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Federal Court of Australia |
Last Updated: 25 January 2008
FEDERAL COURT OF AUSTRALIA
Duus v Dalvella Pty Ltd [2008] FCA 26
PRACTICE AND PROCEDURE – consideration of an application for
an extension of time for the filing of an application for leave to appeal an
interlocutory
judgment
Federal Court Rules, Order 52, Rule
10
Sharman Licence Holdings Ltd v Universal Music Aust Pty Ltd
[2005] FCA 802
Garrett v Universal Holdings Pty Ltd [2007] FCA
526
Duus v Dalvella Pty Ltd [2007] FCA 1921
Cannane (DM) &
Anor v J Cannane Pty Ltd (in Liq) [1998] HCA 26; (1998) 192 CLR 557
Barton v DCT [1974] HCA 43;
(1974) 131 CLR 370
PT Garuda Indonesia Ltd v Grellman (1992) 35
FCR 515
Hardie v Hanson [1960] HCA 8; (1960) 105 CLR
451
ROSS
ANDREW DUUS AND DAVID JOHN CRANSTOUN v DALVELLA PTY LTD ACN 076 620 409 (IN ITS
CAPACITY AS TRUSTEE FOR THE CLIFFSIDE TRUST)
AND DONEMATE PTY LTD ACN 076 620
454 (IN ITS CAPACITY AS TRUSTEE FOR THE KINGS BEACH TRUST)
QUD 28
OF 2007
GREENWOOD J
23 JANUARY
2008
BRISBANE
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AND:
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THE COURT ORDERS THAT:
1. The Notice of Motion filed by the respondents in the proceeding on 2 January 2008 is dismissed.
2. The respondents in the proceeding being the applicants on the motion shall pay the costs of the applicants in the proceeding, being the respondents to the Notice of Motion, of and incidental to the Notice of Motion.
Note: Settlement and entry of orders is
dealt with in Order 36 of the Federal Court Rules.
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BETWEEN:
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ROSS ANDREW DUUS
First Applicant DAVID JOHN CRANSTOUN Second Applicant |
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AND:
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DALVELLA PTY LTD ACN 076 620 409 (IN ITS CAPACITY AS TRUSTEE FOR THE
CLIFFSIDE TRUST
First Respondent DONEMATE PTY LTD ACN 076 620 454 (IN ITS CAPACITY AS TRUSTEE FOR THE KINGS BEACH TRUST) Second Respondent |
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JUDGE:
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GREENWOOD J
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DATE:
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23 JANUARY 2008
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PLACE:
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BRISBANE
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REASONS FOR JUDGMENT
1 The respondents in the proceeding are the applicants by Notice of Motion by which they seek an extension of time until 4.00pm on 2 January 2008 for the filing of an application for leave to appeal from an interlocutory judgment pronounced by me on 6 December 2007.
2 Although the Federal Court Rules contemplate that an application might be made on pronouncement of the judgment before the primary judge or on Notice of Motion, my own practice is that I direct any application for leave to appeal from an interlocutory judgment pronounced by me to another judge of the Court for determination. In this case, the solicitors for the applicants on the motion advised the Court on 21 December 2007 when the matter was re-listed for directions consequent upon an apparent failure by the parties to reach agreement as to consent orders for the future conduct of the matter, that that morning they had received instructions to seek leave to appeal from the interlocutory judgment.
