Radnor Enterprises Pty Ltd v Nicholls (No.2)
[2019] FCCA 480
•5 March 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| RADNOR ENTERPRISES PTY LTD & ORS v NICHOLLS (No.2) | [2019] FCCA 480 |
| Catchwords: BANKRUPTCY – Application under s.30(1)(c) of the Bankruptcy Act 1966 (Cth) (Act) for an order to extend the time provided for by s.139ZS(1A) of the Act to make an application under s.139ZS(1) of the Act to set aside notices issued under s.139ZQ of the Act – whether application has reasonable prospects of success if extension of time granted – whether adequate explanation given for delay – application dismissed. |
| Legislation: Bankruptcy Act 1966 (Cth), ss. 30(1)(c), 120, 121, 128, 139ZS, 139ZQ. |
| Cases cited: Bank of New Zealand v Simpson [1900] AC 182 |
| Applicant: | RADNOR ENTERPRISES PTY LTD ACN 010 185 814 & ORS |
| Respondent: | ALAN RICHARD NICHOLLS, AS TRUSTEE OF THE PROPERTY OF MARK ANDREW BONIFACE, A BANKRUPT AND TRUSTEE OF THE PROPERTY OF MARGARET FIONA OGSTON, A BANKRUPT |
| File Number: | SYG 210 of 2014 |
| Judgment of: | Judge Manousaridis |
| Hearing date: | 23 April 2018 |
| Date of Last Submission: | 23 April 2018 |
| Delivered at: | Sydney |
| Delivered on: | 5 March 2019 |
REPRESENTATION
| No appearance by or on behalf of the First Applicant. |
| Counsel for the Second and Third Applicants: | Mr D Allen |
| Solicitors for the Second and Third Applicants: | Proctor Phair Lawyers |
| Counsel for the Respondent: | Mr A Spencer |
| Solicitors for the Respondent: | McLean & Associates |
ORDERS
The application brought by Andrew Boniface and Margaret Fiona Ogston (applicants) under s.30(1)(c) of the Bankruptcy Act 1966 (Cth) (Act) for an order to extend the time provided for by s.139ZS(1A) of the Act to make an application under s.139ZS(1) of the Act to set aside notices issued under s.139ZQ of the Act to AustralianSuper Pty Ltd is dismissed.
Subject to order 3, the applicants pay the respondent’s costs, other than the respondent’s costs thrown away because of the order made on 22 March 2018 vacating the date that had been set for the hearing of the application referred to in order 1.
The parties have liberty to apply within 14 days, if so advised, to set aside or vary order 2.
THE COURT NOTES
Order 2 is not intended to affect the order for costs made on 22 March 2018.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 210 of 2014
| RADNOR ENTERPRISES PTY LTD ACN 010 185 814 |
First Applicant
| MARK ANDREW BONIFACE |
Second Applicant
| MARGARET FIONA OGSTON |
Third Applicant
And
| ALAN RICHARD NICHOLLS, AS TRUSTEE OF THE PROPERTY OF MARK ANDREW BONIFACE, A BANKRUPT AND TRUSTEE OF THE PROPERTY OF MARGARET FIONA OGSTON, A BANKRUPT |
Respondent
REASONS FOR JUDGMENT
(As Corrected)
Introduction
Before the Court is an amended application filed by Mr Boniface and Ms Ogston (debtors) for an order under s.33(1)(c) of the Bankruptcy Act 1966 (Cth) (Act) extending the time provided for by s.139ZS(1A) of the Act to apply for an order under 139ZS(1) to set aside two notices each issued under s.139ZQ of the Act (Notices) and, if such order is made, for an order setting aside the Notices.
The Notices were issued by a delegate of the Official Receiver on the application of the trustee in bankruptcy (Trustee) of the bankrupt estates of the debtors. One Notice requires the trustee of a superannuation fund of which Mr Boniface is a member to pay to the Trustee $38,217.25, being an amount the superannuation fund had received. The other Notice requires the trustee of the same superannuation fund, of which Ms Ogston is also a member, to pay to the Trustee $24,448.65, being an amount the superannuation fund had also received. Each Notice asserts that the amount stated in the Notice was paid into the superannuation fund as a consequence of transactions that are void because of s.120, s.121, and s.128C of the Act. The transactions, and the grounds on which each Notice alleges the transactions are void, are set out in a schedule to each of the Notices.
