Matthews v Sellars - [2014] FCCA 2230

FEDERAL CIRCUIT COURT OF AUSTRALIA

MATTHEWS v SELLARS & ORS

[2014] FCCA 2230

Catchwords:
BANKRUPTCY – Application for injunction – public examination – examinable person – serious issue to be tried – balance of convenience – matters to be considered.

Legislation:

Bankruptcy Act 1966 (Cth): ss.30(1)(b); 58; 81; 115; 120; 121; 129

Epitoma Pty Ltd v AMIEU (1984) 54ALR 730

Applicant:

ANTHONY CHRISTOPHER MATTHEWS AS TRUSTEE OF THE BANKRUPT ESTATE OF DEAN RAYMOND SELLARS

First Respondent:

DEAN RAYMOND SELLARS

Second Respondent:

JACQUELINE ROBIN SELLARS

Third Respondent:

PETER F COLBERT TRADING AS COLBERT TRANSPORT

Fourth Respondent:

JACQUELINE ROBIN SELLARS IN HER CAPACITY AS THE TRUSTEE OF THE JR SELLARS FAMILY TRUST TRADING AS ADELAIDE FREIGHT

File Number:

ADG 38 of 2014

Judgment of:

Judge Brown

Hearing date:

22 September 2014

Date of Last Submission:

22 September 2014

Delivered at:

Adelaide

Delivered on:

26 September 2014

REPRESENTATION

Counsel for the Applicant:

Mr Douglas

Solicitors for the Applicant:

O’Toole Lawyers

Counsel for the Respondent:

Mr Kaplan

Solicitors for the Respondent:

Andersons Solicitors

ORDERS

The first respondent deliver up the campervan/Mercedes Benz Altego truck registration number SBO7ET to Pickles Auctions at their truck division at 39 Park Avenue Pennington 5013 in the State of South Australia within 7 days of this order.
The first respondent deliver up the Jeep station wagon registration number S732APE to Pickles Auctions at their motor vehicle division at 1754 Main North Road Salisbury Plains 5109 in the State of South Australia within 7 days of this order.

UNTIL FURTHER OR OTHER ORDER

An injunction issue restraining the first, second and third respondents from doing any act or thing relating to antecedent to or facilitating the sale or disposal of the following vehicles to any person or relating to or antecedent to or facilitating the pledging of any interest any of the respondents may have in the said vehicles to any person or relating to or antecedent to or facilitating the grant of any encumbrance or security over the said vehicles to any person:
(a)1994 Hino Rigid Truck Registration No: VOC987, Engine No: H07C0035581, Vin: JHDFF2HPLXXX100;
(b)Isuzu Tautliner Registration No: WJA937, Engine No: 6HH1212948, Vin: JALFTR33P73000094;
(c)1996 Isuzu FTR800 Tautliner 8 tonne plus Tailgate – Red Registration No: SBO8CU, Vin: JALFTR32NR30000956;
(d)1993 Hino FD Hawk Cab Chassis Registration No: VOE9850, Vin: JHFDLLXXX10127;
(e)1994 Mitsubishi Cab Tray Top Registration No: XLG788;
(f)1992 Mitsubishi “24” Tray Top Registration No: XHN127.
The second respondent in her personal capacity and in her capacity as Trustee of the Sellars Family Trust be examined under oath pursuant to section 81 of the Bankruptcy Act, 1966 in order to give evidence in relation to the examinable affairs of Dean Raymond Sellars with any document specified in the summons for examination to be provided by the second respondent on or before 17 October 2014 and her examination to take place on 20 November 2014 at 2:15pm.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT ADELAIDE

