson conceded that the challenge would have to be a substantial challenge (Tr.103.15) to require the Official Receiver to not issue a s.139ZQ notice. In Tsakirakis, Judge Lloyd-Jones said:
92.Two important criteria, in respect to the exercising of the discretion to issue a notice are contained in the Practice Statement (at [76] and [77]):
Exercising the discretion to issue a notice
The minimum requirements which the trustee must meet are:
a) detailed description of the transaction which gave the benefit to the person to whom the notice is to be given;
b) detailed description of why this transfer is void; and
c) evidence in support of the trustee’s assertion that the transfer is void.
The Official Receiver is not required to adjudicate on whether the transfer is actually void. The Official Receiver’s role is merely to determine that the trustee has provided evidence of a void transfer sufficient to allow the exercise of the discretion to issue a notice. Any determination of whether the transfer is actually void must be made by a Court.
93.On the material before the Court, Mr Thomson’s evidence is that he had access to the material lodged by the Trustee when the initial s 139ZQ notice was sought, but there had been no attempt by the Trustee to update or amend that material prior to the oral request for the issuing of the second s 139ZQ notice. However, prior to the issue of the second notice, the Official Receiver had been furnished with a letter from Matthews Folbigg challenging the basis of the claim that the transfer of the $400,000 was actually void, together with the filing of a cross-claim by the Trustee himself seeking a declaration that the transfer was void.
94.As stated in the Practice Statement at para 77 the Official Receiver was not required to adjudicate on whether the transfer was actually void, but rather to determine whether the Trustee had provided sufficient evidence. Even if the assumption is that the Official Receiver was satisfied that the material tendered in support of the original notice satisfied that requirement there had been two intervening events that clearly placed the Official Receiver, as the administrative decision maker, on notice that the sufficiency of the original material was now questioned. That consequently required a Court to adjudicate as to whether the transfer was actually void.
95.At the time of the making of the decision to issue the second notice proceedings to determine that question had been initiated and filed in this Court. In those circumstances the Official Receiver was on notice that the material tendered in support of the initial notice was now being challenged. I acknowledge that the parties have been unable to identify any authority directly on point, and that the Practice Statement is purely a guide with no legislative force or effect. Nevertheless, on the material before the Court, the Practice Guidelines at para 76(b) and (c) are not satisfied, nor at para 77 could the Official Receiver be satisfied that the Trustee had provided evidence of a void transfer sufficient to allow the exercise of the discretion. However, the approach adopted by his Honour Black CJ in Halse v Norton that “the power to issue the notice is conditional not upon the Official Receiver’s opinion or satisfaction that the transaction is void against the trustee, but upon the existence of the facts and circumstances that produce such a result.” With the existence of the two intervening events described above, the validity of the material tendered in support of the original notice has been put in doubt. For an abundance of caution, I believe that the issue of the second s 139ZQ notice should have been delayed until the resolution of those matters by this Court. As there is no bar to the Trustee seeking the issue of a further s 139ZQ notice, he would suffer no permanent detriment if the s 139ZQ notice in dispute in these proceedings were set aside. The structure of the legislation in Subdivision J appears to provide for a mechanism for the revocation and reissue of s 139ZQ notice if it contains a defect.

