Official Trustee in Bankruptcy v Viceconte, P

[1992] FCA 779

JUDGMENT No. ..22.3 .... I ....g,&

NOT SUITABLE FOR DISTRIBUTION

N	A	)
1
VICTORIA DISTRICT REGISTRY	) VG 112 of 1992
1
GENERAL DIVISION	)

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:  THE OFFICIAL TRUSTEE IN BANKRUPTCY as
trustee of the bankrupt estate of
ANDREW McGOLDRICK

Appellant

AND :  PASOUALE VICECONTE, AUSTRALIA AND NEW
ZEALAND BANKING GROUP LIMITED and
RODALEY PTY LTD

Respondents

JUDGES MAKING ORDERS: Davies, Burchett and Hill JJ.

WHERE ORDERS MADE : Melbourne

DATE OF ORDERS: 14 October 1992

SHORT MINUTE OF ORDERS OF THE COURT

RECEIVED

Note :	Settlement and entry of orders dealt with in Order
36 of the Federal Court Rules.

THE COURT ORDERS THAT:

1. The appeal be dismissed.

2. The appellant pay the respondent's costs of the appeal, limited to a hearing lasting one day.

IN THE FEDERAL COURT OF AUSTRALIA )

)

VICTORIA DISTRICT REGISTRY	)	VG 112 of 1992
1
GENERAL DIVISION	)

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:  THE OFFICIAL TRUSTEE IN BANKRUPTCY as trustee of the bankrupt estate of m ANDREW McGOLDRICK

Appellant

AND:  PASOUALE VICECONTE, AUSTRALIA AND NEW
ZEALAND BANKING GROUP LIMITED and
RODALEY PTY LTD

Respondents

CORAM: Davies, Burchett and Hill JJ.
PLACE: Melbourne

DATE : 14 October 1992

REASONS FOR JUDGMENT

THE COURT:

This is an appeal from orders by which a judge of the

Court dismissed with costs an application made by the Official

Trustee in Bankruptcy under S. 120 of the Bankru~tcv

Act 1966.

The argument in the appeal extended into a second day, and

ranged widely over the facts in evidence before his Honour and

the established law with which s. 120 is concerned; however, in the course of his reply, counsel for the appellant trustee conceded that if the Court took a particular view of the contractual arrangements in question, he could not put an argument that there was a settlement of property caught by S. 120. This concession (which we are satisfied was properly made) relieves us of the necessity to examine the law and the circumstances surrounding the alleged settlement, except to the extent required to determine the nature of the contractual arrangements that were reached. The issue is simply whether the relevant terms formed part of the one agreement, or whether (as the appellant contended) there were two quite separate agreements, the second being a settlement of moneys after they had been paid, or at least after the right to them had accrued, pursuant to the first.

Prior to his bankruptcy by virtue of the presentation of

his own petition on 14 April 1989, the bankrupt ("McGoldrick")
controlled a group of companies which operated a number of
nursing homes. The respondents Pasquale Viceconte
("Viceconte") and Rodaley Pty Ltd ("Rodaley") - its correct
name appears to be Rodaley Nominees Pty Ltd - also had some
involvement with nursing homes. In early 1988, McGoldrick was
in a position of great financial difficulty. He was in
default as a purchaser of a nursing home, known as Madeline
Court, from Viceconte under a terms contract for the sum of

$300,000. One of his companies, Kymrange Pty Ltd

("Kymrange"), the relevant obligations of which he had guaranteed, was also in default under a lease and a debenture pursuant to contractual arrangements for the purchase of two other nursing homes, of which, it is relevant to note, one was called Radford Private Nursing Home and the other Grevillea Court Nursing Home, from Rodaley for $1.8 million. McGoldrick had found a buyer at the sum of $300,000 for Madeline Court, and hoped to extricate Kymrange from its embarrassments by finding a buyer for the other two nursing homes also. But Viceconte had lost patience, and had served a notice with a view to rescission of the contract in respect of Madeline Court. However, he too was in some difficulty, because McGoldrick had lodged a caveat on the title, and there was a defect in the notice; in addition, he was concerned that Kymrange might not achieve sales of the other nursing homes at prices sufficient to cover its debts, under the debenture and the lease, owed to his own company, Rodaley.

