Houvardas v Zaravinos - [2003] NSWSC 387

No judgment structure available for this case.

CITATION: Nick Houvardas v George Zaravinos and Anor [2003] NSWSC 387

HEARING DATE(S): 16, 17, 18 and 19 September 2002; 15, 16 and 17 October 2002; 28, 29 and 30 April 2003; written submissions 19 September 2003 and 1 October 2003.

JUDGMENT DATE:
21 October 2003

JURISDICTION:
Equity Division

JUDGMENT OF: Bergin J

DECISION: See pars [130] - [135].

CATCHWORDS: [REAL PROPERTY] - Whether alienation of property by first defendant to second defendant was with intent to defraud creditors under s 37A Conveyancing Act 1919 (NSW) - Transfers registered 10 months prior to consent declaration pursuant to s 78 of the Family Law Act 1975 (Cth) made by the Local Court exercising Family Law jurisdiction - [BANKRUPTCY] -Whether the Bankruptcy Act 1966 (Cth) "covers the field" for proceedings in respect of alienation of property to defeat creditors where disponor becomes a bankrupt - Whether plaintiff precluded from proceeding under s 37A of the Conveyancing Act 1919 (NSW) - Plaintiff granted leave by the Federal Court to proceed against the first defendant under s 37A of the Conveyancing Act 1919 (NSW) - [ESTOPPEL] Whether plaintiff estopped from pursuing relief when proceedings commenced in Local Court exercising Family Law jurisdiction were "withdrawn and dismissed" by consent - [ORDERS] - Whether orders sought pursuant to s 37A of the Conveyancing Act 1919 (NSW) would be in conflict with Consent Orders made in Local Court.

LEGISLATION CITED: Bankruptcy Act 1924-1932 (Cth)
Bankruptcy Act 1966 (Cth)
Conciliation and Arbitration Act 1904-1961 (Cth)
Commonwealth of Australia Constitution Act (The Constitution)
Conveyancing Act 1919 (NSW)
District Court Act 1973 (NSW)
Family Law Act 1975 (Cth)
Judiciary Act 1903 (Cth)
Trade Practices Act 1974 (Cth)

CASES CITED: Baxter, Re; Ex parte Official Receiver in Bankruptcy & Baxter (1986) 10 FCR 398
Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502
Clyne v Deputy Commissioner of Taxation & Ors (1984) 154 CLR 589
Dao & Anor v Australian Postal Commission (1987) 70 ALR 449
Fraser v Commissioner of Taxation & Anor (1996) 69 FCR 99
Green v Schneller (2002) 29 Fam LR 346
Kattirtzis & Anor v Zaravinos [2001] FCA 1158
Langdon v Gruber [2001] NSWSC 276
Lawson v Wallace (1968] 3 NSWR 82
McCauley, Re; Ex parte Fraser & Anor (1995) 61 FCR 251
McLean, Ex parte (1930) 43 CLR 472
Mateo v Official Receiver in Bankruptcy (2002) 117 FCR 179
Metal Trades Industry Association of Australia & Ors v Amalgamated Metal Workers' and Ship Rights' Unions & Ors (1983) 48 ALR 385
Official Trustee in Bankruptcy v Higgins (2000) 109 FCR 1
Official Trustee in Bankruptcy v Mateo (2003) 30 Fam LR 122
Pitman v Pantzer & Ors (2001) 115 FCR 361
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589
R v Credit Tribunal; Ex parte GMAC (1977) 137 CLR 545
Silvera v Savic & Anor (1999) 46 NSWLR 124
Smith v Tatton (1879) 6 LR(ir) 32
State of Victoria & Ors v Commonwealth of Australia (1937) 58 CLR 618 (The Kakariki)
Stileman v Ashdown (1742) 2 Atk 477
Williams & Ors v Lloyd & Anor (1933-1934) 50 CLR 341
Wise, In re; Ex parte Mercer (1886) 17 QBD 290

PARTIES :
Nick Houvardas (Plaintiff)
George Zaravinos (First Defendant)
Ourania Zaravinos (Second Defendant)
NSW Attorney-General (Intervening)

FILE NUMBER(S): SC 4177/99

COUNSEL: Mr F Stevens and Mr R McCrudden (Plaintiff)
Mr MR Aldridge SC (Second Defendant)
Mr N Perram (Written submissions for NSW Attorney-General)

SOLICITORS: Mercuri & Co (Plaintiff)
Horowitz & Bilinsky (Second Defendant)
NSW Crown Solicitor (NSW Attorney-General)

- 6 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BERGIN J

21 OCTOBER 2003

4177/99 NICK HOUVARDAS v GEORGE ZARAVINOS AND OURANIA ZARAVINOS

JUDGMENT

1 The plaintiff, Nick Houvardas, seeks declarations and orders pursuant to s 37A of the Conveyancing Act 1919 (NSW) (the Conveyancing Act) in respect of the transfer of the first defendant’s, George Zaravinos’, half interest in three properties to his former wife, the second defendant, Ourania Zaravinos, in March 1997. The plaintiff alleges that the alienations were not made in good faith and were made with the intention of defrauding the plaintiff as a creditor.

2 The proceedings were originally constituted with George Kattirtzis as a co-plaintiff and were listed for hearing before Acting Justice Foster on 29 August 2001. On that day the second defendant sought the entry of summary judgment. Foster AJ declined to enter summary judgment and ordered that the matter proceed. However the hearing did not proceed because the plaintiffs filed the expert report of a document examiner, Stephen Dubedat, and the second defendant was successful in obtaining the vacation of the hearing. On 26 March 2002 Young CJ in Eq listed the matter for hearing before Acting Justice Burchett on 6 May 2002. On 2 May 2002 Burchett AJ vacated the trial date by reason of the demise of the then second plaintiff, Mr Kattirtzis.

3 The trial was subsequently listed before me for 4 days from 16 to 19 September 2002. It did not conclude in the allocated time and had to be accommodated around other cases already listed for hearing. The trial continued on 15 to 17 October 2002 and 28 to 30 April 2003. Mr F Stevens, of counsel, and Mr R McCrudden, of counsel, appeared for the plaintiff and Mr M Aldridge SC appeared for the second defendant.

4 After reservation of my judgment on 30 April 2003 a matter arose in respect of the plaintiff’s capacity to rely upon s 37A of the Conveyancing Act in light of the fact that the first defendant is a bankrupt. The second defendant claimed that there is inconsistency between the Conveyancing Act and the Bankruptcy Act 1966 (Cth) (the Bankruptcy Act) because the latter Act covers the field in respect of applications for orders that transfers of property were made to defeat creditors in circumstances where the person against whom the orders are sought is a bankrupt. Notices under s 78B of the Judiciary Act 1903 (Cth) were served by the second defendant and on 19 September 2003 written submissions were made by Mr N Perram of counsel on behalf of the Attorney General of New South Wales. Mr Aldridge SC made written submissions in reply on 1 October 2003 and I reserved my judgment on 3 October 2003.

5 Prior to the events that gave rise to this litigation, the plaintiff, his wife, Mr and Mrs Kattirtzis and the defendants were good friends. The second defendant is the aunt of the plaintiff’s wife and of Mrs Kattirtzis. Probate in respect of Mr Kattirtzis’ estate was not granted at the time the trial commenced and on 6 September 2002 I granted leave to the plaintiff to file a Further Further Amended Statement of Claim (FFASC) in which he is now the only plaintiff. That pleading was filed on 13 September 2002. Letters of Administration were granted to Mrs Kattirtzis in late April 2003 and, although an application was made on the ninth day of the trial to bring proceedings on behalf of the Estate of the late Mr Kattirtzis, it was abandoned on that day.

The Defendants’ Properties

6 The second defendant lived in Greece until the age of five when she went to England. From the age of sixteen she worked as a machinist/dressmaker, firstly as an apprentice and then in a factory doing piece-work and from the age of sixteen to the age of twenty she was able to save the equivalent of $32,000. She brought $25,000 to Australia with her in 1976 and $7,000 was transferred to Australia at some later time. The first and second defendants were married in 1978.

7 The second defendant gave evidence that when properties were purchased during her marriage to the first defendant they were put in joint names because this was the “tradition” of Greek families, which she respected. This was so notwithstanding her claim that the first defendant did not make any monetary contribution to the purchase of those properties. However, the first property that was purchased was registered only in the second defendant’s name. This was a property at Westmead of which the second defendant’s brother was the vendor. The second defendant gave no real explanation as to how this registration fitted in with her respect for the Greek family tradition of registering property in joint names.

8 The second defendant’s evidence in relation to this first property is very confused. Firstly she said that she purchased it for $42,000, yet the transfer refers only to a price of $22,000. There was also a mortgage for $12,500 in respect of the property. The second defendant claimed that she gave $25,000 to her brother as part of the purchase price and had difficulty accepting the accuracy of the amount of $22,000 on the Transfer, notwithstanding her signature on it. The Westmead property was sold in approximately 1980 and the second defendant claims it was sold for $60,000. She also claimed that land was then purchased on the Gold Coast.

9 In 1983 a property at 12 Colson Crescent, Werrington County (Colson Crescent) was purchased by the defendants in joint names for $75,000. The second defendant claimed that, once again, the first defendant made no monetary contribution to the purchase of this property. Colson Crescent was purchased with $33,000, which the second defendant claimed came from the proceeds of sale of the Gold Coast property, and a loan of $42,000.

10 In 1988 the second defendant received net $140,000 from a settlement in Supreme Court proceedings brought by her for injuries she claimed to have suffered by reason of a foreign body being present in some milk that she drank. It is alleged that she suffered alopecia as a result of this traumatic event. The defendants purchased a further property in 1988 at Derby Street, Penrith in joint names for $54,000. That property was rented for approximately four years until it was sold in 1992. The second defendant gave evidence that she used the $140,000 from the court settlement to purchase the Derby Street property, to pay off all but about $8,000 of the mortgage on Colson Crescent and to purchase a car at a cost of $38,000. The total amount of those three figures is approximately $126,000. The balance, which approximates $14,000, was claimed to have been invested with AGC at that time, however there are no documents supporting this claim.

11 The defendants purchased two home units in 1995, the first at Union Road, Penrith (the Union Road property) and the second at Castlereagh Street, Penrith (the Castlereagh Street property). These properties were purchased for $81,000 and $82,000 respectively. By Transfers dated 25 March 1997 and registered on 26 March 1997 the first defendant transferred his half interest in Colson Crescent, the Union Road property and the Castlereagh Street property (the three properties) to the second defendant. It is those transactions that are the subject of these proceedings.

