Re Hicks, Stephen Charles Ex Parte Lamb, Kenneth Wayne (in his capacity as Trustee in Bankruptcy of the Bankrupt Estate of Stephen Charles Hicks) v Fairlea International Pty Ltd (in liq)
[1996] FCA 706
•13 Aug 1996
CATCHWORDS
BANKRUPTCY - After acquired property - Purchase of dwelling house in name of company controlled by bankrupt - Purchase price provided by another company controlled by bankrupt - Funds so provided earned by bankrupt and paid to second company - Resulting trust.
Bankruptcy Act, ss 58(1), 116(1)
KENNETH WAYNE LAMB IN HIS CAPACITY AS TRUSTEE IN BANKRUPTCY OF THE BANKRUPT ESTATE OF STEPHEN CHARLES HICKS v FAIRLEA INTERNATIONAL PTY LTD (IN LIQUIDATION) (ACN 054 844 236) and THE REGISTRAR OF TITLES FOR THE STATE OF VICTORIA VG 1473 of 1990
COURT:Sundberg J
PLACE:Melbourne
DATE:13 August 1996
IN THE FEDERAL COURT OF AUSTRALIA )
VICTORIAN DISTRICT REGISTRY ) No VG 1473 of 1990
GENERAL DIVISION )
RE:STEPHEN CHARLES HICKS
A Bankrupt
EX PARTE:KENNETH WAYNE LAMB
In his capacity as Trustee in Bankruptcy of the Bankrupt Estate of Stephen Charles Hicks
Applicant
AND:FAIRLEA INTERNATIONAL PTY LTD (IN LIQUIDATION)
(ACN 054 844 236)
AND:THE REGISTRAR OF TITLES FOR THE STATE OF VICTORIA
Respondents
COURT:Sundberg J
DATE:13 August 1996
PLACE:Melbourne
MINUTES OF ORDER
The Court declares that:
The property situated at and known as 15 Woodridge Court, Eltham in the State of Victoria being the land described in Certificate of Title Volume 9905 Folio 552 ("the land") is property of the bankrupt estate of Stephen Charles Hicks ("the estate").
The land is held by the first respondent on trust for the applicant in his capacity as trustee in bankruptcy of the estate ("the trustee").
The Court orders that:
The first respondent transfer all its right, title, interest and estate in the land to the trustee and forthwith take all steps, including the execution of all necessary documents, to effect such a transfer.
The first respondent pay the costs of the trustee of this proceeding.
A copy of this order, duly authenticated, be served on the second respondent by the solicitors for the applicant.
There be liberty to apply.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
VICTORIA DISTRICT REGISTRY ) No VG 1473 of 1990
GENERAL DIVISION )
RE:STEPHEN CHARLES HICKS
A Bankrupt
EX PARTE:KENNETH WAYNE LAMB
In his capacity as Trustee in Bankruptcy of the Bankrupt Estate of Stephen Charles Hicks
Applicant
AND:FAIRLEA INTERNATIONAL PTY LTD (IN LIQUIDATION)
(ACN 054 844 236)
AND:THE REGISTRAR OF TITLES FOR THE STATE OF VICTORIA
Respondents
COURT:Sundberg J
DATE:13 August 1996
PLACE:Melbourne
REASONS FOR JUDGMENT
SUNDBERG J:
The applicant, who is the trustee in bankruptcy of the estate of Stephen Charles Hicks, seeks a declaration that land known as 15 Woodridge Court, Eltham is an asset of the estate held on trust for him by the first respondent, and consequential relief.
Putting aside formal matters the applicant's claim can be summarized as follows:
(a)Hicks effectively controlled Wang Tip Pty Ltd ("Wang Tip").
(b)At Hicks' direction and on his behalf money he had earned after his bankruptcy was paid to Wang Tip.
(c)At Hicks' direction and on his behalf Wing Tip paid money to the first respondent ("Fairlea") to enable Fairlea to purchase the land.
(d)Fairlea used the money paid to it by Wang Tip to purchase the land, which it did in or about June 1992 and became registered proprietor on 3 July 1992.
(e)Hicks resides at the land.
