Nelson (as trustee) v Supple
[2020] FCCA 597
•23 March 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| NELSON (AS TRUSTEE) v SUPPLE & ANOR | [2020] FCCA 597 |
| Catchwords: BANKRUPTCY – Whether the First Respondent’s consideration he gave for the transfer was at least as valuable as the market value of the property – whether the transferee did not know and could not reasonably have inferred that the transferor’s main purpose in making the transfer was the purpose described in s.121(1)(b) – whether the transferee could not reasonably have inferred that at the time of the transfer the transferor was, or was about to become, insolvent – the relevant property would not have become part of the transferor’s estate and would not have been available to creditors if the property had not been transferred – the Second Respondent’s purpose in making the transfer was not to prevent the transferor’s property from becoming divisible amongst her creditors, or to hinder or delay the process of making the property available for division amongst her creditors – finding that the First Respondent did not know and could not reasonably have inferred that the purpose of the transfer was the impugned one and that he did not and could not reasonably have inferred that at the time of the transfer the transferor was about to become insolvent. |
| Legislation: Bankruptcy Act 1966 (Cth), ss.120, 121, 179 |
| Cases cited: Jury, Re; Ashton v Prentice (1999) 92 FCR 68 |
| Applicant: | SIMON PATRICK NELSON (IN HIS CAPACITY AS TRUSTEE OF THE PROPERTY OF KATARZYNA SUPPLE, A BANKRUPT) |
| First Respondent: | JEFFREY GERARD SUPPLE |
| Second Respondent: | KATARZYNA SUPPLE |
| File Number: | MLG 47 of 2017 |
| Judgment of: | Judge Burchardt |
| Hearing date: | 25-26 February 2020 |
| Date of Last Submission: | 11 March 2020 |
| Delivered at: | Dandenong |
| Delivered on: | 23 March 2020 |
REPRESENTATION
| Counsel for the Applicant: | Mr Snyder |
| Solicitors for the Applicant: | Baker Jones |
| Counsel for the First Respondent: | Self-represented |
| Solicitors for the First Respondent: | Not applicable |
| Counsel for the Second Respondent: | Not applicable |
| Solicitors for the Second Respondent: | Not applicable |
ORDERS
The Form 2 Application filed 10 January 2017 be dismissed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 47 of 2017
| SIMON PATRICK NELSON (IN HIS CAPACITY AS TRUSTEE OF THE PROPERTY OF KATARZYNA SUPPLE, A BANKRUPT) |
Applicant
And
| JEFFREY GERARD SUPPLE |
First Respondent
| KATARZYNA SUPPLE |
Second Respondent
REASONS FOR JUDGMENT
Introductory
As long ago as 10 January 2017, the applicant trustee filed an application pursuant to section 120 and/or section 121 of the Bankruptcy Act 1996 (Cth) (“the Act”), seeking declarations that a transfer of property by Katarzyna Supple to her husband’s father, Jeffrey Supple, in July 2017 was void against the trustee, together with associated relief. The Court has endeavoured to get this matter on for trial on numerous occasions, but it is sufficient to say the substantial delay until the matter was heard as a trial in February 2020 is, with the exception of the period from January to February 2020, entirely as a result of delays imposed by unavoidable circumstances affecting the parties.
The section 120 claim was abandoned, albeit only relatively late in the history of the matter, and now only the section 121 application is extant.
The written submissions of the applicant in closing, (which I should say are extremely thorough and well-drafted), correctly, in my view, identify the matters that arise. First, as regards to the bankrupt Ms Supple, there must be a transfer of property before her bankruptcy. Second, the question is whether the relevant property would have become part of the transferor’s estate, or would probably have been available to creditors if that property had not been transferred (section 121(1)(a)). Third, the question is whether the transferor’s main purpose in making the transfer was to prevent the transferred property from becoming divisible amongst the transferor’s creditors, or to hinder or delay the process of making the property available for division amongst the transferor’s creditors (section 121(1)(b)). The transferor’s main purpose in making the transfer is taken to be such a purpose if it can reasonably be inferred from all the circumstances that, at the time of the transfer, the transferor was, or was about to become, insolvent (section 121(2)).
As against Mr Jeffrey Supple the question is whether:
a)the consideration that he gave for the transfer was at least as valuable as the market value of the property (something now conceded by the trustee);
b)that the transferee did not know and could not reasonably have inferred that the transferor’s main purpose in making the transfer was the purpose described in section 121(1)(b); and
c)the trustee could not reasonably have inferred that at the time of the transfer the transferor was, or was about to become, insolvent.
It is to be noted that Mr Supple bears the onus of proving the matters under subsection (4) (see Jury, Re; Ashton v Prentice (1999) 92 FCR 68 at [67]).
For the reasons that follow I have concluded that although Ms Supple undoubtedly transferred the property to her father-in-law, Mr Supple, the relevant property would probably not have become part of the transferor’s estate and would not have been available to creditors if the property had not been transferred. Further, although I accept that Ms Supple was at the time of the transfer or was about to become insolvent, her purpose in making the transfer was not to prevent the transferor’s property from becoming divisible amongst her creditors, or to hinder or delay the process of making the property available for division amongst her creditors.
Furthermore, I find that the consideration given by Mr Supple was more valuable than the market value of the property, that Mr Supple did not know and could not reasonably have inferred that the purpose of the transfer was the impugned one, and that he did not and could not reasonably have inferred that at the time of the transfer the transferor, Ms Supple, was about to become insolvent.
Agreed or Uncontroversial Matters
Jeffrey Supple has had two children, the younger of whom, Steven, was born on 19 December 1980. At a point not precisely indicated, but while Steven was working in London, he met Katarzyna Supple. As Mr Supple deposes at paragraph 13 of his affidavit sworn 4 May 2018:
Steven and Kat came back from overseas together in about 2008. They both came to live with me in Mordialloc. I have always gotten along very well with Kat and believe that she has been a very good influence on Steven. Steven and Kat married later in 2008. They were living with me when they got married and the wider family fully embraced them and welcomed Kat into the family.
In 2009 to 2010 (according once again to Mr Supple’s affidavit) Steven and Katarzyna Supple bought a property in Carrum. In 2012, they bought Unit 8, 36 Brighton Road, Balaclava, albeit that it was registered in the name of Katarzyna solely. The purchase of this property was to prove in many ways somewhat disastrous.
