Yang v Mead
[2008] FMCA 798
•6 June 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| YANG v MEAD | [2008] FMCA 798 |
| BANKRUPTCY – Application to set aside bankruptcy notice – counter-claim etc exceeding judgment debt – issue estoppels arising from previous litigation – claim owned by debtor in a different capacity – Court not satisfied as to any other claims – application dismissed. |
| Bankruptcy Act 1966 (Cth), ss.40(1)(g), 41(7) |
| BL & GY International Co Ltd v Hypec Electronics Pty Ltd (2001) 164 FLR 268, [2001] NSWSC 705 Glew v Harrowell of Hunt & Hunt Lawyers (2003) 198 ALR 331, [2003] FCA 373 Hypec Electronic v Registrar-General (No 3) [2008] NSWSC 167 Hypec Electronics v Registrar-General [2008] NSWSC 18 Stec v Orfanos [1999] FCA 457 |
| Applicant: | GRACE YANG |
| Respondent: | COLIN MEAD |
| File Number: | SYG 657 of 2008 |
| Judgment of: | Smith FM |
| Hearing date: | 6 June 2008 |
| Delivered at: | Sydney |
| Delivered on: | 6 June 2008 |
REPRESENTATION
| Counsel for the Applicant: | Applicant in person assisted by interpreter |
| Counsel for the Respondent: | Mr V Bedrossian |
| Solicitors for the Respondent: | Etheringtons Solicitors |
ORDERS
The application is dismissed.
The applicant must pay the respondent’s costs, including reserved costs, as agreed or taxed under the Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth).
The respondent must provide a copy of this order to the Official Receiver within 2 days.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 657 of 2008
| GRACE YANG |
Applicant
And
| COLIN MEAD |
Respondent
REASONS FOR JUDGMENT
(Revised from transcript)
This is an application filed on 19 March 2008, in which Ms Yang asks the Court to set aside a bankruptcy notice on the ground that it is satisfied, in terms of s.40(1)(g) of the Bankruptcy Act 1966 (Cth), that she has:
a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counter-claim, set-off or cross demand that he or she could not have set up in the action or proceeding in which the judgment or order was obtained;
The bankruptcy notice was issued on 6 March 2008, and identifies Mr Mead as the creditor. It relies upon a judgment debt entered against Ms Yang by Mr Mead in the District Court of New South Wales on 8 October 2004 in the sum of $738,335.93. Together with accrued interest, the bankruptcy notice required Ms Yang to pay a total debt of $973,895.43 within 21 days.
Ms Yang admits in her application that she was served with the bankruptcy notice on 6 March 2008. The time for compliance has probably been automatically extended pursuant to s.41(7) until today, when I propose to determine whether I am satisfied that she has such a counter‑claim. For the reasons which follow, I am not so satisfied.
Ms Yang has filed affidavits attaching a large pile of documents, which are entirely undigested in her affidavits and submissions. She asks the Court to locate within bundles of documents a counter‑claim in an amount exceeding the debt presented in the bankruptcy notice. In her application, she describes her counter‑claim by reference to three “annexures”, being different parts of the bundles of documents.
In relation to “Annexure A”, she asserts that Mr Mead owes her $666,000 plus interest accruing since 2 May 1997, totalling $3,752,635. The documents to which she refers in the bundle include a deed of assignment by the Commonwealth Bank to her dated 2 May 1997, in which the bank assigned to her its legal title to debts owed by her and her sister, Lucy Guitar Mead, as well as separate debts owed to the Bank by a company, Hypec Technology Group Limited ACN 056 915 327. The company’s indebtedness was secured by an equitable mortgage over the assets of the company, and the Bank also assigned its rights in relation to that security to Ms Yang.
Also included in the assignment was the Bank’s rights under a guarantee executed by Mr Mead and Lucy Mead, who at one time was Mr Mead’s wife. The guarantee was collateral security for the company’s indebtedness to the bank. According to the recitals in the deed of assignment, the total indebtedness of the company and the other debtors to the bank at the date of the assignment was the amount of $1,174,815.38. Prima facie, therefore, Ms Yang became the legal owner of rights under the guarantee to make demands on Mr Mead in relation to the part of that indebtedness which was covered by his guarantee.
It appears to me that in “Annexure A” Ms Yang is seeking to raise as her counter‑claim for the purposes of s.40(1)(g) her rights against Mr Mead arising under this deed of assignment and his bank guarantee. However, as I shall recount, she faces apparently insuperable obstacles in establishing that she currently has any ownership rights in relation to the subject matter of the deed of assignment from the Commonwealth Bank.
I can find no other documented source of a cause of action against Mr Mead in any of the documents which she has presented to the Court. Certainly no such other cause of action appears, on my inspection of the documents, with the substance required by authorities such as Glew v Harrowell of Hunt & Hunt Lawyers(2003) 198 ALR 331, [2003] FCA 373 at [8]‑[12].
Although Ms Yang appears to wish to attribute to Mr Mead liabilities of corporate bodies owed to her other than under the deed of assignment, the basis for these claims is entirely obscure on the documents she has presented. She has not pointed to any currently outstanding action against him in relation to those liabilities. She has not formulated any such causes of action in a pleading or other document. She has not indicated any intention to commence any action against Mr Mead to recover any such liabilities.
Indeed, it appears to me that, if she ever had causes of action against Mr Mead, she has probably already pursued them. This is because the documents give glimpses of a maze of litigation which has been conducted over the last 10 years between Ms Yang, members of her family, including her sister Lucy, companies associated with members of that family, and Mr Mead and his companies. Also involved were liquidators of at least one of the companies.
