Walton v The Official Receiver

[2022] FedCFamC2G 1075

Federal Circuit and Family Court of Australia

(DIVISION 2)

Walton v The Official Receiver [2022] FedCFamC2G 1075   

File number(s):	BRG 417 of 2021
Judgment of:	JUDGE EGAN
Date of judgment:	23 December 2022
Catchwords:	BANKRUPTCY – application to set aside notice issued pursuant to s 139ZQ of Bankruptcy Act – Cross Application for declaration that transfer of money prior to bankruptcy was void as against trustee of bankrupt estate – where applicant failed to satisfy Court that payment was not a voidable transfer – application to set aside notice dismissed – declaratory orders made.
Legislation:	Bankruptcy Act 1966 (Cth) ss. 139ZQ, 139ZS and 121
Cases cited:	Lym International Pty Ltd v Marcolongo [2011] NSWCA 303 BH Australia Constructions Pty Ltd v Kapeller (2019) 100 NSWLR 367
Division:	Division 2 General Federal Law
Number of paragraphs:	32
Date of last submission/s:	12 December 2022
Date of hearing:	11 July 2022 and 12 December 2022
Place:	Brisbane
Counsel for the Applicant:	Ms S Philippou
Solicitor for the Applicant:	Celtic Legal
Counsel for the Respondents:	Mr C Curtis
Solicitor for the Respondents:	Holman Webb

ORDERS

BRG 417 of 2021

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)

BETWEEN:

KRIS ANTHONY WALTON

Applicant

AND:

THE OFFICIAL RECEIVER

First Respondent

MR NICK JIM COMBIS

Second Respondent

order made by:	JUDGE EGAN
DATE OF ORDER:	23 December 2022

IT IS DECLARED THAT:

1.The transfer of $170,010 from Robert Alexander Simpson to the Applicant on 30 April 2020 is a transaction that is void against the Second Respondent / Cross-Claimant pursuant to section 121 of the Bankruptcy Act 1966 (Cth).

IT IS ORDERED THAT:

2.The Applicant is to pay the Second Respondent / Cross-Claimant the sum of $170,010 within 28 days of this order.

3.The Applicant is to pay the Second Respondent / Cross-Claimant’s costs taxed on the standard basis in an amount to be agreed, or failing agreement, to be assessed.

Note: The form of the order is subject to the entry in the Court’s records.

Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).

REASONS FOR JUDGMENT

Judge Egan

Introduction

1. The second respondent was relevantly the trustee of the bankrupt estate of one Robert Simpson.

2. The applicant was at all relevant times in a relationship with Mr Simpson’s daughter, and he lived with her and their respective children.

3. It is not in dispute that on 23 August 2016, the applicant paid the sum of $170,321.03 by bank transfer into a bank account held in the name of Beama Pty Ltd. That company was a company controlled by Mr Simpson, who was its sole director.

4. At all material times Mr Simpson was the registered proprietor of a property situated at 18 Claire Close, Ormeau in the State of Queensland.

5. On 23 April 2020, the applicant purchased the Ormeau property from Mr Simpson for the sum of $775,000.00. Mr Simpson received net proceeds of the sale of such property in the amount of $608,431.74. 

6. On 30 April 2020, Mr Simpson transferred to the bank account of the applicant the sum of $170,010.00.

7. On 22 February 2021, Mr Simpson went into bankruptcy upon the acceptance on that date by the Official Receiver of a debtor’s petition. 

8. On 21 July 2021, a notice was issued by the Australian Financial Security Authority (‘AFSA’) pursuant to the provisions of s. 139ZQ of the Bankruptcy Act 1966 (Cth) (‘the Act’). The notice was directed to the applicant and relevantly required the payment to the second respondent of the sum of $170,010.00, that money being the sum asserted to have been the subject of a void transaction as against the trustee. [1] Section 139ZQ(1),(2) and (3) of the Act relevantly provided as follows:

   [1]           Court Book (CB) Vol 2 p. 390.

   “s. 139ZQ Official Receiver may require payment

   (1)  If a person has received any money or property as a result of a transaction that is void against the trustee of a bankrupt under Division 3, the Official Receiver:

   (a)  if the Official Trustee is the trustee—on the initiative of the Official Receiver; or

   (b)  if a registered trustee is the trustee—on application by the trustee;

   may require the person, by written notice given to the person, to pay to the trustee an amount equal to whichever of the following is applicable:

   (c)  if:

   (i)  the transaction is void against the trustee under section 128B or 128C; and

   (ii)  the transaction is by way of a contribution to an eligible superannuation plan for the benefit of a person (the beneficiary) who may or may not be the bankrupt; and

   (iii)  the beneficiary is a member of the eligible superannuation plan;

   whichever is the lesser of the following:

   (iv)  the money or the value of the property received;

   (v)  the beneficiary’s withdrawal benefit in relation to the eligible superannuation plan;

   (d)  in any other case—the money or the value of the property received.

