Lawrence v Lopez - [2005] FMCA 1789

FEDERAL MAGISTRATES COURT OF AUSTRALIA

LAWRENCE v LOPEZ

[2005] FMCA 1789

BANKRUPTCY – Application to set aside s.139ZQ notice.

Bankruptcy Act 1966, ss.120, 121, 139ZQ, 139ZS

Applicant:

GREGORY NEIL LAWRENCE

Respondent:

GEORGE AUBREY LOPEZ

File Number:

PEG 129 of 2005

Judgment of:

McInnis FM

Hearing dates:

8 and 9 November 2005

Delivered at:

Melbourne (by video link to Perth)

Delivered on:

2 December 2005

REPRESENTATION

Solicitor for the Applicant:

Mr R Butcher

Solicitors for the Applicant:

Butcher Paull & Calder

Solicitor for the Respondent:

Mr G Porter

Solicitors for the Respondent:

Talbot Olivier

ORDERS

The Respondent be granted leave to amend the response by inserting the following in the "final orders sought":
A declaration that the disposition of 5 Munford Street, North Beach, to Tiana Nominees Pty Ltd is void against the Respondent.
So much of the Rules of the Court be dispensed with that would otherwise prevent the Court from making the declaration referred to in Order 1 hereof.
The application filed on 4 July 2005 be dismissed.
It is declared that the disposition of 5 Munford Street, North Beach, to Tiana Nominees Pty Ltd is void as against the Respondent.
The Applicant shall pay the Respondent's costs of the application to be taxed in default of agreement including reserved costs, if any.
Unless within 14 days of a request being made to the Applicant or his solicitors Butcher Paul & Calder to sign documentation necessary to effect transfer or sale of the property known as 5 Mundford Street, North Breach then the Registrar of the Federal Court, as Deputy Registrar of the Federal Magistrates Court shall be authorised to sign the documentation in place of the Applicant.
Liberty to apply is granted to the parties in relation to any matters arising out of these orders.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
PERTH

