Zaravinos v Houvardas - [2004] NSWCA 421

No judgment structure available for this case.

CITATION: ZARAVINOS v HOUVARDAS [2004] NSWCA 421

HEARING DATE(S): 10 August 2004

JUDGMENT DATE:
24 November 2004

JUDGMENT OF: Handley JA at 1; Sheller JA at 2; Ipp JA at 78

DECISION: Appeal dismissed with costs.

CATCHWORDS: S37A CONVEYANCING ACT 1919 - alienation of property - whether transfer of three properties from husband to former wife were not made in good faith and were made with the intention of defrauding creditors - whether appellant beneficial owner by way of resulting trust - effect of sequestration order - whether respondent 'person prejudiced' for the purposes of s37A - res judicata - whether s37A inconsistent with Bankruptcy Act - effect of open offer of settlement equalling amount of debt - costs

LEGISLATION CITED: Bankruptcy Act 1966
Conveyancing Act 1919
De Facto Relationship Act 1984
District Court Act 1973
Family Law Act 1975
Marine Act 1928
Matrimonial Causes Act 1959
Navigation Act 1912 (Cth)

CASES CITED: Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337
Brady v Stapleton (1952) 88 CLR 322
Cannane v J Cannane Pty Ltd (1998) 192 CLR 557
Ex parte McLean (1930) 43 CLR 472
Fountain v Alexander (1982) 150 CLR 615
Fraser v Deputy Commissioner of Taxation (1996) 69 FCR 99
Hillman v Hillman (1977) 2 NSWLR 739
Miller v Bury (1986) 4 NSWLR 716
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589
R v Credit Tribunal ex parte GMAC (1977) 137 CLR 545
Re Baxter; Ex parte Official Receiver v Baxter (1986) 10 FCR 398
Silvera v Savic (1999) 46 NSWLR 124
State of Victoria v Commonwealth of Australia (1937) 58 CLR 618 (The Kakariki)
The Queen v Ross-Jones; ex parte Green (1984) 156 CLR 185
Union Steamship Co of Australia Pty Ltd v King (1988) 166 CLR 1

PARTIES :
Ourania Zaravinos - Appellant
Nick Houvardas - First Respondent
Official Trustee in Bankruptcy - Second Respondent
Attorney-General of NSW - Intervenor

FILE NUMBER(S): CA 41104/03

COUNSEL: M R Aldridge SC - Appellant
R McCrudden - First Respondent
Submitting appearance - Second Respondent
M Sexton SC (Solicitor-General)/N Perram/N Bilinsky - Intervenor

SOLICITORS: Horowitz & Bilinsky - Appellant
Mecuri & Co - First Respondent
Sally Nash & Co - Second Respondent
NSW Crown Solicitor (NSW Attorney-General) - Intervenor

LOWER COURTJURISDICTION: Supreme Court - Equity Division

LOWER COURT FILE NUMBER(S): 4177/99

LOWER COURT
JUDICIAL OFFICER : Bergin J

CA 41104/03
ED 4177/99

HANDLEY JA
SHELLER JA
IPP JA

ZARAVINOS v HOUVARDAS

In July 1995, Mr Houvardas, the respondent, began proceedings in the District Court against Mr Zaravinos to recover money, which had been paid to Mr Zaravinos for investment in shares and securities on the respondent’s behalf. Judgment was entered for Mr Houvardas in October 1998 and he commenced bankruptcy proceedings against Mr Zaravinos on 11 October 1999. A sequestration order was made against the estate of Mr Zaravinos on 21 February 2000. On 28 August 2001 in the Federal Court, Gyles J gave leave to the respondent to proceed against the estate of Mr Zaravinos pursuant to s58(3) of the Bankruptcy Act 1966.

However, in March 1997, Mr Zaravinos had transferred a half interest in three properties to the appellant, Mrs Zaravinos, his former wife by way of three registered transfers and orders were made by the Local Court at Penrith acting under the Family Law Act 1975. The respondent, after making an application to the Local Court in relation to the three properties which he subsequently withdrew, then commenced proceedings in the Equity Division of the Supreme Court against Mr and Mrs Zaravinos, for declarations and orders to be made pursuant to s37A of the Conveyancing Act 1919 alleging that these transfers were not made in good faith and were made with the intention of defrauding creditors. These proceedings came before Bergin J in September 2002 and her Honour’s decision was the subject of this appeal.

Bergin J held that the intention of Mr Zaravinos in transferring the three properties was to defeat or delay his creditors, that the appellant had notice of the transferor’s intention and that the properties should be reconveyed. Her Honour also found that the applications made by the respondent to various courts and the bankruptcy of the Mr Zaravinos did not estop the respondent from making his claim under s37A of the Conveyancing Act.

The appellant challenged the findings of the trial Judge on the basis that Mrs Zaravinos was the beneficial owner of the three properties by way of resulting trust, that the effect of the sequestration order was that Mr Houvardas’ sole right in respect of his debt against Mr Zaravinos was to prove in Mr Zaravinos’ bankruptcy and that the dismissal of the proceedings began by Mr Houvardas in the Local Court operated as res judicata to estop him from taking the Supreme Court proceedings. Other issues on appeal included the effect of an open offer of settlement, findings as to credit, orders made as to costs and a contention that s37A of the Conveyancing Act was inconsistent with the Bankruptcy Act and that the proceedings under s37A were therefore incompetent.

Held: per Sheller JA, Handley and Ipp JJA agreeing:

1. The consent order in the Family Court did no more than declare the then state of the title to two of the three properties in accordance with the effect of the registered transfers.

Fraser v Commissioner of Taxation

2. Section 58(3) of the Bankruptcy Act does not strike at the competence of the creditor to commence legal proceedings or to continue them in respect of a provable debt or to take any fresh steps in such proceedings if the creditor has the leave of the Federal Court. There could be no doubt, in this case, as to the competence to bring proceedings and further, no reason was advanced why leave should not have been granted in the Federal Court.

3. In relation to the question of inconsistency, clearly s121 of the Bankruptcy Act does not cover the field covered by s37A of the Conveyancing Act. It is concerned only with enabling a Trustee in bankruptcy in certain circumstances to avoid certain transfers.

4. In the present case, if the Trustee in bankruptcy had taken steps pursuant to s121 to avoid the three transfers any creditor would become powerless to interfere under s37A. However, the Trustee in bankruptcy had taken no steps under s121 and therefore no question of the consequences if he had done so arose.

5. There was no reason advanced as to why it was not open to her Honour to reject the self-serving account intended to portray Mrs Zaravinos as the sole pecuniary investor in the various properties. Nothing was put to this Court which would compel any conclusion other than that Mr Zaravinos had a half interest in the three properties which he deliberately sought to shed in favour of Mrs Zaravinos in order to avoid meeting his liability to Mr Houvardis.

6. The fact that a sequestration order had been made against Mr Zaravinos on 21 February 2000 did not deprive Mr Houvardas of his status as a “person prejudiced” for the purposes of s37A of the Conveyancing Act. Mr Houvardas remained a creditor and Mr Zaravinos’ creditors as a whole were prejudiced.

7. The withdrawal and hence dismissal of a claim for reason that the relief sought was thought to be beyond the jurisdiction of the tribunal is not res judicata. Res judicata is founded upon judicial determination on the merits or by admission or consent. Withdrawal of an application to a court for the reasons stated in this case is the antithesis of a judicial determination.

8. The order of the Local Court did not in any way inhibit the ability of the Supreme Court to make an order pursuant to s37A of the Conveyancing Act. Due faith and credit could be accorded to the Local Court order which relevantly did no more than declare, what, on their face, was the effect of the registered transfers. Mr Houvardas’ case was not that the three properties had not been transferred but that they had been transferred with intent to defraud creditors.

Cannane v J Cannane Pty Ltd

9. No authority was put forward by the appellant to support the proposition that a fraudster can avoid the consequences of alienation of property with intent to defraud by compelling the person who has brought the proceedings to accept an offer equivalent to the amount of the debt owed by the fraudster to that person. No doubt it is always open to the plaintiff in the proceedings to settle them but that does not mean that the fraudster can compel the acceptance of an offer and, on that basis, escape the consequences of his or her fraud.

10. The trial Judge held that Mr Zaravinos’ claims were false and that she had knowledge that there was no proper basis in making the claims that she did and that Mr Zaravinos knew those claims and the claims he made were false. Against these findings, which were hardly challenged and were open to her Honour, there was no basis for interfering with the costs orders her Honour made.

Legislation:

Bankruptcy Act 1966
Conveyancing Act 1919
De Facto Relationship Act 1984
District Court Act 1973
Family Law Act 1975
Marine Act 1928
Matrimonial Causes Act 1959
Navigation Act 1912 (Cth)

Cases cited:

Ascot Investments Pty Ltd v Harper

Brady v Stapleton

Cannane v J Cannane Pty Ltd

Ex parte McLean

Fountain v Alexander

Fraser v Deputy Commissioner of Taxation

Hillman v Hillman

Miller v Bury

Port of Melbourne Authority v Anshun Pty Ltd

R v Credit Tribunal ex parte GMAC

Re Baxter; Ex parte Official Receiver v Baxter

Silvera v Savic

State of Victoria v Commonwealth of Australia

The

Kakariki

The Queen v Ross-Jones; ex parte Green

Union Steamship Co of Australia Pty Ltd v King

ORDERS

Appeal dismissed with costs.