The facts of Tsakirakis are complicated. However, crucially, in Tsakirakis, the challenge consisted of legal proceedings that had been filed, and which were yet to be determined. There is nothing comparable in the present proceeding. Here, the challenge consisted merely of correspondence. Tsakirakis is distinguishable.
Challenging the existence of a trustee’s claim by correspondence is not a sufficient basis for the Official Receiver to refrain from issuing a s.139ZQ notice, if it would otherwise be proper to do so. Notices under s.139ZQ of the Act are meant to be a quick and inexpensive method for the trustee to recover payments. If there is a genuine dispute, the proper approach is to bring proceedings under s.139ZS of the Act, as has happened here.
In relation to whether there were sufficient grounds to issue the s.139ZQ notice, Mr Davidson and the Official Receiver both relied on Vale v Sutherland (2009) 237 CLR 638; (2009) 83 ALJR 940; (2009) 258 ALR 1; [2009] HCA 26. The High Court said in that case that:
13The “jurisdictional fact”, upon the existence of which depends the exercise of the power conferred by s 139ZQ, was identified by Carr J in Re McLernon; Ex parte SWF Hoists and Industrial Equipment Pty Ltd v Prebble. His Honour said:
“the power to issue the notice is conditioned not upon the Official Receiver's opinion or satisfaction that the transaction is void against the trustee but upon the existence of certain circumstances in which a person has received money or property as a result of a transaction that is void against the trustee. The Official Receiver’s power is ‘dependent upon the existence of a jurisdictional fact’ and must be subject to challenge in circumstances where the supposed existence of that fact is relied upon.”
14There is no provision to the effect that the s 139ZQ notice otherwise is conclusive. Further, the use in s 139ZS of the word “alleged” in the phrase “the basis of the alleged facts and circumstances” is significant. Hence, Carr J held in McLernon:
“A hearing under s 139ZS is in my opinion a hearing de novo in which the Court may investigate and determine the correctness of the facts and circumstances stated in the notice and whether any defence to the liability asserted in the notice arises out of additional facts proved by the applicant.”
…
16.The Trustee submits that (i) the ground for an application by the appellant under s 139ZS(1) is that Subdiv J “does not apply to [the appellant] on the basis of the alleged facts and circumstances set out in the notice”, (ii) the facts and circumstances there identified correspond to those considered by the Official Receiver to render the transaction in question void against the Trustee and identified as required by s 139ZQ(2), (iii) those facts and circumstances do not, where s 120 is the ground of avoidance of a transaction, include the specification of any particular sum of money or value of property received as a result of the transaction, (iv) a notice which, as indicated by s 139ZQ(1), does specify for payment to the Trustee an amount equal to the money or the value of the property received, but is in error as to that amount, is not for that reason liable to attack on the sole ground which is provided by s 139ZS(1), (v) that is because s 139ZS(1) is linked back to s 139ZQ(2), and not s 139ZQ(1), and (vi) any dispute as to the accuracy of the amount to be paid to the Trustee is to be resolved in proceedings to recover the debt or to enforce the charge.
…
19Nor did there appear to be any dispute upon another question of construction of the Act. This concerns the interrelation between s 139ZS and s 30(1) of the Act. The latter endows courts of bankruptcy with “full power to decide all questions, whether of law or of fact, in any case of bankruptcy” and to make “such orders ... as the Court considers necessary for the purposes of carrying out or giving effect to this Act ...”. Section 30 has a provenance which includes s 72 of the Bankruptcy Act 1869 (UK)16, s 105 of the Bankruptcy Act 1914 (UK) and s 25 of the Bankruptcy Act 1924 (Cth). It is to be generously construed, but, consistently with the reasoning in cases such as Anthony Hordern & Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia, it does not authorise the making of an order which would bring about a result which differs from that prescribed elsewhere in the Act. Section 139ZS(2) states that a notice set aside under s 139ZS(1) “is taken not to have been given”; the sub-section does not contemplate severance, reading down or amendment of a notice.
20The result of that construction of the legislation is that s 30 could not be relied upon to qualify what otherwise would be the operation of s 139ZS for which the appellant contends. If his interpretation of that section be correct then an error in valuation will found an application to set aside the notice in question. Section 30 cannot save the notice from expungement under s 139ZS(2) by an order preserving its life as to that part of the amount which is accurately claimed.
…
22The scheme of Subdiv J encourages the saving of costs by, on the one hand, compliance with the notice by the transfer to the trustee of property in respect of the value of which the notice requires payment (s 139ZQ(7)) and on the other, by the revocation or amendment of notices to accommodate a settlement (s 139ZQ(4)).
23But s 139ZS does not provide the means for the determination of a dispute, not as to the engagement of the avoidance provision, here s 120, but as to the amount payment of which is required by the notice. Such disputes are to be resolved in proceedings to recover the debt or enforce the charge.
…
26When Subdiv J is read as a whole, it is apparent that the construction of s 139ZS for which the Trustee contends in steps (i)-(vi) set out [in paragraph 16] above should be accepted. ...
(citations omitted)
Point (iv) in the trustee’s submissions in Vale was that:
a notice which, as indicated by s 139ZQ(1), does specify for payment to the Trustee an amount equal to the money or the value of the property received, but is in error as to that amount, is not for that reason liable to attack on the sole ground which is provided by s 139ZS(1) …
Ultimately, the High Court in Vale held that, while the s.137ZQ notice required a payment of $270,000, the correct figure that it should have required was $208,350. The High Court went on to order that amount to be paid.
In the present case, the s.139ZQ notice contained the incorrect figure, being the whole amount of the monies Mr Davidson had received from Mr Vlahos, including the amounts that Mr Davidson had distributed to his syndicate members prior to the commencement of the bankruptcy. Applying Vale to the present case, that is not a sufficient reason to set aside the s.139ZQ notice. There is no other reason to set aside the s.139ZQ notice.
I will ask the parties to formulate appropriate orders giving effect to these reasons.

I certify that the preceding one hundred and thirty-seven (137) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Riley.
Associate:
Dated: 15 May 2024

