In the Matter Of Il Song Lee, A Bankrupt; Pascoe v Idameneo (No 123) Pty Limited

[2014] FCCA 650

FEDERAL CIRCUIT COURT OF AUSTRALIA

IN THE MATTER OF IL SONG LEE, A BANKRUPT
PASCOE v IDAMENEO (No 123) PTY LIMITED [2014] FCCA 650

Catchwords:
BANKRUPTCY – Notices issued pursuant to s.139ZL of the Bankruptcy Act 1966 (Cth) – competing claims to the money sought by the Notices – payment into court of the disputed funds – consideration of the competing claims.

Legislation:

Bankruptcy Act 1966 (Cth), ss.19AA, 77A, 81G, 139P, 139ZK, 139ZL, 139ZN

Conveyancing Act 1919 (NSW), s.12
Federal Court Rules

Applicant: SCOTT DARREN PASCOE

Respondent: IDAMENEO (No 123) PTY LIMITED

Applicant in a Case: I J LEE PTY LIMITED

Respondent in a Case: SCOTT DARREN PASCOE

File Number: SYG 2736 of 2013

Judgment of: Judge Driver

Hearing date: 2 April 2014

Date of last submissions: 5 May 2014

Delivered at: Sydney

Delivered on: 4 July 2014

REPRESENTATION

Counsel for the Applicant in a Case: Mr Donohue

Solicitors for the Applicant in a Case: Avondale Lawyers

Counsel for the Respondent in a Case: Ms S Cirillo

Solicitors for the Respondent in a Case: Kemp Strang

ORDERS

1. The interlocutory application by I J Lee Pty Limited filed on 13 December 2013 is dismissed.

2. The funds paid into court pursuant to order 1 made on 25 November 2013, together with any interest accrued, is to be paid to Scott Darren Pascoe in his capacity as trustee of the property of Il Song Lee, a bankrupt.

3. I J Lee Pty Limited is to pay the costs of Scott Darren Pascoe incurred in relation to its interlocutory application which, if not agreed, are to be assessed and if necessary, taxed in accordance with the Federal Court Rules.

4. Idameneo (No 123) Pty Limited has leave and liberty to make any further application in relation to its costs within 28 days.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 2736 of 2013

IN THE MATTER OF IL SONG LEE, A BANKRUPT

SCOTT DARREN PASCOE

Applicant

And

IDAMENEO (No 123) PTY LIMITED

Respondent

I J LEE PTY LIMITED

Applicant in a Case

And

SCOTT DARREN PASCOE

Respondent in a Case

REASONS FOR JUDGMENT

Introduction and background

1. By application filed on 6 November 2013, Mr Pascoe, in his capacity as trustee of the bankrupt estate of Il Song Lee (Dr Lee) sought orders (relevantly) that Idameneo pay to him the sum of $70,284.82 held by it. 

2. A delegate of the Official Receiver had purportedly issued a Notice to Idameneo on 22 December 2009, pursuant to s.139ZL of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act). An amended Notice was purportedly issued on 17 May 2010. The amended Notice directed Idameneo to pay to Mr Pascoe the sum of $119,669.02 from Dr Lee’s income on or before 27 May 2010. By letter dated 7 September 2011 from solicitors acting for Idameneo to Mr Pascoe, Mr Pascoe was informed that Idameneo held the sum of $70,284.82 in respect of services provided by Dr Lee after 9 January 2010 (following the sequestration of Dr Lee’s estate) which was described as income of Dr Lee the subject of the amended s.139ZL Notice. Mr Pascoe accordingly claimed that sum.

3. The proceedings came before me on 25 November 2013 at which time Idameneo disclosed its reluctance to pay the amount claimed by Mr Pascoe because of its uncertainty whether the money was due to Mr Pascoe or someone else.  At that time, I made the following orders:

   1.Idameneo (No 123) Pty Limited (Idameneo) is to pay into court, no later than Friday, 29 November 2013, the sum of $70,284.82 plus any interest accrued on that sum since it has been held by Idameneo.

   2.Idameneo is to notify any potential claimants to that money of the payment into court by 29 November 2013.

   3.The sum paid into court and [any interest accrued on it] is to be paid to the applicant trustee on 16 December 2013, provided that no further application from any other person claiming the money is filed by 13 December 2013.

   4.No order as to costs.

