Huynh v Helleh Holdings Pty Ltd

See also per Gaudron J at 800 - 1 and Gummow J at 804 - 5. That case concerned s 121(1) of the BA, but the principle is the same. In the passage cited, their Honours make two points which are of importance in this case, first, that the onus of proof of the intent to defraud lies on the person impugning the transaction and, second, that the essence of the "fraud" is in the diminution of the fund available for the satisfaction of creditors. 18 The plaintiff, in his initial written submissions, contended that the onus of proof of good faith rested on the second defendant. He did not persist in that submission, which is clearly wrong. The meaning of "good faith" in the relevant sense and the burden of proof were discussed by the Full Court of the Federal Court (Wilcox, Gummow and von Doussa JJ) in PT Garuda Indonesia Ltd v Grellman (1992) 35 FCR 515. That case again concerned s 121 of the BA, but the discussion again applies equally in respect of s 37A(3). Their Honours said at 527 - 528: "The notion of good faith is common to the protective provisions of both ss 120 and 121. In each section it is the good faith of the settlee or disponee respectively that must be considered. This is clear from the language of s 121, and well established by authority in the case of s 120: see Mackintosh v Pogose [1895] 1 Ch 505 at 509-510; Re Hyams; Official Receiver v Hyams (1970) 19 FLR 232 at 256.

The appellant's submission that the burden of proof is on the party seeking to avoid the transaction was not disputed by the respondent, and in our opinion is correct. In Michael v Thompson (1894) 20 VLR 548 the Full Court of the Supreme Court of Victoria placed the ultimate burden of proof on the creditors seeking to set aside a settlement under the Elizabethan Statute, although the court held (at 553) that where the settlement is fraudulent and all the facts concerning the settlement are within the knowledge of the settlor and the settlee, and not within the knowledge of the creditors, 'a very slight degree of proof should be sufficient to shift that burden'. In Re Trautwein; Richardson v Trautwein (at 75) and in Re Hyams; Official Receiver v Hyams (supra) (at 256) on applications under s 94 of the Bankruptcy Act 1924 (the precursor to s 120) it was said that the onus of proof was on the party seeking to impeach the settlement to establish a want of good faith in the settlee. In Official Trustee v Marchiori (at 297), Fisher J accepted that the onus of proof on an application based on both ss 120 and 121 by the Official Trustee to have a transaction declared void was on the applicant, and his Honour followed Michael v Thompson (supra). A similar position prevails under the United Kingdom legislation: see Re T (A bankrupt); W (Trustee in Bankruptcy) v Kahn (1966) 110 Sol Jo 387; and see also Official Assignee of Estate of Cheah Soo Tuan v Khoo Saw Cheow [1931] AC 67. …

In Butcher v Stead (1875) LR 7 HL 839 the Lord Chancellor (Lord Cairns) said (at 847) in relation to s 92 of the Bankruptcy Act 1869 (UK): 'I think there can be no doubt that the words "in good faith" mean without notice that any fraud or fraudulent preference is intended.' In Re Hyams; Official Receiver v Hyams (at 256) Gibbs J, in relation to the meaning accorded to good faith by the Lord Chancellor in UK Butcher v Stead (supra), said: ' ... In the context of the Australian statute this exposition may be modified to read "without notice that any fraud or preference contrary to the statute is intended".' This formulation of the meaning of "in good faith" in s 120(1) was applied by the Full Court of the Supreme Court of Queensland in Re Pacific Projects Pty Ltd (In liq) [1990] 2 Qd R 541 at 545. Gibbs J, when sitting as a judge of the Supreme Court of Queensland, had earlier posed the relevant question in a case under s 46 of the Mercantile Act 1867 (Qld) as whether the disponee of a disposition made by the disponor with intention to defraud creditors was 'privy to the fraud': see Re Barnes; Ex parte Stapleton (supra) (at 240).