3 Since Order 52, rule 10(2A)(b) requires an application for leave to appeal from an interlocutory judgment of the Court to be made within seven days after the date on which the interlocutory judgment was pronounced, no application having been made orally upon the pronouncement of the judgment, I made an order that the respondents in the proceeding file and serve any application for leave to extend time for leave to appeal from the interlocutory judgment and interlocutory orders made on 6 December 2007, by 2 January 2008. Other directions orders were made on 21 December 2007 for the future conduct of the matter including the filing and serving of a Defence by 18 January 2008, the filing of an application to strike out all or any part of the Statement of Claim by 18 January 2008 and other matters. The Notice of Motion was filed on 2 January 2008. Since the Rules provide for seven days for filing an application for leave to appeal and 15 days had elapsed by 21 December 2007, some urgency attached to ensuring that any foreshadowed application would be filed and served promptly and accordingly, the respondents were ordered to file and serve any proposed application by 2 January 2008. Having regard to the early January period, the District Registrar requested the parties to indicate whether they were content to have the matter determined by the primary judge as the duty judge arrangements would enable the application to be dealt with during January. The parties consented to those arrangements and the matter was listed for hearing on Monday, 21 January 2008 at 10.15am before me as the duty judge.
4 The Notice of Motion is supported by the applicants by reliance upon two affidavits by Mr Neil John Abercrombie sworn 2 January 2008 and 16 January 2008. The first affidavit simply recites Mr Abercrombie’s position as an employee of Lynch & Company, the solicitors for the applicants on the motion, the pronouncement of judgment on 6 December 2007, the wish of the applicants on the motion to appeal the interlocutory judgment and the direction order made on 21 December 2007 that the application be filed and served by 2 January 2008. Notably, there is no matter deposed to by Mr Abercrombie on information and belief or directly, as to the circumstances which might explain the delay in failing to file an application for leave to appeal within seven days after 6 December 2007.
5 The period of delay beyond the seven day period represents a period from 13 December 2007 to 21 December 2007 which is eight days. Further working days elapsed on 24, 27, 30 and 31 December 2007. Mr Lynch in the course of argument said he understood that the order of 21 December 2007 enabled him to file the application for an extension of time and leave to appeal, between 21 December 2007 and 2 January 2008 without any prejudice by reason of the effluxion of that time. The aim of the order on 21 December 2007 was to set an outer boundary by which the application had to be filed and served as no earlier indication had been made nor any application filed for leave to appeal or for an extension of time within which to seek leave. The first occasion on which this question arose was on the directions hearing on 21 December 2007 which was listed at the initiative of the Court.
6 In any event, I proceed on the footing that the applicants on the motion have sufficiently explained delay between 21 December 2007 and 2 January 2008 on the footing that Mr Lynch advised the Court that he misunderstood the effect of the order.
7 Nevertheless, it is important that the material demonstrate an explanation for the delay between 13 December 2007 and 21 December 2007.
8 The second affidavit of Mr Abercrombie deposes to the provision of a copy of an exhibit described as ‘NJA-1’ to each applicant on the motion on 7 December 2007 by email sent at 11.50am on that date. The affidavit does not exhibit any document. The exhibit is said by Mr Lynch to be an email which sets out, in part, certain legal advice and Mr Lynch does not wish to disclose that email and waive privilege in relation to that matter. Whilst that may be so (and there is no need for present purposes to determine whether privilege has been waived by exhibiting the document) the second affidavit of Mr Abercrombie does not take the matter any further and is of no assistance in explaining any reason for the delay in filing the application within the time limited by the Rules.
9 The principles which govern such an application are well understood and have been put by Lindgren J in Sharman Licence Holdings Ltd v Universal Music Aust Pty Ltd [2005] FCA 802 in these terms:
[20] In order for the Court to allow further time for the filing and serving of an application for leave to appeal from an interlocutory judgment, the following conditions must be satisfied:
1. There must be a satisfactory explanation for the delay beyond the seven-day time limit fixed by 0 52 r 10(2)(b) (see, for example, Deighton v Telstra Corporation Ltd (unreported, Full Court, 17 October 1997);
2. The application for leave to appeal must have such prospects of success as not to render the extending of time and exercise in futility. Since the test for the granting of leave to appeal from an interlocutory judgment is that the decision must be attended with sufficient doubt to warrant its being reconsidered by an appellate court, and that substantial injustice would result if leave were to be refused, supposing the decision to have been wrong (Décor Corporation Pty Ltd v Dart Industries Inc. (1991) 33 FCR 397 at 398 – 400), in principle the question on an application for an extension of time is whether this test has sufficient prospects of being satisfied, to warrant granting the extension. In practice, the debate and treatment of the ‘arguable error’ question on an application for an extension of time, will be no different from what the debate and treatment of it would be on the application for leave to appeal itself.
