Director General of the Department of the Attorney General of the State of New South Wales on behalf of the Victims Compensation Fund v Reid

[1999] NSWSC 346

CITATION:	Director General of the Department of the Attorney General of the State of New South Wales on behalf of the Victims Compensation Fund v Reid [1999] NSWSC 346
CURRENT JURISDICTION:	Equity Division
FILE NUMBER(S):	3820/98
HEARING DATE(S):	16 April 1999
JUDGMENT DATE:	16 April 1999
PARTIES :	Director General of the Department of the Attorney General of the State of New South Wales on behalf of the Victims Compensation Fund (P) Anthony George Reid (D1) Michael Reid (D2)
JUDGMENT OF:	Master McLaughlin

COUNSEL :	Mr. K. Smark (P) Mr. G. Cummins (D)
SOLICITORS:	I V Knight (P) Coyne & Whittmore (D)
CATCHWORDS:
DECISION:

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SUPREME COURT OF
NEW SOUTH WALES
EQUITY DIVISION

MASTER McLAUGHLIN

Friday, 16 April 1999

3820/98 DIRECTOR-GENERAL OF THE DEPARTMENT OF THE ATTORNEY GENERAL OF THE STATE OF NEW SOUTH WALES ON BEHALF OF THE VICTIMS' COMPENSATION FUND CORPORATION -v- ANTHONY GEORGE REID & ANOR