It would appear that Steven undertook certain works in the unit which attracted the opposition of a neighbour who lived directly upstairs, a Mr Maybin. This disputation led to proceedings before the Building Appeals Board (“BAB”). It is unnecessary to go into the detail of the litigation that ensued. It is sufficient to note that by 2014 the BAB had made several determinations that were unsuccessful from the point of view of Steven and Katarzyna Supple. Ms Supple and Steven then issued an appeal in the Supreme Court of Victoria which was heard on 4 March 2015. Both sides were represented by senior and junior counsel. On 12 March 2015, Kaye JA dismissed the appeal.
As the written submissions of the applicant point out, Katarzyna and Steven Supple were represented by a number of legal firms to whom they owed fees. They were initially, it would appear, represented by Hunt & Hunt until no later than November 2012. They then engaged TressCox Lawyers (“TressCox”) over a period of some 13 odd months, and fees in excess of $150,000 were incurred. By May 2014, when TressCox Lawyers ceased acting for the bankrupt and Steven, there were unpaid fees of some $67,000 odd. TressCox issued legal proceedings in the Magistrates’ Court of Victoria on 10 July 2014 to recover the claimed fees, by which time Mahons with Yuncken & Yuncken Lawyers (“Mahons”) were on the record for Katarzyna and Steven in defending that proceeding. Mahons acted for Katarzyna and Steven in making an application for taxation in the costs court of the Supreme Court which was unsuccessful. On 24 November 2015, TressCox obtained judgment in the Magistrates’ Court against Ms Supple and Steven in the sum of $86,615.
Mahons also sued Katarzyna and Steven for unpaid fees in the amount of $8,061.
In the meantime on 17 July 2014, Katarzyna and Steven engaged yet another law firm, Noble Lawyers, who acted for them on the record in the Supreme Court of Victoria appeal. Noble Lawyers acted until April 2015 in relation to the matter, and an invoice issued by Noble Lawyers on 16 April 2015 went unpaid to the extent of $10,165.
Additionally, Katarzyna and Steven incurred substantial liabilities in respect of Mr Maybin’s costs. The costs of the Supreme Court appeal were taxed and allied on 24 July 2015 at the sum of $82,559. A separate costs order was made in April 2016 requiring Katarzyna and Steven payments to be made in costs in the sum of $50,000 in respect of the earlier BAB’s proceedings. None of these have been paid.
It is also apparent from the materials filed, and in my view it is not controversial, that the Carrum property bought in about 2009 or 2010 was sold in around November 2014 with a surplus once the mortgage was paid out, according to Katarzyna’s statement of affairs, of approximately $54,000. In November 2014, Katarzyna refinanced her mortgage loan with the Commonwealth Bank of Australia (“CBA”). to obtain an increase in credit of $60,000. These sums on the materials before the court were substantially dissipated by March 2015, and I accept as uncontroversial the inference in the Trustee’s written submissions that these sums were substantially dispersed in funds leading up to the Supreme Court appeal.
Up to 2015, and it appears thereafter, both Steven and Katarzyna were employed in a business known as Bulk Powders Pty Ltd. This was a supplements business, apparently originally run out of Jeffrey Supple’s home. Bulk Powders was Trustee of the unit trust of which Supple Holdings Pty Ltd held 50 per cent of the units in the trust. On 23 March 2015, Jeffrey Supple replaced Steven as the sole director of Supple Holdings Pty Ltd and also the sole director of Bulk Powders Pty Ltd. I will return to the evidence given about this matter in due course.
Jeffrey Supple has given evidence which was not the subject of challenge that by February to March 2015 he first thought with Steven and Katarzyna about purchasing the apartment off them. The price ultimately agreed was $475,000 which all but paid out the existing mortgage to the CBA. As it transpired, Katarzyna paid an additional $1800 odd to pay out the mortgage at settlement.
By this time, two values had been obtained, namely what is described as the Snowden valuation, prepared in July 2014 of $430,000 (Snowden Valuers were not paid and obtained judgment against Steven for $440 in December 2014). Additionally, there was about valuation by CBRE dated 7 May 2015 for $450,000.
It is now common cause that neither the Snowden valuation nor the CBRE valuation took into account rectification works required to be performed in respect of the property. These fell into two parts. There was an overarching requirement on all the property owners to rectification works which, as I understand it, amounted in the ultimate to some $15,000. Furthermore, there was specific rectification works required to be performed arising out of the BAB proceedings on the property itself. These were not then quantified, but it is accepted by all concerned that they were not insubstantial.
In the ultimate, Jeffrey Supple bought the property from Katarzyna Supple for $475,000 with settlement in July 2015. He thereafter had some measure of success in reversing some aspects of earlier decisions of the BAB’s determinations and was able, as I understand it, to obtain a final outcome at a lesser cost than might otherwise have been thought likely.
Third parties’ affidavits
The Court Book runs to two arch lever folders and I suspect does not even include all the affidavit materials of the parties. There is all too much information before the Court. I would observe in passing that much of the materials filed by both Jeffrey Supple and Katarzyna Supple consists of complaints made against the Trustee generally and which have led to a foreshadowed section 179 of the Act claim. I have determined that matter should await the determination of this proceeding. There is an extant issue as to whether, given the timing of the events, the application would proceed under section 179 and various transitional provisions or under the new provisions in the regulations, which have replaced the old section 179 provisions.
Much of the material filed by Jeffrey Supple and Katarzyna Supple, who have been self-represented most of the time, is objectionable on a number of fronts. Some of it is argumentative. Some of it expresses opinions that the deponents are not qualified to give. Some of it is irrelevant. Furthermore, Katarzyna Supple, who is well able, it would appear, to file affidavit material up to the week before the trial, did not attend to give evidence. One might infer that this was because the strain of giving evidence was more than she was prepared to bear, but there has been no medical evidence put to support this conclusion that is in any way persuasive. The absence of cross-examination is plainly a relevant matter, although the Trustee, through counsel, and to his credit did not seek that the affidavits not be read. Rather it is a question of the weight to be given.
In these circumstances, in my view, it is more profitable to concentrate on what the parties actually said at court because this denotes the areas of dispute more precisely. What follows is taken from my notes. Self-evidently, it is not a transcript but it records matters I found significant. I should make it clear that I have, of course, read all of the parties’ affidavit material in the Court Book and had proper regard to it.
