Official Assignee of New Zealand v Aitkenhead, N.V.

[1991] FCA 902

C A T C H W O R D S

PkRSONAL PROPERTY - records relating to aircraft kept after possession handed over - breach of fiduciary duty or fradddlent alienation of property

~ r o ~ e r t v Act 1952 (N.Z.)

official Assianee of New zealand & Anor

v. Neil Vivian Aitkenhead & Ors.

No. QG 111 of 1990

PIHCUS J.
BRISBANE

17 APRID 1991

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IN THE FED'W	COURT OF AUS*~~LZIIA 1	NO. QG 111 of 1990
QUEENSLAND DISTRICT REGISTRY	1	I
G E N E W DIVISION

BETWEEN! OFFICIAL ASSIGNEE OF HEW ZEALAND

First Applicant

PORTSMOUTH PROPERTIES LIMITED (IN LIOUIDATIONL

Second Applicant

AND:  ~ E I L VIVIAN AITKENHEAD and

JOANNA CATHERINE AITKENHEAD (AS TRUSTEES)

First Respondentk

NEIL V I V I ~ AITKENHEAD, JOANNA CATHERINE

AITKENHEAD and MURRAY GORDON WELLS

Second ~espondents

MINUTES OF ORDER

;JUDGE MAKING ORDER: PINCUS J.

DATE OF ORDER! 17 APRIL 1991

W H ~ ~ E MADE: BRISBME

THE COURT ORDERS THAT:

i.   ~xhibit 2 be delivered to the solicitors for the applicdnts, Messrs Clarke and Kann of Level 7,

Colonial Mutual Building, Post Office Square,

Brisbane forthwith.

2. ~orthwith on any documents (including any propellor logbooks, engine logbooks, airfreight logbooks, avionics logbooks, any other logbooks, any certificates of airworthiness, any certificate of registration, any maintenance manuals or other documents pertaining to the maintenance and history of the aircraft) coming within his knowledge, possession or power; the respondent, Mr. itk ken head, deliver same to the said Messrs Clarke and Kann.

3 .        he respondents pay the second applicant's costs of

and incidental to the notice of motion, to be taxed.

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4.      ~ h & application filed today on behalf of the first

applicant, the Official Assignee OT? New Zealand, be
dismissed.

m! settlement and entry of orders is dealt with in
order 36 of the Federal Court Rules.

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IN THE FEDERAL COURT OF AUSTRALIA	1	NO. QG 111 of 1990	l
DUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION	)

BET WEE^: OFFICIAL ASSIGNEE OF NEW ZEALAND

First Applicant

PORTSMOUTH PROPERTIES LIMITED (IN LIOUIDATIONL

Second Applicant

AtJD:  ~ E I L VIVIAN AITKENHEAD and

JOANNA CATHERINE AITKENHEAD (AS TRUSTEES)

First Respondents

NEIL VIVIAN AITKENHEAD, JOANNA CATHERINE

AITKENHEAD and MURRAY GORDON WELLS

second Respondents

CORAM: PINCUS J.

PLACE! BRISBANE

- DATE: 17 APRIL 1991

EX TEWORE REASONS FOR JUDGMENT

his case concetns log books and other records relating to an aircraft. he applicants apply by notice of motion for delivery up to their solicitors of documents

relating to a Ceesna Turbo CentUrion aircraft Model ho. T210-N

Serial No. 21063962, beating Australian Certificate of

Registration no. VH-NVJ.

In consequence of an interlocutory order, such of the records as the tespondent has have been produced. The applicants have examihed them briefly and do not, as I understand it, make any concession that the records are

complete, but make no particular complaint about them at this
stage.

The aircraft was, at relevant times, the property of

the second applicant, that is Portsmouth Properties Limited.
But on 23 February 1989, by an agreement, it was transferred
to the second respondents. In June 1989, the aircraft was
brought to Australia.

In the meantime, the second applicant was wound up by order of the High Court of hew Zealand dated 24 May 1989. The liquidator caused proceedings to be brought in the name of the company under the Propertv Law Act 1952 of the Dominion of New Zealand, and also on another basis which will be mentioned. There is also an application relating to bankrllptcy law, but it seems to me unnecessary to discuss that.

The Property Law Act 1952 of the Dominion of New the Commonwealth Bankruptcv Act 1966 and with various similar Zealand makes provisions which may be compared with s.121 of	State statutes, and it renders voidable "every alienation of
property with intent to defraud creditors". The alternative basib of suit was that the respondents, who were, at relevant times, directors of the insolvent company, acted in breach of their fiduciary d~ties.

In the result, when the matter finally came before the Court on 12 ~ecember 1990, there was no contest and his Honour Mr. Justice spender made an order disposing of the matter, as was thought, finally. The order included the following provisions:

"2. The transfer of title by the Second Applicant in and to the Cessna Turbo Centurion aircraft . . . in favour of the second Respondents be set aside as void;

3. he transfer of title by the Second Respondents in and to the Cessna aircraft in favour of the First Respondents be set aside As void;

6.   The Court declares that all right title and interest in and to the Cessna aircraft vests in the Second Applicant".

Having had that success, the second applicant nevertheless contends that it has not got complete justice because, in the ptirported carrying out of the order, the respondents delivered up the aircraft but kept the records. It is said, and it is not disputed, that the records have	value. The respondent; Mr. Aitkenhead, seems to assert that	they should be handed over, if at all, only on the payment of
a sum of $23,000. I will come back to that sum later.

he first aspect of the matter consists in the

records which existed as at 23 February 1989 - that is, at the date of the agreement of transfer. The evidence which was given by Mr. Aitkenhead on an examination before the Registrar, and the evidence which he has given in cross-

examination by Mr. Freeburn here, seems to me to make it clear enough that the proper finding is that the aircraft and the records were owned, up to 23 February 1989, by the second applicant. The conclusion is, as it seems to me, that, simply as the second applicant's property, they must be handed over.