3. Since an applicant for extension of time within which to appeal as of right must show ‘special reasons’ (O 52 r 15(2)), nothing less should be required of an applicant for an extension of time within which to apply for leave to appeal (Deighton v Telstra Corporation Ltd, above).
10 In this application, the applicants have not offered any explanation for the delay between 13 December 2007 and 21 December 2007 in terms of any of the affidavit material. There is simply no explanation at all for the delay either by the solicitors for the applicants on the motion by information and belief or by either Mr Richard Waters or his wife, Mrs Margaret Waters, who are the individuals at the centre (together with related entities) of the transactions the subject of the proceeding. In Sharman, Lindgren J also noted that the application for leave made before his Honour was ‘marked by the lack of testimony of all those who could have given a full and frank explanation: Ms Hemming, Mr Herron, and Mr Grieve’. Similarly, Mansfield J observed in Garrett v Universal Holdings Pty Ltd [2007] FCA 526 that to be granted an extension of time ‘the applicant must provide a satisfactory explanation for the delay in making the application’ [11] and ‘the applicant has provided no, far less any satisfactory, explanation for his delay in seeking leave to appeal from the decision. On that basis alone, I would be disposed to reject the application. However, I shall consider additional factors’ [12] (that is, whether the decision is attended with sufficient doubt to warrant its being reconsidered by the Full Court and whether substantial injustice would result if leave were refused).
11 Although the applicants on the motion characterise the delay as seven days between 13 December 2007 and 21 December 2007, the applicants have had a period of 14 days (leaving aside the period from 21 December 2007 to 2 January 2008) to prepare and file an application supported by proper affidavit material properly identifying the contended grounds of appeal.
12 No notice of appeal has been formulated and served with the application which would identify in a properly formulated way, a contended ground of appeal.
13 Although the affidavit material does not explain the reasons for the delay, Mr Lynch made submissions that consideration should be given to the complexity of the issues dealt with in the judgment, the reservation of the primary application and subsequent pronouncement of judgment which required the applicants on the motion and their advisers to become familiar with the content of the issues again and the consideration that the judgment was given at 2.15pm on Thursday, 6 December 2007. Notwithstanding those matters, the applicants have not filed any affidavit material that provides any explanation for the delay.
14 That circumstance seems to me to weigh heavily in the balance. However, like Mansfield J, I propose to consider the merits of the contention of ‘arguable error’.
15 The contended error can be put quite succinctly.
16 I put the contention in the course of argument in these terms and Mr Lynch agrees that it correctly states the contention and represents the only contention upon which the applicants rely. On this footing, Mr Lynch says a formulated Notice of Appeal is not necessary. The well accepted practice, however, is to exhibit a proposed Notice of Appeal to an affidavit and file and serve that affidavit upon the respondent to the application. The contention is this. Mr Lynch says that the applicants in the proceeding assert that Mr and Mrs Waters entered into transactions in 1996 which were part of a scheme orchestrated by them with an intent to defraud their creditors by making a disposition of property at 46 Victoria Terrace, Caloundra, Queensland, held by them as joint tenants, for no consideration in favour of an entity which did not act in good faith. The applicants in the proceeding also rely on transactions in 1997 and a further transaction in 1999. The precise content of the alleged orchestrated scheme is set out in the primary judgment and I do not propose to repeat all of those matters in these reasons. Mr Lynch says that the applicant trustees of the bankrupt estates of Mr and Mrs Waters contend in the proceeding that Mr and Mrs Waters entered into the scheme with the intention of defrauding their present and future creditors but the pleading fails to properly particularise and therefore identify the future creditors (in the post-transaction environment), the amounts owing to either future creditors or an identified class of future creditors, or the effect of subtracting the property from the assets available to meet the claims of creditors by reason of the scheme put in place with the intention of defrauding creditors, as, one cannot tell whether a relevant diminution would occur as the future creditors are undefined and the amount of their claims are unidentified.