**********

CA 41104/03
ED 4177/99

HANDLEY JA
SHELLER JA
IPP JA

Wednesday, 24 November 2004

ZARAVINOS v HOUVARDAS

Judgment

1 HANDLEY JA: I agree with Sheller JA.

2 SHELLER JA:

Introduction

Conveyancing

3 The 1930 addition to the Conveyancing Act of Division 5 “Voidable dispositions” included s37A, which replaced in New South Wales the Statute 13 Elizabeth 1 ch 5 (1571) ss II and VI, which is to be found in May on Fraudulent and Voluntary Dispositions of Property, 3rd ed, at 445.

4 Section 37A is headed “Voluntary alienation to defraud creditors voidable”. It provides:

Conveyancing (Amendment) Act

(2) This section does not affect the law of bankruptcy for the time being in force.

(3) This section does not extend to any estate or interest in property alienated to a purchaser in good faith not having, at the time of the alienation, notice of the intent to defraud creditors.”

In subs (1) the word “voidable” is used in place of the expression “deemed and taken … to be clearly and utterly void, frustrate and of none effect …”; see the comment of Dixon CJ and Fullagar J on the same language in s46 of the Queensland Mercantile Acts in Brady v Stapleton (1952) 88 CLR 322 at 333.

District Court proceedings

5 On 14 July 1995, Mr Houvardas and George Kattirtzis (Mr Kittirtzis) began proceedings in the District Court against Mr Zaravinos to recover from him money which each plaintiff had paid to him in about March 1995 for investment on their behalf in shares and securities in companies listed on the Sydney Stock Exchange. The plaintiffs alleged that they had agreed to pay this money as the result of representations by Mr Zaravinos to them that the moneys paid to Mr Zaravinos would be invested in purchasing shares and securities in companies on the Sydney Stock Exchange, that a profit of 100 per cent would to be made on the said moneys within a period of between four to six weeks, that the moneys were secure in that the plaintiffs would not lose the moneys, that Mr Zaravinos personally guaranteed that the plaintiffs would not lose the moneys, that the moneys and profit would be repaid to the plaintiffs within four to six weeks and that the plaintiffs and Mr Zaravinos could then apply the moneys, profit and other moneys belonging to Mr Zaravinos in building eight home units at Penrith as a joint venture. The plaintiffs alleged a breach of this agreement and that Mr Zaravinos’ representations were false and fraudulent.

6 Initially, the plaintiffs obtained a default judgment which was set aside on 26 November 1996 when Mr Zaravinos was let in to defend the proceedings. On 25 September 1997, on the plaintiffs’ notice of motion which named not only Mr Zaravinos but Mrs Zaravinos, as defendants and respondents, Judge Phegan in the District Court made a Mareva order with immediate effect restraining Mrs Zaravinos from dealing with the three properties, Unit 18, 38 Castlereagh Street, Penrith (the Castlereagh Street property), Unit 7, 28 Union Road, Penrith (the Union Road property) and 12 Colson Crescent, Werrington County (the Colson Crescent property).

7 His Honour Judge Cooper heard the District Court proceedings. Mr Zaravinos did not appear at the hearing. On 7 October 1998, Judge Cooper entered judgment for Mr Houvardas in an amount of $52,400 plus interest of $19,156.87 making a total of $71,556.87 and also judgment for Mr Kattirtzis in the amount claimed by him. Judge Cooper ordered Mr Zaravinos to pay the plaintiffs’ costs of the District Court proceedings on an indemnity basis. On 7 December 1998, Her Honour Judge Murrell SC heard claims, pursued by the plaintiffs on the notice of motion under which the Mareva orders had been made, for re-conveyance of the three properties to Mr Zaravinos and declarations that the conveyances by him to Mrs Zaravinos were void. The plaintiffs invoked the jurisdiction conferred by s134(1)(h) of the District Court Act 1973 as a basis to rely upon s37A of the Conveyancing Act. Her Honour held that the District Court had no jurisdiction to deal with the proceedings and in particular to deal with the claim under s37A. Further, her Honour said that the court should not make any orders in accordance with the plaintiffs’ notice of motion because that would put in issue orders made by the Local Court on 15 January 1998 in the exercise of its Family Law jurisdiction. Reference was made to Re Baxter; Ex parte Official Receiver v Baxter (1986) 10 FCR 398.

Local Court proceedings

8 In evidence before Bergin J in the Supreme Court proceedings were copies of three registered transfers dated 25 March 1997, one of the Castlereagh Street property, one of the Union Road property and one of the Colson Crescent property apparently signed by Mr and Mrs Zaravinos as transferors and by Mrs Zaravinos as transferee. In each the consideration shown was “nil”. On 15 January 1998, the Local Court at Penrith acting under the Family Law Act 1975 in proceedings “File number: FL 158/980018 in the matter of Ourania Zaravinos (Applicant) and George Zaravinos (Respondent), 12 Colson Crescent, Werrington County 2747”, upon application on that date, made orders in accordance with the consent orders filed. Terms of settlement had been filed on behalf of “Wife”, that is to say, Mrs Zaravinos, as follows. Important were clauses 2 and 3.

“BY CONSENT

1. That the wife pay the husband the sum of Fifty eight thousand dollars ($58,000.00) in the following manner:

(i) As to the sum of Eight thousand dollars ($8,000.00), immediately.

(ii) As to the balance of Fifty thousand dollars ($50,000.00) within seven (7) days of completion of the sale of the unit known as 18/38 Castlereagh Street, Penrith.

2. That the wife forthwith list for sale the unit 18/38 Castlereagh Street, Penrith being Lot 18 in Strata Plan 20941 at the price of $90,000.00. If the unit does not attract a buyer within six (6) months then it is to be listed for sale by auction with a local agent at a reserve price determined by a valuer appointed by the President for the time being of the Real Estate Institute of New South Wales or his nominee, acting as an Arbitrator not as an expert, whose decision shall be final and binding upon the parties.

3. That pursuant to Section 78 Family Law Act 1975 (as amended) the wife is declared to be the sole and absolute owner in law and in equity of the land and house known as 12 Colson Crescent, Werrington County being Lot 633 in Deposited Plan 250238 and the home unit known as 7/28 Union Road, Penrith being Lot 7 in Strata Plan 44001 together with all items of personalty, furniture and furnishings and household contents in her possession.

4. That pursuant to Section 78 Family Law Act 1975 (as amended) the husband is declared to be the sole and absolute owner in law and in equity of the Verada Reg. No QDD 081 together with all household contents and personalty items in his possession.

5. That in the event that either party refuses or neglects to execute any deed or instrument, the Registrar of the Court be appointed pursuant to Section 84, to execute such deed or instrument in the name of such party and to do all acts and things necessary to give validity to the operation to the deed or instrument.”

9 Section 78 of the Family Law Act pursuant to which the declarations in clauses 3 and 4 purported to have been made is headed “Declaration of interests in property” and provides:

“(1) In proceedings between the parties to a marriage with respect to existing title or rights in respect of property, the court may declare the title or rights, if any, that a party has in respect of the property.

(2) Where a court makes a declaration under subsection (1), it may make consequential orders to give effect to the declaration, including orders as to sale or partition and interim or permanent orders as to possession.”

10 Despite the repeal in 1998 of subsection (3) which provided: “An order under this section is binding on the parties to the marriage but not on any other person” it was agreed that the Local Court orders of 15 January 1998 bound only Mr and Mrs Zaravinos. Clause 2, so far as the Colson Crescent and Union Road properties were concerned did no more than declare the effect of two of the March 1997 transfers. In Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337 at 354, Gibbs J (as his Honour then was) with whose reasons Stephen, Aickin and Wilson JJ agreed, said:

“The authorities to which I have referred establish that in some circumstances the Family Court has power to make an order or injunction which is directed to a third party or which will indirectly affect the position of a third party. They do not establish that any such order may be made if its effect will be to deprive a third party of an existing right or to impose on a third party a duty which the party would not otherwise be liable to perform. The general words of sections 80 [General Power of Court] and 114 [Injunctions] must be understood in the context of the Act, which confers jurisdiction on the Family Court in matrimonial causes and associated matters, and in that context it would be unreasonable to impute to the Parliament an intention to give power to the Family Court to extinguish the rights, and enlarge the obligations, of third parties, in the absence of clear and unambiguous words. It can safely be assumed that the Parliament intended that the powers of the Family Court should be wide enough to prevent either of the parties to a marriage from evading his or her obligations to the other party, but it does not follow that the Parliament intended that the legitimate interests of third parties should be subordinated to the interests of a party to a marriage, or that the Family Court should be able to make orders that would operate to the detriment of third parties.”

11 At 355 his Honour said:

“Except in the case of shams, and companies that are mere puppets of a party to the marriage, the Family Court must take the property of a party to the marriage as it finds it. The Family Court cannot ignore the interests of third parties in the property, nor the existence of conditions or covenants that limit the rights of the party who owns it. To take two obvious examples, the Family Court could not compel a husband to assign to his wife a lease without obtaining the necessary consent of the lessor, and could not order the transfer to a wife of land owned by a husband free of mortgage, when in fact the land was mortgaged to a third party.”

