Pacific Car & Truck Rentals Holdings Pty Ltd v Damianos

[2001] VSC 504

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

CRIMINAL DIVISION

No. 6561 of 2001

PACIFIC CAR & TRUCK RENTALS HOLDINGS PTY LTD	Plaintiff
v
MICHAEL KOSMOS DAMIANOS & ORS	Defendants

---

JUDGE:	BEACH, J
WHERE HELD:	Melbourne
DATE OF HEARING:	10 December 2001
DATE OF JUDGMENT:	10 December 2001
CASE MAY BE CITED AS:	Pacific Car & Truck Rentals Holdings v Damianos & Ors
MEDIUM NEUTRAL CITATION:	[2001] VSC 504

---

Injunction against non-party – Injunction inappropriate – Injunction dissolved.

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr D. Collins SC	Maddock Lowie & Chisholm
For Sophie Damianos	Mr G.D. Bloch	Baldwins

HIS HONOUR:

1           Between July 2000 and 9 May 2001, the first-named defendant, Michael Kosmos Damianos, was employed by the plaintiff, Pacific Car & Truck Rentals Holdings Pty Ltd, as its managing director.  Another director of the company was the second-named defendant, Joseph Joshua Tigel.  The third defendant in this proceeding, Sharon Goldfeld, is apparently the wife of the second defendant.

2           The plaintiff alleges that between July 2000 and May 2001 the first and/or second defendant defrauded the plaintiff of $2,107,085.  On 3 July 2001 the plaintiff filed a writ in the court by which it seeks to recover that sum from the first and second defendants and by which it seeks to restrain the third defendant dealing with any property that she has purchased with moneys part of the said sum of $2,107,085.

3           That same day the plaintiff made an ex parte application to Gillard J seeking urgent injunctive relief against the three defendants.  His Honour acceded to the application and, so far as the first two defendants were concerned, made orders restraining them from removing any of their assets up to the value of the sum in question from the jurisdiction of the court or disposing in any way of their assets to that value.  His Honour also made certain orders against the third defendant, which are not relevant for present purposes.

4           In addition to the orders His Honour made against the three defendants, His Honour made an order against Sophie Damianos, who is the wife of the first defendant, restraining her from transferring, charging, dissipating or diminishing or in any way dealing with the property known as 78 Stockdale Avenue, East Bentleigh.  The East Bentleigh property is, as I understand it, the matrimonial home of the first defendant and his wife.

5           I now have before me a summons filed on behalf of Mrs Damianos seeking that the order made against her be dissolved.  I should add for completeness that the order was later extended a second time by Gillard J and then a third time by Byrne J.

6           The basis upon which Mrs Damianos seeks to have the injunction dissolved is that in the circumstances of the case there is simply no basis for making an order which in any way restrains her dealing with the East Bentleigh property.  In an affidavit Mrs Damianos has sworn on 29 November 2001, she deposes to the fact that during the first year of her marriage to the first defendant they lived with either her or her husband's parents; that in late 1989 her father, Dimitri Dinous, told her that he intended making a gift to her in the sum of $130,000 for the purpose of them purchasing their own home at 78 Stockdale Avenue, East Bentleigh; that in about February 1990 the property was purchased in their joint names for an approximate purchase price of $144,500.  Mrs Damianos's father duly provided her with the sum of $130,000 which was used for the purpose of buying the home and the first defendant and she borrowed the balance required to settle the purchase from Westpac Banking Corporation.

7           In her affidavit, Mrs Damianos talks of the fact that on a number of occasions the first defendant used to execute mortgages over the East Bentleigh property as security for various loans made to the first defendant and/or his entities for business purposes.  She has sworn how she used to express the fact that she was unhappy that their house should be used as security for business loans especially as it had been in effect a gift from her father.  In about mid 1998 her husband, at her urging, finally agreed to her request not to mortgage the property and promised that he would begin discharging all relevant mortgages and would in due course transfer the property to her.  The title to the property indicates that three mortgages were discharged in the second half of 1998 and that in July 1999 the first defendant transferred his interest in the property to his wife.  The fact that Mrs Damianos's father made the gift of $130,000 to her to enable her and the first defendant to purchase the property has been corroborated by her father in an affidavit sworn by him on 29 November.