ADG 38 of 2014

ANTHONY CHRISTOPHER MATTHEWS AS TRUSTEE OF THE BANKRUPT ESTATE OF DEAN RAYMOND SELLARS

Applicant

And

DEAN RAYMOND SELLARS

First Respondent

JACQUELINE ROBIN SELLARS

Second Respondent

PETER F COLBERT TRADING AS COLBERT TRANSPORT

Third Respondent

JACQUELINE ROBIN SELLARS IN HER CAPACITY AS THE TRUSTEE OF THE JR SELLARS FAMILY TRUST TRADING AS ADELAIDE FREIGHT

Fourth Respondent

REASONS FOR JUDGMENT

Introduction

The applicant in these proceedings Anthony Christopher Matthews, who is the bankruptcy trustee of Dean Raymond Sellars. Mr Sellars became a bankrupt on 4 March 2013, on the petition of the Workcover Corporation.
The Workcover Corporation obtaining a judgement, in the sum of $23,953.52, against Mr Sellars in the Adelaide Magistrates’ Court on 27 February 2012. Mr Sellars failed to comply with a bankruptcy notice in this sum issued on 13 August 2012. This is the date of his act of bankruptcy.
Mr Matthews was appointed the trustee of Mr Sellars’ estate on 4 March 2013. Mr Matthews commenced these proceedings on 31 January 2014.
Initially, the proceedings related to two motor vehicles namely, a campervan/Mercedes Benz Altego truck registered number SB07ET (hereinafter referred to as “the campervan”) and a Jeep station wagon registered number S732APE (hereinafter referred to as “the Jeep”).
It was alleged that Mr Sellars had purchased the campervan in June of 2012. It was further alleged that Mr Sellars had purportedly sold the campervan to his wife, Jacqueline Robin Sellars, on 18 April 2013, which sale followed him being made a bankrupt.
In all these circumstances, the trustee asserted that the purported transfer of property was void, as the campervan was part of the bankrupt’s estate.
Essentially, it was asserted that the transfer of the campervan had been made to quarantine the vehicle from the bankrupt’s creditors and therefore attracted the provisions of section 121 of the Bankruptcy Act 1966 (Cth) (hereinafter referred to as “the Act”).
In general terms, the purpose of section 121 is to allow bankruptcy trustees to recover property, which has been transferred by a person who is or subsequently becomes a bankrupt, where the main purpose of the transfer is to defeat creditors.
The trustee further alleged that the Jeep had been purchased by Mr Sellars in or about May of 2012. However, he had declined to transfer the registration of the vehicle in question from the motor car dealer, from whom he had purchased it. It is the trustee’s position that Mr Sellars routinely drove the vehicle in question.
Mr Matthews believes that the Jeep had been purchased by Mr Sellars, in May of 2012, by means of an insurance payment, which he had received, in respect of a motor vehicle accident, in which a vehicle owned by him had been involved. Mr Matthews was able to obtain correspondence, from the insurer concerned, regarding the payment to Mr Sellars of a sum of $19,423.75.
On 20 January 2014, Mr Matthews located an internet advertisement offering the campervan for sale. Associated with the advertisement was a photograph of the campervan, revealing its number plate. The seller was described as “Dean” and the sum sought in respect of the vehicle’s sale was $55,000.00.
In all these circumstances, Mr Matthews feared that Mr Sellars might sell the vehicle to an innocent third party, when he had no title to sell the vehicle in question, as it vested in Mr Matthew’s pursuant to the sequestration order made on 4 March 2013. Pursuant to the provisions of section 58 of the Act, all property of a bankrupt vests in the relevant trustee as at the date of bankruptcy.
In respect of the Jeep, it was the position of Mr Matthews that it was purchased in the relating back period created by section 115 of the Act. As a consequence of this section the bankruptcy is taken to have relation back to, and to have commenced within a period of six months, prior to the first act of bankruptcy. During this relating back period, the bankrupt concerned is treated as if he had already been bankrupt.