PEG 129 of 2005

GREGORY NEIL LAWRENCE

Applicant

And

GEORGE AUBREY LOPEZ

Respondent

REASONS FOR JUDGMENT

This is an application by Gregory Neil Lawrence (the applicant) seeking an order pursuant to s.139ZS of the Bankruptcy Act 1966 (Commonwealth) (the Act) seeking to set aside a notice given under s.139ZQ of the Act to the applicant to pay to the respondent the sum of $350,000.
The applicant is a 49-year-old man and is an electrician by trade.
The applicant is the sole director of Tiana Nominees Pty Ltd (Tiana) which is the trustee of the Lawrence Superannuation Fund (the fund). The fund was established on 12 May 1988 by the applicant, and in April 1988 Tiana was incorporated and thereafter became trustee of the fund.
The present application therefore seeks to set aside the s.139ZQ notice which had been addressed to the applicant presumably in his capacity as sole director of Tiana, the trustee of the fund.
The s.139ZQ notice states in part the following:
“… Official Receiver for the Bankruptcy District of the State of Western Australia, give notice that you, being a person who has received money or property as a result of a transaction that is void against the trustee of the above bankrupt estate pursuant to Division 3 of Part VI of the Bankruptcy Act 1966, are required to pay to the trustee, Mr George Aubrey Lopez ... the sum of $350,000.00, being the money or value of property received by you.”
The transaction claimed to be void relates to a property situated at 5 Munford Street, North Beach, and more particularly described as Lot 499 on deposited plan 210659 and being the whole of the land comprised in Certificate of Title Volume 340 Folio 105A (the property). The applicant was the sole registered proprietor of the property from 24 May 1996 until 16 May 2003. The transaction involved the registration of a transfer of the property on 16 May 2003. The transfer, which is dated 24 March 2003, refers to the applicant as the transferor and Tiana as the transferee. The consideration is stated to be ‘pursuant to a contribution deed made between the transferor and the transferee dated 24 March 2003’.
The Contribution Deed (exhibit R1) is entitled ‘CONTRIBUTION OF PROPERTY TO THE LAWRENCE SUPERANNUATION FUND DECLARATION OF TRUST’ (the Contribution Deed).
In the Contribution Deed Tiana is referred to as ‘the trustee’ of the fund and the applicant is referred to as ‘the contributor.’ The recitals referred to the fund being created to provide benefits for "the member described in the fund". The applicant is referred to as the ‘registered proprietor’ of the property and it is noted that the applicant is referred to as the contributor in the recitals in the Contribution Deed is "the only member of the fund". The effective date set out in the schedule to the Contribution Deed is 1 January 2003. The Contribution Deed refers in item 3 of the schedule to the contribution value being $350,000.00.
The s.139ZQ notice has annexed to it, as required by law, a schedule setting out the facts and circumstances because of which the Official Receiver considers the transaction to be void against the trustee. Those facts and circumstances include the following:
“1.On 5 July 2004 a Sequestration Order was made in the Federal Court of Australia against the estate of Gregory Neil Lawrence and the Official Receiver for the State of Western Australia was appointed Trustee. A copy of the Sequestration Order is attached as Annexure ‘A’.
2.Pursuant to Section 115(1) of the Bankruptcy Act 1966, the earliest act of bankruptcy within six months of the date of the presentation of the petition, and hence, the date of commencement of bankruptcy, occurred on 27 May 2004. This is evidenced in the creditor’s petition, a copy of which is attached as Annexure ‘B’.
3.On 25 November 2004, George Aubrey Lopez was appointed Trustee to replace the Official Receiver. A copy of the Certificate of Appointment is attached as Annexure ‘C’.
4.On 28 February 2000, Gregory Neil Lawrence commenced legal action against Monique Hodara (aka Monique Lotyczuk) in the Local Court of Western Australia at Perth (Action No.3820 of 2000) for an unpaid debt. A copy of the Summons is attached as Annexure ‘D’.
5.On 13 June 2000, Monique Hodara lodged a claim against Mr Lawrence in the Local Court of Western Australia, action no. 111838 of 2000. The value of her claim exceeded that by Mr Lawrence with the result that she became a creditor. A copy of her Summons is attached as Annexure ‘E’.
6.Monique Hodara and Gregory Neil Lawrence’s actions in the Local Court were consolidated and Monique Hodara filed a defence and counterclaim on 8 January 2001. A copy of her defence and counterclaim is attached as Annexure ‘F’. Ms Hodara claimed from Mr Lawrence the sum of $41,715.02.
7.The Local Court action was remitted to the District Court on 10 April 2001. A copy of the order remitting the action is Annexure ‘G’.
8.A Pre-Trial Conference in the District Court failed to reach settlement and on 23 September 2002, the matter was listed for trial to commence on 29April 2003.
9.On 13 March 2003, the solicitors acting for Gregory Neil Lawrence applied to the Court to cease to act for him. A copy of the order to that effect is attached as Annexure ‘H’.
10.The trial of the matter was first scheduled to take place between 29 April 2003 and 2 May 2003. The trial was adjourned because Monique Hodara was not able to attend as she had become ill and had been admitted to hospital.