At least for the purposes of the application before me, the debtors accept as true the assertions of fact made in each of the Notices and the schedules to the Notices. The debtors also accept, again for the purposes of this application, that, on the facts asserted in each of the Notices and schedules, the transactions would be voidable and, therefore, recoverable by the Trustee. The debtors contend, however, that the Trustee cannot now claim any right to the amounts paid to the superannuation fund because, by a deed of settlement the Trustee made with the debtors and other parties on 16 April 2015 (Deed), the Trustee relinquished his rights to recover the amounts that were paid to the superannuation fund. For his part, although accepting he is a party to the Deed, and that the Deed contains a term that releases the debtors and others from certain claims, the Trustee submits the Deed did not release his rights to recover the amounts that were paid to the superannuation fund.
The principal issue raised by the application before me, therefore, is one of construction, namely, whether, as the debtors contend, the Deed discharged any right the Trustee had in relation to the amounts paid to the superannuation fund. That is so because an important consideration in determining whether an order extending time should be made is whether there is any merit in the grounds on which the debtors rely for setting aside the Notices, assuming an order extending time is made.
I propose, therefore, to proceed as follows. First, I will set out some principles of construction. Second, I will set out the background to the making of the Deed. Third, I will set out the relevant operative parts of the Deed. Fourth, I will consider whether I should make an order extending time. That will depend on two considerations. One is the apparent merits of the grounds on which the debtors intend to rely, if an order extending time is made; and the second is whether the debtors have given an adequate explanation for not having applied to set aside the Notices within the 60 day period provided for by s.139ZS(1A) of the Act. Finally, if I am satisfied it is appropriate to extend time, I will consider whether the Notices should be set aside.
Principles of construction
A starting point is the nature of the instrument I am required to construe. It is a deed. Courts have assumed that the general principles that apply to construing commercial contracts apply to commercial contracts whose terms are reduced into a deed.[1] Those principles were recently stated by French CJ and Nettel and Gordon JJ in Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited:[2]
The rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose.
In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable businessperson would have understood those terms to mean. That enquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract.
Ordinarily, this process of construction is possible by reference to the contract alone. Indeed, if an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning.
However, sometimes, recourse to events, circumstances and things external to the contract is necessary. It may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding “of the genesis of the transaction, the background, the context [and] the market in which the parties are operating”. It may be necessary in determining the proper construction where there is a constructional choice. The question whether events, circumstances and things external to the contract may be resorted to, in order to identify the existence of a constructional choice, does not arise in these appeals.
Each of the events, circumstances and things external to the contract to which recourse may be had is objective. What may be referred to are events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties were operating. What is inadmissible is evidence of the parties’ statements and actions reflecting their actual intentions and expectations.
[1] See, for example, Royal Botanic Gardens and Domain rust v South Sydney City Council [2002] HCA 5 where the High Court held the principles for which Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 stands as authority applied to the construction of a deed. See also Prenn v Simmonds [1971] 1 WLR 1381, pages 1383-4 where Lord Wilberforce said that the “time has long passed when agreements, even those under seal, were isolated from the matrix of facts in which they were set and interpreted purely on internal linguistic considerations”.
[2] [2015] HCA 37, [46]-[50] (footnotes omitted)
Although the general principles of construction of contracts also apply to deeds, particular principles of construction have been developed in relation to deeds. One set of principles relates to the use to which recitals may be put. Those principles were summarised by Campbell JA in Franklins Pty Ltd v Metcash Trading Ltd as follows:[3]
(1)The recitals are a part of the agreement, and can be used as an aid to construction of an operative provision in an agreement . . .
(2)Nevertheless, there is a distinction between the operative terms of a contract and the recitals. Although the recitals can assist in the construction of a contract, they are not themselves operative terms . . .
(3)There is a great deal of authority from the 19th and early 20th Century to the effect that the manner in which the recital can be used depends upon whether either the recital or the operative provision is “ambiguous” . . . . These authorities take the view that recitals can be used to determine the meaning of an ambiguous operative provision, but cannot cut down operative words that are clear and unambiguous, even if the recital is also clear and unambiguous and is contrary to the operative provision . . .
