Re Hardy, R.T. and P.A. Ex parte Geroff, P.I.F.

[1992] FCA 122

Estate No. 1463 of 1990

petition No. 574 of 1990

RE: RODNEY THOMAS HARDY and PAMELA ANNE HARDY,

Bankrupts

Ex Parte: PETER IVAN FELIX GEROFF

Applicant

MARJORIE TREWIN

First Respondent

JAMES RICHARD STANLEY TREWIN

Second Respondent

RODNEY THOMAS HARDY and PAMELA ANNE HARDY

Third Respondents

I MINUTES OF ORDERS

JUDGE MAKING ORDER:	Drummond J
DATE OF ORDER:	3 March, 1992
WHERe MADE:	Brisbane
THE COURT ORDERS THAT:
NOTE :	Settlement and entry of orders is dealt with in
Order 36 of the Federal Court Rules.

1.        There is no ruling on the no case submission.

IN THE FEDERAL COURT OF AUSTRALIA

GENERAL DlVISION	l,
BANKRUPTCY DISTRICT OF THE STATE OF OUEENSLAND

Estate No. 1463 of 1990

Petition No. 574 of 1990

RE: RODNEY THOMAS HARDY and PAMELA ANNE HARDY,

Bankrupts

Ex Parte: PETER IVAN FELIX GEROFF

Applicant

MARJORIE TREWIN

First Respondent

JAMES RICHARD STANLEY TREWIN

Second Respondent

RODNEY THOMAS HARDY and PAMELA ANNE HARDY

Third Respondents

Coram:	Drummond J
Date:	3 March, 1992
Place :	Brisbane

EX TEMPORE REASONS FOR JUDGMENT

Mr. Macklin, counsel for the First and Second Respondents, submits that the applicant has failed to make out a prima facie case on any of the bases on which he seeks to @et aside the transfers of land described as Lot 3 and land described as Lot 4 by the bankrupts (who are also the Third Respondents to this application) to the First and Second Respondents.

2   I

Mrs. Mullins, counsel for the applicant, when asked at the outset, did not submit that Mr. Macklin should be put to this election before I considered his submission. Mr. Macklin, also, acknowledged that the applicant was entitled, in meeting his no case submission, to rely on the affidavits read by Mr. Macklin. That concession by Mr. Macklin is plainly correct. They are now evidence in the case.

The Third Respondents, represented by Mr. Hardy, do not make any similar submission. That is not surprising. No relief is claimed against them in these proceedings. They were only joined, so Mrs. Mullins explained, because of a statement by Sweeney J in Re Mannella: ex Darte Official Trustee in Bankru~tcv v Gioraio h Anor (1989) 21 F.C.R. 50 at 53.

However, Mrs. Mullins relies on James v Australia
and New Zealand Bankina Group Ltd. & Ors. (1986) 64 A.L.R. 347

in submitting that, since only the First and Second

Respondents have made the no case submission and not the Third	Respondents, the no case submission should, for that reason,
be rejected.
If the dismissal of the case against one respondent on a no case submission may open up any possibility that the conclusion against the remaining respondent may be seen as inconsistent with the dismissal of the case against the other respondent, or may open up the possibility of an unjust final outcome that may not have occurred if the whole of the evidence was heard before any decision was given, a no case submission by one respondent with the other not similarly applying should not be entertained.
It is for this sort of reason that, where claims are made against respondents jointly or in the alternative, it will generally not be appropriate for the court to rule on a no case submission by one respondent when the other does not make a similar application. There is, however, no such possibility here because, as I have mentioned, no relief is sought against the Third Respondents.
However, the decision in James goes further than merely disapproving the making of a no case submission in cases where only one respondent makes the submission. At page 400 of the report, Toohey J cited the following passage from the Court of Appeal decision in Alexander v Ravson [l9361 1 KB 169 at 178:

Division to ask for a similar ruling in actions	"It also seems to be not unusual in the Kings Bench
tried by a judge alone (i.e., a no case ruling).
We think, however, that this is highly inconvenient. For the judge in such cases is also the judge of fact and we cannot think it right that the judge of fact should be asked to express any opinion upon the evidence until the evidence is completed."
H i 6 Ilanour, a t page 402, after r-efe~ring to other

authorities, referred to a decision of Davies J in Trade

4   !

Practices Commission V Georae Weston Foods Ltd. No. (21 (1980) 43 F.L.R. 55. That was a case in which all of the defendants sought a no case dismissal of the plaintiff's case. Davies J, however, required them to elect whether or not to adduce evidence, saying:

"In my view, justice would best be done by calling upon the defendants to elect whether or not to call evidence so that the submission of no case to answer, if it is made, proceeds upon the whole of the evidence which is to be taken into account in this action." (at page 61)

Toohey J then continued by looking at the case before him. At page 402, he said:

"In those circumstances I am of the opinion that, in so far as the no case submission has an evidentiary basis, I should not entertain it."