Various Legal Proceedings

12 On 14 July 1995 the plaintiff and Mr Kattirtzis commenced proceedings 5028 of 1995 against the first defendant in the District Court of New South Wales (the District Court proceedings). By Statement of Liquidated Claim (Ex 1) the plaintiffs sought recovery of money allegedly given to the first defendant. That pleading included the following:

1. In about March 1995, the Plaintiffs and the Defendant orally agreed that the Plaintiffs would pay moneys to the Defendant for the Defendant to invest on their behalf in shares and securities in companies listed on the Sydney Stock Exchange.

2. The Defendant made certain representations and inducements to the Plaintiffs and upon which the Plaintiffs relied in entering into the said agreement.

Particulars

Between January and March 1995, the Defendant represented to the Plaintiffs:

a. That the moneys paid to the Defendant would be invested in purchasing shares and securities in companies on the Sydney Stock Exchange.

b. That a profit of at least 100 per cent would be made on the said moneys within a period of between 4 to 6 weeks.

c. That the moneys were secure in that the Plaintiffs would not lose the monies.

d. That the Defendant personally guaranteed that the Plaintiffs would not lose the moneys.

e. That the moneys and profit would be repaid to the Plaintiffs within 4 to 6 weeks.

f. That the Plaintiffs and the Defendant could then apply the moneys, profit and other moneys belonging to the Defendant in a joint venture in building 8 home units at Penrith.

13 The plaintiffs pleaded a breach of agreement together with a claim in relation to the first defendant’s alleged personal guarantee and false and fraudulent misrepresentations. Although the plaintiffs obtained default judgment, such judgment was set aside on 26 November 1996 and the first defendant was allowed in to defend the proceedings.

14 In July 1997 an application was made to this Court for an order restraining the second defendant from dealing in any manner with the three properties. Santow J refused to make that order. On 25 September 1997, Phegan DCJ made a Mareva order with immediate effect restraining the second defendant from dealing in any manner with the three properties (Ex 2). The second defendant was not named as a defendant in the District Court proceedings but was named as the second defendant in the Notice of Motion for the Mareva order.

15 On 15 January 1998 the Local Court at Penrith, exercising its Family Law jurisdiction, made the following Consent Orders in proceedings FL158/980018 between the second defendant as applicant and the first defendant as respondent (Ex 5):

(ii) As to the balance of Fifty thousand dollars ($50,000.00) within seven (7) days of completion of the sale of the unit known as 18/38 Castlereagh Street, Penrith.

2. That the wife forthwith list for sale the unit 18/38 Castlereagh Street, Penrith being Lot 18 in Strata Plan 20941 at the price of $90,000.00. If the unit does not attract a buyer within six (6) months then it is to be listed for sale by auction with a local agent at a reserve price determined by a valuer appointed by the President for the time being of the Real Estate Institute of New South Wales or his nominee, acting as an Arbitrator not as an expert, whose decision shall be final and binding upon the parties.

3. That pursuant to Section 78 Family Law Act 1975 (as amended) the wife is declared to be the sole and absolute owner in law and in equity of the land and house known as 12 Colson Crescent, Werrington County being Lot 633 in Deposited Plan 250238 and the home unit known as 7/28 Union Road, Penrith being Lot 7 in Strata Plan 44001 together with all items of personalty, furniture and furnishings and household contents in her possession.

4. That pursuant to Section 78 Family Law Act 1975 (as amended) the husband is declared to be the sole and absolute owner in law and in equity of the Vorada (sic) Reg. No. CDD081 together with all household contents and personalty items in his possession.

5. That in the event that either party refuses or neglects to execute any deed or instrument, the Registrar of the Court be appointed pursuant to Section 84, to execute such deed or instrument in the name of such party and to do all acts and things necessary to give validity to the operation to the deed or instrument.

16 On 19 May 1998 the first and second defendants signed an Agreement that provided for the second defendant to make “part payment” of the outstanding $50,000 under the Consent Orders by transferring to the first defendant an 18 carat yellow gold single diamond ring said to be valued at $34,000. The Agreement noted that a balance of $16,000 remained owing to the first defendant under the Consent Orders (the May Agreement) (Ex M13).

17 On 14 July 1998, the plaintiff and Mr Kattirtzis made application (6655/98) to the Local Court at Penrith in its jurisdiction under the Family Law Act 1975 (Cth) for various orders (the plaintiff’s Family Law Act Application) (Ex 5). They included: (1) orders restraining the second defendant from dealing in any manner with the three properties; (2) orders setting aside the defendants’ Consent Orders made in January 1998 in the Local Court at Penrith; (3) a declaration that the Transfers of the three properties dated 25 March 1997 for nil consideration were void; (4) an order that the second defendant reconvey to the first defendant his interest in the three properties; (5) an order that the first defendant held his interest in the three properties on trust for the plaintiff and Mr Kattirtzis; (6) an order that the three properties “be charged” and that the plaintiff and Mr Kattirtzis “may have a caveatable interest” in them; and (7) orders restraining the first defendant from dealing with the three properties.

18 On 21 July 1998 the plaintiff and Mr Kattirtzis, having been given advice that the Family Law Act Application was not “correct” (tr. 91), filed the following Consent Orders in the Local Court (Ex 5):

1. The applications of the Applicants filed 14/7/98 (being

application forms 7 and 8) are withdrawn and dismissed.

2. The Applicants shall pay the costs of the respondents assessed at $750.00 in respect of each of them on or before 3 August 1998.

3. The return date of the Form 7 application on 28/8/98 is

vacated.

19 On 24 August 1998 the defendants signed an Agreement that acknowledged that the final balance of $16,000 payable by the second defendant to the first defendant under the Consent Orders had been paid and “that all obligations arising out of the said orders had been fulfilled” (the August Agreement) (Ex M14).

20 In October 1998 Cooper DCJ heard the District Court proceedings. The first defendant’s Defence denied that he had received any moneys from the plaintiffs. The matter was listed for hearing on 6 October 1998 and the first defendant did not appear. Cooper DCJ stood the matter down in the list to give the first defendant a further opportunity to appear but there was no appearance. On 7 October 1998 his Honour entered judgment for the plaintiff against the first defendant in the amount of $52,400 plus interest of $19,156.87, making a total of $71,556.87. Judgment was also entered for Mr Kattirtzis against the first defendant in the amount claimed by him.

21 Cooper DCJ set out the facts upon which he entered judgment. Relevantly those facts included the following (Ex M16: 420-427):

The evidence was given by Mr Houvardas that he has known the defendant for some 23 to 25 years. Not only is the defendant his wife’s uncle by marriage but he is also the Godfather to Mr Houvardas’ child. He said that in January 1995 he was with his family, together with other members of the extended family, on holidays at Port Stephens. It was on this occasion that the defendant first raised with him the question that if the plaintiff were to invest money with him he knew a way to triple the money in a very short time.

After that holiday the defendant phoned him again and asked him if he was interested in making easy money. The plaintiff asked how he can make such a good investment and what about taxation and was told it was clear of tax. There were further phone calls from the defendant to Mr Houvardas, amongst which the defendant told Mr Houvardas not to mention anything about this to his wife. He also told Mr Houvardas that small investments could be made whereby $150 would be deposited and he would get back $500.

The defendant explained to Mr Houvardas that he knew someone in the stock market and could get very good profits and that he would let him know about it. He said there were small investments which he could make on the plaintiff’s behalf of $150 each. He also said that there was no need for the plaintiff, Mr Houvardas, to give him the $150, that he would put it in on his behalf. Indeed, on three separate occasions the defendant paid over to Mr Houvardas $500 saying that this was the result of small investments of $150 each which he had made on his behalf. He further encouraged Mr Houvardas to invest a larger sum of money, pointing out that large profits could be made and suggesting that they could put the profits into a block of land and build townhouses or units which would be a good investment.

There were a large number of conversations and finally the defendant suggested to the plaintiff, Mr Houvardas, that the plaintiff should invest $20,000.

It was after a number of conversations that the defendant asked Mr Houvardas whether the other plaintiff, Mr Kattirtzis, could be trusted. To this Mr Houvardas gave an affirmative reply. There was then a meeting arranged at the defendant’s house between the defendant and the two plaintiffs. They queried the defendant and he told them that there was nothing to worry about, that he had done the investment several times before, it was quite safe, but the moneys had to be paid over in cash. The defendant also said that his barrister was a long-term friend and would also join in the investment.

There was an occasion when the three of them, that is the defendant and the two plaintiffs, met at the BP service station at Werrington when the defendant gave Mr Kattirtzis $500 saying that this was his profit from a small investment similar to that which had been made on behalf of Mr Houvardas.

By this stage the two plaintiffs were becoming fairly keen on the idea of the success of the defendant’s investment. The defendant pointed out to Mr Houvardas that he had a big investment coming up and he did not want to see Mr Houvardas losing out. Mr Houvardas protested that all he had was $20,000 and that if he invested that money he had nothing left. The defendant said that, if they invested $55,000, each of the plaintiffs would get back $375,000. The defendant suggested to Mr Houvardas and also to Mr Kattirtzis that they should borrow the money from the bank or from other people so that they would not lose out on this wonderful investment.

There is no doubt that by this stage both of the plaintiffs were very keen to join in the investment propounded by the defendant. Mr Houvardas paid over a total of $53,000 between about late February and the end of March 1995. Part of this money was borrowed and part came from his own savings. Mr Kattirtzis also agreed to join in and invest money as well and Mr Kattirtzis handed his money over at various stages in about April 1995.

Now the money was handed over in cash and not in one lump sum. This was because the defendant had pointed out to both plaintiffs that under no circumstances should they withdraw from their bank account amounts in excess of $10,000 because otherwise the matter would be reported to the Taxation Department. Consequently they drew out moneys of about $8,000 or $9,000 and paid that over.

Mr Houvardas paid over $53,000 initially. Then the defendant pointed out a further investment in which each share to be invested would cost $1,700. Mr Houvardas agreed to take out two shares and so handed over to the defendant a further $3,400. Thus Mr Houvardas paid over a total of $56,400.

After the two plaintiffs had paid over their money the defendant contacted them from time to time, said that everything was going smoothly; his friend who was a stock broker was very confident and indeed was talking about extending the investments even further into Melbourne. The defendant rang Mr Houvardas and said that the money could be paid over on a date which he nominated. This date was deferred on some three or four occasions and the defendant told Mr Houvardas that he should just wait and be patient.

