Re Gorcilov Macks, Peter Ivan as Trustee for the Bankrupt Estate of Gorcilov, Donka
[1998] FCA 1573
•23 September 1998
IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
SG 7074 of 1998
IN THE MATTER OF DONKA GORCILOV
BETWEEN:
PETER IVAN MACKS
AS TRUSTEE FOR THE BANKRUPT ESTATE OF
DONKA GORCILOV
ApplicantAND:
EKENA PTY LTD
First RespondentMACQUARIE INVESTMENT MANAGEMENT LIMITED
Second respondent
JUDGE:
MANSFIELD J
DATE:
23 SEPTEMBER 1998
PLACE:
ADELAIDE
REASONS FOR JUDGMENT
The Application
This is a motion for judgment on the claim, and for dismissal of the cross-claim, under O 20 rr 1 and 2 of the Federal Court Rules (“the Rules”). The principles upon which judgment may be given under those rules are well established: The power should be exercised with exceptional care: General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129. It must be clear that there is no real question to be tried: U.C. Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 at 99. I recognise that there is an especial need for caution where the ultimate outcome depends upon some disputed issue or issues of fact. This matter is abnormal, as counsel for the applicant acknowledges, because there has been filed on behalf of the first respondent Ekena Pty Ltd (“Ekena”) affidavit material which in some respects gives rise to issues of credibility. The applicant therefore accepts that he can only succeed on the application if, in reality, notwithstanding those affidavits there is no triable issue.
In Webster v Lampard (1993) 177 CLR 598 the High Court approached such an application on the basis that responding affidavits will ultimately be accepted at the trial, provided they are not inherently incredible and absent an opportunity for cross-examination (per Mason CJ, Deane and Dawson JJ at 604). This is one matter where, notwithstanding the affidavits relied upon by Ekena, I am satisfied both that there is no arguable defence to the applicant’s claim and that Ekena’s cross claim cannot possibly succeed.
The applicant has read extensive affidavit material without objection. Ekena also read without opposition a number of affidavits. It also sought to rely on the oral evidence of John Phillips junior (“Mr Phillips”), of Peter Tomaras (“Mr Tomaras”) and of Menka Milosevski (“Ms Milosevski”) given on the application to vary the Mareva injunction first made on 2 April 1998. I dealt with that application and gave judgment with respect to it on 22 June 1998. At that time I did not need to address the question of the reliability of that evidence. Ekena, which appeared on the present application by its director Mr Tomaras, asked that I have regard to that evidence, including my assessment as to the reliability of it.
The applicant’s claim and the defence and cross claim
The nature of the applicant’s claim is straightforward. He is the trustee of the estate of Donka Gorcilov (“the bankrupt”). She became bankrupt on her own petition on 20 February 1998. He was appointed on 17 March 1998 by a meeting of creditors. Up to 10 July 1997 the bankrupt was registered as owner of the following properties, as well as the property at Morphettville referrred to below, namely
·property at 10 Pinehurst Street Golden Grove (“the Golden Grove property”)
·property at 63 Martin Court West Lakes (“the West Lakes property”)
·property at 37 Caroline Drive Fulham Gardens (“the Fulham Gardens property”).
The bankrupt in the period July to August 1997 disposed of those three properties in her name, and is alleged to have applied the net proceeds of the sale of those properties to Mr Phillips.
Mr Phillips is the son of the bankrupt. Up to 21 August 1997, his name was John Gorcilov. The evidence shows that he sometimes used the name John Phillips junior prior to that date. After that date he changed his name. He also is an undischarged bankrupt, following a sequestration order made against him on 1 September 1997. John Phillips senior (“Mr Phillips senior”), is the husband of the bankrupt. At material times up to 14 February 1997 his name was Filip Gorcilov and up to 10 July 1997 his name was Filip Phillips.
Mr Phillips arranged in August 1997 for the acquisition of a shelf company, Ekena, and for the appointment of Mr Tomaras as its director. He is alleged to have applied the proceeds of the sale of the bankrupt’s three properties which he had received, in large measure, through Ekena to the acquisition of certain assets including a taxi plate on 19 August 1997 for $130,000. That taxi plate was sold on 21 January 1998 for $156,000. The funds of Ekena were supplemented during 1998 by various payments, including $10,000 on 30 March 1998, $11,050 on 16 February 1998, $36,469.35 on 27 January 1998 and $11,200 or $11,760 on 17 February 1998. Each of those payments is said to have come from the bankrupt, either directly or through members of her family. The funds available to Ekena were applied in some curious banking transactions. They are presently held by Macquarie Investment Management Limited (“Macquarie”) in the Macquarie Cash Management Trust Account 118 089 820 (“the Macquarie account”). The funds were applied in part to purchase some Caltex shares, and to lend to Mr Phillips senior on 25 March 1998 $11,872.
The applicant seeks declarations against Ekena under ss 116, 120, 121 of the Bankruptcy Act 1966 (“the Act”). Ultimately, it is claimed, all the presently held funds of Ekena are monies of the bankrupt, and that Ekena’s assets are assets acquired by Ekena solely with funds of the bankrupt, so that the applicant is entitled to them.
A defence was ultimately filed, in the face of a motion for judgment in default of defence. The defence does not positively assert facts inconsistent with the applicant’s claim, except in limited respects. Those matters are as follows:
The taxi plate licence purchased for $130,000 was funded by monies paid as follows: $52,500 from Josie Chitti (Mr Phillips’ wife), $47,500 from Menka Milosevski as trustee for Adriana Milosevski, $10,000 from Anna Gorcilov (a daughter of the bankrupt and the defacto wife of Mr Tomaras) and $20,000 from Mr Tomaras. It is denied that any of those monies came from the proceeds of the sale of properties of the bankrupt.
The deposit of $10,000 in to the Macquarie account on 30 March 1998 was a cheque from Dicksons Limited, representing profit earned on a share investment of Mr Phillips senior, which Mr Phillips senior had placed in the name of the bankrupt as trustee for him: she therefore held that sum as constructive trustee for Mr Phillips senior, and it was not a payment by the bankrupt. (The reasons for that transaction being structured in that way are not set out in the defence nor otherwise covered in the affidavits.)