   (2)  The notice must set out the facts and circumstances because of which the Official Receiver considers that the transaction is void against the trustee.

   (3)  The notice may:

   (a)  require the amount to be paid at a time or within a period set out in the notice; or

   (b)  require the amount to be paid at such times, and in such instalments, as are set out in the notice.”

9. On 20 September 2021, the applicant filed an Originating Application seeking the following relief:

   “1. That the Notice No. QLD 302/21/6 made under section 139ZQ of the Bankruptcy Act 1966 (Cth) (“the Act”), which was made aware to the Applicant on 26 July 2021, be set aside pursuant to section 139ZS of the Act.

   2.        The Respondents pay the Applicant’s costs of and incidental to this Application.”

10. Section 139ZS of the Act relevantly provided as follows:

    “139ZS Power of Court to set aside notice

    (1) If the Court, on application by a person to whom a notice has been given under section 139ZQ or by any other interested person, is satisfied that this Subdivision does not apply to the person on the basis of the alleged facts and circumstances set out in the notice, the Court may make an order setting aside the notice.

    (1A)  The application must be made:

    (a) not later than 60 days after the day the notice under section 139ZQ was given to the applicant; or

    (b)  if the applicant is another interested person—not later than 60 days after the day the applicant became aware that the notice has been given.

    (2)  A notice that has been set aside is taken not to have been given.”

11. On 15 November 2021, the Second Respondent filed a Cross-Claim seeking the following relief:

    “Claim for relief

    The Cross-Claimant claims the following relief from the Cross-Respondent:

    14. A declaration that the transfer of $170,010 from the Bankrupt to the Cross-Respondent on 30 April 2020 is a transaction that is void against the Cross-Claimant pursuant to section 120 or alternatively section 121 of the Bankruptcy Act 1966 (Cth).

    15. An order pursuant to section 139ZQ(8) of the Bankruptcy Act 1966 (Cth) that Mr Walton pay the trustee:

    (a) the amount of $170,010;

    (b) pre-judgment interest accruing thereon since the date of the Notice.

    16. In the alternative, consequential relief for the recovery of the amount of $171,010 from Mr Walton to the Trustee if it is declared the Transfer was void as against the Trustee.

    17. Costs.”

    The Underlying Facts

12. It was not in dispute that as at 30 June 2017 and 30 June 2018, the sum of $170,321.03 was recorded in the Beama Pty Ltd balance sheet as a then current liability.  The relevant side note read – “Loan – Kris Walton 170,321.03” It was also apparent from a reading of the balance sheet that Mr Simpson was indebted to Beama Pty Ltd (the notation being “Loan R&B Simpson  -2,671,607.95”) It was not in dispute that Mr Simpson’s wife had died prior to trial. Total debts of Beama Pty Ltd for the year ending 30 June 2018 exceeded $2.5 million. [2]

    [2]           CB Vol. 2 p. 347.

13. That the applicant was paid the sum of $170,010.00 from funds held in the name of Mr Simpson, and not from an account held in the name of Beama Pty Ltd, was conduct inconsistent with the applicant being repaid loan monies earlier paid by the applicant to the company. Mr Simpson could not produce any written document which supported the proposition that the money paid to Beama Pty Ltd by the applicant was always intended to be treated as if it had been a payment directly to Mr Simpson, so as to give rise to any beneficial interest in any property or fund owned by, or controlled by, Mr Simpson.

14. In cases such as the present where the applicant has submitted that an agreement for repayment to him of the sum of $170,321.03 was said to have been formed partly in writing and partly orally, it has been held that post agreement conduct can be looked act to ascertain what the agreement between the parties actually was. In Lym International Pty Ltd v Marcolongo [2011] NSWCA 303 Campell JA at [143] summarised the relevant principles as follows:

    “[143]… the task in ascertaining what are the terms of a contract that is not wholly in writing is quite different — the task is finding as a fact what the parties have agreed. A range of post-contractual conduct could be relevant to ascertaining what the parties have agreed. For example, their conduct in carrying out the contract could itself be objective evidence of what they had agreed, an admission of one of the parties could assist in ascertaining what they have agreed, and business records created to record or report on the contract rather than carry it out could also assist in that task.”

