Nick Houvardas v George Zaravinos and Anor - [2003] NSWSC 387 - NSWSC 2002 case summary — Zoe

NSWNSWSC

Nick Houvardas v George Zaravinos and Anor

[2003] NSWSC 387

Supreme Court of NSW|2002-09-19|Before: Bergin J

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Court

Supreme Court of NSW

Decision date

2002-09-19

Before

Bergin J

Source

Original judgment source is linked above.

Judgment (84 paragraphs)

[1]

CITATION : Nick Houvardas v George Zaravinos and Anor [2003] NSWSC 387 HEARING DATE(S) : 16, 17, 18 and 19 September 2002; 15, 16 and 17 October 2002; 28, 29 and 30 April 2003; written submissions 19 September 2003 and 1 October 2003. JUDGMENT DATE : 21 October 2003 JURISDICTION: Equity Division JUDGMENT OF : Bergin J DECISION : See pars [130] - [135].

[2]

CATCHWORDS : [REAL PROPERTY] - Whether alienation of property by first defendant to second defendant was with intent to defraud creditors under s 37A Conveyancing Act 1919 (NSW) - Transfers registered 10 months prior to consent declaration pursuant to s 78 of the Family Law Act 1975 (Cth) made by the Local Court exercising Family Law jurisdiction - [BANKRUPTCY] -Whether the Bankruptcy Act 1966 (Cth) "covers the field" for proceedings in respect of alienation of property to defeat creditors where disponor becomes a bankrupt - Whether plaintiff precluded from proceeding under s 37A of the Conveyancing Act 1919 (NSW) - Plaintiff granted leave by the Federal Court to proceed against the first defendant under s 37A of the Conveyancing Act 1919 (NSW) - [ESTOPPEL] Whether plaintiff estopped from pursuing relief when proceedings commenced in Local Court exercising Family Law jurisdiction were "withdrawn and dismissed" by consent - [ORDERS] - Whether orders sought pursuant to s 37A of the Conveyancing Act 1919 (NSW) would be in conflict with Consent Orders made in Local Court. Bankruptcy Act 1924-1932 (Cth) Bankruptcy Act 1966 (Cth) Conciliation and Arbitration Act 1904-1961 (Cth) Commonwealth of Australia Constitution Act (The Constitution) LEGISLATION CITED : Conveyancing Act 1919 (NSW) District Court Act 1973 (NSW) Family Law Act 1975 (Cth) Judiciary Act 1903 (Cth) Trade Practices Act 1974 (Cth) Baxter, Re; Ex parte Official Receiver in Bankruptcy & Baxter (1986) 10 FCR 398 Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502 Clyne v Deputy Commissioner of Taxation & Ors (1984) 154 CLR 589 Dao & Anor v Australian Postal Commission (1987) 70 ALR 449 Fraser v Commissioner of Taxation & Anor (1996) 69 FCR 99 Green v Schneller (2002) 29 Fam LR 346 Kattirtzis & Anor v Zaravinos [2001] FCA 1158 Langdon v Gruber [2001] NSWSC 276 Lawson v Wallace (1968] 3 NSWR 82 McCauley, Re; Ex parte Fraser & Anor (1995) 61 FCR 251 McLean, Ex parte (1930) 43 CLR 472 CASES CITED : Mateo v Official Receiver in Bankruptcy (2002) 117 FCR 179 Metal Trades Industry Association of Australia & Ors v Amalgamated Metal Workers' and Ship Rights' Unions & Ors (1983) 48 ALR 385 Official Trustee in Bankruptcy v Higgins (2000) 109 FCR 1 Official Trustee in Bankruptcy v Mateo (2003) 30 Fam LR 122 Pitman v Pantzer & Ors (2001) 115 FCR 361 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 R v Credit Tribunal; Ex parte GMAC (1977) 137 CLR 545 Silvera v Savic & Anor (1999) 46 NSWLR 124 Smith v Tatton (1879) 6 LR(ir) 32 State of Victoria & Ors v Commonwealth of Australia (1937) 58 CLR 618 (The Kakariki) Stileman v Ashdown (1742) 2 Atk 477 Williams & Ors v Lloyd & Anor (1933-1934) 50 CLR 341 Wise, In re; Ex parte Mercer (1886) 17 QBD 290 Nick Houvardas (Plaintiff) PARTIES : George Zaravinos (First Defendant) Ourania Zaravinos (Second Defendant) NSW Attorney-General (Intervening) FILE NUMBER(S) : SC 4177/99 Mr F Stevens and Mr R McCrudden (Plaintiff) COUNSEL : Mr MR Aldridge SC (Second Defendant) Mr N Perram (Written submissions for NSW Attorney-General) Mercuri & Co (Plaintiff) SOLICITORS : Horowitz & Bilinsky (Second Defendant) NSW Crown Solicitor (NSW Attorney-General)

[8]

