Global Group Enterprises Pty Ltd v Julia Ruth McKay

Supreme Court of NSW|2022-12-07|Before: Campbell J, Adams J, Schmidt J, Harrison J

Solicitors: Ronayne Owens, lawyers, Duncan Scott Solicitor (on and after 7 December 2022) (Judgment Creditor) O'Neil Partners (Judgment Debtor) File Number(s): 2012/101127

JUDGMENT

This was a very hotly contested claim for leave under Uniform Civil Procedure Rules 2005 (NSW) ('UCPR'), r 39.1 to issue a writ of execution. The writ is sought for enforcement of a judgment entered by Adams J on 17 September 2014 in the matter of Roxo v McKay [2014] NSWSC 1317 in the sum of $1,240,000. Global Group Enterprises Pty Ltd ('GGE') and Mr Roxo were joint plaintiffs in the action brought against Ms McKay and a company controlled by her which has since been deregistered. The judgment creditors' claim was for unliquidated damages caused by the negligent management under contract of a dairy farm by the judgment debtors.

The current application

A number of things should be said at the outset. First, the application is brought by and on behalf of GGE only. It claims the benefit of an assignment of Mr Roxo's right, title and interest in the judgment debt under s 12 Conveyancing Act 1919 (NSW). Secondly, Mr Roxo gave some oral testimony. While under his affirmation, he denied being an undischarged bankrupt (77.38 - .43T; 79.20T). Mr Roxo denied that he was the person referred to under his former name as an undischarged bankrupt in an extract from the National Personal Insolvency Index when he was shown the document in cross-examination (Julia Ruth McKay affidavit of 1 March 2022, Exhibit C p 11). But I am well satisfied that he is the person referred to in that extract. Mr Roxo admitted that he at one time bore the name 'Raymond Ross' (79.7T), he denied lodging a debtor's petition or that there was any sequestration order made against him (79.21T). He initially avoided answering my question about whether the date of birth shown on the extract was his (78.47T). When pressed further by the cross examiner about his date of birth he denied the date of birth shown on the extract was his (81.25T) and asserted that he was not quite sure about his date of birth because his mother told him she had made a 'mistake there' (35-40T). He said that he knew of the named trustee Andrew Barnden (81.49T). He went on to say that he 'was supposed to seek a consent from him, and I have done that, but that doesn't mean that I admit that I'm bankrupt because I'm not, for many reasons' (82.10 - .15T).
Thirdly, Mr Roxo did not complete his evidence. The matter was adjourned part heard at the end of 21 September 2022 until 7 December 2022. On the adjourned date there was a change of representation for GGE but the proceedings were adjourned because Mr Roxo claimed to be ill. This claim was supported by a medical certificate. When the hearing resumed on 1 February 2023, Mr Roxo again failed to appear, this time without any explanation or excuse (86.20- .34T). Fourthly, on that occasion, Mr Scott, solicitor, who was then acting and appearing for GGE, as he had done since 7 December 2022, informed me that in that capacity the natural person from whom he was ultimately receiving instructions on behalf of GGE was Mr Roxo. He said (86.34T): 'that person is Mr Roxo. I have had some contact with him, but not today. I can continue trying to contact him, but he is simply not here."
Finally, given his absence and the consideration that Mr Archibald, counsel for the judgment debtor, was deprived of the opportunity to complete his cross-examination, I indicated I would have to put his evidence where it was favourable to GGE entirely to one side (88.40; 144.39; and 154.41T). This means that to the extent to which Mr Roxo gave evidence explaining the circumstances and timing of the purported assignment and the provision of notice to Ms McKay, I could not rely upon that evidence because of his unexplained absence and his incomplete cross-examination. This is of particular significance given, while he is not a director or shareholder, I am satisfied he is the person who effectively controls GGE, his apparent bankruptcy notwithstanding.

Issues

It needs to be borne in mind that the only question for my determination is whether leave should be granted for the issue of a writ of execution within the limitation period to enforce a judgment of this Court which has not been vitiated or set aside. The real and only argument advanced against the grant of leave concerns the genuineness of the assignment and when it was effected in relation to Mr Roxo's bankruptcy which despite his denials in his partial evidence is not disputed by GGE. Part of the point of the judgment debtor calling into question the genuineness of the assignment is the related question about Mr Roxo's position in relation to GGE. While he is neither and apparently never has been, a director or shareholder, his evidence, incomplete as it is, and the evidence of the other witnesses called for GGE, is imbued with a strong implication that he is actually the person in control of the company in the sense of being its guiding mind. I was left with the distinct impression that the persons named as director from time to time, on the one hand, and the sole shareholder throughout, Mr Roxo's sister, on the other, were merely his nominees.
If, as is contended on behalf of Ms McKay, the assignment was made after Mr Roxo's bankruptcy, but backdated to create a false impression for the purpose of defeating Mr Roxo's trustee in bankruptcy and his creditors, then leave to issue the writ may be refused by analogy with the reasoning in ML Ubase Holdings Co Ltd v Trigem Computer Inc (2007) 69 NSWLR 577; [2007] NSWSC 859 ('ML Ubase') per Brereton J. That case concerned a garnishee order. I appreciate the policy considerations may be different. And I emphasise, the refusal of leave does not affect the validity of the Court's judgment, or the liability of the judgment debtor. The only question is who is entitled to enforce it?

