Re Bozikas, Nicholas James Ex Parte Ocean Blue Maintenance Pty Ltd

[1996] FCA 299

NOT FOR DISTRIBUTION

IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY )       No NB 2876 of 1994
GENERAL DIVISION                 )

RE:

NICHOLAS JAMES BOZIKAS

EX PARTE:

OCEAN BLUE MAINTENANCE PTY LIMITED
  Applicant

OFFICIAL TRUSTEE IN BANKRUPTCY
  Respondent

CORAM:Lindgren J

PLACE:Sydney

DATE:19 April 1996

REASONS FOR JUDGMENT

There is before the Court an application by Ocean Blue Maintenance Pty Limited ("Ocean Blue") for an order that until further order the respondent, the Official Trustee in Bankruptcy, be restrained from selling, disposing or otherwise dealing with three racehorses.  The racehorses are called "Biblical", "Space Mission" and "Pringle".  It is proposed by the Official Trustee that those horses be sold today at an auction by William Inglis and Sons.

The application for interlocutory relief was filed on Wednesday, 17 April.  I mention in passing that the form in which the application was then filed was recognised by Ocean Blue to be inappropriate and a fresh form of application was filed on the hearing yesterday.  The document as filed yesterday also seeks final relief directed to establishing that Ocean Blue is the owner of the three racehorses.

The Official Trustee's position is that the owner is the bankrupt, Nicholas James Bozikas.  Ocean Blue is a company of which the bankrupt's father James Bozikas is a director.  Apparently the bankrupt's brother Mr Con Bozikas is also a director.

The matter came on for hearing yesterday.  For obvious reasons it had to be heard and determined urgently.  At the conclusion of the hearing yesterday, I said that I would refuse interlocutory relief and would give reasons today because of the lateness of the hour yesterday at which the hearing concluded and of the pendency of another matter awaiting hearing.

Mr Nicholas Bozikas became a bankrupt upon the making of a sequestration order on 14 December 1994 but has not yet filed a statement of affairs.  The three racehorses were seized on behalf of the Official Receiver as long ago as 6 February 1996.  Notwithstanding this, the application was made by Ocean Blue 10 weeks later - only two days prior to the auction.

When the hearing commenced Mr Levet of counsel who represented Ocean Blue indicated that he confronted an initial difficulty. Two affidavits were filed on 17 April in support of Ocean Blue's application, one by the bankrupt Nicholas James Bozikas, and the other by his father James Bozikas.  The affidavit of James Bozikas included in paragraph 6 a statement that the deponent Mr James Bozikas was "not familiar with the English language" and had obtained his son's assistance in matters pertaining to the business affairs of Ocean Blue.  As well, Mr Levet said that as a result of his conversation with Mr James Bozikas with whom he had conferred for the first time yesterday morning, he had become aware of the language difficulties which Mr James Bozikas had.  Mr James Bozikas's native language is Greek.  Mr Levet said that attempts were being made to find an interpreter.  (As well, as Mr Levet said that a question arose or might arise of a conflict of interest between Mr James Bozikas and his son the bankrupt Nicholas Bozikas.) 

By 2.15 pm an interpreter had been found.  I indicated that I would have difficulty in relying upon the affidavit of James Bozikas.  That affidavit was not read.  Mr James Bozikas was, however, called and gave oral evidence with the aid of the interpreter.

Mr James Bozikas showed in the witness box that he had some understanding of English and that it was limited.  There is always some difficulty in knowing the extent of such a person's understanding of the language.  Mr James Bozikas was able to understand the oath when it was read in English by the Court Officer: he repeated it in English.  As well, he answered some questions in English before they were interpreted in Greek for him.  However he gave his evidence through the interpreter for the main part.

In order for Ocean Blue to obtain the interlocutory injunction, it had to show that there was a serious question to be tried as to whether it, rather than the bankrupt, owned the three race horses and if this was established the balance of convenience would fall to be considered.  At the end of the hearing yesterday I said that I found the "serious issue to be tried" question difficult.  I could not say that on a final hearing Ocean Blue definitely will not be able to establish its case.  That is to say, the case is not one in which the evidence demonstrates that, with the benefit of further evidence, a case could not possibly be made on a final hearing.

However, virtually all of the evidence before me, except for generalised statements by Messrs Bozikas senior and junior, favoured the proposition that the horses were owned by the bankrupt.  In that situation it is not shown at present that there is a serious question to be tried.  I have concluded that the correct way to express the matter is to say that on the basis of the evidence before the Court for the purpose of the application for interlocutory relief, it is not shown that there is a serious question to be tried.  This does not, however, prevent Ocean Blue from demonstrating on a final hearing that it is the owner of the three horses.  To express the matter differently, I am not saying, as one would do on an application for summary dismissal, that the respondent has shown that there is not a case meriting a final hearing. 

As I also said yesterday, I am of the view that the balance of convenience favours the refusal of interlocutory relief.

I will turn now briefly to outline my reasons for reaching conclusions in favour of the Official Trustee on both the "serious question to be tried" issue and the "balance of convenience" issue. 