(4)There are also more recent authorities which state that recitals can provide a means of proving background facts that are themselves legitimate aids to construction . . . . They can be at the least an admission by the party to the deed of the truth of the matter stated, under the general law concerning evidence.
[3] [2009] NSWCA 407, [380]
These principles are capable of being applied consistently with the general principles relating to the construction of contracts. That may be done by treating the matters stated in the recitals as the relevant background against which to identify the commercial purpose or object or genesis of the contract embodied in the deed, at least where it is necessary to do so because the operative parts of the deed are not unambiguous, or if the intended subject matter of those provisions are not identified in the operative parts. In Franklins Campbell JA referred to the availability of recitals to be used in this way:[4]
However, it should be emphasised that (at least for recitals not saying that one or other party will carry out a particular action) the recital is merely a means by which the surrounding circumstances and purpose of the transaction can be ascertained. Where recitals purport to record the surrounding circumstances and purpose of a transaction, it is those surrounding circumstances or purposes “as can be got from the language of the recital in the deed itself” that are used to construe the contract . . . . As Lord Wright put it in IRC v Raphael at 144: “The nature of recitals as statements of facts which are in the contemplation of the parties, is illustrated by the Scotch term ‘narrative.’ ”
[4] [2009] NSWCA 407, [389]
There is one other principle that I need to refer to, and that is the principle stated by Lord Davey delivering the opinion of the Privy Council in Bank of New Zealand v Simpson, namely, that “[e]xtrinsic evidence is always admissible, not to contradict or vary the contract, but to apply it to the facts which the parties had in their minds and were negotiating about”.[5] His Lordship referred[6] to a number of authorities in support of this principle, and also to the following passage from the eighth edition of Taylor on Evidence:
It may be laid down as a broad and distinct rule of law that extrinsic evidence of every material fact which will enable the Court to ascertain the nature and qualities of the subject matter of the instrument, or, in other words to identify the persons and things to which the instrument refers must of necessity be received.
[5] [1900] AC 182, page 187
[6] [1900] AC 182, pages 187-188
This principle is relevant because, as will appear later, the issue for construction I am required to decide turns on the identification of the particular subject matter the parties may reasonably be supposed to have had in mind by including in the Deed the clause or clauses on which the debtors rely for submitting the Trustee released his rights to claim the amounts that were paid into the superannuation fund.
Background to Deed
The Deed deals with a number of matters. For that reason it would be useful to divide the background as disclosed by the recitals and other evidence into the subjects with which the Deed deals.
The Trustee and debtors
On 23 June 2011 the Trustee was appointed trustee of the bankrupt estate of Mr Boniface on the presentation by Mr Boniface of a debtor’s petition. The Trustee was also appointed the trustee of the bankrupt estate of Ms Ogston, but on 1 July 2011, following the presentation by her of a debtor’s petition. The debtors were then the joint registered proprietors of two properties, one in Killara, and one in Turramurra.
Proceedings commenced by Radnor and debtors against the Trustee
On 30 January 2014 a company called Radnor Enterprises Pty Ltd (Radnor) and the debtors commenced a proceeding in this Court against the Trustee. The Deed describes this proceeding as the “Primary Proceeding”. The application commencing the Primary Proceeding sought an order under s.178 of the Act that the Court review an act, omission, or decision of the Trustee in failing to carry out an alleged agreement the Trustee made with Radnor to sell to Radnor the equity the debtors held in each of the Killara and Turramurra properties.
On 7 April 2014 the Trustee filed in the Principal Proceeding a statement of cross claim (Cross Claim) and an application in a case against Radnor and the debtors. The application and Cross Claim were directed to what those documents alleged was a contract the debtors had entered into with Radnor for the sale of the Killara property.
Trustee’s objection to discharge of debtors from bankruptcy
In June 2014 the Trustee objected to the discharge of the debtors from bankruptcy. The debtors sought a review of the Trustee’s objections to their discharge. The Inspector General in Bankruptcy upheld the Trustee’s objections, as did the Administrative Appeals Tribunal on an application for review.