5 Prior to the events that gave rise to this litigation, the plaintiff, his wife, Mr and Mrs Kattirtzis and the defendants were good friends. The second defendant is the aunt of the plaintiff's wife and of Mrs Kattirtzis. Probate in respect of Mr Kattirtzis' estate was not granted at the time the trial commenced and on 6 September 2002 I granted leave to the plaintiff to file a Further Further Amended Statement of Claim (FFASC) in which he is now the only plaintiff. That pleading was filed on 13 September 2002. Letters of Administration were granted to Mrs Kattirtzis in late April 2003 and, although an application was made on the ninth day of the trial to bring proceedings on behalf of the Estate of the late Mr Kattirtzis, it was abandoned on that day. The Defendants' Properties 6 The second defendant lived in Greece until the age of five when she went to England. From the age of sixteen she worked as a machinist/dressmaker, firstly as an apprentice and then in a factory doing piece-work and from the age of sixteen to the age of twenty she was able to save the equivalent of $32,000. She brought $25,000 to Australia with her in 1976 and $7,000 was transferred to Australia at some later time. The first and second defendants were married in 1978. 7 The second defendant gave evidence that when properties were purchased during her marriage to the first defendant they were put in joint names because this was the "tradition" of Greek families, which she respected. This was so notwithstanding her claim that the first defendant did not make any monetary contribution to the purchase of those properties. However, the first property that was purchased was registered only in the second defendant's name. This was a property at Westmead of which the second defendant's brother was the vendor. The second defendant gave no real explanation as to how this registration fitted in with her respect for the Greek family tradition of registering property in joint names. 8 The second defendant's evidence in relation to this first property is very confused. Firstly she said that she purchased it for $42,000, yet the transfer refers only to a price of $22,000. There was also a mortgage for $12,500 in respect of the property. The second defendant claimed that she gave $25,000 to her brother as part of the purchase price and had difficulty accepting the accuracy of the amount of $22,000 on the Transfer, notwithstanding her signature on it. The Westmead property was sold in approximately 1980 and the second defendant claims it was sold for $60,000. She also claimed that land was then purchased on the Gold Coast. 9 In 1983 a property at 12 Colson Crescent, Werrington County (Colson Crescent) was purchased by the defendants in joint names for $75,000. The second defendant claimed that, once again, the first defendant made no monetary contribution to the purchase of this property. Colson Crescent was purchased with $33,000, which the second defendant claimed came from the proceeds of sale of the Gold Coast property, and a loan of $42,000. 10 In 1988 the second defendant received net $140,000 from a settlement in Supreme Court proceedings brought by her for injuries she claimed to have suffered by reason of a foreign body being present in some milk that she drank. It is alleged that she suffered alopecia as a result of this traumatic event. The defendants purchased a further property in 1988 at Derby Street, Penrith in joint names for $54,000. That property was rented for approximately four years until it was sold in 1992. The second defendant gave evidence that she used the $140,000 from the court settlement to purchase the Derby Street property, to pay off all but about $8,000 of the mortgage on Colson Crescent and to purchase a car at a cost of $38,000. The total amount of those three figures is approximately $126,000. The balance, which approximates $14,000, was claimed to have been invested with AGC at that time, however there are no documents supporting this claim. 11 The defendants purchased two home units in 1995, the first at Union Road, Penrith (the Union Road property) and the second at Castlereagh Street, Penrith (the Castlereagh Street property). These properties were purchased for $81,000 and $82,000 respectively. By Transfers dated 25 March 1997 and registered on 26 March 1997 the first defendant transferred his half interest in Colson Crescent, the Union Road property and the Castlereagh Street property (the three properties) to the second defendant. It is those transactions that are the subject of these proceedings. Various Legal Proceedings 12 On 14 July 1995 the plaintiff and Mr Kattirtzis commenced proceedings 5028 of 1995 against the first defendant in the District Court of New South Wales (the District Court proceedings). By Statement of Liquidated Claim (Ex 1) the plaintiffs sought recovery of money allegedly given to the first defendant. That pleading included the following: 1. In about March 1995, the Plaintiffs and the Defendant orally agreed that the Plaintiffs would pay moneys to the Defendant for the Defendant to invest on their behalf in shares and securities in companies listed on the Sydney Stock Exchange. 2. The Defendant made certain representations and inducements to the Plaintiffs and upon which the Plaintiffs relied in entering into the said agreement. Particulars Between January and March 1995, the Defendant represented to the Plaintiffs: a. That the moneys paid to the Defendant would be invested in purchasing shares and securities in companies on the Sydney Stock Exchange. b. That a profit of at least 100 per cent would be made on the said moneys within a period of between 4 to 6 weeks. c. That the moneys were secure in that the Plaintiffs would not lose the monies. d. That the Defendant personally guaranteed that the Plaintiffs would not lose the moneys. e. That the moneys and profit would be repaid to the Plaintiffs within 4 to 6 weeks. f. That the Plaintiffs and the Defendant could then apply the moneys, profit and other moneys belonging to the Defendant in a joint venture in building 8 home units at Penrith. 13 The plaintiffs pleaded a breach of agreement together with a claim in relation to the first defendant's alleged personal guarantee and false and fraudulent misrepresentations. Although the plaintiffs obtained default judgment, such judgment was set aside on 26 November 1996 and the first defendant was allowed in to defend the proceedings.

[9]

14 In July 1997 an application was made to this Court for an order restraining the second defendant from dealing in any manner with the three properties. Santow J refused to make that order. On 25 September 1997, Phegan DCJ made a Mareva order with immediate effect restraining the second defendant from dealing in any manner with the three properties (Ex 2). The second defendant was not named as a defendant in the District Court proceedings but was named as the second defendant in the Notice of Motion for the Mareva order. 15 On 15 January 1998 the Local Court at Penrith, exercising its Family Law jurisdiction, made the following Consent Orders in proceedings FL158/980018 between the second defendant as applicant and the first defendant as respondent (Ex 5): BY CONSENT: 1. That the wife pay the husband the sum of Fifty eight thousand dollars ($58,000.00) in the following manner- (i) As to the sum of Eight thousand dollars ($8,000.00), immediately. (ii) As to the balance of Fifty thousand dollars ($50,000.00) within seven (7) days of completion of the sale of the unit known as 18/38 Castlereagh Street, Penrith. 2. That the wife forthwith list for sale the unit 18/38 Castlereagh Street, Penrith being Lot 18 in Strata Plan 20941 at the price of $90,000.00. If the unit does not attract a buyer within six (6) months then it is to be listed for sale by auction with a local agent at a reserve price determined by a valuer appointed by the President for the time being of the Real Estate Institute of New South Wales or his nominee, acting as an Arbitrator not as an expert, whose decision shall be final and binding upon the parties. 3. That pursuant to Section 78 Family Law Act 1975 (as amended) the wife is declared to be the sole and absolute owner in law and in equity of the land and house known as 12 Colson Crescent, Werrington County being Lot 633 in Deposited Plan 250238 and the home unit known as 7/28 Union Road, Penrith being Lot 7 in Strata Plan 44001 together with all items of personalty, furniture and furnishings and household contents in her possession. 4. That pursuant to Section 78 Family Law Act 1975 (as amended) the husband is declared to be the sole and absolute owner in law and in equity of the Vorada (sic) Reg. No. CDD081 together with all household contents and personalty items in his possession. 5. That in the event that either party refuses or neglects to execute any deed or instrument, the Registrar of the Court be appointed pursuant to Section 84, to execute such deed or instrument in the name of such party and to do all acts and things necessary to give validity to the operation to the deed or instrument. 16 On 19 May 1998 the first and second defendants signed an Agreement that provided for the second defendant to make "part payment" of the outstanding $50,000 under the Consent Orders by transferring to the first defendant an 18 carat yellow gold single diamond ring said to be valued at $34,000. The Agreement noted that a balance of $16,000 remained owing to the first defendant under the Consent Orders (the May Agreement) (Ex M13).

[11]

