Kirk v Ashdown

REASONS FOR JUDGMENT 1 Mr and Mrs Kirk each apply for orders with respect to bankruptcy notices served upon them following the conclusion of proceedings in the Supreme Court of Queensland, brought by Mr and Mrs Ashdown. A point initially raised, as to whether service had properly been effected upon Mrs Kirk, is no longer pursued. 2 On 27 October 1998, Mrs Kirk filed an application seeking an order that the time for compliance with the bankruptcy notice be extended and that it be set aside. A Deputy District Registrar made an order extending the time for compliance until further order. Mrs Kirk also seeks an account from Mr and Mrs Ashdown for the sum of $106,100 alleged to have been paid by Mr and Mrs Kirk to them. An application by Mr Kirk, in identical terms, was filed on about 14 December 1998 but not within the time limited by the notice. He also applies for an extension of time to comply with the notice.

Background 3 The notices were founded upon a judgment of the Supreme Court of Queensland of 3 April 1997 which was given in favour of Mr and Mrs Ashdown against Mr and Mrs Kirk in the sum of $250,000 together with interest. The proceedings arose out of an agreement by Mr and Mrs Kirk to purchase a house property owned by Mr and Mrs Ashdown for $2,600,000. The written agreement, dated 5 September 1994, provided for a deposit of $250,000 to be paid by Mr and Mrs Kirk in two instalments: a sum of $50,000 within 180 days from the signing of the contract and a further sum of $200,000 within 360 days. The first mentioned sum was not paid in the time required, and by letter dated 6 March 1995, Mr and Mrs Ashdown advised Mr and Mrs Kirk that the contract was at an end. Proceedings were then brought to recover the deposit monies under the terms of the contract and culminated in the judgment earlier referred to. 4 The legal objection by Mr and Mrs Kirk to the Ashdowns' case in the Supreme Court depended upon the construction of a clause in the standard form of contract providing for the right of retention or recovery of outstanding deposit monies, paid and unpaid. This was resolved in the Ashdowns' favour by the trial Judge, Byrne J, on 3 April 1997 and upheld in the following judgment of the Court of Appeal on 1 May 1998. The construction point was the only issue argued before the Court of Appeal of the Supreme Court. Indeed, a ground of appeal which claimed that perjured evidence had been given was abandoned at the outset of the hearing. That is the contention sought to be advanced in these proceedings. An application for special leave to the High Court, based on the construction point, was heard on 16 April 1999 and was unsuccessful. At no time has a new trial been sought on the ground of perjury, nor is it intended to seek one for the reason, I infer, that difficulties are apprehended in the way of evidence. 5 Both the application to set aside the bankruptcy notices and the claim for an account have their basis in the circumstances surrounding the sum of $106,100 which, it is said, Mr Ashdown had transferred overseas and which Mr Kirk says were monies to which he and his wife were at all times entitled. 6 In the proceedings before Byrne J, no claim was made by Mr and Mrs Kirk with respect to those monies and no issue was raised concerning them on the pleadings. It was submitted before me that Mr and Mrs Kirk were constrained in raising all issues surrounding the ownership and payment of the monies because of the terms of an order made in summary judgment proceedings in that action, with respect to the delivery of a defence. A reference to the order, however, discloses that it was made by consent, and that Mr and Mrs Kirk were to have leave to defend on the grounds set out in the draft defence but on no other ground, except by leave of the Court. No application for leave was made. In any event, the order would not appear to have restricted their bringing a counter claim in the action. 7 Reference to the dealings between the parties concerning these monies arose in two parts of his Honour's reasons in considering defences put forward by Mr and Mrs Kirk. The first concerned representations alleged by them to have been made by the vendor's real estate agent. His Honour considered the accounts, as to what had been said, put forward by Mr and Mrs Kirk, Mr and Mrs Ashdown and the agent Mr Reid. There was difficulty with each of the versions but his Honour ultimately preferred that of the agent. His Honour rejected the evidence of Mr Kirk as unreliable but was also clearly unimpressed with that given by Mr Ashdown. In that latter respect, his Honour recorded Mr Ashdown's evidence concerning