Macks v Valamiou
[2003] FMCA 500
•28 October 2003
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| MACKS v VALAMIOU & ORS | [2003] FMCA 500 |
| BANKRUPTCY – Application to restrain dealings in property claimed by trustee – where matter is shortly to come to trial – where orders have already been made – where balance of convenience favours continuation of orders on terms. |
Bankruptcy Act 1966, s.115
| Applicant: | PETER IVAN MACKS AS TRUSTEE OF THE PROPERTY OF EFSTRATIOS VALAMIOS & ANOR |
| First Respondent: | GEORGE VALAMIOU |
| Second Respondent: | CHRIS VALAMIOU |
| Third Respondent: | VALAMIOS PRODUCE PTY LTD (ACN 098 781 205) |
| File No: | SZ 2095 of 2003 |
| Delivered on: | 28 October 2003 |
| Delivered at: | Sydney |
| Hearing date: | 28 October 2003 |
| Judgment of: | Raphael FM |
REPRESENTATION
| Counsel for the Applicant: | Mr J Johnson |
| Solicitors for the Applicant: | Sally Nash & Co |
| Counsel for the Respondent: | Mr R Newton |
| Solicitors for the Respondent: | Brown & Partners |
ORDERS
Application dismissed.
By consent there shall be added to the orders made on 7 October 2003 these words:
(1)This order shall not prevent the payment by the third respondent of legal costs in relation to these matters such costs not to exceed the sum of $25,000 without further order.
(2) Liberty to apply on 2 days notice.
(3)The existing order to extend to the Supreme Court proceedings.
The words in proviso 1 of the Order “V & P Produce” shall be deleted and replaced with the words “the third respondent”.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SZ 2095 of 2003
| PETER IVAN MACKS AS TRUSTEE OF THE PROPERTY OF EFSTRATIOS VALAMIOS & ANOR |
Applicant
And
| GEORGE VALAMIOU |
First Respondent
| CHRIS VALAMIOU |
Second Respondent
| VALAMIOS PRODUCE PTY LTD (ACN 098 781 205) |
Second Respondent
REASONS FOR JUDGMENT
This application is for the termination of injunctions against the three respondents who are respectively George Valamiou, Chris Valamiou, and a company known as Valamios Produce Pty Limited ACN 098 781 205. George and Chris Valamiou are the sons of the bankrupts and the company is an entity owned by George and Chris.
It is common ground that the bankrupts operated two "stalls" at the Flemington Market. They were assisted in this operation by their sons. In the early part of this year the bankrupts commenced negotiations with their sons for the disposal of their interest in three pieces of real estate and the Flemington Market business. It is also common ground that at that time the bankrupts were in financial difficulties. The bankrupts had an outstanding secured loan to the Westpac Bank. They were also judgment debtors of a company known as Comit Farm Produce Pty Limited which judgment was being repaid by weekly instalments of $25,000.
The first and second respondent arranged with their bank, the ANZ, for a loan to the third respondent which was utilised to pay out the secured debt to Westpac. That occurred in June 2003. The properties and the business were then transferred. The real estate was transferred to the first and second respondents and the shares and stalls were transferred to the third respondent. On 21 July 2003, Mr Efstratios Valamios was made bankrupt with the date of the act of bankruptcy being noted as 22 May 2003. On 15 September 2003 Constantina Valamios was made bankrupt with the date of bankruptcy being noted as 14 May 2003. Very substantial sums of money are claimed in the bankruptcies by auditors.
In early October the applicant, who is the trustee in bankruptcy of the bankrupts, applied to this Court for injunctions restraining the dealing in any of the property that had been transferred by the bankrupts to their sons and the company. On 7 October 2003 I made certain orders against the respondents and each of them restraining them, or their servants or agents, from selling, charging, mortgaging or otherwise dealing with or disposing of, or removing from Australia, or causing to be permitted or to be sold, charged, mortgaged or otherwise dealt with or disposed of or removed from Australia, any property as defined by the Bankruptcy Act of the bankrupts which the respondents may hold in trust for them or which they received from those persons by way of gift, transfer, purchase or otherwise.
The injunction which I made was subject to provisos. The first was intended to ensure that the 3rd respondent, the trading entity of the first two respondents, was allowed to continue in its ordinary course of business, to pay its expenses and deal with its assets. The second proviso was made to permit the respondents to make payment or transfer all or part of the amounts of the assets sought by the applicant, to the applicant.