20 In October 1998 Cooper DCJ heard the District Court proceedings. The first defendant's Defence denied that he had received any moneys from the plaintiffs. The matter was listed for hearing on 6 October 1998 and the first defendant did not appear. Cooper DCJ stood the matter down in the list to give the first defendant a further opportunity to appear but there was no appearance. On 7 October 1998 his Honour entered judgment for the plaintiff against the first defendant in the amount of $52,400 plus interest of $19,156.87, making a total of $71,556.87. Judgment was also entered for Mr Kattirtzis against the first defendant in the amount claimed by him. 21 Cooper DCJ set out the facts upon which he entered judgment. Relevantly those facts included the following (Ex M16: 420-427): The evidence was given by Mr Houvardas that he has known the defendant for some 23 to 25 years. Not only is the defendant his wife's uncle by marriage but he is also the Godfather to Mr Houvardas' child. He said that in January 1995 he was with his family, together with other members of the extended family, on holidays at Port Stephens. It was on this occasion that the defendant first raised with him the question that if the plaintiff were to invest money with him he knew a way to triple the money in a very short time. After that holiday the defendant phoned him again and asked him if he was interested in making easy money. The plaintiff asked how he can make such a good investment and what about taxation and was told it was clear of tax. There were further phone calls from the defendant to Mr Houvardas, amongst which the defendant told Mr Houvardas not to mention anything about this to his wife. He also told Mr Houvardas that small investments could be made whereby $150 would be deposited and he would get back $500. The defendant explained to Mr Houvardas that he knew someone in the stock market and could get very good profits and that he would let him know about it. He said there were small investments which he could make on the plaintiff's behalf of $150 each. He also said that there was no need for the plaintiff, Mr Houvardas, to give him the $150, that he would put it in on his behalf. Indeed, on three separate occasions the defendant paid over to Mr Houvardas $500 saying that this was the result of small investments of $150 each which he had made on his behalf. He further encouraged Mr Houvardas to invest a larger sum of money, pointing out that large profits could be made and suggesting that they could put the profits into a block of land and build townhouses or units which would be a good investment. There were a large number of conversations and finally the defendant suggested to the plaintiff, Mr Houvardas, that the plaintiff should invest $20,000. It was after a number of conversations that the defendant asked Mr Houvardas whether the other plaintiff, Mr Kattirtzis, could be trusted. To this Mr Houvardas gave an affirmative reply. There was then a meeting arranged at the defendant's house between the defendant and the two plaintiffs. They queried the defendant and he told them that there was nothing to worry about, that he had done the investment several times before, it was quite safe, but the moneys had to be paid over in cash. The defendant also said that his barrister was a long-term friend and would also join in the investment. There was an occasion when the three of them, that is the defendant and the two plaintiffs, met at the BP service station at Werrington when the defendant gave Mr Kattirtzis $500 saying that this was his profit from a small investment similar to that which had been made on behalf of Mr Houvardas. By this stage the two plaintiffs were becoming fairly keen on the idea of the success of the defendant's investment. The defendant pointed out to Mr Houvardas that he had a big investment coming up and he did not want to see Mr Houvardas losing out. Mr Houvardas protested that all he had was $20,000 and that if he invested that money he had nothing left. The defendant said that, if they invested $55,000, each of the plaintiffs would get back $375,000. The defendant suggested to Mr Houvardas and also to Mr Kattirtzis that they should borrow the money from the bank or from other people so that they would not lose out on this wonderful investment. There is no doubt that by this stage both of the plaintiffs were very keen to join in the investment propounded by the defendant. Mr Houvardas paid over a total of $53,000 between about late February and the end of March 1995. Part of this money was borrowed and part came from his own savings. Mr Kattirtzis also agreed to join in and invest money as well and Mr Kattirtzis handed his money over at various stages in about April 1995. Now the money was handed over in cash and not in one lump sum. This was because the defendant had pointed out to both plaintiffs that under no circumstances should they withdraw from their bank account amounts in excess of $10,000 because otherwise the matter would be reported to the Taxation Department. Consequently they drew out moneys of about $8,000 or $9,000 and paid that over. Mr Houvardas paid over $53,000 initially. Then the defendant pointed out a further investment in which each share to be invested would cost $1,700. Mr Houvardas agreed to take out two shares and so handed over to the defendant a further $3,400. Thus Mr Houvardas paid over a total of $56,400. After the two plaintiffs had paid over their money the defendant contacted them from time to time, said that everything was going smoothly; his friend who was a stock broker was very confident and indeed was talking about extending the investments even further into Melbourne. The defendant rang Mr Houvardas and said that the money could be paid over on a date which he nominated. This date was deferred on some three or four occasions and the defendant told Mr Houvardas that he should just wait and be patient. Then the defendant rang Mr Houvardas and asked him to tell Mr Kattirtzis that they should all meet in a coffee lounge at the Piccadilly Centre at a stated time. At this stage the two plaintiffs were working together on a building site at Artarmon. They both went to the coffee lounge nominated and after about twenty minutes the defendant arrived. At that stage he appeared happy and excited and said that all went smoothly and there were no problems. Indeed he told the two plaintiffs that they needed to install a safe at their home because they would have a lot of money and that he was going to make them millionaires. At this stage he was waiting for a phone call. Two phone calls came. The second one was said by the defendant to be from his broker and that a lady was bringing the profits and that they should go and collect them. Mr Houvardas asked why it was being done this way because it was so much money it would be risky for a lady to be walking around with that much money. This concern was brushed off by the defendant with words to the effect, "I've done it many times, there is no problem". Then they followed the defendant, walking from the Piccadilly Arcade to the Queen Victoria Building. They went inside that building and at this stage the defendant's appearance changed to one of nervousness. They went from one floor to another. Then the defendant told Mr Houvardas to walk in a particular direction, to look towards the lifts and he would see a lady with a briefcase wearing glasses and she would have the money. Mr Houvardas started to walk in that direction when he was told by the defendant to come back quickly because there were two detectives there. Mr Houvardas did in fact come back quickly and stay with the defendant, but Mr Kattirtzis continued walking and left the sight of the other two. The defendant tried to telephone Mr Kattirtzis on his mobile phone but could not get through. Finally the defendant said to Mr Houvardas, "Stay here and I will go and look for him". Mr Houvardas waited for three to five minutes and then Kattirtzis returned and said the defendant had their money and had gone off and, in effect, that the two of them had been "ripped off". They looked around for the lady and for the defendant but could not find them. They tried to ring the defendant on his mobile phone but could not raise him. Finally, Mr Kattirtzis received a call on his mobile phone from the defendant who told him that he had been arrested, that he was then with detectives in a car and told them to leave the building in case they got arrested. He said the police were taking him to Central Police Station and that they reckoned that he was doing illegal share dealings and they were taking him in for questioning. Not surprisingly, the plaintiffs were somewhat sceptical of this and they went from the Queen Victoria Building over to Central Police Station where they made enquiries as to the whereabouts of the defendant and, not surprisingly, they were told that he was not there. They went back to their work site at Artarmon and tried to ring the defendant unsuccessfully. Finally, the defendant called Mr Houvardas at about 10.30pm that night and told him that it would be better if he did not come near him for a while because the detectives were asking him questions. He said that he and the lady and the broker were arrested and all taken to Central Police Station; that he was bailed out and he had to put up $50,000 bail and the broker had to put up $100,000 bail, but he said that he was completely innocent. He also said the lady was let out and warned Mr Houvardas to lie low and not to go to the defendant's house. He also said that the broker was lucky because he had not withdrawn the money that day. The defendant called Mr Houvardas two or three days later and wanted to meet with the two plaintiffs. The two plaintiffs got together and decided that they would tape record the conversations and so they took to that meeting a small tape recorder which was in the pocket of Mr Kattirtzis' jacket and the conversation was recorded. That recording is now in evidence, as is a transcript of a translation of it. The conversations between the two plaintiffs and the defendant were, generally speaking, in the Greek language. After that meeting they went again to the house of the defendant and spoke to him and that conversation was, likewise, recorded. I will come back to those recordings later. Some time later the defendant rang Mr Houvardas again and said, "Come to the BP service station, I've got your money". So an arrangement was made and the two plaintiffs, together with two others, went to that service station. The defendant was already there. The defendant had two of his henchmen there who searched the two plaintiffs, that is frisked them, but there was no money. The defendant's response was, "You know I haven't got the money, be patient until I get it". Then some time later the defendant and the two plaintiffs met again and he said that he had sold some bits and pieces and he raised $8,000 and he gave $4,000 to each of the plaintiffs. 22 Cooper DCJ was satisfied that the plaintiff and Mr Kattirtzis had established that the first defendant continued with his defence when he knew that it had no chance of success and that he continued with his defence in wilful disregard of the known facts. His Honour made an order that the first defendant pay the plaintiffs' costs of the District Court proceedings on an indemnity basis. In respect of that claim his Honour said (Ex M16: 431): It is quite clear that the defendant knew at all times that his defence was false … There is other evidence before me that establishes that his reasons for persisting in a defence which he knew to be false can be summarised as follows: First, in the hope that, by delay and frustration to the plaintiffs, he could cause them to drop the claim; secondly, to delay the inevitable as long as possible; and, thirdly, to allow him the opportunity of dealing with his assets in a way which would defeat and frustrate the enforceability of any judgment which may be obtained later. 23 On 7 December 1998 Murrell DCJ delivered judgment in respect of the orders sought in the balance of the Notice of Motion in respect of which Phegan DCJ had made the Mareva orders against the second defendant in September 1997 (Ex 3). The balance of the Notice of Motion, in which the second defendant had been named as the second defendant, sought orders including: (1) a declaration that the Transfers of the three properties dated 25 March 1997 were void; (2) an order that the second defendant reconvey the first defendant's interest in the three properties; (3) an order that the first defendant held his interest in the three properties on behalf of the plaintiff and Mr Kattirtzis; and (4) orders restraining the first defendant from dealing with the three properties (Ex 2).