Mr Edelbi

The primary evidence relied upon in support of the application for leave is the affidavit of Miran Edelbi, sworn or affirmed on 28 January 2022. The affidavit was attested by audio-visual link in accordance with Clause 2 of Schedule 1, Electronic Transactions Regulation 2017 (NSW) as Mr Edelbi was then in Lebanon. I interpolate, he appears to have been in Lebanon since leaving Australia on 8 November 2021 (92.18T) and he had remained there at least until the second occasion on which he gave evidence before me on 1 February 2023. When asked "prior to November 2021 how long were you in Australia for at that time?", he answered, "I left for a long time, I go and come. Go and come" (92.25T). From his own evidence and the company search which is Annexure B to the affidavit of Ms McKay sworn on 25 March 2022, he was appointed sole director of GGE on 27 July 2019. He replaced Hadia Edelbi, his cousin, at her request and at the suggestion of his ex-wife (111.35T; 110.7T). Ms Edelbi is currently an undischarged bankrupt (Exhibit 4) and would have obviously been disqualified from continuing as a director. She held that office from 29 June 2019 to 22 July 2019.
To his affidavit, Mr Edelbi annexed the assignment of Mr Roxo's interest in the judgment debt to GGE. It is signed by Mr Roxo and Ms Edelbi. Mr Roxo's signature is purportedly witnessed by a Justice of the Peace, who in context seems to have endorsed the date "15/11/14".
Mr Edelbi also annexed a document entitled "Notice and Direction" by which Ms McKay and the defunct company were notified of the assignment and directed to pay the full amount of the judgment debt to GGE. It too was signed by Mr Roxo and Ms Edelbi and purportedly witnessed by the same Justice of the Peace. It bears the date 19 March 2015. The year being rendered in typeface, the day and month by hand.
There is another version of this notice and direction. A somewhat different version is annexed to Ms McKay's affidavit sworn on 1 March 2022 (Annexure D). While it is broadly in the same form, it is not signed by Ms Edelbi and the year is rendered in typeface as "2014" with the 4 crossed out and a hand-written 5 substituted. Ms McKay gave evidence that she received that document on or about 18 July 2020 which is quite sometime after Mr Roxo's bankruptcy on 23 November 2018. She had not seen the second version until she obtained a copy of Mr Edelbi's affidavit from the Court file.
Mr Edelbi asserts in his affidavit that a copy of the version of the notice annexed to his affidavit was 'given' to Ms McKay on 19 March 2015. But it is quite clear from his evidence that he has no direct personal knowledge of any of the facts or circumstances narrated in his affidavit. He had no involvement in any of the business affairs of GGE prior to him becoming a director (64.45T). He had known Mr Roxo for "maybe 15" years as a friend, but not well prior to becoming director of GGE (109.30- .35T). By the time he became a director GGE "had no trading" (68.25T). He believed the company was renting certain premises at Longueville which corresponds with the address of the registered office, but he could not say how a company of which he was the sole director that was not trading was paying the rent (96.45T). He said, "the manager is doing it". It seems this was his ex-wife. He did not know how she finds the money to pay the rent (97.20T).
His affidavit had been prepared by the solicitor then acting for GGE (99.47T). He did not understand the term 'judgment creditor' (103.11T). The former solicitor from Ronayne Owens Lawyers prepared the affidavit for his signature. He did not instruct them to prepare the affidavit although he said he instructed the solicitors to make the application because the company needed money (103.17- .41T). It became apparent that it was Mr Roxo who filled him in on the facts, 'because he was the director, he was managing before'. I repeat Mr Roxo was never on the register as a director. Mr Edelbi did not consult any financial records of GGE to prepare his affidavit. He asked about records and Mr Roxo said "No". He did not have any recourse to any bank account of the company or other accounting records of the company. He relied upon what Mr Roxo told him (105.28-106.8T). All he knew about the case was what Mr Roxo or the former solicitor told him (106.48-107.11T).
Quite clearly Mr Edelbi's affidavit, at its highest, is purely "formal". Given the dispute, it is not possible to afford it any weight in determining the primary facts relevant to the issues. Moreover, while he wears the director's hat, he clearly has no active or direct involvement in running GGE whatever that involves, given it is not trading but a manager, his ex-wife may be paying rent for the registered office from what funds he cannot say. I find it impossible to hold that he is the person actually responsible for the conduct of the affairs of GGE, such as they may be nowadays.
He was also cross-examined in an attempt to demonstrate that he was not resident in Australia and could not therefore lawfully act as a director of the company. He maintained that he was and that his long absence was due to his mother's ill health. I find it unnecessary to resolve that particular question.

