In the Matter of Paul Alebakis White, Clyde Peter (As Trustee of the Bankrupt estate of Paul Alebakis) v Alebakis, John
[1997] FCA 93
•18 Feb 1997
IN THE FEDERAL COURT OF AUSTRALIA )
)
VICTORIA DISTRICT REGISTRY ) No. VB 709 of 1995
)
GENERAL DIVISION )
IN THE MATTER of PAUL ALEBAKIS Bankrupt
CLYDE PETER WHITE (as trustee of the
Bankrupt estate of Paul Alebakis)
Applicant
JOHN ALEBAKIS and FAY ALEBAKIS
Respondents
CORAM: Jenkinson J
DATE: 18 February 1997
PLACE: Melbourne
MINUTES OF ORDER
The Court orders that:
The application be dismissed.
The respondents' costs of the application be taxed and paid by the applicant.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules
IN THE FEDERAL COURT OF AUSTRALIA )
)
VICTORIA DISTRICT REGISTRY ) No. VB 709 of 1995
)
GENERAL DIVISION )
IN THE MATTER of PAUL ALEBAKIS Bankrupt
CLYDE PETER WHITE (as trustee of the
Bankrupt estate of Paul Alebakis)
Applicant
JOHN ALEBAKIS and FAY ALEBAKIS
Respondents
CORAM: Jenkinson J
DATE: 18 February 1997
PLACE: Melbourne
REASONS FOR JUDGMENT
Trial of an application by the trustee of a bankrupt for a declaration that an instrument of transfer of the bankrupt's interest in land jointly owned by himself and his parents to those parents is void as against the trustee.
The evidence available at the commencement of the trial to counsel for the parties, Mr Randall for the trustee and Mr Frankcom for the respondents, who are the bankrupt's parents, was in an unsatisfactory state and left a number of factual questions very difficult to answer. Without any compromise of his responsibility to present his own case effectively, each counsel, with their solicitors, co-operated during the trial to supply those deficiencies of evidence.
The bankrupt was at material times employed at a salary as credit controller of a company supplying goods to farmers. But he was during the same period the owner of the shares in Everton Downs Pty Ltd, a builder of residential premises, and the owner of a business name, Everton Homes. He had allowed his brother Chris Alebakis and a man called Sid Jansz to carry on a business of home building under the business name and by the use of the company's bank account. The bankrupt's knowledge of these business activities was limited to what those two persons told him until late in 1993 when he began to learn of financial difficulties and litigation affecting the business.
The bankrupt's mother had inherited money, but she had refused her other son, Chris Alebakis, a loan to assist in discharging the debts of the building business. In April 1994 the bankrupt asked her to make available to him $30,000 for the purpose of discharging debts of the business. The bankrupt intended to holiday overseas in May and June. I find that the bankrupt told his mother that she should make the money available, while he was abroad, to his brother Chris for payment of debts. One payment was made while the bankrupt was abroad, by a bank cheque for $9170 to a trade creditor. The bankrupt's parents cannot read English and neither had any involvement in the business activities of their sons. I infer that Chris Alebakis who, although admitted to be available, was not called as a witness and swore no affidavit in the proceeding, asked his mother to procure the cheque and to give it to him for delivery to the trade creditor.
His mother swore an affidavit, which I gave the respondents special leave to use at trial pursuant to Rule 135 of the Bankruptcy Rules, she being unable to attend court because of ill-health. Her affidavit describes the payment, and other payments, as all having been made at the bankrupt's request. But the affidavit is laconic and the payment was, as I find, made at the request which the bankrupt had made, before he went abroad.
The bankrupt returned to Melbourne in June 1994. On 1 August 1994 he was served with the bankruptcy notice upon which was founded the petition upon which the order for sequestration of his estate was made on 4 April 1995. In the last days of August 1994 two bank cheques payable to two trade creditors (not the petitioning creditor) were obtained by Mrs Alebakis and were subsequently delivered to the payees. Those two cheques aggregated $10,000. In the last days of September 1994 a cheque for $5,000 and another for $3,000, each payable to a trade creditor, were obtained by Mrs Alebakis and were subsequently delivered to the payees. In the months of August and September 1994 Mrs Alebakis deposed, and the bankrupt swore, that she gave the bankrupt $2,000 in cash for payment to the owner of a house being built by Everton Homes and about $200 in cash for payment to sub-contractors of Everton Homes.
An executed instrument of transfer of the jointly owned, and unencumbered, land dated 29 September 1994, on which $520 stamp duty was assessed on 14 October 1994, was on the latter date lodged at the Office of Titles for registration. It was the
evidence of the bankrupt and his mother that registration of that instrument was in completion of an oral agreement made between them in April 1994 that she would make available $30,000 for application in discharge of the business debts of Everton Homes in consideration for the transfer of her son's interest in the jointly owned land. (Neither side sought advantage from the failure of the bankrupt's father to give evidence. There was no attack on the testimony of the bankrupt and his mother that the father took no part in the transaction except his execution of the instrument. Nor was it seriously contested that $30,000 was in the vicinity of one third of the value of the land.) The consideration expressed in the instrument was, however "Natural love and affection of Paul Ian Alebakis for John Alebakis and Fay Alebakis."