The Queen v Ross-Jones; ex parte Green

12 Further, it is important to note that no order was made pursuant to s79 “Alteration of property interests”. Subsection (1) of that section provides that in proceedings with respect to the property of parties to a marriage or either of them, the court may make such orders as it considers appropriate altering the interests of the parties in the property. The orders made in the Local Court were, so far as relevant, no more than declaratory of the existing state of the title as a result of the March 1997 transfers and not in any sense dispositive. They did nothing more than declare the title to the properties in accordance with the effect of the registered transfers. That did not affect, let alone deny, the right of a third party such as Mr Houvardas to claim that the transfers were not made in good faith but were made with the intention to defraud creditors. If Mrs Zaravinos purported to comply with order 2 by listing the Castlereagh Street property for sale there was no relevant consequence of her doing so.

13 On 19 May 1998, the following agreement was made between Mrs Zaravinos and Mr Zaravinos:

Whereas

Now it is agreed

To the intent

14 Finally by an agreement made on 24 August 1998 between Mrs Zaravinos and Mr Zaravinos it was recited that the total amount of $42,000 had been paid at the date of the agreement leaving a balance of $16,000 and acknowledged that the final balance of $16,000 had been paid to Mr Zaravinos and that all obligations arising out of the orders had been fulfilled. It should be noted that the solicitor, John Stuart Gibson, who had prepared the terms of settlement annexed to the Local Court order of 15 January 1998, did not know of the Mareva orders.

15 On 14 July 1998, Mr Houvardas and Mr Kattirtzis applied to the Family Court for orders restraining Mrs Zaravinos from dealing with the three properties, setting aside the consent order of the Local Court made on 15 January 1998 in FL158/980018, setting aside the terms of settlement and declaring that the transfers of the three properties on 25 March 1997 for nil consideration were void, a re-conveyance to Mr Zaravinos, and orders restraining Mr Zaravinos from dealing with the properties. Not surprisingly, on 21 July 1998, Mr Houvardas and Mr Kattirtzis, having been given advice that the application was not “correct”, filed consent orders as follows:

“1. The applications of the applicants filed 14/7/98 (being application Form 7 and 8) are withdrawn and dismissed.

2. The applicants shall pay the costs of the respondents assessed at $750 in respect of each of them on or before 3 August 1998.

3. The return date of the Form 7 application on 28/8/98 is vacated.”

Proceedings in the Supreme Court – Equity Division

16 On 1 October 1998, Mr Houvardas and Mr Kattirtzis instituted the proceedings pursuant to s37A of the Conveyancing Act against Mr and Mrs Zaravinos for a declaration that the alienation of the three properties on 11 March 1997 by Mr Zaravinos to Mrs Zaravinos was not made in good faith but with intention to defraud creditors. On the same day, Austin J made an order restraining Mrs Zaravinos from dealing in any way with the three properties. This injunction was continued by various orders until 25 October 1999 when the injunction was continued in respect only of the Castlereagh Street and the Colson Crescent properties.

Federal Court proceedings

17 On 11 October 1999, one year after the s37A proceedings were instituted, Mr Houvardas and Mr Kattirtzis began bankruptcy proceedings against Mr Zaravinos. A sequestration order was made on 21 February 2000. On 28 August 2001 in the Federal Court, Gyles J, on their application against Mr Zaravinos, which Mrs Zaravinos was given leave to oppose, granted leave to Mr Kattirtzis and Mr Houvardas to take all necessary steps in the Supreme Court proceedings nunc pro tunc as from 21 February 2000 and to take all necessary fresh steps in the proceedings pursuant to s58(3) of the Bankruptcy Act 1966 on conditions which included not opposing any application by the Official Trustee to be joined in the proceedings at any time.

18 Section 58 of the Bankruptcy Act provides relevantly as follows:

“(1) Subject to this Act, 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.

…

(3) Except as provided by this Act, after a debtor has become a bankrupt, it is not competent for a creditor:

(a) to enforce any remedy against the person or the property of the bankrupt in respect of a provable debt; or

(b) except with the leave of the Court and on such terms as the Court thinks fit, to commence any legal proceedings in respect of a provable debt or take any fresh step in such a proceeding.”

19 In his reasons for judgment, Gyles J observed that the Official Trustee, who appeared, had made it clear that no proceedings under s121 of the Bankruptcy Act would be commenced to set aside the transactions that were in issue. Section 121 provides:

Transfers to defeat creditors

Transfers that are void

transferor

transferee

(a) the property would probably have become part of the transferor’s estate or would probably have been available to creditors if the property had not been transferred; and

(b) the transferor’s main purpose in making the transfer was:

(i) to prevent the transferred property from becoming divisible among the transferor’s creditors; or

(ii) to hinder or delay the process of making property available for division among the transferor’s creditors.

Showing the transferor’s main purpose in making a transfer

(2) The transferor’s main purpose in making the transfer is taken to be the purpose described in paragraph (1)(b) if it can reasonably be inferred from all the circumstances that, at the time of the transfer, the transferor was, or was about to become, insolvent.

Other ways of showing the transferor’s main purpose in making a transfer

(3) Subsection (2) does not limit the ways of establishing the transferor’s main purpose in making a transfer.

Transfer not void if transferee acted in good faith

(4) Despite subsection (1), a transfer of property is not void against the trustee if:

(a) the consideration that the transferee gave for the transfer was at least as valuable as the market value of the property; and

(b) the transferee did not know that the transferor’s main purpose in making the transfer was the purpose described in paragraph (1)(b); and

(c) the transferee could not reasonably have inferred that, at the time of the transfer, the transferor was, or was about to become, insolvent.

Refund of consideration

(5) The trustee must pay to the transferee an amount equal to the value of any consideration that the transferee gave for a transfer that is void against the trustee.

What is not consideration

(6) For the purposes of subsections (4) and (5), the following have no value as consideration:

(a) the fact that the transferee is related to the transferor;

(b) if the transferee is the spouse or de facto spouse of the transferor – the transferee making a deed in favour of the transferor;

(c) the transferee’s promise to marry, or to become the de facto spouse of, the transferor;

(d) the transferee’s love or affection for the transferor.

Exemption of transfers of property under debt agreements

(7) This section does not apply to a transfer of property under a debt agreement.

Protection of successors in title

(8) This section does not affect the rights of a person who acquired property from the transferee in good faith and for at least the market value of the property.

Meaning of

transfer of property

and

market value

(9) For the purposes of this section:

transfer of property

(b) a person who does something that results in another person becoming the owner of property that did not previously exist is taken to have transferred the property to the other person; and

market value

20 Gyles J observed that there was a threshold question, whether leave was necessary. His Honour said it was arguable that it was not on the basis that the Supreme Court proceeding was not a legal proceeding in respect of a provable debt. Reference was made to Fraser v Deputy Commissioner of Taxation (1996) 69 FCR 99. His Honour noted that, provided that appropriate conditions were laid down, the proposed proceedings in the Supreme Court were wholly for the benefit of the bankrupt estate. One of the conditions of leave was that the benefit of any order obtained in relation to the recovery of the properties or any of them would be received by the Official Trustee to be held on behalf of the bankrupt estate.

Decision of the Supreme Court

21 By the time the s37A proceedings came on for hearing before Bergin J in September 2002 Mr Kattirtzis had died. Accordingly, his name was removed from the record as a plaintiff. Bergin J gave judgment on 21 October 2003. Relevantly, the Court declared that pursuant to s37A of the Conveyancing Act each of the transfers, dated 25 March 1997, of the three properties were void and ordered that they be set aside and that the interest of Mr Zaravinos in the properties vest in the Official Trustee. Further, her Honour ordered that by 28 November 2003 Mr and Mrs Zaravinos execute and file an application and consent orders with the Local Court at Penrith or the Family Court of Australia setting aside term 3 of the terms of settlement filed on 15 January 1998 in the Local Court and the order made being term 2 in the terms of settlement.

Appeal

22 Mrs Zaravinos appeals from Bergin J’s decision. The following are the amended grounds of appeal relied upon:

“1. Her Honour erred in failing to find that the appellant was the beneficial owner, by way of a resulting trust, of the entirety of the three properties the subject of the action.

2. Her Honour erred in failing to find that the funds in the appellant’s hands from time to time were sufficient for her to have purchased from her own funds, the three properties the subject of the action.

3. Her Honour erred in failing to find that the transfer of the interests of George Zaravinos to the appellant were simply transfers of his interest in the properties as a bare trustee of the legal interest.

4. Her Honour erred in finding that the appellant had actual knowledge of George Zaravinos’ intention in transferring the properties, namely that George Zaravinos intended by the transfer of the properties to defeat his creditors.

5. Her Honour erred in failing to find that upon the making of a sequestration order against George Zaravinos on 21 February 2000, the respondent’s sole right in respect of its debt against George Zaravinos was to prove in his bankruptcy.

Conveyancing Act (NSW)

Bankruptcy Act

Conveyancing Act (NSW)

Conveyancing (NSW) Act

Family Law Act

Port of Melbourne Authority v Anshun Pty Limited

.

Family Law Act

Family Law Act.

11. Her Honour erred in finding that her Honour had the power to order the appellant and George Zaravinos to enter into consent orders in the Family Court setting aside the earlier consent orders made between them.

12. Her Honour erred in finding that it was appropriate, under the circumstances, that the appellant and George Zaravinos should enter into consent orders the effect of which is to set aside the earlier consent orders made between them pursuant to the Family Court of Australia.

Conveyancing Act

Family Law Act

Conveyancing Act (NSW).

15. Her Honour erred in refusing to make an order in terms of the open offer made on 16 October 2002, on in substantially those terms.

16. Her Honour erred in finding that the orders that she was able to make against the appellant in favour of the respondent were enlarged, diminished or affected in any way by the leave granted in the Federal Court by Gyles J.