8           There is a third affidavit relied upon by Mrs Damianos in support of her application and that is an affidavit sworn by her husband, the first defendant, also on 29 November whereby he has sworn, inter alia, that at the time of the transfer of his interest in the property to his wife he was solvent and able to pay his debts as and when they fell due.  He has exhibited to the affidavit a statement of his assets and liabilities at that time which, on its face, discloses net assets of $478,647.

9           It has not been suggested on the part of counsel for the plaintiff that any of the funds embezzled by the first-named defendant from the plaintiff (assuming for the moment that the first defendant did embezzle funds) were used to purchase the East Bentleigh property.  And of course it is clear that they could not have been because the property was purchased in February 1990 and the evidence indicates that the first defendant didn't become associated with the plaintiff until July 2000.

10         Counsel for the plaintiff contends that the injunction should remain in place because if the plaintiff does get judgment against the first defendant for the sum of $2,107,085, the probabilities are that the first defendant will be declared bankrupt.  If that proves to be the case, the plaintiff may then be able to establish that the transfer of the first defendant's interests in the house to his wife in July 1999 is void and if it is, the first defendant's interest in the house before the transfer would then be available to satisfy, in part at least, the judgment obtained by the plaintiff.  In that connection, counsel relied upon the decision of the High Court in Cardisle & Ors v. Led Builders Pty Ltd[1].  In that case the majority of the court held that a Mareva order may be appropriate against a third party if the third party holds assets which may be available to a judgment creditor as a consequence of a judgment against the potential judgment debtor pursuant to which, whether by appointment of a liquidator, trustee in bankruptcy, receiver or otherwise, the third party may be obliged to disgorge or otherwise contribute to the fund or property of the judgment debtor to help satisfy the judgment against the judgment debtor.  As the majority said at p.393:  "the counterpart of a court's power to prevent its processes being abused is its power to protect the integrity of those processes once set in motion.  The integrity of those processes extends to preserving the efficacy of the execution which would lie against the actual or prospective judgment debtor.  The protection of the administration of justice which this involves may, in a proper case, extend to asset preservation orders against third parties to the principal litigation."

[1](1999) 198 C.L.R. 380.

11         Section 120 of the Bankruptcy Act, so far as is relevant, provides as follows: 

"Transfers that are void against trustee. 

(1)A transfer of property by a person who later becomes a bankrupt (the transferor) to another person (the transferee) is void again the trustee in the transferor's bankruptcy if:

(a)the transfer took place in the period beginning five years before the commencement of the bankruptcy and ending on the date of the bankruptcy; and

(b) the transferee gave no consideration for the transfer or gave consideration of less value than the market value of the property."

(3)Despite sub-s. 1, a transfer is not void against the trustee if:

(a)the transfer took place more than two years before the commencement of the bankruptcy; and

(b)the transferee proves that, at the time of the transfer, the transferor was solvent."

12         In this case, of course, the first defendant has not been declared bankrupt.  If he is declared bankrupt at some future time, clearly more than two years will have elapsed since the transfer of his interest in the property to his wife.  As to whether or not the first defendant was solvent at the time of the transfer, the evidence before me is to the effect that he was.  The prospect therefore of the transfer being shown to be void in the event the first defendant is declared bankrupt is, in my view, very debatable.

13         I have considered the material placed before the court and I am not satisfied in the present case that it is appropriate to continue the injunction originally granted by Gillard J on 3 July.  Accordingly, in the exercise of my discretion, I order that that injunction be dissolved.  That is the injunction contained in para.3 of His Honour's order of that date. 

14         I order that the costs of the present applicant, Sophie Damianos, of the application be taxed and paid by the plaintiff.

15         I direct that this order be prepared by the solicitors for the applicant and within 48 hours be brought to me for authentication.