The instrument was prepared by Lorraine Boubis, whose affidavit, filed by the respondents' solicitor, reads as follows:
I have been a personal friend of Chris Alebakis and his family for a number of years. I first met him when he was employed by the National Bank and I was employed by a solicitor who had adjourning [sic] offices to the National Bank branch were Chris was an employee.
In 1994 I was asked by Chris whether or not I had a land transfer form to enable Paul Alebakis to transfer his interest in a country property to his parents. The conversation was at the house of Chris and his family but I am unable to recollect exactly when I had this conversation. Paul Alebakis was also present but not their parents.
I was aware that Chris had in the past done his own conveyancing business and had some knowledge of conveyancing. As I have access to the transfer forms, a typewriter and was able to attend to the formalities required by the State Revenue Office and Title Office I agreed to do the conveyancing work as a personal favour to Chris.
Whilst I was talking to his wife Shirley I overhead [sic] part of a discussion between Paul and Chris as to the
consideration to be inserted in the transfer. I cannot recall whether it was Chris or Paul who told me to insert `natural love and affection' but I would think it was likely to be Chris rather than Paul. I was not told of any reason for the transfer and I was not aware of any money being paid by Paul's parents to Paul for the interest in the land. I did not speak to Paul and Chris' parents at any time about the transaction. I was not told nor was I aware of Paul being in any financial difficulty or facing possible bankruptcy.
After I received the executed transfer I then attended to the necessary formalities required by the State Revenue Office and the Titles Office to register the transfer."
Cross-examination of Miss Boubis gave me reason, as I think, to have confidence in her honesty and her capacity to distinguish accurately between what she did and did not remember. The bankrupt deposed in an affidavit that the phrase by which the consideration was expressed in the instrument "was inserted in the transfer without my approval authority or understanding." I find that the bankrupt heard his brother say to Miss Boubis - if he did not himself say to her - that the consideration should be expressed by that phrase. Under cross-examination on the topic he was less than frank about his part in the conversation at his brother's house.
The question arises as to whether Mrs Alebakis advanced the money to her son upon his promise to repay it when he could and without any promise to transfer or encumber his interest in the land to his parents. If so, the choice of "natural love and affection", by whichever brother (each had worked in a bank and had other commercial experience bringing him into contact with legal phrases and conceptions), may have been intended to hide the fact that Mrs Alebakis was an unsecured creditor who was being preferred in the shadow of bankruptcy. But if there had
in fact been in April 1994 an oral agreement for sale of the bankrupt's interest in the land in consideration of payment of $30,000 by his mother, or if there had been in April 1994 an oral agreement that the bankrupt's interest in the land should be security for the advance by his mother of the moneys she later in fact advanced, it is perhaps difficult for a lawyer to understand how in September 1994 either the bankrupt or his brother could have seen advantage in stating the consideration as natural love and affection. One possible explanation is that the brothers supposed that the transfer of the land would, or might, be accepted by the bankruptcy authorities, if there were to be a bankruptcy, as a family arrangement unconnected with financial transactions subject to bankruptcy laws.
It was accepted by the applicant trustee, after enquiries were made while the trial was adjourned, that the payments by Mrs Alebakis were of her own money. And once the bankrupt had consulted the solicitor who acted for him before the sequestration order was made - and who acted for him in this proceeding - no attempt was made by the bankrupt to represent the consideration stated in the instrument of transfer as a true consideration. In his statement of assets and liabilities filed immediately after the sequestration order was made on 4 April 1995 the bankrupt disclosed the sale of his interest in the land to his parents for a price of $30,000. I have carefully considered the evidence of the bankrupt and the two statements of his which were tendered by the applicant (exhibits H and I to the applicant's affidavit sworn 15 March 1996). Notwithstanding the unsatisfactory evidence about the bankrupt's knowledge of the statement of consideration in the instrument of transfer, I am persuaded on the whole of the evidence that he did in April 1994 make with his mother an agreement for sale of his interest in the land to his parents in consideration of her paying $30,000 to be applied in discharging debts of the building business. And I find that the instrument of transfer was executed and registered in performance of that agreement. The affidavit of Mrs Alebakis, while it is corroborative of the bankrupt's evidence, was not accorded any significant weight because she was not able to give oral evidence.
On those findings neither s.120 nor s.122 of the Bankruptcy Act 1966 invalidates the transfer of the land. The application will be dismissed with costs.
I certify that this and the preceding six (6) pages are a true copy of the reasons for judgment of his Honour Justice Jenkinson
Dated:
Associate
Appearances
Counsel for the applicant: Mr R S Randall
Solicitor for the applicant: Swersky & Velos
Counsel for the respondent: Mr J Frankcom
Solicitor for the respondent: Nicholas P Byrne
Date of hearing: 18 and 19 July and 10 September 1996
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