4. Idameneo complied with orders 1 and 2. 

5. On 13 December 2013, I J Lee Pty Limited (I J Lee) filed an interlocutory application seeking orders that the funds paid into court, together with any interest accrued, be paid to it, as well as other orders. Those other orders included an order purportedly pursuant to s.139ZN of the Bankruptcy Act (but presumably under s.139ZM) that the Notice issued pursuant to s.139ZL dated 22 December 2009 and later amended on 17 May 2010, be set aside.

6. I excused Idameneo from further participation in the proceedings save as to costs and the case became a contest between I J Lee and Mr Pascoe over the funds paid into court and the Notice which had been earlier issued to Idameneo.

The evidence and submissions

1. I J Lee relies upon the following affidavits in asserting a right over the money paid into court:

   a)affidavit of Francisco Gutierrez made on 13 December 2013;

   b)affidavit of Francisco Gutierrez sworn on 26 February 2014;

   c)affidavit of Hyo-Won John Lee (the director of I J Lee) made on 27 March 2014; and

   d)affidavit of Rupert James Jordan Gray made on 28 February 2014.

2. Mr Pascoe relies upon two affidavits made by him on 1 November 2013 and 26 February 2014.

3. I also received the following exhibits:

   ·L1 – Bank statements;

   ·L2 – ASIC company search for I S J Lee Pty Ltd (I S J).

4. Mr Pascoe and I J Lee made both written and oral submissions.  At the trial of this matter on 2 April 2014, I invited further submissions directed to the following issues:

   a)income or remuneration derived by Dr Lee from the provision of his services as a medical practitioner pursuant to arrangements with I S J or I J Lee and Idameneo; and

   b)whether the Court could exercise any discretion to allow evidence that may otherwise be excluded as inadmissible pursuant to s.81G of the Bankruptcy Act.

5. As well as dealing with those matters, further submissions filed by I J Lee on 30 April 2014 also raised new contentions concerning the validity of the s.139ZL Notice as well as a Notice which had been issued pursuant to s.77A. The validity of the latter Notice had not been the subject of argument at the trial on 2 April 2014 and, by letter dated 5 May 2014, the solicitors for Mr Pascoe submitted that the Court should ignore the new submissions on behalf of I J Lee going to the validity of the Notices. The solicitors sought the opportunity to respond to those submissions in the event that the Court considered it necessary to deal with them. I have concluded that I should not deal with those additional submissions and the parties were so informed prior to the delivery of this judgment[1].  

   [1] see SZSJA v Minister for Immigration [2013] FCAFC 158 at [67]

Consideration

1. The following uncontroversial facts bearing upon this matter are derived from the affidavit of Mr Gray, who is the solicitor acting for Idameneo.  On or about 16 December 2005, Idameneo entered into several agreements:

   a)a deed with Dr Lee titled “Medical Director”;

   b)a deed with Dr Lee titled “Restraint Deed (medical centre management services only)”;

   c)a deed with Dr Lee and I S J titled “Sale of Practice”;

   d)a deed with I S J titled “Provision of Services to Incorporated Medical Practitioner”; and

   e)a deed with Dr Lee titled “Performance Guarantee: Incorporated Medical Practitioner”.

2. On 24 March 2009, I S J was wound up by order of the Supreme Court of NSW and Mr Pascoe was appointed the liquidator of I S J.  Dr Lee was bankrupted by order of this Court on 27 May 2009.  Mr Pascoe became the trustee in bankruptcy and resigned as liquidator. 

3. Following the service of the first Notice issued pursuant to s.139ZL of the Bankruptcy Act to Idameneo, solicitors for I J Lee asserted to Idameneo that I J Lee was entitled to the money the subject of the Notice. On 22 March 2010 Idameneo sought an indemnity from Mr Pascoe in respect of any payment it made in compliance with the Notice. On 22 March 2010, Idameneo also wrote to the solicitors for I J Lee denying that Idameneo had ever had a contractual relationship with I J Lee. On 26 March 2010 the solicitors for I J Lee wrote to Idameneo, again claiming the money held by Idameneo and threatening action against Idameneo if it complied with Mr Pascoe’s Notice[2].

   [2] In these proceedings, I J Lee ultimately disclaimed any further claim against Idameneo

4. Idameneo proposed a meeting to attempt to resolve the matter but there was no resolution. On or about 17 May 2010, Idameneo received an amended Notice, issued pursuant to s.139ZL. Correspondence between the parties continued and on 7 September 2011, Mr Gray wrote to the parties to advise them that Idameneo would pay the funds it held in accordance with any agreement between them or otherwise would pay the funds into court. There were further attempts at a resolution between the parties during 2012 but ultimately these proceedings resulted.