[13]

25 The first defendant did not pay the judgment debts and on 11 October 1999 the plaintiff and Mr Kattirtzis commenced bankruptcy proceedings against the first defendant. A Sequestration Order was made on 21 February 2000. These Proceedings 26 The plaintiff commenced these proceedings on 1 October 1999. On that day Austin J restrained the second defendant from dealing in any way with the three properties. That injunction was continued by various orders up to 25 October 1999 when the injunction was continued in respect only of the Castlereagh Street property and Colson Crescent until further order. That injunction remains in place. 27 The FFASC claims that the first defendant made a number of representations to the plaintiff and Mr Kattirtzis between January and March 1995. The representations alleged to have been made are in identical terms to the claims made in the District Court proceedings. The FFASC also claims that the second defendant made representations to the plaintiff in about March 1995 and to Mrs Kattirtzis in about April 1995. It is alleged that the second defendant made the following representations to the plaintiff: 1. That the first defendant was skilled in investing funds in the stock market. 2. That the first defendant had invested in the stock market on many occasions prior to the occasion which was presently proposed. 3. That the first defendant would not allow the plaintiff and Mr Kattirtzis to lose their money in the stock market. 4. That the second defendant would not allow the circumstances to arise where the plaintiff's wife would lose her money on the stock market. 5. That the plaintiff should not be worried about a loss of investment in the stock market. 6. That the plaintiff would earn a very large profit in the stock market investment. 7. That the second defendant would not allow the first defendant to talk the plaintiff into investing if she thought it was a risk. 8. That the second defendant would speak to the plaintiff's wife if there were any problems. 28 It is alleged that the second defendant made the following representations to Mrs Kattirtzis in about April 1995 in the expectation that such representations would be repeated to Mr Kattirtzis: 1. That the investment which the plaintiff and Mr Kattirtzis had made with the first defendant was a secure investment. 2. That the second defendant had spoken to the plaintiff and the plaintiff was confident of the investment. 3. That the second defendant was present when the plaintiff gave money to the first defendant. 4. That the first defendant had already (at the time of the representations) procured profits for the plaintiff in small investments in the stock market. 5. That there had never been any need for the first defendant to work as he was always doing deals on the stock market. 6. That the first defendant would invest twice the sum of the investment as to that of the plaintiff and Mr Kattirtzis. 7. That Mrs Kattirtzis should urge Mr Kattirtzis to ensure that the funds were promptly given to the first defendant upon the first defendant's request. 8. That Mrs Kattirtzis should be prepared to give the first defendant the full amount required for the investment at short notice. 29 It is alleged that the plaintiff paid the first defendant a total of $56,400 in various amounts on 6 January 1995, 14 and 27 March 1995 and 10 May 1995. It is also alleged that Mr Kattirtzis paid the first defendant a total of $52,000 in various amounts on 4, 5, 6, 7 and 10 April 1995 and 10 May 1995. 30 It is alleged that the defendants applied the monies paid to the first defendant for the first defendant's own use and benefit and that both the defendants made false representations. The District Court proceedings are referred to in the pleading and it is alleged that the second defendant was aware that in July or August 1995 the first defendant had not returned the money which the plaintiff and Mr Kattirtzis had given him. It is also alleged that the second defendant was aware in November 1996 that the default judgment in the District Court had been set aside and that she was present at Court on the occasion that the judgment was set aside. 31 It is also alleged that in January 1997 the plaintiff and Mr Kattirtzis sought undertakings from the first defendant that he would not divest himself of assets and advised that they were minded to seek a Mareva injunction in aid of enforcement. The first defendant's response, via his solicitors, that he had no intention of altering his circumstances as at 21 January 1997, is also referred to in the pleading. It is alleged that the first defendant procured valuations of all his properties on 13 December 1996 and in March 1997 sought to dispose of his interest in the properties to his wife for nil consideration. 32 The January 1998 Consent Orders in the Local Court at Penrith are referred to in the pleading, as is the decree absolute of 8 October 1998. It is alleged that the proceedings for property settlement and for divorce were a sham and entered into to delay or defeat the plaintiff and Mr Kattirtzis enforcing judgment against the first defendant. It is also alleged that the defendants have always cohabited at the same address and that they travelled overseas together during the period of twelve months when they were purportedly living separately and apart. It is also alleged that they presented to family and friends as a married couple in the period when they were purportedly living separately and apart. 33 The FFASC alleges that the defendants have "wickedly combined together and conspired to defeat the Plaintiff's attempt to secure enforcement of any judgment that might be recovered" (par 24). It is also alleged that the Consent Orders in the Local Court at Penrith and the agreements entered into between the defendants were "in furtherance of a joint fraudulent design" carried out with the intent to defraud the plaintiff and Mr Kattirtzis in the recovery of the fruits of the judgment in the District Court proceedings (par 27). 34 The relief sought by the plaintiff is: (1) a declaration that the alienation by the first defendant to the second defendant was not made in good faith but with intention to defraud creditors; (2) a declaration that the Consent Orders made by the Local Court sitting at Penrith were procured with intent to defraud creditors; (3) a declaration that the second defendant holds the properties in trust for the plaintiff; (4) an order that the properties be sold and that the plaintiff be paid out of the proceeds of sale; (5) an order that the second defendant be restrained from dealing with the properties; (6) any further order or orders in respect of the implementation of the declarations and orders; and (7) costs on an indemnity basis.