A copy of an Affidavit sworn by her former husband confirming the circumstances of her illness is Annexure ‘I’.
11.On 17 December 2003, Monique Hodara obtained judgment against Gregory Neil Lawrence for a net amount of $37,130.60 and costs to be taxed. This figure being $37,820.78 plus interest of $6,270.97 less set off Judgement amount of $6,961.15 equally $37,130.60 being the amount of the petitioning creditor’s claim. A copy of the judgment is attached as Annexure ‘J’.
12.From 24 May 1996 until 16 May 2003, Gregory Neil Lawrence was the registered proprietor of property situated at 5 Mundford Street, North Beach and more fully described as Lot 499 on Deposited Plan 210659 and being the whole of the land comprised in Certificate of Title Volume 340 Folio 105A. A copy of the Certificate of Title is attached as Annexure ‘K’.
13.On 24 March 2003, Gregory Neil Lawrence, as contributor executed a Declaration of Trust incorporating a contribution of property wherein he made an undeducted contribution to the Lawrence Superannuation Fund. A copy of the Declaration of Trust is attached as Annexure ‘L’.
14.The schedule attached to the Contribution of Property to the Lawrence Superannuation Fund Declaration of Trust states:-
ITEM 1:     Effective Date
1^st day of January 2003
ITEM 2:     Property
The property situated at 5 Mundford Street, North Beach and more fully described as Lot 499 on Deposited Plan 210659 and being the whole of the land comprised in Certificate of Title Volume 340 Folio 105A.
ITEM 3:     Contribution Value
$350,000
ITEM 4:     Encumbrance
Nil
15.The effective date on the schedule attached to the Contribution of Property to the Lawrence Superannuation Fund Declaration of Trust is the 1^st day of January 2003.
16.Mr Lawrence transferred the said property to Tiana Nominees Pty Ltd on 16 May 2003. Tiana Nominees Pty Ltd was, at the relevant time, the Trustee for The Lawrence Superannuation Fund. A copy of the transfer is attached as Annexure ‘M’.
17.At that time, Mr Lawrence was the sole director of Tiana Nominees Pty Ltd. A copy of the search is attached as Annexure ‘N’.
18.On or about 15 May 2003, Tiana Nominees Pty Ltd, as Trustee for the Lawrence Superannuation Fund executed a Deed of Variation to the Lawrence Superannuation Fund. The effect of the variation was to declare the fund to be a closed fund, limiting its members to a specific member or members. The Deed further declared that the only member of the fund shall be Gregory Neil Lawrence. Accordingly, the only beneficiary of the fund would be Gregory Neil Lawrence. A copy of the Deed is attached as Annexure ‘O’.
19.The documents giving rise to the transfer of property, and the transfer itself, occurred within two years before the commencement of the bankruptcy.
20.Tiana Nominees Pty Ltd paid no consideration for the property.
21.Had the transfer not occurred, the property would have been available to creditors in the bankruptcy.
22.The effect of the transfer was to transfer the asset to an entity, the only beneficiary of whom would be the bankrupt himself.
23.Given the existence, at the time, of the claim by Monique Hodara which remains unpaid, it can be reasonably inferred that as a consequence of the transfer, the transferor was about to become insolvent. Accordingly, pursuant to Section 121(1)(b), the transferors’ main purpose for the transfer is taken to be to prevent the transferred property from becoming divisible among the transferor’s creditors or to hinder or delay the process of making property available for division among the transferor’s creditors.
24.The aforementioned transfer of the bankrupt’s interest in the property is therefore voidable at the option of his Trustee, pursuant to section 120 or alternatively, section 121 of the Bankruptcy Act.
Accordingly, the amount being pursued by the Trustee for recovery is $350,000.”