Mr James Bozikas' evidence was unsatisfactory as was that of his son, the bankrupt Nicholas Bozikas.  I will deal first with the evidence of Mr Bozikas senior.  Apparently the acquisition of the three horses began in December 1994.  Mr James Bozikas said that his son came with a trainer and said that he wanted him, Mr James Bozikas, to help him, Mr Nicholas Bozikas, buy the horses.  Taken at face value, that means that Mr James Bozikas was going to provide some funds to help Nicholas Bozikas buy the horses as owner.  So understood, the evidence denies Ocean Blue's claim at the outset.  Mr James Bozikas said that his son, Nicholas, got one horse first and later the other two.  He said that all up, the funds provided came to about $50,000.  He said that the conversation took place in December 1994 and that his son said to him, "You are the owner".

Mr James Bozikas could not remember the names of the horses - a striking circumstance for the principal of the company which claims to be the owner of them.  He could not recall the dates of purchase, the individual purchase prices, nor precisely how the purchase money was furnished.  Initially he said that the funds were provided partly by cheque and partly in cash.  He said that he gave authority to his son Nicholas to sign a cheque.  He seemed at first to be saying this in relation to the first horse and indeed in relation to all the horses.  Later he seemed to be saying that the first horse was paid for in cash alone.  No total amounts were mentioned for the cheque or cheques or cash, apart from the "all up" figure of about $50,000.

So far as the cheques are concerned, he said that they came from the account of Ocean Blue at the National Australia Bank at Chatswood.  At a later point, he seemed to depart from the version that there was a purchase of one horse then a purchase of two further horses, saying that the funds were provided progressively, $3000 one week, $4000 the next week and so on.  Yet later he abandoned the version that the cheques had come out of the account of Ocean Blue at all and said that they came out of his own bank account which he referred to as being in the names of himself and his wife Nora.  That evidence alone would, prima facie, destroy the case that Ocean Blue provided the funds.

At one stage he appeared to be saying that the three horses were purchased in December 1994.  Later, he said that Ocean Blue got the funds by means of an overdraft from National Australia Bank at Chatswood in January 1995.  However, bank records in evidence demonstrate that Ocean Blue's account at that Bank was opened on 8 February 1995 and that the first drawing on it occurred as late as on 3 March 1995.  It is true that at one point in Mr James Bozikas' evidence he said that he could not recall the dates of the purchase of the horses, but the general tenor of his evidence was that they had been acquired well prior to 3 March 1995. 

It might be possible, if one analysed very carefully and in a manner favourable to Mr James Bozikas the vague statements which he made in the witness box yesterday, to trace a path which would eliminate the suggested inconsistencies.  But one thing is certain:  his evidence is so vague that it can only be treated as unreliable.  It may be that on a final hearing Ocean Blue will be able to lead other evidence demonstrating the case on which it has sought to establish a serious question yesterday, although I have some doubt about this.  In any event the possibility cannot be excluded.

The evidence from the bankrupt, Mr Nicholas Bozikas, was also unsatisfactory.  His evidence-in-chief was in the form of an affidavit.  He was cross-examined, as was his father.

It is clear that the three racehorses are registered in the name of the bankrupt with the Registrar of Racehorses at Randwick Racecourse.  It is said that this is required under the relevant rules, that is to say, that it is required that the registration be in the name of an individual rather than the name of a company.  It is said that the registration in the name of Nicholas Bozikas is on behalf of Ocean Blue.  There were in evidence two instruments of transfer dated 24 October 1995 from Nicholas Bozikas to "James N. Bozikas" in respect of "Biblical" and of "Pringle".  These are explained by Ocean Blue as transfers from one natural person to another, in each case holding on behalf of Ocean Blue. 

But there is the question of certain signatures on these transfers.  There is a signature which clearly purports to be that of the father, James Bozikas on each transfer.  James Bozikas denies having signed.  Nicholas Bozikas does not say that he saw his father sign them but does say that he recognises the signatures as those of his father.  There is also another document in evidence which bears what purports to be a signature of "James Bozikas" but which James Bozikas denies having signed.  There is at least a real possibility that Mr Nicholas Bozikas has signed his father's name.  This might be consistent with a broad view that the racehorses are those of Nicholas Bozikas and that his father was quite content for Nicholas Bozikas to do whatever he wished in relation to the record keeping in relation to the horses.  Of course I do not determine any of these matters at this interlocutory stage.  I point to the signature problem really as another indication of the unreliability of the evidence. 

Other matters are that the invoices for agistment of the three horses issued by "Neil Compton Racing Complex" and by "Gavan Duffy Racing" were all addressed to Nicholas Bozikas, there being no mention of Ocean Blue or of Mr James Bozikas. 

Yet further evidence against Ocean Blue's case is found in affidavit evidence of a conversation which took place on 11 March 1996 between Mr Nicholas Bozikas and Charles William Butler-Bodon of the Insolvency and Trustee Service Australia.  Mr Butler-Bodon, who swore the affidavit, was not cross-examined.  Apparently Mr Butler-Bodon informed Nicholas Bozikas that the Official Trustee had three horses registered in Nicholas Bozikas' name and that the Official Trustee proposed to sell them in late April.  According to the affidavit, Mr Bozikas said, "How do I get out of the bankruptcy so the horses don't get sold so that they can come back to me."  The words "so that they can come back to me" are strongly suggestive of beneficial ownership being that of Nicholas Bozikas rather than of anyone else.