Then the defendant rang Mr Houvardas and asked him to tell Mr Kattirtzis that they should all meet in a coffee lounge at the Piccadilly Centre at a stated time. At this stage the two plaintiffs were working together on a building site at Artarmon. They both went to the coffee lounge nominated and after about twenty minutes the defendant arrived. At that stage he appeared happy and excited and said that all went smoothly and there were no problems. Indeed he told the two plaintiffs that they needed to install a safe at their home because they would have a lot of money and that he was going to make them millionaires. At this stage he was waiting for a phone call. Two phone calls came. The second one was said by the defendant to be from his broker and that a lady was bringing the profits and that they should go and collect them. Mr Houvardas asked why it was being done this way because it was so much money it would be risky for a lady to be walking around with that much money. This concern was brushed off by the defendant with words to the effect, “I’ve done it many times, there is no problem”.

Then they followed the defendant, walking from the Piccadilly Arcade to the Queen Victoria Building. They went inside that building and at this stage the defendant’s appearance changed to one of nervousness. They went from one floor to another. Then the defendant told Mr Houvardas to walk in a particular direction, to look towards the lifts and he would see a lady with a briefcase wearing glasses and she would have the money. Mr Houvardas started to walk in that direction when he was told by the defendant to come back quickly because there were two detectives there. Mr Houvardas did in fact come back quickly and stay with the defendant, but Mr Kattirtzis continued walking and left the sight of the other two. The defendant tried to telephone Mr Kattirtzis on his mobile phone but could not get through. Finally the defendant said to Mr Houvardas, “Stay here and I will go and look for him”. Mr Houvardas waited for three to five minutes and then Kattirtzis returned and said the defendant had their money and had gone off and, in effect, that the two of them had been “ripped off”.

They looked around for the lady and for the defendant but could not find them. They tried to ring the defendant on his mobile phone but could not raise him. Finally, Mr Kattirtzis received a call on his mobile phone from the defendant who told him that he had been arrested, that he was then with detectives in a car and told them to leave the building in case they got arrested. He said the police were taking him to Central Police Station and that they reckoned that he was doing illegal share dealings and they were taking him in for questioning. Not surprisingly, the plaintiffs were somewhat sceptical of this and they went from the Queen Victoria Building over to Central Police Station where they made enquiries as to the whereabouts of the defendant and, not surprisingly, they were told that he was not there.

They went back to their work site at Artarmon and tried to ring the defendant unsuccessfully. Finally, the defendant called Mr Houvardas at about 10.30pm that night and told him that it would be better if he did not come near him for a while because the detectives were asking him questions. He said that he and the lady and the broker were arrested and all taken to Central Police Station; that he was bailed out and he had to put up $50,000 bail and the broker had to put up $100,000 bail, but he said that he was completely innocent. He also said the lady was let out and warned Mr Houvardas to lie low and not to go to the defendant’s house. He also said that the broker was lucky because he had not withdrawn the money that day.

The defendant called Mr Houvardas two or three days later and wanted to meet with the two plaintiffs. The two plaintiffs got together and decided that they would tape record the conversations and so they took to that meeting a small tape recorder which was in the pocket of Mr Kattirtzis’ jacket and the conversation was recorded. That recording is now in evidence, as is a transcript of a translation of it. The conversations between the two plaintiffs and the defendant were, generally speaking, in the Greek language.

After that meeting they went again to the house of the defendant and spoke to him and that conversation was, likewise, recorded. I will come back to those recordings later.

Some time later the defendant rang Mr Houvardas again and said, “Come to the BP service station, I’ve got your money”. So an arrangement was made and the two plaintiffs, together with two others, went to that service station. The defendant was already there. The defendant had two of his henchmen there who searched the two plaintiffs, that is frisked them, but there was no money. The defendant’s response was, “You know I haven’t got the money, be patient until I get it”.

Then some time later the defendant and the two plaintiffs met again and he said that he had sold some bits and pieces and he raised $8,000 and he gave $4,000 to each of the plaintiffs.

22 Cooper DCJ was satisfied that the plaintiff and Mr Kattirtzis had established that the first defendant continued with his defence when he knew that it had no chance of success and that he continued with his defence in wilful disregard of the known facts. His Honour made an order that the first defendant pay the plaintiffs’ costs of the District Court proceedings on an indemnity basis. In respect of that claim his Honour said (Ex M16: 431):

It is quite clear that the defendant knew at all times that his defence was false … There is other evidence before me that establishes that his reasons for persisting in a defence which he knew to be false can be summarised as follows: First, in the hope that, by delay and frustration to the plaintiffs, he could cause them to drop the claim; secondly, to delay the inevitable as long as possible; and, thirdly, to allow him the opportunity of dealing with his assets in a way which would defeat and frustrate the enforceability of any judgment which may be obtained later.

23 On 7 December 1998 Murrell DCJ delivered judgment in respect of the orders sought in the balance of the Notice of Motion in respect of which Phegan DCJ had made the Mareva orders against the second defendant in September 1997 (Ex 3). The balance of the Notice of Motion, in which the second defendant had been named as the second defendant, sought orders including: (1) a declaration that the Transfers of the three properties dated 25 March 1997 were void; (2) an order that the second defendant reconvey the first defendant’s interest in the three properties; (3) an order that the first defendant held his interest in the three properties on behalf of the plaintiff and Mr Kattirtzis; and (4) orders restraining the first defendant from dealing with the three properties (Ex 2).

24 Murrell DCJ decided that the District Court did not have power under s 134(1)(h) of the District Court Act 1973 (NSW) to make the orders and concluded that the second defendant had never been made a party to the District Court proceedings and that the substantive proceedings had concluded without her having become a party. Her Honour said (Ex 3: 4):

Baxter: Ex Parte Official Trustee in Bankruptcy

25 The first defendant did not pay the judgment debts and on 11 October 1999 the plaintiff and Mr Kattirtzis commenced bankruptcy proceedings against the first defendant. A Sequestration Order was made on 21 February 2000.

These Proceedings

26 The plaintiff commenced these proceedings on 1 October 1999. On that day Austin J restrained the second defendant from dealing in any way with the three properties. That injunction was continued by various orders up to 25 October 1999 when the injunction was continued in respect only of the Castlereagh Street property and Colson Crescent until further order. That injunction remains in place.

27 The FFASC claims that the first defendant made a number of representations to the plaintiff and Mr Kattirtzis between January and March 1995. The representations alleged to have been made are in identical terms to the claims made in the District Court proceedings. The FFASC also claims that the second defendant made representations to the plaintiff in about March 1995 and to Mrs Kattirtzis in about April 1995. It is alleged that the second defendant made the following representations to the plaintiff:

28 It is alleged that the second defendant made the following representations to Mrs Kattirtzis in about April 1995 in the expectation that such representations would be repeated to Mr Kattirtzis:

29 It is alleged that the plaintiff paid the first defendant a total of $56,400 in various amounts on 6 January 1995, 14 and 27 March 1995 and 10 May 1995. It is also alleged that Mr Kattirtzis paid the first defendant a total of $52,000 in various amounts on 4, 5, 6, 7 and 10 April 1995 and 10 May 1995.

30 It is alleged that the defendants applied the monies paid to the first defendant for the first defendant’s own use and benefit and that both the defendants made false representations. The District Court proceedings are referred to in the pleading and it is alleged that the second defendant was aware that in July or August 1995 the first defendant had not returned the money which the plaintiff and Mr Kattirtzis had given him. It is also alleged that the second defendant was aware in November 1996 that the default judgment in the District Court had been set aside and that she was present at Court on the occasion that the judgment was set aside.

31 It is also alleged that in January 1997 the plaintiff and Mr Kattirtzis sought undertakings from the first defendant that he would not divest himself of assets and advised that they were minded to seek a Mareva injunction in aid of enforcement. The first defendant’s response, via his solicitors, that he had no intention of altering his circumstances as at 21 January 1997, is also referred to in the pleading. It is alleged that the first defendant procured valuations of all his properties on 13 December 1996 and in March 1997 sought to dispose of his interest in the properties to his wife for nil consideration.

32 The January 1998 Consent Orders in the Local Court at Penrith are referred to in the pleading, as is the decree absolute of 8 October 1998. It is alleged that the proceedings for property settlement and for divorce were a sham and entered into to delay or defeat the plaintiff and Mr Kattirtzis enforcing judgment against the first defendant. It is also alleged that the defendants have always cohabited at the same address and that they travelled overseas together during the period of twelve months when they were purportedly living separately and apart. It is also alleged that they presented to family and friends as a married couple in the period when they were purportedly living separately and apart.

33 The FFASC alleges that the defendants have “wickedly combined together and conspired to defeat the Plaintiff’s attempt to secure enforcement of any judgment that might be recovered” (par 24). It is also alleged that the Consent Orders in the Local Court at Penrith and the agreements entered into between the defendants were “in furtherance of a joint fraudulent design” carried out with the intent to defraud the plaintiff and Mr Kattirtzis in the recovery of the fruits of the judgment in the District Court proceedings (par 27).

34 The relief sought by the plaintiff is: (1) a declaration that the alienation by the first defendant to the second defendant was not made in good faith but with intention to defraud creditors; (2) a declaration that the Consent Orders made by the Local Court sitting at Penrith were procured with intent to defraud creditors; (3) a declaration that the second defendant holds the properties in trust for the plaintiff; (4) an order that the properties be sold and that the plaintiff be paid out of the proceeds of sale; (5) an order that the second defendant be restrained from dealing with the properties; (6) any further order or orders in respect of the implementation of the declarations and orders; and (7) costs on an indemnity basis.

35 On 28 August 2001 the Federal Court granted leave to the plaintiff and Mr Kattirtzis to take all the necessary steps in these proceedings nunc pro tunc as from 21 February 2000. The Court also granted leave pursuant to s 58(3) of the Bankruptcy Act to take all the necessary fresh steps in these proceedings for recovery of property as against the first defendant. That leave did not include any claims for damages or other monetary relief and was on certain conditions. Those conditions included a requirement that the plaintiff undertake: (i) not to seek final relief without having given seven days notice to the Official Trustee; and (ii) to ensure, by appropriate means, that the Official Trustee received the benefit of any order made in these proceedings to be held on behalf of the bankrupt estate: Kattirtzis & Houvardas v Zaravinos [2001] FCA 1158, Gyles J, unreported, 28 August 2001 (Ex A).