In relation to certain Caltex shares said to be owned by Ekena, there was an agreement made orally between Ekena, Josie Chitti and Bentley International Limited (“Bentley”) on or about 20 March 1998 to the effect that Bentley, owned by Josie Chitti, would purchase the Caltex shares in its own name and in its own right for $44,000 and that Ekena would pay that sum“in lieu of and exchange for” the $52,500 said to have been advanced to Ekena by Josie Chitti so as to reduce that indebtedness to $8,500. Bentley is said to have been registered in the Turks and Caicos Islands. Bentley also claims to be entitled to the refund cheque of $4,000.
A Ford motor vehicle was sold by Mid-City Motor Auctions on 18 February 1998 for $11,050 which was bought and owned by Mr Tomaras, and Ekena contends that he lent the proceeds of that sale namely $11,050 to Ekena in February 1998.
In relation to the loan alleged to have been made to Mr Phillips senior of $11,872 on 25 March 1998, that loan is denied but no positive fact is pleaded; there is a specific denial that the amount was in fact paid at all.
As the banking records of Ekena show, there are two further payments of significance into Ekena which require to be addressed. They are not referred to expressly in the defence, but are dealt with in affidavits. They are:
·payment of $30,469.35 on 27 January 1998, which Ekena suggests was a loan to Ekena made by Anna Gorcilov, and
·payment of $11,200 (there was a more or less contemporaneous payment of $560) on 17 February 1998, said to constitute a loan by Anna Gorcilov to Ekena from the sale of a vehicle owned by her.
Otherwise, apart from admitting that Ekena owns the money in the Macquarie account, the defence denies that any of the funds available to it came from the sale of the proceeds of the bankrupt’s three properties, or from the bankrupt. Although it expressly professes no knowledge of matters relating to the bankrupt, it specifically denies that the commencement of the bankruptcy was 10 July 1997 and asserts that the commencement of the bankruptcy was 17 March 1998 or thereabouts, and it denies that the transactions involving the sale of the bankrupt’s three properties were to prevent the creditors of the bankrupt from receiving property to which they were entitled.
The cross claim asserts that, by reason of the injunction, Ekena has suffered loss and damage, by loss of use of its money held in the Macquarie account, in particular in not being able to buy and sell certain shares by reason of which it would have made some $50,000, and the claim is in that amount.
The Findings
Certain matters are clearly established. They are not controverted by Ekena. They are amply proven by affidavits, and by contemporaneous documentation. In making the findings recorded below, I have indicated by the discussion where there is material which might point in different directions, and my reasons for my conclusions that in the circumstances the applicant’s claimed fact is established for the purposes of the present application and to the extent necessary having regard to the nature of the application.
Ekena is a shelf company. It was registered on 30 July 1997. It was procured on the instructions of Mr Phillips, who nominated Mr Tomaras to be its sole director and shareholder. He was so appointed on 18 August 1997. From that date the primary running of Ekena was in the hands of Mr Phillips, perhaps subject to a degree of consultation with Mr Tomaras in the notional sense of seeking Mr Tomaras’ approval for actions taken by Mr Phillips on behalf of Ekena. Mr Tomaras had no real understanding of his role or responsibilities as a director of Ekena nor of its activities. On 30 January 1998 Mr Phillips senior was appointed as a second director.
The bankrupt granted a mortgage over her property at 4 Gordon Terrace Morphettville to St George Bank Limited, St George Partnership Finance Limited, and St George Partnership Banking Limited some considerable time ago. That advance had a significant unsecured component, in the order of $566,173.81 as at 9 December 1997. The bankrupt was in default under that mortgage, and owed those three entities a considerable sum. The rights of those three entities vested in St George Bank Ltd pursuant to the Mergers (St George Partnership Banking) Regulation 1997 under the Bank Mergers Act 1996(NSW). On 10 December 1997, St George Bank Ltd petitioned for a sequestration order against the bankrupt’s estate.
The petition relied upon an act of bankruptcy said to have occurred on 10 July 1997, by reason of the conveyance, transfer, settlement or other disposition of property which would, if the bankrupt had then been bankrupt, have been void against her trustee. That property was the Golden Grove property, transferred on 10 July 1997. Reliance was also place in sequence on the disposition of the West Lakes property on 21 July 1997, and later the Fulham Gardens property on 5 August 1997.
That petition was listed for hearing on 23 February 1998.
On 20 February 1998, the bankrupt presented her own petition and became bankrupt. That petition was accepted by the Official Receiver without any direction, notwithstanding the extant creditor’s petition, and so she became bankrupt on that date: see s 55 and s 57A of the Act. On 17 March 1998, the applicant was appointed trustee of the bankrupt estate at a meeting of the creditors of her estate. On 2 April 1998 the applicant brought these proceedings.
Section 55(4A)(b) provides that where the Official Receiver accepts a debtor’s petition, upon the Official Receiver endorsing the petition, the debtor becomes bankrupt by force of the section and by virtue of the presentation of the petition. Section 57A provides, that for the purposes of the Act, that person is deemed to become a bankrupt at the first instant of the day in which the petition is accepted by the Official Receiver. Thus, 20 February 1998 is “the date of the bankruptcy”: s 5. However, the commencement of the bankruptcy is the time at which the bankruptcy is deemed to have commenced, by virtue of s 115 of the Act.
Section 115(2) provides that, in the case of the bankruptcy of a person who becomes a bankrupt as a result of the acceptance of a debtor’s petition, the bankruptcy is taken to have relation back to, and to have commenced at the time indicated in the table set out to that section. Where the debtor’s petition was presented when at least one creditor’s petition was outstanding against the petitioning debtor, and accepted by the Official Receiver without a direction from the Court, the time to which the bankruptcy has relation back and the time of commencement of the bankruptcy in that schedule is said to be:
“Time of the commission of the earliest act of bankruptcy on which any of the creditor’s petitions was based”.
By virtue of the creditor’s petition of St George Bank Ltd, that date is 10 July 1997. That is because the St George Bank Ltd’s petition of 10 December 1997 was based upon an act of bankruptcy as defined by s 40(1)(b)(i) that would, if she became bankrupt, be void as against the trustee, namely the disposition on 10 July 1997.
Consequently, the commencement of the bankrupt’s bankruptcy is 10 July 1997.
