Kavich, Vera Mary v Kavich
[1995] FCA 858
•27 Oct 1995
IN THE FEDERAL COURT OF AUSTRALIA )
)
BANKRUPTCY DISTRICT OF ) NB 118 of 1978
)
NEW SOUTH WALES )
Re VERA MARY KAVICH
OFFICIAL TRUSTEE IN BANKRUPTCY
Applicant
VERA MARY KAVICH
GEORGE KAVICH
Respondents
Coram:Whitlam J
Place:Sydney
Date:27 October 1995
MINUTES OF ORDER
THE COURT ORDERS THAT:
The costs order made by Whitlam J on 16 December 1994 be rescinded.
The application instituted by the application filed in court on 4 August 1994 be dismissed.
Note:Settlement and filing of orders is dealt with in Rule 124 of the Bankruptcy Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
)
BANKRUPTCY DISTRICT OF ) NB 976 of 1990
)
NEW SOUTH WALES )
Re ANTHONY FRANCIS KAVICH
DEPUTY COMMISSIONER OF TAXATION and OFFICIAL TRUSTEE IN BANKRUPTCY
Applicants
ANTHONY FRANCIS KAVICH
PAUL SIMON KAVICH
CITIBANK LIMITED
CARMELA PORTELLI
PAUL BAIADA
VERA MARY KAVICH
ANTLERS PTY LTD (IN LIQUIDATION) (RECEIVER AND MANAGER APPOINTED)
FRANK PORTELLI
Respondents
Coram:Whitlam J
Place:Sydney
Date:27 October 1995
MINUTES OF ORDER
THE COURT ORDERS THAT:
The orders made by Einfeld J on 27 November 1992 be rescinded.
The costs orders made by Einfeld J on 19 February 1993 and Whitlam J on 16 December 1994 be rescinded.
The application instituted by the application filed on 23 July 1992 be dismissed.
The applicants' costs be paid jointly and severally by Vera Mary Kavich, Frank Portelli and Antlers Pty Ltd (In Liquidation) (Receiver and Manager Appointed)
Note:Settlement and filing of orders is dealt with in Rule 124 of the Bankruptcy Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) NG 892 of 1992
)
GENERAL DIVISION )
DEPUTY COMMISSIONER OF TAXATION
Applicant
ANTLERS PTY LTD (IN LIQUIDATION) (RECEIVER AND MANAGER APPOINTED)
CITIBANK SAVING LIMITED
WESTPAC SAVINGS BANK SOCIETY LTD
ST GEORGE BANK LIMITED
PAUL BAIADA
CARMELA PORTELLI
PAUL SIMON KAVICH
Respondents
Coram:Whitlam J
Place:Sydney
Date:27 October 1995
MINUTES OF ORDER
THE COURT ORDERS THAT:
The costs order made by Whitlam J on 16 December 1994 be set aside.
The applicant be given leave to discontinue the proceeding so far as concerns the other relief claimed.
The applicant's costs be paid jointly and severally by Vera Mary Kavich, Frank Portelli and Antlers Pty Ltd (In Liquidation) (Receiver and Manager Appointed).
