FEDERAL COURT OF AUSTRALIA
Gomez v Carrafa (Trustee) [2018] FCA 201
Appeal from: File number: VID 1492 of 2016 Judge: MOSHINSKY J Date of judgment: 2 March 2018 Catchwords: BANKRUPTCY – appeal from Federal Circuit Court of Australia – where trustee in bankruptcy of the wife’s estate sought declarations that transfers of two properties to the husband and a payment of money to a company associated with their son were void against the trustee pursuant to s 120 of the Bankruptcy Act 1966 (Cth) – where equity of exoneration raised as a defence – where primary judge held that the defence was not made out – whether primary judge erred in so holding – appeal dismissed Legislation: Bankruptcy Act 1966 (Cth), ss 120, 121
Evidence Act 1995 (Cth), ss 48, 58, 59, 69, 135
Cases cited: Armstrong v Onyearu [2017] 3 WLR 1304; [2017] EWCA Civ 268
Currie v Dempsey (1967) 69 SR (NSW) 116
Day v Shaw [2014] EWHC 36 (Ch)
Farrugia v Official Receiver in Bankruptcy (1982) 58 FLR 474; 43 ALR 700
Ierino v Gutta (2012) 43 WAR 372
In Re Pittortou (A Bankrupt) [1985] 1 WLR 58
Offıcial Trustee in Bankruptcy v Citibank Savings Ltd (1995) 38 NSWLR 116
Parsons v McBain (2001) 109 FCR 120
Re Berry [1978] 2 NZLR 373
Date of hearing: 25 and 26 September 2017 Date of last submissions: 3 October 2017 Registry: Victoria Division: General Division National Practice Area: Commercial and Corporations Sub-area: General and Personal Insolvency Category: Catchwords Number of paragraphs: 165 Counsel for the Appellants: Mr N Gomez appeared with leave on behalf of the appellants Counsel for the Respondent: Mr TJ Sowden Solicitor for the Respondent: Zervos Lawyers ORDERS
VID 1492 of 2016 BETWEEN: IRWIN GOMEZ
First Appellant
JNGO PTY LTD (ACN 168 239 781)
Second Appellant
AND: MICHAEL CARRAFA (AS TRUSTEE OF THE BANKRUPT ESTATE OF KALAISELVI GOMEZ)
Respondent
JUDGE:
MOSHINSKY J
DATE OF ORDER:
2 MARCH 2018
THE COURT ORDERS THAT:
1.The appeal be dismissed.
2.The appellants pay the respondent’s costs of the appeal, to be taxed if not agreed.
3.If any party wishes to seek a variation of paragraph 2, it may within seven days file and serve an outline of submissions (of no more than two pages). In that event, the opposing party may within a further seven days file and serve an outline of submissions in response (of no more than two pages).
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
MOSHINSKY J:
Introduction
The respondent (Mr Carrafa), who was the applicant below, is the trustee in bankruptcy of the estate of Kalaiselvi Gomez (Mrs Gomez), who is also known as Selvi Gomez. The first appellant, Irwin Gomez (Mr Gomez), is her husband. The second appellant, JNGO Pty Ltd (JNGO),…
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- AGLC
- Gomez v Carrafa (Trustee) [2018] FCA 201
- Case
- [2018] FCA 201
- Decision Date
CaseChat Overview and Summary
The court examined the grounds of appeal, including claims of procedural unfairness, misapplication of equitable doctrines, and errors in factual findings. The court found that the appellants had not demonstrated any error in the primary judge’s factual findings or overall conclusions. The primary judge had adequately addressed the evidence and the applicable law, particularly concerning the equity of exoneration and the guarantees provided by Mr. Gomez. The court also considered the doctrine of subrogation but found that it did not assist the appellants' case. The court concluded that the primary judge did not err in law or fact and that there was no basis to grant an adjournment. Therefore, the appeal was dismissed.
In its decision, the court confirmed the primary judge's declarations and orders, voiding the transfers of certain properties and the payment to a company associated with the appellants' son. The court also ordered that the appellants pay the respondents' costs of the appeal. The court noted that if any party wished to seek a variation of the costs order, they could file an outline of submissions within a specified timeframe.
Orders
Orders of the court
1. The appeal be dismissed.
2. The appellants pay the respondent’s costs of the appeal, to be taxed if not agreed.
3. If any party wishes to seek a variation of paragraph 2, it may within seven days file and serve an outline of submissions (of no more than two pages). In that event, the opposing party may within a further seven days file and serve an outline of submissions in response (of no more than two pages).