The bankrupt was
·on 4 April 1997, served with a notice of demand for $1,226,229.56 by St George Bank Ltd
·on 30 May 1997, given or made aware of a notice from the Marion City Council Licensing Authority, also served on Dora’s Lodge Retirement Complex Pty Ltd, the proprietor of Dora’s Lodge Retirement Home, of its intention to cancel the licence to conduct Dora’s Lodge Retirement Home and appointing an administrator under s 31(6) of the Supported Residential Facilities Act 1992(SA)
·on 10 June 1997, served with a notice of intention to exercise power of sale of the Dora’s Lodge Retirement Home by St George Bank Ltd, which had security over it to secure repayment of the amount owing by the bankrupt
·on 18 June 1997, subjected to the appointment of a receiver and manager by the St George Bank Ltd over the property of the bankrupt at 4 Gordon Terrace Morphettville.
The evidence clearly shows that at all times from 10 July 1997 the bankrupt was unable to pay her debts as and when they fell due. At that time she owned the Golden Grove property, the West Lakes property, and the Fulham Gardens property.
On 10 July 1997, the bankrupt sold the Golden Grove property for $107,000 and on 11 July 1997 received as the proceeds of sale $12,069.82 made up of two bank cheques payable to her in the sums of $11,678.67 and $391.15. Each cheque was endorsed by her on 11 July 1997 “pay to the credit of John Phillips” and signed by her. That money was received by Mr Phillips.
On 19 June 1997, Mr Phillips opened Commonwealth Bank of Australia account 5151 1008 5028, which remained open until 23 July 1997. At 10 July 1997 the credit standing to that account was $605.67. On 11 July 1997 a deposit in to that account of $12,069.82 was received from the two bank cheques, and a clearance was requested by 14 July 1997. On 14 July 1997, Mr Phillips withdrew two amounts cashed at separate branches of the Commonwealth Bank, by cash cheques signed by Mr Phillips, in the sum of $7,000 and $4,900 respectively. On 23 July 1997, the account was closed. At that time there was a small balance in it.
On 14 July 1997, Mr Phillips used $11,900 to purchase a Ford motor vehicle from Mid-City motor auctions. That was paid for with the money received by him from the bankrupt following the sale of the Golden Grove property. On 18 February 1998, he sold that car for $11,050. He paid that sum into Ekena for no consideration. Those facts as to the source and application of those funds mean that the facts asserted in the defence on the topic are not correct.
On 21 July 1997 the bankrupt sold the West Lakes property to Mr Phillips senior for $480,000 and received as proceeds of that sale:
(a)$101,639.66 on about 21 July 1997, and
(b)$8,134.34 on 28 July 1997 (the bankrupt directed this sum to be paid as to $6,084 to a sharebroker and as to $2,050.34 to Mr Phillips). It is alleged that that amount was also transferred to Mr Phillips for no consideration. The details of the nature of that transfer are not disclosed in the evidence.
On 5 August 1997, the bankrupt sold the Fulham Gardens property to Mr Phillips senior for $356,000 and, received as proceeds of that sale $197,864.23. The transfer described the consideration as “no consideration” and asserts that the value of the property does not exceed $120,000. The evidence shows, to the contrary, that the consideration was $356,000 and after adjustments and the payment out of securities, the balance was paid by bank cheque (with no stamp duty) in the sum of $197,864.23 to “D Gorcilov”. For the purposes of the receipt of that money, on 14 August 1997 the bankrupt opened ANZ bank account 588 299 823 at the ANZ Gouger Street branch and deposited that cheque into that account. She was the sole signatory. She then made cash withdrawals totalling $145,000 on 14 August 1997 by five separate withdrawals of $50,000, $30,000, $10,000, $40,000 and $15,000 at five different ANZ branches and a further $50,000 (to make $195,000) by two separate cash withdrawals at the Gouger Street branch on 15 August 1997. The balance remaining was drawn on 18 August 1997 so that the account was effectively then exhausted. It was closed on 2 October 1997.
The bankrupt, when opening the ANZ Bank account, attended with Mr Phillips. She sought special clearance on the bank cheque. The bank officer who opened the account has identified a photo of Mr Phillips at the counter of one of the branches where one of the cash withdrawals took place, while the bankrupt sits at the rear of that branch. That officer was concerned at the apparently abnormal nature of the withdrawal transactions, of which she was notified during 14 August 1997, by other branches and as a result she consulted a senior officer. That officer, in a telephone conversation with Mr Phillips, had confirmed that each of the withdrawals took place with the bankrupt’s approval. Nevertheless, a stop order was placed on the account to oblige the bankrupt to attend the Gouger Street branch to operate further on the account. She did so, and told the bank officer that she wished to give the proceeds of the property settlement to her family. Following that, the two withdrawals on 15 August 1997 totalling $50,000 were made. That material induces a strong inference that the sum of $195,000 was given to Mr Phillips. No other beneficiary of her generosity has been identified. He subsequently has demonstrated access to very considerable sums of cash, the source of which is not otherwise identified, including during his bankruptcy. There is nothing to indicate that he had any assets or cash resources of his own up to the date of his bankruptcy. There is no affidavit evidence from the bankrupt at all, in particular as to the application of those funds. The absence of any such affidavit of itself does not lead to any inference as to the application of those funds, but its absence enables me more readily to conclude from other evidence that the cash withdrawals referred to were made available to Mr Phillips without consideration.
On 19 August 1997, Ekena bought taxi plate licence number 836 (“the taxi plate”) for $130,000 cash. The applicant asserts, contrary to the defence, that the cash available to Ekena came from funds received from Mr Phillips for no consideration, from the proceeds of the sale of the West Lakes property and the Fulham Gardens property, and that Ekena had no other source of those funds. The payment for the taxi plate licence was made in tranches of $60,000, $10,000, $10,000, and $50,000 on 23 July 1997, 2 August 1997, 9 August 1997, and 19 August 1997 respectively. The purchase of the taxi plate licence was negotiated primarily by Mr Phillips, but also with Mr Phillips senior and Mr Tomaras being present. Mr Tomaras was the person who handed over the money. Although the receipts are issued to “P Tomaras”, the vendor confirms by affidavit that the transfer of the taxi plate was to Ekena.
