Wynyard, Re J.W. The Estate of Ex Parte Official Trustee

NOT FOR DISTRIBUTION

IN THE FEDERAL COURT

OF AUSTRALIA )

DIVISION

GENERAL

) )

BANKRUPTCY	DISTRICT	OF	)	NO.	W 1158	Of 1985
1

THE STATE OF NEW SOUTH WALES AND	)
)
THE AUSTRALIAN CAPITAL TERRITORY

RE: THE ESTATE OF THE LATE

JOHN WALKER WYNYARD

EX PARTE: THE OFFICIAL TRUSTEE IN

BANKRUPTCY

Applicant

AND: SHARRMENT PTY LIMITED

First Respondent

LEE WYNYARD

Second Respondent

MARK WYNYARD

Third Respondent

AUSTRALIAN BANK LIMITED

Fourth Respondent

LORREINE CLAIRE WYNYARD

Fifth Respondent

CORAM:

WILCOX J

PLACE: SYDNEY

DATE :

6 AUGUST 1986

MINUTES OF ORDER

THE COURT ORDERS THAT:

The application for the dissolution

of the orders

mads on 14 May 1986 and 30 May 1986 be refused.

2. The costs of the application be costs of the applicant (the Official Trustee in Bankruptcy) in the principal proceedings.

3 . Macquarie Bank Limited and Eldercon Pty Limited be added as respondents to the proceedings as the sixth and seventh respondent respectively.

4 .

Until further order

of the Court the sixth respondent

by itself or agents or otherwise howsoever be

restrained from transferring, paying

out to any

person or otherwise dealing in any manner whatsoever

with:

3 .

(a) the funds deposited

in the name of the first

respondent Sharrment Pty Limited

or in the names

of the partners of

the f i rm of Sly & Russell, or

in the name of

S & R Nominees Pty Limited or in

the name of Dare Reed Nominees Pty Limited

the amount of one hundred thousand dollars

($100,000.00) on or about 5 December 1985;

f b )

interest upon the funds referred to in paragraph

(a) hereof.

NOTE :

Settlement and entry of orders is dealt with in

Bankruptcy Rule 124.

NOT FOR DISTRIBUTION

IN THE FEDERAL COURT

OF AUSTRALIA )

DIVISION

GENERAL

1 1

BANKRUPTCY

DISTRICT

W.1158

No.

of 1985

THE STATE OF NEW SOUTH WALES AND )

)

THE AUSTRALIAN CAPITAL TERRITORY 1

RE: THE ESTATE OF THE LATE

JOHN WYNYARD WALKER

EX PARTE: THE OFFICIAL TRUSTEE

BANKRUPTCY

Applicant

AND: SHARRMENT PTY LIMITED

First Respondent

LEE WYNYARD

Second Respondent

MARK WYNYARD

Third Respondent

AUSTRALIAN BANK LIMITED

Fourth Respondent

LORREINE CLAIRE WYNYARD

Fifth Respondent

2 .

CORAM: WILCOX J

PLACE: SYDNEY

DATE :

6 AUGUST 1986

EXTEMPORE REASONS FOR JUDGMENT

On 14 May 1986, I made orders the effect of which was

Sharrment Pty Limited, the first respondent, wlth the

to freeze operations in an interest bearing deposit held by the subject of that order, were the proceeds of the payment in

part of the principal owing under a mortgage

of certain

property at Moss Vale

by a company called Eldercon

Pty

Limited.

The terms of the order were varied

on 30 May to

provide for reinvestment

of the deposit but otherwise the

order was maintained.

By Notice of Motion filed on 30 June 1986, Sharrment

Pty Limited and three presons, who are beneficiaries under the

Wynyard Family Trust, namely, Lee

Wynyard, Mark Wynyard and

LorreKClaire Wynyard seek an order that the interim orders

be dissolved.

The basis of the application

is that there is

no serious question to be tried as to whether the late John

Walker Wynyard settled moneys within the possible application

of s.120 or s.121 of the Bankruptcy Act

1966.

3 .

I do not propose to

set out details of the evidence

which has been given, nor do I propose to indicate any concluded vlew as to whether a-claim under s.120 or s.121 is likely to succeed. I, in fact, have no concluded view on this

matter;

and I think that there may be evidence, not presently

before the Court, which may become available and which may

assist one way

or the other in regard to that matter.

Counsel agreed that the test to be applied is whether there is a serious question to be tried

as to the existence of

a good claim under either of those sections

and that, if there

is such a question, there

is no reason relevant to convenience

why I should rescind the existing order.

The claim, which has been outlined on behalf

of the

Official Trustee, is that within a period of five years before the death of Mr Wynyard he made a payment of money to a

company controlled by him and

which was the trustee of Wynyard

Family Trust No.6,

namely Seyto Pty Limited; ostensibly in

repayment of a loan owed

by himself personally to that trust,

but in reality by way of settlement.

The basis of the case put

by the Official Trustee is

that certain transactions, which were undertaken in September

1979, were really shams designed to achieve an appearance of

genuine debt by Mr Wynyard to the trust

when, in fact, there

was none. It

appears, that on 28 September 1979, there were

4 .

payments made between a number

of different persons and

companies;

but with the result that at the end

of the day the

amount which had been paid and received by each of those

persons and companies was identical.

Counsel for the present applicants has argued that

there was nothing remarkable

or unusual about the

transactions, and that they were all commercially explicable.

I have to say that in

my experience, at least, one

of the

transactions was highly unusual. But that is not to say that it is properly to be characterised as a sham. What I will say

is that I think that the transactions are

so remarkable as to

create a serious question as to the reality	of the
transactions.

