Re Bird, Alex Neville (as Trustee of the Estate of Yiangos Arcadiou, a bankrupt) Ex parte Pozzuto, Salvatore and Ors

[1980] FCA 12

CATCHWORDS

Bankruptcy A c t 1 9 6 6 , s.122 - payees having

f a i l e d t o n e g a t i v e t h e i n f e r e n c e s set o u t

i n s u b - s e c . ( 4 ) (c ) h e l d n o t p a y e e s i n good

f a i t h ; h e l d , p a y m e n t v o i d a s a g a l n s t t h e

t rustee o f t h e es ta te o f t h e b a n k r u p t .

RE: A L E X N E V I L L E B I R D ( a s T r u s t e e Of t h e E s t a t e

of YIANGOS ARCADIOU, a bankrup t )

EX PARTE: SALVATORE POZZUTO,

GIOVAN'NI	NIGRO,
PASQUALE	NIGRO and

ANGEL0 POZZUTO

SWEEXEY J.

19 D E C 3 I B E R 1 9 7 9

1 r

I N THE PEDE3AL COURT OF AUSTRALIA

GENERAL D I V I S I O N Xo. 68 of 1977

BANKRUPTCY D I S T R I C T OF THE

STATE OF V I C T O R I A

RE: ALEX N E V I L L E B I R D (as T r u s t e e of

t h e Es ta te Of - YIANGOS ARCADIOU,

a bankrup t )

EX PARTE:	SALVATODE	POZZUTO,	GIOVANNI
NIGHO,	PASQUALE XIGRO and

ANGEL9 POZZUTO

ORDER

JUDGE MAKING ORDER: SWEENEY 3.

WHERE MADE: MELBOURNE

DATE OF ORDER: 1 9 DECEMBER 1979

THE COURT DECLARES THAT:

The payment of $ 1 0 , 0 0 0 . 0 0 made by t h e b a n k r u p t t o t h e

r e sponden t s on 2 9 September 1 9 7 6 is v o i d as a g a l n s t

t h e a p p l i c a n t a s t r u s t e e of t h e p r o p e r t y of t h e

b a n k r u F t a n d o r d e r s t h a t t h e r e sponden t s pay t o the

a p p l i c a n t t h e sum of $10,000.00 toge thcr w l t h h l s

taxed costs of a n d l n c i d e n t a l t o t h e a p p l i c a t i o n ,

l n c l u d i n g r e s e r v e d costs, such costs t o Se t a x e d , i f

n o t a g r e e d . L l b e r t y t o app ly 1 s r e s e r v e d t o e l t h e r

p a r t y .

I N THE FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION	No. 68	of	1 9 7 7
BANKRUPTCY DISTPTCT OF THE

STATE O F V I C T O R I A

Re : ALEX NEVILLE B I R D (As T r u s t e e of

t h e e s t a t e of YIANGOS ARCADIOU

a bankrup t )

A p p l l c a n t

and

REASONS FOR JUDGMENT

C.?.. Sweeney J .

19 December, 1 9 7 9

I n t h l s a p p l i c a t i o n , a s amended by l e a v e , t h e

a p p l i c a n t seeks t h e f o l l o w l n g d e c l a r a t l o n s a n d o r d e r s :

" ( a ) That payment made by t h e b a n k r u p t

t o the Responclent on the 2 9 t h September,

1 9 7 6 f o r $ 1 0 , 0 0 0 . 0 0 1 s vold a s a g a l n s t

t h e a p p l i c a n t as T r u s t e e o f t h e p r o p e r t y

of t h e b a n k r c p t as belng payment havlnc;

t h e e f f e c t o f g l v l n g t h e r e s p o n ? e r . t a

p r e f e r e n c e p r l o r l t y o r a d v a n t a g e o v e r

c r e d l t o r s of the banlcrdpt or alternatively

by v i r t u e of t h e B a n k r u p t c y o f t h e

Bankrupt havlng been deemed t o h a v e

r e l a t i o n b a c k t o d z t e t h e 20th day of

September , 1376 on whlch da te the

b a n k r u p t g a v e n o t l c e t o some of h:s

c r e d l t o r s namely Gubbatta Nonnnees P t y .

L t d . t r a d i n g a s H l y h e t t Tlmbzr Co.

Tasmanlan Board Ih l l s L t d . , B e n e f i c l a 1

F inance Corpord t lcn L t2 . and Al l la i lce

Acceptance Corpora t lor L ;ml tcd , tha t he

has suspen?ed cr 1 s a t o u t t o s u s p e n d

payment of h i s d s b ~ s .

( b ) An o r d e r t h a t t h e r e s p o n d e n t p a y t o t h e

a p p l i c a n t t h e sum of $ 1 0 , 0 0 0 . 0 0 . "

. . . / 2

2 .

I n t h e i r n o t l c e o f i c t e n t l o n t o o p p o s e t h e

a p p l i c a t i o n , as amended by l e a v e , t h e r e s p o n d e n t s relied

upon t h e following grounds :

"l. THAT the Responden t s and a l l o f t hem were

payees i n good f a l t h a n d f o r v a l u a b l e

c o n s i d e r a t i o n a n d I n t n e o r d l n a r y c o u r s e

of	b u s i n e s s , w i t h l n	t h e m e a n l n g o f S . l 2 2 ( 2 ) ( a )
of	the Bankrup tcy	A c t 1 9 6 6 .