[23]

47 The second defendant claimed that it was in January 1997 that the first defendant informed her that he had gone into a business deal with the plaintiff and Mr Kattirtzis and that it had not worked out. She claimed that the first defendant informed her that the business deal was in relation to a brothel. She also claimed that about a week after this disclosure the first defendant informed her that the plaintiff had accused him of having an affair with his wife. The second defendant said that the first defendant denied such an affair but that over the next two or three weeks she informed the first defendant that she knew he had been having such an affair. She said that in about late January 1997 she informed him she wanted to separate. 48 The second defendant claimed that about one month after the first defendant moved out of the house she informed him that the three properties were hers, that she had paid for them and that he did not contribute any money towards the purchase of the properties. She informed him that she wanted him to transfer the properties to her and that she would not have him back "no matter what" (tr. 417). She said that she also informed him that he could have the car and that she would pay him $58,000 as soon as she could but she wanted the properties "transferred now". She claimed the first defendant agreed to that and he reminded her that he could not afford to pay her regularly "or a lot for the support of the children" because of his financial position. 49 The second defendant gave evidence of a meeting on 26 March 1997 with the first defendant and George Moutafis in a cafe at the Queen Victoria Building in George Street, Sydney. Mr Moutafis was a solicitor until he was struck off in late 1996, but prior to that he had acted for the defendants in their conveyances. The second defendant claimed that Mr Moutafis informed them that the best thing to do was to transfer the properties back to the second defendant and then file for Family Court orders after six months. She claimed that Mr Moutafis said that they could do this themselves because it would save them money and it was easy to do. She also said that Mr Moutafis said: "You just need to come with me and I will help you fill out the documents. Have you got the valuations of the properties I told you to get George?". The second defendant said that she spent most of the rest of the day with the first defendant and Mr Moutafis and that they went to different places. She also said that: "George Moutafis did most of the talking for us". She said that she "filled out three transfer forms in my own handwriting" and signed each one twice and the first defendant signed each one once in front of the Justice of the Peace.

[27]

54 The plaintiff submitted that neither of the defendants can be believed on their oath and that I would be satisfied that the first defendant had the requisite intent under s 37A(1) of the Conveyancing Act when he transferred his share in each of the properties to his wife. It was also submitted that I would be comfortably satisfied that the second defendant conspired with her husband in that regard or that, at the very least, she had notice of the first defendant's intention to put the property beyond the reach of the plaintiff and Mr Kattirtzis so that any defence pursuant to s 37A(3) of the Act is not available to her. 55 There are a number of areas of attack upon the defendants' credibility. The first defendant gave evidence that he met Carlos in early 1995 and that within weeks he had handed to him $16,000 for investment in a brothel. He did not know Carlos' surname and said that it was part of the agreement that he was not to know his surname. He did not know where the brothel was to be located, except that it was to be in Parramatta. He claimed that $5,000 of the $16,000 was borrowed from a third party. In oral evidence he said that the $16,000 was obtained from the second defendant. He claimed that after he, the plaintiff and Mr Kattirtzis had each given Carlos $16,000 the latter disappeared. There is no evidence that the first defendant did anything about trying to locate Carlos for the purpose of trying to get his money back. For a man on social security benefits and allegedly out of work, this just adds to the farcical nature of this claim. 56 There is absolutely no evidence that suggests that Carlos ever existed other than the first defendant's evidence. The first and second defendants have been in receipt of social security payments for 20 years. The first defendant claims to have worked from time to time as a waiter and in a friend's real estate agency. His bank statements show cash deposits during the time the plaintiff claimed he and Mr Kattirtzis were providing the money to him for investment on the stock market. The first defendant claimed that these amounts in the bank statements were received from a Mr Lee Wong to whom he had sold some antique jewellery that belonged to the second defendant. He claimed to have sold the jewellery for $115,000 and that Mr Wong paid him in various amounts over a six-month period. The bank accounts do not disclose deposits totalling $115,000.

[55]

81 In Langdon v Gruber [2001] NSWSC 276, unreported, 12 April 2001, Austin J referred to the main object of s 37A as preventing debtors from dealing with their property in any way to the prejudice of creditors. His Honour said at pars [53] - [54]: [53] Consistently with the purposive approach to the interpretation of the section, the words 'intent to defraud' have been held to include an intention to defeat, hinder or delay, although if the transfer is for consideration, a real intent to defeat or delay creditors must exist: Electrical Enterprises Pty Ltd v Rodgers (1988) 15 NSWLR 473, 497. Even by the liberal standards of interpretation which are said to be applicable to s 37A, it is somewhat surprising that a provision which speaks of an 'intent to defraud' is said to be satisfied by an intent to defeat, hinder or delay. Perhaps the better way to put it is that if the debtor acts so as to defeat, hinder or delay creditors and thereby to prejudice them by putting his property beyond their reach temporarily or permanently, there are grounds for the Court to infer that the debtor has acted with a dishonest intention: Lloyd's Bank v Marcan [1973] 3 All ER 754, 759 per Russell LJ. [54] It is not necessary to prove all of the ingredients of the tort of deceit. In Lloyd's Bank v Marcan, at 760-761, Cairns LJ said that a dishonest intention must be shown, at any rate where the conveyance is for consideration. But in Australia, at least, it is not necessary for the plaintiff to bring actual proof that the debtor had in his or her mind an intention to defraud creditors; if it appears from evidence of all of the circumstances that the transfer might be expected to have that effect, and has had that effect, the Court will attribute fraudulent intention to the debtor: Re Trautwein (1944) 14 ABC 61; P T Garuda Indonesia Ltd v Grellman (1992) 35 FCR 515, 523-524; Cannane v J Cannane Pty Ltd (In Liq) (1998) 192 CLR 557, 566. However, the onus of proof of intent to defraud is on the plaintiff: Williams v Lloyd (1934) 50 CLR 341, 372. 82 I am satisfied that the plaintiff has established that the first defendant had the requisite intention under s 37A(1) and I am satisfied that the second defendant is unable to have the benefit of s 37A(3) because she had notice of the first defendant's intention. Indeed, I am satisfied that it was also her intention to place the three properties out of the reach of the plaintiff and Mr Kattirtzis. The Defences 83 The numerous applications the plaintiff has made to various Courts in relation to the transfer of the first defendant's share in the three properties have not only contributed to the complicated factual matrix but have also been relied upon by the second defendant to claim that the plaintiff is estopped or prohibited from making the claim under s 37A of the Conveyancing Act. The plaintiff made the first application in the District Court in his Notice of Motion filed in September 1997. However it was not heard until December 1998, when Murrell DCJ held that the District Court did not have jurisdiction to entertain the application. In the meantime the Family Law Act Application was filed in the Local Court at Penrith on 14 July 1998 and on 20 July 1998 the plaintiff consented to an order that it be "withdrawn and dismissed". These proceedings were commenced on 1 October 1999. On 11 October 1999 Bankruptcy proceedings against the first defendant were commenced with the Sequestration Order being made on 21 February 2000.