The applicant relies upon an affidavit sworn by him on 4 October 2005 and otherwise gave oral evidence. The respondent relies upon an affidavit sworn by him on 4 November 2005 and was not required to give oral evidence. However, the respondent called under subpoena evidence from the applicant's accountant, Mr Giuseppi Scali (also known as Carlo Scali) a partner in the accounting firm Poolman Scali Zinni Pty Ltd, and Ms Dawn Angela Wright, sole director, secretary and shareholder of Sunrise Promotions (WA) Pty Ltd ("Sunrise Promotions").
I should note at the outset that both Mr Scali and Ms Wright, in normal circumstances where as in the present case orders were made for trial by affidavit, would reasonably have been expected to depose to affidavits for and on behalf of the applicant rather than be the subject of a subpoena to give evidence and be called by the respondent. The accountant had been involved in making arrangements including the establishment of Sunrise Promotions and otherwise referring the applicant for further advice which ultimately led to execution of the Contribution Deed.
The schedule to the s.139ZQ notice appears to contain an error in relation to the date of the Sequestration Order, as it is common ground that the sequestration order was in fact made on 5 October 2004. Neither party has sought to make any issue out of that error in the schedule.
It should be noted that whilst both parties relied on affidavit evidence, certain objections were taken to parts of that evidence and rulings made by the court were made either with or without consent in relation to certain paragraphs of the respective affidavits. In particular, in relation to the affidavit of the applicant sworn 4 October 2004, the court ruled that paragraphs 4, 5, 6, 7, 8, 9, 15, 17, 21, 26 and 33 be deleted and further ruled that in paragraph 27 the word "bad" be deleted and in paragraph 28 the first sentence be deleted. Paragraphs 14, 16 and 17 of the affidavit of George Aubrey Lopez sworn 4 November 2004 were deleted. In addition the court ordered that the first sentence of paragraph 20 be deleted.
The chronology of events relevant to this application are largely undisputed. However, unless otherwise stated, reference to factual matters already set out in this judgment and the chronology of events with details to be further set out are findings of fact by the court based upon the evidence before it.
The applicant as indicated earlier is an electrician by trade. He had operated a number of accounts with United Credit Union, with the relevant accounts being the following:
1)Account number 101562-S13, Access Plus account in the name of Gregory Neil Lawrence t/as Seasonair and Allied Catering.
2)Account number 78092-S13, Access Plus account in the name Gregory Neil Lawrence.
3)Account number 78092-L37, Access and Intro INVHL account in the name Gregory Neil Lawrence.
4)Account number 78092-L58, Investment Loan Plus account in the name Gregory Neil Lawrence.
A number of matters are clear from an analysis of the chronology and the factual background of this matter. The first is that the applicant was unsuccessfully trading as an electrician. He initially traded and used the name ‘Seasonair’ and then used the name ‘Allied Catering’.
After discussions with his accountant on or about 23 October 2002, it appears that the applicant decided to cease conducting his business as ‘Allied Catering Equipment’ and arrangements were made for the incorporation of Sunrise Promotions. That company was incorporated on 12 November 2002, and as indicated earlier the applicant ceased to be registered as Allied Catering Equipment on 17 November 2002.
An agreement for sale of business as a going concern was entered into between Sunrise Promotions and the applicant whereby the applicant claimed to have sold his business namely "Allied Catering Equipment" to “Sunrise Promotions”. Although dated 24 March 2003, the agreement referred to 18 November 2002 as being both the "settlement date" and "the possession date". The gross purchase price was $15,740.00, comprising $9,240.00 for plant and equipment, according to annexure A of the agreement, and stock to the value of $6,500.00.
