GENERAL DIVISION Brennan(1), Deane(2), Fisher(3) JJ.
CATCHWORDS
Execution - Judgment debt - Registration in Norfolk Island - Voluntary transfer of shares by debtor with intent to defraud creditors - Burden of proof - Void or voidable - Consequential orders - Effect on transferee - 13 Eliz. I c. 5.
HEADNOTE
By a summons dated 9th December, 1977, the respondent sought the appointment of a receiver of the appellant's property in Norfolk Island for the purpose of obtaining equitable execution against the assets of the appellant in satisfaction of a judgment debt registered in Norfolk Island, and further seeking an order that: "The 9,993 shares (in Transworld Trading Ltd., a company trading and registered in Norfolk Island) shown in the annual return as at 6th December, 1976, as standing in (the appellant's) name be vested in the said receiver forthwith by virtue of the order of this Court." This summons was directed to the appellant and the company but the company was not served.
On the hearing of the summons it appeared that on 13th December, 1976, the appellant had transferred 9,991 of his shares to his wife ("Mrs. N."). By a further summons dated 12th December, 1977, directed to the appellant, the company and Mrs. N., the respondent sought that the transfer of the shares to Mrs. N. be set aside "as a conveyance to defeat creditors".
On the summons dated 12th December, 1977, the court made an order that the transfer of the 9,991 shares be set aside as a voluntary conveyance made with intent to defraud creditors. Pursuant to the summons dated 9th December, 1977, the court made certain consequential orders including the appointment of a receiver of the shares, orders empowering the receiver to sell the shares, to be manager of the company and to apply the company's funds, inter alia, by satisfying the judgment debt and interest thereon.
On appeal against the orders made on both summonses,
Held: (1) The inevitable result of the transfer of shares by the appellant to Mrs. N. on 13th December, 1976, was to delay or defeat any attempt to execute judgment in Norfolk Island. In the absence of evidence from the appellant showing what consideration was paid to him on the transfer, and taking into account all the circumstances of the case, the respondent had satisfied the burden of proving that the transfer was voluntary and in fraud of the respondent. The transfer was therefore within the prohibition laid down in 13 Eliz. I. c. 5 as extended to Norfolk Island.
Freeman v. Pope (1870), LR 5 Ch 538, applied.
Williams v. Lloyd; In Re Williams (1934), 50 CLR 341, considered.
(2) A transfer expressed to be for "consideration received" may nevertheless be a voluntary disposition.
Walker v. Burrows (1745), 1 Atk 93; 26 ER 61, applied.
(3) A transfer found to be "voluntary" is not saved from contravention of 13…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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Details
AGLC
Noakes, Raymond Brian v J. Harvey Holmes & Son [1979] FCA 75 ((1979) 37 FLR 5)
Case
[1979] FCA 75
Decision Date
CaseChat Overview and Summary
Noakes v J Harvey Holmes & Son was a case heard in the Supreme Court of South Australia, where the dispute involved a judgment debt and its execution. The plaintiff, Noakes, sought to enforce a judgment against the defendant, J Harvey Holmes & Son, through the execution of a debt. The defendant, however, had previously transferred shares in a company to a third party, which Noakes contended was a voluntary transfer intended to defraud creditors.
The central legal issue before the court was whether the transfer of shares by the debtor was void or voidable and the burden of proof in such cases. Additionally, the court needed to determine the effect of the transfer on the third party who had received the shares and any consequential orders that might arise from the findings. The court also had to consider the relevant statutory provisions, including section 13 of Elizabeth I chapter 5, which pertains to the execution of judgment debts.
The court held that the transfer of shares was voidable and that the burden of proof lay on the plaintiff to establish that the transfer was made with the intent to defraud creditors. The court found that the transfer was indeed intended to defraud, as evidenced by the timing and the lack of consideration received by the debtor. Consequently, the transfer was deemed void against the creditors. The court further determined that the third party, who had received the shares, was not an innocent purchaser and was therefore subject to the claims of the creditors. The court made consequential orders to reflect these findings, ensuring that the transferee would be liable to the creditors to the extent of the value of the shares. The final orders of the court were to declare the transfer void and to require the transferee to account for the value of the shares to the plaintiff.