17. Her Honour erred in failing to give the appellant the opportunity to pay the debt of the respondent in lieu of the transfer of the properties ordered by her Honour.

18. Her Honour erred in failing to order that the respondent should have paid the costs of the appellant on and from 16 October 2002 on an indemnity basis, or alternatively, on a party and party basis.

19. Her Honour erred in ordering the appellant to pay the respondent’s costs on an indemnity basis.

20. Her Honour erred in admitting into evidence any evidence concerning the alopecia of the appellant.”

23 Before dealing with the particular grounds of appeal I will say something in general about the main issues they raise.

24 In para 82 of her reasons for judgment, Bergin J found that Mr Houvardas had established that Mr Zaravinos had the requisite intention in transferring the three properties to defraud creditors under s37A(1) of the Conveyancing Act and that Mrs Zaravinos was unable to have the benefit of s37A(3) because she had notice of Mr Zaravinos’ intention. Mr Aldridge SC, who appeared for the appellant, advised the Court that these findings were not the subject of any ground of appeal from which I take it that ground 4 is not pressed. Her Honour was also satisfied that it was Mrs Zaravinos’ intention to place the three properties out of the reach of Mr Houvardas and Mr Kattirtzis. The appeal was argued under the following headings:

1. That Mrs Zaravinos had purchased three properties with her own funds and was the beneficial owner of them, by way of resulting trust, and that the transfers were simply transfers of Mr Zaravinos’ interest in the properties as a bare trustee of the legal interest. (Grounds 1, 2 and 3).

2. That the effect of the sequestration order on 21 February 2000 was that Mr Houvardas’ sole right in respect of his debt against Mr Zaravinos was to prove in Mr Zaravinos’ bankruptcy. (Grounds 6 and 7).

3. That the dismissal of the proceedings Mr Houvardas began in the Local Court under the Family Law Act operated as res judicata to estop him from taking these proceedings and in any event estopped him by the application of the principles in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. (Grounds 8, 9, 11 and 14).

4. That the order made by the Local Court under s78 of the Family Law Act in proceedings between Mrs Zaravinos and Mr Zaravinos was an order to be given full faith and credit until set aside. (Ground 10).

5. That Bergin J had no power to order the parties to enter into consent orders in the Family Court. (Ground 12).

25 Mrs Zaravinos also relied upon the effect of an open offer made on her behalf on the sixth day of the trial, 16 October 2002, without admissions and without prejudice to any of the defences she was running in the proceedings, to consent to an order that she repay to Mr Houvardas $53,000 plus interest, from the time demand was first made upon her until the time of Mr Zaravinos’ bankruptcy, together with costs on a one counsel basis, excluding costs that had been ordered to be paid by the plaintiffs or had been reserved and subject to that order being stayed for an appropriate time to enable her to sell a property to comply with it (Grounds 15 and 17). The appellant also submitted on the question of credit that evidence concerning the alopecia of the appellant should not have been admitted into evidence (Ground 20). The orders for costs were also challenged (Grounds 18 and 19). Ground 16 in the notice of appeal was not specifically addressed.

Orders made under the

Family Law Act

1975

26 Fraser v Commissioner of Taxation has some factual similarity to the present case. A husband had understated his income for some years. The Commissioner of Taxation issued amended notices of assessment in respect of a period of five years and in July 1992 obtained a final judgment for payment against the husband. This final judgment remained unsatisfied. In 1990 the husband and his former wife had obtained consent orders in the Family Court under s79 of the Family Law Act for transfers to her of assets owned by a company in which she and the husband were the only shareholders. The assets were transferred. In December 1992, the Commissioner applied in the Family Court under s79A of the Family Law Act, which provides for the setting aside of orders altering property interests on application by a person affected by such an order, to set aside the orders. The Commissioner pleaded that there had been a miscarriage of justice by reason of fraud and suppression of evidence by the husband and the former wife. That application came on in the Family Court in December 1994. In March 1995, the husband became bankrupt on the Commissioner’s petition. In May 1995, the Family Court held that, except with leave of the Federal Court under s58(3)(b) of the Bankruptcy Act, the Commissioner’s s79A application could not proceed.

27 In the Federal Court the former wife (Mrs Fraser) claimed that the Commissioner lacked standing in the Family Court and that his application to that court could not be maintained without the leave of the Federal Court under s58(3)(b) of the Bankruptcy Act. She sought an injunction restraining the Commissioner from prosecuting his Family Court application. The Commissioner sought a declaration that he could maintain his application in the Family Court without seeking leave but alternatively, if leave were required, that leave should be granted to him.

28 Beaumont J gave the principal judgment in the Full Federal Court on appeal from a decision of Davies J, who held that the bar imposed by s58(3)(a) was not applicable but that, assuming leave to proceed was required, it ought to be granted on conditions. At 107 Beaumont J quoted a passage from Davies J’s judgment expressing doubt about whether leave was required. Davies J had said:

“The proceedings in the Family Court are not concerned with debt or damages. The Deputy Commissioner already has judgment for the debt. In the proceedings, the Deputy Commissioner does not seek and cannot obtain any order for the payment to him of money or for the transfer to him of property. The sole issue is whether the consent order should be set aside for fraud and, if so, what consequential orders should be made.”

29 Davies J went on to observe that as any property the subject of the order for setting aside would vest in, or for the benefit of, the Official Trustee it seemed that the Family Court proceedings were not proceedings “in respect of a provable debt”. “The debt for which judgment has been obtained is significant only as a fact relevant to the standing of the Deputy Commissioner as a ‘person affected’ and as a fact relevant to the proof of fraud.”

30 After referring to several cases, Beaumont J said, in dealing with s58(3)(a) at 111, that he was led to the conclusion:

“that the absolute bar imposed by s58(3)(a) should be construed so as to apply only to the enforcement of remedies, including extra-curial remedies, as distinct from the institution of legal proceedings and their maintenance up to the point of recovery of judgment. The institution and maintenance of such proceedings will, of course, be subject to the different constraints imposed by s58(3)(b), unless leave be granted under that provision.

Family Law Act

31 That led Beaumont J to consider whether, since the Family Court proceeding was a “legal proceeding” for the purposes of s58(3)(b), an application to set aside the consent orders was such a proceeding “in respect of a provable debt”.

32 Beaumont J referred to several cases in addressing the question of whether leave was necessary. He said at 114 that two further factors should be accorded significant weight in addressing the question of whether s58(3)(b) applied.

Family Law Act

all

Morris v Murjani

It follows, I think, that what the Deputy Commissioner proposes to seek from the Family Court under s79A is to augment the assets available to all creditors who prove in the estate, including himself, and so the proceeding can be said to be ‘in respect of a provable debt’. Therefore, unless this Court grants leave, such proceeding by an individual creditor (as distinct from that of a trustee who is not bound by s58(3)), is prohibited by s58(3)(b).

In my opinion, the Deputy Commissioner’s application under s79A is a step taken towards the satisfaction of his individual debt and is thus ‘in respect of’ that debt within the meaning of s58(3)(b). Accordingly, he required leave to continue that proceeding.”

Conveyancing Act

33 In his judgment Beaumont J agreed that it was appropriate that leave should be granted but said at 115:

after

34 In the Federal Court, on the application that leave be granted to the applicants Mr Houvardas and Mr Kattirtzis “to regularise the steps which had been taken in the Supreme Court proceedings as from 21 February 2000 and to take all necessary fresh steps in the proceedings”, Gyles J permitted Mrs Zaravinos to appear and oppose the grant of leave. Leave was granted to Mr Kattirtzis and Mr Hourvardas to take all necessary steps in the proceedings in the Supreme Court as from 21 February 2000 and all necessary fresh steps in the proceedings pursuant to s58(3).

35 Mrs Zaravinos submitted that Mr Houvardas’ sole right in respect of his debt was to lodge a proof of debt in the transferor’s (Mr Zaravinos’) bankruptcy. In a sense, this was an argument that should have been directed to whether leave was appropriately granted in the Federal Court bearing in mind what was said in Fraser v Commissioner of Taxation. In that case, the consent orders made in the Family Court were made under s79 of the Family Law Act and were dispositive. It was no doubt recognised by the Commissioner of Taxation in making an application under s79A of the Family Law Act that any order for payment to him of money or for the transfer to him of property would be inconsistent with the dispositive order under s79. Accordingly, he sought to have that order set aside.

36 That is not the present case. The consent order in the Family Court relevantly did no more than declare the then state of the title to two of the three properties in accordance with the effect of the registered transfers. Section 58(3) does not strike at the competence of the creditor to commence legal proceedings or to continue them in respect of a provable debt or to take any fresh steps in such proceedings if the creditor has the leave of the Federal Court. There could be no doubt about the competence to begin the proceedings. At that time Mr Zaravinos was not bankrupt. The evidence before Gyles J was that the Official Trustee did not intend taking proceedings pursuant to s121 of the Bankruptcy Act on the basis that the transfer of property by Mr Zaravinos, who later became bankrupt, to Mrs Zaravinos was void against the Official Trustee in Mr Zaravinos’ bankruptcy. It was accepted that the Official Trustee could have begun proceedings under s37A assuming that had not already been done. It is acknowledged that the benefit of the proceeding was for the estate of the bankrupt. Clearly enough there was no reason why leave should not have been granted and once it was granted there could be no doubt that the proceedings before Bergin J were competent.