Upon the basis

of the material presently before the

Court, I think that it is, at

least, strongly arguable that

what occurred in September 1979 amounted to a sham and that

there was no genuine debt

by Mr Wynyard-to the trust.

emphasise that I reach no finding

on the matter and, as I say,

it is quite possible that further evidence will show that this

conclusion would be incorrect. But

I certainly feel there is

a serious question as to the genuineness

of the debt.

If that be so, then, I think, there can be no doubt

that there is a serious question as to whether the payment made by Mr Wynyard in 1980, that is to say within the five

year period before his death, was a settlement. If, in fact,

no moneys were owing,

it is difficult to escape the conclusion

that what he

did was to make a settlement under

the guise of

repaying the moneys. On the other hand, of course, if moneys

were genuinely owing, there is no question of a settlement:

and this is conceded by counsel for the Official Receiver.

Counsel for the applicants for discharge

of the

orders has put a number of detailed submissions to

regarding the operation of

s.120, and referred to authority.

He says that s.120 strikes only at a settlement

made by the

bankrupt. I accept this submission but there is no doubt that

in fact the moneys

paid in 1980 were paid by Mr Wynyard. The

real question is the circumstances under which they were

paid.

Secondly, it is submitted that

a settlement must

answer the test

of permanency, and again, I accept that

submission.

However, it is clear that the moneys which were,

in fact, paid by Mr Wynyard were never repaid and

so far as I

can see that they were never intended to be repaid.

Again,

the real question is	the basis upon which the payment was
made.

It is pointed out that a claim under

s.120 will be

defeated if valuable consideration was given. Counsel for the owing, then there was valuable consideration. Again, the same question arises.

Finally, reference is made to s.l20(2)(a) of

the Act,

and it is submitted that there is evidence before the Court to

indicate that the putative settlor, that

is to say Mr

Wynyard,

was at the time of making the settlement, that

is to say

August through to December 1980, able to pay all his debts

without the aid

of the property comprised in the settlement.

The only evidence which goes to Mr Wynyard's

financial position is a document annexed to the affidavit of

Jan Patricia Farrell, and which purports to be a copy of a

letter written by Mr Wynyard to

an officer of the Rural Bank

of New South Wales

on 6 August 1981.

In that letter and the

accompanying documents, Mr Wynyard sets out certain

information regarding

his assets and liabilities, and he shows

a substantial surplus of assets over liabilities. In regard

to that letter, I

comment, firstly, that the statement shows

the position as at a date later than the relevant date; although it must immediately be conceded that it is unlikely that he would have acquired that surplus in such a short interval of period as the interval between the two dates. However, secondly and more importantly, this statement of

assets and liabilities is not verified. It is simply a self serving statement in a letter to a bank officer in support of an application for a loan.

Section 120(2)(a) throws the onus of showing solvency

at the relevant time upon the parties claiming under the

settlement.

I do not think that the onus

can be discharged

simply by a letter along these lines. It may well

be, of

course, that at the final hearing the parties claiming under

the settlement will be able to discharge the onus. But that

would have to be upon the basis

of proper evidence.

I am of the opinion that there is a serious question

to be tried in relation to s.120. I do not think that there is material to justify the view that there is a serious

question arising under

s.121, but it is not necessary for

to go to that matter since

it would be enough that there is a

serious question under s.120.

For those reasons I refuse the

relief sought in the Notice

of Motion.

The application for the dissolution of the orders made on 14 May 1986, and 30 May 1986 is refused. I order that the costs of this application be costs of the applicant in the

principal proceedings, that is to say the Official	Trustee, in
these proceedings.

. It appears that there are additional moneys to come

from Eldercon Pty Limited

in repayment of the balance of the

principal sum.

I think that it is appropriate that there be

an order to ensure that these moneys are	not paid to any
person without an order of the Court.

8 .

t h e r e f o r e make

o r d e r s

a d d i n q

a s

r e s p o n d e n t s

t o t h e

p roceed ings

Macquar i e

Bank

L imi t ed

a s

t h e s i x t h

r e s p o n d e n t a n d

E l d e r c o n

P t y

L i m i t e d

t h e

s e v e n t h

r e s p o n d e n t .

m a k e

o r d e r s

i n

a c c o r d a n c e w i t h t h e h a n d w r i t t e n

m i n u t e s

o f o r d e r s

i n i t i a l l e d b y

a n d d a t e d

t o d a y .

c e r t i f y t h a t

t h i s a n d

t h e s e v e n

(7)

p r e c e d i n g p a g e s

a re

t rue

copy

t h e R e a s o n s

for

Judgment

h i s Honour Mr

J u s t i c e Wilcox.

Associate: 7

A . H&

Date: a* A1/3dM

C o u n s e l f o t

t h e

Applicant:

T Simos QC w i t h

R e i n

So l i c i to r s

f o r

t h e A p p l i c a n t :

A u s t r a l i a n G o v e r n m e n t

S o l i c i t o r

Counse l

for

t h e F i r s t ,

S e c o n d ,

T h i r d ,

F o u r t h

a n d

F i f t h R e s p o n d e n t s :

M a r t i n

S o l i c i t o r s

for

t h e

F i r s t ,

S e c o n d ,

T h i r d ,

F o u r t h

a n d

F i f t h R e s p o n d e n t s :

Messrs

S l y &

R u s s e l l

Date(s)

o f

h e a r i n g :

August

1986

[1986] FCA 364

8 Jun 1986