Ms Edelbi

Ms Edelbi swore an affidavit on 15 June 2022 annexing the 'assignment of interest' and 'notice and direction'. The latter being the version with '2015' rendered in typeface. She identified her signature and stated she recalled signing each of the documents 'on or about the dates that appear in each respective document'. Ms Edelbi was reluctant to answer any questions about whether she had ever been in a personal relationship with Mr Roxo or to provide other personal details. In cross-examination she could not recall who showed her the documents annexed to her affidavit for the purpose of swearing it (48.20T). She then said it was Mr Roxo who provided the documents (48.40 - 49.6T).
She said that after she had signed the assignment document, 'I gave them to Mr Roxo' (51.35T). She could not give any coherent evidence about whether she had seen the documents again at any time between signing them and receiving copies for the purpose of her affidavit (eg, 52.7T). She believed the documents had been signed in front of a "JP in Naremburn or Crows Nest" (53.35T). She gave some details of others she thought may have been present including Mr Roxo's sister, the sole shareholder, but her evidence was very indefinite (54.27T).
Although she was the sole director, Ms Edelbi had no involvement in the litigation before Adams J but knew some background about it. Before the assignment was drawn up and signed, she had a discussion with Mr Roxo. She could not recall if anything was said about whether the assignment was a good idea, but the discussion 'was with Mr Roxo and his family'. She could not recall what was said about why the transaction should be entered into (59.16-60.13T).
She recalled there was a debt due from Mr Roxo to the company in relation to the farm in Queensland, the subject of the principal proceedings (60.45- 61.2T). She could not recall any request or direction about forgiving the debt due from Mr Roxo. She said, 'I just, you know, assigned it to Mr Roxo' (61.34T).

Mr Roxo

Two affidavits of Mr Roxo affirmed on 15 March 2002 and 15 June 2022 were read. They mainly responded to Ms McKay's affidavits. So far as service of notice of the assignment on Ms McKay was concerned, Mr Roxo stated that he recalled posting the first version on 19 March 2015. Later the same day after a conversation with his solicitor he arranged for the second version to be signed and gave that document to Ms Edelbi (affidavit of Mr Roxo affirmed on 15 June 2022 [7]-[8]). In his first affidavit, he said that the second version was served on Ms McKay with a bankruptcy notice in 2020. I will return to that bankruptcy notice.
In cross-examination, he accepted that he affirmed an affidavit on 12 December 2015 in the case at hand in support of a motion for the issue of a writ of execution in which he styled himself as 'the judgment creditor' (30.47T). I interpolate this is nine months after notice of the assignment was allegedly given. GGE was not named as an applicant and on their face the documents evince an application by Mr Roxo alone in his own right. As I have already said that writ was issued (Exhibit 2).
Concerning the purported assignment of November 2014, Mr Roxo said he took that action on behalf of GGE. He described himself 'as a human being who was managing the process and managing the entire business'. He said the GGE group of companies are family related companies, and he made an adjustment based on what he regarded as money he owed them (41.20- .25T). He said he considered the prospect of recovery 'doubtful' and the arrangement that a debt due from him to the company of $126,000 would be forgiven was satisfactory to him. He said, 'that was simply negotiated between the family' (43.38T). When it was put to Mr Roxo that his account is 'just not true' he responded, 'you can believe what you want … the fact is that's … what happened' (74.37T). He could not explain 'what it was that triggered' his decision to make the assignment when he did (74.40T). Again, he said it was to assist his family and "I am not able to explain my decisions" (75.4T). In response to a challenge to his evidence about assisting his family, he responded at (75.20T): "Well, … do you think that the … effort of running the action against Ms McKay …. and…running the operation for all the time I did, I … wasn't entitled to any remuneration for it? (My emphasis.) He also said GGE is owned by his extended family, there is a family trust, and he gives his efforts freely for that purpose (75.48T). Although GGE was not the trustee of the family trust. There were other trustee companies (75.45-76.10T).