36 No Defence has been filed for the first defendant and the Official Trustee has not taken part in the proceedings, although a witness from the Trustee’s Office was called to give evidence in the plaintiff’s case. The first defendant also gave evidence in the second defendant’s case.

37 The second defendant’s Defence denies the alleged representations were made and also denies that she was aware that the default judgment had been set aside. There is also a denial that she was in Court when judgment was set aside. The second defendant claims she is entitled to the properties by reason of valid orders made under the Family Law Act 1975 (Cth) by the Local Court at Penrith in January 1998. It is alleged that the plaintiff is estopped from commencing the proceedings because the plaintiff’s Family Law Act Application sought to set aside her entitlement to the properties and those proceedings were dismissed by consent. It is also alleged that the plaintiff is estopped in line with the principles expounded in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589.

38 The second defendant also claims that the plaintiff is no longer entitled to pursue any relief in the proceedings under s 37A of the Conveyancing Act because: (1) upon the making of a sequestration order the plaintiff’s rights as a creditor of the first defendant became converted to rights to prove in the bankrupt estate and the plaintiff thereby ceased to be a creditor for the purpose of s 37A of the Conveyancing Act; (2) s 121 of the Bankruptcy Act ousts the operation of s 37A Conveyancing Act where a sequestration order has been made against the estate of the debtor; and (3) the present action is an action to enforce a remedy against the property of the first defendant, a bankrupt, in respect of a provable debt and is thereby barred by s 58(3)(a) of the Bankruptcy Act.

39 The plaintiff relied upon much the same evidence in this Court as relied upon in the District Court proceedings, the detail of which is set out in Cooper DCJ’s reasons extracted earlier in this judgment. There is the additional evidence in this Court dealing with the second defendant’s knowledge of the transactions entered into by the plaintiff and Mr Kattitrzis with the first defendant.

40 The plaintiff claimed that the second defendant was present at Colson Crescent in March 1995 when he handed $20,000 to the first defendant. The second defendant denied that she was present. The plaintiff also claimed that the second defendant was present on a second occasion at Colson Crescent when he handed a further $20,000 to the first defendant. The plaintiff alleged that on this occasion the first defendant said that he would invest the money “in the stock market” that day and would let the plaintiff know when he needed to supply the balance of the funds. The second defendant denied that she was present at this meeting.

41 The plaintiff gave evidence that he and his wife attended a barbecue at the home of Mr and Mrs Kattirtzis at 47 Reservoir Road, Blacktown in about the beginning of April 1995. Also present at the barbecue were Mr and Mrs Kattirtzis and the first and second defendant. In his oral evidence the plaintiff said that the second defendant was speaking with Mrs Kattirtzis in his presence and that she said: “If it wasn’t a sure thing or secure we won’t let even Nick to be in it and he already make good money” (tr. 35). The plaintiff also claimed that the second defendant informed the group that the first and second defendants had put in “double the amount” (tr. 36).

42 Mrs Kattirtzis gave evidence that her husband informed her that the first defendant and the plaintiff had suggested that he borrow money for the purpose of investing to obtain a large return on his money in a short time. Mrs Kattirtzis said that she was very concerned about the borrowing of the money from her husband’s employer as they had little money at that time in 1995. She decided to invite the defendants to her home for a barbecue with the plaintiff and his wife for the purpose of discussing the investment. She said that she knew that the first defendant had suggested to her husband that the investment plan should be kept from her, but said that there were no secrets between she and her husband.

43 Mrs Kattirtzis gave evidence that the barbecue occurred in late March or early April 1995 soon after the birth of her second daughter. She said that she informed the second defendant that she was a little bit worried about the proposed investment. The second defendant advised her not to worry and that she “would not let us put our money into anything she was not sure of herself” (tr. 109) and to trust the first defendant as he would not do anything wrong by them and neither would the second defendant. She said the second defendant assured her that if anything did go wrong she would look after them and also said that Mrs Kattirtzis should trust her uncle, the first defendant, “because he was a genius at these investments; he has done this sort of thing before, that is why he has never had a normal job” (tr. 110).

44 The second defendant denied that this barbecue had taken place. She gave evidence that she attended Mr and Mrs Kattirtzis’ home for a barbecue to celebrate the birthday of her first child in November 1994 and that approximately 30 people were present, including a clown to entertain the children. The second defendant claimed that this barbecue was the only one that she had attended at Mr and Mrs Kattirtzis’ home and denied ever discussing the investment with Mrs Kattirtzis, either at a barbecue or at all.

45 The plaintiff and Mrs Kattirtzis also gave evidence of a visit they made to Colson Crescent in mid-1995. By this time the first defendant had been avoiding the plaintiff and Mr Kattirtzis, notwithstanding their persistent attempts to get in touch with him. When they arrived outside Colson Crescent the plaintiff telephoned the defendants from his mobile phone. The second defendant answered the phone and informed the plaintiff that the first defendant had gone out. The plaintiff or Mrs Kattirtzis asked the second defendant to let them in but she advised them that the first defendant had taken the keys with him and she could not come out of the house. Mrs Kattirtzis saw the first defendant behind the curtain and although the front gate to the premises was locked, Mrs Kattirtzis climbed over the front fence, went up the steps to the front door and said: “I can see you, come out” (tr. 38). The first defendant eventually came out of the premises and it appears that a slanging match ensued. The second defendant denied that this incident occurred.

46 The plaintiff also claimed that the second defendant was at the District Court on 27 November 1996 when the default judgment was set aside. The second defendant originally agreed that she had been at the Court, but outside, when the judgment was set aside (tr. 381). The second defendant then gave evidence that she was having some difficulty remembering which proceedings she was being asked about (tr. 382).

47 The second defendant claimed that it was in January 1997 that the first defendant informed her that he had gone into a business deal with the plaintiff and Mr Kattirtzis and that it had not worked out. She claimed that the first defendant informed her that the business deal was in relation to a brothel. She also claimed that about a week after this disclosure the first defendant informed her that the plaintiff had accused him of having an affair with his wife. The second defendant said that the first defendant denied such an affair but that over the next two or three weeks she informed the first defendant that she knew he had been having such an affair. She said that in about late January 1997 she informed him she wanted to separate.

48 The second defendant claimed that about one month after the first defendant moved out of the house she informed him that the three properties were hers, that she had paid for them and that he did not contribute any money towards the purchase of the properties. She informed him that she wanted him to transfer the properties to her and that she would not have him back “no matter what” (tr. 417). She said that she also informed him that he could have the car and that she would pay him $58,000 as soon as she could but she wanted the properties “transferred now”. She claimed the first defendant agreed to that and he reminded her that he could not afford to pay her regularly “or a lot for the support of the children” because of his financial position.

49 The second defendant gave evidence of a meeting on 26 March 1997 with the first defendant and George Moutafis in a cafe at the Queen Victoria Building in George Street, Sydney. Mr Moutafis was a solicitor until he was struck off in late 1996, but prior to that he had acted for the defendants in their conveyances. The second defendant claimed that Mr Moutafis informed them that the best thing to do was to transfer the properties back to the second defendant and then file for Family Court orders after six months. She claimed that Mr Moutafis said that they could do this themselves because it would save them money and it was easy to do. She also said that Mr Moutafis said: “You just need to come with me and I will help you fill out the documents. Have you got the valuations of the properties I told you to get George?”. The second defendant said that she spent most of the rest of the day with the first defendant and Mr Moutafis and that they went to different places. She also said that: “George Moutafis did most of the talking for us”. She said that she “filled out three transfer forms in my own handwriting” and signed each one twice and the first defendant signed each one once in front of the Justice of the Peace.

50 The second defendant claimed that in April 1997 she agreed with the first defendant that he could return to Colson Crescent and they would attempt reconciliation. However she claimed that between April and June 1997 they had further arguments and he left the home in June 1997. She claimed they have not lived together since that time. The second defendant gave evidence that she did not share a bank account with the first defendant and that neither when she was married to the first defendant nor since their divorce has the first defendant discussed his business dealings with her.

51 The second defendant claimed that she knew nothing about the alleged business dealings between the first defendant, the plaintiff and Mr Kattirtzis until her conversation with the first defendant in about January 1997. She said that until the plaintiff and Mr Kattirtzis involved her in the District Court proceedings in 1997 when the Mareva order was obtained, she was not aware of any allegations that the first defendant had received money from the plaintiff and Mr Kattirtzis, nor that he had not paid them back.

52 The first defendant gave evidence in the second defendant’s case. He maintained that neither the plaintiff nor Mr Kattirtzis had given him any money. His version of events was that the plaintiff and Mr Kattirtzis had approached him to invest with them in a brothel through a person they knew by the name of “Carlos”. The first defendant alleged that he met with Carlos, the plaintiff and Mr Kattirtzis in the Chillies restaurant in Parramatta and they each handed $16,000 to Carlos. According to the first defendant, the mysterious Carlos disappeared, never to be sighted again and they each lost their $16,000.

53 The first defendant also alleged in his affidavit that in early 1995 he had a conversation with the plaintiff in which the plaintiff accused the first defendant of having an affair with his wife and that he denied such accusation. The first defendant also alleged that in late 1996 he informed the second defendant that he had gone into a business deal with the plaintiff and Mr Kattirtzis involving a brothel, that it had gone wrong and that they had lost money. He also claimed that he informed the second defendant about the plaintiff’s accusation of an affair with Mrs Houvardas. He said that over the next few weeks at the beginning of 1997 the relationship with the second defendant deteriorated and he agreed to move out because the second defendant claimed she could not deal with the “brothel and the affair”. The first defendant claimed that the properties were transferred to the second defendant as part of the property settlement relating to their divorce, which was made absolute in October 1998.

54 The plaintiff submitted that neither of the defendants can be believed on their oath and that I would be satisfied that the first defendant had the requisite intent under s 37A(1) of the Conveyancing Act when he transferred his share in each of the properties to his wife. It was also submitted that I would be comfortably satisfied that the second defendant conspired with her husband in that regard or that, at the very least, she had notice of the first defendant’s intention to put the property beyond the reach of the plaintiff and Mr Kattirtzis so that any defence pursuant to s 37A(3) of the Act is not available to her.