15. In BH Australia Constructions Pty Ltd v Kapeller (2019) 100 NSWLR 367 at [69] – [70] Leeming JA stated:

    “[69]It is clear that in the case of a contract which is partly written and partly

    
    oral, regard may be had to the whole of the circumstances. The parol evidence
    rule applies only to contracts which are wholly in writing: see Masterton
    Homes Pty Ltd v Palm Assets Pty Ltd (2009) 261 ALR 382; [2009] NSWCA234 at [90(3)]. The non-written components of a contract which is not wholly
    in writing give rise to questions of primary fact, which are capable of being
    proven in the usual way, including by conduct after the event which bears
    upon those matters. In particular, an admission after the event may be powerful
    evidence supportive of a particular aspect of a contract. Indeed, Stephenson LJ
    said for the Court of Appeal in Mears v Safecar Security Ltd[1983] QB 54 at
    77 that:

    “Common sense suggests that [the parties’] subsequent conduct is the best
    evidence of what they had agreed orally but not reduced to writing, though it is not evidence of what any written terms mean …”

    [70] That passage was approved in Fazio v Fazio[2012] WASCA 72 at

    
    [192]–[195]

     (Murphy JA, Pullin and Newnes JJA agreeing) and by Black J in

    
    

    In the matter of Centura Global Holdings Pty Ltd (2016) 111 ACSR 185;

    
    [2016] NSWSC 62

     at [64], who also noted that Edelman J had written to the

    
    

    same effect in Hightime Investments Pty Ltd v Adamus Resources Ltd [2012]WASC 295 at [98]–[99]. Thus a conversation between homeowner and

    
    

    tradesman, which is followed by work being done by the tradesman and

    
    

    invoices sent in the name of a company controlled by the tradesman to the

    
    

    homeowner is apt to be regarded as a contract between homeowner and

    
    

    company, the latter having been bound by its agent the tradesman.”

16. Exhibit 5 purported to be a receipt dated 23 August 2016 which had been signed by each of the applicant and Mr Simpson. The applicant was unable to remember when, or in what circumstance, such document was signed. [3]

    [3]           See Transcript p. 28.5 – p. 29.24.

    Sorry, 91? Yes. Yes. Just here.

    Can you just turn to the last sheet of paper? At 96?

    in that tab.  Do you see a document headed RS1?   Yes.

    And that’s what appears to be a document bearing your signature?   Yes.  My god. 

    Mr Walton, that document was not in your list of documents, was it?   Obviously not.

    Well, do you want to check? No.  To me, it doesn’t make any difference.

    Okay? Sorry. It’s just what it is.  But, yes, again, it’s 170,000 and I’ve signed for it, so      

    Okay.  Do you have any explanation for why it was not in your list of documents?   No.

    And do you say that that was a document that you signed in 2016?   I signed it when I signed it, to be honest with you.  I couldn’t remember.

    Well, could it have been in the last year or so?   I don’t know.  I know I signed it and that is my signature.  That’s all I can tell you. 

    Okay.  Do you remember that? It’s not dated so I don’t remember when I signed it. 

    Do you remember the circumstances in which you signed it? No.I don’t even remember my mother’s birthday, so      

    Well, Mr Walton, this is a, on its a face, a document which was a receipt for $170,000?   Exactly.

    That’s a lot of money?   Correct.

    Wouldn’t this be an important document if it was authentic?   Excuse me?

    Wouldn’t this be an important document to you?   Are you telling me this is forged?

    HIS HONOUR:   Don’t ask questions of Mr Curtis?   Well, we’re just going around in circles.  Like, I’m sorry, I      

    Mr Walton, be respectful of me?   I am and I apologise, I just don’t understand      

    And I’m telling you, once you are asked a question, ask – answer the question to the best of your ability.  Don’t question Mr Curtis why he’s asking it.  All right?   I’m sorry, I just don’t – okay.  I apologise and I just don’t understand.  We’re going around in circles here.  To me, it’s black and white.  I don’t get all this stuff. 

    MR CURTIS:   Mr Walton, I suggest to you that document was not signed by you in 2016 or ’17 or 2018?   I can’t remember when I signed that.

    Okay.  But it may have been well after 2016;  is that your evidence?   It may have well been before.

    Okay.  And you don’t recall anything about the circumstances in which it was signed?   No.

    Did you type up this document?   I don’t know.  I can’t remember.

    Do you know? I don’t know who typed it up.  I may have done.  Like I said, I can’t remember.

    Okay.  And you can’t remember whether you signed it together with Robert Simpson together or at different times? I don’t know.

17. The applicant conceded that he had not disclosed the existence of such document in his affidavit of documents. The applicant was surprised when that document was first pointed out to him, his having said “My god” after having admitted that the document bore his signature.

18. Mr Simpson swore in his affidavit that he had asked the applicant to pay Beama Pty Ltd the sum of $170,321.03 for half the cost of renovations because he allegedly did not have a personal bank account at the time. [4] Such evidence was plainly false. Mr Simpson had a “ME Everyday Transaction Account” number 015692701 [5] which had a credit balance in it of $3,676.98 as at 23 August 2016. He also had a “ME Online Savings Account” number 000216253 [6] which had a credit balance of $129,230.94 as at 23 August 2016. Hence there was no need for any payment supposedly for renovations to be paid into the company account rather than into a personal account in the name of Mr Simpson. The Court finds it inconceivable that at the time he swore his affidavit, Mr Simpson did not remember that he had at least two private bank accounts held in his name as at 23 August 2016. His affidavit evidence was deliberately false. The evidence of Mr Simpson that he had forgotten all about his personal bank accounts being in existence at the time, and his evidence that he thought he ran everything out of “ … the company account … ” was incredible. A perusal of the transactions recorded for

    [4]           Paragraph 8 of Simpson affidavit filed on 8 March 2022.