It was Mr Matthews understanding that both the campervan and the Jeep had been held at a property in Greenfields, which was occupied by Mr Sellars. On this basis, Mr Matthews sought an order that both vehicles be delivered up to Pickles Auctions pursuant to section 30(1)(b) and section 129 of the Act.
Pursuant to section 129(1), a trustee is directed to take possession of all the property of a bankrupt capable of manual delivery. Pursuant to section 129(2) the court may, on the application of a trustee, enforce such possession accordingly.
Section 30(1) provides the court with the power to make any order, including an injunction, as it considers necessary for the purposes of carrying out or giving effect to the Act.
Mr Matthews’ application came before Judge Lindsay (as he then was) on 6 February 2014. At this stage the application had not been served on either Mr Sellars or Ms Sellars or Mr Harms, who was the motor vehicle dealer, who was the registered owner of the Jeep. Notwithstanding the lack of service, Judge Lindsay made the following orders:
“The first, second and third respondents be restrained and an injunction be granted restraining each of them from doing any act or thing relating to or antecedent to or facilitating the sale or disposal of a Mercedes Benz Altego truck registration SBO7ET to any person or relating to or antecedent to or facilitating the pledging of any interest any of the respondents may have in the said vehicle to any person or relating to or antecedent to or facilitating the grant of any encumbrance or security over the said vehicle to any person.”
As can be seen, this order related only to the campervan, which Mr Matthews believed had been advertised for sale. Following this order, both Mr Sellars and Ms Sellars were formally served with the application in question and were granted a period of twenty-eight days to file answering material in response to it.
On 4 March 2014, Susan Mary O’Toole, Mr Matthews’ solicitor filed an affidavit in which she deposed that she had located documentary evidence, which linked the Jeep to Mr Sellars.
This evidence took the form of a personal cheque of Mr Sellars, in the sum of $14,000.00, which had been made payable to an entity known as Auto Estate, which was the business name of the motor car dealer, who was the registered owner of the Jeep. The date of the cheque in question was 23 April 2012, which fell within the relation back period.
On this basis, Mr Matthews sought an injunction, in similar terms to that which had been made by Judge Lindsay in respect of the campervan, in relation to the Jeep. Such an order was made, on 6 March 2014, by Judge Cassidy.
These proceeding arise as a consequence of what is alleged to have occurred since the making of those injunctions. Mr Matthews seeks the broadening of those injunctions and their application to a wider category of motor vehicles, which have been used in a business known as Adelaide Fast Freight.
In particular, he seeks that the Jeep and campervan be delivered to a motor vehicle storage yard for safekeeping and that a further six trucks, used by Adelaide Fast Freight either be subject to injunctions preventing their sale or charge or also be delivered up for safekeeping.
These applications, relating to the injunctions, are to be characterised as interlocutory proceedings. The substantive proceedings arise under the provisions of section 58 of the Act and seek to set aside any dealing relating primarily to the campervan or the Jeep, but by necessary implication to the vehicles.
On 7 April 2014, both Mr Sellars and Ms Sellars filed affidavits in these proceedings, in opposition to Mr Matthews primary application that a declaration be made that both the campervan and the Jeep are the property of Mr Matthews pursuant to the provisions of section 58 of the Act.
They also oppose any broadening of the current injunctive orders relating to the Jeep and the campervan or that any further injunctions are made in respect of other vehicles. In short, Ms Sellars asserts that all the vehicles in question are either her property or the property of a trust of which she is the sole trustee and over which Mr Sellars has no control. I turn now to summarise the respective positions of Mr Matthews and Mr and Ms Sellars.