55 There are a number of areas of attack upon the defendants’ credibility. The first defendant gave evidence that he met Carlos in early 1995 and that within weeks he had handed to him $16,000 for investment in a brothel. He did not know Carlos’ surname and said that it was part of the agreement that he was not to know his surname. He did not know where the brothel was to be located, except that it was to be in Parramatta. He claimed that $5,000 of the $16,000 was borrowed from a third party. In oral evidence he said that the $16,000 was obtained from the second defendant. He claimed that after he, the plaintiff and Mr Kattirtzis had each given Carlos $16,000 the latter disappeared. There is no evidence that the first defendant did anything about trying to locate Carlos for the purpose of trying to get his money back. For a man on social security benefits and allegedly out of work, this just adds to the farcical nature of this claim.

56 There is absolutely no evidence that suggests that Carlos ever existed other than the first defendant’s evidence. The first and second defendants have been in receipt of social security payments for 20 years. The first defendant claims to have worked from time to time as a waiter and in a friend’s real estate agency. His bank statements show cash deposits during the time the plaintiff claimed he and Mr Kattirtzis were providing the money to him for investment on the stock market. The first defendant claimed that these amounts in the bank statements were received from a Mr Lee Wong to whom he had sold some antique jewellery that belonged to the second defendant. He claimed to have sold the jewellery for $115,000 and that Mr Wong paid him in various amounts over a six-month period. The bank accounts do not disclose deposits totalling $115,000.

57 The first defendant was asked about later deposits of cash into his bank accounts. The explanations as to the provenance of those amounts changed during his evidence. Initially he was unable to say from where the moneys came. When he was given an opportunity to consider his answers he suggested that the moneys were loans from a Mr Phillipou. The second defendant did not call Mr Phillipou to give evidence and no documentary evidence is available to satisfy me that there was any loan arrangement between the first defendant and Mr Phillipou in relation to these amounts. A further bank account in the first defendant’s name with Suncorp Metway, apparently opened in June 2002, was discovered during the proceedings. It recorded cash deposits of approximately $16,000. The plaintiff’s solicitor notified the Official Trustee of this account and the first defendant claimed that Mr Phillipou was successful in having those moneys paid to him by the Trustee after he claimed that they were funds loaned to the first defendant.

58 Mr Lee Wong was not called as a witness, however there is a document entitled “Acknowledgment” which purports to be signed by Mr Wong, the first defendant and Mr Moutafis. That document makes no mention of any price to be paid for the jewellery nor does it refer to any payment regime. It states that Mr Wong “of Hong Kong” agrees to buy the jewellery “subject to formal valuation” and that “payment will be made after confirmation of value”. The second defendant did not know Mr Wong’s address in Hong Kong, nor did he have a telephone number for him. He claimed that when Mr Wong would come to Sydney he would telephone the first defendant and they would meet.

59 The piece of jewellery allegedly sold to Mr Wong was said to have been a gift from the first defendant’s mother to his wife. The second defendant claimed it was a gift for her wedding, although she also gave evidence that it was a birthday gift (tr. 429-430). The first defendant claimed he handed the piece of jewellery over to Mr Wong without payment of the alleged $115,000 and with a willingness to be paid in small amounts for which there are no proper receipts. The only documents to which the first defendant referred were some photocopies of deposit slips totalling approximately $27,200.

60 The piece of jewellery allegedly sold to Mr Wong was handed down from the first defendant’s grandmother to his mother and then to his wife. The first defendant claimed that the reason the jewellery was sold in 1995 was because his wife was thinking of buying some units. This was also an extraordinary aspect of the defendants’ versions of events. Here are two people on social security benefits who, so far as at least the second defendant is concerned, “respect” the tradition of Greek families, yet they are willing to sell the jewellery handed down in the family not for the purpose of making ends meet, but for the purpose of investing in property. The second defendant said that the first defendant gave her the money from the sale of the jewellery after Mr Wong paid it to him and she then gave it back to the first defendant to bank for her. However the first defendant banked it into his own account rather than his wife’s account. This is just another peculiarity in what I regard as totally farcical and false claims.

61 The Consent Orders filed at the Local Court at Penrith in January 1998 ordering the sale of the Castlereagh Street property and declaring the first defendant to be the sole owner at law and in equity of the Colson Crescent and Union Road properties were made when both defendants knew the properties were the subject of the restraining orders in the District Court. Mr Stewart Gibson was the solicitor who prepared and filed the Consent Orders in the Local Court at Penrith. The first defendant gave evidence that he informed Mr Gibson of the existence of the District Court orders. The second defendant said that she did not realise that she had to tell Mr Gibson about the orders. Mr Gibson gave evidence that the defendants did not inform him that there were District Court Orders affecting the properties. I accept Mr Gibson’s evidence.

62 The second defendant gave evidence that after she drank contaminated milk in 1981 she developed alopecia, a condition in which one loses one’s hair. It was apparently this condition for which the second defendant received a court settlement of $140,000 in 1988. The plaintiff attacked this claim alleging that the second defendant had suffered from this condition well before the incident in 1981. The second defendant’s sister gave evidence that when the second defendant came to live with her for a number of months in 1976 she wore a scarf all of the time. On one occasion during this period the second defendant’s sister “by accident” walked into a room when the second defendant was not wearing a scarf and she saw that the second defendant did not have any hair on her head. She said that her hair subsequently grew back when she was pregnant.

63 The second defendant’s niece also gave evidence of her observations of her aunt during that period and said that she did not have any eyebrows or eyelashes. A hairdresser of whom the second defendant was a client in the period before 1981 also recalled that she suffered from alopecia at that time, although his evidence of the timing was rather vague.

64 This family has been suffering from the events that have caused this litigation since 1995. It is obvious to me that emotions have run very high and that caution needs to be exercised in relation to the various claims made by the parties and the witnesses. It seems to me that the second defendant’s niece was a very careful and honest witness. She has had the least to do with the family since the late 1970’s, when she married and moved to Wollongong with her husband. I accept her evidence as truthful and conclude that it is more probable than not that the second defendant was suffering from alopecia prior to the incident with the milk in 1981. I do not know what evidence was put to Dairy Farmers to induce them into a settlement but this finding is relevant to the second defendant’s claim in these proceedings that it was “only” the incident with the milk in 1981 that caused the development of the alopecia (tr. 243). I am not satisfied that the second defendant’s evidence about this matter can be relied upon. I accept the plaintiff’s witnesses’ evidence that the condition was present prior to 1981.

65 The second defendant gave evidence that the first defendant has been living at the Castlereagh Street property since 1998. She said that the first defendant paid her rent of $120 per week for the first six months but that he then stopped making those payments. She said that she did not declare that rent because she used it in paying expenses. In fact, the second defendant gave evidence that neither she nor the first defendant had lodged tax returns for the last 20 years. She said that for the last four years she has not required the first defendant to pay her rent because she did not want to leave him on the streets and she feels sorry for him.

66 The second defendant was shown a copy of a Residential Tenancy Agreement for the Castlereagh Street property between herself as landlord and Scott John Burdekin and Shane Daniel Miller as tenants for the period 20 September 1999 to 19 March 2000 at a rental of $140 per week (Ex Z). She said that she did not remember the names of the tenants but finally agreed that she had received the rental referred to in the Agreement (tr. 378). The evidence given by the second defendant about the occupancy of the Castlereagh Street property is, in my view, totally unreliable.

67 The second defendant’s evidence about the events of 25 or 26 March 1997 when the Transfers were allegedly signed is not supported by Mr Moutafis. He gave evidence that he did not go into the Land Titles Office with the defendants on that day and was thus not in a position, as the second defendant claimed, to do most of the talking for the defendants. The signatures of the transferors and the transferee are purportedly witnessed by a Justice of the Peace (JP), John Rondon, with an address 123 High Street, Penrith. The plaintiff has made exhaustive searches for the JP, John Rondon. Such a person is not, and has not been registered with any of the Australian States or Territories as a JP. Such a person is not registered as a ratepayer with any of the forty seven councils of the Sydney metropolitan area, Blue Mountains, Central Coast and Wollongong areas searched by the plaintiff’s solicitors. No person of that name worked at the Land Titles Office at the relevant time. Additionally the address 123 High Street, Penrith is a vacant block of land. The plaintiff submits that on this evidence I would find it is probable that John Rondon JP does not exist.

68 The evidence about the execution of these Transfers is highly suspicious. It appears that there is no JP by the name of John Rondon who allegedly witnessed the signatures on the Transfers and Mr Dubedat, the expert document examiner, expressed the view that the Transfers did not contain the second defendant’s signature.

69 The Transfers effecting the alienation of the first defendant’s share in the three properties were for “nil” consideration. The second defendant’s evidence was inconsistent with the contents of the Transfers. In her affidavit sworn on 19 July 2000 she claimed that approximately one month after the first defendant moved out of Colson Crescent, claimed to have been in late January 1997, she demanded that the first defendant transfer his share in the three properties, informed him that he could keep the motor vehicle and she would also pay him $58,000 as soon as she could. This conversation is alleged to have taken place prior to the date the Transfers were signed. The second defendant claimed that she “filled out the three transfer forms in my own handwriting”. That handwriting includes the word “nil” next to the words “acknowledges receipt of the consideration of” in paragraph (D) on each of the Transfers.

70 There was nothing in writing in relation to this alleged $58,000 until the Consent Orders were filed in the Local Court at Penrith in January 1998. Those Orders do not express the $58,000 as consideration for the transfer of the three properties, but rather link the payment to the sale of the Castlereagh Street property. The plaintiff claimed that the two Agreements signed by the defendants in May and August 1998 in relation to the payment of the $58,000, the alleged transfer of an 18 carat yellow gold single diamond ring, (said to be valued at $34,000), and the alleged payment of $16,000 were part of the steps taken by the defendants in furtherance of their fraudulent design and were prepared for the purpose only of creating the false impression that the three properties were transferred bona fide.

71 The second defendant was cross-examined about the ring referred to in the May Agreement and gave the following evidence:

…

Q: Did you report that to the Police?
A: Yes.

Q: How much was the cheque?
A: I’m not sure. It wasn’t much. It was just maybe 1,000 or two, maybe.

Q: Whereabouts did you get this $36,000 worth of jewellery from what was stolen?
A: I brought it with me from England. Some were given as a gift, but most of them I collected them from England.

Q: Yes.
A: Well, one of us did. I don’t remember who did, whether it was George or me, but we both did call them.

Q: It was mostly your jewellery stolen?
A: Yes.

(tr. 396-398)

72 The second defendant was asked whether she had suggested to the Police that the total value of what was stolen was only $14,000. She said that it could not have been $14,000 because they would not have replaced the ring at $34,000. The New South Wales Police Service COPS Report in relation to the robbery on the evening of 4 September 1994 refers to a number of items of jewellery having been stolen with a stated total value of $14,980 (Ex KK).

