Re Staples, Bryan Douglas & Anor Ex Parte Baker, Peter James & Ors v Staples, Bryan Douglas & Anor
[1996] FCA 915
•23 Sep 1996
IN THE FEDERAL COURT OF AUSTRALIA )
GENERAL DIVISION )
No. QX 40 of 1994
BANKRUPTCY DISTRICT OF THE )
STATE OF QUEENSLAND )
RE:Bryan Douglas STAPLES and Susan Jane STAPLES
Debtors
EX PARTE:Peter James Baker, Noela May Baker, David Sutcliffe Firth and Arthur Henry Carrick
Applicants
AND:Bryan Douglas STAPLES and Susan Jane STAPLES
Respondents
MINUTES OF ORDER
JUDGE MAKING ORDER: Spender J
DATE OF ORDER: 23 September 1996
WHERE MADE: Brisbane
THE COURT ORDERS THAT:
The application to discharge the orders of Spender J of 12 July 1996 be dismissed. The previous orders are to continue until determination of the principal proceedings.
Costs of this application be reserved.
NOTE: Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
GENERAL DIVISION )
No. QX 40 of 1994
BANKRUPTCY DISTRICT OF THE )
STATE OF QUEENSLAND )
RE:Bryan Douglas STAPLES and Susan Jane STAPLES
Debtors
EX PARTE:Peter James Baker, Noela May Baker, David Sutcliffe Firth and Arthur Henry Carrick
Applicants
AND:Bryan Douglas STAPLES and Susan Jane STAPLES
Respondents
CORAM: Spender J
DATE: 23 September 1996
PLACE: Brisbane
REASONS FOR JUDGMENT
On 12 July 1996, after five days of a bankruptcy proceeding, which was then part-heard and which is set down for further hearing for the five days commencing 4 November 1996, I made certain interlocutory orders. For present purposes, the relevant orders are those numbered 1 to 7 inclusive of those orders, which, for completeness, I set out.
"1. Bryan Douglas Staples, either in his own capacity or as trustee of the AFT Market Section Estate Trust or in any other capacity, and Susan Jane Staples, whether by themselves or with each other, by agents or servants or otherwise, be restrained from selling, assigning, gifting, encumbering or otherwise dealing in any way with their assets, joint, several or otherwise except in the ordinary course of business, and any such dealing in the ordinary course of business is to be the subject of a complete, accurate and timely written record.
Douglas Reginald Staples and Catherine Margaret Staples whether by themselves or with each other, by agents or servants or otherwise, be restrained from selling, assigning, gifting, encumbering or otherwise dealing in any way with their assets, joint, several or otherwise except in the ordinary course of business, and any such dealing in the ordinary course of business is to be the subject of a complete, accurate and timely written record.
Such assets including but not limited to :
(i)the one half share of Douglas Reginald Staples as tenant in common of lands described as Lot 1 on RP 131938 County Stanley Parish Cleveland Volume 5175 Folio 204 and Lot 2 on RP 131938 County Stanley Parish Cleveland Volume 5175 Folio 205;
(ii)the respective shareholding of Douglas Reginald Staples and Catherine Margaret Staples in Goodys Pty Ltd.
Goodys Pty Ltd whether by itself, by agents or servants or otherwise, be restrained from selling, assigning, gifting, encumbering or otherwise dealing in any way with its assets, joint, several or otherwise except in the ordinary course of business, and any such dealing in the ordinary course of business is to be the subject of a complete, accurate and timely written record.
Goodys Unit Trust and the Goodys Super- annuation Fund whether by themselves, by agents or servants or otherwise, be restrained from selling, assigning, gifting, encumbering or otherwise dealing in any way with their assets, joint, several or otherwise except in the ordinary course of business, and any such dealing in the ordinary course of business is to be the subject of a complete, accurate and timely written record.
Each person or company, the subject of these orders, have liberty to apply on 2 working days’ notice.
These orders are subject to the usual undertakings as to damages which has been offered by Mr Carrick on behalf of the Inspector General in Bankruptcy. "
The bankruptcy proceedings are brought by two creditors, P.J. and N.M. Baker, as one creditor, and D.S. Firth, as another, and also by A.H. Carrick, who is acting on behalf of and at the direction of the Inspector-General in Bankruptcy.
The proceedings involve a series of quite involved commercial transactions, dealing with some property at Thornlands, a number of businesses, some of which were involved with flower-growing, and others not so specifically confined. There are a number of transactions involving the debtors, Bryan Douglas Staples, and his wife, Susan Jane Staples, and the parents of the male debtor, Douglas Reginald Staples, and his wife, Catherine Margaret Staples. When the matter was part-heard, I gave short reasons for the interlocutory orders that I then made.
In the course of those reasons, I indicated that the orders sought had to be qualified, and that, further:
"..having regard particularly to the fact that three of the persons against whom the orders are sought are third parties, and the application made against them is ex parte, the three being Douglas Reginald Staples, his wife, Catherine Margaret Staples, and Goodys Pty Limited, a company in which it appears they are the two shareholders....there ought to be liberty to apply, not only in respect to the making of the orders, which of course is implied by their ex parte character, but also in relation to any particular dealing which would otherwise fall within the prohibition contained in the orders which I have been asked to make. "
I then said:
"Subject to those two qualifications [the first was one dealing with the width of the orders sought and not permitting any dealing in the ordinary course of business]...it seems to me, on the present material, that, as a matter of the prudent exercise of the discretion conferred by section 30 of the Bankruptcy Act 1966, the Court ought to make orders of the kind sought by the application of Mr Carrick. The essence of that application is to hold the fort, so to speak, pending the determination of the principal proceedings.