The position of Jacqueline Sellars

Ms Sellars deposes that she has been married to Mr Sellars for approximately forty years. However, it is her position that the two separated in 2007 on amicable terms. They are not apparently divorced but live separated under the same roof of premises located in Royal Park.
It is Ms Sellars position that she and Mr Sellars have undergone an informal settlement of their matrimonial property. She retained a greater proportion of this property by dint of her superior financial contributions during their long marriage. She has been employed in a senior managerial position at Woolworths. Whilst, on the other hand, Mr Sellars has had a somewhat financially precarious career in the transport industry.
In terms of the Jeep, it is Ms Sellars position that this vehicle is wholly owned by her. She concedes that the vehicle was purchased in May of 2012, but was funded in respect of an insurance payout, which related to another vehicle, a Mitsubishi Canter, which she owned and which was written off in an accident. In particular, she deposes as follows:
“The Jeep was purchased in May 2012 using proceeds from an insurance policy in respect of a Mitsubishi Canter registration number XBH-411 which was written off in a motor vehicle accident. The said Mitsubishi Canter was owned by me but was insured in the name of the First Respondent as per the arrangement with him that he insure and register all vehicles in his name. As the said vehicle was registered and insured under the name of the First Respondent the insurance proceeds were paid to him. Those funds were used to pay for the Jeep, however the Jeep merely “replaced” the Mitsubishi Canter and is therefore my vehicle.”[1]
[1] See affidavit of Jacqueline Robin Sellars filed 7 April 2014 at paragraph 18
It is Ms Sellars position that she and Mr Sellars are the joint owners of the campervan. She asserts that she has contributed $28,000.00 towards the purchase of the campervan, with Mr Sellars contributing the balance. She asserts that the van was purchased in June 2011 so that she and Mr Sellars could use it together, for recreational purposes, as they remained friends.
In this context, she concedes that the vehicle was advertised for sale but only because she was no longer able to access it due to poor health. She asserts that Mr Sellars was nominated, in the advertisement in question, as the contact person because he was better placed to answer inquiries in respect of the vehicle, given his background in the transport industry.
Mr Sellars has been involved in the transport industry since 1992, when he commenced a business Fastline Pty Ltd, of which he was the sole director and shareholder. It is Ms Sellars’ position that she personally purchased a truck and some other vehicles, which were utilised by Fastline but which remained her property. When Fastline went into voluntary liquidation, in 2004 or 2005, because she owned the vehicles utilised by Fastline, none of these were liquidated.
Following the liquidation of Fastline, Mr Sellars commenced another truck business under the business name Dean Sellars Transport. It is Ms Sellars’ position that she leased the various vehicles, owned by her to Mr Sellars, for a weekly sum of around $1,000.00 and subject to the condition that he keep each vehicle registered, insured and in a good state of repair.
As a consequence of this arrangement, it seems to be her case that a practice developed whereby various motor vehicles, which were in fact her property, came to be insured in the name of Mr Sellars and from time to time registered in his name. These vehicles included the Jeep, its predecessor the Mitsubishi cantor and the campervan.
She further asserts that on 6 August 2007, the J R Sellars Family Trust of which she is the sole trustee was established. The trust ultimately became the owner of various motor vehicles, which she had purchased over the years as a consequence of her involvement with Fastline and more recently Dean Sellars Transport. It is her case that the trust acquired the business of Dean Sellars Transport in April of 2012.[2] This date falls within the relating back period of Mr Sellars’ bankruptcy.
[2] See affidavit of Jacqueline Sellars filed 7 April 2014 at paragraph 13

The position of Dean Sellars

It is Mr Sellars position that Fastline was only able to operate, from 1992 onwards, because Ms Sellars was in permanent and well-paid employment. As a consequence, she was able to regularly purchase trucks and other vehicles, which the business utilised. It is his position that any other vehicles previously utilised by Dean Sellars Transport are the property of the J R Sellars Trust of which he is a beneficiary but not a trustee.
Mr Sellars confirms that he was rendered bankrupt on the petition of the Workcover Corporation. Workcover obtained a judgment against him in the Adelaide Magistrates Court, which related to unpaid workcover levies. The amount owed to Workcover was approximately $23,000.00. In addition, it was found that Mr Sellars had other debts, primarily to credit card providers, in a further sum of approximately $23,000.00.
In his report to creditors, dated 15 May 2013, Mr Matthews found that the various sums outstanding to the creditors of Mr Sellars, together with costs, amounted to approximately $60,000.00. Mr Matthews could discern no realisable assets of Mr Sellars, from which this sum could be satisfied. Mr Sellars is due to be automatically discharged from bankruptcy on 4 April 2016.
Mr Sellars relies on the report of Mr Matthews, as evidence of his bona fides. In particular, Mr Matthews reported as follows:
“The bankrupt has indicated he owns no vehicles in his own name but has the benefit of a Jeep Cherokee Auto sport vehicle owned by Adelaide Fast Freight – a business operated by his wife.
….
No other assets are disclosed however, investigations of Transport SA have determined a number of prime movers and vehicles registered to the bankrupt.
Explanations provided by the bankrupt indicate that the vehicles attach to the business Adelaide Fast Freight which is operated and owned by his wife and subject to the vehicles being rented by him he remains liable for registration and the on-going maintenance of the vehicles.
Interviews with the wife have indicated that the vehicles are owned by Adelaide Fast Freight ATF The JR Sellars Family Trust.”[3]
[3] See Annexure DRS1 to the affidavit of Dean Raymond Sellars filed 7 April 2014
It is Mr Sellars assertion that he was made bankrupt on grounds which he considered to be unjust and unfair. He asserts that he did not pay the requisite Workcover levy because he believed that Workcover owed him money for wages due to a worker, employed by him, who had suffered a workplace injury.