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) NG 105 of 1993
)
GENERAL DIVISION )
DEPUTY COMMISSIONER OF TAXATION
Applicant
ANTHONY FRANCIS KAVICH
PAUL SIMON KAVICH
CITIBANK LIMITED
CARMELA PORTELLI
PAUL BAIADA
VERA MARY KAVICH
ANTLERS PTY LTD (IN LIQUIDATION) (RECEIVER AND MANAGER APPOINTED)
FRANK PORTELLI
Respondents
Coram:Whitlam J
Place:Sydney
Date:27 October 1995
MINUTES OF ORDER
THE COURT ORDERS THAT:
The application be dismissed with no order as to costs.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) NG 118 of 1993
)
GENERAL DIVISION )
PAUL SIMON KAVICH
VERA MARY KAVICH
FRANK PORTELLI
Applicants
DEPUTY COMMISSIONER OF TAXATION
OFFICIAL TRUSTEE IN BANKRUPTCY
Respondents
Coram:Whitlam J
Place:Sydney
Date:27 October 1995
MINUTES OF ORDER
THE COURT ORDERS THAT:
The application be dismissed with no order as to costs.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) NG 3118 of 1993
)
GENERAL DIVISION )
IN THE MATTER OF
ANTLERS PTY LTD (IN LIQUIDATION)
(RECEIVER AND MANAGER APPOINTED)
ACN 000 900 989
OFFICIAL TRUSTEE IN BANKRUPTCY
Applicant
ANTLERS PTY LTD
GEORGE KAVICH
VERA MARY KAVICH
Respondents
Coram:Whitlam J
Place:Sydney
Date:27 October 1995
MINUTES OF ORDER
THE COURT ORDERS THAT:
James Morrison Millar be discharged as receiver and manager.
The application be dismissed.
The applicant's costs be paid jointly and severally by Vera Mary Kavich, Frank Portelli and Antlers Pty Ltd (In Liquidation).
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) NG 131 of 1994
)
GENERAL DIVISION )
IN THE MATTER OF
COMPANIES ACT, 1961 (NSW) and
ANTLERS PTY LTD (IN LIQUIDATION)
ACN 000 900 989
OFFICIAL TRUSTEE IN BANKRUPTCY
Applicant
ANTLERS PTY LTD
GEORGE KAVICH
VERA MARY KAVICH
Respondents
Coram:Whitlam J
Place:Sydney
Date:27 October 1995
MINUTES OF ORDER
THE COURT DECLARES THAT:
George Kavich was not a member of the company on 7 July 1978.
The entry at folio 6 of the company's Transfer Journal, purporting to record the registration of a transfer of a share to George Kavich, is unauthorized and of no effect.
AND THE COURT ORDERS THAT:
Leave be given nunc pro tunc to commence and proceed against the company in proceedings nos NB 976 of 1990, NG 892 of 1992 and NG 3118 of 1993, notwithstanding that they were commenced after the making of the winding up order.
Costs ordered to be paid by the company in the said proceedings may be paid out of its assets.
The costs order made by Whitlam J on 16 December 1994 be set aside.
The applicant's costs of the application filed on 12 August 1994 be paid out of the assets of the company.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
)
BANKRUPTCY DISTRICT OF ) NB 118 of 1978
)
NEW SOUTH WALES )
Re VERA MARY KAVICH
OFFICIAL TRUSTEE IN BANKRUPTCY
Applicant
VERA MARY KAVICH
GEORGE KAVICH
Respondents
IN THE FEDERAL COURT OF AUSTRALIA )
)
BANKRUPTCY DISTRICT OF ) NB 976 of 1990
)
NEW SOUTH WALES )
Re ANTHONY FRANCIS KAVICH
DEPUTY COMMISSIONER OF TAXATION and OFFICIAL TRUSTEE IN BANKRUPTCY
Applicants
ANTHONY FRANCIS KAVICH
PAUL SIMON KAVICH
CITIBANK LIMITED
CARMELA PORTELLI
PAUL BAIADA
VERA MARY KAVICH
ANTLERS PTY LTD (IN LIQUIDATION) (RECEIVER AND MANAGER APPOINTED)
FRANK PORTELLI
Respondents
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) NG 892 of 1992
)
GENERAL DIVISION )
DEPUTY COMMISSIONER OF TAXATION
Applicant
ANTLERS PTY LTD (IN LIQUIDATION) (RECEIVER AND MANAGER APPOINTED)
CITIBANK SAVING LIMITED
WESTPAC SAVINGS BANK SOCIETY LTD
ST GEORGE BANK LIMITED
PAUL BAIADA
CARMELA PORTELLI
PAUL SIMON KAVICH
Respondents