5. The critical contention by I J Lee in support of its interlocutory application is that it is entitled to the funds paid into court because it is entitled to receive the benefit of services it rendered from time to time for Idameneo pursuant to a purported Deed of Assignment.  That purported Deed of Assignment is said to reflect an agreement dated 13 February 2009 between I J Lee and I S J (the purported Deed). 

6. The purported Deed set out, amongst other things the following:

   All of the previous agreed management responsibilities of ISJ Lee Pty Limited in relation to all aspect of medical practice, both clinical and non-clinical of Dr Il-Song Lee are to be transferred to I J Lee Pty Ltd with no financial gain or financial loss for both Company A [I J Lee Pty Ltd] and Company B [ISJ Lee Pty Ltd].

   I J Lee Pty Ltd is to pay all payables and collect all monies owed to ISJ Pty Ltd and Dr Il-Song Lee from all third parties in relation to the medical practice of Dr Il-Song Lee

The Provision of Services Deed

1. I J Lee submits that from about February 2009, it effectively stepped into the shoes of I S J in relation to any medical practice management responsibilities, including obligations of making payments and collection of funds due to I S J (the obligations and rights).  At the heart of these obligations and rights is the Deed titled “Provision of Services to Incorporated Medical Practitioner” dated 16 December 2005 entered between Idameneo and I S J (Provision of Services Deed).

2. I J Lee submits that there has been an assignment of all obligations and rights pertaining to the Provision of Services Deed.

3. The obligation which fall upon I S J are most notably set out in clauses 5.1, 5.2, 5.3, 6.1, 6.2, 6.3, 6.4, 6.5, 6.6 and 6.7 pursuant to the Provision of Services Deed.

4. Clauses 7.1 and 7.2 of the Provision of Services Deed set out the way the income is to be calculated:

   7.1 The Company [Idameneo] charges, and the IMP [ISJ] agrees to pay to the Company [Idameneo], by way of remuneration for the use of the Premises by the IMP [ISJ] and the services provided by the Company [Idameneo] under this Deed, 50% of all such money banked (and required to be banked under Clause 5.2) to the credit of the banking account referred to in Clause 5.1 as are directly referrable to medical services rendered by the Doctor.

   7.2 After deduction of the charges due to the Company [Idameneo] under Clause 7.1, the Company [Idameneo] must remit to the IMP [ISJ] twice monthly (that is, about the middle of the month and near the ned of the month) the other 50% of the money referred to in Clause 7.1

5. The Provision of Services Deed lists the parties as Idameneo and I S J.  However, the document is not correctly executed.  I S J has not executed the document, but the director of I S J at the time executed the document in a personal capacity.

6. I J Lee submits that it was the intention of the parties that I S J is the correct party to the Provision of Services Deed.

7. I J Lee further submits that I S J received income generated pursuant to the Provision of Services Deed from about April 2009[3].  I J Lee further submits that an inference can subsequently be drawn that it did all things required under the Provision of Services Deed in place of I S J.

   [3] Affidavit of Hyo-Won John Lee, 27.03.2014 at [11]

8. I J Lee further submits that no other arrangement could possibly be inferred as I S J was placed into liquidation on 23 March 2009.

9. It is central to the assertions by I J Lee that Dr Lee, who is a medical practitioner, provided services to I S J and I J Lee at the relevant times.  As Dr Lee is a bankrupt, Mr Pascoe asserts a claim to the funds paid by Idameneo into court on the basis that his estate is entitled to income generated by Dr Lee.  I J Lee contends that while Dr Lee was rendering medical services at premises occupied by Idameneo, the relevant services were rendered to I S J prior to 13 February 2009 and to I J Lee after that date.  It contests any submission that Dr Lee rendered services to Idameneo directly. 

10. While conceding that the purported Deed is not effective at law due to the failure of the parties to comply with s.12 of the Conveyancing Act 1919 (NSW) (Conveyancing Act), I J Lee submits that there was an equitable assignment and that the purported Deed is admissible to prove it.

11. I J Lee further submits that Mr Pascoe cannot rely on the Notices as against I J Lee because the relevant services were not rendered personally by Dr Lee, the services were not supplied by Dr Lee and all relevant services were rendered by I J Lee.