File number:	MLG 319 of 2020
Judgment of:	JUDGE RILEY
Date of judgment:	15 May 2024
Catchwords:	BANKRUPTCY – application under s.139ZS of the Bankruptcy Act 1966 to set aside a notice under s.139ZQ of the Act – whether payments void under s.120 of the Act – value of consideration – significance of the payments from the bankrupt having been disbursed to third parties prior to the commencement of the bankruptcy – whether incorrect figure in the s.139ZQ notice requires it to be set aside.
Legislation:	Bankruptcy Act 1966 ss. 15(5), 120, 127, 139ZS, 139ZQ
Cases cited:	Anscor Pty Ltd v Clout (Trustee) (2004) 135 FCR 469; [2004] FCAFC 71 Associated Alloys Pty Limited v ACN 001 452 106 Pty Ltd [The Associated Alloys Case] (2000) 202 CLR 588; (2000) 202 CLR 588; (2000) 171 ALR 568; (2000) 74 ALJR 862; (2000) 21(9) Leg Rep 9; (2000) 18 ACLC 509; (2000) 46 ATR 91; (2000) Aust Contract R 90-114 Brady v Stapleton (1952) 88 CLR 322; [1952] ALR 989; (1952) 26 ALJR 428 Clout v Anscor Pty Ltd [2003] FCA 326 Ex Parte James (1874) LR 9 Ch App 609 [1874-80] All ER Rep 388; (1874) 30 LT 773; (1874) 22 WR 937 McBain v Parsons [2000] FCA 935 Parsons v McBain (2001) 109 FCR 120; (2001) 192 ALR 772; [2001] FCA 376 Re O'Halloran [2002] FCA 1305 Roufeil v Tarrant Enterprises Pty Ltd (2023) 299 FCR 204; [2023] FCAFC 142 SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362; (2017) 91 ALJR 936; (2017) 347 ALR 405; [2017] HCA 34 Taylor v Owners – Strata Plan No 11564 (2014) 253 CLR 531; (2014) 88 ALJR 473; (2014) 306 ALR 547; [2014] HCA 9 Tsakirakis v Official Receiver (2013) 276 FLR 66; [2013] FCCA 106 Vale v Sutherland (2009) 237 CLR 638; (2009) 83 ALJR 940; (2009) 258 ALR 1; [2009] HCA 26 Westpac Banking Corporation v The Bell Group Ltd (in liq) (No 3) (2012) 44 WAR 1; (2012) 270 FLR 1; (2012) 89 ACSR 1; [2012] WASCA 157 White (Trustee), in the matter of Vlahos (Bankrupt) v Ljubicic [2017] FCA 717
Division	Division 2 General Federal Law
Number of paragraphs:	137
Dates of hearing:	4 and 5 March 2024
Place:	Melbourne
Counsel for the Applicant:	Michael Gronow KC and Peter Agardy
Solicitor for the Applicant:	Comlaw Barristers and Solicitors
Counsel for the First Respondent:	Georgina Costello KC and Bridget Slocum
Solicitor for the First Respondent:	Colin Biggers & Paisley
Counsel for the Second Respondent:	Michael Galvin KC and Chris Fenwick
Solicitors for the Second Respondent:	Nicholas O’Donohue and Co

MLG 319 of 2020
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2) IN THE MATTER OF WILLIAM STEPHEN VLAHOS, BANKRUPT
BETWEEN:	SAM DAVIDSON Applicant
AND:	OFFICAL RECEIVER First Respondent PHILIP NEWMAN AS TRUSTEE OF THE BANKRUPT ESTATE OF WILLIAM STEPHEN VLAHOS Second Respondent

ORDER MADE BY:	JUDGE RILEY
DATE OF ORDER:	15 MAY 2024

Deposit Number	Date	Amount
1	14 January 2005	$2,100.00
2	7 March 2005	$100.00
3	14 April 2006	$1,930.33
4	2 October 2006	$5,000.00
5	3 October 2006	$5,000.00
6	4 October 2006	$699.16
7	17 December 2008	$608,943.00
8	2 April 2009	$297,600.00
9	28 September 2009	$557,477.00
10	1 April 2011	$200,000.00
11	27 June 2011	$195,267.00
12	2 September 2013	$5,000.00
Total	$1,879,116.49

Transfer Number	Date	Method	Amount
i.	3 July 2009	Cheque 000035	816,129.00
ii.	4 January 2010	Cheque 000138	68,458.00
iii.	6 August 2010	Cheque 000306	650,000.00
iv.	21 September 2010	EFT	188,014.00
v.	4 October 2010	Cheque 000323	98,669.00
vi.	14 January 2011	Cheque 000424	298,495.00
vii.	6 October 2011	Cheque 000604	387,904.00
viii.	17 January 2012	Cheque 000591	450,000.00
ix.	10 April 2012	Cheque 000677	900,000.00
x.	11 July 2012	EFT from Noble Edict	1,150,000. 00
xi.	9 October 2012	EFT from Noble Edict	870,000.00
xii.	11 October 2012	EFT from Noble Edict	500,000.00
xiii.	11 October 2012	EFT from Noble Edict	500,000.00
xiv.	25 January 2013	EFT from Noble Edict	1,000,000.00
xv.	29 January 2013	EFT from Noble Edict	1,000,000.00
xvi.	1 February 2013	EFT from Noble Edict	978,000.00
xvii.	5 February 2013	EFT from Noble Edict	550,000.00
xviii.	13 February 2013	EFT from Noble Edict	150,000.00
xix.	15 February 2013	EFT from Noble Edict	250,000.00
xx.	1 March 2013	EFT from Noble Edict	500,000.00
xxi.	8 March 2013	EFT from Noble Edict	322,000.00
xxii.	5 April 2013	EFT from Noble Edict	500,000.00
xxiii.	15 April 2013	EFT from Noble Edict	300,000.00
xxiv.	29 April 2013	EFT from Noble Edict	400,000.00
xxv.	23 May 2013	EFT from Noble Edict	450,000.00
Total	13,277,669.00