17 Mr Lynch says that it is not sufficient to simply plead a reduction in the assets available to future creditors or an intention to defraud simply by reference to future creditors. The trustees must show a relationship between the scheme, the relevant intention, the creditors to be defrauded, the amounts and the diminution in the pool of assets available to meet the claims of creditors. Mr Lynch accepts that it is proper to plead foundation facts from which inferences might be drawn about intention but the foundation facts must be pleaded with sufficient particularity to enable inferences to be drawn about each of the above matters especially since the allegation is one of fraud.
18 The paragraph of the primary judgment which dealt with the issue of future creditors and facts giving rise to relevant inferences was [29] of Duus v Dalvella Pty Ltd [2007] FCA 1921 which is in these terms:
29. As to para 1(c) of the Request which seeks particulars of each and every one of the creditors the applicants contend Waters intended to defraud, the applicants say the reference to ‘creditors’ in para 22.1 is a reference to ‘all of [Waters] then present creditors and all future creditors ... including Jefferson and Stevenson and BSA’. The applicants say these particulars are sufficient and adequate as the response identifies all the then present creditors and, by class, all of the future creditors with a specific reference to two identified future creditors. The respondents say the particulars are inadequate and too broad as they capture all future creditors and adopt the ‘inclusive’ reference that does nothing to limit the field of inquiry the subject of the alleged intention. Paragraph 22.1 asserts money transfers as part of a scheme put in place by Waters with an intent to defraud creditors. There must be a relation between the steps taken in the scheme and an intention to defraud identified creditors. Those creditors might be existing creditors with provable debts or future creditors (Barton v Deputy Federal Commissioner of Taxation [1974] HCA 43; (1974) 131 CLR 370 at 374; PT Garuda Indonesia Ltd v Grellman (1992) 35 FCR 515 at 525-526; DM Cannane & Anor v J Cannane Pty Ltd [1998] HCA 26; (1998) 192 CLR 557 at 566 and 593; Ebner v Official Trustee in Bankruptcy [1999] FCA 110; (1999) 91 FCR 353 at 370-371) or any present or future creditor. In this case, the applicants contend Waters held the relevant intent at the time of orchestrating the scheme, in relation to present creditors and those who, like Jefferson and Stevenson and BSA, might become creditors. A trustee at pleading stage, seeking to recover assets on behalf of the beneficiaries of a bankrupt estate is not likely to know whether a scheme has been implemented with an intent to defraud each present creditor or a group of present creditors (perhaps those agitating the most); or future creditors or a group of future or anticipated creditors perceived by the former bankrupt to be those who might pursue claims or causes of action arising out of the conduct of the bankrupt; or both classes of claimant. What is important is the identification of the contention within the limits of what might reasonably be put having regard to all the circumstances pleaded. In this case, the applicants plead a sequence of steps including a set of inherently odd transactions by which Waters borrowed money from a trust established by them in which they were formerly principals and substituted almost immediately after formation, their own children as principals, and immediately made gifts of the borrowing back to the trust. The applicants say all the scheme steps were made with an intent to defraud all creditors (that is, to remove the assets from the reach of those who ultimately might call upon them should payment not occur) whether present creditors or future creditors. The function of particulars is to put Waters on notice of what is contended against them, enable them to plead and to isolate those documents relevant to the issues. Waters would understand from this pleading as particularised that the trustees say Waters took scheme steps with an intention of removing assets from anyone who was at the time a creditor or anyone who might be a creditor, emblematic of which are the nominated future creditors. The pleading as particularised enables each of Waters to ask, ‘Did I take the contended steps (if any) with the intention of defrauding my present creditors or future creditors?’; and although the answer might be ‘no’, ‘Am I aware, after reasonable enquiry, of any document relevant to a contention that I put in place the contended steps with an intention to defraud present creditors or future creditors?’ being a document falling within Order 15, r 2(3).