In Mogridge v Clapp [1892] 3 Ch 382 at 401 Kay LJ, in considering a provision under the Settled Land Act 1882 (UK) which required a dealing with a tenant for life to be one in good faith, said that good faith 'must mean or involve a belief that all is being regularly and properly done'. That statement was applied to ss 120 and 121 by Fisher J in Official Trustee v Marchiori (at 298)." That contended

THE PARTIES' CONTENTIONS 19 The plaintiff correctly points out that, to be entitled to relief under s 37A, a plaintiff must establish that there has been: (i) an alienation; (ii) of property; (iii) within intent to defraud creditors. Even where all of the above three factors are proved, s 37A does not apply to an interest in property:- (i) alienated to a purchaser in good faith; (ii) who does not have, at the time of the alienation, notice of the mind that check when you come to until the exact amount of girl intention to defraud creditors. The plaintiff contends (and it is common ground) that the transfer of the property by the first defendant to the second defendant was an alienation of property. The plaintiff contends that it was made with intention to defraud creditors. If the creditors contemplated by the section must be creditors of the alienor, then the relevant creditors are Dr Le and Mrs Le. Alternatively, if the creditors referred to in the section need not be creditors of the alienor, then the intention to defeat the plaintiff as a known creditor of Dr Le would be inferred. The plaintiff conceded that the intent which must be considered is the intent behind the sale of the property rather than the intent behind some other transaction, such as the transfer of the proceeds of sale overseas. The intent to defraud in this case was an intent to implement a scheme whereby the pool of assets available for the satisfaction of the shareholders loans would be reduced, so that neither could they enforce repayment nor could their bankruptcy trustee nor their creditors have recourse to the debt owed to them. In the implementation of the scheme, the proceeds of sale were never received by the first defendant: "the first defendant's intent was to remove the value of the property from the pool of assets available to its creditors, by allowing Mrs Le to 'steal' the proceeds of sale before they were received by the company." The plaintiff contended that, even if Mr Duong (or, indeed, Mrs Nguyen) had no actual knowledge of the Les' financial affairs, the unusual circumstances of the transaction, eg, the statement by Mrs Le that the property had recently been offered at a higher price, the sale without an agent, the readiness of the vendor to reduce the price to $410,000 on demand and the apparent urgency of the sale, ought have put Mr Duong on inquiry and that, if inquiry were not made, the transaction ought be impeached. The plaintiff contended that the Sorrenson valuation at $550,000 should be accepted, and that the sale was consequently at an undervalue. The plaintiff contended that Mr Duong and Mrs Nguyen's account that they received the necessary cash moneys from Nga Tran in Vietnam ought be rejected and it ought be inferred that the cash moneys, which were undoubtedly paid on settlement and which were undoubtedly received into Mr Duong and Mrs Nguyen's bank account, emanated from the Les or sources associated with them. In the end, the plaintiff did not seem to contest or at least seriously to contest the existence of Nga Tran, but strongly contended that the fax dated 2 August 1999 was not in fact created until early 2001 and that its contents should not be regarded as true. It is said that an inference arises in the plaintiff's favour under Jones v Dunkel (1959) 101 CLR 298 from the fact that Nga Tran was not called as a witness, nor were the Les. So far as the cause of action in fraud is concerned, the plaintiff relies on the above facts and refers to Ex parte Kirk (1745) 1 Atk 108; 26 ER 71, Earl of Chesterfield v Janssen (1751) 2 Ves Sen 125 at 156; 28 ER 82 at 100 and Meagher, Gummow and Lehane "Equity Doctrines and Remedies" [1210]. The plaintiff asked that any indication that may be appropriate be given in the judgment to ensure that no Anshun estoppel arises from the determination of these proceedings vis-a-vis the third defendant, bearing in mind the circumstances of the joinder of the third defendant. 20 In his submissions, the second defendant emphasises that an intention to prefer one or more creditors over others, rather than an intention to defraud creditors generally, does not fall within the statute: Middleton v Pollock (1876) 2 ChD 104 at 108; Re Johnson (1881) 20 ChD 389 at 392; Glegg v Bromley [1912] 3 KB 474 at 484; and Abignano v Wenkart (1998) 9 BPR 16,765 at 16,776 - 16,777. There is no evidence that creditors of the first defendant were defrauded. The creditors referred to by the section are creditors of the alienor. The plaintiff was not a creditor of the first defendant. There could be no question of the first defendant defrauding its own creditors, since its only creditors were its controllers, and it is unlikely that they intended to deceive themselves. The plaintiff must be a person "thereby prejudiced", ie, prejudiced by the impugned transaction. Here, the cause of any loss to the plaintiff is not the sale of property, but the disappearance or transfer of the proceeds of the sale overseas. In respect of the requirement of good faith, there is a requirement, at least where the conveyance is for consideration, of dishonest intention: Lloyds Bank Ltd v Marcan [1973] 1 WLR 1387 at 1392; Electrical Enterprises Pty Ltd v Rodgers (1989) 15 NSWLR 473 at 497. What is required is subjective intention. There is no duty to inquire: Coghlan v Alexander (1905) 5 SR (NSW) 441; Re Hyams; Official Receiver v Hyams (1970) 19 FLR 232 at 256, 261. In any event, in the circumstances there was no basis for Mr Duong to have been on inquiry. There is simply no basis in the evidence for any assertion that Mr Duong knew anything of the first defendant's or the Les' financial affairs at all. The plaintiff cannot succeed because the assignment by the third defendant to the plaintiff is invalid. Its terms are too broad and do not adequately or properly define what is assigned. The rights purported to be assigned are personal to the third defendant and cannot be assigned.. In any event, a bare right to sue in equity to set aside a deed for fraud may not be assigned: Prosser v Edmonds (1835) 1 Y&C Ex 481; 160 ER 196; McGregor v Fraser (1913) 32 NZLR 1325. In any event, the operation of s 37A of the CA is excluded by the operation of s 109 of the Constitution because the proceedings deal with the estate of a bankrupt: it is part of the plaintiff's claim that Dr Le is entitled to recover from the first defendant the debt owed to him by it; the only provisions applicable are the relevant provisions of the BA. 21 The plaintiff submits in reply that the principle in Jones v Dunkel does not apply in the circumstances. The second defendant might not reasonably be expected to call either Nga Tran or the Les: O'Donnell v Reichard [1975] VR 916 at 929; Payne v Parker [1976] 1 NSWLR 191 at 201 - 202. Under ss 134 and 135 of the BA the trustee has the right to sell a bare cause of action.