On 21 January 1998, Ekena sold the taxi plate for $156,000 and deposited $155,000 from the proceeds of that sale in to its bank account with the Westpac Bank, account number 115 425 (“the Westpac account”). Between 21 January 1998 and 9 February 1998 there were various withdrawals made from that account, all by Mr Phillips. At the time of the sale, Ekena leased back the taxi plate from the new owner at $280.00 per week. The dealings with the Passenger Transport Board concerning that transfer in late January and early February 1998 were conducted by Mr Phillips, and he described himself at the time as “Peter” the sole director of Ekena.
The Westpac account was opened by Ekena on 21 January 1998 at Victor Harbor. The representative of Ekena who signed the application to open the account as its director and sole signatory was Mr Phillips senior, although Mr Phillips was also present and Mr Phillips played a significant role in the interview process. There were only two significant deposits into that account: the $155,000 on 21 January 1998, and $30,469.35 on 27 January 1998. The source of the $30,469.35 is addressed below. Following the various withdrawals from the account, it was overdrawn by 9 February 1998 and closed on 23 February 1998. In the period 29 January to 9 February 1998 there were many withdrawals by cheque from that account. Those in excess of $1,000 were as follows:
Date
Amount Comment 29 January $17,500 Cash Mr Phillips senior 29 January $3,000 29 January $9,500 Cash Mr Phillips senior 29 January $4,130 30 January $5,312.63 30 January $3,500 30 January $1,400 30 January $15,000 Cash Mr Phillips senior 2 February $10,000 Cash Mr Phillips senior 3 February $10,000 Cash Mr Phillips senior 4 February $20,000 Cash Mr Phillips senior 5 February $10,000 Cash Mr Phillips senior 9 February $69,961.05 Balance of account (transfer)
The withdrawals identifiably in favour of Mr Phillips senior totalled $92,000. There is no information as to why Mr Phillips senior was entitled to those amounts, or as to the purposes for which those payments were made.
On 9 February 1998 Ekena opened Commonwealth Bank of Australia account 5151 1010 1163 (“the Commonwealth account”) at its West Lakes branch. The authorised signatories were Mr Tomaras and Mr Phillips senior. The initial deposit was the $69,977.75 from the Westpac account. The reason for the closure of the Westpac account and the opening of the Commonwealth Bank account was not explained. There were a number of deposits of substance in to the Commonwealth Bank account during the course of its life as follows:
9 February $69,977.75 From Westpac account
13 February $17,455.47
16 February $11,050 Sale of Ford car discussed above
17 February $11,760
5 March $9,500
5 March $20,000
5 March $5,000
5 March $77,000
5 March $9,500
5 March $19,500
5 March $9,500
5 March $20,000
12 March $168,979.52 From Leveraged Equities Ltd
During that period, there were also numerous withdrawals. Those in excess of $1,000 include:
Date
Amount Comment 16 February $9,900 Cash Mr Phillips senior 16 February $9,500 Cash Mr Phillips senior 19 February $10,000 Cash Mr Phillips senior 19 February $9,800 Cash Mr Phillips senior 19 February $20,200 Cash Mr Phillips senior 19 February $20,000 Cash Mr Phillips senior 20 February $7,500 23 February $1,200 24 February $2,500 25 February $9,500 25 February $8,000 4 March $1,200 9 March $2,000 Autoteller withdrawal 9 March $1,040 9 March $10,500 Cash Mr Phillips senior 9 March $25,000 Cash Mr Phillips senior 9 March $20,000 Cash Mr Phillips senior 9 March $20,000 Cash Mr Phillips senior 9 March $10,000 Cash Mr Phillips senior 10 March $2,000 Autoteller withdrawal 10 March $5,000 10 March $70,000 Leveraged Equities A/C 11 March $1,200 13 March $2,000 Autoteller withdrawal 13 March $2,000 13 March $20,000 13 March $150,000 Transfer to Macquarie Bank 16 March $2,000 Autoteller withdrawal 16 March $1,000
The withdrawals by cash cheques identifiably in favour of Mr Phillips senior were again substantial. As noted below, the evidence suggests that others of the substantial withdrawals were paid to his benefit. Again, there is no information proferred as to why Mr Phillips senior was entitled to those amounts, or as to the purposes for which those payments were made. Nor is any explanation proferred for why the cheques were presented at various different branches of the bank, sometimes on the same day. Photographs taken at the time of the withdrawal of $20,000 on 19 February 1998 by a security camera show Mr Phillips present and handling the money.
There was only a balance of $279.54 in the Commonwealth account as at 4 March 1998. On 5 March 1998 the eight cash deposits totalling $170,000 were made, again at various branches. The teller receiving the deposit of $77,000 described the depositor as having “a suitcase full of money”. Surveillance cameras at two of those branches show the depositor to be Mr Phillips, who was then of course himself a bankrupt. The inflow of funds was clearly for a purpose: on 5 March 1998, a cheque was drawn on the Commonwealth account for $170,000 in favour of “Leveraged Equities”. It was dishonoured, as the signature did not conform to the specimen signature of the authorised signatories. Two other cheques drawn on the account on 9 March 1998 for $606.00 and $1,040.00 were dishonoured for the same reason.
The account was not left in substantial credit for long. On 9 March 1998, there were five withdrawals, again at different branches of the Commonwealth Bank, by cash cheques signed by Mr Phillips senior, totalling $85,500. On the occasion of the withdrawal of $25,000 on that day, evidence shows that Mr Phillips wrote out the cheque and gave it to Mr Phillips senior. On the occasion of the withdrawal of $20,000 on that day, again Mr Phillips and Mr Phillips senior were together and Phillips was holding the case of cash. They left together in Mercedes motor car UXK-002 (“the Mercedes”). On 10 March 1998 an Ekena cheque for $70,000 was exchanged for a bank cheque for $70,000 to “Leveraged Equities A/C” and special clearance sought on 11 March 1998. The documents show that two deposits were put in to the account of “Leveraged Equity”, namely the $70,000 cheque and $99,200 cash on 10 March 1998. I conclude that the $99,200 cash was largely made up of the $85,500 withdrawn in cash from the Commonwealth Bank on that day (the difference is $13,700).
On 12 March 1998, by direct deposit credited from Leveraged Equities the payment of $168,979.52 was made. The proposed transaction for which funding had apparently been provided by Ekena seems not to have been completed. That left the account in credit of $177,430.96.