The opening and evidence of the applicant trustee
Counsel gave a very helpful opening which identified the issues very much in the terms in which I have already set them out myself. He took the court through the long history of litigation involving Steven and Katarzyna. He noted that there was an issue as to whether TressCox acted for Steven alone and not for Katarzyna as she had deposed. He drew attention to the fact that the sale of the property was an off market sale and noted an endeavour by Jeffrey Supple to sell the property at a price range of $620,000 to $670,000 as early as 28 September 2016, only 14 or so months after purchase. It was submitted that the incapacity of Katarzyna Supple to pay her fees was established. It was put that there were four issues. First of all, whether at the time of the settlement of the sale the transferror was insolvent. This gave rise it was submitted to an irrebuttable presumption that this was done to defeat creditors and was therefore a void transfer. Second, there was the question of the bankrupt’s actual purpose. Third, there was also the issue of the possible defence for Jeffrey Supple pursuant to section 121(4) of the Act. This, of course, focussed attention upon whether Jeffrey Supple knew or inferred that the purpose of the transfer was to hinder creditors and/or whether he had inferred that Katarzyna Supple was about to become insolvent, in respect of which he bore burden of proof. Finally, Counsel also raised the question as to whether there should be an accounting in equity in relation to the property and submitted that this should be dealt with after the primary section 121 dispute was resolved.
The evidence of Andrew Whitelaw
Mr Whitelaw was called first without objection. He is an experienced solicitor who was a partner with TressCox in 2013 to 2014. That partnership still exists but is winding down and not operating.
Mr Whitelaw confirmed that it was his signature on the Court Book at page 913 being a proof of debt lodged in the bankruptcy. This related to work performed for Katarzyna Supple and Steven Supple in their defence in the proceedings in the BAB matter. Katarzyna Supple owned the property but invoices were sent to Mr and Mrs Supple. The Court Book at page 924 was such an invoice. The work started in about March 2013.
Mr Whitelaw confirmed that he had attended a conference on 9 August 2013 with counsel Joe Forrest and the clients who were Katarzyna and Steven Supple. Michael Sharkey, a junior lawyer was also present. He had met Jeffrey Supple previously only at the BAB, but he was also at this conference. Katarzyna Supple attended a number of hearings at the BAB and he had met both her and Steven Supple. It was a complicated matter with numerous issues and he had sought instructions from both Katarzyna Supple and Steven Supple. The proceeding was first handled by Brian Thomas but he had taken over later because it was a complex matter. Joe Forrest appeared at the BAB and Katarzyna Supple never told the Building Appeals Board she was not represented by his firm. Mr Whitelaw was taken to “KS-32”, being an affidavit sworn by Katarzyna Supple on 1 October 2019. He recalled the email at paragraph 28 thereof and recalled the response from Steven Supple. Mr Supple said they were unable to pay the outstanding legal fees and that TressCox should take no further action. Exhibit A1 was tabled through Mr Whitelaw. This was correspondence from Tim Whitehead of Mahons who was then acting for Steven and Kasia (sic) Supple. It should be noted that the letter from Mr Whitehead which is written on behalf of Steven Supple and Kasia Supple makes a number of complaints about the conduct of TressCox but in no way, and at no point, asserts that TressCox had not acted properly on behalf of Kasia Supple. Indeed, there was annexed to the letter, an authority which relevantly said:
We, Steven Supple and Kasia Supple, both of 8/36 Brighton Road Balaclava in the State of Victoria authorise and direct you to provide to our solicitors, Mahons with Yuncken & Yuncken, Lawyers of 177 Surrey Road Blackburn Vic 3130 all documents and files in your possession in relation to the work performed by your firm on our behalf and advice provided to us in relation to the proceedings before the Building Appeals Board.
This is dated May 2014 and signed by both Steven and Kasia Supple.
I should say in passing that this document stands as an insuperable objection to the assertions subsequently made by Katarzyna Supple that Steven Supple alone is or was responsible for the debt to TressCox.
Mr Whitelaw deposed that TressCox sued for their fees in late 2014 and judgment was obtained following which both Katarzyna Supple and Steven Supple became bankrupt. Mr Whitelaw confirmed that the Notice of Order at Court Book 914 was the order made on 24 November 2015 whereby both Steven and Katarzyna Supple were ordered to pay the outstanding costs due to TressCox.
This order had followed a Supreme Court assessment of costs and the subsequent withdrawal from the record by Mahons. The matter had been stayed until the Supreme Court taxation concluded and in the ultimate proceeded on an undefended basis in the Magistrates’ Court. The applicants in the Supreme Court costs matter were Katarzyna Supple and Steven Supple. Mahons had been on the record at the start.
Mr Supple, who by leave of the court was permitted to represent not only himself but Ms Supple (there being no other practicable way to proceed), cross-examined Mr Whitelaw. Mr Whitelaw conceded that the BAB proceedings were protracted and involved a number of hearings. When Mr Supple asked Mr Whitelaw if he had been a supportive parent. Mr Whitelaw said that Mr Supple had been present, including at a conference with counsel but no instructions had been taken from him. At all times they had acted on behalf of Mr and Mrs Supple.
Cross-examination about the history of the matter in the costs dispute did not, in my view, take the matter further. Mr Whitelaw certainly stuck by his evidence in chief. Mr Whitelaw was aware of a recent proceedings in the Magistrates’ Court in October 2019. The Trustee had appeared and indicated that Katarzyna Supple had no standing to pursue her claim. It is apparent from exhibit R2 that Ms Supple’s application for a rehearing was dismissed.
Mr Whitelaw was taken to paragraph 45 of “KS-32” being part of Katarzyna Supple’s affidavit sworn 1 October 2019. This was an extract of the judgment of the BAB that was critical of Katarzyna and Steven Supple and their lawyers. He conceded that this was an extract from the judgment. When it was put to him that Jeffrey Supple had been able to reverse the BAB’s decision for some $30,000 Mr Whitelaw was unable to say as it was after he had ceased to act.
The evidence of the Trustee of Mr Nelson
Mr Nelson adopted his various affidavit as true and correct.
Under cross-examination by Mr Supple, Mr Nelson confirmed he was aware of the proper duties of the trustee and had always followed the relevant guidelines. He conceded that he did not include LMS Lawyers in his first affidavit. It was his practice always to ask the bankrupts for documents but they had not provided any. The first valuation from WPB was for $650,000. Mr Sutherland’s estimate was $575,000. Then this was revised down to $425,000 at the time of the transfer. He was familiar with Mr Sutherland’s affidavits. He was aware of Mr Supple’s affidavit of 18 February 2019. He had a good regard for the firm of Mr Sutherland which he had dealt with for over 30 years.
He was not present when Statements of Affairs were filed by the bankrupts. He conceded that Katarzyna had sought to have debts allotted to Steven Supple. The Trustee will not adjudicate the question as to who was responsible for the debts until funds were available. From the documents provided the TressCox debt appeared to be a joint one.