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) NG 105 of 1993
)
GENERAL DIVISION )
DEPUTY COMMISSIONER OF TAXATION
Applicant
ANTHONY FRANCIS KAVICH
PAUL SIMON KAVICH
CITIBANK LIMITED
CARMELA PORTELLI
PAUL BAIADA
VERA MARY KAVICH
ANTLERS PTY LTD (IN LIQUIDATION) (RECEIVER AND MANAGER APPOINTED)
FRANK PORTELLI
Respondents
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) NG 118 of 1993
)
GENERAL DIVISION )
PAUL SIMON KAVICH
VERA MARY KAVICH
FRANK PORTELLI
Applicants
DEPUTY COMMISSIONER OF TAXATION
OFFICIAL TRUSTEE IN BANKRUPTCY
Respondents
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) NG 3118 of 1993
)
GENERAL DIVISION )
IN THE MATTER OF
ANTLERS PTY LTD (IN LIQUIDATION)
(RECEIVER AND MANAGER APPOINTED)
ACN 000 900 989
OFFICIAL TRUSTEE IN BANKRUPTCY
Applicant
ANTLERS PTY LTD
GEORGE KAVICH
VERA MARY KAVICH
Respondents
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) NG 131 of 1994
)
GENERAL DIVISION )
IN THE MATTER OF
COMPANIES ACT, 1961 (NSW) and
ANTLERS PTY LTD (IN LIQUIDATION)
ACN 000 900 989
OFFICIAL TRUSTEE IN BANKRUPTCY
Applicant
ANTLERS PTY LTD
GEORGE KAVICH
VERA MARY KAVICH
Respondents
Coram:Whitlam J
Place:Sydney
Date:20 October 1995
REASONS FOR JUDGMENT
The Deputy Commissioner of Taxation ("DCT") and the Official Trustee in Bankruptcy ("OTB") apply for their costs in several proceedings, the procedural history of which is described in McAusland v Commissioner of Taxation (1993) 47 FCR 369. These applications have been heard together with an application by the OTB to rectify the register of members of Antlers Pty Ltd ("Antlers"). It is convenient to deal first with the costs applications.
Matter no. NB 976 of 1990 invoked the Court's jurisdiction in bankruptcy. The ex parte orders made by Einfeld J on 23 July, 4 August and 18 August 1992 were discharged
on 4 August 1994. The assets, which were the subject of those orders, are now held by Antlers' liquidator. It remains to rescind the orders made by Einfeld J on 27 November 1992 and to dismiss the application. The DCT and the OTB seek an order that their costs be paid jointly and severally by Vera Mary Kavich also known as Victoria Kavich ("Mrs Kavich"), Frank Portelli and Antlers. In the alternative, they seek an order that their costs be paid out of the assets of Antlers. Mrs Kavich and Mr Portelli oppose the making of any costs order against them personally.
There is now no dispute that the assets which are the subject of the application instituted on 23 July 1992 belong to Antlers. The assets in question are the proceeds of the sale on 1 May 1992 of land at Lot 51 Knox Road, Doonside. However, the DCT is also a creditor of the bankrupt estate of Anthony Francis Kavich, who is one of Mrs Kavich's sons. In September 1991 Mrs Kavich told one of the DCT's investigators that another of her sons, Paul Simon Kavich, was the beneficial owner of Lot 51. She also produced a declaration of trust to this effect purporting to have been executed by Antlers on 11 November 1977. In April 1992 the investigator received from Antlers' liquidator a copy of another declaration of trust dated 11 November 1977, but this document showed Anthony Kavich to be the beneficial owner of Lot 51 and it had apparently been stamped. Accordingly, when further investigations revealed that settlement moneys on the sale of Lot 51 had been deposited into a bank account in Paul Kavich's name and that Anthony Kavich had cashed cheques drawn on that account, the DCT commenced the proceeding entitled in Anthony Kavich's bankruptcy NB 976 of 1990. The OTB is the trustee of his bankrupt estate.