Again the account was not left idle for long. On 13 March 1998, a cash cheque to Mr Phillips senior for $20,000 was cashed and on the same day a cheque for $150,000 signed by Mr Phillips senior was exchanged for a bank bearer cheque payable to Ekena for $150,000. That bank cheque was deposited into the Macquarie account. The Commonwealth Bank account was closed on 30 March 1998.
The Macquarie account had been opened on 9 February 1998. The applicant for that account was said to be Mr Tomaras, and his residential address given “63 Martin Court West Lakes”. That is not his residential address, but that of Mr Phillips senior. The fax contact number similarly was that of Mr Phillips senior. The application form is dated 9 February 1998. A further application form was completed on 13 March 1998, apparently also by Mr Tomaras. The signature on that latter form is totally different from that on the earlier document, and the date of birth of the applicant is given as 1 March 1936 (the date of birth of Mr Phillips’ senior) rather than the earlier date of birth of Mr Tomaras given on the earlier application of 18 March 1947. It also nominates as a contact “John Gor”.
The deposit on 13 March 1998 rendered the Macquarie account substantially in credit. There were only two substantial withdrawals from that account until the injunction was granted on 2 April 1998, namely $44,000 to Ord Minett Ltd stockbrokers on 20 March 1998 and $11,872 to Mr Phillips senior on 25 March 1998. There was only one further deposit into that account, of $10,000 on 1 April 1998. That is the payment which, according to the defence, was paid by cheque from Dicksons Ltd on account of Mr Phillips senior by way of loan. As at 2 April 1998, there appears to have been a credit standing to Ekena on the Macquarie account of about $97,000.
On 2 April 1998, the Macquarie Bank received a telephone request for a bank cheque payable to F Gorcilov for $87,000, and then a faxed handwritten note authorising a cheque payable to Filip Gorcilov (Mr Phillips senior) to be collected by Mr Phillips. The injunction granted on 2 April 1988 prevented that payment.
The source of Ekena’s funds
It is critical to address the source or sources of Ekena’s funds. Unless there is no prospect of Ekena showing that they came from resources other than those of the bankrupt, the present application must fail.
(a)The funds to purchase the taxi license
The explanation ultimately proffered in the defence and in affidavits filed on behalf of Ekena concerning the source of funds for the taxi licence includes an asserted loan of $52,500 by Josie Chitti to Ekena. The affidavits filed assert that she gave to “Anna” and “Peter” the following amounts:
8.5.97 $8,000 from her Diners Club facility
15.5.97 $19,000 from her American Express (“AMEX”)
facility
15.7.97 $13,000 from her AMEX facility
16.7.97 $12,500 from her AMEX facility
The statements of the AMEX account show the three payments were to Salon Hair Care Supplies Pty Ltd, but Josie Chitti says she was then given these amounts by that company. Evidence clearly rebuts much of those allegations. The AMEX account, as the statements show, is not that of Josie Chitti but is in the name of Mr Phillips. The cash advances (allegedly to accommodate the $52,500) were reduced by 3.5 per cent for commission. They did not total $52,500. On 12 May 1997, an application was lodged with the Stamp Duties Office of South Australia for an opinion as to the amount of stamp duty to be assessed in respect of an apparently unrelated transaction. The stamp duty was assessed at $41,000. It was paid in three cheques of $15,000, $18,000, and $8,000. The $19,000 drawn on the AMEX account on 15 May 1997 was, as the application then shows, used by Mr Phillips to procure the bank cheque of $18,000 paid to the Stamp Duties Office. The $4,000 of the $8,000 drawn on the Diners Club account was, as the endorsements on it show, used towards the $8,000 cheque for stamp duty. In each instance the cheques were signed by John Gorcilov (Mr Phillips).
Thus, putting aside the various features as to the timing of the first of those alleged advances, having regard to the time of purchase of the taxi licence, and to the date that Ekena was “acquired”, it is clear that the allegations are not capable of being sustained as credible. There is, in my view, no prospect of that explanation of the funds available to Ekena to buy the taxi licence being made out.
Another explanation for the source of those funds was given. It was the version first given by Ekena. It touches upon the overall source of those funds, and the sum said to have been advanced by Mr Tomaras. An affidavit in the name of Mr Tomaras, witnessed by a Justice of the Peace at the Adelaide Police Station Victoria Square Adelaide, on 7 April 1998 exists. Mr Tomaras is said to have deposed in that affidavit, which was presented in evidence before the Court to resist the continuance of the Mareva order, that the taxi plate was “purchased from my own funds” and not from funds of the bankrupt. Counsel appearing for Ekena on a later occasion withdrew that affidavit, asserting that it was no longer relied upon as it was not Mr Tomaras’ affidavit. The evidence of the Justice of the Peace before whom that affidavit was sworn makes it plain that it was not Mr Tomaras who deposed to that affidavit, but Mr Phillips. It is clear from the later explanation in other affidavits, and in the defence, that the assertion in that document is not true.
By letter of 14 April 1998, Ekena by its solicitors put a further version as to the source of the funds. It was said that they were lent to Ekena by Mr Phillips senior from monies available to Mr Phillips senior from a compensation settlement. That version was not later advanced.
The third version of the source of those funds, including the asserted loan from Josie Chitti, has no prospect of being made out, partly for the reasons given, In addition, part of those advances include an advance from Mr Tomaras of $20,000 which he says was made on about 23 August 1997. However, that could not be the case, as the vendor explains when he received payment for the taxi licence, the last payment was on 19 August 1997.