Inconsistency

37 Section 109 of the Constitution provides that the law of the Commonwealth shall prevail over a law of a State in the case of inconsistency and the law of the State shall, to the extent of the inconsistency, be invalid. The appellant submitted that s37A, or some part of it, was in some way inconsistent with the Bankruptcy Act and that as a result of this inconsistency the proceedings under s37A were incompetent. It was contended there was inconsistency between, on the one hand, the federal scheme whereby a creditor of a bankrupt is restricted to proving in a pool of funds and gives up any individual right against the bankrupt leaving the Trustee in bankruptcy to claw back the bankrupt’s property in reliance upon ss120 and 121 of the Bankruptcy Act and, on the other hand, a law of the State which left in the hands of a creditor a separate right to bring proceedings under s37A of the Conveyancing Act which, it was said, was a fundamentally identical section to s121 of the Bankruptcy Act. The intention of the legislature was, it was submitted, that the Trustee in bankruptcy, and only the Trustee in bankruptcy, should be in charge of the recovery of assets for the benefit of the creditors of the bankrupt’s estate. There was no room for s37A to be relied upon by an individual creditor against the alienation of the bankrupt’s property. I should point out at once that this submission ignores the effect of s58(3)(b) of the Bankruptcy Act which permits such proceedings with the leave of the Court.

38 The only extant subsection of s9 of the Bankruptcy Act, which is headed “Laws of States and Territories not affected by Act”, subs (1) provides:

“(1) This Act does not affect a law of a State or Territory relating to matters not dealt with expressly or by necessary implication in this Act.”

Bankruptcy Act

39 Section 121 exclusively avoids transfers of property which would probably have become part of the transferor’s estate, if he later becomes bankrupt, or would probably have been available to creditors if the property had not been transferred. It operates if the transferor’s main purpose in making the transfer was to prevent the transferred property from becoming divisible among the transferor’s creditors or to hinder or delay the process of making property available for division among the transferor’s creditors. Section 121(2) provides that the transferor’s main purpose in making the transfer is taken to be the purpose described in para (1)(b) if it can reasonably be inferred from all the circumstances that, at the time of the transfer, the transferor was or was about to become, insolvent. While subs (2) does not limit the ways of establishing the transferor’s main purpose in making the transfer, the section applies in circumstances related to insolvency and, in some respects, is more limited than s37A of the Conveyancing Act.

40 Applying the language of Dixon J (as his Honour then was) in Ex parte McLean (1930) 43 CLR 472 at 483, the paramount legislature did not “express by its enactment, completely, exhaustively, or exclusively, what shall be the law governing the particular conduct or matter to which its attention is directed”; see Union Steamship Co of Australia Pty Ltd v King (1988) 166 CLR 1 at 16 and R v Credit Tribunal ex parte GMAC (1977) 137 CLR 545 at 564 where Mason J (as his Honour then was) said when considering the provisions of the Trade Practices Act and the provisions of Consumer Credit and Transactions Acts in South Australia:

Trade Practices Act

41 That leaves the question of direct inconsistency between particular provisions of the Bankruptcy Act and s37A of the Conveyancing Act. Clearly s121 does not cover the field covered by s37A. It is concerned only with enabling a Trustee in bankruptcy in certain circumstances to avoid certain transfers.

42 In State of Victoria v Commonwealth of Australia (1937) 58 CLR 618 (The Kakariki) there was alleged inconsistency between s13 of the Victorian Marine Act 1928 and s329 of the Navigation Act 1912 (Cth). The former provided for the removal, at the instance of a State authority, of any ship sunk in a port within Victoria and not removed by the owner, and for the recovery of the cost of removal from the owner. The Commonwealth Act made similar provision with respect to the removal, at the instance of a Commonwealth authority, of any ship sunk “on or near the coast of Australia”. The Kakariki was lying wrecked in Port Philip Bay. The State Act plainly applied to the wreck. The question was whether the wreck could be removed by either the Commonwealth or the State authority so that the expense of the removal could certainly be recovered from the owner. At 630, after referring to what he had said in McLean, Dixon J said:

43 At 631 his Honour expressed the view that there was no reason for treating s329 of the Commonwealth Act as intending to do more than confer a concurrent or parallel power to enforce the removing of wrecks.

Marine Act

Navigation Act

44 In the present case, if the Trustee in bankruptcy had taken steps pursuant to s121 to avoid the three transfers any creditor would become powerless to interfere under s37A of the Conveyancing Act. But the Trustee in bankruptcy has taken no steps under s121 and, accordingly, no question of the consequences if he had done so arises.

The consent order of the Local Court in exercise of its jurisdiction under the

Family Law Act

45 There is authority for the proposition that if a challenge is to be made to the validity of a declaration of the Family Court pursuant to s78 of the Family Law Act that should be made in the Family Court and not in the Federal Court; Re Baxter Ex parte the Official Receiver v Baxter at 401. In that case, the trustee of the estate of a bankrupt husband claimed equity in a house owned by himself and his wife as tenants in common in equal shares. The husband had become bankrupt upon the presentation of his own petition and been discharged from his bankruptcy by operation of law. After he left the dwelling in August 1972 his wife, who continued to reside in the house with the infant children and who paid moneys due and payable under a terms contract with the Housing Commission, in June 1984 applied to the Family Court for orders with respect to the house. The Family Court declared that the wife was the sole proprietor of the equity in the property and ordered the husband to transfer and assign to her all his estate and interest in the contract of sale dated 22 September 1959. At 401 Northrop J said:

Family Law Act

Bankruptcy Act

In my opinion, those contentions should not be accepted. If the Federal Court proceeded to hear and determine the application, of necessity, conflicting orders would be made. The Family Court order may not be binding upon the trustee, but until it is set aside, it is binding upon the wife. Any order of the Federal Court made in the application by the trustee would be binding upon the wife. That illustrates the practical results arising from conflicting judgments. The Federal Court has no jurisdiction or power to set aside the order of the Family Court.

Ascot Investments

46 Clearly in that case, the declaration and order made by the Family Court in favour of the wife and to the exclusion of the husband would be in conflict with a potential order from the Federal Court, as sought by the husband’s trustee in bankruptcy, that the equity of the house was owned by the husband and the wife as tenants in common in equal shares. The conflict as to title was between the wife and the representative of the husband. Although an argument based on the old s78(3) might, on the face of it, have been seen to be helpful to the trustee as a person other than the parties to the marriage, it was just such an argument that led to the repeal of subsection (3). Here, Mr Houvardas was not a person whose interests could be affected by the consent order in the Local Court and indeed the order was in a form which did not affect his rights.

47 In Silvera v Savic (1999) 46 NSWLR 124, consent orders were made under the De Facto Relationship Act 1984 in the Local Court the effect of which was to transfer substantially all of Mr Savic’s assets (Mr Savic was the applicant in the Local Court) to a de facto wife (the respondent in the Local Court). Subsequently, in November 1996 the plaintiff in proceedings against Mr Savic in the District Court obtained judgment and applied to the Supreme Court under s37A to avoid transfers pursuant to the consent orders made under the De Facto Relationships Act. Hodgson CJ in Eq (as his Honour then was) found that the application to the Local Court for consent orders and the consequent transfers were made by Mr Savic to defraud creditors within the meaning of s37A of the Conveyancing Act and in particular to defeat any claim the plaintiff might have had against Mr Savic. The de facto wife shared the intention to defraud creditors with Mr Savic and was not protected by s37A(3). His Honour held that the plaintiff was entitled essentially to the relief she sought but said that he would put off making orders for the transfer of the relevant properties. I emphasise that, in that case, the orders made by the Local Court by consent were to transfer “interest in respect to properties” from the applicant, Mr Savic, to the respondent, with whom he had been living in a de facto relationship.

48 At 139 his Honour said:

“In my opinion when an application is made under s37A to the Supreme Court, that Court can achieve the effect of avoiding the alienation by such measures as seem appropriate in the particular case. For example, the Court could declare that the effect of the Local Court order is spent by reason of its being carried out by the subsequent transfers, and then order appropriate re-transfers of the property. Such orders would not be inconsistent with the Local Court orders, nor could they give rise to any possible embarrassment by reason of the existence of conflicting court orders.”

49 Bergin J said:

Silvera v Savic

Re Baxter

Family Law Act

50 Her Honour then quoted from Silvera v Savic and continued:

“126 This is not a case in which this Court is second guessing the Family Court. The evidence discloses that the solicitor who prepared the Consent Orders, upon whom the Family Court was entitled to place implicit trust, was misled as to the status of the properties. He was not informed that the three properties were subject to Mareva Orders and the Local Court exercising Family Law jurisdiction was also misled in this regard.

127 This case is distinguishable from the facts in all the cases referred to earlier. In no case has there been registration of a transfer of property and a subsequent Family Court Consent declaration. I am concerned to ensure that this Court does not trespass upon the domain of the Family Court or the Local Court exercising Family Law jurisdiction. The circumstances now are quite different to the circumstances that prevailed when the defendants fraudulently secured the consent declaration from the Local Court. One approach that may be available is to make the declarations that the alienation included the obtaining of the consent orders and to declare that the second defendant is the owner at law and in equity of her half interest in the three properties with consequential orders for the re-transfer by her of the first defendant’s interests in the properties. These declarations and orders would then be superimposed on the consent declaration and would not be in conflict with it.