Evidence of Ms McKay

Ms McKay swore two affidavits of 1 March 2022 and 25 March 2022 respectively. Ms Mckay stated her disbelief that the purported assignment took place before Mr Roxo became bankrupt. I admitted this under s 136 Evidence Act 1995 (NSW) purely as a statement of her position. She also gave evidence that Mr Roxo and GGE made two attempts unsuccessfully to bankrupt her by bankruptcy notices issued on 19 August 2019 and 14 September 2020. They were both named as judgment creditors on each occasion. She said she did not receive notice of the purported assignment until 18 July 2020 when she received the first version of the s 12 notice as I have already said. She had not seen the second version until 25 February 2022. She believed she was entitled to set off matters against the judgment debt including a lump sum costs order in her favour in the sum of $6,000 made in the Federal Court on 19 May 2020 as a result of her successfully resisting the first bankruptcy proceedings.
In her affidavit of 25 March 2022, she sets out other matters which she believes should be set off against any debt. Importantly, she said that her searches failed to identify a Justice of the Peace with the number ascribed to the person who purportedly witnessed the relevant documents. She attempted to ring the phone number Mr Roxo provided for that person in his first affidavit but received a recorded message, "the number you have dialled is not in service".
By leave Ms McKay was permitted to supplement her affidavit evidence in relation to the value of property she said had been removed from the property in execution of the writ issued on 23 December 2015. I have to say the evidence was quite indefinite as to value and covered some matters which were the subject of other evidence admitted of a local court judgment obtained by her against Mr Roxo on 15 March 2018 (117.47T; Exhibit 3). There was a degree of cross examination about a joint venture in Queensland which was the subject of the proceedings at hand resulting in the judgment entered by Adams J, which was not directly relevant to the present issues. Ms McKay did confirm that she had applied to have the judgment of Adams J set aside, unsuccessfully (122.30T). She agreed that the cattle sold under the writ of execution of 23 December 2015 numbered 33 in total according to the sales document, with a total return of $28,432.29 (127.30T). She was unable to say how much should be set off against the judgment debt in respect of items sold under the earlier execution of writs (135.50T). She agreed that she had not made any effort to pay the judgment debt (139.2T). After making an allowance for cattle, equipment and paintings, Ms McKay agreed that the vast bulk of the debt and interest probably remains outstanding (139.14T). She agreed that notwithstanding Mr Roxo's bankruptcy she still owed the debt (139.245T). In re-examination, Ms McKay said she thought she had more cattle than shown in the sales records. She believed she had 'something in the order of 45 to 50 head' (140.17T).