    [5]           CB Vol. 2 p194.

    [6]           CB Vol. 2 pp. 271 – 300.

    
    

    Account Number 015692701 for the period from 1 January 2016 – 31 December 2021 shows regular almost daily use by Mr Simpson of that account. [7]  The unconvincing evidence of Mr Simpson during cross-examination was as follows: [8]

    [7]           Vol 2. – CB 183 – 265.

    [8]           See Transcript of 11 July 2022 – pp. 45.36 – 55.35.

    “One of the things that you swore to be true but which you corrected was that you didn’t have a personal bank account in August 2016?   No.

    Can I take you to – if you take up volume 2. 

    Do you have that?   Yes.

    Can you skip through the documents and try and find the page with 183 at the bottom.  I apologise.  I can get a better number. 

    HIS HONOUR:   That’s in volume 1, I think, isn’t it?

    MR CURTIS:   No.  285, sorry, your Honour.  It’s in the exhibit numbering. 

    THE WITNESS:   Yes. 

    MR CURTIS:   Do you recognise that now as the bank statement for your personal bank account?   That’s correct.  Yes. 

    And I won’t trouble you with the details if you accept that there’s very regular transactions on that account?   Yes. 

    And you see what appears to be the case is when the account gets a bit lower, there’s credits put in but this was your day to day transaction account?   Yes.

    And we see entries for things like McDonalds, Puma, Gold Coast, probably fuel?   Yes.

    So this wasn’t a dormant account;  this was what you used for your daily living expenses, wasn’t it?   Just the basics, yes.

    Yes.  Mr Simpson, I suggest to you that you must have known when you were preparing an affidavit that you did have a bank account at the time?   No.  I honestly forgot all about it.  I thought I had run everything out at BEAMA but      

    HIS HONOUR:   You thought what?   I run everything out of the company account.  As you can see with the company account, there’s the same sort of transactions appear. 

    MR CURTIS:   But Mr Simpson, your affidavit doesn’t just say, “I didn’t have a bank account,” your affidavit says that the reason that you had Mr Walton pay money into BEAMA was because you didn’t have a bank account – a personal bank account.  Do you want to go to your affidavit to check that or do you accept that?   I wouldn’t use that as an excuse but      

    Well, do you want to have a look at your affidavit?        I should have – thought I wouldn’t have had it. 

    Well, let’s go to your affidavit.  Can you get out volume 1?   Yes.

    And go to tab 15. 

    HIS HONOUR:   Well, first of all, the house was registered in your name, was it, Mr Simpson?   In both names until I sold it.

    Your wife and     ?   Yes. 

    your name?   Yes.

    But your wife passed away and     ?   Yes.

    you sold the house in – when?   2019. 

    ’19.  All right?   That was still in both names at that stage. 

    Yes.  All right. 

    MR CURTIS:   Your Honour, I don’t suggest that there’s anything affecting Mr Simpson’s recollection but I think it’s common ground that the sale actually occurred on 23 April in terms of the money transferring.  2020, not 2019.

    HIS HONOUR:   23 April, yes. 

    MR CURTIS:   Yes.  I’m not taking the point about his recollection of the date.  The sequence would be important. 

    Mr Simpson, do you have a page – it might be cut off but 93 at the bottom behind that tab?   Yes. 

    Can you read to yourself paragraph 8?   Yes.

    Mr Simpson, I suggest to you you couldn’t have been mistaken in known that you had a personal bank account at the time because you were using it, it appears from the statements, almost every day?   Yes.  But they were only for – you could see they’re just for food, coffee – food. 

    Okay?   It wasn’t for general purchasing or anything. 

    Okay.  Do you say it was just for – you only had a personal – was that your only personal bank account?   Yes.

    And was that just for smaller amounts?  Just a daily transaction account?   Yes.

    Can you go back to volume 2 and can you turn to page 382.  Sorry, 373.  The number is in the middle down the bottom?   Yes.

    Do you have that?   Yes.

    Are you looking at a bank statements with at the top left ME?   Yes.

    Online savings account statement?   Yes.

    And do you accept that has a different account number and a different description to the previous statement we looked at?   Yes.

    This is another account that was in your name?   That’s a trust – it’s a high bearing interest account, yes.

    Yes.  The evidence that you just gave that you only had one personal account, a transaction account, that was false, wasn’t it, if we’re talking about the period 2016?