Mr Nelson was cross-examined about the recent Magistrates’ Court proceeding. Katarzyna Supple was trying to set judgment aside but this needed the approval of the Trustee. The Trustee had the right to intervene in the proceeding. To reject a proof of debt you need evidence. He had met Steven Supple some 10 days ago, but Mr Supple had been reluctant to attend his office, as was Katarzyna. He had read Katarzyna’s affidavit. He was not sure that the cash amounts asserted were correct. It had never been demonstrated that cash was asserted to be in her possession existed. It was odd that Ms Supple should have filed a debtors petition so soon after she had deposed to being solvent.
Mr Nelson was taken to Court Book 433, but noted that these documents were not available in 2017. His couple of meetings with Katarzyna Supple had involved general discussion about the bankrupt’s obligations and travel issues. He would be keen to recover if there was $90,000 cash available. This was not disclosed in the Statement of Affairs.
Mr Nelson was taken to Court Book 1090 and conceded that the amounts referred to there in the records of Supple Holdings Trust were not included in the solvency report. They had issued demands to the trustee of the Supple Holdings Trust for payments of the sums allegedly owing to Steven and Katarzyna Supple but had not been paid. The trusts were restructured in about March 2015.
There was some cross-examination about the role of Vince Aquilina who had previously been a financial advisor to the Supples and subsequently joined Mr Nelson’s firm. It should be noted that while Mr Nelson denied any impropriety these would be matters for the section 179 claim should it proceed.
Cross-examination then moved to the correspondence sent by Mr Nelson to Gareth Brown, Senior Inspector Australian Financial Security Authority dated 7 June 2019 (Court Book 1653 and following). Mr Nelson said that there had been a whole heap of valuations and it was view that the transfer was at an undervalue, even at the price of $485,000. However, he was driven to concede that the assertion at Court Book 1657 that “Mr Aquilina has had no involvement in the administration of either bankrupt’s estate save for the meeting on 10 October 2018” was probably wrong. Mr Aquilina might have attended one or two subsequent meetings.
The opening and evidence of Mr Supple
Mr Supple opened his case. He said the provisions of section 121(4)(a) of the Act were satisfied. There had been sufficient consideration for the property. Valuations were available. There was no equity at the time of transfer. Ron Courtney had been engaged (it should be noted that he had produced a valuation of under $400,000). He would see if Mr Courtney was available in the following week. There has been speculation about property values. He has spent $60,000 in excess of the purchase price of the property since he obtained it. Solvency was addressed in Katarzyna Supple’s affidavits. It was a question of timing. He queried as to who had debts at that time and whether they were the subject of Steven Supple. Katarzyna Supple had provided affidavits dated 14 August 2019 and 19 February 2020 which provided comprehensive evidence that they were all Steven Supple’s debts. The property had been transferred to him because of the difficulties with Katarzyna Supple’s health. There was no interest for the Trustee. His equitable interest comprised the whole property. The same advisor referred Katarzyna Supple to the Trustee and became a partner of the Trustee. There has now been a concession that there was a fair price paid for the property and he is just being pursued for costs.
Mr Supple referred to Katarzyna Supple’s affidavit of 14 August 2019 which has 27 attachments. It deals with proceedings in the BAB. There was evidence that the property transfer was bona fide. She was not insolvent. Her later affidavit of 19 February 2020 provides further information and valuations. Because the property was a stratum title it was less valuable than a strata title. The CBA value was $450,000.
In his affidavit of 4 May 2018, Mr Supple had deposed to his son being irresponsible and antisocial.
In considering section 121(1)(b), the Court should consider the CBA value. The transfer of $475,000 included ongoing responsibility arising from the BAB’s orders. Katarzyna Supple was stressed. Mr Supple referred to High Court authority in respect of his case. I have regard to those authorities but it must be noted that, given his self-representation unsurprisingly, the propositions he advanced whilst sound were of matters generally well accepted in the bankruptcy field.
Mr Supple said he paid $475,000. Mr Sutherland had not known about the BAB and his report contained other flaws. Ron Courtney had produced a valuation of $395,000. This allowed for $60,000 remedial work. Mr Sutherland revalued the property at $485,000. There was no equity at the time of transfers. Subsequent to purchase he appealed the BAB and overturned the original proceeding because the neighbour had presented false information. This decision was in at Court Book 1389. The property has recently been revalued as at 2019 at $450,000. There was no legal or equitable interest for the trustee.
So far as solvency was concerned the trustee’s insolvency reports did not take account of the debts of Steven and Katarzyna Supple. There were funds available in the bank account of Katarzyna Supple and she was also entitled to payments from the trust. Her affidavits showed that she was solvent before and after the transfer. All instructions were given by Steven Supple. Katarzyna Supple’s affidavit of 14 August 2019 details cash in her possession plus income. Mr Supple referred to Sandell v Porter (1966) 115 CLR 666 in this regard. Katarzyna Supple had actually left the apartment before the settlement because she was so stressed. Mr Supple referred to conflict of interest on the part of Mr Aquilina. Mr Supple noted that Katarzyna Supple’s bankruptcy has now been extended. The transfer was in good faith. The transfer was to enable Katarzyna Supple to escape a serious predicament including significant mental health pressures.
At this point the matter adjourned. On the following day Mr Supple, whom I had advised to contact Katarzyna Supple to see if she could possibly give evidence, informed the Court that she was not available. As earlier indicated, counsel did not seek that her affidavits not be read but noted that it was not possible to traverse matters with her and that obviously there would be issues as to the weight to be provided to those affidavits.
Mr Supple was called and adopted his affidavits as true and correct.
Under cross-examination Mr Supple confirmed that he was a public servant in 2015. He is on a three year contract but has had a long career in the State Public Service. He works as a consultant for a number of companies and gave details. He is experienced in emergency services. He gave evidence about the Bulk Powders business including Jeffrey Supple Holdings Pty Ltd. He deposed that he had not been involved in litigation to any significant extent for the matters that had given rise to these proceedings.
In 2008, Steven and Katarzyna Supple were living with him but they moved out in 2009 to 2010. They moved to a Carrum property they had bought at 10 Little Colenso Street. This was sold in late 2015. He was aware of this sale prior to July 2015. The only property that Katarzyna Supple owned was that in Brighton.
Katarzyna Supple started the Bulk Powders business.