The package of funding sources as part of this version includes $47,500 from Ms Milosevski. Her evidence is quite incredible: it involves a request for a loan made in July 1997 by Mr Tomaras and Anna Gorcilov, in respect of which by coincidence she had withdrawn from a Commonwealth Bank account held in trust for her daughter Adriana, amounts on 19, 21 and 24 March, 7, 9 and 10 April, 1, 6, 7, 12, 15 and 20 May, and 16 July 1997 in the following sums respectively: $6,500, $12,000, $12,000, $1,500, $3,000, $1,400, $3,500, $2,000, $500, $500, $400, $400 and $4,000. That is a total of $47,700. She says she kept $200 for her personal use. Furthermore, the copy of the bank book shows that the amounts so withdrawn respectively were deposited in that account and almost spontaneously withdrawn, that is within a day or so, in each instance. The account at no time of more than a day or so had other than a minimal balance. The practice of depositing and then promptly withdrawing any significant amount continued after the amount available for the alleged loan. The next inflow of funds to that account, on the material, , was on 26 August of $1,500. That amount too was paid in and out within a day. The source of the deposits is not identified. It is, in my view, quite incredible that the monies identified, which represent all the deposits withdrawn in the period immediately before the alleged loan sufficient to get to the required amount, were held and made available for the purpose asserted. Ms Milosevski says that on 23 July 1997 she was told that a company was to be formed to buy the taxi licence, and later on 25 August 1997 that its name was Ekena. Despite the time at which Ekena was acquired, namely 18 August 1997, there is what purports to be an acknowledgment of debt of 22 July 1997 (unstamped, as are all documents other than the sale of the taxi plate) signed for Ekena by Mr Phillips. Quite apart from any views which I formed about Ms Milosevski’s reliability for the reasons expressed, I do not regard that material as capable of providing a credible basis for the assertion as to the source of funds of Ekena to buy the taxi licence, either in relation to Ms Milosevki’s alleged advance or, in conjunction with the other evidence, in relation to the collective sources of those funds.
(b)The source of the $30,469.35 deposit
Ekena asserts that $30,469.35 was paid into Ekena on 27 January 1998 by Anna Gorcilov from the proceeds of her trading through Pont Securities in the name of the Dora Trading Trust. It is said to be a loan from Anna Gorcilov. A Deed of Trust with John Gorcilov as settlor and Anna Gorcilov as trustee dated 18 August 1997 has been produced. Again, independent evidence clearly and unequivocably disproves that allegation.
The funds of $30,469.35 were not funds of the Dora Trading Trust. They were funds payable to “Dora Trading Pty Ltd”, whose address is that of the bankrupt. On the application to Pont Securities for an account for share trading, the application was presented in the name of Dora Trading Pty Ltd per “Dora Gor”, an alias of the bankrupt. In fact, Dora Trading Pty Ltd is a Victorian registered company carrying on business in Victoria and is unrelated to the bankrupt or to members of her family. Dora Gor is not an officer. What that material demonstrates is that the account with Pont Securities was not procured by, or operated by, Anna Gorcilov, but by the bankrupt.
(c)The source of the $11,050 deposit
I have referred above to the application of the bankrupt’s funds from the sale of the Golden Grove property, and how they ultimately found their way into Ekena. Mr Tomaras asserts that the Ford Falcon vehicle purchased with the bankrupt’s funds was his, and that he sold it and paid the proceeds of $11,050 to Ekena by way of a loan. That vehicle was never registered in Mr Tomaras’ name. As noted, it was purchased for cash in July 1997. A cheque payable to Mid-City Motor Auctions drawn on the joint account of the bankrupt and Mr Phillips senior was dishonoured. There were then the cash movements following the sale of the Golden Grove property. No transfer of the vehicle was then registered. On 11 February 1998, the vehicle was registered in the name of Anna Gorcilov, and on 12 February 1998, sold for the net proceeds of $11,050. The evidence clearly indicates that the source of the funds for the purchase of that vehicle was the bankrupt. I am satisfied there is no prospect on the material before me of Mr Tomaras establishing that he was the owner of that vehicle.
(d)The source of the $10,000 deposit
As noted above, the defence asserts that the source of this deposit is a payment by a sharebroker, Dicksons Limited, as a result of share trading in the name of the bankrupt but in reality the bankrupt was a trustee for Mr Phillips senior. The form opening the account, and the client agreement form, were each executed by the bankrupt on 30 November 1997. On 11 December 1997 Mr Phillips senior opened a separate account with Dicksons Limited. The payment of $10,000 does not, as asserted, represent profits from share trading or dealing through Dicksons Ltd. It was in fact a payment to the bankrupt in settlement of the bankrupt’s claim for damages made against Australian and International Equities. The cheque payable to the bankrupt for $10,000 was from solicitors acting for Australian and International Equities in relation to that claim. That cheque was paid into Ekena. This particular transaction shows clearly an attempt by the bankrupt to conceal her assets from her trustees, and Ekena through its defence has joined in that purpose.
(e) The source of the $11,200 deposit
The vehicle which was sold to generate this amount, paid into Ekena on 17 February 1998, was never registered in the name of Anna Gorcilov. The evidence however shows that the vehicle was registered in the name of Ekena until it was sold, rather than, as asserted, in the name of Anna Gorcilov. Anna Gorcilov does not assert that it was held by Ekena for her in any way.
(f) Conclusion
Accordingly, in my judgment, Ekena has no prospect of establishing that the funds available to it from time to time were procured in the manner it asserts, that is from persons other than the bankrupt. That leaves the question whether there is any triable issue as to whether the source of those funds was other than the bankrupt, through Mr Phillips or other members of the bankrupt’s family. It is my conclusion that there is not. I have had regard to the maters discussed above. There is some additional material which pertains to that issue, and generally to the relief claimed.
Control of Ekena
In various documents Ekena’s principal place of business is shown as 1/15 Torrens Avenue Lockleys, the residence of Mr Phillips. In addition, as well as Mr Phillips arranging the incorporation of Ekena, he later gave instructions to the solicitors from whom the shelf company was acquired for the appointment of Mr Phillips senior as a director of Ekena, and he arranged for a minute to be prepared dated 30 January 1998 to that effect. That minute records Mr Phillips senior and Mr Tomaras to have been present, but they did not attend. There was no meeting. Only Mr Phillips was involved on that occasion. Mr Phillips also arranged for payment of the account of the solicitors for the provision of Ekena as a shelf company.
The evidence shows that Ekena was incorporated at the direction of Mr Phillips, that the acquisition of the taxi plate was at the instigation of Mr Phillips, Mr Phillips senior and Mr Tomaras, that the conduct of the Westpac, Commonwealth and Macquarie accounts was through Mr Phillips and Mr Phillips senior, that the business of Ekena was conducted from the West Lakes property, the residence of Mr Phillips senior, and Mr Phillips represented himself as Mr Tomaras on at least one occasion.
The solicitors for Ekena have asserted in submissions that they were instructed that Mr Phillips was the manager of Ekena.