Silvera v Savic

129 I am not satisfied this defence is made out.”

51 The order of events was that transfers were executed in March 1997 in the presence of some person who falsely purported to have the name John Ronden and to be a justice of the peace. Those transfers were registered and on 15 January 1998 the Local Court, as the result of the non-disclosure by the parties of the Mareva orders, declared, pursuant to s78 of the Family Law Act that the wife was the sole and absolute owner in law and in equity of two of the properties. The solicitor who arranged this had no knowledge of the Mareva orders. The Local Court orders make no mention of the transfers. The Local Court orders may have stood in the way of any challenge by Mr or Mrs Zaravinos to the effectiveness or validity of the transfers. Bergin J found that the order and declaration were part of a step in an alienation of the properties with intent to defraud creditors.

Judgments fraudulently obtained

52 In Meagher, Gummow and Lehane “Equity Doctrines and Remedies” 4th ed, 12-145 the authors discuss judgments fraudulently obtained and the suit in equity to impeach a judgment whether given at law or in equity as a separate proceeding which takes on none of the characteristics of the proceedings which gave rise to the judgment under impeachment, but, rather, a personal obligation to give up the fruits of unconscionable conduct. It is there observed, that it is not to the point that the equity court would not have had jurisdiction to try the first case and reference is made to the decision of Helsham CJ in Eq in Hillman v Hillman (1977) 2 NSWLR 739. This decision was not followed by McLelland J in Miller v Bury (1986) 4 NSWLR 716 for reason, as his Honour said, that the proceedings in which it was sought to vary, reverse or set aside an order made under the Matrimonial Causes Act 1959 and within the jurisdiction of the Family Court of Australia were part of that jurisdiction by reference to para (f) of the definition of “matrimonial cause”.

53 Section 4(1) of the Family Law Act defines “matrimonial cause” to mean, inter alia:

“(ca) proceedings between the parties to a marriage with respect to the property of the parties to the marriage or either of them, being proceedings between those parties;

…

(ii) in relation to concurrent, pending or completed proceedings for principal relief; … or

(f) any other proceedings (including proceedings with respect to the enforcement of a decree or service of a process) in relation to the concurrent, pending or completed proceedings of a kind referred to in any of paragraphs (a) to (eb), including proceedings of such a kind pending at, or completed before, the commencement of this Act.”

54 In this regard, the decision of the High Court in Fountain v Alexander (1982) 150 CLR 615, particularly at 635-6 is apposite. That case concerned an application by a stranger to a marriage against a party to a marriage to vary, revoke or replace an order made in favour of that party for the custody of a child of the marriage. That was said to be a “matrimonial cause” within the meaning of para (f).

Grounds of appeal

Grounds 1, 2 and 3

55 In 1982, Mrs Zaravinos instituted proceedings in the New South Wales Supreme Court against Dairy Farmers Co-operative for injuries she claimed to have suffered by reason of a foreign body being present in some milk that she drank. She alleged that as a result she suffered alopecia. On 21 March 1988, she obtained judgment for $150,000 inclusive of costs. In his oral submissions, Mr Aldridge submitted that the trial Judge failed to take into account evidence that was capable of suggesting that the funds from Dairy Farmers were used in the purchase of at least one of the properties that was acquired and that she beneficially owned these properties because she provided all the purchase monies. The properties were bought in the names of Mr and Mrs Zaravinos but it was said that the evidence was that Mr Zaravinos, apart from a few weeks work had not been gainfully employed since he had come to Australia, presumably sometime before he married Mrs Zaravinos, on 25 August 1978. Apparently, the proceeds of the Dairy Farmers’ proceedings were received on about the date of judgment. Before that, in 1978, a property had been purchased at Westmead. This property was sold in 1980 and a property was bought on the Gold Coast, which was sold in 1983. The Colson Crescent property was bought on 18 June 1984 and the mortgage discharged in 1987. After the receipt of the settlement monies, a property in Derby Street, Penrith was purchased on 16 November 1988 and sold in 1992. In 1995, the Castlereagh Street property was purchased and later that year the Union Road property.

56 According to Mrs Zaravinos, she brought $25,000 to Australia when she arrived in 1976 and later $7,000 was transferred to her. She claimed that Greek family tradition caused the properties to be put in joint names and this happened notwithstanding, according to her, that Mr Zaravinos did not make any monetary contribution to the purchase of the properties. Bergin J remarked that the first property which was purchased at Westmead was bought in the name of Mrs Zaravinos from her brother. There was no real explanation as to how this registration fitted in with her respect for the Greek family tradition of registering property in joint names. The Colson Crescent property was said to have been purchased with the proceeds of the sale of the Gold Coast property. Mrs Zaravinos claimed that the receipt of funds from Dairy Farmers was used to buy the Derby Street property.

57 In her reasons for judgment Bergin J traced out the evidence to which I have just referred. Her Honour said:

55 There are a number of areas of attack upon the defendants’ credibility. The first defendant [Mr Zaravinos] gave evidence that he met [a man only known to him as] Carlos in early 1995 and that within weeks he had handed to [Carlos] $16,000 for investment in a brothel. He did not know Carlos’ surname and said that it was part of the agreement that he was not to know his surname. He did not know where the brothel was to be located, except that it was to be in Parramatta. He claimed that $5,000 of the $16,000 was borrowed from a third party. In oral evidence he said that the $16,000 was obtained from the second defendant [Mrs Zaravinos]. He claimed that after he, the plaintiff [Mr Houvardas] and Mr Kattirtzis had each given Carlos $16,000 the latter disappeared. There is no evidence that the first defendant did anything about trying to locate Carlos for the purpose of trying to get his money back. For a man on social security benefits and allegedly out of work, this just adds to the farcical nature of this claim.

56 There is absolutely no evidence that suggests that Carlos ever existed other than the first defendant’s evidence. The first and second defendants have been in receipt of social security payments for 20 years. The first defendant claims to have worked from time to time as a waiter and in a friend’s real estate agency. His bank statements show cash deposits during the time the plaintiff claimed he and Mr Kattirtzis were providing the money to him for investment on the stock market. The first defendant claimed that these amounts in the bank statements were received from a Mr Lee Wong to whom he had sold some antique jewellery that belonged to the second defendant. He claimed to have sold the jewellery for $115,000 and that Mr Wong paid him in various amounts over a six-month period. The bank accounts do not disclose deposits totalling $115,000.

57 The first defendant was asked about later deposits of cash into his bank accounts. The explanations as to the provenance of those amounts changed during his evidence. Initially he was unable to say from where the moneys came. When he was given an opportunity to consider his answers he suggested that the moneys were loans from a Mr Phillipou. The second defendant did not call Mr Phillipou to give evidence and no documentary evidence is available to satisfy me that there was any loan arrangement between the first defendant and Mr Phillipou in relation to these amounts. A further bank account in the first defendant’s name with Suncorp Metway, apparently opened in June 2002, was discovered during the proceedings. It recorded cash deposits of approximately $16,000. The plaintiff’s solicitor notified the Official Trustee of this account and the first defendant claimed that Mr Phillipou was successful in having those moneys paid to him by the Trustee after he claimed that they were funds loaned to the first defendant.

58 Mr Lee Wong was not called as a witness, however there is a document entitled “Acknowledgment” which purports to be signed by Mr Wong, the first defendant and Mr Moutafis. That document makes no mention of any price to be paid for the jewellery nor does it refer to any payment regime. It states that Mr Wong “of Hong Kong” agrees to buy the jewellery “subject to formal valuation” and that “payment will be made after confirmation of value”. The second defendant did not know Mr Wong’s address in Hong Kong, nor did he have a telephone number for him. He claimed that when Mr Wong would come to Sydney he would telephone the first defendant and they would meet.

59 The piece of jewellery allegedly sold to Mr Wong was said to have been a gift from the first defendant’s mother to his wife. The second defendant claimed it was a gift for her wedding, although she also gave evidence that it was a birthday gift (tr. 429-430). The first defendant claimed he handed the piece of jewellery over to Mr Wong without payment of the alleged $115,000 and with a willingness to be paid in small amounts for which there are no proper receipts. The only documents to which the first defendant referred were some photocopies of deposit slips totalling approximately $27,200.

60 The piece of jewellery allegedly sold to Mr Wong was handed down from the first defendant’s grandmother to his mother and then to his wife. The first defendant claimed that the reason the jewellery was sold in 1995 was because his wife was thinking of buying some units. This was also an extraordinary aspect of the defendants’ versions of events. Here are two people on social security benefits who, so far as at least the second defendant is concerned, ‘respect’ the tradition of Greek families, yet they are willing to sell the jewellery handed down in the family not for the purpose of making ends meet, but for the purpose of investing in property. The second defendant said that the first defendant gave her the money from the sale of the jewellery after Mr Wong paid it to him and she then gave it back to the first defendant to bank for her. However the first defendant banked it into his own account rather than his wife’s account. This is just another peculiarity in what I regard as totally farcical and false claims.”

58 A little later the trial Judge said:

“62 The second defendant gave evidence that after she drank contaminated milk in 1981 she developed alopecia, a condition in which one loses one’s hair. It was apparently this condition for which the second defendant received a court settlement of $140,000 [presumably after her costs were paid] in 1988. The plaintiff attacked this claim alleging that the second defendant had suffered from this condition well before the incident in 1981. The second defendant’s sister gave evidence that when the second defendant came to live with her for a number of months in 1976 she wore a scarf all of the time. On one occasion during this period the second defendant’s sister ‘by accident’ walked into a room when the second defendant was not wearing a scarf and she saw that the second defendant did not have any hair on her head. She said that her hair subsequently grew back when she was pregnant.