In this situation, discussions took place between Viceconte and McGoldrick in about February 1988. During those discussions, McGoldrick said he was unable to pay the stamp duty in respect of his purchase of Madeline Court. An agreement was reached which resolved the impasse. The learned trial judge found this agreement in the following terms:

"An agreement was reached whereby the bankrupt would

not contest the rescission of the contract . . . and would withdraw his caveat and Viceconte would transfer the property to the Arducas [the proposed	purchasers] at the agreed price of $300,000. It was	further agreed that upon settlement the net sale
proceeds would be appropriated first to whatever sum would have been due to Viceconte under the terms of the original sale and variation agreement [ie, the contract of sale of Madeline Court as it then stood] as if it had been completed on the date settlement with the Arducas was finalised, and the balance would be paid into an interest bearing account in the joint names of the bankrupt and Viceconte with
AN2 [Bank] South Melbourne branch. In his affidavit
sworn 18 July 1991 and filed in these proceedings Viceconte says in paragraphs 16 - 18:
16. ... The intention of paying the surplus monies

into this account was to better secure amounts due by Kymrange to Rodaley (in respect of the sale of Radford and Grevillea).

17.  It was always understood by both McGoldrick and myself that if there was a shortfall in the sale proceeds of the Radford and Grevillea businesses then the surplus mentioned in paragraph 16 herein would be appropriated to make up such shortfall. To further record these intentions an irrevocable authority was signed by McGoldrick on the 17th March, 1988.

. . .

18.  In consideration of the execution of the irrevocable authority I undertook to procure from Rodaley its forbearance in taking action against McGoldrick and other guarantors and against Kymrange under both the contract of sale and the debenture thereby giving McGoldrick time to sell the two nursing home businesses for the best possible price."

The authority signed by McGoldrick referred to in this passage, which was dated 17 March 1988 (replacing an earlier authority purely in order to adjust the figure in its recital C) and related to a sum of over $90,000, was, his Honour found, as follows:

"IRREVOCABLE AUTHORITY

To: The Manager

Australia & New Zealand

Banking Group Limited,

52 Albert Street
SOUTH MELBOURNE	3205

Attention:	M r John Bibby
Dear Sir,

re: McGoldrick & Viceconte

3-5 Madeline Court, Avondale Heiahts

WHEREAS :

A.	I, Ian Andrew McGoldrick ('McGoldrick') agreed to purchase the above-mentioned property from Pasquale Viceconte ('Viceconte') (hereinafter called 'the terminated contract') and Viceconte has issued a Notice of Rescission in relation to that contract;
B.	McGoldrick has agreed not to contest the rescission following allegations of breaches which McGoldrick does not hereby admit, in order to mitigate any losses (if any) by permitting Viceconte to enter a fresh contract of sale to Anthony and Annunziata Arduca (referred to respectively as 'the Arduca contract' and 'the Arducasr)[;]
C.	Upon the settlement of the sale of the above- mentioned property to the Arducas by Viceconte, Viceconte has agreed with McGoldrick to pay to the AN2 Banking Group Limited, 52 Albert Street, South Melbourne, a sum of money representing the difference in the sale price on the contract between Viceconte and the Arducas (net of adjustments, selling expenses and Viceconte's legal costs incurred in respect of the terminated contract and the Arduca contract) and the sum which would be due to Viceconte if the terminated contract had settled on the same date as the contract with Arducas (hereinafter called 'the net proceeds'). McGoldrick acknowledges that the said sum due pursuant to terminated contract was $185,089.28 at 22nd February, 1988 with daily interest due of $104.42 per day thereafter.

I, IAN ANDREW McGOLDRICK D0 HEREBY AUTHORIZE AND
DIRECT the AN2 Banking Group Limited as follows:

1.    To receive as Stakeholder the said net proceeds on behalf of Viceconte and myself;

2.    To deposit the said net proceeds in an interest earning account in the names of Pasquale Viceconte and Ian Andrew McGoldrick;

3.    To pay on or after 4th April, 1988, and from time to time thereafter and in such manner and to such persons as Viceconte directs so much of the net proceeds of sale and interest earnt thereon as are [sic] required to satisfy the indebtedness of Kymrange Pty. Ltd. pursuant to a Debenture dated 3rd September, 1985 made between Kymrange Pty. Ltd. and Rodaley Nominees Pty. Ltd. and/or pursuant to the Lease of the Radford Private Nursing Home and legal fees due to Viceconte's solicitor and to pay the surplus to such accounts operated by myself or associated companies as shall be agreed upon between the Australia and New Zealand Banking Group Limited and myself."