The Share Transaction
On 20 March 1998 $44,000 was paid to Ord Minnett Ltd to buy 10,000 Caltex shares in the name of Bentley International Limited, with funds from the Macquarie account. A refund of $4,000 overpaid is held by the applicant pursuant to the Court order of 21 April 1998. As I have noted above, the defence alleges that there was an oral agreement between Ekena, Josie Chitti and Bentley made on 20 March 1998 whereby Bentley would buy those shares, and Ekena would pay for them “in lieu of and in exchange for” the $52,500 advance referred to above to reduce its debt to Josie Chitti to $8,500. It is asserted that Bentley is registered in the Turks and Caicos Islands and is a company owed by Josie Chitti, so that Ekena is not entitled either to the Caltex shares or the $4,000 refund.
The evidence shows that Bentley applied to Ord Minnett Limited for an allotment of 10,000 Caltex shares at $4.40 and presented an Ekena cheque for $44,000 payable to “O/M/L”, (meaning Ord Minnett Limited) dated 20 March 1998. On 23 March 1998, Ekena had applied for a company account with Ord Minnett Limited supported by an indemnity given by “Filip Gor” with an address given as the Fulham Gardens property.
It is fundamental to Ekena’s version of this transaction that there existed a debt owed by Ekena to Josie Chitti of $52,500. If there is no prospect of Ekena succeeding in making out that matter, the foundation for the claim that this transaction was not one for Ekena’s benefit but was a means of Ekena partially repaying a debt to Josie Chitti disappears. I have concluded above that Ekena cannot possibly succeed as to that alleged loan. It follows that Ekena cannot possibly succeed in its claim that the purchase of the Caltex shares was not making use of its own monies, but was a means of repaying a loan.
I also note the inconsistency in affidavits relied upon by Ekena as to whether the alleged loan from Josie Chitti was repaid in part prior to the purchase of the Caltex shares. The defence, and certain affidavits, clearly assert that there had been no such repayment, so that after the purchase of the Caltex shares there would be owing still $8,500. Other affidavit evidence asserts that sundry payments on 30 January, 4 and 23 February and 3 and 4 March 1998 totally were paid in reduction of the indebtedness totalling $6,965. In respect of one of those sundry payments for $3,500 on 31 January 1998, other evidence again shows that it was paid to American Express in reduction of Mr Phillips’ indebtedness.
I also note the suggestion that there has been some apparent misdealing with the Caltex shares. Pursuant to the order made on 21 April 1998, the certificate for the 10,000 Caltex shares in the name of Bentley was sent to the applicant to be held by him. On 31 July 1998, by declaration, Bentley asserted that that certificate was lost. It is unclear who signed the declaration. A new certificate was issued on 4 August 1998 in the name of Bentley , and at the same time a new account with Baker Young stockbrokers in the name of Bentley, with “Philip Corcov” as director, was opened. The Caltex shares were then sold on 12 August 1998 by Baker Young and the net proceeds of $36,623.75 were drawn by cheque to Bentley. On 12 August 1998, “Filip Paule Gorcilov” opened an ANZ bank account. Part of the identification provided was a water bill for 37 Caroline Drive Fulham Gardens. The date of birth, and the name given, relate to Mr Phillips senior. On 19 August 1998, that cheque was paid into that account. On that and a subsequent day, various withdrawals were made by “Filip Gorcilov” to cash or to “John Phillips account number 271836264” in the sums of $9,800, $9,800, $7,120, $4,800, $5,020.82, making a total of $36,540.82. The applicant does not, on this application, seek to have findings made with respect to those matters.
The Mercedes
On 29 January 1998, Ekena through Mr Phillips bought the Mercedes for $17,500. He remained in possession of and had the use of it at all times, including after 2 April 1998. On that date it was registered in the name of Pars Motor Company (“Pars”), but Pars has no knowledge of, or record relating to, the Mercedes and does not claim any interest in it.
Mr Phillips was confronted with those circumstances by Detective Senior Constable Schar on 14 April 1998, when he admitted: “Ekena bought it a few months ago and it is now for sale”. He also said that Ekena had paid for the transfer of that vehicle in to the name of Pars. He asserted later, to a representative of Pars, on 30 April 1998 that Pars had bought the car for $16,200 cash. Pars’ records and its officers confirm that that is not true. There was at the time no reference to Ms Milosevski having had any dealings with the Mercedes.
Later, it was suggested that the Mercedes was “sold” to Ms Milosevski on 5 March 1998 for $17,000, with a rather loose ‘buy back’ arrangement, as a form of Ekena obtaining $17,000 funds from Ms Milosevski. The Commonwealth Bank passbook of Ms Milosevski as trustee for Adriana Milosevski covers the period from 7 October 1997 to 2 March 1998. It has no entries which would account for such a payment. As with earlier deposits and payments, it appears for that period that any significant deposit to that account was withdrawn on the same or the following day. Subject to those deposit/withdrawal transactions, that account was never in credit for more than a small amount. The Mercedes was never transferred to Ms Milosevski.
Despite that apparent conflict between that version of the arrangement concerning the Mercedes, and the version given by Mr Phillips in April 1998, it is not necessary to determine where the truth lies for the purpose of this application. The Mercedes was clearly purchased with Ekena’s funds (as I conclude, in turn derived from the bankrupt’s funds). The Mercedes remains an asset of Ekena. The question of whether Ekena’s available funds are in reality funds of the bankrupt and whether Ekena’s assets are in reality assets of the bankrupt remains the same. If Ms Milosevski did advance $17,000 to Ekena, title to the Mercedes did not pass to her. She may still be entitled to that sum from Ekena. The orders I propose to make will not affect such rights as she may have in that regard.
Overview
I have in the above consideration treated each of the issues severally. That seemed to be the appropriate way to ensure that there was a proper focus on whether Ekena has any prospect of resisting the applicant’s claim in any or all respects. I have concluded that it does not.
