Vale v Sutherland [2009] HCA 26 29 July 2009 S38/2009
ORDER
1.The respondent have special leave to cross-appeal against order 3 of the orders of the Full Court of the Federal Court of Australia made 20 August 2008 ("the Full Court Orders"), upon the condition that he bear the appellant's costs of the proceedings in this Court.
2.The respondent be deemed to have filed and served the Notice of Cross‑Appeal on 21 May 2009.
3.Upon the cross‑appeal, order that:
(a)cross-appeal allowed;
(b)order 3 of the Full Court Orders be set aside and in place thereof:
(i)on the cross‑claim by the respondent there be judgment entered for the respondent in the sum of $208,350.00, and
(ii)all questions of the award of interest upon that sum be remitted to the Federal Magistrates Court.
4.Set aside order 5 of the Full Court Orders, to the intent that there be no costs order in respect of the appeal to the Full Court, but otherwise dismiss the appeal to this Court.
5.The respondent pay the costs of the appellant of the proceedings in this Court.
On appeal from the Federal Court of Australia
Representation
G T Bigmore QC for the appellant (instructed by Watson Mangioni Solicitors)
B A J Coles QC with B J Skinner for the respondent (instructed by Sparke Helmore)
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.
CATCHWORDS
Vale v Sutherland
Bankruptcy – Notice – Official Receiver issued notice under s 139ZQ of the Bankruptcy Act 1966 (Cth) ("the Act") asserting certain property transactions void under s 120 of the Act – Notice asserted market value of properties at time of transfer – Failure to comply with notice may result in criminal sanctions under s 139ZT of the Act – Whether notice should be set aside under s 30 or s 139ZS if value stated incorrect.
Bankruptcy – Notice – Whether value in s 139ZQ of the Act value at time of transfer or when notice given.
Practice and procedure – Pleadings – Whether correctness of value traversed in defence or cross-claim – Effect of failure to make specific denial or specific non-admission in pleadings where trial conducted on basis that correctness of value was in issue.
GUMMOW, HAYNE, HEYDON, CRENNAN AND KIEFEL JJ. The appellant, Mr Vale, is the husband of the bankrupt, Mrs Vale, in respect of whose estate a sequestration order was made on 24 April 2001 by the Federal Magistrates Court of Australia. The respondent ("the Trustee") is the trustee of the estate of Mrs Vale.
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Vale v Sutherland [2009] HCA 26
Case
[2009] HCA 26
Decision Date
CaseChat Overview and Summary
The High Court of Australia considered an appeal and cross-appeal concerning a notice issued by the Official Receiver under section 139ZQ of the *Bankruptcy Act 1966* (Cth). The notice asserted that certain property transactions were void under section 120 of the Act and demanded payment based on a stated market value. The appellant, Mr Vale, sought to set aside this notice, while the respondent, the Trustee, sought to enforce it.
The central legal issues before the High Court were whether the notice issued under section 139ZQ should be set aside if the stated value of the property was incorrect, and whether the value referred to in section 139ZQ was the value at the time of the transfer or at the time the notice was given. The court also considered whether the correctness of the value had been properly traversed in the pleadings and the effect of the trial being conducted on the basis that this value was in issue.
The High Court reasoned that the construction of Subdivision J of the *Bankruptcy Act*, including section 139ZS, supported the Trustee's position regarding the operation of section 120. The court found that the notice issued under section 139ZQ was flawed because it relied on an incorrect valuation. Specifically, the court determined that the value stated in the notice should reflect the market value at the time of the transfer, not a later valuation. The court allowed the cross-appeal, setting aside the order of the Full Court of the Federal Court and entering judgment for the respondent on his cross-claim for a sum of $208,350.00, with questions of interest to be remitted to the Federal Magistrates Court. The appeal to the High Court was otherwise dismissed.
Orders
Orders of the court
1. The respondent have special leave to cross-appeal against order 3 of the orders of the Full Court of the Federal Court of Australia made 20 August 2008 ("the Full Court Orders"), upon the condition that he bear the appellant's costs of the proceedings in this Court.
2. The respondent be deemed to have filed and served the Notice of Cross-Appeal on 21 May 2009.
3. Upon the cross-appeal, order that:
(a) cross-appeal allowed;
(b) order 3 of the Full Court Orders be set aside and in place thereof:
(i) on the cross-claim by the respondent there be judgment entered for the respondent in the sum of $208,350.00, and
(ii) all questions of the award of interest upon that sum be remitted to the Federal Magistrates Court.
4. Set aside order 5 of the Full Court Orders, to the intent that there be no costs order in respect of the appeal to the Full Court, but otherwise dismiss the appeal to this Court.
5. The respondent pay the costs of the appellant of the proceedings in this Court.
Background
Background to the litigation
When Subdiv J is read as a whole, it is apparent that the construction of s 139ZS for which the Trustee contends in steps (i)‑(vi) set out above should be accepted. With that in mind, it is convenient to turn to the facts and the course of the litigation.The facts and the litigation Mr and Mrs Vale were the registered proprietors as joint tenants of seven parcels of land registered under the Real Property Act 1900 (NSW). On 28 September 1998 Mr and Mrs Vale obtained a "valuation" ("the 1998 valuation") which was based upon the sum of the highest range of prices given, and gave a total valuation of $540,000.00. The sum of the lowest range of prices given was $520,000.00. This "valuation" contained a disclaimer that it was "an opinion of a reasonable asking price only and not to be taken as a sworn valuation". On 31 March 1999 a further valuation of the properties was obtained, giving a total value of $416,700.00 ("the 1999 valuation"). This valuation was obtained for the purpose of assessing the stamp duty payable on the proposed transfer of Mrs Vale's interests in the properties to Mr Vale. It was undertaken by a registered valuer and it did not contain a disclaimer. The interest of Mrs Vale as joint tenant in the properties was transferred to Mr Vale on 23 April 1999, the date certified on the transfer, in exchange for $2.00. On 26 February 2001 Mrs Vale committed an act of bankruptcy upon failure to comply with a bankruptcy notice (s 40(1)(g)). This marked the commencement of bankruptcy, for the purposes of the Act (ss 5 and 115). The transfer of Mrs Vale's interests in the properties occurred within two years of the commencement of her bankruptcy and was for less than the market value of the properties. The result is that the transfer was void by reason of s 120(1) of the Act and s 120(3) had no application. As remarked earlier in these reasons, the appellant does not deny the operation of s 120 to the facts of this case. On 27 May 2002 a notice was issued by the Official Receiver to Mr Vale and was expressed to be pursuant to s 139ZQ of the Act ("the Notice"). The Notice recited the 1998 valuation of $540,000.00 and Mrs Vale's ownership as joint tenant with Mr Vale. It stated that payment by him of one half of that sum, $270,000.00, was required 28 days after service upon him of the Notice. The charge created by s 139ZR in favour of the Trustee was registered upon the title to the properties. The dispute concerns not the satisfaction of the jurisdictional fact presented by s 120, but the amount claimed by the Notice. Several years passed. By Statement of Claim filed on 19 April 2006 in the Federal Magistrates Court (which is a court of bankruptcy identified in s 27 of the Act), the Trustee sought possession of the land against which the charge was registered, and also sought to recover by an action in debt with a claim for judgment against Mr Vale for $270,000.00 "together with interest". By his cross‑claim, and his defence, Mr Vale sought an order under s 139ZQ setting aside the Notice.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
GUMMOW, HAYNE, HEYDON, CRENNAN AND KIEFEL JJ
(dissent)