I do not really think that that will cause prejudice to the persons against whom the orders are made and, if I be wrong in that, the opportunity exists, through the liberty to apply order, for the Court to ameliorate any such prejudice.
As against that, the making of the orders will preserve, without further complication, the need for a complicated unravelling of any dealings that might occur in the absence of the making of these orders. Considerations of the kind before me were considered by Pincus J in Re Bayliss; Ex parte the Official Trustee in Bankruptcy (1987) 73 ALR 455, where Pincus J granted interlocutory relief to preserve the funds in question in the principal proceedings, but sought a declaration that a certain transaction was void as against the Official Trustee in Bankruptcy.
The interest in question there, which had formerly been the property of the bankrupt, had been transferred to a company controlled by the bankrupt's children, and the entire property was to be sold by the company to a purchaser at arm's length. In this particular case, there have been a number of significant inter-family transactions, not all of which have been the subject of either precise or accurate documentation, and there are very real questions as to the legal validity of at least some of them and the efficacy of the validity of claims made by family members at a creditors' meeting, called to consider a deed of arrangement pursuant to Part X of the Bankruptcy Act 1966.
Today, on behalf of Douglas and Catherine Staples, Mr Martin of counsel submits that the order against them ought to be discharged. The essence of the application, it seems to me, has two primary features. The first being that, on the material, it is not made out that the creditors have any claim against Douglas or Catherine Staples so as to underpin the orders which I made. There is no evidence to suggest that they will remove any assets which they may have or dissipate them within the jurisdiction, pending the termination of the principal proceedings.
It was said that the orders that I made, putting to one side those against Douglas and Catherine Staples, afford sufficient protection to the interests of the creditors and, in particular, the orders made against Goodys Pty Ltd effectively provide sufficient protection for the interests of the creditors.
I will not vary the orders that I made so as to exclude Douglas and Catherine Staples from their purview. This is not precisely a Mareva injunction case. The orders that I made were made in the exercise of the powers conferred on the Court by s 30 of the Bankruptcy Act 1966 ("the Act"), and in particular s 30(1)(b) of the Act, which relevantly provides:
"The Court:
...
(b)may make such orders (including declaratory orders and orders granting injunctions or any other equitable remedies) as the Court considers necessary for the purposes of carrying out or giving effect to this Act in any such case or matter. "
The reference to "such case or matter" is a reference back to the words used in s 30(1)(a) of the Act, which confers on the Court:
"... full power to decide all questions, whether of law or of fact, in any case of bankruptcy or any matter under Part X or Part XI coming within the cognizance of the Court;... "
Here the evidence suggests that Douglas Staples primarily, but also in a significant way, in respect of what are said to be joint obligations to Douglas and Catherine Staples, Bryan Staples, were involved in a series of transactions, which, on their proper analysis, are shams and which have the consequence of removing funds from the reach of creditors, which were properly to be available to them. There is an argument as to the effect of an admission made by Bryan Staples in proceedings in the District Court, the admission being that the transaction involving a disposition or a sale to Goodys Pty Ltd, was a transaction entered into for the purpose of preventing creditors from obtaining access to their entitlements.
The shareholders of Goodys Pty Ltd are the parents of Bryan Staples. If the effect of that admission is as the applicants in the principal proceedings contend, then there is very strong reason to think that the orders that were made were really necessary and appropriate. There are, of course, other transactions. I am concerned, amongst other things, with the mortgage given by Bryan Staples to his father and with the re-financing, at a late stage in the proceedings, after the meeting which is sought to be impugned, of the farm at Thornlands by the National Australia Bank and with the disposition of the net assets after the finance to the Commonwealth of Australia Bank had been discharged.
The $230,000.00 surplus on that re-financing and the commercial justification for what was done with it seem to me to raise very serious questions. I am, as I indicated when the orders were made, conscious of the need not to unnecessarily interfere with the rights of third parties, nor to hinder their proper entitlement to deal as they wish with their assets. The material before me then was such, nonetheless, to indicate to me that, in a proper exercise of the discretion conferred by s 30(1)(b) of the Act, I ought to make the orders and extend those orders to the parents of the male debtor.
I remain open to consider any particular matter, should the need for consideration of that matter arise, but, absent any particular prejudice concerning any particular transaction prevented by the orders from occurring being raised, it seems to me that I ought to continue the full effect of those orders until the determination of the principal proceedings, which one hopes will be in the not too distant future.
I decline to make any order in the terms sought by the present application.
The costs of today's application are reserved.
I certify that this and the preceding seven (7) pages are a true copy of the reasons for judgment herein of the Honourable Justice Spender.
Associate
Date: 23 September 1996
Counsel for the applicants : Mr M D Martin
instructed by : Franco de Pasquale Solicitors
Counsel for the respondents : Mr K Varley and
Mr M Drysdale
instructed by : Barwicks
Dates of Hearing : 23 September 1996
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