Mr Supple was cross-examined about paragraph 27 of his affidavit of 4 May 2018 in which he had expressed a lack of knowledge of the details of Steven or Katarzyna Supple’s financial circumstances. It was put to him that in July 2015 the only assets that they had was the property at Brighton and the Bulk Powders business and Mr Supple agreed. Katarzyna Supple was pregnant in July 2015 and the child was born in October 2015. Katarzyna Supple was working at Bulk Powders in July 2015. Steven Supple was only working sporadically at Bulk Powders in July 2015.
Mr Supple was aware of the dispute at the BAB prior to March 2015. He was aware that TressCox had been retained. He had been to a few of the hearings at the BAB and the proceeding had been going on for many months. He did not recall the dates of the proceedings but agreed that they were lengthy. He agreed that he had attended TressCox in August 2013 and accepted that there were two solicitors and counsel Joe Forrest there. He could not recall if Steven and Katarzyna Supple were there. He became interested because of the protracted matter.
Mr Supple was cross‑examined about his affidavit at Court Book 1361. He accepted that the main reason for him borrowing was the outstanding legal fees. He said, however, that Steven and Katarzyna were meeting their financial responsibilities. He was aware of the determination in March 2015 of the BAB matter but was not privy to all of the decisions. It was put to him that he was aware that Katarzyna and Steven Supple had lost in the BAB in March 2015.
He responded that he did not believe this to be the case at that time. He was not aware that the BAB was finished by March 2015. As at March 2015, he was getting very little information from Steven Supple about the BAB. There were technical issues, according to Steven, and the matter was proceeding, as he understood it, in a positive way, albeit that his son’s illness meant that there was a lack of information.
He was in contact with Steven Supple in late 2014, but he could not recall if he was discussing these matters with Katarzyna Supple in late 2014. He could not recall that the BAB had not gone well. Katarzyna and Steven Supple appealed to the Supreme Court and he was aware of the appeal. He must have been aware of the unfavourable decision that occurred.
The appeal only lasted one day and he attended for part of the preliminary discussions about the appeal. He went to a conference with a barrister about the appeal. He went with Steven Supple for part of the appeal itself, but could not recall if there were solicitors present at the appeal. He did not recall senior and junior counsel, but just recalled the barrister.
The other side were represented by solicitors, but he could not recall barristers. He could not recall that a QC and junior appeared for the respondents. He said he was not aware in July 2015 of the costs issue. He thought there might have been pro bono representation for Steven Supple and Katarzyna Supple. He accepted that there was no reference to pro bono work in his affidavits.
I should interpolate and say that Mr Supple’s evidence about the possibility of the Supreme Court appeal having been conducted on a pro bono basis was manifestly untrue and had every appearance of being made up on the run.
It was put to Mr Supple that he knew by July 2015 that Katarzyna and Steven Supple had lost their appeal. He was evidently reluctant to admit this, but ultimately, I think, said, “I would say yes.” He knew that it was likely that the costs of appeal would be payable by Katarzyna and Steven Supple. It was put to him that he knew that the costs were substantial, but he said he did not know the costs at the time. Steven Supple was still looking at appeal options. Some aspects of the BAB decisions were favourable to Steven and Katarzyna. He did, however, know the result of the Supreme Court appeal.
He was aware of the decline in his son’s condition by 2015. He was aware in mid‑2015 that he might be abusing drugs and alcohol. He thought Steven Supple was on the edge of a serious breakdown. Katarzyna Supple was also very distressed and was seeking medical support for distress and anxiety.
It was put to Mr Supple that he was concerned about Steven’s capacity to manage his financial affairs by March 2015. Mr Supple said that he was aware that they had sold their property in Carrum and borrowed, but he thought this was within their limits. It was put to him that Katarzyna Supple had no capacity to manage the costs of litigation. Mr Supple said he knew she was resilient, apart from her health issues. She would refinance the property to cover their debts.
Mr Supple conceded that he had discussed the possibility of purchase in March 2015 with Katarzyna Supple. He initially thought he would get a valuation so that he could purchase through his self‑managed superannuation fund. Katarzyna Supple was thinking about the value of the property and trying to get a fair value. It was put to Mr Supple that the discussions were at that time of the Supreme Court hearing. Mr Supple professed to be unable to recall but conceded this was before July 2015.
Mr Supple was cross‑examined about paragraph 4 of his affidavit, 6 December 2017, in which he had deposed to how he had arrived at the sale value of $475,000. He said he had considered the matters referred to. He denied drafting Ms Supple’s affidavits and said he had no role in the preparation of them. He said he became more aware of the BAB orders but was not aware, at the time of purchase, of the rectification works required.
Mr Supple confirmed that the matters referred to in paragraph 4d of his affidavit, at Court Book 1222, were rectification work on the entire property, not on the particular unit. He was aware of the BAB determinations, but not the detail until later. In 2015, he had only a general awareness of the BAB. His focus was on the health of his son and daughter‑in‑law. Costs escalated and blew them out of the water. They were not guided well by their lawyers and they were significantly distressed by the BAB matter.
Mr Supple could not recall if Katarzyna Supple had discussed with him $50,000 worth of rectification costs.
When asked how the valuations of Mr Snowden and CBRE had been obtained, Mr Supple said Snowden was nothing to do with him. He was aware of that valuation at the time of sale. Steven Supple had obtained it, but he did not know why. He had obtained the CBRE valuation because he was seeking funds from CBA. Mr Supple conceded that Mr Snowden had not taken into account rectification costs. He could not recall the details of the comparable properties referred to at paragraph 4c of his affidavit.
It was put to Mr Supple that in July 2015 the true value of the property was likely less than $430,000. Mr Supple said he was trying to recall and asked for the question to be repeated. He recalled that Katarzyna Supple expected that the property would be worth more than $475,000 when she first approached him. The issue was the strata title, rather than the stratum title.
Mr Supple was asked that, after the CBRE valuation in July 2015, he understood the property was worth less than $430,000. There was a very lengthy delay before Mr Supple replied. The bank valuation was $450,000 and he thought it was around that figure. This took no account of the rectification, specifically and generally. When it was put to him that therefore the value of the property must have been less than $450,000, Mr Supple’s answer was evasive. He said he saw it as an investment opportunity and that there was value in a future benefit. He did not know the costs of rectification at the time. The purchase was from the heart and not the head. He was removing them from concerns about the properties.
Mr Supple said he had discussed the CBRE valuation with Katarzyna Supple. She still wanted $470,000. She was surprised by the CBRE valuation and wanted a bit higher. Her borrowings exceeded $450,000. She was desperate to leave the property and, in fact, left it in May. He was aware that the mortgage was in excess of $475,000 at the time of settlement. He was aware from March and through until settlement this was so. The price was the value of the mortgage. The stratum title was a shock to Katarzyna Supple.