19 As to the amounts due to future creditors, the paragraphs of the primary judgment dealing with that matter are these:
39. By para 3 of the request, the respondents seek particulars of the ‘large sums of money’ referred to in para 23 of the SoC. Paragraph 23 asserts the inference previously discussed that the liquidators of Freedom Homes and the BSA were either creditors, contingent creditors or anticipated creditors for large sums of money and inevitably these creditors would press Waters for payment and they would not be able to pay. In response, the applicants gave particulars that the large sums of money are said to ‘include debts claimed in the proofs of debt lodged in the bankruptcies of Mr and Mrs Waters by Jefferson and Stevenson and the BSA. The applicants say that the proofs of debt have been identified and copies of the proofs of debt lodged in the bankruptcies of Waters have been provided to the respondents and those proofs identify the precise amount claimed. Nevertheless, the applicants ought to provide the respondents with a statement based on the proofs of the amount of the debt and to whom it is owed.
40. By para 4 of the request, the respondents seek particulars of the monies Waters would not be able to pay as contended in para 23 of the SoC. The applicants say the monies unable to be paid include the debts claimed in the proofs of debt previously mentioned. The provision of the particulars extracted from proofs of debt will provide particulars for the purposes of para 4 of the request.
41. By para 9 of the request, the respondents seek particulars of the monies the applicants allege by para 31 of the SoC that Waters would not be able to pay. By para 31 the applicants say that in the circumstances of the particulars pleaded in paras 22 and 30 of the SoC an inference arises that Jefferson and Stevenson, the Deputy Commissioner of Taxation, the BSA and the liquidator of Delvine were creditors for large sums of money; a time would come for payment of those monies by Waters; and Waters would not be able to pay. The applicants provided particulars of para 9 that the monies include ‘the debts claimed in the proofs of debt lodged in the bankruptcies of Mr and Mrs Waters by Jefferson and Stevenson, the DCT and the BSA and the judgment debt owed by Mr Waters to the liquidator of Delvine’. The respondents say that those particulars do not identify the monies. The applicants say the respondents have been provided with copies of the proofs of debt. However, a statement extracted from the proofs of debt of the amounts claimed and by whom ought to be provided to the respondents.
20 Mr Lynch says that the treatment of these issues in the above paragraphs reflect an ‘arguable error’ in the assessment of the sufficiency, as a particularised pleading, of the steps said to have been taken by Mr and Mrs Waters in connection with the scheme, the contended intention of Mr and Mrs Waters and a nexus between those matters and future creditors and the value of their claims. Mr Lynch says that the identification as a matter of pleading of that sequence of contentions based on what is ‘reasonable’ is not the test. Mr Lynch says that the elements of that sequence must be put with great precision. However, [29] of the primary judgment makes it clear that the contentions must be identified within the limits of what might reasonably be put ‘having regard to all the circumstances pleaded’ recognising that the trustees must necessarily rely upon facts from which inferences might be drawn. The pleading by the trustees is not simply a pleading of a disposition that reduced assets available to creditors as the basis for an inference. In Cannane (DM) & Anor v J Cannane Pty Ltd (in Liq); [1998] HCA 26; (1998) 192 CLR 557 at 565-568 [10] – [15] Brennan CJ and McHugh J recognised a number of principles including these. The party seeking to avoid a disposition of property bears the onus of proving an actual intent at the time of the disposition to defraud creditors (Barton v DCT [1974] HCA 43; (1974) 131 CLR 370 at 374; PT Garuda Indonesia Ltd v Grellman (1992) 35 FCR 515 at 525-6). The creditors whom the fraudulent disponor of property might intend to defeat need not be existing creditors; they may be future creditors and the intent is an intent to defraud any present or future creditor. The intent must accompany the disposition. It must relate to the effect of disposing of property then existing. Although a party impugning a disposition of property must show actual intent to defraud creditors at the time of the disposition, the intent may be inferred from the making of a disposition which subtracts from the property which is the proper fund for the payment of debts, an amount without which the debts cannot be paid. Their Honours at [12] said this:
The ‘proper fund’ may consist in assets out of which future creditors as well as present creditors would be entitled to be paid a dividend in respect of what is owing to them. Therefore, a subtraction of assets which, but for the impugned disposition, would be available to meet the claims of present and future creditors is material from which an inference of intent to defraud those creditors might be drawn. Whether that inference should be drawn depends upon all the circumstances of the case.