The second point and one which, in the end, Mr. Aitkenhead laid emphasis on, is the question of records kept by the respondents after they took possession of the aircraft. In respect of those records which were kept in documents then owned by the company, I see no difficulty. But Mr. Aitkenhead says that, particularly after the aircraft was brought to Atistralia, the respondents acquired fresh pieces of paper, to pht it simply, and kept records on them.

I will return to the legal question shortly, but it is necessary to interpolate that one aspect of the defence mounted by Mr. it ken head, with, if I may say so, some ability, was that he said that the proper term to impose in

Atlstralia. The sum, as I mentioned, was about $23,000. This	exchange for the records would be payment of moneys which were spent by his family trust on the aircraft after it came to
was necessary for two purposes: first of all, because the dircraft was somewhat deteriorated with the passage of time, And secondly, he says that the Australian aviation authorities require that considerable sums be spent to get Australian certification.
I have come to the view that whether or not these moneys would be properly payable is not a question which affects the records directly. If the records would otherwise be the property of the second applicant, I cannot see how, by spending this money, Mr. Aitkenhead can have deprived the second applicant of the records or succeed in having payment imposed as a condition of delivery of the records to it. He says, in effect, that there was some trickery in that there was a deliberate delay in obtaining possession while he went ahead and spent the money. If he did so, it seems to me he did so voluntarily in the sense that he had no obligation to do so. Nor, in the events as now known, did he have any right to do so because he should not have had the aircraft. However, assuming in his favour that he has a good claim for moneys so spent (a matter which I do not think 1 have to deternine) it seems to me quite plain that it would not be fair or, indeed, permissible to require those moneys to be paid in exchange for the company's property.
Coming back to the records which were kept on pieces of paper owned by the Aitkenhead trust, the problem which arises is that the order which was made does not identify the basis on which it was made. No doubt that did not then mattek, because there was no contest. But as I have mentioned, there are two rather distinct bases of suit.
Regarding the order of Spender J. as having been made on the basis of breach of directors' fiduciary duty,

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there would seem to be no difficulty. It would undoubtedly be within the power of the Court exercising the jurisdiction of the Court of Chancery to force the wrongdoers, because in this case they are assumed to be wrongdoers, to give up the records. The well-known principle is that the fiduciary must give up any benefit he has obtained by his wrongdoing. Here, Mr. nitkenhead concedes, indeed he asserts, that the records are quite valuable and they plainly constitute a benefit.

If one regards the order as having been based upon the Prowertv Law Act, however, a slightly more difficult question arises. ~t has been decided by the High Court in a case concerning s.293 of the Comvanies Act 1961 (Q.) , N.A. Kratzmann Ptv. Ltd. v. Reid Murrav Develowments (Old.) Ptv.

Ltd. (1968) 42 A.L.J.R. 164 at 165, that the Court's power

under that section extended to affording consequential relief, by appropriate order. It seems to me, firstly, that if that can be done under s.293 of the old Comwanies Act, it may be done under the New Zealand statute, and secondly, the power to

which was fraudulently alienated.	afford consequential relief wodld extend to requiring the books to be handed over without the claim to the property
The result is that, whether one regards the order which was made by Spender J. setting aside the transaction of 23 February 1989 as having been based on a breach of fiduciary duty or on a fraudulent alienation of property, the result is the same. That is, the Court should, in the exercise of
discretion, order that the records be delivered up to the second applicant.
~t appears to me that there is a broader answer and that is that, on any view, the order of Spender J. was based on the presumption (although the precise sort of wrongdoing was unidentified) that a wrongdoing had taken place. But for that wrongdoing, namely the wrongful transfer of the aircraft in February 1989, the airplane and the records would undoubtedly have remained the property of the company. On those facts, in my opinion, the respondents are estopped from asserting that they kept the records after the wrongful transfer, otherwise than in the way they should have been kept, namely on behalf of the company.
Although I must congratulate Mr. Aitkenhead upon the measured and capable way in which he, despite his lack of legal training, argued the matter, in my opinion, his argument fails and the application must succeed.

What I propose to do is to mark the documents which

were produced by Mr. Aitkenhead as Exhibit 2. I will order that Exhibit 2 be delivered to the solicitors for the applicants, Messrs Clarke and Kann of Level 7, Colonial Mutual ~uilding, Post Office Square, Brisbane forthwith. In case any other documents turn up, I propose to make an order also in terms of a more general kind, based upon the notice of motion. I will also order that forthwith on any documents (including

any propeller logbooks, engine logbooks, air£ reight logbooks, avionics logbooks, any other logbooks, any certificates of airworthiness, any certificate of registration, any maintenance manuals or other documents pertaining to the maintenance and history of the aircraft) coming within his knowledge, possession or power, the respondent, Mr. Aitkenhead, deliver same to the said Messrs Clarke and Kann. It will further be ordered that the respondents pay to the second applicant its costs of and incidental to the notice of motion, to be taxed. As at present advised, I do not see any justification for making an order for costs in favour of the first applicant. I will order that the application filed today on behalf of the first applicant, the Official Assignee of New Zealand, be dismissed.

I certify that this and the seven preceding pages are a true copy of the reasons for judgment herein of his Honour Mr. Justice Pincus.

c+ L.2ia-e-

Associate

Date 13 @v\\ \75'

Counsel for the applicant:	Mr. P.A. Freeburn
Solicitors for the applicant:	Clarke and Kann
For the respondents:	Mr. N.V. Aitkenhead in person
Date of Hearing:	17 April 1991