2 . THAT the payment was not made under such

c l r c u m s t a n c e s a s t o l e a d t o t h e i n f e r e n c e

t h a t	t h e R e s p o n d e n t s o r a n y o f	t h e m	knew,
or	h a d r e a s o n t o s u s p e c t	-

(a ) t h a t YIANGOS ARCADIOU was unable t o

p a y h i s d e b t s as they became due from

h i s own money: and

I (b) t h a t t h e e f f e c t of the payment would

l be t o g l v e t h e R e s p o n d e n t s o r a n y of

them a p r e f e r e n c e , p r l o r l t y o r

a d v a n t a g e o v e r o t h e r c r e d i t o r s -

so t h a t t h e Respcndents and all o f t h e m r e t a l n

t h e r l g h t s o f p a y e e s I n good f a l t h , a n d a r e

n o t e x c l u d e d f r o m t h a t s t a t u s by t h e o p c r a t i o n

of S . 1 2 2 ( 4 ) ( c ) o f t he Bankrup tcy Act 1 9 6 6 .

3 . THAT the pa l a l en t so nade i s r i o t l n v a l i d a t e d

( a ) t h e t r a n s a c t i o n t o o k p l a c e b e f o r e t h e

d a t e on whlch YIAXGOS ARC>.DIOU became

a bankrup t ;

(b) the Respondents and any of then hac? no

n o t l c e , a t t h e tlme o f t h e t r a n s a c t l o n

4 of t h e p r e s c n t a t l o n o f a p e t l t l o n

4 a g a l n s t YIANGDS APCirDIOU : and

(c ) t h e t r a n s a c t l o n a s 111 yood f n l t h a n d

1 i n t h c o r d i n a r y cowsc o f b u s m e s s -

so t h a t t h e R e s p o n d e n t s a r e e n t l t l e d t o r e l y

o n t h e v a l l d l t y o f t h e t r a n s a c t l o n , w h l c h Was

a payment t o a n y o r a l l o f them a s creditors

because o f t he provisions c o n t a l n c d I n S -123 (1)

of the Bankruptcy Act 1 5 6 6 . I'

. . . / 3

3 .

Mr J .S . S t e v e n s o n , c o u n s e l f o r t h e r e s p o n d e n t s ,

s a i d t h a t t h e i r sole answer t o t h e case based upon s.122

of the Bankrup tcy A c t 1 9 6 6 was t h a t , w i t h i n t h e m e a n i n g

o f t h a t s e c t l o n t h e y were payees In good f a i t h a n d f o r

v a l u a b l e c o n s i d e r a t l o n a n d i n t h e o r d l n a r y c o u r s e of

b u s i n e s s . M r I r l i c h t , who a p p e a r e d f o r t h e a p p l i c a n t ,

c o n c e d e d t h a t The sole answer made t h e y were p a y e e s f o r v a l u a b l e c o n s l d e r a t l o n .

by t h e r e s p o n d e n t s t o t h e

case based upon s .123 of the A c t was t h a t :

1. t h e t r a n s a c t i o n t o o k p l a c e o n o r b e f o r e

t h e d a t e	on wh ich	the deb to r	became	a
bankrup t ;

2 . t h e p e r s o n , o t h e r t h a n t h e d e b t o r , w l t h

whom It took p l a c e , d l d n o t , a t t h e t l m c

o f t h e p r e s e n t a t l o n o f t r a n s a c t l o n , h a v e no t l ce o f t h e

a p e t l t l o n a g a l n s t t h e

d e b t o r ; a n d

3. t h e t r a n s a c t i o n was I n gngd f d l t h a n d

i n t h e o r d l n a r y c o u r s e of b a l n e s s .

M r I r l l c h t c o n c e d e d t h e f i r s t two p r o p o s l t l o n s b u t n o t t h e

t h l r d .

Under S. 1 2 2 ( 3 ) t h e bu rden o f p rov ing tha t t hey

were p a y e e s I n g o o d f a l t h a n d I n t h e o r d l n a r y c o u r s e o f

b u s l n e s s l i e s upon t h e r e s p o n d c n t s .

S e c t l o n 1 2 2 ( 4 ) ( c ) ? r o v l ? e s t h a t fo r t n e purposes of s.122:

" a c r e d j t o r s h a l l b e deemed n o t t o be a

pu rchase r , payee o r eccumbrance r In good

f a l t h If t h ? c o n v e y a n c e , t r a n s f e r , c h a r s e ,

payment or o b l l q a t l o n was c x e c u t e d , mzdc

or i n c u r r e d u n d e r s u c h c l r c u m s t a n c e s a s t o

lead t o t h e l n f e r e n c e t h a t t h e c r e d l t o r knew,

o r h a d r e a s o n t o s u s p e c t -

(i) t h a t t h e d e b t o r was unable t o pay

h i s d e b t s as t h e y became duc from

h i s OW-I money; and

(11) c h a t t h e e f f e c t o f t h e c o n v e y a n c e ,

t r a n s f e r , c h a r g e , p a y m n t o r

o b l i g a t l o n w o u l d b e t o g l v c h l m a

p r e f e r e n c e , p l c r l t y o r a d v a n t a g e

o v e r o t h e r c r c d ~ ':or$;. "

I .