Mr Supple said that discussion of the CBA’s mistake in relation to valuation was more probably discussed with Steven than with Katarzyna by him. He was taken to paragraph 16 of Ms Supple’s affidavit of 21 February 2019 at Court Book 1525 and accepted that Ms Supple had no family in Australia and turned to him for support as a result. He conceded that he offered to assist them. Katarzyna Supple has no family here, and he is her closest support in Australia. When it was put to him that the price of $475,000 was set by reference to the outstanding mortgage, he accepted that this was a strong contributory factor.
Cross-examination turned to the affairs of what I might describe as the Bulk Powders business and its various corporate emanations. He had removed Steven Supple as sole director on 23 March 2015 and replaced him as the sole director. This was about two weeks after the Supreme Court Appeal. It was put to him that Steven and Katarzyna had given up on the disputes by that stage. Mr Supple said that Steven Supple was in a difficult space and had given up, but Katarzyna Supple was not involved. Steven was erratic at that time.
Bulk Powders operated as a trust. There was a unit trust with three unitholders. Supple Holdings Trust held 50 per cent and the other two were Silvia Goncalves and Sophat Phon. On 23 March 2015, he became the sole director of Supple Holdings Trust and the sole shareholder replacing Steven Supple. Supple Holdings Pty Ltd was the trustee of Supply Holdings Trust. When asked why he replaced him, Mr Supple said he discussed Steven’s behaviour with his accountant. Steven was acting in a fashion that was antisocial and was on the verge of a breakdown. The company accountant suggested the change. He was already supporting Katarzyna and Steven and took on that responsibility as well. He understood they were meeting their financial obligations. He was familiar with the position of the companies generally. He conceded that he had signed the Bulk Powders Unit Trust accounts at Court Book 1099. The profit for the year ended June 2016 was $18,716. The company traded through the unit trust. He agreed that there was no physical distribution to Supple Holdings Trust in that year. The trust accounts for 2015 were tendered as exhibit A3. The amounts distributed to Steven and Katarzyna in 2014 were $4,557. In fact, the physical distribution to Steven and Katarzyna in the 2015 year was $122. The same records showed loans in respect of Steven and Katarzyna totalling $48,000. The cash assets of the trust in 2015 (Court Book 1103) were $29,000.
The beneficiary loans of $48,000 at Court Book 1105 had not been repaid as far as he was aware.
Katarzyna and Steven Supple were employed by Bulk Powders in June 2015. Mr Jeffrey Supple considered he was the sole director and was aware of their salaries being approximately $65,000 each. They had living expenses which were due to go up when the child was due in a few months. He discussed the CBRE evaluation with Katarzyna Supple. He nonetheless paid $475,000 for the property. Katarzyna was under considerable distress. The neighbour would stamp up and down on the ceiling. The mortgage had to be paid out.
Mr Supple conceded that he had contacted Chisholm & Gamon in 2016. This was two weeks after Katarzyna became bankrupt. He executed an authority to market, but denied that the reference to $680,000 at Court Book 145 was there when he signed the document. The price he discussed with the agent was about $620,000. This assertion was not in his earlier affidavits. There was an error in his email at Court Book 142. The figures should have been $520,000-540,000.
Mr Supple went on to say that in the period between May 2015 and September 2016 there was a strong market move in real estate to the extent of 20 to 30 per cent. The rental is now $100 less.
He denied being aware in July 2015 that Katarzyna and Steven would not be able to pay their legal costs, although he has subsequently become so.
In re-examination Mr Supple said his focus was on protecting Katarzyna and Steven Supple from emotional distress. Katarzyna had $170,000 in June 2015, and the cash available to her and her husband was $340,000.
Some Brief Findings about the Credit of the Witnesses
Mr Whitelaw was an excellent witness who was clearly truthful. There is no need to say anything more.
Mr Nelson was generally a satisfactory witness although at times, perhaps understandably, he showed some exasperation with Mr Supple’s questions and to an extent speculated as a result.
Mr Supple was not an entirely satisfactory witness. His witness brings to mind the story of the curate’s egg. In parts he was very good and in other parts he was very bad. A number of his answers suggested that he was trying to, as it were, outguess counsel. He was loathe to answer questions which he palpably perceived to be contrary to his interests. Some of his answers were manifestly unbelievable.
Nonetheless, in giving his answers about his motivation to purchase the property for the figure of $475.000, I found Mr Supple to be credible. I will return to this when I deal with the facts below.
Findings on the Facts
Jeffrey Supple had an, at times, strained relationship with his son, Steven. Steven’s history involved various difficulties that Mr Supple has deposed to without challenge. When Steven and Katarzyna returned to Melbourne and got married, they lived with Jeffrey Supple who clearly took a shine to Katarzyna whom he saw as a good influence on his potentially somewhat erratic son.
Steven and Katarzyna conducted their Bulk Powders business and were able to buy and then ultimately sell a property in Carrum. The sale is perhaps noteworthy.
Steven and Katarzyna bought the ill-fated unit in about 2009 to 2010. There is no evidence that I can immediately find as to its purchase price but one would assume it was substantially the subject of a mortgage. Then in 2012 and onwards, Katarzyna and Steven got involved in what was protracted and embittered litigation with Mr Maybin. Although Mr Maybin has been described, I think, as the neighbour from hell, I note that it was Katarzyna and Steven who were the subject of excoriating criticism, together with their lawyers, by the BAB. Irrespective, the proceedings in the BAB dragged on and on and were in the main, substantially unsuccessful from the point of view of Katarzyna and Steven Supple. This unsurprisingly put them under pressure. They sold their property in Carrum and whatever may have happened, the funds engendered have been dissipated.
This brings us to Katarzyna Supple’s evidence as to her solvency. In her first affidavit sworn 21 February 2019, Ms Supple referred to the error of the CBA (clearly the matter of the stratum title) which extended her home loan to 90 per cent of the valuation then extant of $530,000 which I would infer would have been just under $480,000 (this being the amount ultimately paid out). As Ms Supple said at paragraph 12:
I was placed into a serious negative asset position by the CBA where I now owed more on my home than the property was worth. This liability was further compounded with the unknown financial impacts of the council building orders and notices and the Building Appeals Board matters.