[62]

91 The terms of s 37A of the Conveyancing Act are set out in full earlier in this judgment. The current s 121 introduced into the Bankruptcy Act in 1996 provides: 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. 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. Transfer not void if transferee acted in good faith (4) Despite subsection (1), a transfer of property is not void against the trustee if: (a) the consideration that the transferee gave for the transfer was at least as valuable as the market value of the property; and (b) the transferee did not know that the transferor's main purpose in making the transfer was the purpose described in paragraph (1)(b); and (c) the transferee could not reasonably have inferred that, at the time of the transfer, the transferor was, or was about to become, insolvent. Refund of consideration (5) The trustee must pay to the transferee an amount equal to the value of any consideration that the transferee gave for a transfer that is void against the trustee. What is not consideration (6) For the purposes of subsections (4) and (5), the following have no value as consideration: (a) the fact that the transferee is related to the transferor; (b) if the transferee is the spouse or de facto spouse of the transferor - the transferee making a deed in favour of the transferor; (c) the transferee's promise to marry, or to become the de facto spouse of, the transferor; (d) the transferee's love or affection for the transferor. Exemption of transfers of property under debt agreements (7) This section does not apply to a transfer or property under a debt agreement. Protection of successors in title (8) This section does not affect the rights of a person who acquired property from the transferee in good faith and for at least the market value of the property. Meaning of transfer of property and market value (9) For the purposes of this section: (a) transfer of property includes a payment of money; and (b) a person who does something that results in another person becoming the owner of property that did not previously exist is taken to have transferred the property to the other person; and (c) the market value of property transferred is its market value at the time of the transfer.

[63]

92 In support of his submission Mr Aldridge SC relied upon the joint judgment of Gibbs CJ, Murphy, Brennan and Dawson JJ in Clyne v Deputy Commissioner of Taxation & Ors (1984) 154 CLR 589 at 594 and Beaumont J's decision in Pitman v Pantzer & Ors (2001) 115 FCR 361. Neither of these authorities deal with whether the plaintiff is entitled to bring an action pursuant to s 37A of the Conveyancing Act to have the alienation of property declared void, with a consequential order for reconveyance of the share in the three properties and thus into the bankrupt estate. The second defendant submitted that "to the extent there is conflict" the Bankruptcy Act prevails over the Conveyancing Act as the former Act is "clearly intended to cover the field of administration of the affairs of insolvent individuals" or at least "its 'claw-back' provisions are intended to cover the field". In further support of this submission, the second defendant relied upon the joint judgment of Gibbs CJ, Wilson and Dawson JJ in Metal Trades Industry Association of Australia & Ors v Amalgamated Metal Workers' and Ship Rights' Unions & Ors (1983) 152 CLR 652 and Dao & Anor v Australian Postal Commission (1987) 162 CLR 317. In the latter of these cases the High Court referred to a number of "analogous" cases, including Metal Trades Industry Association v Amalgamated Metal Workers' and Ship Rights' Union, and said at 337: Illustrative though these cases are of the operation of s. 109 of the Constitution in a situation where it is said that a State law is inconsistent with the provisions of an award made or an agreement registered under the Conciliation and Arbitration Act , it must be remembered that in those circumstances the question of inconsistency can arise only because of the provisions of s. 65 of that Act. The cases therefore are to be understood in the way explained by the Court in T.A. Robinson & Sons Pty. Ltd. v Haylor (1957) 97 C.L.R. 177 at p. 182 and discussed again in the Metal Trades case to which we have referred: (1983) 152 C.L.R., at pp. 641-642, 646, 648-652.

[70]

101 Although in Re McCauley; Ex Parte Fraser Davies J was dealing with s 121 in its form prior to 1996, the 1996 amendments are not such as to cause me to disagree with his Honour's conclusion that the Bankruptcy Act does not purport to cover the field. I am not satisfied that s 121 of the Bankruptcy Act prevents the orders being made as sought by the plaintiff under s 37A of the Conveyancing Act, subject of course to the conditions imposed by Gyles J in granting the plaintiff leave to proceed. 102 Mr Perram's submissions on behalf of the New South Wales Attorney General supported this conclusion but with emphasis upon section 9(1) of the Bankruptcy Act as being conclusive in defeating any argument that the Bankruptcy Act covers the field. Mr Perram referred to a similar section in the Trade Practices Act 1974 (Cth) (s 75(1)) and the approach adopted by the High Court in R v Credit Tribunal; Ex parte GMAC (1977) 137 CLR 545 at 552, 564 and 565, in support of the proposition that such a section defeats such an argument. Mr Perram also recognised that s 9(1) of the Bankruptcy Act leaves open the possibility that there may be a direct conflict but correctly stated that the second defendant did not make such a submission. In any event, Mr Perram went further and submitted that even if such a submission had been put it should not find favour because the Trustee has not invoked s 121 of the Bankruptcy Act. 103 In support of this last submission Mr Perram relied upon The State of Victoria & Ors v The Commonwealth of Australia & Ors (1937) 58 CLR 618 (The Kakariki) in which the High Court considered the Victorian Marine Act 1928 (s 13) and the Commonwealth Navigation Act 1912 (s 329), both of which purported to authorise the removal of the wreck of the steamship Kakariki from Port Phillip Bay. In that case there was no attempt by the Commonwealth to exercise its power to remove the wreck and Dixon J said at 630: "I shall confine my reasons to a brief statement of why I think that upon its proper construction sec. 329 of the Navigation Act does not exclude the operation of such a State law as sec. 13 of the Marine Act contains, unless at all events some step is taken by the Commonwealth authorities to exert the power given by sec. 329". After referring to what he had said in Ex parte McLean, Dixon J continued at 631: No doubt there would be or might be an inconsistency if simultaneous attempts by Commonwealth and State authorities to remove the same wreck were possible. But that means, not that the Federal enactment is an exhaustive statement of what power to compel the removal of wrecks shall exist, but that it confers a power to remove wrecks the exercise of which is intended to be exclusive. In other words, sec. 329 should be interpreted as meaning that the exertion of the power by the Minister shall impose upon the shipowner an obligation to the exclusion of similar obligations which might otherwise arise from the exercise of State authority. It may thus be proper to understand sec. 329 as implying that, when the Minister undertakes the removal of a wreck, he may do so without interference from any other public authority. But, if this be so, no more follows than that, when, but not before, steps are taken under sec. 329 by the Commonwealth authority, the State authority becomes powerless.

[72]

105 Mr Aldridge SC put submissions in opposition to those put on behalf of the Attorney General, once again submitting that the relevant provisions of the Bankruptcy Act "cover the field" and that there is simply no room for a multiplicity of actions. There will probably be cases in which the Official Trustee decides to act pursuant to s 121 against a bankrupt in which, as Dixon J said in The Kakariki case, "there would be or might be an inconsistency" if a creditor attempts to bring proceedings pursuant to s 37A of the Conveyancing Act. It will depend on the circumstances of the case. This is not one of them. For the reasons I have given above, I am not satisfied that this defence is made out. Res Judicata/Anshun 106 The second defendant submitted that there is a res judicata estoppel by reason of the consent dismissal of the plaintiff's Family Law Act Application on 20 July 1998. It was submitted that the "issue of the Family Court orders and subsequent transfer" is precluded from being pursued in this action. It was also submitted that even if the precise relief claimed in this Court was not claimed in the Family Court, it could have been claimed. It was submitted that an order could have been claimed "setting aside the Family Law orders and subsequent transfers" but it was not claimed, thus estopping the plaintiff from bringing these proceedings: Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. 107 The Transfers were not "subsequent" to or dependent upon the Consent Orders (Ex M12). They were registered ten months prior to the making of the Consent Orders. The Consent Orders included two declarations stated to have been made "pursuant to Section 78" of the Family Law Act 1975 (Cth) (the Family Law Act) declaring: (1) the second defendant the "sole and absolute owner in law and equity" of 12 Colson Crescent and the Union Road property; and (2) the first defendant "the sole and absolute owner in law and in equity" of the motor vehicle. The Orders did not make any declaration as to the ownership of the Castlereagh Street property, however there was an order that the second defendant list the property for sale forthwith at a sale price of $90,000. The order that the second defendant pay the first defendant the amount of $58,000 did not refer to any section of the Family Law Act and referred to the timing of the payment: $50,000 was to be paid within 7 days of the sale of the Castlereagh Street property.