the receipt of the $106,100 as not assisting his credit-worthiness, in particular because it appeared to involve Mr Ashdown in dealings of doubtful propriety. In addition to the nature of the transactions, to which I shall shortly refer, his Honour also referred to misstatements of fact by Mr Ashdown in an earlier affidavit and concluded that "Mr Ashdown's testimony deserves careful scrutiny". Whilst Mr Kirk was also involved in these dealings, his Honour did not base the conclusion, that his evidence was also to be approached with care, on his participation in them but on other factors including the evidence given by him in relation to the other ground of defence, which was that the termination of the contract had been consensual. 8 The dealings between the parties, connected with the sum of $106,100, to which his Honour referred were not relevant to the question as to what, if any, representations had been made about matters relevant to the contract the subject of the proceedings. The reference to them by his Honour was by way of highlighting problems with credit-worthiness and in particular that of Mr Ashdown. His Honour did not attempt to determine what had in fact taken place between the parties concerning the monies, and noted that the detail provided in evidence was "obscure". In submissions before me they have become more so. His Honour's understanding was that Mr Ashdown had received the sum of $106,100 from Mr Kirk and this was to be used "clandestinely" to acquire an interest in a ship then lying in Brisbane. Mr Ashdown assisted Mr Kirk to disguise Mr Kirk's outlay in the ship from the "Australian authorities". The owner of the ship, Mr Lin, was overseas. Mr Ashdown believed he was able to apply the monies received from Mr Kirk, on Mr Lin's behalf, towards the purchase of a horse from his, Mr Ashdown's, stables. 9 His Honour also observed that the sum accounted for an increase in the sale price of the house property from $M2.5 to $M2.6 and the creation of a document, at the same time that the contract was executed, signed by Mr Ashdown and authorising him to retain those monies "until the interested parties can agree on a suitable disbursement" if the purchase of the house was not completed. 10 Mr and Mrs Kirk also defended the action on the basis that there had been a consensual termination. His Honour did not accept Mr Kirk's evidence as to this largely, it seems, because it appeared to be of recent invention. That a meeting had occurred at the Ashdowns' stud at Mutdapilly and that the future of the contract was discussed, were matters not in dispute. Mr Kirk contended that Mr Ashdown was simply agreeable to discharging the contract, so long as they continued to pay rent for the house. Mr Ashdown, however, said that when he was told of the Kirks' inability to complete, he advised that if rent and "the deposits" were paid Mr and Mrs Kirk would not be held to the balance, but that Mr Kirk did not agree with this. 11 His Honour considered that Mr Kirk's account was "most improbable". There were then no other prospective purchasers and Mr Ashdown was not liable to be conciliatory towards the Kirks for a number of reasons. No instructions to their solicitor, consistent with Mr Kirk's version, were apparent from what then took place. When the defendant's new solicitor wrote, no mention was made of it. 12 Mr Kirk also contended that another meeting followed at which Mr Ashdown prepared a document dated 22 February 1995 for him to sign, because the sale was over and it needed to be shown that the Kirks owed no monies. It was a document "…to send that money supposedly on my behalf to Hong Kong, or something". This is somewhat difficult to follow when regard is had to the terms of the document: "I Jude Kirk formerly (sic) request that the $106,100 paid to Glengarry Stud on 5th November 1993 and never used for the intended purpose, now be transferred to "Aella Pty Ltd" (C.K. LIN) by bank draft as soon as possible." Mr Ashdown explained the document as arising from the need to acknowledge Mr Lin's entitlement to the monies because of bankruptcy proceedings which another person had threatened to bring against Mr Kirk. He was concerned that he might be required to pay the sum both to the trustee in bankruptcy and also to Mr Lin. His Honour accepted this as more plausible. Here, it may also be observed that his Honour's findings were not linked to the narrative concerning the complex transactions. His Honour was concerned only with the meaning of a direction to transfer and whether it could be said to support Mr Kirk's account that he and his wife were to have no further liability to the Ashdowns.