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
For these reasons, the primary judge rejected the equity of exoneration contention.The declarations and orders On 7 December 2016, the primary judge made declarations and orders. The declarations were as follows:1.The transfer of the bankrupt’s interest in the property situated at … Hinrichsen Drive, Hallam in the State of Victoria (certificate of title volume 09970 folio 306), to the first respondent registered on or about 23 May 2014, is void pursuant to s.120 of the Bankruptcy Act 1966.2.The transfer of the bankrupt’s interest in the property situated at 2 Hatherley Grove, Altona North in the State of Victoria (certificate of title volume 05218 folio 573), to the first respondent registered on or about 23 May 2014, is void pursuant to s.120 of the Bankruptcy Act 1966.3.The transfer of $171,100 from the bankrupt’s Commonwealth Bank of Australia (ACN 123 123 124) bank account no. 10821202 on 27 February 2014 to JNGO Pty Ltd (“JNGO”) is void against the applicant, pursuant to s.120 the Bankruptcy Act 1966.4.The funds held in Rabobank (ACN 001 621 129) (“Rabobank”) bank account no. 142-201-3587482-21 in the name of JNGO with a current balance of $123,139.01 are the property of the bankrupt. The primary judge made an order to the effect that Rabobank pay the sum of $123,139.01, held in JNGO’s account, to Mr Carrafa.The appeal The appellants (who are not legally represented) initially filed an application for leave to appeal from the orders of the primary judge. However, at a case management hearing in relation to the appeal, I raised with the parties whether leave to appeal was required. Counsel for Mr Carrafa expressed the view that the decision below was final and, accordingly, leave to appeal was not required. In these circumstances, I made an order granting the appellants an extension of time in which to file a notice of appeal. They subsequently filed a notice of appeal in accordance with that leave. One of the grounds of appeal related to the refusal of Mr Gomez’s application for an adjournment. I gave Mr Gomez leave to appeal from that decision. The appellants appeal from the orders made by the primary judge on 7 December 2016. The grounds of appeal also challenge the refusal of Mr Gomez’s adjournment application on 14 June 2016. The appellants contend that the primary judge erred on the following grounds:1. Erred in Law by denial of procedural fairness and a fair triala. Assets FrozenThe trial judge had refused to allow for funds for the defence although several repeated requests have been made before and during the trial. The appellant’s defence during the trial has been compromised substantially due to these actions.b.The trial judge erred in law by compelling the first appellant to go unrepresented before and during the trial.c.The trial judge erred in law and fact by not allowing funds to have the accounts prepared for court using an expert but instead had chosen to state paragraph 51.d.Instilling and imparting false confidence and not adhering to assurances made.i.The trial judge had erred in law by instilling false confidence and not adhering to assurances made to the appellants before and during the trial.ii.The trial judge had erred in law by misleading the appellants that the court had the ability and the capacity to follow large volumes of complex company and personal accounts.e.Erred in law by allowing stereotypical questions to be asked by during cross-examination and relying on these for the judgment.f.Erred in law and fact by dismissing the application made by the first appellant to adjourn the hearing for 3 months due to his serious illness. The trial judge erred in law by assuming that she had medical expertise to make determinations.g.The trial judge erred in law by making unethical decisions giving more weightage to court timetable rather than a person’s health.h.Erred in law by forcing the appellants to do and present complex accounts and related paperwork to court which they are not capable of or do not possess adequate skills for.i. Erred in law by exercising bias:i.By allowing a hearsay document that were objected to during the trial and into the judgement – the so called “NAB Memorandum”.ii.Allowing the respondent’s counsel’s objections to pass without proper reasoning, and aiding counsel with his objections.iii.But dismissing the appellant’s objections to the hearsay document without giving proper reasoning.2. Erred in law and fact by making a multitude of erroneous assumptionsa.Trying to discredit witness testimony relying on erroneous assumptions with no evidence.b.Deriving erroneous assumptions from third-party representations that no-one testified for, or which were testified by witness to be untrue.c.The use of something “may have happened’ but no evidence showing that it ‘did happen”.d.In Paragraph 219, the trial judge had relied on the respondent’s allegation “who got the money, is that they both did”. No evidence of any money or “how much it was?”, that the first appellant received, was ever shown by the respondent.e.Neglecting to understand the facts of matters correctly.f.Multiple payments refuted as unaccountable using erroneous assumptions.3.Erred in law and fact by not considering or understanding key evidential informationa.Neglecting to consider or understand key evidential information provided by the appellant.b.Neglecting to address the fact that no evidence has been provided by the respondent to refute the evidence provided by the appellants.c.In paragraph 51, the trial judge states that there are gaps in the evidence, but fails to state what the gaps are.d.Erred in law by contradicting her own judgement/judicial opinion.e.Erred in fact by not doing the calculations accurately.f.Erred in law and fact by not addressing the calculations, figures and detail of flow of funds in the appellant’s submissions particularly after requesting for it.g.Erred in law and fact by giving very little consideration to the respondent’s submission.4.Erred in law by not giving due consideration to the lack of legal incapacity of the appellant during the trial:a.Not allowing for cross-examination of the respondent.b.Not allowing for proper questioning of the witness due to constant interruptions and objections by respondent’s counsel and by the court. Aiding the respondent’s counsel with his objections but dismissing my objections without proper reasoning.c.Not allowing for legal representation when requested, to assist being able to understand the legal arguments and implications that were transpiring during the trial.d.Erred in law by allowing legal contentions during the trial without warning or explanation.5.Erred in law and fact by throwing in a whole lot of past cases with no or very little reference made in support of the judgement.6.Erred in law and fact by not clearly distinguishing or understanding the difference in functions of the different entities involved in the proceeding.7.Erred in law and fact by allowing inadmissible third-party hearsay documents as evidence in the case.8.Erred in law and fact by relying on incorrect statements, tendering incorrect and statements the witness testified against.9.Erred in law and fact by not correctly applying the equitable doctrine of exoneration:a.No tangible benefit received was ever shown by the respondent.b.Merging of company and personal finances into one. Not a single bank statement was shown to support this.c.The case used in paragraph 23 in support of the judgement depicts a dissimilar scenario to the present one. Careful consideration was not given to the significant differences.10.Erred in law and fact by not correctly applying the equitable doctrine of subrogation.a.The trial judge does not seem to understand the law nor how guarantees operate in financial institutions.(Errors in original.)