[77]

114 In Silvera v Savic & Anor (1999) 46 NSWLR 124 Hodgson CJ in Eq regarded the Consent Orders as "spent" because the conveyance had been effected in conformity with the Orders. That case involved orders made under s 79 of the Family Law Act 1975 (Cth) whereas in this case the declaration was made under s 78 of that Act. In Green v Schneller Barrett J was also dealing with orders made under s 79 of the Family Law Act 1975 (Cth) requiring one of the parties to transfer property to the other party. His Honour said: [24] This last point requires amplification. A s 79 order of the kind to which I have referred is not to be regarded as a command that the party to whom the property is to be transferred must remain its owner permanently. Once the order has been complied with, it is open to the transferee to sell or give the property back to the transferor if both of them are minded to take voluntarily the steps necessary to achieve that end. Any such return of the property does not entail disobedience to or disregard of the original order. Rather, there is a new and separate set of events predicated on the position created in obedience to the order, namely, that the transferee party has become the owner of the property to the exclusion of the transferor. [25] I consider that the same kind of analysis holds good in a case where it is asserted that s 37A of the Conveyancing Act should be invoked to reverse the effect of a transfer of property effected in conformity with a s 79 order. Section 37A works on the basis that the alienation sought to be impugned has taken effect and, unless reversed by reference to the section itself, will stand indefinitely. 115 His Honour then referred to the concept of alienation, in particular, that the alienation consists of a series of steps taken by the initiating property owner and said: [30] With the alienation concept thus understood as limited to the acts of the initiating property owner, there need be no particular concern that an order made by reference to s 37A aimed at eliminating the effects of the alienation appears to cut across s 79 orders obtained on the application of that initiating party. That party's approach to a Court exercising jurisdiction under the Family Law Act may fairly be regarded as no more or less than the invocation of the jurisdiction exercisable by reference to the requirements of justice as they effect the interests of the parties to the marriage, unaffected by considerations relevant to other interests. If considerations relevant to s 37A are afterwards found to provide independent grounds for a subsequent order that the effect of the particular alienation be undone, the earlier Family Law Act order does not operate as any form of impediment to the making of the subsequent order.

[78]

116 Barrett J was considering the capacity to make orders under s 37A of the Conveyancing Act where there had been orders made under s 79 of the Family Law Act in the Family Court. Barrett J, in referring to Tamberlin J's decision in Official Trustee in Bankruptcy v Higgins (2000) 109 FCR 1, referred at par [22] to the "clear finding" that there was jurisdiction to make an order under s 121 of the Bankruptcy Act in respect of a disposition of property effected by or pursuant to consent orders made under s 79 of the Family Law Act. Barrett J also referred to Tamberlin J's decision in Mateo v Official Receiver in Bankruptcy (2002) 117 FCR 179 and to the general desirability of questions under ss 120 and 121 being determined in the context of and together with proceedings to set aside the relevant orders under the Family Law Act. Since Barrett J's decision in Green v Schneller the Full Federal Court has dismissed the appeal from Tamberlin J in Official Trustee in Bankruptcy v Mateo (2003) 30 Fam LR 122. Branson J said: [99] In summary, even where the parties to a marriage seek an order by consent in the Family Court under s 79 altering their interests in property, the court has a duty to satisfy itself that the order sought is just and equitable in all of the circumstances. The relevant circumstances include the liabilities, including the unsecured liabilities, of each of the parties to the marriage. A failure to give notice to a significant unsecured creditor of either of the parties to the marriage of the application for the order would be likely to constitute a ground for an application under s 79A to vary or set aside any order made. A disregard by the court of the proper interests of an unsecured creditor who appeared on an application under s 79 would be likely to constitute a ground of appeal against any order made. For these reasons, it would be wrong to see s 79 of the Family Law Act as providing a means whereby the parties to a marriage, or either one of them, can defraud their creditors or the creditors of either of them. [100] It is crucial, in my view, to bear in mind the nature and extent of the powers vested in the Family Court by ss 79 and 79A in giving consideration to whether s 121 of the Bankruptcy Act, on its proper construction, is intended to reach to a transfer of property effected by, or made in compliance with, an order of the Family Court made under s 79 of the Family Law Act. It seems to me that a number of factors suggest against s 121 being intended to have such an operation. 117 Her Honour expressed the view that it was unlikely that the legislature intended s 121 of the Bankruptcy Act to render void an order or part of an order of the Family Court calculated by the Family Court to achieve a proper balance between the competing interests of the parties to a marriage and third party creditors (par [101]). Her Honour also expressed the view that an alteration of the interests of the parties to a marriage does not constitute a "transfer of property" within the meaning of s 121 of the Bankruptcy Act (par [102]). Branson J also expressed the view that at no time after the making of the Family Court order could it be said that any interest in the matrimonial home would probably have become part of the bankrupt's/husband's estate within the meaning of s 121(1)(a). Her Honour continued: [104] The above analysis, in my view, reveals that both the nature of the power given to the Family Court by ss 79 and 79A of the Family Law Act and the language of s 121 of the Bankruptcy Act are inconsistent with a legislative intention that s 121 should have any operation in respect of an order made under s 79 of the Family Law Act including in respect of a transfer made pursuant to such an order. Rather, as it seems to me, the legislature intended that any failure by an order under s 79 of the Family Law Act properly to respect the interests of third party creditors should be addressed by an appeal to the Full Family Court or, in an appropriate case, by an application under s 79A of the Family Law Act to vary or set aside the order. 118 Of some significance to this case, Branson J said: [112] This court's attention was drawn during the hearing of this appeal to a number of decisions of the Supreme Court of New South Wales concerning the interrelationship of s 37A of the Conveyancing Act 1919 (NSW) (the Conveyancing Act) on the one hand and s 79 of the Family Law Act, or s 14 of the Property (Relationships) Act 1984 (NSW) on the other hand, previously known as the De Facto Relationships Act 1984 (NSW). As Wilcox J has pointed out, the terms of s 37A of the Conveyancing Act are significantly different from the terms of s 121 of the Bankruptcy Act. 119 In this regard, I presume that her Honour was referring to the following portion of Wilcox J's judgment dealing with his reference to the view expressed by Hodgson CJ in Eq in Silvera v Savic that the alienation was the whole process of obtaining the consent order and the consequent transfer and that s 37A purports to give power to set that step aside. Wilcox J said: [61] I do not wish to cast doubt upon the correctness of the view expressed in Silvera v Savic and subsequent New South Wales cases, but I see difficulty in applying that view to s 121 of the Bankruptcy Act . Section 37A of the Conveyancing Act uses the broad term "alienation", whereas s 121 is concerned with a "transfer of property". This term is not defined by the Act, other than by the statement in s 121(9)(a) (and s 120(7)(a)) that it includes a payment of money. It seems to direct attention to the particular transaction, commonly a document, that changes title to the relevant property. However, it is important to note that the transaction will not necessarily affect the legal title to the property. That is clear from the passage in Mullane , quoted by Needham AJ in Craven , in which Mason ACJ, Wilson, Brennan, Deane and Dawson JJ said s 79 referred to "orders which work an alteration of the legal or equitable interests in the property of the parties". If the effect of a s 79 order requiring a party to a marriage to transfer an interest in real estate to the other party is to cause the designated transferee to become a bare trustee of the relevant legal interest, that is because the order has vested an equitable interest in the proposed transferee. 120 Wilcox J also expressed the view that it was inappropriate for the Federal Court to put itself in the position of second-guessing the Family Court's assessment of what was just and equitable as between the parties to the marriage. His Honour was of the view that there was a fundamental problem that the critical divesting event was the Family Court's order under s 79 of the Family Law Act, which event lies outside the reach of ss 120 or 121 of the Bankruptcy Act. The critical divesting event in this case was not the Family Court declaration but the Transfers registered in March 1997.