4 .

Under S . 1 2 3 ( 2 ) t he bu rden of p r o v i n g t h a t t h e

t r a n s a c t i o n was i n good f a i t h a n d l n t h e o r d i n a r y c o u r s e

o f b u s i n e s s l i e s upon t h e r e s p o n d e n t s .

S e c t i o n 1 2 3 ( 3 ) p r o v l d e s :

"For the purposes o f sub-sec t lon (1) of

t h i s s e c t i o n , a t r a n s a c t l o n s h a l l n o t b e

deemed n o t t o have been In good fa l th and

i n t h e o r d i n a r y c o u r s e of b u s m e s s by

r e a s o n o n l y t h a t , a t t h e time of t h e

t r a n s a c t i o n , t h e p e r s o n , o t h e r t h a n t h e

d e b t o r , w l t h whom i t took p lace had

n o t l c e of the conunlsslcn of an a c t of

bankruprcy by t h e d e b t c r . I'

It was common g r o u n d t h a t n o n e o f t h e r e s p o n d e n t s

h a d n o t i c e	of	the commisslon	of	an ac t of bankruptcy by	t h e
bankrup t .

M r S tevenson conceded tha t the bankrupt had on

2 0 September 1 9 7 6 committed t h e a c t of b a n k r u p t c y a l l e g e d

i n t h e a p p l i c a t i o n a n d t h a t , p m s u a n t t o t h e p r o v l s l o r l s of

s .115 , t h e b a n k r u p t c y of t h c b a n k r u p t s h a l l b e d e e m 2 t o

h a v e r e l a t i o n Dack t o , a n d t o h a v e commenced a t t h a t t i n e ,

so t h a t , p u r s u a n t t o t h e p r o v - s l o n s of s.116, t h e su-n of

$lO,OCO.OO pa ld on 2 9 September 1 9 7 6 was p r o p e r t y d 1 v l s r b l c

among h i s c r e d l t o r s , u n l e s s h l s c l l e n t s s v c c e e d e d 12 r e l h t l o n

t o t h e g r o u a d s of o p p o s l t l o n s e t o u t l n t h e l r n o t l c r

The e v i d e n c e showed tha t f rom September 1 9 7 3 t h e

r e s p o n d e n t s , a s c o n c r e t e r s , c a r r l e d o u t c o n t r a c t s f o r t h e

bankrupt th rouqhout t h e bz l ance cf 1 9 7 3 zim2 1 9 7 1 wlt.1

l n c r e a s i n g f r e q u e r . c y , u n t l l t h e y here devo t lng abou t 4s: ~f

t h e l r worklnc; t m e t o h i s J D ~ S . [Intll the end of 1 3 7 4 t h e

bankrup t was d e s c r i b e d as prom2t 1 1 1 rndlclncj pa.yxer:ts.

S a l v a t o r e P o z z u t o ' s n a r r a t l v e o f t h e r e s p o ? ? e n t ' s

d e a l l n g s w i t h Lhe bankrupt then cont lnue2 as f o i l o w s :

. . . /5

5.

" 8 . THAT d u r i n g t h e y e a r 1975 I presented

lnvolces t o t h e s a l d YIANGOS ARCP.DIOL

fo r payment whcn I saw h m on work s l tes ,

r a t h e r more some occasions t h e sale YIANGOS ARCADIOU f r e q u e n t l y t h a n b e f o r e , b e c a u s e

of h l s i n c r e a s l n g s l o w n e s s I n payment. On

stated t h a t h e c o u l d n o t p a y t h e f u l l a m o u n t

immedla te ly , and on o thcr occas ions the

s a i d YIANGOS ARCADIOU s t a t e d t h a t h e c o u l d

no t pay - - a t a l l f o r a f2w d a y s , b e c a u s e of

d e l a y s i n s e t t l l n q s a i e s a f -h i s p r o p e r t i e s .

It was s a i d YIANGOS ARCADIOI; had a great d e a l of a p p a r e n t t o ne, h o w e v e r , t h a t t h e

v a l u a b l e	rea l	e s t a t e whlLh	was	s e l l l n g
well.

9 . THAT as 1 9 7 5 drew t o a c lose, t h e s e e x c u s e s

o f t h e s a l d YIAXGOS A?.CADIOU f o r non-

payment became more f r e q u e n t . On some

occasions, I would go t o h l s home a t

4 Glengala Road, Sunshlne t o p r e s e n t

l n v o l c e s f o r p a y m e n t . O c c a s l o n a l l y , t h e r e

were o t h e r people who . :o rked for h lm there ,

a l s o rcqucs t ing yayment . Sometmes, he

would t e l l u s aboLt slow s e t t l e m e n t of

sales of h l s ? r o p c r t i i s , a n d t h a t we would

have t o be s a t l s f l e d by p a r t i a l payment

f o r a r e a s s u r e d ne, few days , or u n t l l t he nex t week .