A reason has been proffered for the lack of a single piece of paper demonstrating or suggesting that Ocean Blue is or may be the owner of the three horses.  That reason is deposed to by Mr Nicholas Bozikas in his affidavit sworn 16 April 1996.  It is that on 18 October 1995 his Commodore vehicle registered number ABE-01X was stolen from outside his then residence at 45-55 Virginia Street, Rosehill and was never recovered and that the papers in relation to the financial affairs of Ocean Blue were in the vehicle at that time and were taken with the vehicle.  The suggestion thus seems to be that the cheque butts which would demonstrate the making of payments by Ocean Blue for the three horses were stolen.  The affidavit does not, in fact, descend into such detail as the nature of the papers which were in the vehicle or what they would have proved.  In any event, the explanation is really not good enough.  It would have been at least possible for Mr James Bozikas, or more accurately his company Ocean Blue, to obtain bank statements and to identify the particular cheques as revealed by the bank statements.  As well, one might have expected some evidence from the sellers of the three horses.  (Of course it is part of the case of Ocean Blue that the initial arrangements were made by Nicholas Bozikas and I do not mean to suggest that that fact necessarily indicates that title could not have been that of Ocean Blue.)

In summary, which ever way one looks one sees evidence pointing to Nicholas Bozikas as the owner of the three horses and no evidence, apart from vague generalisations from Nicholas Bozikas and his father James Bozikas, to the contrary. 

For this reason I have concluded, but only for the purposes of the present interlocutory application, that a serious question to be tried has not been shown. 

When I turn to the question of balance of convenience, the Official Trustee again succeeds.  It is common ground that there have been expenses incurred in connection with the agistment of the horses and the auction.  There was not evidence of the amounts before me.  It was stated from the bar table on behalf of the Official Trustee that a registration fee of $250 per horse has been paid and that agistment of $200 per week is being paid.  A statement from the bar table to that effect is quite unsatisfactory.  It was stated similarly from the bar table on behalf of Ocean Blue that the agistment fees are substantially less.  All of these statements from the bar table do not assist me.  There should have been evidence of the nature and amounts of the outgoings.  All that I need note is that it is common ground at least that expenses have been incurred by the Official Trustee and would continue to be incurred by him if the auction does not proceed.

Apparently, and again this is based on a statement from the bar table, it is expected that an amount of some $18,500 might be realised at the auction for the three horses and the amounts owed to creditors total some $36,000. 

Undertakings have been proffered on behalf of Ocean Blue and those associated with it.  There is an undertaking as to damages proffered by Ocean Blue, and also by its director, James Bozikas.  There is no evidence whatever of the financial position of either the company or James Bozikas.

As well, Mr James Bozikas has offered to pay into Court $2,000 on account of agistment fees.  There is no payment in yet but an offer to pay into court within seven days.  Apparently, though again this is a matter stated from the bar table, auctions are held every two months and the next one is some two months away. 

Although, no doubt, it may be said that race horses are a peculiar kind of property, there is no evidence relied on by Ocean Blue with a view to showing that there is a peculiar, special or unique feature of the three horses.  Again there is no suggestion in the evidence led by Ocean Blue of anything untoward in connection with the procedure which has been followed in connection with the auction.  If on a final hearing it is demonstrated that Ocean Blue is indeed the owner of the three horses, of course it will have a remedy in relation to the sale which has taken place.

What Mr Levet has sought on behalf of Ocean Blue is an adjournment of the matter for some four weeks and an injunction in the meanwhile.  I think that having regard to the interests of creditors of the bankrupt, the somewhat less than satisfactory nature of the undertakings (in the sense of lack of any evidence as to their substantiality), and the lateness of the application (Mr James Bozikas said that he became aware of the seizure of the horses on behalf of the Official Trustee some one to two months ago), the balance of convenience favours a refusal of interlocutory relief.

Accordingly, as I indicated yesterday, I refuse the order sought in paragraph 1 of the application by Ocean Blue which was filed in court yesterday.  I stand over Ocean Blue's application otherwise to Monday, 29 April, at 9.30 am for directions.  I order Ocean Blue Maintenance Pty Limited to pay the costs, to be agreed or taxed, of the Official Trustee in Bankruptcy of the application for interlocutory relief.

I will indicate to the parties I do propose, on the next occasion, to make an order granting leave to the Official Trustee to proceed to taxation now.

I certify that this and the preceding 12 pages are a true copy of the Reasons for Judgment of the Honourable Justice Lindgren.

Associate:

Dated:29 April 1966

Heard:       18 April 1996

Place:       Sydney

Decision:     19 April 1996

Appearances:  Mr B Levet of counsel instructed by Peter Reiner & Associates appeared for the applicant (Ocean Blue Maintenance Pty Ltd).

Mr J T Johnson of counsel instructed by Sally Nash & Co appeared for the respondent (the Official Trustee in Bankruptcy).