Other evidence

In addition to other facts, notwithstanding Mr Roxo's denial, GGE admitted that he is the same person as Raymond Ross who became bankrupt on 26 November 2018 pursuant to a debtor's petition dated 23 November 2018 completed by Mr Roxo but in the name of Raymond Ross. He remains an undischarged bankrupt. Ms Edelbi is the same person as Sarab Chami who is also presently an undischarged bankrupt. That fact is relevant for another purpose which will become clear below. Other facts were agreed by operation of the rules following service of a Notice to Admit facts (Exhibit 4) but to my mind they are not germane for present purposes.
Mr Roxo's debtor's petition is Exhibit 6. In it the only asset he disclosed was cash at hand in the sum of $104. He otherwise described himself as a retired administration manager. He said he did not own nor rented any real property. He was not paying off any real property. He denied having received a superannuation payout from any fund in the 5 years preceding the application. He made no lump sum payment to any superannuation fund in the same period, and he did not expect to receive payment from a superannuation fund in the following 3 years. He did not own nor have any interest in any motor vehicles. He was not in the process of buying any real property. He did not own any shares or similar choses in action. He had no managed investments. No debts were due to him. Most significantly, for the purpose of these proceedings, bearing in mind the assignment which is central to the application, he denied having sold, transferred or given away any assets worth more than $1,000 in the five years preceding his application. He said that there were no assets of his which were not in his possession. It is also notable given the sale of the Bungonia property under the writ of possession issued following the successful conclusion of the possession proceedings, he did not disclose that sale. He did not own any general household furniture or other personal property of any value.
Notwithstanding his bankruptcy and what he said about his financial position he twice was a party to the issue of a bankruptcy notice against Ms McKay after he was bankrupted himself, as I have said, on 19 August 2019 and 14 September 2020. The second notice was issued with the consent of his trustee in bankruptcy, Mr Andrew Barnden, given on 9 September 2020 (Exhibit B). That was given after GGE signed an indemnity in favour of the trustee.
However, Exhibit B does not tell the full story. While the evidence is not entirely clear or complete, the non-disclosure of the alleged assignment of the undisclosed judgment debt is clearly raised with Mr Roxo by Mr Barnden after the Federal Court set aside the first bankruptcy notice. On 12 August 2020, using the name Raymond Ross, Mr Roxo wrote to Mr Barnden in the following terms (Exhibit 7): "Mr Barnden, As discussed, Please see attached copy of 1) [a]ssignment of Interest and direction served in person on Ms McKay on 9 Dec[ember] 2016 2. Judgment 3. copy of Bankruptcy Notice" [sic] (My emphasis).
On 15 September 2020 (Exhibit 6), Mr Barnden issued a 'pre-referral inquiry to AFSA' concerning alleged offences under the Bankruptcy Act 1966 (Cth). AFSA is a reference to the Australian Financial Security Authority. The first allegation related to a failure by Mr Roxo to notify the trustee of a change of name or address contrary to s 80 Bankruptcy Act. And the second related to a failure to disclose information and/or property contrary to s 265 as well as the making of a false declaration contrary to s 264, both of the Bankruptcy Act.
It is necessary to set out aspects of the report in some detail. I will start by recording that Mr Barnden considered that the effect of the alleged offending on the administration of Mr Roxo's bankrupt estate was significant and that his investigations were not yet complete. It is also well to bear in mind that this report was made doubtless pursuant to the statutory obligations of the trustee after Mr Roxo produced the assignment of interest and notice and direction to Ms McKay to the trustee.
The details of the breaches were the failure to disclose that Raymond Ross (Mr Roxo) had used "an alternate name which he had changed by Deed Poll" prior to the trustee's appointment. The name had been used in a number of Supreme Court proceedings. The other matters consisted of Mr Roxo's failure to disclose the commencement of the Supreme Court proceedings and failure to disclose the judgment and costs order in his favour. I interpolate that there is no suggestion of any disclosure of the possession proceedings to the trustee in bankruptcy at any time. The trustee also noticed that Mr Roxo had commenced bankruptcy proceedings with GGE against Ms McKay which were commenced following the trustee's appointment and without his consent.
The trustee also considered the following matters to be relevant to any investigation by AFSA: "I am aware of allegations that the Bankrupt is also using an additional alias, Mr Christopher Ross, which may require further investigation by AFSA. I note that a person by the name of Christopher Ross has a registered mortgage over a real property located at xxxxx, Northwood, New South Wales 2066. I note that the registered proprietor of this property is Ms Sarab Chami. I was appointed trustee of Ms Chami's estate…on 19 July 2018. I have written to Mr Christopher Ross on multiple occasions requesting particulars of this mortgage, however, I have not received a response. In addition, this is the second instance that I, as Trustee of the Bankrupt Estate have reported the bankrupt to AFSA for offences committed. I note that AFSA previously issued an official caution to the Bankrupt on 19 Mach 2019…in respect to a similar contravention of Section 267(2) in his failure to declare a significant unsecured creditor." Ms Sarab Chami is also known as Ms Hadia Edilbi, as I have previously noted.
To complete the picture, I note that Mr Roxo, signing off simply as 'Ross', wrote to the trustee by email on 18 October 2022, six weeks after the first date of hearing before me, seeking consent to pursue this enforcement action and additional enforcement action in respect of the possession proceedings for the unrecovered portion of the debt in that matter. It is interesting to note that in pursuing the matter, Mr Roxo asserted, notwithstanding the debtor's petition, I interpolate, that he was not bankrupt and that the costs order in favour of Lane Cove Council in respect of Land and Environment Court proceedings was obtained by 'proven fraudulent misrepresentations to the Court'. He disputes the improper extension of his bankruptcy 'if ever there was a bankruptcy etc'. The trustee's response, if any, is not in evidence before me and, as I have said, GGE is the only applicant relying upon the disputed assignment.