In the course of one such proceeding, Gzell J published a judgment on 29 January 2008, in which he addressed numerous issues, including the effect of the Commonwealth Bank’s deed of assignment which I have referred to above. Ms Yang and Mr Mead were both parties to this proceeding. Contrary to the submissions of Mr Mead to Gzell J, but in accordance with the position taken by Ms Yang before his Honour, Gzell J found that the funds with which Ms Yang had procured the assignment had been held by her on trust for other people represented by Mrs Tsui, and that Ms Yang therefore acquired all the property under the assignment only as trustee for these people (see Hypec Electronics v Registrar General [2008] NSWSC 18 at [87] and [126]). His Honour confirmed his opinion in a second judgment (see Hypec Electronic v Registrar‑General (No 3) [2008] NSWSC 167 at [11], where he found:
In my view the entirety of the debts due to CBA before the transfer of the mortgages to Grace Yang are due to Mrs Tsui. That is $1,174,815.38 made up, as I found at [28] of my principal judgment, of $673,062.68 due under the overdraft facility issued to Hypec, and $500,761.20 due on the commercial bill discount facility issued to Lucy Mead and Grace Yang and $991.50 in legal fees.
It appears to me that this finding provides an issue estoppel in any litigation involving Ms Yang and Mr Mead, in which she attempts to assert beneficial ownership of liabilities owed by Mr Mead under his bank guarantee. It therefore prevents her from now denying that her claimed counter‑claim against Mr Mead based on the bank assignment would be owed in a different capacity to the capacity in which prima facie she incurred the judgment debt upon which the bankruptcy notice was based. Her current rights in relation to the assigned indebtedness are held, if at all, as trustee, whereas there is nothing in the evidence suggesting that Mr Mead’s judgment debt was not entered against her in her personal capacity. Any current claim of Ms Yang against Mr Mead under the deed of assignment would not, therefore, be a claim which she could set up in answer to the bankruptcy notice (see Stec v Orfanos [1999] FCA 457 at [24]).
Moreover, Gzell J’s judgment points to a further apparently insuperable problem facing Ms Yang in raising this claim. This is that, according to his Honour’s findings on the evidence presented in that case, Ms Yang has previously assigned her title acquired from the Commonwealth Bank to different people, so that she is no longer in possession of even the legal title to the rights against Mr Mead which were assigned to her by the Commonwealth Bank. I am, therefore, not satisfied that she has a counter‑claim against Mr Mead referable to the assignment from the Commonwealth Bank.
Ms Yang asserts in “Annexure B” and “Annexure C” that she has other claims against Mr Mead. As I have indicated, she has presented a mass of business documents evidencing transactions involving companies in which both she and Mr Mead appear to have been associated. However, she has not formulated any claim which would allow me even to start to assess its prospects of success if it were properly presented in a Court.
Ms Yang referred me to a judgment of Einstein J in BL & GY International Co Ltd v Hypec Electronics Pty Ltd (2001) 164 FLR 268, [2001] NSWSC 705 delivered on 21 August 2001, in which his Honour gave reasons for making orders under the Corporations Law, authorising Mr Mead to use the name of “Hypec Electronics Pty Ltd” in pending litigation in which various claims were being pursued. His Honour’s judgment contains an account of the maze of litigation at the stages it had reached in 2001, including matrimonial litigation between Mr Mead and his ex‑wife, Lucy. I have carefully read that judgment, but am unable to identify in it any evidence of a claim which is currently available to Ms Yang to raise in answer to this bankruptcy notice.
Ms Yang’s oral submissions to me today did not advance her case. She made repeated assertion that she believes that Mr Mead is indebted to her in large amounts of money arising from the affairs of Hypec Electronics Pty Ltd. However, she did not at all satisfy me that there is any factual or legal basis for these beliefs.
On all the evidence she has presented, and on all that she has said to me, I am not satisfied in terms of s.40(1)(g) of the Bankruptcy Act, and I therefore dismiss the application.
I should note that Ms Yang today asked the Court to adjourn the present application until further hearings in the Family Court, which appear to be listed later this year.
However, the nature of those proceedings, the basis on which Ms Yang is involved in the matrimonial litigation between Mr Mead and his ex‑wife, Lucy, and their bearing on the present judgment which Mr Mead is seeking to enforce, are entirely obscure on the evidence before me. In my opinion, Ms Yang did not present any proper basis for this Court to withhold from Mr Mead its determination on the validity and enforcement of his bankruptcy notice.
Whether he will be able to rely on Ms Yang’s non‑compliance with the bankruptcy notice in a petition against Ms Yang is a matter which future events may influence. I would only comment that Ms Yang’s financial affairs, and the litigation in which she has been engaged for the last 10 years, are not matters which she should assume this Court will be able to understand without them being presented to this Court in a clear and concise manner. Based on how she has presented her present application, I doubt whether she will be able to do this without legal assistance. I strongly recommend to her that she should take advice from a lawyer, and follow that advice, in relation to her situation under the Bankruptcy Act.
For the above reasons, I shall dismiss the application today.
In relation to costs, Mr Mead seeks costs against Ms Yang on an indemnity basis. He submitted that she has come to this Court with the only identifiable claim presented against Mr Mead based on the bank assignment, which she had previously presented to Gzell J as an assignment in relation to which she acquired and retained no personal rights. I agree that there is inconsistency in her conduct, which casts some doubt upon the bona fides of her application. However, I am not persuaded that she is capable of properly understanding the inconsistency. I therefore decline to order indemnity costs.
I certify that the preceding twenty-two (22) paragraphs are a true copy of the reasons for judgment of Smith FM
Associate: Lilian Khaw
Date: 20 June 2008
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