    HIS HONOUR:   Mr Curtis, the document at page 285 has a BSB of 944300. 

    MR CURTIS:   Sorry, your Honour.  Page 373.

    HIS HONOUR:   I know, but you took the witness to an account at  285. 

    MR CURTIS:   Yes.  I’m just turning that up, your Honour. 

    HIS HONOUR:   Are you there, Mr Curtis? 

    MR CURTIS:   Yes.  I should probably take him to the difference between      

    HIS HONOUR:   Well, it’s just that the statement at page 285 relates to BSB 944300. 

    MR CURTIS:   Yes.

    HIS HONOUR:   And the statement at page 373 has BSB 944600.

    MR CURTIS:   Yes. 

    HIS HONOUR:   Which would suggest a different bank. 

    MR CURTIS:   It would, your Honour.

    HIS HONOUR:   Not branch, but bank.

    MR CURTIS:   Well, correct.  They both bear the name ME Bank but the point is that they’re different accounts.

    HIS HONOUR:   Well, a different bank.  The BSB is generally an identifier for a particular bank. 

    MR CURTIS:   It is, your Honour.

    HIS HONOUR:   Unless, in the interim, ME, whatever that was, was taken over by a different bank.

    MR CURTIS:   Yes, your Honour.  And I don’t think the evidence will resolve that.  The only relevance here is that they’re different accounts which is established by all the differences in the particular name.

    HIS HONOUR:   Well, how – how – where does the 944300 account finish?

    MR CURTIS:   That ends in the figures 2701 in the account number. 

    HIS HONOUR:   No.  But just in the book, which – 944300.  It seems to go up to page 322.  323, 324. 

    MR CURTIS:   I think it actually might go      

    HIS HONOUR:   I’m sorry.  It goes after that.  To 324      

    MR CURTIS:   It goes to 31 December ’21, your Honour. 

    HIS HONOUR:   I beg your pardon? 

    MR CURTIS:   I think 367 we see the last one. 

    HIS HONOUR:   367.  Well, the date of that is – that statement is 1 October ’21 to 30 December ’21.

    MR CURTIS:   Yes. 

    HIS HONOUR:   ..... state the period.  And then the next statement – and that’s for BSB – sorry, that’s the BSB 944600.

    MR CURTIS:   Yes.  And that’s a different account number and a different account name.

    HIS HONOUR:   Yes.  But I’m looking at – I’m wanting to know when the 300 account finishes. 

    MR CURTIS:   Well, it might be an old-fashioned bank ..... does use a different BSB for different branches and they often have the same ..... three digits for the bank and three digits for the branch. 

    HIS HONOUR:   That’s generally not right, is it?  I thought it was – 944300      

    THE WITNESS:   ME Bank doesn’t have branches. 

    HIS HONOUR:   I beg your pardon?   ME Bank doesn’t have branches.

    All right?   That’s a different account because it’s an interest bearing account .....  I couldn’t use that as daily transactions or anything. 

    Yes.  Mr Curtis, if you look at the statement at page 329 for account BSB 944300, that’s for the period from 1 January ’19 to 23 February ’19.

    MR CURTIS:   Yes.  I see that, your Honour.

    HIS HONOUR:   And then the next statement for the – for account BSB 944600 which is the different – different BSB number is for the period 23 February onwards. 

    MR CURTIS:   Your Honour has detected that the BSB changes. 

    HIS HONOUR:   Well, the BSB changes but the transaction dates are sequential.

    MR CURTIS:   Yes. 

    HIS HONOUR:   So that would perhaps indicate that it’s the same operating account but with a different BSB number from 23 February 2019 perhaps because it was taken over by another bank. 

    MR CURTIS:   That’s quite likely, your Honour, but the evidence I don’t think will resolve it. 

    HIS HONOUR:   But, in any event, what’s your point, Mr Curtis      

    MR CURTIS:   My point is      

    HIS HONOUR:        that there was an operating account from as early as January ’16;  is that right?

    MR CURTIS:   Correct.  And can I try and deal with it crisply, your Honour.

    HIS HONOUR:   But Mr Curtis, immediately before the start of the ME statement for the period 1 January ’16 to 31 March ’16 is an ANZ statement      

    MR CURTIS:   Yes.

    HIS HONOUR:         for – when did that start?

    MR CURTIS:   That’s a single statement for a single account.  Your Honour, the bank statements for Mr Simpson are tabulated in Mr Combis’ affidavit.

    HIS HONOUR:   Yes.  When did they start, though?

    MR CURTIS:   I did look into them.

    HIS HONOUR:   It’s just behind tab 16(b) there are statements relating to an ANZ Access Advantage statement but it tells you the month but it doesn’t tell you – the date and the month but it doesn’t tell you the year. 

    MR CURTIS:   I’ve had a lot of trouble with these, your Honour.  It does on the first page of the statement.