73 The second defendant’s evidence on this topic was totally unpersuasive. I am satisfied that she was not telling me the truth. If the intention was to discharge $34,000 of the alleged $58,000 debt to the first defendant by transfer of a ring, such transfer could have taken place in 1997 at the time of the Transfers. The Consent Orders and the May and August Agreements were put in place after the plaintiff had discovered the Transfers and after the Mareva Orders were made in the District Court. The second defendant knew that she was restrained from dealing with the three properties after the Mareva Order was made in September 1997 in the District Court. I do not believe the second defendant’s claim that she did not think she had to tell Mr Gibson about the Mareva Order. I do not believe the first defendant’s claim that he told Mr Gibson that the Mareva Order was in place.

74 Mr Aldridge SC submitted that proof the first defendant and/or the second defendant may have given unreliable or false evidence does not prove that the first defendant had the requisite intention at the time of the Transfers or that the second defendant was aware of that intention. There is force in that submission, however the evidence the defendants gave on relevant matters, especially in relation to the state of their finances and the timing of the Transfers, assists in assessing whether the requisite intent was present and whether the second defendant had notice of it.

75 I prefer the evidence of the plaintiff and Mrs Kattirtzis to that of the defendants. I am satisfied that there was a barbecue in April 1995 as claimed by the plaintiff and Mrs Kattirtzis and that the conversations alleged by them to have occurred on that occasion between them and the second defendant did take place.

76 The timing of the valuations of the three properties is significant. They are each dated 13 December 1996, before there was any suggestion of an alleged deterioration in the relationship between the first and second defendant. The proximity of the date of the valuations to the date of the setting aside of the default judgment in the District Court on 27 November 1996 is also significant. In late January 1997 the first defendant advised the plaintiff, through his solicitors, that he was not intending to alter his financial circumstances, yet within eight weeks he had transferred his interest in the properties to the second defendant without notice to the plaintiff.

77 I am satisfied that in November 1996 the second defendant knew the nature of the District Court proceedings. I do not accept that she demanded the Transfers to herself for reasons associated with the deterioration in her relationship with her husband. The claims she and the first defendant have made about the sale of the jewellery to the mysterious Mr Wong are riddled with inconsistencies. The claims that the Castlereagh Street property has been the home of the first defendant for the last four years when the second defendant has agreed in evidence that it has been tenanted to others for at least 6 months in 1999/2000 adds to the lack of credibility of these two defendants. Their receipt of social security payments for the last 20 years and their failure to lodge tax returns for the same period in the light of the evidence of property, rental and cash deposits in bank accounts is deserving of a thorough investigation by the relevant departments. However for these proceedings this conduct simply adds to the weight of the evidence that persuades me that neither the first or second defendant can be believed that the Transfers were made for the reasons claimed. The Transfers were made with intent to defraud creditors and the Consent Orders they caused to be filed in the Local Court at Penrith in January 1998 were in pursuance of their fraudulent intent.

78 I am satisfied that when the first defendant transferred his shares in the three properties to his wife in March 1997 he did so to put the properties beyond the reach of the plaintiff and Mr Kattirtzis. Although the plaintiff claimed that the first defendant forged his wife’s signature on the Transfers of the three properties, I am not satisfied that this is a claim that I have to decide. Whether or not she filled them out and signed them as she claimed, I am satisfied that the second defendant knew that the Transfers were to be made into her name because it was her husband’s intention to put the properties beyond the reach of the plaintiff and Mr Kattirtzis.

79 Section 37A of the Conveyancing Act1919 (NSW) as amended provides:

37A

Conveyancing (Amendment) Act 1930

(2) This section does not affect the law of bankruptcy for the time being in force.

(3) This section does not extend to any estate or interest in property alienated to a purchaser in good faith not having, at the time of the alienation, notice of the intent to defraud creditors.

80 The plaintiff claims that he was prejudiced by the alienation of the first defendant’s share in the properties because it meant that the only asset available to the plaintiff from which to recover the judgment debt had been placed beyond his reach. The onus of proof lies on the plaintiff to prove that the first defendant had an intention to defraud creditors, including future creditors: Ex parte Mercer; Re Wise (1886) 17 QBD 290; Stileman v Ashdown (1742) 2 Atk 477 at 481; Smith v Tatton (1879) 6 LR(ir) 32 at 41.

81 In Langdon v Gruber [2001] NSWSC 276, unreported, 12 April 2001, Austin J referred to the main object of s 37A as preventing debtors from dealing with their property in any way to the prejudice of creditors. His Honour said at pars [53] – [54]:

[53] Consistently with the purposive approach to the interpretation of the section, the words ‘intent to defraud’ have been held to include an intention to defeat, hinder or delay, although if the transfer is for consideration, a real intent to defeat or delay creditors must exist: Electrical Enterprises Pty Ltd v Rodgers (1988) 15 NSWLR 473, 497. Even by the liberal standards of interpretation which are said to be applicable to s 37A, it is somewhat surprising that a provision which speaks of an ‘intent to defraud’ is said to be satisfied by an intent to defeat, hinder or delay. Perhaps the better way to put it is that if the debtor acts so as to defeat, hinder or delay creditors and thereby to prejudice them by putting his property beyond their reach temporarily or permanently, there are grounds for the Court to infer that the debtor has acted with a dishonest intention: Lloyd’s Bank v Marcan [1973] 3 All ER 754, 759 per Russell LJ.

Lloyd’s Bank v Marcan,

82 I am satisfied that the plaintiff has established that the first defendant had the requisite intention under s 37A(1) and I am satisfied that the second defendant is unable to have the benefit of s 37A(3) because she had notice of the first defendant’s intention. Indeed, I am satisfied that it was also her intention to place the three properties out of the reach of the plaintiff and Mr Kattirtzis.

The Defences

83 The numerous applications the plaintiff has made to various Courts in relation to the transfer of the first defendant’s share in the three properties have not only contributed to the complicated factual matrix but have also been relied upon by the second defendant to claim that the plaintiff is estopped or prohibited from making the claim under s 37A of the Conveyancing Act. The plaintiff made the first application in the District Court in his Notice of Motion filed in September 1997. However it was not heard until December 1998, when Murrell DCJ held that the District Court did not have jurisdiction to entertain the application. In the meantime the Family Law Act Application was filed in the Local Court at Penrith on 14 July 1998 and on 20 July 1998 the plaintiff consented to an order that it be “withdrawn and dismissed”. These proceedings were commenced on 1 October 1999. On 11 October 1999 Bankruptcy proceedings against the first defendant were commenced with the Sequestration Order being made on 21 February 2000.

84 The second defendant claimed that orders should not be made in the plaintiff’s favour on three bases: (1) that the plaintiff has no rights under s 37A of the Conveyancing Act by reason of the Sequestration Order made against the first defendant in February 2000 (Bankruptcy Act); (2) there is a res judicata by reason of the plaintiff’s Family Law Act Application having been dismissed and there is an Anshun estoppel because it would be reasonable to expect that the application to set aside the Transfers would have been made at that time (Res Judicata/Anshun); and (3) that this Court would not make declarations and orders that are inconsistent with the Consent Orders made in January 1998 in the Local Court at Penrith exercising its Family Law jurisdiction (Inconsistent Orders).

Bankruptcy Act

85 On 16 March 2000 Mr Peter Dwyer, for the Official Trustee, in the Report to Creditors (Ex U) referred to the Transfers of the three properties and stated: “The properties were transferred to the former wife prior to the commencement of the relation back period and it is unlikely that they can be recovered by the trustee for the benefit of the creditors”. Mr Dwyer gave evidence in the plaintiff’s case in these proceedings and said that the plaintiff, Mr Kattirtzis and their barrister had attended upon him in the year 2000 to inform him of the application they were making in these proceedings under s 37A of the Conveyancing Act. Mr Dwyer also gave evidence that he asked the “creditors” to fund an application by the Trustee under s 121 of the Bankruptcy Act. The “creditors” were at that time the plaintiff, Mr Kattirtzis and the Deputy Commissioner of Taxation although, at that stage, the last-mentioned was only a nominal creditor.

104 In the present case there was no application or step taken by the Trustee and by analogy Mr Perram submitted that there is no direct inconsistency between the two Acts in the circumstances of this case. I agree.

105 Mr Aldridge SC put submissions in opposition to those put on behalf of the Attorney General, once again submitting that the relevant provisions of the Bankruptcy Act “cover the field” and that there is simply no room for a multiplicity of actions. There will probably be cases in which the Official Trustee decides to act pursuant to s 121 against a bankrupt in which, as Dixon J said in The Kakariki case, “there would be or might be an inconsistency” if a creditor attempts to bring proceedings pursuant to s 37A of the Conveyancing Act. It will depend on the circumstances of the case. This is not one of them. For the reasons I have given above, I am not satisfied that this defence is made out.

Res Judicata/Anshun

106 The second defendant submitted that there is a res judicata estoppel by reason of the consent dismissal of the plaintiff’s Family Law Act Application on 20 July 1998. It was submitted that the ”issue of the Family Court orders and subsequent transfer“ is precluded from being pursued in this action. It was also submitted that even if the precise relief claimed in this Court was not claimed in the Family Court, it could have been claimed. It was submitted that an order could have been claimed “setting aside the Family Law orders and subsequent transfers” but it was not claimed, thus estopping the plaintiff from bringing these proceedings: Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589.

107 The Transfers were not “subsequent” to or dependent upon the Consent Orders (Ex M12). They were registered ten months prior to the making of the Consent Orders. The Consent Orders included two declarations stated to have been made “pursuant to Section 78” of the Family Law Act 1975 (Cth) (the Family Law Act) declaring: (1) the second defendant the “sole and absolute owner in law and equity” of 12 Colson Crescent and the Union Road property; and (2) the first defendant “the sole and absolute owner in law and in equity” of the motor vehicle. The Orders did not make any declaration as to the ownership of the Castlereagh Street property, however there was an order that the second defendant list the property for sale forthwith at a sale price of $90,000. The order that the second defendant pay the first defendant the amount of $58,000 did not refer to any section of the Family Law Act and referred to the timing of the payment: $50,000 was to be paid within 7 days of the sale of the Castlereagh Street property.