On occasions whcn he d ldn ' t pay , he a lways

a n d o t h e r s who mlght be w l t h

me, t h a t i-.is b u s m e s s ::as sound. Indeed ,

It was o b v l o u s t o me, 2nd I presume t o

anybody ~1115 m g h t be p r e s e i l t , t h 6 t h l s

residence ;;as of a s u r c r l o r n a t u r e , and

t h a t It was f u l l o f 3:; k l n d s of va luab lc

goods. Ne% bG:llcllncj s:;,;>lles w e r e s t o r e <

on t h e YIANGOS .X?C.;DIOIJ p r e m s e s , ~n profusion. The said

a l s o had a new ca r , I

b e l i e v e t h a t It G J ~ S a Sord "ka i r l aL?" .

1 0 . THAT t h e s z l d YJANCOS .-.SC>LlIOU hcc1, s l n c e

t h e b s g i n n l n g nlaterlals. of lY75, ~ : O I L bu l id lc~q

I n a p z r t of t h e "Col l ie P z v s i g

Company's' ' business ;,r-.nlses whlch :~;2 wcre

no t u s lnc j . b u i l d l n g Th l s a ; : pxcn t ab1 l l t ; r t o Surchase

materials h e 7:as n o t g o l n q t o use

immedlatelv .' re:nforccl ITV - oclnior. - t h a t t h e

s a l d YIANC-OS __ A R C \ I J ~ O L I X I S a weal thy man, who

was wel l aDle t o pcy d.11 hls debLs when he

wanted t o .

11. THAT toward the end o f 1 9 7 5 . I was t o l d bv

$ 5 0 0 , 6 0 0 . 0 0 . T h l s r - e l q t o r c e d my own o p l n l o n

t h a t t h e s a l d YIANCOS ;~I.CAD:OU's f a l l u r e t o

make p rompt paym~nt to mc a n d o t h e r c r e d l t o r s

was duc t o w l l f u l b e n a v l o u r o n h l s p a r t ,

r a t h c r t:.m a n y L n a b l l l t y t o pay. A t t h e

. . ./6

6.

e n d of Ncvember ar.d t h e b e g ~ n n l n g of

December 1975, I, t o g e t h e r w i t h t h e

o ther Respondents herc ln , worked on

some of W e r r l b e e c o n s t r u c t i o n t h e s a i d YIANGOS A R C A D I O U ' s

s i t e s , and many

o t h e r p e r s o n s were working there: nobody

was compla in ing abou t no t be lng pa ld .

12. THAT i n December of 1975 J met t h e s a l d

YIANGOS ARCADIOU and to ld hlm t h a t I

wan ted the "Collle Pavlng Company's"

invoices t o b e p a l d b e f o r e C h r l s t m a s ,

a n d t h e s a i d YI,iNGOS AXCADIOU s t a t e d t o

me t h a t t h e r e would ~2 n o t r o u b l e a b o u t

t h a t . However, no money was recelve2.

I n s p i t e of t h l s , I and t he o the r Responden t s

h e r e i n a t t e n d e d . a C h r l s t m a s p s r t y q lven by

t h e s a i d YIANGOS ARCADJOU f o r t h e S e o p l e

who worked for him a t th? Sunsh ine He i sh t s -

Hotel , Sunshlne. Many people were p r e s e n t

a t th i s l av l sh fu r . c t lo r . , and nobody excep t t h e o t h e r R e s p o n d e n t s h e r e l n a n d m y s e l f ,

a p p e a r e d t o me t o De uriahppy a b o u t t h e

non-payment of a c c o u n t s o i i ing t o them, or

a n y t h l n g else.

1 3 . THAT d u r i n g t h e ho1id.aj.s t h a t I arc! t h e

o the r Respcnden t s t ook l runed la t e ly a f t e r

C k r i s t m s 1 9 7 5 , we d r c l d e d n o t t o ~ o r k f o r

t h e s a i d YIA?!GOS A X C A D I O t i I n t h e f u t u r e ,

u n t i l h e p a i d u s all thr3 m m e y t h a t h e owed

u s . I it would pct an end p r o p o s e d t h l s c c t l o n b e c a u s e 1 t hdugh t

to what I c o n s i d e r e ? t c

be so~ne f l n a n c l a l t r l c k s I d l d n o t unde--+--- L > d.-d.

14. THAT l n February of 1 9 7 6 t n e s a l d Y?Y<COS

ARCADIOU ce l e shone6 I ~ C anJ t o l d me c:lat i f

- t h e s a l d "Ccllle Pav1r.q Compny" wo;ll? do a

small j o b on a proper:? a t C r a l g i e b u l n , he

would pay off a l a r q e :>zr t o f t h e a r c u ~ t

owlng t o the sal6 " C c 1 l l e Pcvlng CoE,?zny".

We d i d t h a t ] o b s t a :air and rezsc.&le

pr lcc	of	$1.	:7	.00,	an2	the	sald	YIA?:GGS
--.--c

-	ARCADIOU s e a t u s a cheque 13 t h c dmodnt of
$5,000.00 a lnas t m m e C l a t e l y .