    HIS HONOUR:   Whereabouts? 

    MR CURTIS:   I think on the first page of the statements. 

    HIS HONOUR:   Which first page?  It’s page 251. 

    MR CURTIS:   Just getting there, your Honour.  Yes.  One has to go to the previous volume to get to the start of the statement. 

    HIS HONOUR:   And that’s volume 1. 

    MR CURTIS:   They’re very long statements, so      

    HIS HONOUR:   Volume 1, page, what, 250?

    MR CURTIS:   235 is the first page of the statement that rolls onto 251. 

    HIS HONOUR:   Well – sorry, what page?

    MR CURTIS:   In volume 1      

    HIS HONOUR:   Page what?

    MR CURTIS:   235. 

    HIS HONOUR:   All right.  Well, that’s ANZ. 

    MR CURTIS:   This is a later account. 

    HIS HONOUR:   Again, it doesn’t give you a date. 

    MR CURTIS:   At the top of the page 235, it’s statement number 9 and then you get the year. 

    HIS HONOUR:   22 September 2020 to 20 November 2020.  I see.  All right.  But you’re only interested in the ME account;  is that right?

    MR CURTIS:   Yes, your Honour.  Because      

    HIS HONOUR:   And where do they start?

    MR CURTIS:   They start, your Honour      

    HIS HONOUR:   235?

    MR CURTIS:   Page 285.

    HIS HONOUR:   Sorry, two      

    MR CURTIS:   Eight five is the start of the transaction account. 

    HIS HONOUR:   Yes.  I see.  Yes, Mr Simpson.

    MR CURTIS:   And the online savings account starts at page 370.  Relevantly, both those accounts start on 1 January ’16.

    HIS HONOUR:   Sorry, 370. 

    MR CURTIS:   370.  That’s a statement headed Online Savings Account Statement, statement period 1 January ’16 to 30 June.  And if your Honour was to keep your thumb on that page and flick to page 285.  See the same statement – sorry, the same period but different statements so it makes clear that these are concurrent accounts operating in the same period from January ’16 onwards.

    HIS HONOUR:   285. 

    MR CURTIS:   Is where the transaction account statement starts. 

    HIS HONOUR:   16 January to 31 March ’16;  January to 30 June.  Online savings account.

    MR CURTIS:   They’re six monthly statements but that makes sense for an online savings account.

    HIS HONOUR:   Yes.  But that online savings account started earlier than 1 January ’16. 

    MR CURTIS:   It looks that way, your Honour, but only – the statements are only in evidence.  Well, the statement number 2 because it looks like it was opened some months      

    HIS HONOUR:   I beg your pardon?

    MR CURTIS:   It’s statement number 2 but they’re just not in evidence.  I don’t think there’s any relevance to      

    HIS HONOUR:   Well, there’s a statement at 367 for that.  I’m sorry, 367. 

    MR CURTIS:   That’s the last of the transaction accounts.

    HIS HONOUR:   But it’s the same – I see.  It’s a different account. 

    MR CURTIS:   No, they’re different accounts, your Honour.

    HIS HONOUR:   A different account number.

    MR CURTIS:   And, your Honour, if you look at the two statements from the same period of 1 January, you can see completely different balances and completely different amounts.  So they’re parallel accounts.

    HIS HONOUR:   I can see that.  All right.  Yes.  So your point is that there were two personal bank accounts      

    MR CURTIS:   There were. 

    HIS HONOUR:        in operation as far back as January ’16.

    MR CURTIS:   ’16. 

    Mr Simpson, I don’t know if you’ve been – your Honour, that’s an order to continue with the witness?

    HIS HONOUR:   Yes.

    MR CURTIS:   Mr Simpson, can you go to page 370?   Mmm.

    Do you accept there that we’re looking at bank statements of another account that you held, a personal bank account?   Well, it’s not another account, it’s the same, but this is just the online savings account.

    HIS HONOUR:   Well, Mr Simpson, they have different account numbers?   Because it’s a savings account.  They identify the last three numbers as one type of account. 

    Yes, but one would seem to be a savings account     ?   Yes.

    where money is credited and interest is paid on it     ?   That’s right.  And the other one doesn’t have interest and it’s      

    and the other one is just an operating account     ?   A transaction account, yes.

    But they’re different.  They have different account numbers?   Yes.

    Which would suggest that there are two accounts?   Yes.

    MR CURTIS:   Well, Mr Simpson, I thought you gave evidence that the reason that you didn’t remember the first bank account is because it was just a transaction account?   That’s right. 

    But if we’re having a look at the document at page 370, we’re looking at a savings account with $200,000 in it, aren’t we?   But that’s just – yes. 

    That wasn’t a minor account.  $200,000 is a lot of money?   But I didn’t use it for anything.