108 It is not in issue that Consent Orders can properly ground a res judicata or an estoppel claim: Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502 at 508. The only evidence before me as to why the plaintiff’s Family Law Act Application was “withdrawn and dismissed” by consent is that the plaintiff received advice that it was “not correct”. The Application filed on 14 July 1998 sought an order: “1. that leave of the court be granted under section 44(1C)” and then annexed a document that set out the orders sought as referred to earlier in this judgment. It is therefore clear that the plaintiff was seeking to bring the proceedings “by leave” under s 44(1C) of the Family Law Act and only pursuant to that subsection.

109 Section 44(1C) of the Family Law Act provides that leave may be granted to the parties to a marriage to file an application for a decree of dissolution of marriage or nullity of marriage, notwithstanding that 2 years have not elapsed since the date of the marriage, if the Court is satisfied that special circumstances exist. The subsection had nothing to do with what the plaintiff appears to have been seeking to achieve. There was no jurisdiction to grant the plaintiff leave to bring the Application under that subsection. It is little wonder that the plaintiff was advised that the Application was “not correct”.

110 The application was not within the Court’s jurisdiction and the cause of action has not merged into judgment in a prior proceeding. In those circumstances, it seems to me that there is no res judicata and no Anshun estoppel precluding the plaintiff from bringing these proceedings. The consent dismissal in the Local Court is a similar situation to the dismissal of the Notice of Motion in the District Court by Murrell DCJ when her Honour decided the District Court did not have jurisdiction to grant the relief sought. That dismissal is not relied upon to submit that the plaintiff is precluded from bringing these proceedings.

111 Although it is perhaps unnecessary to consider this defence further because of the conclusion I have reached, it is interesting to note that the term used by the parties in the Consent Orders was that the application was “withdrawn and dismissed” as opposed to simply being “dismissed”. Although the Court was considering the statutory provisions of the Child Welfare Act 1939-1956 (NSW) in Lawson v Wallace [1968] 3 NSWR 82, Asprey JA, with whom Wallace A.CJ and Holmes JA agreed, analysed the concepts of withdrawal and dismissal. His Honour said at 86:

When a complaint is withdrawn, the effect in law is that the complainant has ceased to assert any matter against the person named in the complaint, and there no longer being any subject-matter which, by the summons, the defendant has been commanded to answer, the summons may be dismissed ... Where, as here, the complaint is allowed to be withdrawn there is no adjudication or determination of any of the matters the subject of the complaint and the dismissal of the summons merely relieves the defendant from any obligation to appear at the Court because there is no longer anything for him to answer. Instead of the cryptic marking “Withdrawn … Dismissed” it would, I think, avoid the appearance of confusion if such marking read: “Complaint Withdrawn … Summons Dismissed”. Accordingly there was no basis for the application of the principles of either res judicata or issue-estoppel in the first proceedings.

112 I am not satisfied that this defence is made out.

Inconsistent Orders

113 Mr Aldridge SC submitted that any order made pursuant to s 37A of the Conveyancing Act in respect of the Castlereagh Street and Colson Crescent properties would be in conflict with the orders of the Local Court and therefore should not be made.

114 In Silvera v Savic & Anor (1999) 46 NSWLR 124 Hodgson CJ in Eq regarded the Consent Orders as “spent” because the conveyance had been effected in conformity with the Orders. That case involved orders made under s 79 of the Family Law Act 1975 (Cth) whereas in this case the declaration was made under s 78 of that Act. In Green v Schneller Barrett J was also dealing with orders made under s 79 of the Family Law Act 1975 (Cth) requiring one of the parties to transfer property to the other party. His Honour said:

[24] This last point requires amplification. A s 79 order of the kind to which I have referred is not to be regarded as a command that the party to whom the property is to be transferred must remain its owner permanently. Once the order has been complied with, it is open to the transferee to sell or give the property back to the transferor if both of them are minded to take voluntarily the steps necessary to achieve that end. Any such return of the property does not entail disobedience to or disregard of the original order. Rather, there is a new and separate set of events predicated on the position created in obedience to the order, namely, that the transferee party has become the owner of the property to the exclusion of the transferor.

[25] I consider that the same kind of analysis holds good in a case where it is asserted that s 37A of the Conveyancing Act should be invoked to reverse the effect of a transfer of property effected in conformity with a s 79 order. Section 37A works on the basis that the alienation sought to be impugned has taken effect and, unless reversed by reference to the section itself, will stand indefinitely.

115 His Honour then referred to the concept of alienation, in particular, that the alienation consists of a series of steps taken by the initiating property owner and said:

[30] With the alienation concept thus understood as limited to the acts of the initiating property owner, there need be no particular concern that an order made by reference to s 37A aimed at eliminating the effects of the alienation appears to cut across s 79 orders obtained on the application of that initiating party. That party’s approach to a Court exercising jurisdiction under the Family Law Act may fairly be regarded as no more or less than the invocation of the jurisdiction exercisable by reference to the requirements of justice as they effect the interests of the parties to the marriage, unaffected by considerations relevant to other interests. If considerations relevant to s 37A are afterwards found to provide independent grounds for a subsequent order that the effect of the particular alienation be undone, the earlier Family Law Act order does not operate as any form of impediment to the making of the subsequent order.

116 Barrett J was considering the capacity to make orders under s 37A of the Conveyancing Act where there had been orders made under s 79 of the Family Law Act in the Family Court. Barrett J, in referring to Tamberlin J’s decision in Official Trustee in Bankruptcy v Higgins (2000) 109 FCR 1, referred at par [22] to the “clear finding” that there was jurisdiction to make an order under s 121 of the Bankruptcy Act in respect of a disposition of property effected by or pursuant to consent orders made under s 79 of the Family Law Act. Barrett J also referred to Tamberlin J’s decision in Mateo v Official Receiver in Bankruptcy (2002) 117 FCR 179 and to the general desirability of questions under ss 120 and 121 being determined in the context of and together with proceedings to set aside the relevant orders under the Family Law Act. Since Barrett J’s decision in Green v Schneller the Full Federal Court has dismissed the appeal from Tamberlin J in Official Trustee in Bankruptcy v Mateo (2003) 30 Fam LR 122. Branson J said:

[99] In summary, even where the parties to a marriage seek an order by consent in the Family Court under s 79 altering their interests in property, the court has a duty to satisfy itself that the order sought is just and equitable in all of the circumstances. The relevant circumstances include the liabilities, including the unsecured liabilities, of each of the parties to the marriage. A failure to give notice to a significant unsecured creditor of either of the parties to the marriage of the application for the order would be likely to constitute a ground for an application under s 79A to vary or set aside any order made. A disregard by the court of the proper interests of an unsecured creditor who appeared on an application under s 79 would be likely to constitute a ground of appeal against any order made. For these reasons, it would be wrong to see s 79 of the Family Law Act as providing a means whereby the parties to a marriage, or either one of them, can defraud their creditors or the creditors of either of them.

[100] It is crucial, in my view, to bear in mind the nature and extent of the powers vested in the Family Court by ss 79 and 79A in giving consideration to whether s 121 of the Bankruptcy Act, on its proper construction, is intended to reach to a transfer of property effected by, or made in compliance with, an order of the Family Court made under s 79 of the Family Law Act. It seems to me that a number of factors suggest against s 121 being intended to have such an operation.

117 Her Honour expressed the view that it was unlikely that the legislature intended s 121 of the Bankruptcy Act to render void an order or part of an order of the Family Court calculated by the Family Court to achieve a proper balance between the competing interests of the parties to a marriage and third party creditors (par [101]). Her Honour also expressed the view that an alteration of the interests of the parties to a marriage does not constitute a “transfer of property” within the meaning of s 121 of the Bankruptcy Act (par [102]). Branson J also expressed the view that at no time after the making of the Family Court order could it be said that any interest in the matrimonial home would probably have become part of the bankrupt’s/husband’s estate within the meaning of s 121(1)(a). Her Honour continued:

[104]

118 Of some significance to this case, Branson J said:

[112]

119 In this regard, I presume that her Honour was referring to the following portion of Wilcox J’s judgment dealing with his reference to the view expressed by Hodgson CJ in Eq in Silvera v Savic that the alienation was the whole process of obtaining the consent order and the consequent transfer and that s 37A purports to give power to set that step aside. Wilcox J said:

[61]

Silvera v Savic

Bankruptcy Act

Conveyancing Act

Mullane

Craven

120 Wilcox J also expressed the view that it was inappropriate for the Federal Court to put itself in the position of second-guessing the Family Court’s assessment of what was just and equitable as between the parties to the marriage. His Honour was of the view that there was a fundamental problem that the critical divesting event was the Family Court’s order under s 79 of the Family Law Act, which event lies outside the reach of ss 120 or 121 of the Bankruptcy Act. The critical divesting event in this case was not the Family Court declaration but the Transfers registered in March 1997.

121 Although it is true Wilcox J referred to some differences between s 37A and s 121 of the Bankruptcy Act, he did not suggest that those differences in any particular case were such that would mean that s 37A had a reach that s 121 of the Bankruptcy Act did not have. However his Honour did say that he did not wish to call into question the New South Wales cases that had in fact dealt with the Family Court orders differently, in Silvera v Savic because the orders were “spent”, and in Green v Schneller because the different circumstances prevailed at the time of making of a subsequent order.

122 In Official Trustee v Mateo Merkel J was of the view that the contention that ss 120 and 121 operated to render void a transfer of property made under s 79 of the Family Law Act might raise a question of the usurpation of judicial power (at [139]). His Honour was of the view that because the orders had not been set aside or varied on appeal under s 79A or under s 75(v) of the Constitution, they stood valid and operative. His Honour said:

[146]

Family Law Act

Higgins

123 The second defendant’s submission is that the plaintiff is required to make application to the Family Court or the Local Court exercising Family Law jurisdiction rather than seeking to have declarations made under s 37A of the Conveyancing Act which, it is submitted, would be inconsistent with the declaration made in the Local Court in January 1998 that the second defendant was the sole and absolute owner “in law and in equity” of the Colson Crescent and the Union Road properties. Of course there is no such argument available in respect of the Castlereagh Street property and thus, subject to the other defences, there is no impediment to a declaration and order in respect of that property.

124 All of the cases referred to above are cases in which the Court was dealing with a potential conflict between s 79 orders and s 37A of the Conveyancing Act or s 121 of the Bankruptcy Act. This case involves a declaration under s 78 of the Family Law Act. In Re Baxter; Ex Parte Official Receiver in Bankruptcy and Baxter (1986) 10 FCR 398 Northrop J was dealing with a declaration that the wife was the sole proprietor of the equity in the property and an order that the husband forthwith transfer his estate and interest in that property to the wife. Northrop J said that even though such order “may have been beyond the power of the Court”, he expressed no view on that question “nevertheless the order remains in existence”. His Honour took the view that until the order of the Family Court was set aside it should be given “full faith and credit”.