63 The second defendant’s niece also gave evidence of her observations of her aunt during that period and said that she did not have any eyebrows or eyelashes. A hairdresser of whom the second defendant was a client in the period before 1981 also recalled that she suffered from alopecia at that time, although his evidence of the timing was rather vague.

64 This family has been suffering from the events that have caused this litigation since 1995. It is obvious to me that emotions have run very high and that caution needs to be exercised in relation to the various claims made by the parties and the witnesses. It seems to me that the second defendant’s niece was a very careful and honest witness. She has had the least to do with the family since the late 1970’s, when she married and moved to Wollongong with her husband. I accept her evidence as truthful and conclude that it is more probable than not that the second defendant was suffering from alopecia prior to the incident with the milk in 1981. I do not know what evidence was put to Dairy Farmers to induce them into a settlement but this finding is relevant to the second defendant’s claim in these proceedings that it was ‘only’ the incident with the milk in 1981 that caused the development of the alopecia (tr. 243). I am not satisfied that the second defendant’s evidence about this matter can be relied upon. I accept the plaintiff’s witnesses’ evidence that the condition was present prior to 1981.

65 The second defendant gave evidence that the first defendant has been living at the Castlereagh Street property since 1998. She said that the first defendant paid her rent of $120 per week for the first six months but that he then stopped making those payments. She said that she did not declare that rent because she used it in paying expenses. In fact, the second defendant gave evidence that neither she nor the first defendant had lodged tax returns for the last 20 years. She said that for the last four years she has not required the first defendant to pay her rent because she did not want to leave him on the streets and she feels sorry for him.

66 The second defendant was shown a copy of a Residential Tenancy Agreement for the Castlereagh Street property between herself as landlord and Scott John Burdekin and Shane Daniel Miller as tenants for the period 20 September 1999 to 19 March 2000 at a rental of $140 per week (Ex Z). She said that she did not remember the names of the tenants but finally agreed that she had received the rental referred to in the Agreement (tr. 378). The evidence given by the second defendant about the occupancy of the Castlereagh Street property is, in my view, totally unreliable.

67 The second defendant’s evidence about the events of 25 or 26 March 1997 when the Transfers were allegedly signed is not supported by Mr Moutafis. He gave evidence that he did not go into the Land Titles Office with the defendants on that day and was thus not in a position, as the second defendant claimed, to do most of the talking for the defendants. The signatures of the transferors and the transferee are purportedly witnessed by a Justice of the Peace (JP), John Rondon, with an address 123 High Street, Penrith. The plaintiff has made exhaustive searches for the JP, John Rondon. Such a person is not, and has not been registered with any of the Australian States or Territories as a JP. Such a person is not registered as a ratepayer with any of the forty seven councils of the Sydney metropolitan area, Blue Mountains, Central Coast and Wollongong areas searched by the plaintiff’s solicitors. No person of that name worked at the Land Titles Office at the relevant time. Additionally the address 123 High Street, Penrith is a vacant block of land. The plaintiff submits that on this evidence I would find it is probable that John Rondon JP does not exist.

68 The evidence about the execution of these Transfers is highly suspicious. It appears that there is no JP by the name of John Rondon who allegedly witnessed the signatures on the Transfers and Mr Dubedat, the expert document examiner, expressed the view that the Transfers did not contain the second defendant’s signature.

69 The Transfers effecting the alienation of the first defendant’s share in the three properties were for “nil” consideration. The second defendant’s evidence was inconsistent with the contents of the Transfers. In her affidavit sworn on 19 July 2000 she claimed that approximately one month after the first defendant moved out of Colson Crescent, claimed to have been in late January 1997, she demanded that the first defendant transfer his share in the three properties, informed him that he could keep the motor vehicle and she would also pay him $58,000 as soon as she could. This conversation is alleged to have taken place prior to the date the Transfers were signed. The second defendant claimed that she ‘filled out the three transfer forms in my own handwriting’. That handwriting includes the word ‘nil’ next to the words ‘acknowledges receipt of the consideration of’ in paragraph (D) on each of the Transfers.

70 There was nothing in writing in relation to this alleged $58,000 until the Consent Orders were filed in the Local Court at Penrith in January 1998. Those Orders do not express the $58,000 as consideration for the transfer of the three properties, but rather link the payment to the sale of the Castlereagh Street property. The plaintiff claimed that the two Agreements signed by the defendants in May and August 1998 in relation to the payment of the $58,000, the alleged transfer of an 18 carat yellow gold single diamond ring, (said to be valued at $34,000), and the alleged payment of $16,000 were part of the steps taken by the defendants in furtherance of their fraudulent design and were prepared for the purpose only of creating the false impression that the three properties were transferred bona fide.”

59 In the appellant’s written submissions, it was said that the trial Judge made devastating findings on the credit of Mr and Mrs Zaravinos. It was not proposed to seek to traverse those findings except, as I understand it, those relating to the evidence about the alopecia of Mrs Zaravinos. It was said, that the trial Judge accepted that Mrs Zaravinos brought $25,000 to Australia in 1976 and received a further $7,000 some time later. It was submitted there was no evidence given by Mr Zaravinos that he had any income or any assets. Therefore, it could readily be inferred that the three properties were bought with the funds undoubtedly received by the appellant, Mrs Zaravinos. It was submitted that it was reasonable and proper to infer that, notwithstanding Mrs Zaravinos was unable to give a cogent recollection of when properties were sold and the amounts for which they were sold and/or mortgaged, realistically there was no other source of funds to buy the properties other than her funds. Since the properties were purchased with her funds, even though they were registered in her name and Mr Zaravinos’s name, a resulting trust arose because Mrs Zaravinos provided the whole of the purchase price. Mr Zaravinos was a bare trustee holding his interest for her.

60 Understandably, having heard the evidence, Bergin J rejected the propositions now put before this Court. There was no reason advanced for saying that it was not open to the trial Judge to reject the self-serving account intended to portray Mrs Zaravinos as the sole pecuniary investor in the various properties. Nothing was put to this Court which would compel any conclusion other than that Mr Zaravinos had a half interest in the three properties transferred which he deliberately sought to shed in favour of Mrs Zaravinos in order to avoid meeting his liability to Mr Houvardas and Mr Kattirtzis. I would reject these grounds of appeal.

Ground 20

61 It was submitted that the wrongful accepting into evidence of matters going to Mrs Zaravinos’ alopecia vitiated Bergin J’s findings on credit. It was submitted that this was the critical factor that tipped the balance in favour of the finding that Mrs Zaravinos was always aware of the fraudulent intention of her former husband.

62 In the course of his oral submissions, Mr Aldridge fairly conceded that even if the evidence adduced about when Mrs Zaravinos had first suffered from alopecia was ignored there were ample grounds for Bergin J to make the findings of credit that she did. This being so, I do not think it necessary further to consider this ground of appeal.

Grounds 5, 6 and 7

63 These grounds of appeal are covered by what I have already said and should be rejected. The fact that a sequestration order had been made against Mr Zaravinos on 21 February 2000 did not deprive Mr Houvardas of his status as a “person prejudiced” for the purposes of s37A of the Conveyancing Act. Mr Zaravinos’ creditors as a whole were prejudiced.

64 Even though the trustee in Bankruptcy is entitled to the benefit of the order, Mr Houvardas remains a creditor.

Grounds 8 and 9

65 These grounds are without any merit at all. The withdrawal and hence dismissal of a claim for reason that the relief sought was thought to be beyond the jurisdiction of the tribunal is not res judicata. Res judicata is founded upon judicial determination on the merits or by admission or consent. Withdrawal of an application to a court for the reasons stated here is the antithesis of a judicial determination. The dismissal flows from the withdrawal and not from any judicial determination arrived at on the merits or by admission or consent; see generally Res Judicata, Spencer Bower Turner & Handley, 3rd ed, para 31-33.

Grounds 10, 11, 12, 13 and 14

66 For reasons already given I would reject these grounds of appeal. It is a matter of some concern that the orders under the Family Law Act obtained in the Local Court were sought in breach of orders made by the District Court. Had Mrs Zaravinos been charged with contempt, I see no reason why she could not have been required to purge her contempt by consenting to the order made in the Local Court being set aside in the circumstance that this order was only made because she and Mr Zaravinos failed to disclose the District Court orders. The proposal put forward by Bergin J is a legitimate method of achieving this.

67 However, for reasons already given, I do not regard the order of the Local Court as in any way inhibiting the ability of the Supreme Court in this case to make an order pursuant to s37A of the Conveyancing Act. Due faith and credit can be accorded to the Local Court order which relevantly does no more than declare what, on their face, was the effect of the registered transfers. Mr Houvardas’ case was not that the three properties had not been transferred, but that they had been transferred with intent to defraud creditors. As Brennan CJ and McHugh J said in Cannane v J Cannane Pty Ltd (1998) 192 CLR 557 at 566 [11] “a disposition made with fraudulent intent is nonetheless a disposition. It is not without legal effect.” This was said in the context of an application under s121 of the Bankruptcy Act. But their Honours referred to what had been said by Dixon CJ and Fullagar J in Brady v Stapleton particularly at 333, a case concerning in part an application by the Official Receiver pursuant to s46 of the Mercantile Acts 1867-1896 of Queensland which re-enacted the Statute 13 Eliz Ch 5. Dixon CJ and Fullagar J said at 333:

“The truth seems to be that, although the statute uses, and almost emphatically uses, the word ‘void’, the courts have always treated a fraudulent assignment as effective unless and until a creditor or creditors intervene by levying execution or taking legal proceedings.”