Anthony Kavich and Paul Kavich both filed affidavits sworn 7 August 1992 stating that the wrong trust deed had been stamped and that Lot 51 had always been beneficially owned by Paul Kavich. The respondents then switched tack. They filed an affidavit of Paul Kavich sworn 18 August 1992, stating that his mother had arranged the sale of Lot 51 and that he had only dealt with the proceeds at her direction. They also filed affidavits of Frank Portelli sworn 18 August 1992 and Mrs Kavich sworn 19 August 1992. Mrs Kavich said that she had arranged the deposit of settlement moneys in the bank account of Paul Kavich as "Antlers hasn't got a bank account." She also said that Mr Portelli had signed the two declarations of trust in 1984.
Mrs Kavich's solicitor had, in fact, forwarded the stamped declaration showing Anthony Kavich as the beneficial owner of Lot 51 to the liquidator on 19 July 1985. Her solicitor also had written to the liquidator's solicitors on 26 August 1985, asserting that Mrs Kavich had informed the liquidator of the trust in 1980. This correspondence took place against a background of interest by potential purchasers in land registered in Antlers' name. (Antlers was, of course, in liquidation in 1984 and 1985, and Mr Portelli had no authority to execute the deeds on its behalf.) However, Anthony Kavich had been made bankrupt on 1 June 1990.
By 21 August 1992 the DCT was faced with this position: in 1985 Mrs Kavich had asserted Lot 51 was beneficially owned by Anthony Kavich, in 1991 (after Anthony Kavich had become bankrupt) she said that it was beneficially owned by Paul Kavich, and now indications were that Mrs Kavich controlled the sale of the land in Antlers' name. Mrs Kavich had herself been made bankrupt on 28 February 1978 and, although she had
been discharged on 28 February 1991, the OTB was the trustee of her bankrupt estate. The OTB was accordingly added as an applicant, and alternative relief was claimed in Mrs Kavich's bankruptcy on the basis that Lot 51 had been beneficially owned by Antlers, the shares in which she had beneficially owned at the time of her bankruptcy. Mrs Kavich, Antlers and Frank Portelli were also added as respondents to the application.
Mrs Kavich was not fazed by this development. She had become bankrupt upon a petition presented on 5 December 1977. She produced a declaration of trust made just over 6 months earlier on 9 May 1977. In answers to interrogatories sworn on 14 September 1992, Mrs Kavich said that her former husband George Kavich had been the beneficial owner of the share registered in her name since 9 May 1977. Just over a week later, on 22 September 1992, she made an affidavit to which were exhibited copies of excerpts from Antlers' "share register", purporting to show that George Kavich was entered as a member on 9 or 10 May 1977. I canvass this material in more detail below when dealing with the OTB's application for rectification.
By letter dated 4 November 1992 the respondents served their "contentions" on the case put against them by the DCT and the OTB. In this document Mrs Kavich and Mr Portelli resiled from both the trust deeds dated 11 November 1977, conceding that they were ineffective, but they alleged instead that the assets of Antlers were held on trust for various beneficiaries under a deed of settlement, a copy of which had been annexed to Mrs Kavich's affidavit sworn 22 September 1992 and which she said was executed on 17 May 1976.
No party now seeks to sustain the consent orders made by Einfeld J on 27 November 1992, which reflected an agreement that a specified sum of money be withdrawn from Paul Kavich's bank account and paid to the OTB to be dealt with as property of the bankrupt estate of Mrs Kavich. It was only after proceeding no. NG 892 of 1992 was commenced that on 10 December 1992 Antlers conceded that the funds in Paul Kavich's account were beneficially owned by it. Up to that point of time Mrs Kavich and Mr Portelli held themselves out as directors of Antlers and the litigation was conducted on Antlers' behalf upon the instructions of Mrs Kavich. The proceedings instituted by the DCT were necessary to recover and preserve Antlers' assets, and the DCT and the OTB are entitled to their costs.