PRELIMINARY QUESTIONS OF FACT 22 Before proceeding to consider whether the requirements of s 37A of the CA are met, there are two preliminary questions of fact to be determined. They are, first, whether the sale of the property by the first defendant to the plaintiff was at an undervalue and, secondly, whether the Court accepts Mr Duong and Mrs Nguyen's account of the source of the cash funds which were used in the purchase of the property. 23 As to the first question, there is the conflicting evidence of two valuers, Mr Barone, who made the Barrone valuation for Westpac at $410,000, and Mr Sorrenson, who made a valuation of the property as at the date of sale at $550,000 for the plaintiff ("the Sorrenson valuation"). I accept Mr Sorrenson's evidence as showing the real value of the property at the time of the sale. The Deane valuation at the same figure had been obtained for stamp duty purposes early in 1999, but on the basis that the property was zoned special industrial. The Sorrenson valuation was avowedly made as a fair market value, whereas the Barone valuation was made for Westpac for mortgage purposes, a type of valuation usually made on a more conservative basis for obvious reasons. Mr Sorrenson was a very much more experienced valuer than Mr Barone, who had only short experience at the time that he made his valuation. The principal difference of method was that Mr Sorrenson did give, whereas Mr Barone declined to give, weight to or allowance in his valuation for the fact that the property had a potentiality to be rezoned from a purely residential zoning (which it had at the date of sale) to a zoning for special industrial purposes. Whilst it is obvious there must generally be great caution in assigning an increased element of value for a prospective rezoning, there was good ground for doing so in the peculiar circumstances of this property. The property is adjacent to properties on Cabramatta Road which were at all times zoned special industrial. The property had itself previously been zoned special industrial. There was evidence that the Council was firmly inclined to approve a rezoning of the property to be again special industrial. Furthermore, reality is given to the view that there was at the relevant date a real potentiality for rezoning by the fact that the rezoning to special industrial has indeed been effected since that date and the property is at present zoned special industrial. Mr Barone seems also to have omitted from consideration a recent comparable sale that supported the higher valuation. I also take into account the manner in which Mr Sorrenson and Mr Barone respectively gave evidence and dealt with cross examination. In all the circumstances, I accept that the Sorrenson valuation at $550,000 reflected the real value of the property at the time of the sale. On that basis, the sale at $410,000 was at an undervalue of some $140,000. 24 In light of what has been said above about the onus of proof, the question as to whether or not I accept the first defendant and his wife's account of the source of the cash funds which were used in the purchase might be better stated as whether the plaintiff has established that the moneys used by them were not from the source asserted by them, bearing in mind that it is for the plaintiff to establish that the purchase by them was not made bona fide. The question of whether their word ought be accepted on this subject matter I have found a difficult one. Many reasons have been put forward to doubt their word, some of them of considerable substance. There was great reluctance on their part to reveal Nga Tran's whereabouts. No affidavit by her has been produced, nor any really convincing evidence that she could not make an affidavit. There is not squarely any evidence that she has been firmly asked to come to Australia to give evidence and refused, rather than simply expressing reluctance to come. The second defendant was not an impressive witness. Even the banking documents that were finally produced do not indicate the ultimate source of the funds and are consistent with the plaintiff's assertion that they emanated from the Les or their associates. Both the banking vouchers and the document said to emanate from Nga Tran were produced late after non-production in response to earlier demands. In the case of the Nga Tran document, it was, on Mr Duong and Mrs Nguyen's story, already in their possession when not brought forward in answer to those demands. However, whilst Mrs Nguyen's