Consideration

Justice Brereton's decision in the ML Ubase case concerned, inter alia, enforcement of a monetary judgment by a garnishee under Pt 46, r 3(1) Supreme Court Rules 1970 (NSW). By that means the judgment creditor may enforce a judgment against the judgment debtor by collecting debts owed to the judgment debtor from third parties. As I said at the outset, the policy informing a grant of leave in respect of what is now a garnishee order under UCPR r 39.34 may not be the same as that informing the leave question under UCPR r 39.1. His Honour referred to the significant body of authority that holds "the pendency of insolvency proceedings is reason to decline to make a garnishee order absolute". ML Ubase referred to foreign restructuring proceedings in respect of a corporate insolvency. His Honour said ([69]) that even the pendency of a foreign administration proceeding remains a relevant consideration informing the discretion whether or not to make an order absolute. His Honour said foreign insolvency proceedings against a judgment debtor "may be less compelling a consideration than… local" insolvency proceedings.
Here the relevant bankruptcy concerns the judgment creditor rather than the judgment debtor. Even so, there are, in my view, important public policy considerations suggesting that the Court's powers should not be exercised to in any way circumvent or frustrate the objects of the Bankruptcy Act , at least in the absence of clear evidence that the debt in question is not covered by the bankruptcy order, or the trustee in bankruptcy has properly given "consent" to the bringing and maintenance of the enforcement proceedings so far as they affect the bankrupt's estate.
It is, of course, trite law that by force of s 58 of the Bankruptcy Act that upon bankruptcy the property of the bankrupt vests first in the Official Trustee and then in the trustee of the estate of the bankrupt appointed under s 156A. It is equally trite that subject to s 60(4) all actions commenced by a person who subsequently becomes a bankrupt, are upon the bankruptcy, stayed until the trustee makes an election either to prosecute or discontinue the actions. While there is some evidence that the trustee consented to the commencement of the second bankruptcy proceedings against Ms McKay, there is no evidence whatsoever that he has consented or elected to prosecute the current application.
I fully appreciate that only Mr Roxo is a bankrupt. This is an agreed fact and from the evidence, such as it is, it appears that his initial bankruptcy has been extended beyond the statutory three-year period for discharge. There is no evidence of any insolvency proceedings having been taken, or even pending, against GGE. GGE is the only applicant for the writ. Having said this, its title in part depends upon the assignment, but this is not the only issue. Although I am putting Mr Roxo's evidence to one side, so far as it is supportive of GGE's case, much of his evidence and some of the evidence of Ms Edelbi strongly suggests that he is the person who in fact controls GGE on a daily basis regardless of the state of the register. He certainly said he had been responsible for running GGE as a family concern at least up to the date of the purported assignment. I am not satisfied that this situation has been fully disclosed to Mr Roxo's trustee in bankruptcy. Even if there was an assignment in March of 2015, it was not an arm's length transaction between independent commercial operators. The evidence of Mr Edelbi is not capable of shedding any light on this issue as he was not involved at all until his 'appointment' in July 2019. From his evidence, I am satisfied that he is a mere nominee, at least in practical terms; someone else is running the company and I doubt very much it is his ex-wife as she has not been mentioned at all at any time by any other witness. It is clear that his source of knowledge is Mr Roxo and the solicitor acting at the time his affidavit was sworn or affirmed. There is no evidence as to who selected and retained that solicitor. But it is apparent Mr Scott is instructed by Mr Roxo.
So far as Ms Edelbi's evidence is concerned, she certainly identified her signature on the purported assignment and on one version of the notice and direction. I found her evidence otherwise, to say the very least, vague and largely devoid of relevant persuasive detail. At its highest, however, notwithstanding her occupation of the office of director of the company, even after she became bankrupt in 2018, Mr Roxo was running the company. It was at his suggestion that the purported assignment was made, perhaps following discussion within his family. She said in signing it, she did what she was asked to do and handed the assignment back to Mr Roxo, who is said to be the assignor.
Mr Roxo's evidence is to the effect that GGE is a concern of his family and that there may be layers of corporations and trusts in place to manage the financial affairs of his family. He certainly seems to have adopted a patriarchal role, on the limited evidence available to me, given his concern that some members of his family are disadvantaged and in need of his assistance. He was certainly the person running things at the time of the dispute giving rise to the proceedings determined by Adams J. He ran the case in front of Adams J.
It appears to me, regardless of the question of the genuineness of the assignment, and its timing, that Mr Roxo is the person likely to benefit from enforcement of the judgment debt. At the very least, the proceeds of any recovery will be within his dispositive power and he is an undischarged bankrupt. On this ground, alone, I do not regard it as appropriate to grant leave for the issue of a writ of execution having regard to the policy considerations to which I have already referred by way of analogy with those referred to by Brereton J in ML Ubase.
I am not affirmatively satisfied on the balance of probabilities that the purported assignment is a genuine commercial, arms-length transaction. Nor am I affirmatively satisfied that it was entered into in November 2014 or that notice was given to Ms McKay by letter posted on 19 March 2015.
It seems to me at least equally likely that the documents are a sham entered into after Mr Roxo's bankruptcy for the purpose of circumventing the legal effect of it which he apparently no longer accepts. Indeed, that he does not accept the validity of the bankruptcy notwithstanding it was apparently initiated by him, provides a strong motive for him to create the sham. I appreciate that he has not been cross-examined on these matters because he failed to attend on the subsequent occasions the matter was listed for further hearing. On the first occasion, I accepted his absence was due to illness, but on the second occasion, it was entirely unexplained. For this reason, I am unable to find affirmatively that the purported assignment is a sham but there is a persuasive body of evidence pointing in this direction: Lewis v Condon (2013) 85 NSWLR 99; [2013] NSWCA 204 at [57]-[64] (Leeming JA).