--- 1 5 . THAT In >!arch ~~ of 1 9 7 6 I i i e n t t o scc the s a d

YIANGOS ARCADICILI and to ld . h lm tha t we necdeci

mvncy t o pay our t axes . The s a l d Yi;NGG!;

ARCAbIOU s a i d t h a t I s h o u l d n o t worry, tnzk

hc coul.1 t h e s e t t l e m e n t eas l ly pay tnc amount due t o u s on

of che sa le of a p r o p e r t y d u e

on 9 t h A p r l l , 1 9 7 6 . dnd t h a t h e would pay

any interest c t~arqe ;ncui - red . I t o l d t h e

s a i d CGLIN EO33 3TrC4;:I 0: t h l s c o n v c r s s h o n ,

--__-

and on , I S ~ Xarzh 1 9 7 6 i.e wrote a l e t te r t o

t h e s a i d YIANGOS A I K A D I O U whlch I s l g n e d and

p o s t e d . I'

. . . / 7

.

l .

That l e t t e r r e a d a s follows:

"We r e f e r t o t h e b a l a n c e o u t s t a n d i n g i n

your accoun t w i th us, amount ing to $17686.85

B t t h e time o f w r i t i n g .

We acknowledge your l a t c s t p romise of a

r emi t t ance on or b e f o r e 9 t h A p r r l , b u t ,

a s w e have had t o r a l s e f i n a n c e t o c o v e r

pressing commltments w e now f o n m l l y a d v i s e

you t h a t w e must now impose an i n t e re s t cha rge

a t t h e ra te of 1 0 % p .a . on the amount

o u t s t a n d i n g o n 9 t h . A p r i l n e x t , u n t i l	f i n a l l y
l i q u i d a t e d .

T h l s i n t e r e s t w l l l b e c a l c u l a t e d o n a d a i l y

b a s l s , a n d o n t h e p r e s e n t b a l a n c e o u t s t a n d l n g

would amount t o approx lma te ly $ 7 . pe r day . "

" 1 6 . THAT s h o r t l y a f t e r I senL t h e said l e t t e r

d a t e d 31st P:z.rcn 1375, T n e t t h e s a i d

Y I A X G O S A F C A D I I I U &1.2 he c o n f l r n e d . t h a t h e

-.

would pay tale i n i e r e s t . A f t e r t h a t I cilrl

n o t a p p r o a c h t h e s a l d Y I A N G O S AT,CA.DIOti so

f r e q u e n t l y f o r p a y m e n t , b e c a u s e I ccn5idsred.

t h a t w e h a d a n I n t e r e s t - b e a r l n g i n v e s t r c n t .

However, I and t he o thc r Responden t s were

s t i l l de termined not t o work f o r t h c s a l d

Y I A N G O S ARCA9IOI' a g a l n , u n t l l w e had recc lved

payncnt i n f u l l o f t h e a m o u n t owlncj t o u s .

1 7 . THAT towards t he e n d o f A p r i l 1 9 7 6 we d l d .

w o r r a t a p r o ; > e r t y i n W e r r l b c e a t t h e r e q u c s t

o f t h e s a i d Y I A X G O S Z X C i i D I O U on t h c promlse

t h a t a la rge paymcnt o i p a s t d u e a c c o d r t s

would be forthcomu1g If w e < i d so; b u t K O

paymcnt was recelvcd.

b t h & b u s i n e s s . I t n e n observed- t h a t t h c r ?

were many peop le work ing the re , mc lu2 lKq

s3me who were d o l n ~ c o n c r e t n g I : O L ~ . T ~ P

development of t h o s e p r o p c r t l e s a p p e a r e d

t o m e t o be 2 roceed ing no rma l ly .

- -

p r e p a r e d t o so some work f;r k l l r n . rcpLlt-2

t h a t we werc u n w l l l l n q t o work f o r h l m u x l e s s

w e were p a l d t h e f u l l amount of money owlng

t o us; t o t h l s h e a n s w e r e d t h a t i f I wcnt t o

t h e R e a l E s t a t e f l r m of T r i b e and Assoc la t e s

i n Sunshlne It t h a t WC t h e n e x t n l g h t , h e w o u l d s e e t c l

were p a l d .

. . ./a

:

8 .

2 0 . THAT I proceeded t o t h e p r e m l s e s of

t h e f i r m of T r l b e a n d Associates as ~~~ ~ ~ ~~

i n s t r u c t e d by t h e s a d YIANGOS A R C h D I O U

. a n d t h e r e son P!IILIP I met t h e s a l d Y l a n g o s Arcacl?ou's

ARCADIOU. The s a i d P H I L I P -_

ARCADIOLI t h e n s a v e m e a c h c a u e l n t h e amount

o f $lG, 0 0 0 . 0 0 which had been w r l t t e n o u t by

h lm, bQt s lnr .ed DY t h e s a l d YIANGOS AKCADIOU;

it was q u l t e u s u a l . t h a t t h e c h e q u e s I

r e c e l v e d Erom t he sa ld YIAliGOS ARCADIOU

were p r e p a r e d i o r his signature by t h e s a l d

PHILIP ARCADIOU. I a s k e d t h e s a l d P H I L I P

ARCADIOU w h e r e t h e S a l a n c c o f t h e money

owing t o u s was, a n d h e r e p l i e d t h a t we would

g e t It would n o t s tart work t h e n e x t wee:;. I t h e n s a l d t h a t we

u n t l l a l l the money due

t o "Co l l l e Paving Company" had beer . pald, and

t h e s a l d P H I L I P ARC,\DIOU r e p l l e d t h a t t he re

was p l e n t y of m o x y , arid t h a t e v e r y b o d y was

b e l n g pald.