[80]

122 In Official Trustee v Mateo Merkel J was of the view that the contention that ss 120 and 121 operated to render void a transfer of property made under s 79 of the Family Law Act might raise a question of the usurpation of judicial power (at [139]). His Honour was of the view that because the orders had not been set aside or varied on appeal under s 79A or under s 75(v) of the Constitution, they stood valid and operative. His Honour said: [146] In the present case, the Family Court was not accurately informed by the bankrupt of the extent of his liabilities as the Form 12A application did not disclose that the bankrupt was insolvent or that the alteration in property interests would result in the bankrupt being unable to pay his creditors. Thus, the official receiver would appear to be in a strong position to apply to the Family Court under s 79A(1)(a) of the Family Law Act for a variation of the orders. While the issue of whether the official receiver is a "person affected" by the s 79 orders does not appear to have been finally determined in the Family Court (see Higgins at [32]-[37]) it would be an anomalous outcome if the official receiver was not a person affected, given the conclusion reached on this appeal that if the official receiver wishes to set aside or vary s 79 orders that may have been consented to by the bankrupt to defeat his creditors, she needs to do so by an application under s 79A. 123 The second defendant's submission is that the plaintiff is required to make application to the Family Court or the Local Court exercising Family Law jurisdiction rather than seeking to have declarations made under s 37A of the Conveyancing Act which, it is submitted, would be inconsistent with the declaration made in the Local Court in January 1998 that the second defendant was the sole and absolute owner "in law and in equity" of the Colson Crescent and the Union Road properties. Of course there is no such argument available in respect of the Castlereagh Street property and thus, subject to the other defences, there is no impediment to a declaration and order in respect of that property. 124 All of the cases referred to above are cases in which the Court was dealing with a potential conflict between s 79 orders and s 37A of the Conveyancing Act or s 121 of the Bankruptcy Act. This case involves a declaration under s 78 of the Family Law Act. In Re Baxter; Ex Parte Official Receiver in Bankruptcy and Baxter (1986) 10 FCR 398 Northrop J was dealing with a declaration that the wife was the sole proprietor of the equity in the property and an order that the husband forthwith transfer his estate and interest in that property to the wife. Northrop J said that even though such order "may have been beyond the power of the Court", he expressed no view on that question "nevertheless the order remains in existence". His Honour took the view that until the order of the Family Court was set aside it should be given "full faith and credit". 125 In Silvera v Savic Hodgson CJ in Eq distinguished that case from Re Baxter on the basis that in the latter case a declaration of right had been made. One of the distinguishing features to this case is the fact that the declaration was made ten months after the property had been transferred. There was, therefore, no consequential order under s 79 of the Family Law Act as there had been in the cases referred to above. The appellate process or the process of setting aside orders altering property interests under s 79A is predicated upon the applicant being a "person affected by an order made by a court under s 79 in proceedings with respect to the property of the parties to a marriage". This was not such an order. In Silvera v Savic Hodgson CJ in Eq said: 78. However, it seems to me that s 37 A itself may provide the necessary power to the Supreme Court. In my opinion, the "alienation" in this case was the whole process of obtaining the Local Court order and the consequent transfer; and it is that whole alienation that is made voidable by s 37 A . In my opinion, if one step in that alienation is the fraudulent obtaining of a Local Court order, then s 37 A itself purports to give power to set that step aside. The question would be whether that legislative grant of power prevails over the possible exclusion of that power by s 69 of the Local Courts (Civil Claims) Act 1970 . On the whole, I am inclined to think that s 37 A would prevail: the very existence of s 84(1)(r) in the Local Courts (Civil Claims) Act 1970 shows that s 69 of that Act is not intended to prevail over more particular inconsistent statutory provisions. 79. The final possibility, namely a declaration and orders making provision for an application to the Local Court to set aside its order is also, in my opinion, one that would be open to this Court. Having found that the whole process was undertaken with the intention to defraud creditors, the Supreme Court can, in my opinion, order the parties to the transaction to apply to the Local Court to set aside the order which they obtained. However, for reasons I have given this is not necessary in this case. 126 This is not a case in which this Court is second guessing the Family Court. The evidence discloses that the solicitor who prepared the Consent Orders, upon whom the Family Court was entitled to place implicit trust, was misled as to the status of the properties. He was not informed that the three properties were subject to Mareva Orders and the Local Court exercising Family Law jurisdiction was also misled in this regard. 127 This case is distinguishable from the facts in all the cases referred to earlier. In no case has there been registration of a transfer of property and a subsequent Family Court Consent declaration. I am concerned to ensure that this Court does not trespass upon the domain of the Family Court or the Local Court exercising Family Law jurisdiction. The circumstances now are quite different to the circumstances that prevailed when the defendants fraudulently secured the consent declaration from the Local Court. One approach that may be available is to make the declarations that the alienation included the obtaining of the consent orders and to declare that the second defendant is the owner at law and in equity of her half interest in the three properties with consequential orders for the re-transfer by her of the first defendant's interests in the properties. These declarations and orders would then be superimposed on the consent declaration and would not be in conflict with it. 128 For abundant caution and to ensure that there is no question of usurpation of judicial power, the approach adopted by Hodgson JA in Silvera v Savic is, in my view, one that is appropriate to take in this case. The "alienation" in this case was the whole process of the registration of the transfers and the subsequent fraudulent obtaining of the Consent Orders in the Local Court. Consistently with what Hodgson JA said in Silvera v Savic and with my finding that the whole process was undertaken with the intention to defraud creditors, it is appropriate in this case to order that the first and second defendants lodge further Consent Orders in the Local Court to set aside the declaration made in January 1998.

Nick Houvardas v George Zaravinos and Anor

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