As I have already said in different contexts, Mr Edelbi's evidence is entirely derivative from what he has been told by Mr Roxo and the former solicitor. It is highly likely that Mr Roxo is the source of the former solicitor's information about the matter. Of its own weight, Mr Edelbi's evidence proves nothing.
Ms Edelbi's evidence does no more than establish that her signature is on the assignment and one version of the notice and direction. Such an inference could have been drawn no doubt from the face of the documents themselves. Her vagueness in giving evidence gives me no confidence that she signed on the day shown on each of the documents. She has no independent recollection of the date or even the approximate time when these events are said to have occurred. It is clear that whatever she did, whenever she did it, she was acting on the instructions of Mr Roxo. Her reliability as a witness is not enhanced by the consideration that she was not forthcoming about the nature of her relationship with Mr Roxo, particularly as the documents produced by Mr Roxo's trustee in bankruptcy show that Mr Roxo, under a different alias, is apparently Ms Edelbi's mortgagee. Mr Barnden is also Ms Edelbi's trustee in bankruptcy.
I have, of course, for the reasons explained, put to one side Mr Roxo's own evidence favourable to GGE about these matters.
Some of these concerns, of course, could have been dispelled had the Justice of the Peace, who is said to have witnessed the documents been called to give evidence, but he was not and there is no satisfactory evidence explaining his absence. While I would treat her evidence a little cautiously in terms of what it is capable of proving, I have taken into account the evidence of Ms McKay that dialling the phone number given by Mr Roxo for the witness is answered by a recorded message stating the number is not in use. And the registration number appearing on the assignment and notice and direction appears not to be in use. These matters of themselves may prove nothing other than the Justice of the Peace has either died or moved on. But they do not assist GGE's application.
I am, of course, familiar with the circumstance proprietary companies may lend money to persons associated with them, but perhaps not so much to persons who are said to be neither shareholders nor officers. Usually when a loan has been made it will appear in the company's books. No financial records have been produced to substantiate the consideration said to have been advanced by GGE to Mr Roxo for the assignment of his interest in the judgment debt. I reiterate such matters are routinely shown in a proprietary company's financial records, generally prepared on an annual basis. Doubtless this evidence, if it existed, could have been easily produced and tendered. Likewise, the forgiveness of the debt.
I am not so concerned about the apparent disproportion between the elements of the stated consideration. I accept that as at 2014 when the judgment was obtained, the prospects of recovery may have seemed doubtful, particularly, as Mr Roxo was the mortgagee over the real property controlled by Ms McKay and the deregistered company. He had proceedings for possession on foot. However, that was a reason not to take the step of Mr Roxo divesting his interest in the judgment debt in favour of GGE especially at the expense of the forgiveness of an albeit much lesser debt for which Mr Roxo was likely to be good. He said he conceived the idea of the assignment to help his family. It is difficult to see how swapping a good debt for a bad, or doubtful, debt was of any assistance to them.
There is also the important question of the timing of the giving of notice. Although I have set Mr Roxo's evidence about this aside, the various dates given remain significant. The fact that there are differences in accounts is itself of some significance. The first independent mention of the assignment and its service is to be found in Exhibit 7, Mr Roxo's email to his bankruptcy trustee of 12 August 2020. I emphasise this postdates his bankruptcy by nearly two years, and postdates his first attempt jointly with GGE to bankrupt Ms McKay, which was made without consent and was withdrawn in the Federal Court of Australia on 19 May 2020, with an adverse order for costs (affidavit of Ms McKay sworn on 1 March 2022; Annexure E). The belated disclosure to his trustee in bankruptcy was made in the context of the trustee taking him to task about his material non-disclosures in his statement of financial affairs. It is notable that in that email Mr Roxo asserted that notice of the assignment was not given to Ms McKay until 9 December 2016. No corroborating material is provided to the trustee to substantiate this assertion, which is inconsistent with his evidence before me. While it is not a legal requirement of the giving of notice under s 12 Conveyancing Act, verification could easily have been secured had service occurred by either registered or certified post. This apparently did not occur.
I accept Ms McKay's evidence that service of the notice and direction first occurred on 18 July 2020 in the context of Mr Roxo's attempts to bankrupt her. This preceded his email to his trustee of 12 August 2020, and was part of the ground work for his request to the trustee in bankruptcy to "consent" to him recommencing bankruptcy proceedings against Ms McKay jointly with GGE. One may question why it was necessary for that to be done jointly if there indeed had been an assignment of his interest in the judgment debt to GGE before his own bankruptcy, leaving aside for the moment the question of him being the de facto guiding mind of GGE. There is no suggestion in any of this of any other individual separately representing GGE.
There are other factors, including Mr Roxo's application in December 2015 for leave to issue a writ of execution to enforce this judgment debt, describing himself as the judgment creditor and his failure to disclose in his statement of financial affairs lodged with his debtors petition in 2018, the existing judgment debt in this court and his purported assignment of this judgment debt to GGE. I have already observed, in substance, that he presented himself for bankruptcy purposes as a complete indigent. He did not give that impression in his evidence before me. One might understand why some people may fail to disclose an asset in a statement of financial affairs, but not so much the divestment of an asset some four years before the application for bankruptcy. All of these considerations leave me in a state where I am unpersuaded about the genuineness and the timing of the purported assignment. As I have said, on the state of the evidence before me, it seems to me just as likely the documentation of the assignment and notice is a sham. I should also point out my acceptance of Ms McKay's evidence as to the receipt of notice fixes the date on which the assignment took legal effect under s 12 Conveyancing Act as 18 July 2020 about 20 months after Mr Roxo's proprietary interest vested in the official receiver. As at that date he had no proprietary interest in the debt to assign to GGE: nemo dat quod non habet.