Proceedings nos NG 105 of 1993 and NG 118 of 1993 are in a different position. The DCT and the OTB could not have sustained the agreement noted by the Court on 27 November 1992. The moneys in question belonged to Antlers and the relief sought in NG 105 of 1993 was inconsistent with the declaration obtained on 10 December 1992 in NG 892 of 1992. It follows too that they could not have defended NG 118 of 1993 by setting up that agreement. Both these proceedings will be dismissed with no order as to costs.
The OTB is, however, entitled to its costs of proceeding NG 3118 of 1993. The OTB was not, of course, aware that Antlers was still in liquidation when it commenced that proceeding on 6 May 1993. However, the interlocutory order appointing James Morrison Millar as receiver was plainly necessary to preserve the assets of Antlers, as appears from his reports of 24 September 1993 and 24 June 1994. On 1 June 1994 Mr Millar was appointed liquidator of Antlers. The parties accept that the application should now be
dismissed, and I should have thought that Mr Millar could also be discharged from his appointment as receiver and manager.
Counsel for Mrs Kavich and Mr Portelli submits that his clients should not be visited with costs orders because there was no real threat to the assets of Antlers. The above chronicle should be sufficient to scotch that submission. At all times Mrs Kavich had the control and direction of Antlers. Mr Portelli appears to have played a supine role. The acknowledgment that the proceeds of the sale of Lot 51 were beneficially owned by Antlers was only achieved as a result of this litigation. Mr Millar's reports show how, even if Mrs Kavich was not aware that the company was still in liquidation, the assets of Antlers were being improperly dissipated.
The most extravagant submission is that Mrs Kavich cooperated with the OTB and Antlers' liquidator. I completely reject this submission. It is contrary to the evidence. At her bankruptcy examination on 17 April 1979 Mrs Kavich explained that she had delayed filing her statement of affairs on account of her "nerves". She was still complaining of "nerves" when she made an affidavit on 3 March 1993 on behalf of Antlers and said that at no time had it been explained to her that she had become disentitled to hold office as a director when she became bankrupt. This statement is contradicted by the explicit acknowledgment at her bankruptcy examination on 17 April 1979 that she was aware that she could not act as a director or manage a company. In my view, the only kind of nerve displayed by Mrs Kavich over the intervening years has been the kind of blatant effrontery that has brought the insolvency laws into disrepute in the eyes of ordinary citizens.
When cross-vesting to this Court the motion relating to the retirement of the liquidator appointed by the Supreme Court, McLelland CJ in Eq. commented that the application to terminate the winding up of Antlers had been "irregularly filed" on 8 November 1987. The filing was irregular in two respects. The notice of motion should have been filed in the Supreme Court winding up proceedings no. 2520 of 1978: Companies Rules, 1968 (NSW), r 43. Instead, it was filed in Supreme Court matter no. 2557 of 1986, which was the application for reinstatement that had been irregularly assigned a separate serial number. More importantly, an application to stay a winding up could only be made by the liquidator, a creditor or a contributory. Here the notice of motion named the applicant as "The Directors of Antlers Pty Limited (In Liquidation)" and was signed by a solicitor purporting to act for Antlers. In fact, the solicitor was acting upon the instructions of Mrs Kavich, as appears from counsel's memorandum to that solicitor concerning his appearances on 16 and 23 November 1987. Because the motion was filed in the reinstatement proceedings no. 2557 of 1986, the title of the order entered on 25 November 1987 showed as the "plaintiff" Laurence Brian Hunter, who was the original liquidator and the applicant for the reinstatement of Antlers' registration. But, as Gummow J remarked in McAusland (at 372), on 14 July 1986 Mr Hunter had been replaced as liquidator by Peter Bernard Allen.