The current application

Mr Matthews has instituted further proceedings, on 30 June 2014, in which he seeks the following orders:
·An order for the delivery up of the campervan to Pickles Auctions;
·An order for the delivery up of the Jeep to Pickles Auctions;
·Jacqueline Robin Sellars, in her capacity as trustee of the J R Sellars Family Trust, be added as a respondent to the proceedings;[4]
·An order that the respondents be restrained from dealing with six specified motor vehicles, including utilising them as security for any advance of funds;
·An order that Ms Sellars be orally examined, pursuant to section 81 of the Act, in her capacity as trustee of the J R Sellars Family Trust.
[4] An order to this effect was made on 4 July 2014.
It would currently appear to be Mr Matthews’ position, for reasons which will become apparent in due course, that he seeks the delivery up, to Pickles Auctions, of a number of commercial motor vehicles, which are currently in the control of Ms Sellars, but which have apparently been previously leased to Mr Peter Colbert, the third respondent in these proceedings. Mr Colbert has, to date, played no part in these proceedings.

The further evidence

Mr Matthews filed a further affidavit, in support of this application, on 30 June 2014. He deposed that it had come to his attention that Ms Sellars had put forward the campervan as security for a short-term commercial business loan.
In these circumstances, it was Mr Matthews’ position that he could have no confidence that the injunction relating to the Jeep would be respected, given that it appeared axiomatic that the injunction in respect of the campervan had been breached.

