FEDERAL COURT OF AUSTRALIA
El-Debel v Micheletto (Trustee) [2021] FCAFC 117
Appeal from: Micheletto (Trustee), in the matter of the El-Debel (Bankrupt) v El-Debel [2020] FCA 1031 File number: NSD 1038 of 2020
NSD 1029 of 2020Judgment of: MARKOVIC, DERRINGTON AND COLVIN JJ Date of judgment: 30 June 2021 Catchwords: BANKRUPTCY AND INSOLVENCY - appeals from decision finding whole or part of interests in properties held on resulting trust for bankrupt - where properties registered in names of parties associated with bankrupt - whether bankrupt provided all or part of purchase price for properties - whether presumption of resulting trust rebutted by evidence of intention of bankrupt to contrary - whether reasoning of primary judge rested upon finding of express oral trust not advanced in hearing - whether interest in property formed part of bankrupt estate of bankrupt's earlier bankruptcy - whether primary judge erred in using content of file note of solicitor as admission by bankrupt's mother of a trust - whether primary judge erred in finding payments of purchase price by companies associated with bankrupt were contributions by bankrupt - whether primary judge reasoned by process of impermissible speculation and conjecture - whether principle in Jones v Dunkel should not be applied where witness subjected to compulsory examination - appeals allowed in part Legislation: Bankruptcy Act 1966 (Cth) s 31
Conveyancing Act 1919 (NSW) s 23C
Cases cited: Aldi Foods Pty Ltd v Moroccanoil Israel Ltd [2018] FCAFC 93; (2018) 261 FCR 301
Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) [2008] WASC 239; (2008) 39 WAR 1
Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1
Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833; (2001) 117 FCR 424
Chairman, National Crime Authority v Flack (1998) 86 FCR 17
Donnelly v Edelsten (1994) 49 FCR 384
Fabre v Arenales (1992) 27 NSWLR 437
Fidock v Legal Profession Complaints Committee [2013] WASCA 108
Jones v Dunkel (1959) 101 CLR 298
Lee v Lee [2019] HCA 28; (2019) 266 CLR 129
Luxton v Vines (1952) 85 CLR 352
Morgan v Babcock & Wilcox Ltd (1929) 43 CLR 163
Payne v Parker [1976] 1 NSWLR 191
RPS v R [2000] HCA 3; (2000) 199 CLR 620
Seltsam Pty Ltd v McGuiness [2000] NSWSCA 29; (2000) 49 NSWLR 262
Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: General and Personal Insolvency Number of paragraphs: 218 Date of hearing: 27-28 May 2021 For NSD 1038 of 2020: Counsel for the Appellants: Mr D Allen Solicitor for the Appellants: Avondale Lawyers Counsel for the Respondents: Mr MR Pesman SC with Mr P Newton Solicitor for the Respondents: ERA Legal For NSD 1029 of 2020: Counsel for the Appellant: Mr M Einfeld QC with Mr D Krochmalik Solicitor for the Appellant: Darby Jones Lawyers Counsel for the Respondents: Mr MR Pesman SC with Mr P Newton Solicitor for…
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Details
- Case
- [2021] FCAFC 117
- Decision Date
CaseChat Overview and Summary
The case of El-Debel v Micheletto (Trustee) involved a dispute regarding the extent of interests held on resulting trust for a bankrupt in certain properties registered in the names of parties associated with the bankrupt. The primary issue was whether the bankrupt had provided all or part of the purchase price for these properties, and if so, whether this resulted in the bankrupt holding a resulting trust interest. The dispute also involved whether the presumption of a resulting trust was rebutted by evidence of the bankrupt's intention to the contrary, and whether the primary judge's reasoning was based on findings of an express oral trust that was not properly advanced in the hearing.
The court examined several legal issues, including whether the reasoning of the primary judge relied on findings of an express oral trust not presented in the hearing, whether the interest in the property formed part of the bankrupt estate from a previous bankruptcy, and whether the primary judge erred in considering a file note of a solicitor as an admission by the bankrupt's mother of a trust. Additionally, the court considered whether the primary judge erred in finding that payments made by companies associated with the bankrupt were contributions by the bankrupt, and whether the primary judge's reasoning involved impermissible speculation and conjecture. The court also examined whether the principle in Jones v Dunkel should not apply where a witness had been subjected to compulsory examination.
The court found that there was insufficient evidence to support some of the primary judge's findings, and that the primary judge's reasoning contained errors. The court concluded that the bankrupt held a 38.04% resulting trust interest in the second Peakhurst property, rather than the 43% determined by the primary judge. The court also found that the primary judge erred in using the content of a file note as an admission by the bankrupt's mother, and in considering payments by companies associated with the bankrupt as contributions by the bankrupt. The appeals were allowed in part, and the final orders of the primary judge were varied accordingly. The parties were directed to attempt to agree on costs orders, with any unresolved issues to be determined on the papers.