12. It might be noted here that Dr Lee was the Director of I S J (now in liquidation) and his son is the Director of I J Lee.  The Provision of Services Deed entered into between Idameneo and I S J provided for Idameneo to sublease fully equipped premises to I S J and undertook to continue to service those premises so that Dr Lee could conduct his medical practice from them.  Relevantly, clause 5.2 of the Provision of Services Deed required I S J to deliver, without deduction, any money received by Dr Lee’s medical practice so that the money might be placed in a bank account controlled by Idameneo.  Clause 7.1 rendered 50 per cent of the banked money as consideration owing to Idameneo for use of the premises.  Clause 7.2 provided that Idameneo was to remit the other 50 per cent of the banked money to I S J twice monthly. 

13. On 28 September 2009 Mr Pascoe determined that for the period 27 May 2009 to 26 May 2010 Dr Lee had an assessed income of $292,985.64. Mr Pascoe determined that for that period, Dr Lee was liable to pay compulsory income contributions pursuant to s.139P of the Bankruptcy Act of $119,669.02. Mr Pascoe received no payments from Dr Lee in reduction of that liability. The Notices issued to Idameneo pursuant to s.139ZL of the Bankruptcy Act were consequential upon that non payment by Dr Lee. The amended Notice asserted that Idameneo was a person:

    …from whom any money is due or accruing, or may become due to the [bankrupt] and/or a person who is liable to pay money or transfer property wholly or principally in consideration of personal services supplied by the [bankrupt] after the commencement of the bankruptcy.

14. Essentially, Mr Pascoe claimed the funds ultimately paid into court on the basis that this was income generated by Dr Lee as a medical practitioner and paid to Idameneo which was due to I S J (in effect, on behalf of Dr Lee) pursuant to the Provision of Services Deed. 

15. The claim by I J Lee to the money held in court depends principally on the purported Deed between it and I S J.  Mr Pascoe does not concede the authenticity of the purported Deed but submits that the following arguments are sufficient to dispose of the interlocutory application:

    a)the purported Deed is not admissible in these proceedings by reason of s.81G(1)(b) of the Bankruptcy Act;

    b)even if the purported Deed were admissible, it was not effective to have assigned to I J Lee all rights, title and interest to any monies that were owing to I S J and Dr Lee by Idameneo; and

    c)Mr Pascoe is entitled to the funds paid into Court by reason of the amended Notice issued pursuant to s.139ZL of the Bankruptcy Act and there is no basis to set that Notice aside.

16. I have come to the view that Mr Pascoe’s submissions should be accepted. 

The purported Deed is not admissible in these proceedings

1. On 7 March 2013, Mr Pascoe (for the purpose of examining Dr Lee’s affairs pursuant to s.19AA of the Bankruptcy Act) issued a notice to I J Lee pursuant to s.77A of the Bankruptcy Act (the 77A Notice). Point 2 of the 77A Notice required I J Lee, among other things, to produce to him by 1 April 2013:

   All documents concerned with, evidencing or relating to any agreement, arrangement of understanding between I J Lee and any other entity relating to medical services to be provided by Dr Lee during the Relevant Period.

2. The “Relevant Period” meant from 27 May 2009 (the date of bankruptcy) to the date of the 77A Notice.

3. Mr Pascoe did not receive any books from I J Lee in respect of the 77A Notice[4]. 

   [4] Mr Pascoe’s affidavit made on 26 February 2014 at [4]

4. I accept that the purported Deed falls within the scope of the 77A Notice.  This is because it:

   a)is made between I J Lee and I S J (being an “other entity” within the terms of Point 2 of the 77A Notice); and

   b)purports to effect the transfer to I J Lee of the “management responsibilities” in relation to the medical practice of Dr Lee during the relevant period (and so “relates” to such “medical services” within the terms of Point 2 of the 77A Notice). 

5. As to the second point, I have presumed that the purported Deed remained in force during the relevant period as there is no evidence to suggest that it terminated.  Indeed, any suggestion that the purported Deed terminated prior to the relevant period would appear to be inconsistent with the claim by I J Lee to the funds.    

6. Having established that the purported Deed falls within the scope of the 77A Notice, the purported Deed is inadmissible by reason of s.81G(2) of the Bankruptcy Act, which states:

   (2) Subject to subsection (3), where a person refuses or fails to comply with a request or requirement set out in a notice given to the person under Division 1 or 2 to give any information or produce any books:

   (a)     if the request or requirement applies to information--the information is not admissible in a relevant proceeding; or

   (b)      if the request or requirement applies to books--neither the books, nor any secondary evidence of the books, is admissible in a relevant proceeding.