In support of his assertion that Ms Sellars had pledged the campervan, Mr Matthews relied upon a document headed short term commercial business loan application, which named Ms Sellars as the borrower and identified Adelaide Fast Freight as her trading name. The loan sought was $25,000.00, which was proposed to be utilised to maintain a fleet of vehicles. The campervan was included, with another vehicle, as security offered in support of the loan.
In addition, Mr Matthews asserts that, as at 1 July 2010, Mr Sellars held himself out to be the owner of twelve motor vehicles, which he purported to lease to one Shannon Black for the sum of $1,300.00 per week for a period of four years. Mr Matthews supplied two contracts to this effect, which named “Mr Dean Sellars and/or nominees” as the leasing parties.
The documents in question are purportedly executed by Mr Sellars. The implication of these documents being, as I take it, from Mr Matthews’ perspective, that they are not consistent with the J R Sellars Family Trust owning the vehicles, as was contended by both Mr Sellars and Ms Sellars.
Mr Matthews’ application was listed before the court on 4 July 2014. At that stage, neither Mr Sellars nor Ms Sellars had had an opportunity to file answering affidavit material. In addition, their solicitor, Mr Kaplan, had recently suffered a minor physical sporting mishap and was unable to come to court. In those circumstances, the proceedings were adjourned and I declined to extend the two existing injunctions on effectively an ex-parte basis.
On 8 August 2014, both Mr Sellars and Ms Sellars filed affidavits, primarily addressed to the issue of the short-term commercial business loan application, purportedly made by Ms Sellars and which, on its face, had offered the campervan as a source of security, ostensibly in breach of the earlier affidavit.
In her affidavit, Ms Sellars denied having pledged the campervan. It is her evidence that she had not seen the loan application in question, prior to it being served upon her with Mr Matthews’ affidavit. In this context, she points to the fact that the document in question, although bearing her name, has not been signed by her.
Ms Sellars does however acknowledge being under some financial pressure, both at the present time and when the purported document was created. In this context, she approached a Mr Bill Korallis, who is a finance broker well known to both her and Mr Sellars. In this context, Ms Sellars wrote to Mr Korallis requesting his assistance in urgently raising the sum of $15,000.00 to affect repairs and to register a number of vehicles relating to the business of Adelaide Fast Freight.
Mr Matthews has a copy of this letter, which was exhibited to his affidavit of 30 June 2014. The letter is signed by Ms Sellars and does include a reference to the campervan but, as Ms Sellars points out, only as being one of “a list of a few trucks which can be available for work in a fortnight”. It is accordingly her position that it is unfair to assert her letter amounts to any offer to put up the campervan as security for a loan.
It is further Ms Sellars’ case that, prior to early March of 2014, through the agency of the J R Sellars Family Trust, she had leased a number of vehicles to the third respondent, Peter Colbert. On 7 March 2014, one of these vehicles had been involved in a fatal motor vehicle accident.
As a consequence of this tragic event, police had examined all of the vehicles leased by the trust to Mr Colbert and had issued defect notices in respect of them. Mr Colbert himself had been incarcerated, following charges being laid against him relating to his alleged involvement in the causation of the accident. In these circumstances, the vehicles in question were generating no income and Ms Sellars had taken possession of them.
In her affidavit, Ms Sellars deposed that she had expended several thousand dollars to repair the vehicles, with the aim of having them declared roadworthy. In addition, she had incurred substantial storage fees in respect of the vehicles in question. It was against this background that she had sought assistance from Mr Korallis to obtain finance to, in effect, put the fleet of vehicles back on the road and so earn money for the trust.
It is further Ms Sellars’ evidence that, as she was engaged in full-time employment and was busy, she asked Mr Sellars to negotiate with Mr Korallis on her behalf, in this regard. It is her understanding that Mr Sellars provided Mr Korallis with a list of all the vehicles, which were insured in his name, which included the campervan.
Given her assertion that she has not pledged the campervan as security for any loan and therefore has not breached the injunction, she asserts that Mr Matthews assertion that he has no confidence that she will not also breach the injunction in respect of the Jeep, must be considered to be baseless.
In his affidavit, Mr Sellars confirms that he met with Mr Korallis, at an Adelaide café, in late May of 2014. He confirms that he took with him to this meeting a list of motor vehicles, which included the campervan. When Mr Korallis inquired of him whether the campervan could be used as security, Mr Sellars has deposed that he immediately said words to the effect of “you can’t have that one, that is under a court order”.
Mr Sellars further denies having seen the business loan application form, at the time Mr Korallis completed it. As such, he is at a loss to know why Mr Korallis included the campervan on the document in question.