Ms Supple went on to disdain any detailed knowledge of the proceedings but I should make it clear I do not accept that evidence. It is inconsistent with Mr Supple’s own evidence. It is clear that the sale of the property was engendered primarily, if not wholly, through discussions between Jeffrey Supple and Katarzyna Supple. Steven Supple was acting so erratically that he was removed on the advice of the accountant from an executive role in the various entities in March 2015 as a result of concerns over his behaviour.
Ms Supple goes on to depose to never having failed to have paid the home loan payments and to have paid all her bills that were known to her. No final demand notice had been served upon her.
At paragraphs 15-16 of her affidavit she deposed:
15. By July 2015 I was exhausted mentally, physically, heavily pregnant, depressed, and alone. My marriage was broken. 2012 to 2016 was a very traumatic time for my family and I needed mental health assistance and continue to speak with a psychologist today.
16. I have no family here in Australia, so I turned to Mr Supple for support, he offered to help by relieving my husband and I of the subject property and all matters known and unknown.
By this stage, of course, the Supreme Court proceedings were at an end as were the antecedent BAB matters. Ms Supple must have known about these matters. They were, after all, part of the reason that she was exhausted mentally, physically, and otherwise.
In her third affidavit sworn 14 August 2019, Ms Supple predominantly deposes to matters that might ground a section 179 application. However, at Court Book 1585 she tabulates her asserted solvency position on 30 June 2015. She asserts that she had cash assets of $90,000 and Steven had cash assets of $140,000. She was not able to be cross-examined on these matters because she did not present herself to give evidence. I should make it clear that I accept the trustee’s evidence that there is no evidence that would justify figures of this order. The accounts of the various Supple entities that have been tendered to the Court, whether as annexures to affidavits or as exhibits, would not, for one instant, give rise to a cash resource of that sort. Furthermore, had they been available it is reasonable to suppose that they would have been used to remove the debts that were there extant. The income asserted as to $60,000 odd each by Katarzyna and Steven was plainly gross figures if one looks at the Bulk Powders records. The trust distributions were, in fact, tiny and the unpaid trust distributions have never been paid. The basic joint cost of living asserted by Ms Supple of $120,000 of itself would have been more than enough to not only subsume their then wages but also any trust distributions even if they had been made. Even if one were to notionally allocate the loan balances which have never been repaid there was a substantial net default in terms of outstanding legal fees that were then payable. Katarzyna Supple, in my view, was or was about to become insolvent. This bring us then to the matters the court is required to determine pursuant to the Act.
Section 121(2) – Showing the transferor’s main purpose in making a transfer
It should be noted that section 121(2) provides a mandatory conclusion. The subsection reads:
The transferrer’s main purpose in making the transfer is taken to be the purpose described in paragraph (1)(b) if it can be reasonably inferred from all the circumstances that, at the time of the transfer, the transferor was, or was about to become, insolvent.
The Full Court of the Federal Court made it plain in Re Jury; Ashton v Prentice [1999] FCA 671 at [55]:
In our view, the phrase in subs 121(2), “if it can reasonably be inferred from all the circumstances that … the transferrer was … insolvent:, is not synonymous with “if the transferrer was insolvent”. The statutory provision, as a matter of ordinary language, leaves open the possibility that it may also reasonably inferred that the transferrer was solvent. In other words, it is sufficient if the inference of insolvency is reasonably open. An analogy is the leaving of a case to civil jury. If it can reasonably be inferred from all the circumstances that the defendant was negligent, or that the publication complained of was defamatory of the plaintiff, then the matter must go to a jury. Nevertheless, the jury is not required to draw the relevant inference, and may not do so.
It should be noted that in the same case at paragraph 57, the Court went on to assert:
Counsel for Mr Ashton did not attack his Honour’s finding that it could reasonably be inferred from all the circumstances that in August 1995 the bankrupt was insolvent. Rather, he argued that the presumption created by 121(2) of the Act could be rebutted by direct proof that the transferor’s main purpose was other than that described in 121(1)(b). It was sought to derive support for that interpretation from the language of 121(3).
At paragraph 61 the Full Court continued:
It would thus not be to the point if, contrary to his Honour’s findings, the bankrupt in fact had the purpose of selling the house to meet legal costs. Nor would it matter if, leaving 121(2) aside, that might have been his main, or even only, purpose. Section 121(2) cannot be left aside. In its terms it operates to establish the 121(1)(b) “main purpose” if the reasonable inference of insolvency is open.
In my view, in circumstances where, even on her own evidence, Ms Supple’s financial affairs were marginal, and she faced Court orders for major and substantial payments of legal fees, leaving aside her own fees, which might not then have actually resulted in extant orders, the conclusion that it was reasonably open to infer that she was insolvent is irresistible.
I should make it clear again, as I think I already have, that Ms Supple’s denials at paragraph 26 of her affidavit of 19 February 2020, at paragraph 27, that she never retained TressCox is manifestly untrue for the reasons earlier given. This blatant disregard for the truth also informs the weight to be given to her evidence more generally.
Section 121(1) - Would the property have become part of the transferor’s estate or would probably have been available to creditors if the property had not been transferred?
In my view, this is an area of real difficulty for the trustee. At the time the property was transferred the mortgage was slightly over $475,000. The property was worth, at best, it would appear, $450,000 (CBRE valuation) less the apparent $15,000 general rectification costs and the unquantified, but not insubstantial, specific rectification costs arising out of the BAB judgment.
Katarzyna Supple has deposed that she was paying her bills as they fell due and that she never missed a mortgage payment, but she has not been made available for cross‑examination. It is implicit in the trustee’s position that her assertions as to her solvency are not to be accepted and I accept that. Although Mr Supple sought to sell the property at a vastly increased price only some 14 months after the transfer, in September 2016, there is no valuation evidence of any moment as to what it was worth in the intervening period and, indeed, Mr Supple’s evidence that there was a 20 to 30 per cent increase in price in that time is not evidence that he was competent to give.
If Ms Supple had done nothing at all and assuming, as I find she was, that she was insolvent, it is far more probable than otherwise that she would have defaulted on her mortgage payment. Had she done so, the bank would have taken proceedings for possession and been successful. It is reasonable to infer that while Katarzyna Supple would doubtless have resisted the proceeding on the footing that the extension of additional funds arose by reason of negligence on the part of the bank, the fact is that she received those funds and was liable to pay them.
It is therefore, in my view, far more probable than otherwise that had Ms Supple not sold the property for Mr Supple to pay out her mortgage, at a figure well in excess of its realisable value at the time, the net result would have been that the bank, whose interest as a registered mortgagee could never have been defeated, would have sold the property. In doing so they would have incurred further costs. The net result, more probably than otherwise, is that the bank would have filed a proof of debt for the balance between what they achieved in the sale and the amount then outstanding in lieu of costs. The creditors have benefited significantly from the sale of the property by Ms Supple to Mr Supple.