7. Section 81G(1)(b) provides that a “relevant proceeding” is a proceeding “for the recovery of an amount payable by a person under section 139ZL”. These are such recovery proceedings. This is established by the assertion in the solicitors for Idameneo’s 7 September 2011 letter that it held monies “in respect of services provided by ISJ/Dr Lee” which comprise the funds that are the subject of these proceedings. That money, being for services provided by Dr Lee, is referrable to what was sought in the amended Notice.

8. Therefore, s.81G(2) of the Bankruptcy Act mandates that the purported Deed is not admissible in these proceedings because I J Lee did not provide it to Mr Pascoe pursuant to the 77A Notice.  Even on the evidence in Mr Lee’s affidavit that he did not “refuse”, to comply with the 77A Notice, it is plain that he nevertheless “fail[ed] to comply” with it by reason that he failed to produce the purported Deed.   

9. Furthermore, there is no persuasive evidence in accordance with s.81G(3) of the Bankruptcy Act that the purported Deed was either not in the possession of I J Lee, or that there were no reasonable steps that I J Lee could have taken to obtain the purported Deed at the time that the 77A Notice was issued.

10. For completeness, I find that I have no discretion to receive the purported Deed as evidence because the circumstances do not fall within the exception contained in s.81G(3). Mr Lee deposes that he searched for but could not find the purported Deed when dealing with the s.77A Notice. The document was located for the purposes of the application by I J Lee and I am not satisfied that there were no reasonable steps that could have been taken to obtain it for the purposes of the s.77A Notice.

The purported Deed does not effect an assignment of monies

1. I considered this issue in case I was wrong on the question of the inadmissibility of the purported Deed.  While the phrase “collect all monies owed to I S J Lee Pty Ltd and Dr Il-Song Lee from all third parties…” might suggest that I J Lee was to be assigned all rights, title and interest to any monies that were owing to I S J and Dr Lee by third parties, this construction is not apparent on the face of the document.  Hence Mr Pascoe denies that the purported Deed actually effects an assignment of rights, title and interest to any monies that were owing to I S J Lee and Dr Lee by third parties. 

2. I agree with that submission.  The mere obligation to collect money does not transfer any rights of ownership to the collecting agent.  On the proper construction of the purported Deed, I S J and/or Dr Lee retained the rights, title and interest to monies owed to them by third parties until such time as I J Lee would, after collecting those monies, satisfy any of I S J’s and Dr Lee’s liabilities to third parties.

Mr Pascoe is entitled to the funds by reason of the Notice

1. I accept that Mr Pascoe is entitled to the funds held in court because those funds are properly the subject of the amended Notice, a notice for which there is no basis to set aside. This is because Idameneo was a “person” to whom sub-division I of division 2 of part 4 of the Bankruptcy Act applies by reason that Idameneo fell within one or more of the categories of persons set out in s.139ZK(1) of the Bankruptcy Act, but principally paragraph (e) which applies to a person:

   who is liable to pay money or transfer property wholly or principally in consideration of personal services supplied by a bankrupt after the commencement of the bankruptcy, whether the services were supplied to the first-mentioned person or to some other person.

2. Such liability on Idameneo’s part arises by reason of clause 7.2 of the Provision of Services Deed which provided that Idameneo was to remit the other 50 per cent of the banked money “as [were] directly referrable to the medical services rendered by [Dr Lee]” (under clause 7.1) to I S J  twice monthly. 

3. Furthermore, Mr Pascoe submits, and I accept, that the 7 September 2011 letter from the solicitors for Idameneo notifying that the funds were received by Idameneo “in respect of services provided by ISJ/Dr Lee”, was effectively an admission[5] as to Mr Pascoe’s assertion stated in the amended Notice that various agreements, including the Provision of Services Deed, meant that money that Idameneo was to pay I S J was attributable to the consideration for the bankrupt’s services as a medical practitioner[6] and therefore that the funds were validly the subject of the amended Notice.

   [5] A similar admission was made in earlier correspondence by Idameneo on 22 March 2010: see [11] of page 66 of the exhibit bundle to the affidavit of Rupert James Jordan Gray sworn on 28 February 2014.  

   [6] annexure SDP 4 at [6] on page 26 of the affidavit of Mr Pascoe made on 1 November 2013

4. I also accept that these are “relevant proceedings” for the purposes of s.81G. They are proceedings to recover money as a debt pursuant to s.139ZL(10). It is permissible to rely on a statement that is effectively an admission by Idameneo, as evidence that the statement was made, to establish that these proceedings relate to the funds that are the subject of the amended Notice, and that are sought to be recovered pursuant to s.139ZL(10). That statement makes no assertion that Dr Lee rendered services directly to Idameneo, but simply that the funds are funds “in respect of” services provided by Dr Lee, a statement which is consistent with the operation of clauses 7.1 and 7.2 of the Provision of Services Deed[7].