    Well, you did, didn’t you, because if you have a look over the page at 371, we see, for example, on 27 April, you were transferring $10,000 out?   Yes.  To another account I had.

    ..... transaction account, I would suggest?   It was to Z Corse.  It’s written there.

    But the account number ends in 201?   701.

    2701 are the last digits?   2701, yes.

    Yes.  That was your transaction account, wasn’t it?   No.

    No?   That’s a BEAMA run Z Corse account for the go karts.

    HIS HONOUR:   But it’s in your name, Mr Simpson?   Yes.

    MR CURTIS:   And if you go over the page and look at 28 June, another      

    HIS HONOUR:   Sorry, what page, Mr      

    MR CURTIS:   372. 

    HIS HONOUR:   All right. 

    MR CURTIS:   That’s a transfer out to the account ending in 2701 of 5000?   Yes. 

    And if you go to the next page, 373, we’re in a new statement.

    HIS HONOUR:   Do you need to go any further, Mr Curtis?  You’ve established that he has got two accounts that he’s operating in his name.

    MR CURTIS:   Yes. 

    THE WITNESS:   But these are just transfers between the two accounts there.

    MR CURTIS:   Yes.  And the way that you replenish your transaction account was taking money occasionally from the savings account and that’s what you used for your daily living expenses?   On the transaction account was just for food.  Food and drinks, really. 

    I understand.  Fuel and things like that?   Yes.

    But you would regularly transfer money out of the savings account so there was actually money available?   Yes.  Because it was in – yes.  Because it was money that I had received from the death of my wife, so      

    Yes.  And my suggestion is though you couldn’t have forgotten about those matters when preparing your affidavit in terms of that you had a personal account that was active at the time?   Okay.

    Do you accept that?   I agree that I did that, that’s correct, but it wasn’t something that I used regularly so it just didn’t come to my mind that I had a separate account.

    Looking at these statements, Mr Simpson, you would suggest that you could have, if you wished to, paid for renovation works out of these accounts?  Ie, the personal statements, bank accounts that we’ve been looking at?   Well, there was not enough money in there in the transaction account. 

    Well, there was 200,000 in the savings account, wasn’t there?   Yes.

    Well, how do you say the renovation works were actually paid in terms of which account they came out of?   Sorry?

    You say, do you not – is it your evidence that $340,000 in building renovation work was carried out?   Yes.

    And when was that carried out?   Well, it started in 2016 and I think it finished in 2017 – April 2017.

    Okay.  So there were payments in 2017?   Yes.

    Okay.  And that was after Kris Walton had paid 170,000-odd?   Yes.

    Okay.  And out of which account did you pay for the renovation works?   Out of the account that Kris Walton paid into?   So if you go to those – if we go to the bank statements for that account, we will be able to see the renovation works paid out of that account?   Yes.”

1. The Court was also not satisfied that Exhibit 5, purporting as it does to have the original signatures of Mr Simpson and the applicant on it, was a document executed by each of them at or about the time of the applicant’s payment to Beama Pty Ltd on 22 or 23 August 2016. Mr Simpson and the applicant were not witnesses of credit, and the Court does not accept the truth of their evidence relating to the circumstances surrounding the applicant’s payment of money to Beama Pty Ltd.      

2. Quite apart from the fact that the applicant was in a relationship with Mr Simpson’s daughter, on the question of what motive the applicant and Mr Simpson might have had to give false evidence, by mid-2019 it was apparent that Beama Pty Ltd was destined to be liquidated, and that Mr Simpson was destined to be bankrupted. On 30 October 2019, proceedings were instituted in the District Court of Queensland against Mr Simpson by the Deputy Commissioner of Taxation seeking recovery of a tax debt in the amount of $387,116.77. [9]

   [9]           Annexure NJC – 08 to Combis affidavit filed on 28 March 2022

3. Mr Simpson had earlier sought accounting advice from, and had received advice from de Jonge Read Business Consultants, in respect of his and his company’s respective dire financial positions.[10] It is of note that in the de Jonge Read letter addressed to Mr Simpson dated 18 July 2019, mention was made of a “$170,000 contribution”. That letter read in part as follows:

   “You have discussed returning the $170,000 contribution with funds held in savings. The issue that arises from such a transaction is, that should you enter bankruptcy, the Trustee would be expected to claim this payment was preferential. In other words, you have repaid an amount to your relative for the return of the payment they had received. Given your specific circumstances it may be more appropriate to establish that your relative has an existing equitable interest in the property.