version of when and through what fax machine the Nga Tran document was received was challenged, it was not squarely put to the second defendant or Mrs Nguyen in cross examination that they fabricated or were involved in the fabrication of the text of the document, nor was it squarely put to them (particularly to Mrs Nguyen, who might be thought to be familiar with Nga Tran's handwriting) that the handwriting in the document was not Nga Tran's. The document, as I have observed, was admitted into evidence without objection and I subsequently refused to remove it from evidence. It was suggested that the document must be false because it named Ho Chi Minh City as Saigon and that the apparently genuine fax transmission inscription at the top of it may be faked, but no evidence was led on the plaintiff's part that the name "Saigon" is not used in Vietnam as part of commercial titles such as "Saigon Bfax" or as to how fax transmission notes may be fabricated. 25 As I say, considerable doubts have been thrown on Mr Duong and Mrs Nguyen's accounts and on the Nga Tran document and the circumstances of its receipt. However, I have already indicated that I accept Mrs Nguyen overall as a witness of truth and in the end, on the balance of probabilities, I accept her account of when and how the fax arrived and when and where the moneys came from. Whilst no doubt it may said that the story of the old association with Nga Tran is very convenient, I do not in light of the troubled history of Vietnam over the last 30 years regard as utterly improbable the story that Mrs Nguyen and her friend started a trading business in the early days after the hostilities; that Mrs Nguyen left her interest in it behind when she fled the country with her husband after his release from detention; and that in the changed circumstances of the 1990s the friend who had made good was both prepared to recognise an old friendship and a financial advantage that she had gained a long time ago in the way in which she is said to have done. I do not forget the fact that even the envelope in which the bank statements were received was thrown away. It is also put that it was virtually inconceivable that the second defendant and his wife, whose only asset was their comparatively modest home subject to a mortgage, together with their daughter, should enter into an enterprise for the purchase of this commercial property for more than $400,000. However, it seems to me that they were offered a once in a lifetime opportunity to acquire a property in circumstances (with the promise to take a lease which would essentially cover the repayments) that would greatly improve the financial future of all three of them. That the whole idea was not entirely fanciful is shown by the fact that in reliance upon the incomes of all three of them Westpac was prepared to make a substantial loan for the purpose. Again, I do not regard it as utterly improbable that, given the opportunity, it should have been taken. As I have said, on the balance of probabilities, I accept the second defendant and Mrs Nguyen's evidence in these regards. 26 It is contended on behalf of the plaintiff that inferences arise from the plaintiff's failure to call Nga Tran and the Les and that these should result in the opposite conclusion. In my view the inferences do not arise. In the case of Nga Tran, despite what is said about Nga Tran in [24], the fact remains that she is overseas and not subject to compulsion as a witness and it does not appear on the evidence that she is willing to travel to Australia to give evidence. So far as the Les are concerned, I do not regard them as witnesses whom the second defendant might reasonably be expected to call. They are the directors of the first defendant, which is a party to the proceedings, although not represented at the trial. On the plaintiff's case they are the perpetrators of the fraud of which he complains. They were certainly on the evidence involved in abstracting the proceeds of sale of the property from the first defendant and disposing of it so that it did not form part of their bankrupt estates. Their interests are not coincidental with the interests of the second defendant. More importantly, on his case they are the persons who involved him in the transaction said to be fraudulent and they did not reveal to him the facts constituting the alleged fraud. Neither of them is a witness he might reasonably be expected to call. In regard to both these matters, see Payne v Parker ibid.