Mr Sellars further denies that he owns any further motor vehicles. He acknowledges having had some discussions with Mr Black, regarding subletting premises leased by him in Wingfield to Mr Black, as well as a possible hirer purchase agreement between him and Ms Sellars, regarding various motor vehicles owned either by Ms Sellars outright or in her capacity as the trustee of the JR Sellars Family Trust.
In this latter context, Mr Sellars points to the fact that the document, in Mr Matthews’ possession, refers to Mr Sellars and/or his nominee. Essentially, it appears to be Mr Sellars position that he was only negotiating with Mr Black, on Ms Sellars behalf, as her agent and not personally, as the beneficial owner of the vehicles concerned.
The case returned to court on 22 September 2014. Prior to this date, on 17 and 19 September 2014 respectively, Ms O’Toole filed two further affidavits in rebuttal of claims made by Mr Sellars and Ms Sellars and in support of the extension of the injunctions arising in these proceedings.
In the first affidavit, Ms O’Toole deposed that she had obtained the contents of a solicitor’s file, which relates to the defence of a claim brought by G De Poi Nominees Pty Ltd against Mr Sellars. In the defence filed on his behalf, Mr Sellars purported to have entered into a sale of his business to Mr Black. This apparently included the transfer of the lease of its premises.
As part of a discovery process, in these proceedings, Mr Sellars disclosed documents relating to this purported agreement. In particular, a letter from Mr Sellars to Mr Black, dated 14 September 2010, was provided, which indicated that Mr Black was in default in respect of lease payments and other incidental expenses relating to various motor vehicles.
In this context, counsel for the trustee, Mr Douglas, points to the fact that there is no reference to the trust or to Ms Sellars, as on its face, the documents in question appear to indicate that Mr Sellars is the owner of the various vehicles in question.
In the second affidavit, Ms O’Toole has provided a proof of evidence, from Mr Korallis, which contradicts Mr Sellars’ account of the meeting between the two, in May of 2014. It is Mr Korallis’ evidence that Mr Sellars provided him with a registration certificate, in respect of the campervan, on the basis that it was to be utilised as security for a commercial business loan.
The case returned to court, following the filing of these two affidavits, on 22 September 2014. Neither Mr Sellars nor Ms Sellars had had an opportunity to respond to these affidavits. On this basis, their solicitor, Mr Kaplan, sought an adjournment of the proceedings.
In the circumstances, I was not prepared to grant a further adjournment. It was my view that the court needed to make a decision, given that Mr Sellars and Ms Sellars had already provided their view of the circumstances surrounding the campervan, Jeep and other vehicles and the further evidence, from Ms O’Toole, was, in effect, a rebuttal of it.
Nonetheless, Mr Kaplan was able to tender, with the acquiescence of Mr Douglas, counsel for Mr Matthews, a letter dated 18 September 2014, to Ms O’Toole, which purported to answer some of the rebuttal material adduced by Ms O’Toole.
This letter advised that Mr Sellars and Ms Sellars had been unable to provide disclosure of relevant documentation, relating to the fleet of motor vehicles, as much of this documentation had been seized by the police in the course of their investigation of Colbert Transport Services, following the fatal accident.
In addition, Mr Kaplan provided a profit and loss statement of a company, Niglou Pty Ltd for the year ending 30 June 2007. This company had gone into liquidation in 2008, following which it was alleged Ms Sellars had utilised the J R Sellars Family Trust to acquire freight vehicles from the company. A figure of $121,235.00 stood in the balance sheet of the company, as at 30 June 2007, which is attributable to motor vehicles.
This document is the basis for the following statement, in Mr Kaplan’s letter:
“As explained in Mr Sellars’ affidavit of 4/4/2014, various vehicles previously owned by Niglou Pty Ltd were acquired by the JR Sellars Family Trust trading as Adelaide Fast Freight, after the former company went into liquidation in 2008. The trust continues to own the vehicles, regardless of whether they have been used by Dean Sellars Transport or made the subject of sale (or potential sale) to third parties. It is not in dispute that Dean Sellars negotiated contracts for the sale or potential sale of the vehicles owned by the trust but did so at all material times on the instructions, or with the authority, of Jacqueline Sellars. This is hardly a new revelation, nor is it surprising given the fact our clients had been in a long term marriage and remained parties in a business relationship.”[5]
[5] See exhibit A
In addition, in his letter, Mr Kaplan asserted that the various motor vehicles in question remain subject to police defect notices and, as such, require significant repairs. In these circumstances, it was submitted, by Mr Kaplan, that there were significant doubts as to whether there was any cost benefit in including the vehicles in the bankrupt estate, given the significant liability they potentially represented.
Finally, Mr Kaplan asserted that Adelaide Fast Freight had defrayed a sum in excess of $23,000.00 in repairing the various vehicles in question, and as such, sought to recover these costs from the bankrupt estate, if the application to seize the vehicles was successful.