JUDGMENT

1    MASTER: There is presently before the Court a notice of motion filed by the defendants, Anthony George Reid and Michael Reid, on 23 March 1999. By that notice of motion the defendants seek, firstly, an order that the present proceedings be stayed. In paragraph 1 it is described as an order that the proceedings be stood over pending the determination of certain objections either already raised or to be raised by the defendants in relation to restitution orders made by the Victims' Compensation Tribunal against the first defendant. 2    Other items of relief are sought in the notice of motion. However it was the view of the Counsel for the respective parties that it was appropriate that I should deal firstly with the foregoing application in paragraph 1 of the notice of motion; since, if the applicants, are successful in obtaining such a stay of the substantive proceedings, then the various further procedural orders sought in the remaining paragraphs of the notice of motion will at that stage be unnecessary. 3    It is appropriate that I should set forth, at least in summary, the background to the present application. In May 1997 the first defendant was convicted of seven child-related sexual offences. On 23 June 1997 the first defendant transferred to the second defendant certain real property. In October 1997 the first defendant was convicted of further offences. Applications by the victims of those offences have been made for compensation pursuant to the provisions of the Victims Compensation Act 1996. There have already been made a number of awards of compensation in favour of some of those victims. Other such applications for compensation are pending. 4 The plaintiff, the Director-General of the Department of the Attorney General of the State of New South Wales on behalf of the Victims' Compensation Fund Corporation, brings the present proceedings pursuant to the provisions of section 37A of the Conveyancing Act, whereby he seeks to set aside what is asserted to be a fraudulent transfer of property. 5 The reason why the proceedings have been instituted is that there has already been made a number of what are described as restitution orders, that is, orders made against the first defendant requiring him to pay to the Victims' Compensation Fund the amounts necessary to reimburse that statutory fund in respect of the awards of compensation that have been made to the victims. 6 For the purpose of the present application it is unnecessary for me to set forth the details of the statutory provisions relating to the making of the restitution orders. However the procedure relating to those orders is set forth in the notices which have already been served by the Victims' Compensation Tribunal upon the first defendant. 7 There have already been made provisional orders for restitution in a number of instances against the first defendant. He has an entitlement to appeal against those orders by way of raising objections. He has already done that in a number of instances. It is contemplated that there will be a total of ten restitution orders sought to be made against the first defendant. 8 The substantive proceedings were instituted by statement of claim which was filed by the plaintiff on 4 September 1998. By paragraph 12 of that statement of claim it is asserted that the transfer of the subject property from the first defendant to the second defendant was an alienation of property made with intent to defraud creditors within the meaning of s 37A of the Conveyancing Act 1919. Particulars are appended to that paragraph; those particulars being firstly that the transfer was for nominal consideration or alternatively for no consideration, and, secondly, that the first defendant transferred the property to prevent the victims of the offences and/or the plaintiff recovering money from him in relation to the offences. 9 Counsel for the plaintiff has informed the Court that, according to his instructions, it is not presently known when the further claims for restitution against the first defendant will be determined or when the first defendant's objections to those restitution orders will be determined. The applicant defendants submit that the appeals of the first defendant against the restitution orders already made or against any future restitution orders which might be made may be entirely successful, with the consequence that no moneys are payable by the first defendant to the plaintiff. It is submitted on behalf of the defendants that it would be inappropriate for the Court at this stage to attempt to pre-empt the outcome of that appeal process. 10 Further, it is submitted on behalf of the defendants that it is possible that after the appeals are heard they may reach agreement with the plaintiff concerning the payment of moneys or the amount of such payment under the restitution orders. Section 50(2) of the Victims Compensation Act contemplates that such an arrangement made be made. It is submitted that if there is an agreement reached between the first defendant and the plaintiff, then the plaintiff will no longer be a creditor of the first defendant and that if he is not a creditor, then there will be no utility in him pursuing the present proceedings. Indeed there would be very considerable doubt as to whether legally he would be entitled to do so. The evidence discloses that the present plaintiff has expressly informed the defendants that these proceedings are brought by him only in his statutory capacity on behalf of the Victims' Compensation Fund Corporation and not on behalf of any other person or entity. 11 It is further submitted on behalf of the defendants that there is considerable prejudice to the defendants (and in particular to the first defendant) in having the present claim of the plaintiff proceed concurrently with the appeals which the first defendant has already made or which he proposes to make in respect to any further restitution orders. 12 It will be appreciated that the first defendant is in custody. He is serving his sentence in the Goulburn Gaol, and it is submitted on behalf of the defendants that there may be difficulty in obtaining instructions from the first defendant in regard not only to the present proceedings but also to any appeals against the restitution orders. 13 The plaintiff opposes any such stay or postponement of the present proceedings. He submits that he has an entitlement to seek to have property which has been alienated from the first defendant in the circumstances contemplated by section 37A of the Conveyancing Act restored to the first defendant so that it can be available to meet the legitimate claims of creditors, not only the present creditors but future creditors. 14    The plaintiff points to the fact that already provisional orders for restitution have been made in three of the ten matters in respect of which the first defendant has been convicted, and (as I understand it) it is submitted that the likelihood of restitution orders being made in the remaining matters is strong. The plaintiff submits that there is little likelihood of all the restitution orders being set aside on appeal. Indeed, as I understand it, it is submitted on behalf of the plaintiff that there is little likelihood of any of them being set aside on appeal. The plaintiff has submitted that there is a duty in the plaintiff, who brings proceedings such as the present in an official capacity representing a statutory fund, to bring the proceedings promptly, so that he cannot be charged with what, in analogous civil proceedings, might be described as laches. 15    That is quite so, and it seems to me that there can be no criticism of the plaintiff in having instituted the proceedings when he did and having sought an injunction against the defendants from disposing of the subject property or mortgaging, charging or otherwise encumbering or dealing with the property. But there was made on 4 September 1998, that being the very day of the filing of the statement of claim, an injunction as sought by the plaintiff. That injunction was made by consent. It has from time to time been extended, and is presently continuing in force without any opposition from the defendants. 16    It seems to me that, on the ground of prejudice, there would be no prejudice to the plaintiff but there would be considerable prejudice to the defendants (especially to the first defendant) if the present proceedings were allowed to continue to progress in a normal fashion until the outcome of the first defendant's appeals against the restitution orders is known. Once that appeal process has been completed, then it will be known not only whether the first defendant is liable to make restitution but also the total amount of the restitution which he is liable to make to the statutory fund. 17    I am not unmindful of the prejudice and the practical disadvantages to the first defendant in conducting his appeals against the restitution orders concurrently with defending the present proceedings whilst he is in custody and whilst his communication with his legal representatives is thereby not as unfettered as it might otherwise be. 18    Quite apart from the respective prejudice to the parties, it seems to me that it is essential that the first defendant be allowed to exercise his rights of appeal and that those appeal processes be determined before the present proceedings can advance. As I have already recorded, it was the submission of the defendants that the Court should not at this stage in the present proceedings pre-empt the outcome of the appeal process. I am in agreement with that submission. It is all very well for the plaintiff to say that the likelihood of the appeals being successful is not great. That may or may not be so. But where the first defendant has a statutory right of appeal against the restitution orders that are made, he should be allowed to exercise that right before the present proceedings (which are grounded solely upon the existence of enforceable restitution orders in favour of the plaintiff) are allowed to proceed. 19    Accordingly, it seems to me that it is appropriate in all the circumstances of this case that the Court should make an order which will have the effect of either staying or postponing the progress of the present proceedings, such order being of the nature of that sought in paragraph 1 of the notice of motion filed by the defendants on 23 March 1999. I propose to make such an order. In those circumstances it is unnecessary for me at this stage to deal with any of the other items of relief which are sought in that notice of motion.

