Dixon v Raffaele

[1999] FCA 337

FEDERAL COURT OF AUSTRALIA

Dixon v Raffaele [1999] FCA 337

THOMAS WILLIAM FREDERICK DIXON v RENATO ROBERT RAFFAELE

NG7853 OF 1998

WHITLAM J
SYDNEY
9 MARCH 1999

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 7853 OF 1998

IN THE MATTER OF TINA RAFFAELE

BETWEEN:	THOMAS WILLIAM FREDERICK DIXON Applicant
AND:	RENATO ROBERT RAFFAELE Respondent
JUDGE:	WHITLAM J
DATE OF ORDER:	9 MARCH 1999
WHERE MADE:	SYDNEY

THE COURT DECLARES THAT:

1.The applicant in his capacity as trustee of the estate of Tina Raffaele is the legal and beneficial owner of a half interest (“the interest”) as joint tenant in the property known as 55 Wymston Parade, Five Dock and being the property comprised in Folio Identifier 6/26615 (“the property”).

AND ORDERS THAT:

2.The interest in the property be transferred from the respondent to the applicant.

3.The respondent pay the costs of this application.

Note    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 7853 OF 1998

IN THE MATTER OF TINA RAFFAELE

BETWEEN:	THOMAS WILLIAM FREDERICK DIXON Applicant
AND:	RENATO ROBERT RAFFAELE Respondent

JUDGE:	WHITLAM J
DATE:	9 MARCH 1999
PLACE:	SYDNEY

REASONS FOR JUDGMENT (EX TEMPORE)

1. Tina Raffaele (“the bankrupt”) was made bankrupt on 14 January 1998.  This is an application by the trustee of her bankrupt estate alleging the invalidity of a transfer of property by her. 

2. On 13 August 1993 the bankrupt transferred her joint interest in the ownership of property at 55 Wymston Avenue, Five Dock to her son Renato Robert Raffaele (“the respondent”). He gave no consideration for the transfer. Since the transfer also took place in the period prescribed by s 120(1) of the Bankruptcy Act 1966 (“the Act”), it is void against the applicant unless the respondent can prove that, at the time of the transfer, the bankrupt was solvent.

3. Section 5(2) of the Act provides that a person is solvent if, and only if, the person is able to pay all the person's debts as and when they become due and payable. This differs from the statutory definition under consideration in Sandell v Porter (1966) 115 CLR at 666, but both counsel accept the applicability of what Barwick CJ said in that case (at 670-671) about a person's “assets or capacities” yielding ready cash in sufficient time to meet the debts as they fall due.

4. The bankrupt is alive and well.  She lives in the property that is the subject of the present proceedings with her husband, who is the respondent's father, and with whom she jointly owned that property prior to the transfer.  She has not given evidence. 

5. There is some slight evidence of the bankrupt's debts as at 13 August 1993.  Approximately one year earlier, on 28 July 1992, she had been issued with notices of assessment of income tax totalling $47,417.70 for the years 1988, 1989 and 1990.  On 18 August 1992 the bankrupt lodged an objection in respect of the assessment for the 1990 year.  (That objection was eventually disposed of on 25 October 1994 when Davies J dismissed an appeal against its disallowance).  The notice of assessment of her income tax for the 1993 year, issued on 15 March 1994, shows an outstanding debt of $46,726.38.  On 31 May 1994 the Deputy Commissioner of Taxation commenced proceedings in the Local Court at Parramatta for amounts owing in respect of the assessments for the 1988 and 1989 years.  Judgment for $23,900.39 was obtained in that proceeding by the Deputy Commissioner on 31 March 1995.  That is the only evidence before me of the bankrupt's debts as at about the relevant time.

6. So far as the bankrupt's assets at that time are concerned, the respondent has gathered from the bankrupt passbooks for various bank accounts, benefit statements from two superannuation funds of which the bankrupt was a member, and allotment and dividend       re-investment advices in respect of shares in two public companies.  The respondent has also tendered information showing the price of the shares in those companies as at 13 August 1993.  One of the savings accounts is a joint account in the name of the bankrupt and her husband.

7. Counsel for the respondent relies on the credit balances shown in the various bank accounts as at about 13 August 1993 as evidence of assets available to the bankrupt.  He also relies on the value of the shares in the two public companies as at about that date according to the Stock Exchange price information.  However, it is at this point that the absence of evidence from the bankrupt, and to a certain extent from her husband, becomes critical.  The mere fact that these accounts are, or were, operated in the name of the bankrupt does not of itself mean that the cash in respect to the balance shown in the accounts was available for the purposes of the bankrupt.  Nor does the fact that shares were registered in her name mean that she beneficially owned the shares.  There simply is no evidence of that whatsoever.  As counsel for the applicant correctly submits, the absence of evidence from the bankrupt's husband about the bank account in their joint names is also significant.  I should also add that it is agreed between the parties that the bankrupt's husband has been present in Court throughout the proceedings.