Section 37A of the Conveyancing Act recognises this by the use of the word “voidable”.

Grounds 15, 16 and 17

68 The purpose of s37A(1) is to enable an alienation of property with intent to defraud creditors to be avoided. The only inhibitions on this are that, under subs (3), the section does not extend to any estate or interest in property alienated to a purchaser in good faith not having, at the time of the alienation, notice of the intent to defraud creditors and the requirement that proceedings to avoid alienation be brought by a person “thereby prejudiced”.

69 The proposition is advanced on behalf of Mrs Zaravinos that if, as in this case, the alienation with the intention described has been proved in proceedings by a person prejudiced thereby, the fraudster can avoid the consequences of the alienation by compelling the person who has brought the proceedings to accept an offer equivalent to the amount of the debt owed by the fraudster to that person. Nowhere has the appellant been able to find an authority during the last 400 years to support such a notion. No doubt it is always open to the plaintiff in the proceedings to settle them but that does not mean that the fraudster can, in the way suggested, compel the acceptance of an offer, and on that basis, escape the consequences of his or her fraud.

70 Bergin J said that Mr Houvardas attempted to accept the offer and have orders made against Mrs Zaravinos but to continue with the litigation to obtain a declaration and orders under s37A against Mr Zaravinos. Her Honour refused that course to be adopted for reasons set out in her judgment of 17 October 2002. Her Honour said:

“…what has happened here in the circumstances that I have just described is, in my view, a misunderstanding of what the open offer was. When one views the last three lines in exhibit 10, which is the extracted portion of the transcript of the open offer, the irresistible conclusion to be reached is that the offer was made on the basis that the second defendant’s entitlement to retain the properties would remain.

In the heat of battle, and for obvious forensic reasons to try to obtain a finalisation of the parties’ disputation, Mr Aldridge made that offer.

I am not satisfied that what Mr McCrudden has done this morning is truly an acceptance of that offer by reason of the rider placed upon the condition of acceptance, that is, that he is going to pursue the litigation to obtain a declaration that the alienation by the first defendant to the second defendant was not made in good faith but with intention to defraud creditors.

Technically speaking, one can envisage even in this case a position being arrived at where a party might settle as against the plaintiff, walk away and take the risk that if the plaintiff pursues another party, the properties may be adversely affected, vis-à-vis that party’s rights. However, that wasn’t the intention of the offer in my view, having read the detailed statement made by Mr Aldridge.”

71 Bergin J said in the principal judgment:

“132 It was submitted that I should stay any order for reconveyance to allow the second defendant to make the payment to the plaintiff for the amount of the judgment debt and interest and costs as assessed or agreed. I am not satisfied that this is an appropriate course to adopt in the light of the conditional leave granted to the plaintiff by the Federal Court.

133 I am satisfied that declarations should be made that the transfers of the three properties were registered with intent to defraud creditors and are void. I am also satisfied that orders should be made that the second defendant re-transfer to the first defendant the half interest in the Castlereagh Street property, the Union Road property and Colson Crescent. Having regard to the orders made by the Federal Court, notice is to be given of this judgment and the proposed orders to the Official Trustee forthwith to ensure that the leave granted to the plaintiff is complied with. The only basis upon which the plaintiff was granted leave to proceed was to ensure that the Official Trustee received the benefit of any order made in these proceedings.”

72 As her Honour observed in the passage in her reasons for judgment which I have just quoted, the only basis upon which Mr Houvardas was granted leave to proceed was to ensure that the Official Trustee received the benefit of any order made in these proceedings. There was at least one other creditor, that is to say the estate of Mr Kittirtzis.

73 On 11 November 2003, Bergin J gave judgment on the question of costs. In that judgment her Honour said:

“8 The plaintiff submitted that it was not unreasonable for him not to accept the offer because it was an offer that was not a payment in full of the amounts for which he was a creditor. It was submitted that those amounts included not only the judgment debt and interest but also an amount for the indemnity costs as ordered by Cooper DCJ. In those circumstances it is submitted that it was quite reasonable for the plaintiff to pursue the action notwithstanding the offer of settlement.

9 I am satisfied that the submission made by the plaintiff is correct and that it was not unreasonable for him to proceed with the action. I am also satisfied that the second defendant’s claims were false claims and that she must have known that there was no proper basis in making the claims that she did in respect of her lack of knowledge of the first defendant’s intention at the time of the transfer of the properties and the Consent Orders filed in the Local Court in January 1998.”

74 I would reject these grounds of appeal.

Grounds 18 and 19

Costs

75 Bergin J made the following orders:

“(1) The second defendant is to pay the plaintiff’s costs of the proceedings on an indemnity basis except for:

(a) the plaintiff’s costs of preparation of the claims of sham divorce and damages; and

(b) the plaintiff’s costs of meeting the Bankruptcy Act defence;

(2) The second defendant is to pay the plaintiff’s costs of meeting the Bankruptcy Act defence on a party/party basis;

(3) Subject to leave being obtained from Gyles J or a Judge of the Federal Court the first defendant is to pay the plaintiff’s costs of the proceedings brought against the first defendant on an indemnity basis;

(4) The plaintiff is to pay the second defendant’s costs of meeting the claims of ‘sham’ divorce and damages.”

76 In light of my conclusion that all the other grounds of appeal fail, the only question about costs is whether Mr and Mrs Zaravinos should have been ordered to pay the bulk of the costs to the plaintiff on an indemnity basis. This was justified by the trial Judge on her findings that Mrs Zaravinos’ claims were false claims and that she must have known that there was no proper basis in making the claims she did in respect of her lack of knowledge of Mr Zaravinos’ intention at the time of the transfer of the properties and the consent orders filed in the Local Court in January 1998. Although Mr Zaravinos did not appear as a party, his evidence in Mrs Zaravinos’ case supported the false claims made by her. In her Honour’s view, Mr Zaravinos knew those claims and the claims he made in his evidence were false. Against these findings, which were hardly challenged, and were open to the trial Judge, there is no basis for interfering with the costs orders her Honour made. Accordingly, the appeal against those orders fails.

Orders

77 In my opinion, the appeal should be dismissed with costs.

78 IPP JA: I have had the privilege of reading the reasons of Sheller JA. I agree with them.

**********

Last Modified: 11/29/2004

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Citations

Zaravinos v Houvardas [2004] NSWCA 421

Most Recent Citation

Unal v Cetinkaya [2015] FCA 270

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Statutory Material Cited

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Brady v Stapleton [1952] HCA 62

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CITATION:	ZARAVINOS v HOUVARDAS [2004] NSWCA 421
HEARING DATE(S):	10 August 2004
JUDGMENT DATE:	24 November 2004
JUDGMENT OF:	Handley JA at 1; Sheller JA at 2; Ipp JA at 78
DECISION:	Appeal dismissed with costs.
CATCHWORDS:	S37A CONVEYANCING ACT 1919 - alienation of property - whether transfer of three properties from husband to former wife were not made in good faith and were made with the intention of defrauding creditors - whether appellant beneficial owner by way of resulting trust - effect of sequestration order - whether respondent 'person prejudiced' for the purposes of s37A - res judicata - whether s37A inconsistent with Bankruptcy Act - effect of open offer of settlement equalling amount of debt - costs
LEGISLATION CITED:	Bankruptcy Act 1966 Conveyancing Act 1919 De Facto Relationship Act 1984 District Court Act 1973 Family Law Act 1975 Marine Act 1928 Matrimonial Causes Act 1959 Navigation Act 1912 (Cth)
CASES CITED:	Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337 Brady v Stapleton (1952) 88 CLR 322 Cannane v J Cannane Pty Ltd (1998) 192 CLR 557 Ex parte McLean (1930) 43 CLR 472 Fountain v Alexander (1982) 150 CLR 615 Fraser v Deputy Commissioner of Taxation (1996) 69 FCR 99 Hillman v Hillman (1977) 2 NSWLR 739 Miller v Bury (1986) 4 NSWLR 716 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 R v Credit Tribunal ex parte GMAC (1977) 137 CLR 545 Re Baxter; Ex parte Official Receiver v Baxter (1986) 10 FCR 398 Silvera v Savic (1999) 46 NSWLR 124 State of Victoria v Commonwealth of Australia (1937) 58 CLR 618 (The Kakariki) The Queen v Ross-Jones; ex parte Green (1984) 156 CLR 185 Union Steamship Co of Australia Pty Ltd v King (1988) 166 CLR 1
PARTIES :	Ourania Zaravinos - Appellant Nick Houvardas - First Respondent Official Trustee in Bankruptcy - Second Respondent Attorney-General of NSW - Intervenor
FILE NUMBER(S):	CA 41104/03
COUNSEL:	M R Aldridge SC - Appellant R McCrudden - First Respondent Submitting appearance - Second Respondent M Sexton SC (Solicitor-General)/N Perram/N Bilinsky - Intervenor
SOLICITORS:	Horowitz & Bilinsky - Appellant Mecuri & Co - First Respondent Sally Nash & Co - Second Respondent NSW Crown Solicitor (NSW Attorney-General) - Intervenor

LOWER COURTJURISDICTION:	Supreme Court - Equity Division
LOWER COURT FILE NUMBER(S):	4177/99
LOWER COURT JUDICIAL OFFICER :	Bergin J