21 Their Honours note that sale of an asset at a price less than the true value of the property or an asset given away is a fact relevant to the intent to be attributed to the disponor in disposing of the property. A mere disposition which reduces assets is not sufficient to establish an intent to defraud present or future creditors of the company or ‘cheat’ creditors of their rights if the intention is effected (Hardie v Hanson [1960] HCA 8; (1960) 105 CLR 451 at 456).
22 In this case, the trustees rely upon (and [29] of the primary judgment reflects) a sequence of transactions which are inherently odd, involve the establishment of companies and trusts where the children of Mr and Mrs Waters are interposed in relevant roles in relation to the trusts and the transactions consist of a series of ‘round robin’ payments. All of those facts as particularised are relied upon to support an inference (which may or may not be drawn) of an intention to defraud particular and identified creditors and future creditors as a class within which there will or may be individual creditors who cannot, at the moment in time when the transactions made with an intention to defraud creditors arose, be identified. However, the trustees have identified a number of entities who are said to be future creditors likely, on all the evidence, to make claims for ‘large sums of money’. For the sake of completeness in these reasons, the particulars in support of the proposition that the 1996 transactions were part of a scheme orchestrated with the intent to defraud their creditors, are set out below as they appeared in the primary judgment at [11].
Particulars
22.2.1 Mr and Mrs Waters were the directors and sole shareholders of Freedom Homes (Qld) Pty Ltd (Freedom Homes) which was incorporated on 29 May 1992.
22.2.2 Freedom Homes formed part of a group of companies, that included Delvine Pty Ltd (Delvine).
22.2.3 On 29 February 1996, Mr and Mrs Waters appointed Phil Jefferson Jefferson) and Jay Stevenson Stevenson) voluntary administrators of Freedom Homes.
22.2.4 On 14 March 1996, Mr and Mrs Waters appointed David Clout voluntary administrator of Delvine.
22.2.5 On 10 April 1996, David Clout was appointed liquidator of Delvine by resolution of Delvine’s creditors at a second meeting of creditors.
22.2.6 Between 4 and 28 June 1996, a seven day public examination was conducted in the voluntary administration of Freedom Homes and the liquidation of Delvine during which Mr Waters was the primary examinee.
22.2.7 On 3 July 1996, Mr Waters sought and received advice from his then solicitor, Dr Garry Hamilton to the affect that liability under personal guarantees given by Mr and Mrs Waters to the Building Services Authority (BSA) would survive a winding-up of Freedom Homes.