The court examined several legal issues, including whether the reasoning of the primary judge relied on findings of an express oral trust not presented in the hearing, whether the interest in the property formed part of the bankrupt estate from a previous bankruptcy, and whether the primary judge erred in considering a file note of a solicitor as an admission by the bankrupt's mother of a trust. Additionally, the court considered whether the primary judge erred in finding that payments made by companies associated with the bankrupt were contributions by the bankrupt, and whether the primary judge's reasoning involved impermissible speculation and conjecture. The court also examined whether the principle in Jones v Dunkel should not apply where a witness had been subjected to compulsory examination.
The court found that there was insufficient evidence to support some of the primary judge's findings, and that the primary judge's reasoning contained errors. The court concluded that the bankrupt held a 38.04% resulting trust interest in the second Peakhurst property, rather than the 43% determined by the primary judge. The court also found that the primary judge erred in using the content of a file note as an admission by the bankrupt's mother, and in considering payments by companies associated with the bankrupt as contributions by the bankrupt. The appeals were allowed in part, and the final orders of the primary judge were varied accordingly. The parties were directed to attempt to agree on costs orders, with any unresolved issues to be determined on the papers.
Orders
Orders of the court
1. The appeal be allowed in part.
2. The declarations made by orders 4 and 5 and orders 12, 13 and 14 be amended by deleting 43% wherever appearing and substituting 38.04% and by deleting 57% wherever appearing and substituting 61.96%.
3. The appeal be otherwise dismissed.
4. Within 14 days, the parties do file an agreed minute of orders as to the costs or if agreement is not reached, competing minutes with short written submissions of no more than three pages in support of the costs orders sought.
5. Any issue as to costs orders be determined on the papers.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
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Evidence
Evidence Before The Court
There is simply insufficient evidence. To that limited extent the complaints raised by Fallow should be accepted.Alleged rebuttal of the presumption by evidence of intention The submission advanced as to intention was that the reasoning of the primary judge as to the second Peakhurst property was wrong for the same reasons as submitted as to the first Peakhurst property. For reasons already given, the contentions of Fallow in that regard should not be accepted.The calculation of the resulting trust interest of the bankrupt On the evidence, the contributions to the purchase of the second Peakhurst property were (a) $40,000, unknown; (b) $208,369.91 from Mr Bassam El-Debel ($183,369.91 plus half of the rent being $25,000); and (c) $152,502.07 from the bankrupt ($127,502.07 plus half of the rent being $25,000). Therefore, the percentage interest in the second Peakhurst property held on resulting trust for the bankrupt was $152,502.07 divided by the total contributions being $400,871.98 producing a result of 38.04%. The reasons of the primary judge were to the effect that the resulting trust was as to 43%. The Second Appeal should be allowed to that limited extent.The resulting trust in respect of rental As the submissions for Fallow acknowledged, the challenge to the findings of the primary judge as to the resulting trust in respect of rental from the Peakhurst properties turned upon the merits of the contentions as to the resulting trust in respect of the properties. Given the conclusions that have been reached as to those contentions, the appeal in respect of the rental should be upheld as to the second Peakhurst property to the extent that the percentage interest of the resulting trust should be 38.04%, not 43% as determined by the primary judge.Contention (3) in the Second Appeal The final contention advanced by Fallow concerns the application of the rule in Jones v Dunkel in circumstances where a party has been required to submit to a compulsory examination concerning matters the subject of subsequent proceedings and the transcript of the examination has been relied upon in those proceedings. The submission advanced was to the effect that in such circumstances a party has had the opportunity, in effect, to adduce evidence from that witness and the rule should not be applied for that reason. It is to be noted that the unexplained failure of a party to call a particular witness does not give rise to an inference that the uncalled witness would not have assisted the party's case in all circumstances. The particular circumstances may themselves mean that such an inference should not be drawn even though the witness may be available to give evidence. For example, there must be reason to conclude that the witness had enough knowledge to put a 'true complexion on the facts' before the inference will be drawn: Payne v Parker [1976] 1 NSWLR 191 at 202 (Glass JA). Also, an inference may not be drawn where the party who did not call the witness simply has no reason to know what the witness might say: Fabre v Arenales (1992) 27 NSWLR 437 at 449‑450 (Mahoney JA).
Decision
Reasons for decision
For those reasons, the contention as advanced is unsupported by authority and should not be accepted.Conclusion and costs For the reasons that have been given, each of the two appeals succeeds to a limited extent. Therefore, there should be orders allowing each of the appeals in part and orders varying the final orders of the primary judge to the extent indicated in the course of the reasons. As the respondents have not been wholly successful in opposing the appeals, the parties should have the opportunity to agree orders as to costs and if costs cannot be agreed then for short submissions to be filed and for any issue as to costs orders to be resolved on the papers.
Ratio Decidendi
Legal Principle Established
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