Mrs Kavich made affidavits on 27 March 1987 and 20 November 1987 in support of the application to stay the winding up. She said that all Antlers' debts had been paid and that it had no liabilities. She also said, quite specifically, that all advances secured on properties registered in Antlers' name had been repaid. However, following the sale of Lot 51 in 1992, Mrs Kavich authorized the payment from the proceeds of debts allegedly outstanding when the petition to wind up Antlers was filed on 7 July 1978. The entire exercise of staying the winding up evinces chicanery on the part of Mrs Kavich. In my view, it is entirely appropriate that those who purported to act as directors of Antlers should be made jointly and severally liable with Antlers for the costs to be awarded to the applicants. It does not matter, of course, that Mrs Kavich and Mr Portelli are not parties to each of the proceedings: Knight v FP Special Assets Ltd (1992) 174 CLR 178. It will, however, be necessary in each matter to grant leave nunc pro tunc to commence and proceed against Antlers.
The provisions of the Companies Act, 1961 (NSW) ("the UCA") apply to the winding up: Corporations Law, s 601; Companies (Transitional Provisions) (New South Wales) Code, s 25. The winding up proceedings no. 2520 of 1978 in the Supreme Court have been cross-vested to this Court, where they have been assigned serial number NG 131 of 1994. The OTB has filed its application for rectification in this matter, and it is convenient to consider it now.
The impugned entries exist at folio 6 and page 24 of one of Antler's books, which is the Revised 1962 edition of the Graphic Australian Companies Register published by a stationery firm. Folio 6 is part of the Transfer Journal and page 24 is part of the Register of Members. Folio 6 purports to record the registration of a transfer dated 9 May 1977 from "V Kavich" to "G Kavich" of one ordinary share for a consideration of $1. Page 24 contains the prescribed particulars of one of the original subscribers. It also purports to show the date he ceased to be a member upon transfer of his share to "V. Kavich". It then goes on nonsensically to record the transfer of his share yet again on 10 May 1977 to "G Kavich". These are very curious entries.
The Register of Members at page 26 also shows "Vera Kavich" as a member, having been entered as such by virtue of the registration on 2 November 1971 of a transfer of the subscriber's share. This accords with the particulars furnished in Antlers' annual return dated 27 August 1974. There is no entry in the Register of Members in respect of George Kavich.
Counsel for George Kavich relies on s 209(9) of the Corporations Law to submit that the entry at folio 6 is prima facie evidence that his client is a member of Antlers. However, I reject this submission since s 209(9) only relates to matters inserted in the "register of members". Here the only relevant matter is at page 24 and obviously it does not constitute the entry of George Kavich as a member. Furthermore, reg 20 of Table A in the UCA applies to Antlers. It provides in respect of share transfers that "the transferor shall remain the holder of the share transferred until the transfer is registered and the name of the transferee is entered in the register of members in respect thereof" (underlining supplied). By itself the registration of a transfer does not effect the entry of the transferee's name in the register of members. The distinction between registration of a transfer and entry in the register of members is well-known. If, after registration of a transfer, a company fails to make an entry in the register of members, the aggrieved person may apply for rectification: Nation's Case (1866) LR 3 Eq 77. (It may also be observed that the suspension of registration of transfers permitted by reg 23 of Table A may not necessarily involve the closing of the register of members permitted by s 210 of the Corporations Law: see Palmer's Company Precedents, 17th ed, p.457, where words are added to the equivalent United Kingdom provision to achieve that effect.)
In any event, the Transfer Journal purports to be a book kept by Antlers and, unless it is proved that such a book is not required to be kept under the Corporations Law, then s 1305 of the Law makes it prima facie evidence of the matter recorded in it. On that basis, notwithstanding that I do not consider any question of rectification arises, it will be useful to determine the authenticity of the entries in dispute.