When one steps back to see together the various matters asserted by, or on behalf of, Ekena measured against the documentary and other evidence, the picture emerges even more strongly and irresistibly. Ekena is shown to have been a vehicle into which the bankrupt’s funds were applied, largely through the medium of Mr Phillips, so as to remove those funds from the reach of her creditors and to continue to make them available to members of her family for their benefit. The overall picture is quite overwhelming. Affidavits which in significant respects are demonstrably false and inherently incredible should not be able to be used to delay the applicant from recourse to those assets of the bankrupt to which he is entitled. The affidavits filed by Ekena demonstrate a glib and progressive response to each new piece of information uncovered by the applicant as to the scheme of the bankrupt and at least certain members of her family. As each piece of information was uncovered to demonstrate the falsity of one version of events presented, the story changed, and further changed to meet the progressive exposure of primary documentation and other material.
Accepting that the power to grant a summary judgment must be exercised only with great caution, I think this is one case where the applicant is entitled to summary judgment to the extent sought, notwithstanding the affidavits filed on behalf of Ekena.
The matter is also somewhat different for another reason. I heard an application to vary the Mareva order, which included oral evidence from Mr Phillips, Mr Tomaras, and Ms Milosevski. I had not needed to resolve any issues of credit in relation to the evidence then given, in rejecting that application. On this application, Mr Tomaras asked me to have regard to that oral evidence, including my assessment of it. In reaching the conclusion expressed above, I have not found it necessary separately to do so. The evidence in chief of those persons is to much the same effect as the affidavit evidence which was tendered. It has been considered in that way. However, the cross examination of Mr Phillips left me with the firm view that Mr Phillips was an untruthful witness. His evidence was given in an unimpressive and unsatisfactory manner. He was argumentative, and creative in his responses so that, to my perception, he was simply developing the response to the questioning which he regarded as most fitted to the issue he was being asked about, rather than giving a truthful answer. I place no weight on his evidence. I also place no weight on the evidence of Mr Tomaras. He gave his evidence in such a way that it was quite clear he was but the tool of Mr Phillips. He had no real idea of what Ekena had done, or its assets or liabilities, or any of its transactions. Despite being its sole director for some time, he clearly did not fulfil that role. He simply could give no credible evidence. Those matters in themselves tend to support the view which I expressed above as to Ekena’s process of simply putting forward what it was thought at the time might avoid the consequences of a material piece of evidence adverse to its interest, rather than presenting a coherent and truthful version of its affairs and its sources of funds. In the case of Ms Milosevski, it is again my conclusion after seeing her give evidence that in significant respects she was an unreliable witness. In particular, her demeanour and the nature of her responses when being questioned about the alleged advance to Ekena in July and August 1997, were entirely unsatisfactory. I reject that evidence. I do not need to determine whether she advanced to Ekena $17,000 in March 1998 in some way related to the Mercedes for the reasons given above, save to conclude that there is no triable case that the Mercedes itself is other than the property of Ekena, and was bought with funds of the bankrupt.
The relief sought on the application was limited to declaratory relief and consequential orders. The orders which I make, in the light of my reasons, are as follows:
That the counter-claim made by the first respondent (“Ekena”) be dismissed.
That a declaration be made that:
2.1Pursuant to section 115(2) of the Bankruptcy Act 1966, the bankruptcy of Donka Gorcilov (“the bankrupt”) is taken to have relation back to, and to have commenced at, 10 July 1997;
2.2The following property was acquired by or has devolved on the Bankrupt after the commencement of the Bankrupt’s bankruptcy (“the after-acquired property”), namely
2.2.1the proceeds of the sale of the estate in fee simple in the land comprised in Certificate of Title Register Book Volume 5249 Folio 51 (“the West Lakes property”) being the sum of $101,639.66;
2.2.2the proceeds of the sale of the estate in fee simple in the land comprised in Certificate of Title Register Book Volume 5300 Folio 49 (“the Fulham Gardens property”) being the sum of $197,864.23;
2.2.3the proceeds of the sale of the estate in fee simple in the land comprised in Certificate of Title Register Book Volume 5140 Folio 293 (“the Golden Grove property”) being the sum of $12,069.82;
2.2.4the sum of $30,469.39 to the credit of “Dora Trading Pty Ltd” in Pont Securities account number 629746;
2.2.5the sum of $10,000.00 paid to the Bankrupt by bank cheque dated 30 March 1998 drawn on Australia and New Zealand Bank Group Limited;
and pursuant to section 116 of the Bankruptcy Act 1966, the after-acquired property is property divisible amongst the creditors of the Bankrupt;
2.3Ekena acquired the following from the after-acquired property:
2.3.1the sum of $152,250.00
2.3.2the amount referred to in paragraph 2.2.4 hereof
2.3.3the amount referred to in paragraph 2.2.5 hereof
in circumstances where the acquisition was not in good faith nor in the ordinary course of business of Ekena;
2.4The transfer by the Bankrupt of the sum of $152,250.00 to Ekena is void as against the applicant.
2.5The transfer by the Bankrupt on 27 March 1998 of the sum of $30,469.39 to Ekena is void as against the applicant;
2.6The transfer by the Bankrupt on 30 March 1998 of the sum of $10,000.00 to Ekena is void as against the applicant.
That a declaration be made that:
3.1Ekena’s right, title and interest in the following property, namely: the Mercedes motor vehicle registered number UXK-002 is held on trust for the applicant as trustee of the bankrupt estate of the Bankrupt and was held on trust for the applicant as trustee of the bankrupt’s estate since the date of acquisition of the right, title or interest in that property by Ekena;
3.2The Mercedes vested in the applicant as property of the Bankrupt on and from 29 January 1998.
That the Mercedes be transferred to the applicant as trustee of the estate of the Bankrupt.
That judgment be entered in favour of the applicant against Ekena in the sum of $218,719.39.
That Ekena pay the applicant’s costs of and incidental to this application.
That Ekena pay the applicant’s costs of and incidental to the within proceedings, including any reserved costs.
I also make consequential orders to the Mareva order as made and varied on 21 April 1998, 30 April 1998 and 4 May 1998 to accommodate those orders.
As my decision was announced, and the orders made, before these reasons were published, I extend the time within which any appeal or application for leave to appeal from my decision may be instituted until 18 December 1998.
I certify that this and the preceding twenty-six (26) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield
Associate:
Dated:
Counsel for the Applicant: Ms S Maharaj
with her
Mr B RobertsSolicitor for the Applicant: Kelly & Co Mr P Tomaras appears on behalf of the first respondent Date of Hearing: 23 September 1998 Date of Judgment: 23 September 1998
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