Charge Proceedings
On 27 November 2015 NSW Building Consultants commenced what the Deed identifies as the “Charge Proceedings”. By those proceedings NSW Building Consultants, in a way not stated in the Deed, sought to enforce “the Charge”, being a charge over the Killara property that arose under the terms of a building contract between the debtors and JP Hickey Building Services.
Assessment for income contribution
On 27 February 2015 the Trustee reassessed amounts payable by Mr Boniface for income contributions for the first three contribution assessment periods. The assessed contributions totalled $136,547.54. Further, the Trustee estimated that Mr Boniface was liable for income contribution for the fourth contribution assessment period in the amount of $64,924.47. Ms Ogston accepted she was liable to pay $16,504 worth of income contributions for the fourth contribution assessment period of which she had paid $12,238.02. Mr Boniface, however, disputed the Trustee’s assessment of Mr Boniface’s income contributions.
Amount received by Horizontal Blue
The last and, for the purposes of these reasons, the most important subject dealt with by the recitals is that described in recital Z:
The Trustee has identified payments totalling $105,000.00 made by Mr Boniface and Ms Ogston to Fergusson & Dodd of which $64,093.29 was ultimately received by Horizontal Blue and that he has elected to treat as void.
The Deed defines “Horizontal Blue” to mean “Horizontal Blue Superannuation Fund, the self managed superannuation fund of the” debtors. The Deed, however, does not otherwise identify “Fergusson & Dodd” or the payments of the $105,000 and $64,093 referred to in recital Z. These matters are identified in the Notices and in evidence that has been adduced at the hearing before me. I will now set out these payments, and the circumstances in which they were made, as revealed by the Notices and the evidence before me.
I begin with “Fergusson & Dodd” that is referred to in recital Z. That is a reference to Ferguson and Dodd Pty Ltd (FDL). The debtors were the directors and equal shareholders of that company.
In December 2007 the debtors commenced proceedings against Mr John Hickey and JP Hickey Building Services Pty Ltd (JPH) claiming that Mr Hickey and JPH (who in the remainder of these reasons I will collectively refer to as “the Creditors”) had built defective works on the Killara property. It is apparent from recital C to the Deed that the debtors had entered into a building contract with JPH under which the debtors engaged JPH to undertake building work on the Killara property.
JPH filed a cross-claim that, so I infer, was for payment of amounts outstanding under the building contract it had entered into with the debtors. The claim for defective work was put out to a reference, and in September 2009 a report was issued. The report was adopted by the District Court and, on 13 July 2010, that court dismissed the debtors’ statement of claim, and ordered that judgment be entered for $18,252.58 in favour of JPH on the cross-claim. The District Court also ordered that the debtors pay the Creditors’ costs.[7]
[7] Exhibit C, page 98
On 9 December 2010 the debtors signed an application to borrow $1,890,000 from National Australia Bank Limited (NAB);[8] and on 11 December 2010 the debtors applied to AMP Bank Ltd (AMP) to refinance a loan that was secured by a mortgage over the Turramurra property.[9] The debtors succeeded in their applications, after which the following transactions occurred.
a)On 8 March 2011 the debtors borrowed $926,551 from AMP, $887,339.62 of which they used to pay St George Bank Ltd, and $48,772.38 of which was transferred to a loan account in the name of the debtors that was created on AMP drawing down the loan;[10] and the mortgage Westpac held over the Turramurra property was discharged.[11]
b)On 9 March 2011 the debtors transferred $48,622.39 from the loan account to an offset account held by the debtors with AMP.[12]
c)On 16 March 2011 the debtors borrowed $1,710,000 from NAB. They applied $1,528,717.38 of this amount to discharge the mortgage Westpac held over the Killara property.[13] The debtors also directed that $145,778.12 of the loan be paid into an account they had opened with NAB on 1 February 2011 (NAB Account).[14]
[8] Exhibit C, page 113
[9] Exhibit C, page 172
[10] Exhibit ARN-2, pages 100-101
[11] Exhibit C, page 197
[12] Exhibit C, pages 200-201
[13] Exhibit C, page 207
[14] Exhibit ARN-2, page 123
On 6 May 2011 the debtors withdrew $105,000 from the NAB Account and deposited that amount into an account held by FDL with the Commonwealth Bank of Australia (CBA Account).[15] Two further withdrawals from the NAB were made, each for $5,000. One was made on 11 May 2011, and one on 12 May 2011. These amounts, too, were deposited into the CBA Account.