It is cl. 3 of the Irrevocable Authority which is said to constitute a settlement vulnerable to S. 120. For some reason which is obscure, however, the application was brought against Viceconte and not Rodaley Nominees Pty Limited. Plainly, the company should have been joined, notwithstanding it may be that the "purchaser" for the purposes of S. 120 was Viceconte: cf. Re Abrahams: Ex ~arte: Thomas v. Fuzi (unreported,

Burchett J., 4 August 1989) citing Hance v. Hardinq (1888) 20

Q.B.D. 732 at 737-738, per Lord Esher M.R.

The failure to join Rodaley has a consequence. Counsel for the appellant sought to argue that the respondents were bound by the conduct of the case below to accept his contention that there were two separate agreements, and not one. We can find nothing in the transcript to support this contention, but in any event Rodaley could not be bound by the conduct of the case in its absence, the appellant not having

seen fit to join it as a respondent.

There is no basis for the appellant's argument to be discerned in the way his Honour found the agreement. He treated it, in the passage we have cited, as one agreement. Later in his reasons, he said:

"In my opinion, the payment of the deposit money to ANZ in accordance with the aareement [emphasis added] between Viceconte and the bankrupt, the terms of which are evidenced by the authority, constitutes a settlement of that money."

It is unnecessary to consider whether there was truly a settlement, in view of the concession already mentioned. What is important for present purposes is that his Honour referred, in the singular, to "the agreement". And the evidence fully entitled him to do so. In his examination under S. 81, which was tendered at the hearing, Viceconte, whose testimony found some favour with the judge, explained his negotiations with McGoldrick in terms suggesting there was one over-all agreement. Asked specifically about what led him to agree with McGoldrick "to have the remainder of the moneys put into the joint account", he said:

"Well, it really was quite clear to me that, in fact, there were problems out of the sale of the nursing homes, that there would not be sufficient funds to pay us. So I suggested to him that that should [scilicet would] be the case. And he said: 'Well, we also hold a caveat over the property as you know. Now, if we are going to deal with this property it will only be on these sorts of conditions'."

This evidence firmly links the conditions relating to the	joint account to the agreement which freed Madeline Court from
the caveat by providing for the rescission of the original contract and the substitution of a fresh contract for sale to the persons referred to as the Arducas.
It is true that the trial judge analysed the agreement as involving an assignment of moneys belonging to McGoldrick, rather than as providing for the payment of moneys to be held, from the instant of their receipt, upon the terms of the agreement. But this is a matter of legal characterization. His Honour did not find separate agreements, nor does the oral evidence, nor anything in the circumstances, suggest that he should have done so. Accordingly, having regard to counsel's concession, the appeal must be dismissed.
The final questions relate to costs. The proceedings below involved the respondent bank. The learned judge ordered the appellant to pay its costs. That was an exercise of discretion, and in the special circumstances of the case, we should allow it to stand. But we are minded ourselves to exercise our discretion in favour, to some extent, of the appellant in respect of the costs of the appeal. Its length was contributed to by the respondents' failure to raise, until a very late stage, the matters which led to the sensible concession then made by the appellant's counsel. All things considered, we are of the view that the respondents should
one day. have their costs of the appeal, limited to a hearing lasting I certify that this and the preceding seven (7) pages are a true copy of the Reasons for Judgment herein of the Court.

Associate: ?a-	-	?	l	L
Date: 14 October 1992

Counsel for the appellant:	Mr J. Lenczner
Solicitor for the appellant:	Australian Government Solicitor
Counsel for the first and
third respondents:	Mr N.A. Moshinsky Q.C. with Mr B. Scheid
Solicitors for the first and
third respondents:	Messrs Vann Fisher & Associates
Counsel for the second
respondent:	Mr B.M. Griffin
Solicitors for the second
respondent:	Messrs Dunhill Madden Butler
Dates of hearing:	8 and 9 October 1992