Ms Dawn Wright, a friend of the applicant's and formerly an employee of a business conducted by a partner of the applicant's accounting firm, agreed to become sole director, secretary and shareholder of ‘Sunrise Promotions’. She had no previous experience conducting a company or business similar to the business conducted by the applicant, though had worked in businesses and gained some experience over the years. She agreed to take up to this position upon her return from an overseas visit to the United Kingdom.
The agreement between ‘Sunrise Promotions’ and the applicant provided for a special condition in the following terms:
“The vendor agrees to grant to the purchaser a 10-year lease calculated from the settlement date over the whole of the property comprised in certificate of title volume 340 volume 105A (the property) upon the following terms and conditions:
2.1 Rent: $1000 per annum payable in arrears;
2.2Insurance: The purchaser shall insure at its own cost the building on property for its market value and also take out public liability insurance;
2.3Outgoings: The purchaser shall pay all outgoings, adjusted if necessary on a daily basis;
2.4Repairs: The purchaser shall at its own cost keep the property in good repair, fair wear and tear excepted.”
In annexure A to the agreement a number of items purportedly sold by the applicant to ‘Sunrise Promotions’ are listed. It is clear that many of those items could not be described as items used in the course of the applicant's business. They include for example video equipment, a television, magazine rack, tall boy mahogany, two bicycles, a wind trainer and a fridge.
It is not in dispute that after the agreement the applicant continued to reside in and conduct his business from the property. Until recently the applicant was the sole operator of his business, and interestingly was a signatory to the cheque account of ‘Sunrise Promotions’ whereby he could sign cheques without a counter-signatory.
To the extent that it was claimed by both the applicant and Ms Wright that this arrangement for the sale of business was to enable the business to be conducted more efficiently and to give Ms Wright a source of income, then that evidence is rejected. In my view, a proper assessment of the evidence is that this arrangement to sell the business was an arrangement made to divest Mr Lawrence of all assets against the backdrop of pending proceedings against him, to which reference will be made further in this judgment, and against the backdrop of his financial circumstances, which in my view were in a parlous state for many months prior to the transfer of the business.
I am satisfied that these arrangements, and others to which reference will be made, were entered into by the applicant for the sole or dominant purpose of ensuring that his assets were beyond the reach of creditors, including potentially his former de facto partner, Ms Hodara, who had proceedings pending against the applicant. I do not find the evidence of either the applicant or Ms Wright to be particularly convincing in relation to the circumstances whereby ‘Sunrise Promotions’ took over the business of the applicant.
It is clear to me that if Ms Wright had chosen to be engaged in the business simply to improve its efficiency and debt recovery, then she could have done so as a salaried employee without the elaborate arrangements being entered into whereby the applicant divested himself of property, some of which clearly included personal property, though remained in possession of that property, and indeed the premises, and continued to conduct his business and reside at the property.
On 28 February 2000 the applicant filed a summons in the local court of Perth wherein he, as plaintiff, claimed against Ms Hodara (referred to as Ms Lotyczuk) an amount of $6,961.15, claimed to be moneys “due and owing by the defendant to the plaintiff for work done and materials supplied by the plaintiff to the defendant at the defendant's request”.
On 13 June 2000 Ms Hodara filed a summons in the local court at Perth wherein she was the plaintiff and the applicant the defendant. Ms Hodara claimed $15,712.00, then alleged to be “moneys due and owing by the defendant to the plaintiff for delays claimed by the builder and certified by the architect.”