In order to be effective the entries must have been validly made no later than 7 July 1978 when the petition to wind up Antlers was filed. This would require a proper instrument of transfer and a meeting of directors. Mrs Kavich was questioned about these entries by Mr Millar's counsel at her examination on 14 September 1993. She said that a meeting of directors had been held the day after she signed the declaration of trust in favour of George Kavich and that the meeting had approved the transfer of her share. However, Mrs Kavich said that she did not know whether she and George Kavich had signed a transfer, but that they "didn't think about" stamp duty. She said that the handwriting of the entries "looks like mine", but she was not sure. Mrs Kavich offered the absurd suggestion that the handwriting "may have been one of the children". In this examination Mrs Kavich again said that she had furnished Antlers' books to the liquidator when the order to wind up Antlers was made. This was what she said too on 21 August 1992 when she failed to produce, in answer to a subpoena served on Antlers, its register of members. She subsequently said in an affidavit sworn on 3 March 1993 and filed in matter no. NG 117 of 1993 that the minute book had never been completed, and that between 1974 and August 1982 (when she answered the subpoena) Antler's documents were held at her mother's place. Her evidence about handing over the books to the liquidator is contradicted by the liquidator's letter to Mrs Kavich of 28 July 1980 and the liquidator's report to creditors dated 30 June 1982, in both of which
he complains that he has not received Antlers' books, including the register of members and the minutes of directors' meetings.
Then, mirabile dictu, the register appeared at the hearing before me on 24 May 1993. Mrs Kavich allowed in her examination on 14 September 1993 that the entry at folio 6 "would have been" made on 9 May 1977. This careful language suggests a conclusion, rather than recollection. The striking thing is that no one gives evidence of having made, or even having seen, such an entry prior to the commencement of the winding up. Nor does anyone give evidence that a stamped transfer was ever brought into existence. This is hardly surprising. The solicitors for George Kavich wrote to the Australian Government Solicitor on 17 November 1992, asserting that the "transfer of Vera's beneficial interest in her share in Antlers was made by the clumsy device of [the declaration of trust dated 9 May 1977]". I am quite satisfied that no proper instrument of transfer capable of registration ever existed at the relevant time and that the entries are not genuine.
My finding that no such entries had been made before 7 July 1978 is reinforced by the consistent statements in earlier times that the only shareholders were Mrs Kavich and Mr Portelli. These begin with Mrs Kavich's bankruptcy examination on 17 April 1979 and run through to the affidavits sworn on 3 March 1993 by her and Mr Portelli. They even said in their sworn answers to interrogatories on 14 September 1992 that Mrs Kavich was the registered holder. Although Mrs Kavich admits that she backdated the two declarations of trust dated 11 November 1979, it is not necessary to find that she made these impugned entries at some date after 9 or 10 May 1977. I need only be satisfied, as I am, that the entries were not made at a time when the directors of Antlers had any authority to register
transfers. Nor is it necessary that the effectiveness of the declaration of trust dated 9 May 1977 be determined. George Kavich may well wish to prove as a secured creditor in the bankrupt estate of Mrs Kavich.
The relief that I consider appropriate is reflected in the draft orders attached to these reasons. It varies somewhat from that sought by the applicants and opposed by the other parties. The consequence of Mrs Kavich remaining on the register as a member is that the OTB will participate in the anticipated distribution of the surplus by the liquidator by virtue of s 220(2)(a) of the UCA. The relief sought in the application filed in court on 4 August 1994 by the OTB in Mrs Kavich's bankruptcy proceeding no. NB 118 of 1978 is not now required. The extent of any interest George Kavich may have in her bankrupt estate should be determined in the light of any claim that he makes. I shall fix the matter for a short hearing within the next few days to settle the form of the orders.
I certify that this and the preceding eleven pages are a true copy of the reasons for judgment herein of the Hon. Justice A.P. Whitlam
Associate:
Date: 20 October 1995
Appearances:
M.R. Aldridge of counsel appeared for the Deputy Commissioner of Taxation and the Official Trustee in Bankruptcy instructed by the Australian Government Solicitor.
Bernard Glennon of counsel appeared for Vera Mary Kavich instructed by O'Connor Bellamy and for Frank Portelli instructed by Kevin Seggie.
R.W. Cameron of counsel appeared for George Kavich instructed by Victor Krikunov.
Date of hearing: 21 February 1995
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