2 1 . THAT t h e b a l a n c e d u e t o " C o l l l e P a v i n g

Company" was n e v e r p a l d , a n d t h e "Co l l l e

Tavlng Company(" neve r d l d work f o r t h e sald

YIANGOS ARCADIOU a g d l n .

2 2 . - THAT I c o n t l n u e d t o t e l e p h o n e t h e s a l d

YIANGOS A R C A D I O U from tlme t o tlme, dccus lng

-- him of u n f a i r r e s s I.? t h a t h e had n o t p : ~ ?

t h e s a l d "Col l ie P a v l n g Conpary" lr, full ;vhen

he had. p a l d o f f h l s o t h e r c r e d l t o r s . T!Ie

s a l d YIAXGOS A3C;UlOi: cont lnued. t o qlxJ-e

-

various escuses f o r non-payment. Xcver'~k,eless,

I w a s astonished :;hen a "Kot lce of 1 :ee t lnc"

Under cross-examinat lon on h l s a f f i d a v - t S a l v a t o r e

Pozzu to conceded tha t he m u s t have known of t h e b a n k r u p t ' s

f a i l u r e t o make pronlpt payment t o other c r e d l t o r s when he

r e f e r r e d i n p a l a g r a p h 11 t o h i s " € a l l u r e t o make prom?t payment

t o me a n d o t h e r c r e d l t o r s " . O c c a s l o n a l l y whcn h e c a l l e d a t

t h e b a n k r u p r ' s home t o present l n v o i c e s for payment there were

o t h e r people who worked f o r hlm a l s o r e q u c s t l n g p a y m e n t . The

. . . /g

9.

bankrup t made f r e q u e n t p r o m i s e s t o pay h lm bu t b roke h i s

promises. He had never r e q u e s t e d a n y o t h e r debtor t o pay

i n t e re s t on unpaid accounts a n d t h e r e s p o n d a n t s t.ad neve r

had another debtor whose account w d s ove raue fon any:hlng

l i k e t h e time t h e b a n k r u p t owed them rnoney.

M r C o l i n Brown made a n a f f l d a v l t I n which he set

o u t t h e accountancy services whlch he rendered t o t h e

r e sponden t s . HIS a f f l d a v l t c o n t l n u e d as follows:

"7 . THAT u n t l l t h e e n d of 1974 It appea red

t o m e t h a t t h e s a i d Y I A N G O S ARCADIOU

was pavlnq 1nvo;ces w l t h i n a few days

of the- tine when I prepared them. -

8 . THI.T on 1 4 t h J a n u a r y 1 9 7 5 t h e s a l d

SALVATORE POZZil?'3 gzve ne 2 cheque 15

t h e a m o u t of $ 2 ~ O O O . O L ? h? hzd r ece lved

from t h e s a i d YJ:XSOS h R C , d I O U , t o p r o c e s s .

T h l s d l s t u r b e d me, bzcause l t u p s e t t h e

system whereby I could see v h a t l n v o l c c s

had been e x p l a l n e d pa id . The s a ld SAL'JhTORE ;OZZUTO

t o ne t h a t t h e said YIhNciS

A R C h D I O U had t o l d t : lm t h a t ne had a

temporayy shor taqe of cash , due t o a d e l a y

i n s e t t l i n g a sa ic of r ea l e s t a t e ; Zur ing

t h e n e x t month, p2)'xerrt r\7db nade I n 2n

amount suf f lc? 'enL t o b r i n g t h e a c c o u n t b a c k

t o 1ts u s u a l cur len t status.

~.

a n d o b s 2 r v e d t h a t t h e r e were s e v e r a l

thousand fee t of a r o h l t r a v e s s t o r e d ? , ? e r e

On e n q u l r y , I was mformed t ha t t hey

be lonqsd t o t h e sald Y1AN';OS ARCADICI:. Over

t h e n e x t few months, t h i s accumulatidrl cf

a r c h l t r a v e s b u l l t L:? t o accu: 1 0 0 , 0 0 0 f e e t .

I knew from a y erpc'r;rncc :E and ex:;osure

t o tile b u i l d 1 n 5 Lradr a t t h a t tlme t h a t

s u c h a r c h i t r a v e s \;?re worth about . l $ C p e r

foo t , so t h a t 1 0 0 , 0 0 0 fee t would be wort!l

about $18,000.00, and r e a d l l y s a l e a b l e .

A t about t h e e~:d of 1 9 7 6 or t h e b e g l n 2 l n q of

1 9 7 7 I f u r t h e r o b s e r v ? d t h a t about 1 0 new

washing I rzshlnes h'??tl Leen s t o r e d on t k e

b u s i n e s s uremses of t h e "Co l l l c Pavlnq

Company" ,- ancl aga1.l I was Informed. t h a t t h e y

be longed t o t h e s a l d YIANGOS A R C A D I O 5 . T h l s

s tor inq of va luable qoods on t h e p r e m i s e s of

t h e "Collie Pavlng C&qxmy"was 2 f ac to r whlch

he lped t o conf i rn my b e l ~ e f t h a t t h e s a l d

Y I A N G O S ARCADIOL' - was s o l v e n t at a l l tlmes.