What Toohey J was referring to, when he made that
comment, can be gathered from a consideration of Davies' J

judgment in Georae Weston Foods, the judgment upon which

Toohey J relied in coming to his conclusions. In that case

the applicants alleged that five of the respondents had engaged in various breaches of the Trade Practices Act 1974 iCth1 in that they had been parties to an anti-competitive agreement. The relief sought by the applicants included penalties. The sixth respondent was sued on the basis that he aided the other five respondents.

At page 57 Davies J referred to a statement by Fullagar J in Union Bank of Australia Ltd. v [l9491

V.L.R. 242 at 244 to the effect that it was established practice in Victoria and the other States of Australia and the United Kingdom for a judge as a general rule not to rule on a no- case submission without first putting the defendant to his election not to call evidence.

At page 57, Davies J, referring to Fullagar's J

statements said:

"His Honour was referring to submissions that there is no evidence to support the plaintiff's case, or that there is some evidence but the court should not act upon it. His Honour went on to say that: " ... although the general rule appears now to be well established, it is, like all rules of practice, not inflexible.""

Beginning at the end of page 58, Davies J, after reviewing other authorities, said:

his conclusions of fact only at the close of the

"Generally, it is better that a judge should come to

evidence and for the purpose of giving judgment. In those cases where the discretion not to put a defendant to an election has been exercised, there has generally been a sound reason why justice would best be done by considering the submission and, if allowing it, by bringing the action to a premature end. Such a case may arise where the issue does not depend on the resolution of a subtle state of facts or where the evidence for the plaintiff is so palpably inadequate that it would appear to be an unnecessary waste of time and money to continue the trial. There are other such cases where the discretion should be exercised. I do not wish to circumscribe the discretion."

In my view, enough emerged in argument with respect to the claims based on S. 120(1) of the Bankruptcv Act 1966

ICth)_, the outcome of which will govern the fate of both:

(i)  the claims based on the view that both lots were transferred after the commencement of the bankruptcy of the Third Respondents: and

(ii) the claims based on S. 121

to show that the evidence on which the Applicant relies cannot be said to be hopelessly insufficient to justify findings in his favour. The same position, I think, obtains with respect to the claims based on S. 122.

I am therefore in the same position that Davies J

found himself in, in Georae Weston Foods when he said at page

61:

upon the defendants to elect whether or not to call	"In my view, justice would best be done by calling
evidence so that the submission of no case to answer, if it is made, proceeds upon the whole of the evidence which is to be taken into account in
this action. "

Ordinarily, having come this far, I would have been prepared to rule on a no case submission if Mr. Macklin, at this late stage, were first prepared to elect to call no evidence. I would then have been able to consider the matter on the whole of the available evidence. However, that

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position is not now open to him since he has read the affidavits of his clients, and the Applicant having given notice that it requires the First and Second Respondents for cross-examination, is entitled to that opportunity to elicit evidence from them which may, in one way or another, strengthen the Applicant's case. In short, even if Mr. Macklin were now to elect, I still will not have the whole of the evidence before me that will be available to me at the end of the case.

For those reasons, I decline to rule on the no case

submission.

There is one further matter on which I should make

some comments.

As to whether S. 120(1) of the Bankru~tcv Act
requires the Applicant to prove both an absence of good faith

and an absence of valuable consideration, or only the absence

of one of those elements, before he can set aside a	transaction, I take the view that it will be enough to justify
setting aside a transaction if he can prove the absence of either one of those elements. That is, it is not necessary for the Applicant to prove the absence of both elements before a transaction will be void.
The Full Court of the Supreme Court of Queensland, in Re Pacific Prolects Ptv. Ltd. fin liquidation1 [l9901 2

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Qd.R. 541, so construed S. 120(1) in order to reach its decision in that case. In other words, its view of the construction of S. 120(1) was part of the ratio of the decision, or at least the decision of Connolly J, with whom Carter J agreed.

In that case, the trial judge, as appears from page 543 of the report, found that NatWest, a creditor of the company in liquidation, was not a purchaser for valuable consideration and that, even if it were, it had not taken in good faith. He accordingly set aside the transaction in favour of NatWest, who appealed, challenging those two findings .

Connolly J disagreed with the findings of the trial judge on the issue of valuable consideration. At page 545 he said:

"I therefore, with respect, cannot accept the view that the liquidator has established that NatWest was

not a purchaser for valuable consideration."

However, at page 548 Connolly J agreed with the

conclusion below that there was an absence of good faith on

the part of NatWest.

Connolly J (Moynihan J agreeing) dismissed the Having made those two findings, Connolly J could only have dismissed the appeal by taking the view that S. 120(1) of the Bankruotcv Act requires the trustee to prove the absence of only one of the elements, and not both of them. appeal.

,b .

The decision in Pacific Proiects is, of course, in

conformity with the approach taken by Pincus J in Re Osborn -
(1989) 25 F.C.R. 547 at 555, which was cited to me in the
course of argument.

I certify that this and the eight

preceding pages are a true copy
of the reasons for judgment
herein of the Honourable

Mr. Justice Drummond.

Associate: @*?P"+

Date:  3 March, 1992