8. So far as the benefit statements from the superannuation funds are concerned, on no view could it be said that those were assets which could yield cash to the bankrupt as at 13 August 1993.  The evidence suggests she was a member of the funds at the beginning and end of the 1994 financial year and that she remained throughout the period in the relevant company’s employ.  So plainly that was not cash available to her at the relevant time.  It is not to the point to indicate what would have been the benefit payable to her had she resigned from her employment.  The fact is it appears that she was still in employment at the end of the financial year.

9. Counsel for the respondent has relied on the values obtained from the credit balances shown in those bank accounts, the imputed price of the shares and the value of the benefits in the superannuation funds to ascribe value to assets said to be available to the bankrupt.  There is another item that he also adds to that equation.  That is a loan said to have been made by the bankrupt to the respondent of some $30,000 in the first half of 1989.  The respondent says that amount was owing by him to the bankrupt as at 13 August 1993.  However he says that soon afterwards (and he dates it from the time that his son was born on 6 October 1993), after he had made some small payments in reduction of that debt, he asked the bankrupt whether some consideration might be given to deferring repayments.  This request was made in view of the financial difficulties he and his wife were then having in meeting their obligations, his wife being out of work temporarily as a result of leave taken for the birth of her son.  The respondent says that the bankrupt forgave the loan.

10. In view of what I have said about the absence of evidence as to beneficial ownership of the other assets, it may not matter, however I do not find that there was any real likelihood of the bankrupt having access to that $30,000 said to be owing by the respondent as at 13 August 1993.  Counsel for the respondent totals up the value ascribed to all those matters and says that they amount to about $74,000.  He says that that amount is greatly in excess of the proved amount owing to the Deputy Commissioner of Taxation which, for the purpose of argument, I think he accepts would be a figure in the mid-$40,000 range. 

11. However, it must be borne in mind that it is the respondent who bears the onus here to prove that the bankrupt was solvent. That requires evidence that will meet the statutory specifications in s 5(2). It requires evidence of the bankrupt's debts and evidence of how they might be met as they became due and payable. While I cannot be satisfied that the bankrupt had no other debts, I am satisfied that she had the debt to the Deputy Commissioner in the sum of approximately $46,000 at about the relevant time and that it had not been paid. So much is not in dispute.

12. Often that situation can be met by evidence from the debtor that they are simply unwilling or refuse to pay such an amount.  No such evidence has been given.  In any event, what needs to be shown by the respondent is that the bankrupt was solvent, and this the respondent has failed to do.  Accordingly I am satisfied that the applicant has made out his case under s 120 and is entitled to the relief sought in the application.

13. There is one other matter I should mention.  Upon resumption today, after the overnight adjournment, counsel for the respondent made an application to adjourn the matter so that he might re-open his case.  This was done, it was said, for the purpose of seeking to obtain evidence from the bankrupt.  Counsel accepted that this had not been done before and indeed that no affidavit evidence was presently available from the bankrupt.  Counsel frankly said that he had no instructions that, if an affidavit were not obtained from the bankrupt, the respondent would wish to subpoena her to give evidence if an adjournment were granted.

14. In November 1998 the respondent was represented on two occasions before a Deputy District Registrar.  On the occasion on which the respondent's own affidavit was filed in Court on 8 December before the District Registrar, it was plain that that was the respondent's case, and it was only envisaged there would be evidence in reply from the applicant.  The respondent signalled that he would defend the proceedings without the benefit of any attempt to obtain evidence from the bankrupt.  In those circumstances I did not accede to the application by counsel for the respondent to re-open his case by having the matter adjourned in order to seek evidence from the bankrupt, particularly as there was no indication that, in the event the bankrupt was unwilling to co-operate, instructions would be forthcoming to compel her to give evidence.

1. Accordingly I make orders in terms of paragraphs 1, 2 and 3 of the application filed on 6 August 1998 and grant liberty to apply.

I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Whitlam J.

Associate:

Dated:  9 March 1999

Counsel for the applicant:	S J McMillian
Solicitor for the applicant:	Peta Bollinger
Counsel for the respondent:	M J Stevens
Solicitors for the respondent:	P A Somerset & Co
Dates of hearing:	8-9 March 1999
Date of judgment:	9 March 1999