CONCLUSIONS 27 As I have said, the plaintiff's submissions accurately set out the elements which must be established for the plaintiff to succeed under s 37A. To succeed the plaintiff must establish both that he was disadvantaged by an alienation of property with intent to defraud creditors and that the second defendant did not acquire the property bona fide without notice of the fraud. Since I have come to a clear conclusion that, assuming the establishment on the facts of the first of these matters, the second of these matters is not established and that the plaintiff therefore cannot succeed, I shall deal with the second matter first. 28 The requirement of sub s (3) is that the second defendant must have received the transfer of the property as a purchaser in good faith who did not at the time have notice of the intention to defraud creditors. It is my conclusion that the plaintiff has not established that the second defendant was lacking in good faith or that he was not a person who did not at the relevant time have notice of the intention to defraud creditors. These are matters on which, on the authority cited in [18] above, the plaintiff bears the onus of proof. In this regard I have already recorded that I accept that the source of the cash moneys which were paid on completion were moneys received byto Mrs Nguyen and furnished by her for use in the transaction. I accept that Mr Duong, Mrs Nguyen and their daughter were purchasing the property on the basis that it was a good opportunity offered to them to improve their financial situation and within their reach because the rental which the property would produce would permit payment of the Bank loan, which their combined incomes were sufficient to procure. 29 Mrs Nguyen's evidence is that Mrs Le told her that it was desired to sell the property to pay some debts of Dr Le. But people choose at times to liquidate assets to reduce their debts without being on the verge of bankruptcy and I do not think that it should be inferred that Mrs Nguyen or Mr Duong should have come to the conclusion from having been told this that Dr Le, Mrs Le or the first defendant were on the verge of bankruptcy or in financial difficulties at all. In view of my general acceptance of Mrs Nguyen's evidence, I do not find it difficult to accept that she did not have any extensive knowledge of the Les' financial affairs, much less that Mr Duong did. Indeed, it is simply not established on the evidence that Mr Duong knew anything of their financial affairs nor of any dishonest intention that they had. In my view the conclusion cannot properly be drawn on the evidence that Mr Duong was lacking in good faith or had notice of any intention to defraud creditors on the part of the first defendant or, so far as it is material, on the part of Mrs Le or Dr Le. 30 Equally, I do not think it can be concluded on the evidence that Mrs Nguyen or Mr Duong was aware at the time of the contract or the transfer that the property was being sold to them at an undervalue, despite my conclusion about the valuation evidence: see [23]. Mrs Nguyen's account of what Mrs Le had told her included that Mrs Le had been earlier looking for a higher price for the property. However, it was clear that that price had not been obtained. It did not flow in my view from the fact that she was now prepared to sell for less that the property was necessarily in fact worth any appreciable amount more than $450,000. However, most importantly, even if it had been believed in the first instance that $450,000 was an advantageous price, the basis of that belief was in my view dispelled by Westpac's receipt of a valuation at $410,000. Mrs Nguyen and Mr Duong were informed to that effect. I accept that Mr Duong insisted on the price being reduced to that level before he would continue with the transaction and that he believed at the time that he entered into the contract and took the transfer that that was indeed the true value of the property. 31 The result of these conclusions is that the plaintiff has not made out a case for relief under s 37A of the CA. 32 So far as concerns the first matter, whether the plaintiff was disadvantaged by an alienation of property with intent to defraud creditors, the plaintiff also faces difficulties. The first element is that there should have been a transfer of property. That this occurred is undoubted. Secondly, in my view it is not difficult to draw the conclusion that the abstraction of moneys from the company by both the Les or by Mrs Le was with the intention of enabling Mrs Le to put the money beyond the reach of creditors. The timing of the transaction, the surrounding circumstances (including the payment of the moneys to Mrs Le in satisfaction of a debt to her the existence of which is not established) and the disappearance of the funds so that they were not able to be found by the Official Trustee in either Dr Le or Mrs Le's bankrupt estate makes that inference easy to draw and I do draw it.