[15] Exhibit ARN-2, pages 124, 128
On 19 May 2011 the debtors transferred $64,093.29 from the CBA Account. The CBA Account statement describes the transfer as a “Loan repayment”.[16] The amount was credited to an account with the Commonwealth Bank of Australia held by “The Trustees Horizontal Blue Super Fund” (HBSF Account). This was followed on 24 May 2011 with a further transfer of $4,763.98 from the CBA Account to the HBSF Account. The CBA Account statement describes the transfer as “Staff Super”,[17] and the HBSF Account describes it as “Super rom FAD”.[18] One day after this transfer, a liquidator was appointed over FDL pursuant to a resolution by the creditors of FDL that it be voluntarily wound up.
[16] Exhibit C, page 278
[17] Exhibit C, page 279
[18] Exhibit C, page 280
On 20 May 2011 judgment was entered by the District Court against the debtors for $714,975.98. That represents the sum of the two amounts contained in a certificate of determination of costs issued by the costs review panel pursuant to s.375 and s.378 of the Legal Profession Act 2004 (NSW). On 29 May 2011 Mr Boniface and Ms Ogston each signed a declaration of intention to present a debtor’s petition. On 23 June 2011 Mr Boniface became bankrupt, and Ms Ogston became bankrupt on 1 July 2011.
By 25 June 2012 $24,448.65 from the HBSF Account was rolled over into an AMP Flexible Super account held by the debtors. On 4 September 2015 the funds in that account totalling $51,154.88 were rolled over to AustralianSuper.
From this narrative of the effect of the matters stated in the Notices and the evidence, it will be seen that the $105,000 payment referred to in recital Z to the Deed is the withdrawal on 6 May 2011 from the NAB Account of $105,000, and the deposit of that amount on the same day into the CBA Account; and that the $64,093.29 referred to in recital Z is the transfer on 19 May 2011 of $64,093.29 from the CBA Account into the HBSF Account. Counsel for the debtors accepts that the $105,000 withdrawal and deposit is the subject of the Notices, and recital Z is intended to apply to that withdrawal and deposit.
The operative provisions of Deed
The Deed deals in separate sections with each of the subjects that are dealt with in the recitals. First, the Deed deals with the Primary Proceedings and the cross-claim filed by the Trustee in that proceeding. The principal provision is cl.2 of the Deed which provides:
In settlement of all claims made in the Primary Proceedings and in the Cross Claim, Mr Boniface, Ms Ogston, Mr Boniface Snr, Mrs Boniface and Radnor Enterprises agree to jointly and severally pay to the Trustee an amount of $300,000 (the “Settlement Sum”) in accordance with the terms of this Deed, which the Trustee agrees to accept in full and final satisfaction of those claims.
Second, the Deed deals with the Trustee’s assessments of income contributions by Mr Boniface and Ms Ogston. Clauses 11 and 12 provide that Mr Boniface and Ms Ogston agree to pay the amounts stated in those clauses, and that the Trustee agrees he will accept those payments “in full and final settlement of” the debtors’ outstanding liabilities “to pay income contributions to the Trustee”.
Third, there is the Charge Proceedings. Here the Trustee acknowledged the debtors had granted to NSW Building Consultants a charge over the Killara property. Clause 19 of the Deed provides that, on their execution of the Deed, the debtors, Mr Boniface Senior, Mrs Boniface, and Radnor “relinquish all claims, actual or asserted, made on the Trustee in relation to the Killara Property”.
Fourth, the Deed deals with the Trustee’s objections to the discharge of the debtors. It provides that within seven days of the execution and exchange of the Deed and all ancillary or collateral documents, the Trustee will withdraw his objections to the discharge of the debtors in accordance with s.149J of the Act.