   [7] see [19] of Mr Pascoe’s submissions dated 1 April 2014

5. I find that the amended Notice is valid and there is no reason to set it aside.

6. Furthermore, any claimed entitlement to the funds by I J Lee, even if it could be proved, cannot defeat Mr Pascoe’s entitlement to the funds that are sought pursuant to an s.139ZL notice. Such funds are sought because of the statutory mandate in s.139P that a bankrupt is to contribute his income above the prescribed threshold to a bankruptcy trustee. The interests of creditors ought not to be defeated in the manner that I J Lee seeks, simply by drawing closed the veil of an incorporated medical practice. Indeed were the Court to order that the funds be paid to I J Lee on the basis of the purported Deed, Mr Pascoe has warned that he would have to apply for a stay of such an order so as to investigate any claim pursuant to s.121 of the Bankruptcy Act that he would have to void any transfer that is purportedly effected by the purported Deed.

7. I J Lee concedes that the purported Deed is “ineffective at law” because of non-compliance with s.12 of the Conveyancing Act. Section 12 requires express written notice be given “to the debtor, trustee, or other person from whom the assignor would have been entitled to receive or claim” a debt or chose in action so as to effect an absolute assignment of that debt or chose in action. I J Lee appears to concede that such notice was not given by I S J, presumably to Idameneo.

8. Notwithstanding I J Lee’s concession that the purported Deed is legally ineffective, I J Lee contends that the Deed is evidence of an equitable assignment that was effective in assigning the rights, title and interest to any monies that were due to ISJ as an equitable assignment.  However, whether the purported Deed is effective or ineffective, on its proper construction, in my view it assigns no such interest.

9. There is no other evidence before the Court of this alleged equitable assignment.  While I am prepared to assume that if the incorporated medical practice continued to function as a trading entity following the liquidation of I S J, it was probably through I J Lee, there is no evidence that I J Lee rendered management services to Idameneo in accordance with the Provision of Services Deed, and even if there were such evidence, that would not be evidence of an assignment to I J Lee of any money owed by Idameneo to I S J. 

10. Furthermore, I J Lee’s submission that it apparently stepped into the shoes of I S J is curious in light of Mr Pascoe’s submission that he is entitled to the funds because those funds are properly the subject of the amended Notice. Idameneo was the proper recipient of that Notice because Idameneo was liable to pay money that was attributable to the consideration for the bankrupt’s services as a medical practitioner. It does not matter whether that money was payable by Idameneo to I S J, or to I J Lee (as it contends). Mr Pascoe does not assert that Dr Lee rendered medical services directly to Idameneo. Rather, he asserts an entitlement on the basis set out at [46] above.

11. As noted above, I have not had regard to I J Lee’s post hearing submissions on the validity of the s.77A Notice (and s.139ZL Notice to the extent not raised at trial) as those submissions should have been made at the trial of the matter and no leave was granted for post hearing submissions on those issues. Further, as was noted in the correspondence from Mr Pascoe’s solicitors, those further submissions purport to seek relief additional to that sought in the interlocutory application.

Conclusion

1. In consequence of my acceptance of the submissions by Mr Pascoe, I will order that the interlocutory application by I J Lee be dismissed.  I will further order that the funds held in court be released to Mr Pascoe in his capacity as trustee of the bankrupt estate of Dr Lee.

2. Mr Pascoe sought costs if successful on an indemnity basis from 18 December 2013 or, in the alternative, from 13 December 2013 on the ordinary basis.  I have concluded that costs should be payable on the ordinary basis from the time of the interlocutory application on 13 December 2013.  Mr Pascoe has not been put to any significant expense by the attempted late submissions put on behalf of I J Lee and, while the purported Deed was produced only shortly before the trial of the interlocutory application on 2 April 2014, the claim by I J Lee, which was allegedly supported by the purported Deed, was known to Mr Pascoe before that.

3. Idameneo will have the opportunity to apply for any costs of the proceedings claimed from Mr Pascoe or I J Lee.

I certify that the preceding fifty-nine (59) paragraphs are a true copy of the reasons for judgment of Judge Driver

Associate: 

Date: 4 July 2014