. . . / l 0

1 0 . THAT u n t l l August of 1975 payment from

t h e sa3.d YIANGCS ARCADIOU was slower

t h a n it h a d b e e n i n 1 9 7 4 , b u t t h e

maximum d e l a y I n payment was well under

6 0 d a y s p u r c h a s e of t h e a v e r a g e o f

b u s i n e s s be ing done, and i n vlew of t h e

s i z e of t h e a c c o u n t a n d t h e tlme it had

been runnlng , and my h l q h o p l n l o n of t h e

wor th of t h e s a l d YIANGOS ARCz.DIOU, I

was n o t a t a l l c o n c e r n e d t h a t t h e s a l d

YIANGOS ARCADIOU might n o t b e a b l e t o

p a y h i s d e b t s .

11. THAT i n August of 1975 the palment of

" r o u n d f l g u r c " a m o u n t s r a t h e r t h a n e x a c t

i nvo ice amounts r e s u r e d . b u t t h e s a l d

SALVATORE I-OZZUTO e s ? l a l n e d t o ne t h a t

t h e s a i d YIANGOS 4RCACIC.L' had ~ n l d h111 cf

s l i g h t l l q u l d i t ' : p r o b l e . n s d.:e to d e l a y s

i n s e t t l i n g sales- of properties, and i

was s a t l s f l e d w i t h t h a t e x p l a n a t l o n .

1 2 . THAT c n s e v e r a l f l c c a s i o n s d u r l n g 1 9 7 4 and

1 9 7 5 I went t o c o n s t r u c c l o n s l tes t o sec

t h e salcl SALVATORE PO3ZVTO when some

matter had a r i sen w:llcI1 i wished t o d l s c u s s

w l t h h m . On sone of those o c c a s i o n s I saw

Impressed-by h is obvi (3us encrTy an6 d i l v e ,

a n d t h l s a?dec? EO ny confidence 11'1 h111 whlch

l a s t e d ; n t o 1 9 7 7 .

13 . TAAT I t h o u q h t i t d g p r o p r i a t e t o con:lr?. t h e

-

f a v o u r a b l e jxpressicn I h26 formed oi such a

t h e b u i 1 d l r . q t r a d e , a n d who I c o n s i d c r t o t-.

most r c s u t a ; r l e , w h a t ,i?s their oplr,:on o i

t h e sala YIKJGOS i ! j . C z d I @ U . 92 t h e o c c z s l o i l s

-. - v-

whzn I made such rnc-ulr- les in 1975 and :97G,

I was r e a s s u r e d by t k c r e p l l e s I received.

11. THAT no dellnc!uency I n payment whlch I

c o n s i d e r e d s e - 1 o u s ,JTclrrecl u i l t i l the ecd

of 1975, whon thc sL id SIAN'XS A R C h D T O U ' s

f a l l u r c t o make a s substanti?. l a pay;n?nt as

had bcen p r o m i s e s i n DGcember causec me some

alarm. However, I {.a5 once a q a l n r e a s s u r e d

n o t o n l y by my own e n ~ l u ~ r l e s , b u t a l s o h;

the Responden t s hc r t , i n , who a p s e a r e d t o be

c o n v i n c e d t h a t t h e s a id YIAKJC-OS ARCAI!IOU - was

n o t in s e r l O u s f l n a n c l a l d i f i i c u l t i e s .

. . . /l1

15. THAT ear ly i n 1976 the Respondents h e r e l n

t o l d me o f t h e i r d e t e r m l n a t l o n n o t t o

work fo r t h e s a l d YIAMGOS ARCADIO'J u n t i l

h e h a d p a l d o f f t h e amount due t o thcm;

. it was thought by me t h a t t h e payment he

c~u1 .d dell a f f o r d c o u l d b e f o r c e d o u t of

him i n t h i s way.

1 6 . THAT I n March of 1 9 7 6 It became apparent

t h a t t h e R e s p o n d e n t s h e r e l n w o u l d b e

u n a b l e t o pay a l l of t h e l r p r o v l s l o n z l

income t a x 2ue on 3 1 s t March 1 9 7 6 u n l e s s

t h e s a i d YIANGOS ARCADIOU p a l d o f f m e

amount t h a t h e owed t o t h e " C o l l l e P a v l n s

Company". A f t e r t h e s a l d SALVATORE ;OZZCTO

had had a rncetlng vith t11z s a l d YI;-.tCOS

ARCADIOU I com?oseG 2nd typed a le-cter t o

t h e s a i d YIANGOS A R C A C I O U lnpos lng an

i n t e r e s t c h a r g e o n t h e a m o u n t o u t s t a n d i n g

if h e d i d n o t p a y as he had promised. I'

T h i s was t h e l e t t e r ear l ie r set o u t .