22.2.8 On or about 19 July 1996, Mr and Mrs Waters were provided with a s439A second report to creditors issued by Jefferson and Stevenson in the voluntary administration of Freedom Homes. The report contained the following extracts:
"Counsel has delivered an extensive report resulting from the seven (7) day public examination which advises:-
1. The company was insolvent from the last quarter of 1994;
2. The directors have breached Section 588G, 232(4) and 598 of the Corporations Law;
3. The defences for directors provided by the Corporations Law, in certain circumstances, will not be available by directors in the present case;
4. The QBSA was justified in taking action to remove the builders license of Freedom Homes (Qld) Pty Ltd;
5. There are breaches of other legislation by the company and the directors ...
As a result of the public examination and Counsel’s advice, I believe that a claim could be made against the directors for up to $2,647,255 being the balance of unsecured creditors outstanding at February 1996 of $1,531,596 and taxation debts of $1,115,659...
In my opinion, creditors should vote to place the company into liquidation"
22.2.9 On 29 July 1996, at an adjourned meeting of creditors which was attended by Mr and Mrs Waters:
(a) the recovery actions identified in the second report to creditors were ventilated at length; and
(b) Freedom Homes was placed in liquidation and Jefferson and Stevenson were appointed liquidators of Freedom Homes to enable the claims against Mr and Mrs Waters to be pursued.
22.2.10 Between 13 June 1996 and 16 August 1996, Mr and Mrs Waters obtained personal insolvency advice from John Ebbage of BDO Kendalls Chartered Accountants and Philip Pan of Minter Ellison Lawyers in respect of at least:
(a) financial "Problems" identified by Mr Waters including "Defects $400,000", Delvine $200,000" and "Personal Guarantees $700,000";
(b) the extent of Mr and Mrs Waters’ personal financial exposure as a result of the failure of Freedom Homes, including in respect of personal guarantees given to the BSA;
(c) the prospects of success of the insolvent trading claim identified by Jefferson and Stevenson;
(d) Mr and Mrs Waters personal asset and liability position;
(e) ways to place assets beyond the reach of creditors including by the establishment of a discretionary trust and the gifting of assets into the trust;
(f) recommendations that Mr and Mrs Waters negotiate with creditors informally with a view to compromising claims rather than entering into a Part X; and
(g) recommendations that Mr and Mrs Waters concentrate on paying all debts owed to creditors holding personal guarantees from them.
22.2.11 The BSA issued "Letters of Demand" to Mr and Mrs Waters on 17 December 1996 claiming an amount of $4,460.00 noting that further claims of approximately $77,000.44 were being processed and that possible recourse in relation to those claims may be taken in the future.
22.2.12 Between 26 April 1996 and 5 December 1996, Mr and Mrs Waters paid creditors of Freedom Homes which held personal guarantees granted by Mr and Mrs Waters, amounts totalling $701,156.00, as follows:
Date Personal Guarantee Creditor Amount
26/4/96 Plumbing World 4,44330/10/96 Full Moon 23,000
13/11/96 Boral 1,146
13/11/96 Skyes 16,000
13/11/96 Southport Ceramics 5,000
13/11/96 BBC 10,005
14/11/96 Vintec 16,000
14/11/96 Austral 8,000
15/11/96 Vox 13,750
3/12/96 Southport Ceramics 14,114
3/12/96 BBC 179,116
3/12/96 Southport Timbers 23,320
5/12/96 Full Moon 48,076
5/12/96 Vox 13,776
5/12/96 Austral 11,133
5/12/96 Vintec 46,516
5/12/96 Boral Tiles 176,003
5/12/96 BHP Steel 31,512
5/12/96 Plumbing World 25,837
5/12/96 Skyes 34,409
22.2.13 The Liquidators of Freedom Homes and the BSA have lodged proofs of debt in the bankruptcies of Mr and Mrs Waters.