Fifth, cl.58 of the Deed provides as follows:
Nothing in this Deed will preclude the Trustee from seeking to recover from parties other than parties to this Deed any amount determined by him to be voidable, including amounts which may have been paid to the Bankrupts’ own superannuation funds.
The Deed then deals with a number of other matters. Of relevance is clauses 66, 67, 68, and 60 of the Deed, all of which appear under the heading “Releases”. These clauses are as follows:
66.Conditional upon compliance with the terms of this Deed, the Trustee hereby releases Mr Boniface and Ms Ogston from all claims, actions, suits, demands, costs, damages and expenses relating to the Primary Proceedings, the Cross Claim and other than as dealt with by this Deed, any income contributions for which Mr Boniface and Ms Ogston are or may become liable.
67.Conditional upon compliance with the terms of this Deed, the Trustee hereby releases Mr Boniface Snr, Mrs Boniface and Radnor Enterprises from all claims, actions, suits, demands, costs, damages and expenses relating to the Primary Proceedings and the Cross Claim which he may have had but for the execution of this deed.
68.Mr Boniface, Ms Ogston, Mr Peter Boniface, Ms Wendy Boniface and Radnor Enterprises hereby immediately release the Trustee from all claims, actions, suits, demands, costs, damages and expenses relating to the Primary Proceedings and the Cross Claim which they may have had but for the execution of this deed.
69.Save as expressly provided in this Deed, each of Mr Boniface, Ms Ogston, Mr Peter Boniface, Ms Wendy Boniface and Radnor Enterprises acknowledge and accept that this Deed and the releases contained herein do not affect the ongoing administration of the Bankrupt Estates and that the Trustee is obliged to administer the Bankrupt Estates in accordance with the Act and the Regulations.
Parties’ submissions
Counsel for the debtors submits that cl.58 of the Deed, when read with cl.66, precluded the Trustee from issuing the Notices, and preclude him from now claiming that the transactions identified in the Notices are void. Counsel relies on two matters.
a)First, cl.58 seeks to carve out from the operation of the Deed rights the Trustee has against persons “other than parties to this Deed”. Counsel submits that the debtors are parties to the Deed and, because the Notices seek the payment from the trustee of the debtors, the claim is a claim against the debtors, something that is not carved out from the operation of the Deed.
b)Second, cl.58 of the Deed only operates in relation to amounts that may have been paid to the bankrupt’s own superannuation funds. That means that cl.58 does not apply to transactions the Trustee has not yet identified. That, however, cannot be said about the payments that are the subject of the Notices. The Trustee has identified them, and they are identified in recital Z of the Deed.
Counsel for the Trustee, on the other hand, submits that whether or not the Trustee has released his rights to claim the amounts identified in the Notices turns on the construction of cl.66 of the Deed, and there is nothing in that clause that could reasonably be taken to release any rights the Trustee has in relation to the amounts that were paid to the superannuation fund.
Is it reasonably arguable Trustee precluded from relying on Notices?
Whether or not the Trustee released rights in relation to the amounts identified in the Notices does not turn on cl.58 of the Deed; and that is because it is beyond argument that cl.58 does not contain any word or expression that could reasonably be construed as a release of any right the Trustee has or may have, or as an agreement by the Trustee not to pursue by action or otherwise any right the Trustee has or may have. Clause 58 is directed to limiting the operation of other provisions the Deed might have in relation to the matters identified in cl.58, namely, amounts determined by the Trustee to be voidable, including amounts which may have been paid to the debtors’ own superannuation funds.
That, then, raises the question of whether it is reasonably arguable that there are any clauses in the Deed that it could reasonably be said are directed to the matters identified in cl.58. Given the debtors also rely on cl.66 of the Deed, the question is whether that clause could reasonably be taken to refer or relate to amounts determined by the Trustee to be voidable, including amounts which may have been paid to the debtors’ own superannuation fund. It is beyond argument that that question is to be answered in the negative. Clause 66 is directed to the release of rights the Trustee has or may have “relating to” the subject matters identified in the clause. These are the “Primary Proceedings, the Cross Claim and other than as dealt with by this Deed, any income contributions for which Mr Boniface and Ms Ogston are or may become liable”. None of these matters can reasonably be taken to refer to claims the Trustee has or may have in relation to the amounts referred to in the Notices.