"It was my i d e a t h a t t h c i n t e re s t charged

would o f f s e t Respondents herein would have t h e l n t e r e s t t h a t t h e

t o ay on

ove rdue t axes and f l na : ?ce cha rges ; because

o f a l l I hdd seen on c o n s t r u c t l o n s l t e s ,

and b e e n ARCADIOU was a Wealthy man t o l d by v a r l o c s p c r s o n s , I s t l l l

h e l d t h e o p l n i o n t h a t t h e s e l d -- YIAXGOS

who was s??k lng

t o augr.?nt h12 ~ W S Y ~ - L I : ~ c e p l t a l by delayr:1g

payment t 3 t h e ' C o l l l e Favlng Comymy",

Chouqh !IS was well a b l e	t o p a y p r o n p t l y
had he wished t o cl? so.

17.	TiiAT	o n c e	t h e	ln te rcs t chary? was	Imposed,
-

I f e l t h a p p i e r abo7Jt t n e s i t m t l o n , I n t h a t

I f e l t ComLjany" anG the RcsFordents I h a d e n s u r e d t h a t t h e "Collie Pilv;n;

here;!; ~ ~ o u l ~

n o t l o s e money Lhrour;l: the s a l d "'r'I:,i!,3OS __-

ARC:\DIO~; 'S	c . = ? r l c l o u >	i a l l u r e	t o p ~ y .
-

- 18 . TiIAT It appeared t,, m? t h a t , l n g e n e r a l ,

t h e y e a r s 1975 and 1 3 7 6 wcrc p r o f l t a b l c

b u o y m t fo r t h e b u l l d l n y t r a d e 1" t h e Vesterr?

suburbs of Melbourr:c, and I knew of nc reascn

whv t h e b u i l d i n c l o L ~ e r a t i o n s of t h e s a i d

YIANGOS AXCADIOG should prov? t o be any

e x c e p t i o n t o the r u l c .

1 9 . THAT

my payment of c o n f i d c n c c was r e i n f o r c e d when

$10 ,000 .00 vas r e c e i v e d f r o m t h e

s a i d YIANGOS I.:ICADIOU cn 29th Se2tember 1 0 7 6 .

I c e r t a i r . l y s a l d YIANGOS kncd o f y o m e e t l n g s w h i c h t h e

ARCADIOU - may h a v e a t t e n d e d a t

a b o u t t h a t tme .

. . . /l2

12.

20. THAT o n s e v e r a l occasions, bo th be fo re and

a f t e r S e p t e m b e r 1976, I h a v e p a r t i c l p a t e d

i n mee t ings wi th the Responden t s he re in ,

when it was d e c l i i e d t o wrlte o f f b a d d e b t s .

There was neve r any d l scuss ion abou t w r l t l n g

off any amounts owed by t h e s a i d YIAKGOS

ARCADIOU p r i o r t o 1977, because they were

always considered to be good.

22. THAT on one o r two occasions t h e " C o l l i e

Paving Company" h a s o b t a i n e d ~ u d g e m e n t s

a g a l n s t d e b t o r s who had f a i l e d t o p a y . L e g a l

a c t i o n was taken on my adv lce on those

occasions: b u t I n e v e r a d v r s e d l e g a l a c t i o n

a g a i n s t t h e s a l d YIAKGOS ARCADIOU, no r was

any eve r t h a t t h e b e s t a n d l e a s t e x p e n s l v e c o u r s e t a k e n , because l t s e e n e d t o mc

t o a d o p t w l t h a s low paycr who was f l n a n c i a l l y

sound	was	t o	l n p o s e a n	l n t e re s t	charge ,	and
walt	u n t l l	he pa ld .

23. THAT because I never h a d a n y s u s p l c i o n t h a t

t h e s a i d Y I A N G O S ARCI?DIOU was anythlng more

t h a n a problems, I nevcr s l o w p a l e r w l t h o c c a s l o n a l 1 l q u l . d l t y

; \arnsd any of t h e Res:;cndents

h e r e i n t h a t t!le sa ld Vlangos F?rcadlou m l g ? , t

have a funda rncn ta l f l nanc la l problem which

would prevent n i m trom payxng all h15 rlehts

w>.thout any great c l c l a y : a*ld I kn?w c i !10

per son t o who% t h e s a l 6 'II$NGOS A,SC.-.LIfJL

- - - __ - -

owed money t o t h e ? x t e r . t ti:at SUCA persor:

would, I n my opin lon , have been well advl.;e;l

t o c o n t e m p l a t e t a k l n g l c g a l a c t l o n a q a l n s t k i n . "

F o r t h e p u r p o s s s of t h e h c a r l n g , a schedu le was

produced, Ighich Mr Drown v e r l i l e d , l n t h e following forrr.:

"SCHZDCLE OF AGE or 3 x . w ~ ~ ~ OWIXG BY

YIANGOS A R C A D I O U TO COLLIC PAVI:JG COh'Ei.LIY

AT EKD OF QUAXTEII, 31.i2.73 TO 3l.12.75

31.12.73 S 239.00 $ 239.00

31.3.74 842.00 842.00

30.6.74	3174.10	3174.10
30.9.74	4246.20	4246.20
31.12.74	8805.50	8805.53
31.3.75	7423. a o	6595.80 828.00

30.6.75 13194.35 6609.31 6585.05

30.9.75 15164.03 10338.70 4825.30

31.12.75 22539.85 10343.20 4235.30 4797.35 3164.00"

. . ./l3

I