23 It can be seen from the particulars that the trustees have identified particular persons or entities that have foreshadowed likely claims for substantial sums of money. For example, consequent upon a seven day public examination conducted in the voluntary administration of Freedom Homes (Qld) Pty Ltd by Mr Jefferson and Mr Stevenson, and the liquidator of Delvine Pty Ltd (Mr Clout) during which Mr Waters was the primary examinee, Messrs Jefferson and Stevenson issued a report to creditors which advised creditors that as a result of the public examination and counsel’s advice, the administrators believed that a claim could be made against Mr and Mrs Waters for an amount up to $2,647,255.00 being the balance of unsecured creditors claims outstanding at February 1996 of $1,531,596.00 and debts due to the Commissioner of Taxation of $1,115,659.00. In addition, the particulars identify steps undertaken by Mr and Mrs Waters to take advice concerning possible insolvent trading claims and other claims against them personally. The particulars also identify a demand made by the Building Services Authority for a relatively small amount of $4,460.00 but the foreshadowing by the BSA of further claims of $77,000.44. The trustees contend that these claims represent either claims by creditors or contingent or future creditors for large sums of money and prior to the implementation of the 1996 transactions it would have been obvious to Mr and Mrs Waters that those parties identified in the particulars would be likely to bring those claims and that Mr and Mrs Waters would not be able to pay those claims, if pursued. The trustees rely upon the same particulars and other letters of demand to support the contention that the 1997 and 1999 transactions were entered into for the main purpose of preventing the property from becoming divisible among their creditors or to hinder or delay the process of making the property available for division among the creditors.
24 Accordingly, the pleading as particularised seeks to establish a set of facts going to a series of inherently old transactions which involved a round robin of payments which, in turn, call for an explanation and are capable of supporting an inference (whether drawn or not) that Mr and Mrs Waters entered into transactions in and in connection with the relevant entities and trusts with an intention to defraud then present creditors and future creditors which in the circumstances pleaded and particularised, comprehend identified likely future claimants and extends to a contention that the intention was one of defrauding identified future creditors and future creditors as a ‘class’. It is not necessary to precisely identify each and every future creditor and the value of each and every future creditor’s claim. The contention cannot simply be put at a high level of abstraction. That is not this pleading. A pleading of particularised facts which identifies examples of the conduct and its connection with particular present or future creditors as emblematic of the conduct, is perfectly proper even though the identified claimants are included in a broader class of future creditors. The trustees plead that the effect of the arrangements was to remove a one half legal and beneficial interest in the Caloundra property from the estate of Mr Waters and a one half legal and beneficial interest in the Caloundra property from the estate of Mrs Waters which would have been available to meet the claims of present and future creditors of Mr and Mrs Waters but for the conduct. The effect properly asserted is a diminution in the pool of assets available for payment of then present creditors and future creditors.
25 Having regard to all of these matters, I am not satisfied that the applicants on the motion have demonstrated a failure on the part of the pleader (by failing to provide further particulars) to establish a relationship between the transactions, the intention to be drawn from those transactions, the giving effect to the scheme in relation to properly identified present or future creditors, and the diminution in the pool of assets available to satisfy those claims.
26 Accordingly, I am not satisfied that the primary decision is attended with sufficient doubt to warrant reconsideration by the Full Court. Nor am I satisfied that substantial injustice would result if leave is refused. Moreover, the applicant has failed to provide any explanation for the delay. In addition, the question is one which goes to a matter of practice and procedure (the adequacy of particulars) in which event leave ought not to be given as finality in such interlocutory matters is an important consideration. Unless there is clear and demonstrated error requiring consideration by a Full Court with a view to avoiding substantial injustice which would arise should leave not be given, leave is inappropriate in an interlocutory judgment dealing with matters of practice and procedure. However, on the merits, there is no basis upon which leave ought to be given.
27 Accordingly, the application for an extension of time for leave to appeal the interlocutory judgment of 6 December 2007 is refused and the application for leave to appeal is refused. The Notice of Motion is to be dismissed with costs.
Associate:
Dated: 23 January 2008
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Solicitor for the Applicants (Respondents on the Motion):
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Solicitor for the Respondents (Applicants on the Motion):
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Date of Hearing:
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21 January 2008
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Date of Judgment:
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23 January 2008
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