125 In Silvera v Savic Hodgson CJ in Eq distinguished that case from Re Baxter on the basis that in the latter case a declaration of right had been made. One of the distinguishing features to this case is the fact that the declaration was made ten months after the property had been transferred. There was, therefore, no consequential order under s 79 of the Family Law Act as there had been in the cases referred to above. The appellate process or the process of setting aside orders altering property interests under s 79A is predicated upon the applicant being a “person affected by an order made by a court under s 79 in proceedings with respect to the property of the parties to a marriage”. This was not such an order. In Silvera v Savic Hodgson CJ in Eq said:

78. However, it seems to me that s 37 A itself may provide the necessary power to the Supreme Court. In my opinion, the “alienation” in this case was the whole process of obtaining the Local Court order and the consequent transfer; and it is that whole alienation that is made voidable by s 37 A . In my opinion, if one step in that alienation is the fraudulent obtaining of a Local Court order, then s 37 A itself purports to give power to set that step aside. The question would be whether that legislative grant of power prevails over the possible exclusion of that power by s 69 of the Local Courts (Civil Claims) Act 1970 . On the whole, I am inclined to think that s 37 A would prevail: the very existence of s 84(1)(r) in the Local Courts (Civil Claims) Act 1970 shows that s 69 of that Act is not intended to prevail over more particular inconsistent statutory provisions.

79. The final possibility, namely a declaration and orders making provision for an application to the Local Court to set aside its order is also, in my opinion, one that would be open to this Court. Having found that the whole process was undertaken with the intention to defraud creditors, the Supreme Court can, in my opinion, order the parties to the transaction to apply to the Local Court to set aside the order which they obtained. However, for reasons I have given this is not necessary in this case.

126 This is not a case in which this Court is second guessing the Family Court. The evidence discloses that the solicitor who prepared the Consent Orders, upon whom the Family Court was entitled to place implicit trust, was misled as to the status of the properties. He was not informed that the three properties were subject to Mareva Orders and the Local Court exercising Family Law jurisdiction was also misled in this regard.

127 This case is distinguishable from the facts in all the cases referred to earlier. In no case has there been registration of a transfer of property and a subsequent Family Court Consent declaration. I am concerned to ensure that this Court does not trespass upon the domain of the Family Court or the Local Court exercising Family Law jurisdiction. The circumstances now are quite different to the circumstances that prevailed when the defendants fraudulently secured the consent declaration from the Local Court. One approach that may be available is to make the declarations that the alienation included the obtaining of the consent orders and to declare that the second defendant is the owner at law and in equity of her half interest in the three properties with consequential orders for the re-transfer by her of the first defendant’s interests in the properties. These declarations and orders would then be superimposed on the consent declaration and would not be in conflict with it.

128 For abundant caution and to ensure that there is no question of usurpation of judicial power, the approach adopted by Hodgson JA in Silvera v Savic is, in my view, one that is appropriate to take in this case. The “alienation” in this case was the whole process of the registration of the transfers and the subsequent fraudulent obtaining of the Consent Orders in the Local Court. Consistently with what Hodgson JA said in Silvera v Savic and with my finding that the whole process was undertaken with the intention to defraud creditors, it is appropriate in this case to order that the first and second defendants lodge further Consent Orders in the Local Court to set aside the declaration made in January 1998.

129 I am not satisfied this defence is made out.

Orders

130 On the sixth day of the trial, 16 October 2002, the second defendant, through Mr Aldridge SC, made an open offer in Court in the following terms:

Without admissions and without prejudice to any of the defences Mrs Zaravinos is running in these proceedings, she is prepared to consent to an order that she repay to Mr Houvardas $53,000 plus interest from the time demand was first made upon her until the time of Mr George Zaravinos’ bankruptcy, together with costs on a one-counsel basis, excluding costs that have been ordered to be paid by the plaintiffs or have been reserved, and subject to that order being stayed for an appropriate time to enable her to sell a property to comply with it.

(Ex 10)

131 The plaintiff attempted to accept that offer and have orders made against the second defendant but to continue with the litigation to obtain a declaration and orders under s 37A against the first defendant. I refused to allow that course to be adopted for reasons set out in my judgment of 17 October 2002.

132 It was submitted that I should stay any order for reconveyance to allow the second defendant to make the payment to the plaintiff for the amount of the judgment debt and interest and costs as assessed or agreed. I am not satisfied that this is an appropriate course to adopt in the light of the conditional leave granted to the plaintiff by the Federal Court.

133 I am satisfied that declarations should be made that the transfers of the three properties were registered with intent to defraud creditors and are void. I am also satisfied that orders should be made that the second defendant re-transfer to the first defendant the half interest in the Castlereagh Street property, the Union Road property and Colson Crescent. Having regard to the orders made by the Federal Court, notice is to be given of this judgment and the proposed orders to the Official Trustee forthwith to ensure that the leave granted to the plaintiff is complied with. The only basis upon which the plaintiff was granted leave to proceed was to ensure that the Official Trustee received the benefit of any order made in these proceedings.

134 I also intend that an order be made that by 28 November 2003 the first and second defendants sign an Application and Consent Order and file them with the Local Court at Penrith or the Family Court seeking to set aside the declaration made on 15 January 1998 and also setting aside the order made on that day for the sale of the Castlereagh Street property. A copy of this judgment and the Orders made pursuant to it are to be annexed to the Consent Order. The orders to be entered in this case should include an order that if the defendants or either of them fail to sign such Application and Consent Order the Registrar in Equity is authorised to sign such Application and Consent Order on behalf of the defendants or either of them.

135 The parties are to provide a copy of this judgment to the Official Trustee forthwith. The matter is listed on 4 November 2003 at 9.30am for the parties to file Short Minutes of Order, at which time I will grant leave to the Trustee to make submissions. Those orders should include a costs order, however if the parties are unable to agree on a costs order I will hear argument on that day.

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Last Modified: 10/23/2003

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Citations

Houvardas v Zaravinos [2003] NSWSC 387

Most Recent Citation

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CITATION:	Nick Houvardas v George Zaravinos and Anor [2003] NSWSC 387
HEARING DATE(S):	16, 17, 18 and 19 September 2002; 15, 16 and 17 October 2002; 28, 29 and 30 April 2003; written submissions 19 September 2003 and 1 October 2003.
JUDGMENT DATE:	21 October 2003
JURISDICTION:	Equity Division
JUDGMENT OF:	Bergin J
DECISION:	See pars [130] - [135].
CATCHWORDS:	[REAL PROPERTY] - Whether alienation of property by first defendant to second defendant was with intent to defraud creditors under s 37A Conveyancing Act 1919 (NSW) - Transfers registered 10 months prior to consent declaration pursuant to s 78 of the Family Law Act 1975 (Cth) made by the Local Court exercising Family Law jurisdiction - [BANKRUPTCY] -Whether the Bankruptcy Act 1966 (Cth) "covers the field" for proceedings in respect of alienation of property to defeat creditors where disponor becomes a bankrupt - Whether plaintiff precluded from proceeding under s 37A of the Conveyancing Act 1919 (NSW) - Plaintiff granted leave by the Federal Court to proceed against the first defendant under s 37A of the Conveyancing Act 1919 (NSW) - [ESTOPPEL] Whether plaintiff estopped from pursuing relief when proceedings commenced in Local Court exercising Family Law jurisdiction were "withdrawn and dismissed" by consent - [ORDERS] - Whether orders sought pursuant to s 37A of the Conveyancing Act 1919 (NSW) would be in conflict with Consent Orders made in Local Court.
LEGISLATION CITED:	Bankruptcy Act 1924-1932 (Cth) Bankruptcy Act 1966 (Cth) Conciliation and Arbitration Act 1904-1961 (Cth) Commonwealth of Australia Constitution Act (The Constitution) Conveyancing Act 1919 (NSW) District Court Act 1973 (NSW) Family Law Act 1975 (Cth) Judiciary Act 1903 (Cth) Trade Practices Act 1974 (Cth)
CASES CITED:	Baxter, Re; Ex parte Official Receiver in Bankruptcy & Baxter (1986) 10 FCR 398 Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502 Clyne v Deputy Commissioner of Taxation & Ors (1984) 154 CLR 589 Dao & Anor v Australian Postal Commission (1987) 70 ALR 449 Fraser v Commissioner of Taxation & Anor (1996) 69 FCR 99 Green v Schneller (2002) 29 Fam LR 346 Kattirtzis & Anor v Zaravinos [2001] FCA 1158 Langdon v Gruber [2001] NSWSC 276 Lawson v Wallace (1968] 3 NSWR 82 McCauley, Re; Ex parte Fraser & Anor (1995) 61 FCR 251 McLean, Ex parte (1930) 43 CLR 472 Mateo v Official Receiver in Bankruptcy (2002) 117 FCR 179 Metal Trades Industry Association of Australia & Ors v Amalgamated Metal Workers' and Ship Rights' Unions & Ors (1983) 48 ALR 385 Official Trustee in Bankruptcy v Higgins (2000) 109 FCR 1 Official Trustee in Bankruptcy v Mateo (2003) 30 Fam LR 122 Pitman v Pantzer & Ors (2001) 115 FCR 361 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 R v Credit Tribunal; Ex parte GMAC (1977) 137 CLR 545 Silvera v Savic & Anor (1999) 46 NSWLR 124 Smith v Tatton (1879) 6 LR(ir) 32 State of Victoria & Ors v Commonwealth of Australia (1937) 58 CLR 618 (The Kakariki) Stileman v Ashdown (1742) 2 Atk 477 Williams & Ors v Lloyd & Anor (1933-1934) 50 CLR 341 Wise, In re; Ex parte Mercer (1886) 17 QBD 290
PARTIES :	Nick Houvardas (Plaintiff) George Zaravinos (First Defendant) Ourania Zaravinos (Second Defendant) NSW Attorney-General (Intervening)
FILE NUMBER(S):	SC 4177/99
COUNSEL:	Mr F Stevens and Mr R McCrudden (Plaintiff) Mr MR Aldridge SC (Second Defendant) Mr N Perram (Written submissions for NSW Attorney-General)
SOLICITORS:	Mercuri & Co (Plaintiff) Horowitz & Bilinsky (Second Defendant) NSW Crown Solicitor (NSW Attorney-General)