Ancillary matters

I appreciate that a purported assignment of legal property made for value which fails at law may be effective in equity when the consideration is paid, a question about which I have already expressed my doubts. Contrary to my findings, were this so, Mr Roxo would be a necessary party either as applicant or respondent if he declined to co-operate and at least as applicant there would be a difficulty with the statutory stay under s 60 Bankruptcy Act. That too would be a reason to refuse leave in the absence of some action, perhaps 'consent', of his trustee in bankruptcy. This may be subject to s 62 Bankruptcy Act as UCPR 6.20(3) provides that a person may not be joined as a party to proceedings in contravention of any other act or law.
Section 62 Bankruptcy Act is in the following terms: 'Where a bankrupt is a contractor in respect of a contract jointly with another person or other persons, that person or those persons may sue or be sued in respect of the contract without the joinder of the bankrupt.'
While the original proceedings in the case at hand were an action for damages for breach of the management contract in respect of the Queensland dairy farm, that cause of action, of course, merged in the final judgment pronounced by Adams J. These proceedings are not a suit in respect of the contract within the meaning of s 62. Rather they are proceedings to enforce a judgment to which both GGE and Mr Roxo were jointly entitled. Had Mr Roxo's bankruptcy arisen before judgment in the case, GGE could have continued it 'without the joinder of the bankrupt'. But that is not this case. I also accept Ms McKay's reliance on Australian Workers' Union v Bowen (No 1) (1946) 72 CLR 575; [1946] HCA 24 at pp 583 and 590 that only one writ of execution can be issued for the one judgment debt to which joint judgment creditors are entitled. It is therefore necessary that it should be obtained in the names of all of them.
I reject GGE's argument that the email correspondence between Mr Roxo and Mr Barnden on 8 and 9 September 2020 constitutes an abandonment in the interests of GGE under s 60(3) because the trustee made no election under s 60(2). First, these proceedings for enforcement were not on foot when the emails were exchanged. Secondly, therefore, no occasion for an election arose under s 60(2). And, finally s 60(3) is not engaged because Ms McKay did not serve upon the trustee notice of the action when it was commenced in the name of GGE only. In any event, an abandonment under s 60(3) is an abandonment in favour of the responding party, here, Ms McKay, not GGE.
Finally, there is a question of the amount of the debt which I should address. It is clear to me that there are certain matters to which Ms McKay is entitled which should be set off against the total judgment debt. They are not in the overall scheme of things very large. She has the benefit of a costs order of $6,000 in the first bankruptcy proceedings in the Federal Court which remains unsatisfied by either GGE or Mr Roxo. Moreover, according to Exhibit 3, she has two judgments in the Local Court against Mr Roxo on 5 March 2017 and 7 March 2018 respectively. The second is a monetary judgment in the sum of $35,411.29. That appears to be for conversion. It should also be set off. The judgment of 5 March 2018 was for the return of personal property including art works and a rare book. I have no evidence of their actual value, but I accept it is unlikely to be nugatory and I would allow an amount of $12,000 in respect of those matters in the absence of better evidence. There are also the proceeds of the writ of execution of 23 December 2015. Regrettably, the only evidence about that is attached to the affidavit of Mr Roxo of 15 June 2022. I accept that the proceeds of the sale of cattle pursuant to that writ totalled $28,432.29 despite Ms McKay's contrary views as to their value and that $7,000 was received on account of equipment sold taken from the property. Were I disposed to grant leave, I would have held that these things should be set off against the amount of the judgment debt.

Orders.

For the reasons I have expressed, I make the following orders: 1. Refuse leave to Global Group Enterprises Pty Ltd to issue a writ of execution under Rule 39.1 Uniform Civil Procedure Rules 2005 (NSW); 2. Dismiss the notice of motion filed on 4 February 2022; 3. Direct that a copy of these reasons be provided to Andrew James Barnden of Rogers Reidy, Chartered Accountants, Level 12, University Centre, 210 Clarence Street, Sydney NSW 2000.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 22 June 2023

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