33 However, the second defendant submits that there was no relevant fraud. The relevant creditors, being the only creditors of the first defendant, were Dr Le and Mrs Le. They, as the controlling minds of the company, could not be found to be defrauding themselves. However, as noted in [17] above, the relevant concept of fraud is the diminution of the pool available to satisfy the relevant creditors. If the available pool were diminished, it would cease to be available not only to the first defendant's creditors, but to those claiming through them, who might indirectly have access to the pool. On the facts of this case, that would include the plaintiff, who was a judgment creditor of Dr Le and who would be disadvantaged by loss of access to the pool. On this analysis, it seems to me that the existence of a fraud within s 37A is not excluded by the fact that the controllers of the first defendant were identical with its actual creditors. There was an alternative argument that the creditors contemplated by s 37A are not limited to creditors of the alienor, but may include anybody who can be characterised as a creditor, including the plaintiff, who may have relief if disadvantaged by the alienation. It is not necessary in the circumstances to consider this argument.

34 As the plaintiff concedes, it is important to bear in mind that it is necessary that it was the impugned transaction that caused the requisite element of disadvantage to the plaintiff for the plaintiff to succeed. If the abstraction of the value of the property from the resources of the first defendant available or potentially available to creditors were effected, not by the impugned transaction, ie, the sale of the property, but by another transaction, then the impugned transaction could not be struck down under the statute. The only transaction impugned in these proceedings is the transfer of the property from the first defendant to the plaintiff. The second defendant argues that, if the sale was at full value and if the vendor received that full value, it could not be said that the plaintiff was disadvantaged by the transaction. The fund available for the first defendant's creditors would not be diminished by the property owned by it simply being converted into a cash fund in its hands. If the sale was at an undervalue and the price was received, then the degree of the creditors' disadvantage would simply be the amount of the undervalue, in this case on the finding I have made $140,000 out of a value of some $550,000, not the whole value of the property.