In these circumstances, I would make two findings. First, and critically, the property would not, probably, have become part of the bankrupt’s estate or been available to creditors if it had not been transferred. Second, the transferor’s main purpose in banking the transfer cannot have been to prevent the transferred property from becoming divisible amounts to her creditors, precisely for the reasons I have just set out. It should be noted, counterintuitively, that this is of no moment in the light of the findings already made pursuant to section 121(2) above, but it is certainly an unusual situation.
Section 121(4) - Did the transferee act in good faith?
First, it is conceded that the consideration that Mr Supple gave for the purchase of the property was at least as valuable as the market value of the property. In fact, it exceeded it, it would seem, by at least 10 per cent.
Second, did Mr Supple know, or could he not reasonably have inferred, that the transferor’s purpose in making the transfer was the purpose described in section 121(1)(b)?
I should make it clear that I do not accept the fanciful suggestions made in both Mr Supple and Katarzyna Supple’s affidavits as to the methodology for the purchase of the property. These accounts are untruthful, although I do not know whether or not Jeffrey Supple and Katarzyna Supple genuinely believed them. It is abundantly clear on the evidence, and as I find, that Mr Supple wanted to pay out his daughter‑in‑law’s mortgage to relieve her from the stress of the situation she was then in. Mr Supple has deposed in his affidavit, sworn 4 May 2018, in paragraph 26:
Seeing the stress that Steven and Kat were under and recognising that it was very difficult for them to remain in the Property having regard to the acrimonious litigation with the upstairs neighbour, I offered that I could buy the Property, which I thought would take the problem off their hands and relieve the immediate stress. I believe that Steven, Kat and I first talked about me purchasing the Property in about February/March 2015. Steven and Kat moved out of the Property in about early May 2015, about 10 weeks before settlement of my purchase. My principal concern was to ensure that Steven’s mental health improved and that his marriage with Kat, who was pregnant, survived. I believed that if Steven’s marriage with Kat had ended that that would have pushed Steven completely over the edge. I feared that Kat would have moved back to Poland had the marriage ended, leaving Steven here with his child (a son) living with Kat in Poland. I wanted to offer them the appropriate support for them to retain their relationship and family with the anticipation of a new baby in October 2015.
Mr Supple was not cross-examined about that expression of opinion. It has about it the ring of truth and Mr Supple’s answers about his desire to assist his daughter-in-law, which of course I observed him giving in the witness box, were part of his evidence that in my view were given with conviction. They make immanent sense. They are consistent with his longstanding liking of and friendship with Katarzyna Supple. They are also consistent with his fears about his son’s health, manifested amongst other things in the removal of Steven as a director in March 2015.
Mr Supple knew that the value of the building was $450,000 from his own CBRE valuation less what he also knew, at least in general terms, about the need for rectification work. The notion that in buying the property for more than it was worth Mr Supple would have known or reasonably inferred that Ms Supple was seeking to keep the property from creditors is not sustainable. As Mr Supple has said on numerous occasions in his affidavits, there was at that time no equity to transfer to the creditors. I do not accept that Mr Supple knew or ought reasonably to have inferred that the transfer was in the circumstances one to defraud creditors. Rather, as he himself and Katarzyna Supple have also said, he acted with his heart and not his head, and paid out the mortgage, being fortunately in a position to do so.
The next question is whether or not Mr Supple could not have reasonably inferred that at the time of the transfer, the transferor was or was about to become insolvent.
Mr Supple was, of course, aware in a general way of the BAB proceedings. His evidence about his knowledge of his son and Katarzyna’s financial affairs was not entirely satisfactory. Nonetheless, he has said, and it is not inconsistent, perhaps, with his son’s erratic mental state at the time, that there was still talk of further legal review in the period between March and June 2015. He had no reason to understand that Katarzyna Supple was not paying her bills as they fell due.
He had a measure of involvement, probably rather greater than he might be prepared now to be admitting, in the appeal process. He must have known that his daughter‑in‑law faced bills. Nonetheless, it is a fact that quite substantial amounts of money had been paid towards those bills. It would appear that the net profits of the sale of the home in Carrum had been applied to this end.
Mr Supple’s unchallenged evidence was that he had not, in any material way, been involved in litigation himself prior to any of these matters. I think, having heard and seen him give his evidence, that while he knew that the marriage was under stress, at least in part because of the proceedings, this does not go so far as for me to be able to find that he knew or ought reasonably to have known that Ms Supple was insolvent.
As Mr Nelson’s own affidavit material makes plain, solvency is not an accounting exercise. Mr Supple was not an experienced litigant. However misguided it may have been, there was still talk of further potentially successful legal proceedings. It is quite clear that the discussions that Mr Supple and Katarzyna entered into were all about the stress to her, and in her marriage, of the erratic behaviour of Steven Supple and the perceived appalling behaviour of Mr Maybin.
They moved out of the property well before settlement in May 2015. The emphasis in the discussions was plainly one in which Katarzyna Supple was complaining, and I have no doubt vituperatively so, given the terms of her affidavit, about the misconduct of the CBA in putting her in the dreadful negative equity position she was in. The debate was about Mr Supple coming to the rescue. That is what occurred and that was plainly the intense focus of what was motivating him and what they were discussing.
In all the circumstances, notwithstanding the objective indicia is now known, making it clear that Katarzyna Supple was insolvent in this period, I find that Mr Supple did not know that this was the case and could not reasonably have made that inference, given what was vouchsafed to him by his son and his wife.
Conclusion
In these circumstances it is plain, in my view, that, first, Katarzyna Supple did not transfer the property to Jeffrey Supple to prevent it being available to her creditors, although the fact that it can reasonably be inferred that she was insolvent at the time defeats that intention. Further, the property would not, for the reasons I have given, probably have been available for distribution to the creditors.
Even if I am wrong as to these matters, the price paid by Mr Supple was well and truly over what it was worth. He did not know and could not reasonably have inferred that Ms Supple’s main purpose was to defeat her creditors, and he could not reasonably have inferred that at the time of the transfer Ms Supple was, or was about to become, insolvent. It follows that the application must be dismissed.
I certify that the preceding one-hundred and nineteen (119) paragraphs are a true copy of the reasons for judgment of Judge Burchardt
Associate:
Date: 23 March 2020
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