It is also not reasonably arguable that the trustee of the superannuation funds to whom the amounts identified in the Notices were paid could in effect be treated as a party to the Deed. Counsel’s submission that the trustee of the superannuation fund can or should be treated as if the trustee were the debtors rests on the implicit premise that the trustee was an agent or a person who ought to be treated as an agent of the debtors. It is true that in certain circumstances a trustee holding property on trust for a beneficiary may also be the beneficiary’s agent. There is no evidence before me, however, on the basis of which I could reasonably find that the trustee of the superannuation fund received the money referred to in the Notices as agent of the debtors, or currently holds the money that was paid to it as agent for the debtors.
In any event, even if the trustee of the superannuation fund is an agent of the debtors, the question is whether the Trustee released the debtors or the trustee of the superannuation fund of rights the Trustee has or may have to recover the money referred to in the Notices. I have already concluded that none of the matters to which the release provided for by cl.66 of the Deed can reasonably be taken to apply to the money referred to in the Notices. That means that even if the trustee of the superannuation fund is taken to be the agent of the debtors or may otherwise be taken to stand for the debtors, it is not reasonably arguable that cl.66 of the Deed, and therefore the Deed, operate as a release by the Trustee of the rights he has to recover the amounts identified in the Notices.
That, finally, leads me to counsel’s submission that cl.58 of the Deed does not exclude from its operation claims of which the Trustee is aware, but only claims of which he is unaware. Although arguable, I do not accept the submission. Clause 58 refers to amounts “determined by him to be voidable”. That may be taken to assume that the Trustee had already made such a decision (as stated in recital Z) and, for that reason, is intended to refer to a decision the Trustee had already made. In any event, whether or not cl.58 of the Deed applies only to claims the Trustee may make but of which he was unaware, I have already found it is beyond argument that whether or not the Trustee has released his rights in relation to the money referred to in the Notices depends on the operation of cl.66 of the Deed; and I have found that none of the matters which are the subject of the release in cl.66 can reasonably be taken to refer to claims the Trustee has or may have in relation to the amounts referred to in the Notices.
Should an order extending time be made?
It follows that I am not satisfied the debtors would have reasonable prospects of success in setting aside the Notices on the ground that the Deed precluded the Trustee from applying for the issue of the Notices and now precludes the Trustee from relying on them. In those circumstances it is not necessary that I consider the length of delay in the debtors’ applying to set aside the Notices, and the reasons for their delay. I will, however, say something about the delay and the reasons the debtors give for the delay.
Ms Ogston gives an explanation for the debtors’ delay in her affidavit made on 31 March 2017. She deposes that she and Mr Boniface received a copy of the Notices on 26 November 2016. Ms Ogston further deposes that she had been endeavouring to negotiate a resolution with the Trustee by making submissions, but she and Mr Boniface were unable to resolve the matter with the Trustee.
That is not an adequate explanation. The debtors appear to have been aware of the 60 day time limited; and they do not suggest they did not make their application within that period because they assumed they would resolve the matter with the Trustee or, if they held that assumption, it was induced by the Trustee. The absence of an adequate explanation, however, even in the context of the debtors having filed the application to set aside the Notices almost two months after they were required to do so, would not have weighed heavily in favour of my not exercising the discretion to make an order extending time had I otherwise been satisfied that the debtors had reasonable prospects of succeeding on their application to set aside the Notices.
Disposition
I propose to dismiss the application for an order to extend the time provided by s.139ZS(1A) of the Act for the filing of an application under s.139ZS(1) for an order to set aside the Notices issued under s.139ZQ of the Act. I also propose to order that the debtors pay the Trustee’s costs, other than the Trustee’s costs thrown away because of the order I made on 22 March 2018 vacating the day that had been set down to hear the application. I will also grant the parties liberty to apply within fourteen days should any party wish to apply for a different order for costs.
I certify that the preceding forty-five (45) paragraphs are a true copy of the reasons for judgment of Judge Manousaridis
Date: 5 March 2019
CORRECTION
On 20 May 2019 the date of delivery “6 March 2019” was replaced with “5 March 2019”.
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