The applicant relies on ss 58 and 116 of the Bankruptcy Act 1966. Section 58(1) provides that where a debtor becomes a bankrupt:
(a)the property of the bankrupt, not being after-acquired property, vests forthwith in the Official Trustee or, if, at the time when the debtor becomes a bankrupt, a registered trustee becomes the trustee of the estate of the bankrupt by virtue of section 156A, in that registered trustee; and
(b)after-acquired property of the bankrupt vests, as soon as it is acquired by, or devolves on the bankrupt, in the Official Trustee or, if a registered trustee is the trustee of the estate of the bankrupt, in that registered trustee.
The applicant is a registered trustee. Section 116(1)(a) provides that property divisible amongst a bankrupt's creditors includes
all property that belonged to, or was vested in, a bankrupt at the commencement of the bankruptcy, or has been acquired or is acquired by him, or has devolved or devolves on him, after the commencement of the bankruptcy and before his discharge.
The application was listed for hearing on Monday 29 July 1996. Three weeks were allotted to the hearing. On the preceding Friday Fairlea was wound up. Because the applicant thought the winding up might affect the commencement of the hearing on the Monday, the matter came before me for mention late on Friday 26 July.
Mr Broberg, solicitor, appeared for Fairlea's liquidator and asked for the matter to be taken out of the list so the liquidator could become familiar with the proceeding and decide whether to oppose the application. I declined to take matter out of the list, but granted an adjournment for one week. I gave leave under s 500(2) of the Corporations Law for the proceeding to continue against Fairlea in liquidation.
On 5 August Mr Broberg informed me the liquidator had decided to take no part in the proceeding, and asked to be excused from further attendance. He was excused and the case proceeded unopposed.
The material relied on by the applicant consisted in the main of the following affidavits: the affidavit of Shayne Spencer Legg sworn 15 April 1994, two affidavits of the applicant sworn 1 June 1994 and 23 November 1994, and two of Neil William Holland sworn 23 November 1994 and 18 May 1995, together with exhibits to some of these affidavits. Other documents were tendered in evidence in the course of the applicant's case.
Some of the affidavits contain hearsay matter. Counsel for the applicant informed me that if the case had proceeded as a contested hearing, the applicant would have called some fifteen witnesses with a view, amongst other things, to removing the hearsay quality of the matter. In the events that had happened, I ruled that the hearsay rule did not apply to the matter in question on the ground that calling the witnesses in order to render the matter admissible would cause undue expense and undue delay. See Evidence Act 1995, s 64(2)(b). No notice under s 67(1) had been given to Fairlea, although Fairlea had for some time had the affidavits and exhibits containing the hearsay matter. Under s 67(4) I directed that s 64(2) should apply despite the absence of formal notice.
On the material contained in the affidavits I have described, I am satisfied that:
(a)at all relevant times Wang Tip was controlled by Hicks
(b)Wang Tip was acquired for use as a vehicle for the concealment of property belonging to Hicks
(c)money earned by Hicks since his bankruptcy as consultancy fees was paid to Wang Tip
(d)at all relevant times Fairlea was controlled by Hicks and the company was acquired for use as the vehicle to conceal from the applicant that the Eltham property was acquired with after-acquired property of Hicks
(e)apart from the funds raised by mortgage over the land ($190,000), almost all the money used by Fairlea to defray the purchase price ($455,625) came to Fairlea from Wang Tip
(f)Hicks and his wife inspected the land prior to its purchase by Fairlea and have lived in the dwelling on the land ever since Fairlea became entitled to possession.
The applicant does not attack the mortgage. Putting to one side the money secured thereby, Fairlea purchased the land with money provided to Wang Tip by Hicks. In those circumstances, there being no presumption of advancement in favour of Fairlea, it holds the land either on a resulting trust for Hicks or on a resulting trust for Wang Tip which in turn holds on a resulting trust for Hicks.
The applicant is entitled to a declaration that the land is property of Hicks' bankrupt estate and an order that Fairlea transfer the land to the applicant.
I certify that this and the preceding four pages are a true copy of the reasons for judgment of the Honourable Justice Sundberg
........ ........ ........ ........ ........ ........ .
Associate
13 August 1996
Counsel for the Applicant: M S Weinberg QC and M E Kennedy
Solicitors for the Applicant: Blake Dawson Waldron
Solicitors for the first Respondent: Irlicht & Broberg
Date of Hearing: 5 August 1996
Place of Hearing: Melbourne
Date of Judgment: 13 August 1996
0
0
0