The injunctions which were made by me were made in the presence of a solicitor acting on behalf of the respondents, but he was not entirely au fait with the proceedings and I therefore made certain other orders which gave the respondents the right to come back to this Court and seek the termination of those injunctions. The injunctions were extended until 29 October 2003 or further order and an application to terminate them has been made to me today. I should point out that the substantive proceedings brought by the applicant, which are proceedings for declaratory orders concerning the ownership of these assets or alternatively orders under sections 120 or 121 of the Bankruptcy Act, are to be heard by this Court on 12 December 2003.
Evidence in support of the application was given by Mr George Valamios and by a solicitor, Mr Skouteris. The application which was made by the respondents also contained a request for an injunction against the applicant trustee to restrain him from certain conduct which it was alleged he had indulged in and which it was suggested had caused harm to the respondents in their business. In particular, the respondents alleged that people were reluctant to deal with them because of information which they had received from the applicant trustee.
It should be said straight away that there is really very little evidence concerning these matters. Certainly, there is very little evidence that the trustee has made the type of affirmative statements which are sought to be injuncted and I do not propose to make any of those orders on the basis of the evidence before me at the moment. The real issue that I have to decide is whether or not the current injunctions should be maintained. Mr Newton, who appears on behalf of the respondents, has suggested that there could be substituted for them certain undertakings which he believed would make life easier for the respondents insofar as the conduct of their business was concerned and insofar as the obtaining of refinance on the properties was concerned.
Evidence has been brought before the Court today indicating that the ANZ Bank, who financed the arrangements which I previously set out, has now called up the loan. It did this at a date almost a month prior to the injunctions being granted so it can hardly be said that any action on the part of the trustee following the grant of the injunctions was responsible for that state of affairs.
My duty is to assess whether or not there is a real issue to be tried between the parties and then to assess where the balance of convenience lies. I am satisfied that there is a real issue to be tried between the parties. Mr Johnson argues that as both bankrupts were, for the purposes of s 115 of the Bankruptcy Act 1966 (the “Act) "bankrupt" in May 2003 the arrangements between themselves and their sons which were completed on 13 June 2003 must be void against the trustee. He argues that the property of the bankrupts was by that time vested in the trustee, subject to registration.
I understand there may well also be an argument that the amount of money paid for the assets was an undervalue and, to the extent that is the case, the transaction may be capable of being set aside or that it be set aside subject to that amount of the consideration that was paid (if it was properly paid) being repaid. Mr Newton has wisely not gone into these matters in great detail no doubt saving his powder for the hearing that is effectively next month.
In relation to the balance of convenience, whilst I am sympathetic to the wish of the applicants to be able to take whatever steps are available to them to refinance these properties and thus save themselves from the effects of the ANZs demand, I see no reason why this cannot be done within the context of the existing injunctions. I am advised from the bar table that the injunctions have not been sought to be registered with the Land Titles Office and so they are at present operating "in personam".
This should not prevent the respondents from making application for refinancing if they wish. They say they have sought to do this. But the evidence which I heard concerning their success has not convinced me that a refinancing offer is likely to be placed before them from a lender in the near future. What I will indicate is that rather than make any alterations to the provisos contained in the original document with the exception of an alteration to proviso 1 so that the words "V and P Produce" are deleted and are replaced with the words "the third respondent" liberty to apply is given and that I would sympathetically consider an application allowing the refinancing of the properties provided that the basis of such refinancing was purely to pay out the ANZ Bank and prevent it from taking the steps which it has indicated it might well take against the respondents.
I think that in those circumstances the balance of convenience favours the continuation of these orders until my judgment on the substantive hearing. I would hope that as this is only set down for one day the parties can produce short minutes of order relating to the production of evidence at that hearing which will enable the real issues to be approached as quickly as possible. I dismiss the application made in the notice of motion. By consent there shall be added to the orders made on 7 October 2003 these words:
(1)This order shall not prevent the payment by the third respondent of legal costs in relation to these matters such costs not to exceed the sum of $25,000 without further order.
(2) Liberty to apply on 2 days notice.
(3)The existing order to extend to the Supreme Court proceedings.
I certify that the preceding fourteen (14) paragraphs are a true copy of the reasons for judgment of Raphael FM
Associate:
Date:
0
0
0