35 The second defendant argues that what happened here and what really removed the bulk of the funds from the purview of the plaintiff and the creditors generally was that the first defendant received the funds (thereby putting them for the moment into the funds available for its creditors), then paid them away to Mrs Le. If this was in satisfaction of a debt to her, thereby at most it preferred one creditor over others, a preferential payment to creditors not evincing an intent to defraud that is caught by s 37A. The difficulty with this argument is that the payment was to Mrs Le alone and it is not established by the material concerning shareholder loans set out in [3] above that Mrs Le was a creditor for that sum or any particular sum. But the principal argument is that it was not by the alienation but by this second separate transaction that the funds were abstracted. 36 To counter this principal argument, it is argued on the plaintiff's behalf that the funds never reached the first defendant: the whole point of the scheme was that, instead of being received by the first defendant on the completion of the sale, they were diverted from the first defendant to Mrs Le in a fashion which meant that they were simply abstracted and made unavailable to creditors without ever having reached the first defendant. Equally, in my view, this argument is not correct. Although the bank cheques given at settlement were made out in Mrs Le's favour, so that the funds never reached any bank account of the first defendant, the cheques were made out in that fashion by direction of the first defendant, which was the only person entitled validly to give such a direction to the second defendant at the time of settlement, and that cheques were delivered in that form in accordance with that direction. In my view, the correct view of the situation is that the moneys were paid to or at the direction of and must be taken to have been received by the first defendant at the time of settlement, whatever it was that the first defendant did with them and however immediately afterwards. In those circumstances it appears to me that (except for the matter of the undervalue) it cannot be said that it was by the impugned transaction (rather than by the way in which the first defendant dealt with the moneys after their receipt) that the plaintiff or any creditor of the first defendant was disadvantaged by the abstraction after settlement of the purchase moneys.

37 It could only therefore be by the amount of the undervalue that creditors of the first defendant could be said to have been disadvantaged by the transaction impugned. However, by reason of my findings as to the state of mind of the purchaser, my conclusion as set out above is that no contravention of s 37A has been established.

38 For the same reason, if for no other, the plaintiff cannot succeed in its cause of action in fraud. If the facts do establish a fraud on the part of the first defendant actionable in equity independently of s 37A, there was no participation in or knowledge of that fraud on the part of the second defendant and the plaintiff cannot succeed against him. 39 In these circumstances, it is not necessary to determine whether the assignment from the third defendant to the plaintiff was valid. The provisions of ss 134 and 135 of the BA referred to by the plaintiff do not appear to me to assist him. But whether the principle in Prosser v Edmonds supra should still be regarded as precluding relief in the year 2001 in a suit in which the assignor was originally a plaintiff and was removed to the ranks of the defendants on withdrawing instructions from the plaintiff's solicitor and bearing in mind the radical changes of recent years to the laws of champerty and maintenance in this State must be doubtful. 40 As to the issue of whether or not s 37A of the CA applied at all in view of the fact that the plaintiff was the creditor of Dr Le, a person who was bankrupt, it was submitted that in these circumstances the operation of the BA including s 121, alone applied in the situation, and that the operation of s 37A of the CA was precluded by the operation of s 109 of the Commonwealth Constitution. The argument of this question would in my view have necessitated notice to the Attorney Generals of the Commonwealth and of the States pursuant to s 78B of the Judiciary Act 1903 (Cth) to permit them to intervene and argue this question if desired. To prevent the trial of the antecedent factual questions which I have now determined being encumbered by this process I ordered that the question of the application of s 37A by reason of the operation of the Constitution be tried separately from and after the other questions in this case. By reason of my determination of these issues in the fashion in which I have determined them the determination of that question will not now be necessary.

41 The only order necessary to give effect to my decision is that there should be judgment for the second defendant on the plaintiff's claim. It appears inevitable that the plaintiff should be ordered to pay the second defendant's costs of the proceedings. ******************************

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