(At this stage the parties by consent agreed to bring in short minutes of order in relation to the foregoing judgment, and the Court heard submissions on costs.)

20    Counsel for the respective parties propose to attempt to agree on an appropriate order to give effect to the conclusions expressed in my reasons for judgment which I have just delivered. 21    I have heard submissions concerning costs. In my view the applicant defendants are entitled to have the costs of the application paid by the plaintiff. Those costs will be the costs of to-day’s hearing and the costs of the application in similar form which was returnable on 15 March 1999 and was adjourned to 29 March 1999. 22    I propose also to grant leave to the defendants to proceed forthwith to assessment of those costs. 23    The balance of the notice of motion will be stood over generally, with liberty to either party to restore on seven days' notice. I would appreciate if Counsel were able to prepare short minutes incorporating those orders which I have indicated. I will stand the matter down for that purpose. 24    SMARK: Your Honour, I may have misled you in something that I said. You asked me a question about the progress of the appeals and of the application. I said that there was nothing I could tell you about that. You said in your judgment some things about the progress. I was not attempting to be tricky but there was nothing I could tell you. That was not meant to mean any particular state of facts. As I said, I told you nothing. 25    MASTER: Yes. I have noted down that it is not known when the further matters will be determined or when the objections will be heard. 26    SMARK: I did not say that. I intentionally did not and I am sorry if I misled you. I had no intention of doing so. I did not wish to convey that proposition. 27    MASTER: Well what was it that you wished to convey Mr Smark because I have obviously written down something that you did not wish to convey. Would you tell me what you did wish to convey. 28    SMARK: There was nothing that I could tell you about the matter. 29    MASTER: But I think you said something before that. 30    SMARK: If I said something further then I apologise because all I wished to say was there was nothing I could tell you about the matter. You did specifically raise it so I did respond to it. 31    MASTER: Yes, and you sought instructions. 32    SMARK: Yes. 33    MASTER: I will have it noted that Mr Smark has stated after the delivery of my foregoing reasons for judgment that the statement which I attributed to him in my reasons for judgment was not correct and that what he informed me, in response to an inquiry made by me as to when the further matters would be determined or when the first defendant's objections to the restitution orders would be determined was that there was nothing he could tell me about that matter. 34    SMARK: Thank you Master. I am sorry if I misled you. 35    MASTER: Not at all. 36    That statement by Mr Smark which he has just made to correct what he perceived as an inaccuracy in my judgment does not alter my views concerning the substantive matters upon which I relied to reach the conclusions expressed in the judgment. 37    I will stand the matters down for some convenient time. 38    AT A LATER STAGE 39    MASTER: I will make the following orders: -

1. I order that the proceedings be stayed up to and including twenty-eight days after the determination of objections raised or to be raised in appeals in relation to restitution orders made by the Victim's Compensation Tribunal against the first defendant arising out of the convictions the May and October 1997.
2. I order that the plaintiff pay the costs of the defendants of today's hearing and of the application returnable on 15 March 1999 and adjourned to 29 March 1999.
3. I grant leave to the defendants to proceed forthwith to assessment of the foregoing costs.
4. I direct that the balance of the notice of motion filed by the defendants on 23 March 1999 be stood over generally, with liberty to restore on seven days notice.

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