The legal principles applicable

As previously indicated, pursuant to section 30(1)(b) of the Act, the court is authorised to grant such injunctions as it considers necessary for the purposes of carrying out or giving effect to its powers under the Bankruptcy Act.
In this context, the court has powers, pursuant to section 115 of the Act, in respect of transactions involving the relation back period, which in this case is 13 February 2012 and pursuant to section 120 potentially back to 13 August 2007, in respect of transactions which are under value.
The task for the court in determining whether or not to grant an interlocutory injunction is two-fold. Firstly, the court must be satisfied that there is a serious question to be tried. Secondly, the court must consider where the balance of convenience lies. In determining this second aspect, the court may also have to consider what conditions should apply to the grant of the injunction sought, if any. [6]
[6] See Epitoma Pty Ltd v AMIEU (1984) 54ALR 730
In my view, the applicant has made out a prima facie case that Mr Sellars had proprietary interests in both the campervan and the Jeep, during a relevant period of bankruptcy. The campervan was registered in his name, whilst the Jeep was registered in the name of a car dealer with whom he had had recent dealings.
The business affairs of Mr Sellars and Ms Sellars are complicated, involving a trust and proprietary companies. In addition, the marital status of Mr Sellars and Ms Sellars is controversial. The evidence however indicates that Mr Sellars has earned his living in the transport industry and has utilised a fleet of trucks to this end, which the trustee asserts should be included in the bankrupt estate.
It seems probable that Ms Sellars has both information and documents, which are relevant to this inquiry. On the basis of the evidence available to me, I am satisfied that she is an examinable person, for the purposes of section 81(1) of the Bankruptcy Act.
Pending her evidence, particularly in respect of issues pertaining to the JR Family Trust, I am satisfied that the trustee has made out a case that the bankrupt has a proprietorial interest in the fleet of motor vehicles, previously operated by Adelaide Fast Freight. This follows from the documentation provided which establishes a contractual relationship between Mr Sellars and Mr Black in respect of the vehicles.
In these circumstances, I propose to injunct Mr Sellars and Ms Sellars from dealing with the various motor vehicles in question. The issue for the court lies in what form those injunctions should take, bearing in mind issues of convenience.
At an earlier stage of the proceedings, injunctions were made by the court restraining both Mr Sellars and Ms Sellars from doing any act or thing relating to or antecedent or facilitating the sale or disposal of both the Jeep and the campervan to any person any person or relating to or antecedent to or facilitating the pledging of any interest either of them might have in either such vehicle. In my view, the injunction was broadly and clearly constructed and cannot be regarded as being ambiguous in any way.
In my view, the trustee has provided strong evidence that Mr Sellars took steps to firstly sell the campervan and secondly and more recently pledge it for credit. If either of these transactions had been finalised, it would have represented a clear breach of the injunction in question. In addition, it would have frustrated the discharge, by the trustee, of his statutory obligations.
In these circumstances, in my view, the balance of convenience favours the trustee and the orders, which he seeks in respect of the campervan and the Jeep. Accordingly, I propose that the terms of the original injunctions should be broadened to require the first and second respondents to deliver up the two motor vehicles, hither to subject to injunction, namely the campervan and the Jeep, to the storage facility as nominated by the trustee.
In my view, the situation is different in respect of the remaining motor vehicles. These vehicles have not as yet been subject to injunction. In addition, I have been told that each of these vehicles is currently inoperative and subject to defect notice.
In all these circumstances, I accept that there are likely to be significant logistical difficulties in moving the vehicles and substantial costs may be incurred in so doing. I am apprehensive that these costs may outweigh the issues which arise in this case, serious though they are.
In my view, it would be a commensurate response to the issues raised in this case, if an injunction is made restraining both Mr Sellars and Ms Sellars from dealing with, selling or otherwise encumbering any or all of these vehicles. I am satisfied that such an order will preserve the motor vehicles pending the outcome of these proceedings, certainly pending the public examination of Ms Sellars.
I will direct that a summons, pursuant to section 81 of the Bankruptcy Act issue, directing Ms Sellars to firstly bring relevant documents to the court and secondly, on a date thereafter, to be publically examined. The date for production of documents will be 17 October 2014 with the examination to take place on 20 November 2014.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.

I certify that the preceding ninety (90) paragraphs are a true copy of the reasons for judgment of Judge Brown

Associate:

Date: 26 September 2014