The delays were claimed to be caused by “the negligence of the defendant in not notifying the plaintiff, her builder and architect of non-attendance at site and refusal to take instructions as previously agreed to.”
Ms Hodara filed an amended defence and counterclaim in the proceedings against her by the applicant on 8 January 2001 seeking to set up a counterclaim for damages for breach of contract and misrepresentation, which as far as I can tell involved damages of $34,136.42.
On 10 April 2001 it appears that the local court actions, which

I understand are being consolidated, were remitted to the District Court. A pre-trial conference was held in the District Court which failed to reach settlement between the parties and on 23 September 2002, significantly, that action was listed for trial to commence on 29 April 2003.
On 13 March 2003 the solicitors then acting for the applicant applied to the District Court to cease to act for him. To understand the circumstances leading up to the application by the applicant's former solicitors, Hotchkin Hanly, it is useful to refer to extracts of correspondence from that firm to the applicant. The first letter dated 19 June 2002 refers to the pre-trial conference held in the District Court and provides information about an adjourned conference date. Significantly, however, the solicitors then state the following:
“In relation to the substance of the matters in dispute in the action, we confirm your advice to reject the Defendant's offer of $18,000 inclusive of costs to settle this matter. We confirm that we again put our offer that each party walk away and bear their own costs, which was again rejected.
For your benefit, and as you requested, we advise you of the following in relation to your legal costs incurred to date:
1.total billed to date:   $11,406.89
2.      work in progress not billed
(excluding today's time):   $1,737.50
3.amount currently outstanding:   $1,566.00”
The next letter dated 19 July 2002 from Hotchkin Hanly to the applicant provides a breakdown of the likely further costs to be incurred if the matter should go to trial. Specifically, the solicitors advise as follows:
“- getting up case and all preparations for trial, including proofing of all lay witnesses: $10,000
- conduct of 3-day trial with counsel and instructing solicitor: $10,000”
In the same letter, after referring to those figures as being "approximations", the solicitors further state, significantly, the following:
“In terms of your liability as to costs at the end of the trial and after a decision is pronounced, it is likely that the Court will make an order that Ms Lotyczuk pay the costs associated with you having to prosecute your claim should you be successful in obtaining a judgment on the claim. Similarly, it is likely that the Court will make an order that you pay the costs associated with Ms Lotyczuk prosecuting her counterclaim should she be successful in obtaining a judgment against you on that counterclaim. In our opinion, more costs are likely to be associated with prosecuting and defending Ms Lotyczuk's counterclaim that are likely to be associated with prosecuting and defending your claim. This arises by virtue of the greater number of issues that arise in the counterclaim than arise in the context of your claim ... In these circumstances, even if both you and Ms Lotyczuk are successful in your respective claims and obtain a judgment against each other (with the likely associated costs orders against each other) in our opinion it is likely the Court will assess that you must pay Ms Lotyczuk a greater quantum of costs than it assesses Ms Lotyczuk must pay you. This of course presumes that Ms Lotyczuk is successful in her claim.”
By letter dated 27 February 2003 the solicitors then advised the applicant concerning the possible fixture of a hearing date. In the same letter the solicitors state the following:
“Further, and as to costs, I have ascertained that an amount of $5,084.75 remains outstanding in relation to our professional fees. In this respect, we refer you to our invoice number 005593 dated 7 October 2002. Given that the costs involved in preparing this matter for trial and attending the trial itself are not insubstantial, we require you to forward payment of the amount currently outstanding in addition to a further $20,000 to be placed in our trust account on account of further anticipated costs (preparing for trial and Counsel at trial).”
By letter dated 28 February 2003 the solicitors for the applicant then advised in relation to the trial date and the requirement that the hearing fee for four days of trial be paid; namely an amount of $1400 due by 4 March 2003. The solicitors state in that letter the following:
“In those circumstances please forward us your cheque made payable to the District Court for $1,400, in addition to providing us with payment of our outstanding account in the sum of $5,084.75 and your further cheque in the sum of $20,000 on account of expected professional costs by 4 March 2003. Should we fail to hear from you in this regard we will have no alternative then to consider our position as your solicitors of record.”
It is not disputed that the amounts requested by the then solicitors for the applicant were not paid and, as indicated earlier, the solicitors applied to the court to cease to act for the applicant. The trial which was scheduled to commence on 29 April 2003 was adjourned due to the unavailability of the other party.
It is not in dispute that on 17 December 2003 Ms Hodara obtained judgment against the applicant for a net amount of $37,130.60 and costs to be taxed. That amount of $37,130.60 was arrived at after calculating the claim of $37,820.78 plus interest of $6270.97 less a set‑off judgment amount of $6961.15.
Arising from that judgment in the District Court, a creditors petition was filed by Ms Hodara against the applicant on 30 June 2004, and as indicated earlier it is common ground that a Sequestration Order was made against the estate of the applicant on 5 October 2004, and the date of the active bankruptcy appears to be 27 May 2004.
It is clear from the chronology of events including the correspondence in relation to the litigation between the applicant and Ms Hodara that throughout 2002 and the first quarter of 2003, the applicant would have been well aware that the pending proceedings at the very least posed the prospect of the imposition of a significant order against him. Further, I am satisfied that the material demonstrates that the applicant was unable to finance the litigation through his solicitors and chose to represent himself.
To the extent that both the applicant and Ms Wright in evidence claimed that the arrangements for the sale of his business and other activities at this time were undertaken for other reasons, I reject their evidence. In particular, it was noted at one point during her evidence, Ms Wright suggested “We didn't even know about the court case at the time”. The ‘time’ being the time of the transfer of the business being signed in March 2003. Clearly, that could not have been the case and