   There is no guarantee that this equitable interest will not be contested by the eventual trustee. However, we believe that this is the preferred course of action in your case.”
   (underlining inserted)

   
   

   [10]          CB Vol 2. pp. 303 - 306

4. It is of note that in the first paragraph of the de Jonge Read letter as reproduced above, reference was made to Mr Simpson having discussed returning the “$170,000 contribution with funds held in savings.” Such latter statement is inconsistent with evidence led on behalf of the applicant by both the applicant and Mr Simpson that the alleged total cost of renovations was in the order of $340,000, and that such sum was in fact spent in renovating the property. Mr Simpson’s evidence was that the renovation works had been paid for in full, and that the work had finished by April 2017. [11] Having regard to the evidence of Mr Simpson and the applicant that each of them paid about $170,000 toward renovations, if all of that money had been used for such purpose, there wouldn’t have been any savings left. As at the date of the de Jonge Read letter of 18 July 2019, the ME Everyday Transaction Account only had a credit balance of $40,715.42 in it, and the ME Online Savings Account only had a credit balance of $30,870.50 in it, so there was insufficient money from “savings” to repay the sum of $170,010.00 or any similar figure back to the applicant in any event.

   [11]          See Transcript of 11 July 2022 – p. 55.5 - 55.28.

5. Mr Simpson could not otherwise have advanced the proposition that the alleged savings totalling $170,000 were able to be paid from accounts held by Beama Pty Ltd, because by the time of the writing of the letter to Mr Simpson, the company was in a dire financial state. The Court noted that though the applicant was in a position to lead expert evidence from an accountant or financial consultant as to where the said “savings” might have been, the applicant elected not to do so.

6. Beama Pty Ltd had liquidators appointed to it on 20 April 2020. The Ormeau property was said to have been purchased by the applicant from Mr Simpson some 3 days later on 23 April 2020. There was no evidence from any real estate agent referred to by the applicant as having set the sale price at $775,000.00, notwithstanding that the applicant had sworn an affidavit that one had been involved. In cross examination, the applicant was unable to recall how the real estate agent came to be involved, the name of the real estate agent, or the name of the real estate agency associated with such agent. [12] There was no independent valuation which identified what the market value of the property was.

   [12]          See Transcript of 11 July 2022 – p. 30.33 – p. 31.45.

7. During the course of the trial, the applicant was given the opportunity to seek an adjournment for the purpose of obtaining documentary evidence verifying that payments in the order of $340,000.00 had been made in respect of renovations said to have been conducted at the Ormeau property. Counsel for the applicant, on instructions, did not seek any such adjournment. [13]

   [13]          Transcript of 11 July 2022 – p 66.5 – 68.45

8. In the absence of any evidence probative of renovations to the value of some $340,000.00 having taken place at the Ormeau property, this Court is unprepared to find that any such large scale renovations ever took place. The Court was not asked to undertake a view of the residence in question for the purpose of its appreciating the nature and extent of any such renovations. No council planning/building approval documentation was placed before the Court signifying that relevant local authority approval for any renovations had existed. No builder or other tradesman was called to confirm that any large scale renovations had taken place and that they had been involved in the work. No photographic evidence in the nature of before/after photographs of the renovated areas of the home was placed before the Court. In such circumstances, the applicant has failed to satisfy the Court of a fundamental aspect of his claim, namely that the money paid to the company by him was good consideration for renovation work which had actually been performed.

9. The Court finds that in circumstances where there was at all relevant times a familial connection between the applicant and Mr Simpson, where there was an absence of documentary proof of the carrying out of the renovations, and where there was the absence of a written document which unambiguously set out the basis on which money was paid by the applicant to Beama Pty Ltd, the applicant has failed to establish any basis for the setting aside of the relevant s. 359ZQ notice.

10. Section 121(1), (2) and (3) of the Act relevantly provided as follows:

    “s. 121 Transfers to defeat creditors

    Transfers that are void

    (1)  A transfer of property by a person who later becomes a bankrupt (the transferor) to another person (the transferee) is void against the trustee in the transferor’s bankruptcy if:

    (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.

    Note: For the application of this section where consideration is given to a third party rather than the transferor, see section 121A.

    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.”

11. The Court finds that:

    (a)the payment by Mr Simpson to the applicant of the sum of $170,010.00 was a transfer of property by a person who later became bankrupt which was void as against the trustee of Mr Simpson’s bankrupt estate.

    (b)the money so transferred would probably have become part of the estate of Mr Simpson, or probably would have been available to creditors, if the money had not been transferred.

    (c)Mr Simpson’s main purpose in making the payment to the applicant was to prevent the transferred money from becoming divisible among his creditors.

    (d)Mr Simpson knew at the time of the transfer that he was insolvent and soon to be bankrupt. 

12. The Application to set aside the notice is accordingly dismissed.

13. The second respondent has sought declaratory relief under s. 121 of the Act, and a declaration ought to be made in the terms sought in paragraph 14 of the Statement of Cross-Claim insofar as a claim under s. 121 of the Act was made.

14. The Court will hear the parties as to the terms of orders sought in paragraphs 15, 16 and 17 of the Statement of Cross-Claim.     

I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Egan.

Associate:

Dated:       23 December 2022