I reject her evidence whereby she sought to be somewhat dismissive of the relevance of the pending court proceedings between the applicant and Ms Hodara.
I am further strengthened in drawing that conclusion by reference to file notes produced by Mr Scali, the accountant for the applicant. The file notes include a note dated 23 October 2002 which refers to the establishment of Sunrise Promotions with Ms Wright being director and shareholder, and then on a date shortly after that, though prior to 29 November, the following note appears after reference to the company being set up:
“Greg has a court case coming up
may have a liability issue.
How can he structure things?
Business to t/fr to company.”
It is also significant to note in an analysis of the background financial circumstances and dealings of the applicant in relation to his business that as at 3 February 1998 he had a zero balance in account 78092‑L58, whilst as at 11 February 2003 there was a zero balance in account number 101562-S13. There were also zero account balances in account numbers 78092-L37 and 78092-S13 as at 28 March and 30 April 2003 respectively.
It is further noted that the amount of the purchase price to be paid under the agreement for sale of business between Sunrise Promotions and the applicant, namely $15,740, was not paid until 30 June 2003. When it was in fact paid on that date, rather than be paid directly to the applicant it was paid to Tiana Nominees. In my view this provides further evidence of the conduct of the applicant in trying to ensure as far as possible that all assets and funds be directed to his superannuation fund via the trustee company of that fund.
It is against this background analysis of the financial circumstances and court proceedings that I conclude in the present case that the transaction which was the subject of the s.139ZQ notice could properly be regarded as voidable at the option of the trustee pursuant to either ss.120 or 121 of the Act.
Whilst I accept that the trustee is confined to the particulars and circumstances annexed to the s.139ZQ notice, it is clear that the evidence produced to this court in relation to the proceedings between the applicant and Ms Hodara is relevant, as I am satisfied that those proceedings lead to a reasonable inference that the transfer of the property referred to earlier in this judgment was undertaken as the applicant was about to become insolvent.
I accept for the purposes of s.121(1)(b) that the applicant's main purpose for the transfer should be taken to prevent the transferred property from becoming divisible amongst the transferor's creditors or to hinder or delay the process of making property available for division amongst the transferor's creditors. The creditors at that time clearly included the former solicitors for the applicant and Ms Hodara.
I find that there was no consideration given for the transfer and I reject the suggestion that there was any taxation advantage which accrued to the applicant over and above the maximum amount deductible for contributions to a superannuation fund in the year the transfer took place. Any other benefits are purely speculative, and in my view there is insufficient to provide the court with any basis upon which it could conclude that there was either consideration given for the transfer, and certainly the court is able to conclude that any consideration was certainly of less value than the market value of the property.
Whilst there was some attempt to suggest that a proper value had not been given through evidence in relation to the $350,000.00 claimed to be the contribution value, I am satisfied that where the applicant, as in this case, has placed that value on the contribution, then that of itself may constitute a sufficient evidentiary basis for the court to conclude that that is indeed the value of the property in this instance.
It is not necessary for the trustee then to seek to adduce further evidence to challenge that assertion. When it has clearly been an assertion made for and on behalf of the applicant himself, he should not then effectively be given the opportunity to undermine his own assessment.
Overall, in my view the conduct of the applicant reveals a pattern of behaviour where he has sought to divest himself of all his assets and money in order to defeat creditors including Ms Hodara and his former solicitors, amongst others. The transaction which was the subject of the notice under s.139ZQ was clearly part of this process and, as I have found, is voidable at the option of the trustee pursuant to s.120 or alternatively s.121 of the Act. That being so, it follows that the application seeking to set aside the notice pursuant to s.139ZS of the Act should be dismissed.
It remains to consider whether the court should then proceed to make a declaration of the kind sought by the respondent in the affidavit of the respondent sworn 4 November 2005. I can see no prejudice to the applicant in permitting the respondent to seek the declaration referred to in that affidavit; namely a declaration that
“The disposition of 5 Munford Street, North Beach, to Tiana Nominees Pty Ltd is void against the respondent.”
In doing so I would further order that so much of the rules be dispensed with that would prevent the court from making that order and/or in the alternative would permit the respondent to add, as part of the relief sought in the response, the declaration referred to in order to bring some certainty and finality to this matter.
In my view it is important in matters of this kind not to prolong the proceedings or indeed require the trustees to seek to commence further proceedings whereby the declaration is sought, having regard to the findings of fact which I have made in considering the application to set aside the s.139ZQ notice.
I shall in addition to dismissing the application and making the declaration make a further order in relation to costs and otherwise grant liberty to apply to the parties should there be further orders required, arising out of the orders made by the court in this matter.
The orders I propose making are:-
(1)The Respondent be granted leave to amend the response by inserting the following in the "final orders sought":-
A declaration that the disposition of 5 Munford Street, North Beach, to Tiana Nominees Pty Ltd is void against the Respondent.
(2)So much of the Rules of the Court be dispensed with that would otherwise prevent the Court from making the declaration referred to in Order 1 hereof.
(3)The application filed on 4 July 2005 be dismissed.
(4)It is declared that the disposition of 5 Munford Street, North Beach, to Tiana Nominees Pty Ltd is void as against the Respondent.
(5)The Applicant shall pay the Respondent's costs of the application to be taxed in default of agreement including reserved costs, if any.
(6)Liberty to apply is granted to the parties in relation to any matters arising out of these orders.

I certify that the preceding fifty-five (55) paragraphs are a true copy of the reasons for judgment of McInnis FM

Associate:

Date: 2 December 2005