Official Trustee in Bankruptcy (Trustee of the bankrupt estate of George Stephen Greer) v Greer

REASONS FOR JUDGMENT 1 On 25 June 1998 Burchett J made a sequestration order against the estate of George Stephen Greer ("Mr Greer") in proceedings NP 818 of 1996: Greer (aka Duffy) Re; Deputy Federal Commissioner of Taxation (1998) 39 ATR 331. The debtor was described in the title to those proceedings as: "George Stephen Greer (also known as John Duffy)", but his Honour directed that the proceedings be amended to show the name of the debtor as George Stephen Greer. 2 The property known as 5 Blackwood Close, Beecroft NSW ("the Beecroft property") is the land comprised in Certificate of Title Vol 11523 Folio 106. John Duffy is registered as the proprietor of that land as a result of a transfer registered on 4 March 1982. A form of transfer dated 16 February 1982 for a consideration of $129,500 has been produced, which was accepted by Peter James Caldwell, solicitor, for John Duffy as transferee. Contact was made by an Insolvency & Trustee Service Australia ("ITSA") officer with Mr Caldwell on 21 December 1998. He had no recollection of Mr Duffy or the transaction, and said that his files had been destroyed many years ago. Subsequently, Mr Caldwell located a security register recording collection of title deeds to the Beecroft property by "Duffy J" on 29 November 1982. That did not assist Mr Caldwell's recollection. 3 The applicant in the present proceedings contends that John Duffy and Mr Greer are one and the same person. The name John Duffy is said to be an alias adopted by Mr Greer. Alternatively, the applicant says that if John Duffy and Mr Greer are different persons, Mr Greer is entitled to an equitable interest in the property arising from contributions which he made to its purchase price in 1982, and from an agreement with John Duffy made at that time as to the sharing of any profit attributable to any subsequent increase in value of the property. 4 On 27 August 1987 Mr Greer was arrested by police (affidavit of M Findlay of 1 December 2000 at 58. All subsequent page references in brackets refer to this affidavit.) He was suspected of supplying heroin. On that date a search warrant was executed at the Beecroft property (58) and a large number of articles were seized. Thereafter Mr Greer was charged with 27 counts of receiving stolen property and with the offence of "goods in custody" in respect of articles which were seized on that occasion. 5 At the time of Mr Greer's arrest he had in his possession receipts in relation to the purchase and sale of Australian Mint sovereigns from and to Jaggards Coins Australia Limited ("Jaggard") (58). The significance of this will later emerge. 6 On 28 August 1987, Pamela Joy Blain gave a signed record of interview to police (79) as to the circumstances regarding her friendship with Mr Greer, who she first met in July 1986. The record included the following: "Q.9 Where did he reside? A. I have only known him to reside at 5 Blackwood Close, Beecroft. Q.10 What did he tell you about the ownership of that house? A. That he paid cash for it about four years ago, he said $150,000. He's got a photo album and it shows the house being advertised for $180,000. He got it cheaper because it was run down and he was paying cash. ... Q.12 Does any other person reside there with him? A. Not that I'm aware of, no. ... Q.16 How often have you been to the Beecroft address? A. Say every Friday night. Very rarely did we go Saturday as well. I would drop my kids off at my parents on Friday nights and we would go out for dinner and stay at Beecroft Friday nights. Sometimes I would stay Saturdays and do housework for him." On 1 August 2001 Ms Blain swore an affidavit in these proceedings in which she repeated the statements made by her in the record of interview. 7 In a record of interview with Detective Sergeant Steer on 22 November 1988, Mr Greer is recorded as having stated that he lived at the Beecroft property which was owned by John Duffy. Mr Duffy lived in Melbourne. Mr Greer did not know his address. He last saw him "some time ago". 8 On 11 September 1989 Mr Greer was imprisoned. That date is taken from evidence given by Mr Greer. The circumstances of his imprisonment on that date have not been established. It may have been in relation to the receipt of stolen property. He remained in jail until his release on 8 September 1996. On 9 October 1992 Judge Hinchington sentenced Mr Greer to various terms of imprisonment on a number of counts of supplying heroin and other drug offences. 9 According to a letter from Hornsby Council dated 7 April 1998 "Mr Duffy" purchased the Beecroft property some time in 1981. The first rate notice was issued to "Mr Duffy" in January 1982. Rates were paid between 1982 and 1989. From 1990 to the date of the letter no payments on account of rates have been received. Thus rates ceased to be paid on the Beecroft property at about the time of Mr Greer's imprisonment. 10 At some stage in 1992 proceedings were instituted in the Common Law Division of the Supreme Court of NSW between the Deputy Commissioner of Taxation as plaintiff and Mr Greer as defendant. On 16 September 1993 the Court granted an injunction in the nature of a Mareva injunction against Mr Greer which, amongst other things, restrained him from dealing with the Beecroft property (91). The evidence in those proceedings included an affidavit by Detective Sergeant McKay (58-59) which deposed to a belief that the Beecroft property was property of Mr Greer for reasons which were given. The affidavit included a statement that the title to the Beecroft property is registered in the name of John Duffy, but: "All attempts to locate or identify this person have been unsuccessful and I believe this name to be fictitious and that the true owner of this property is (Mr Greer)." On 17 September 1993 (187) a request was made that the Registrar General should note the orders of the Supreme Court upon the title to the Beecroft property, a request which was complied with (29). 11 As I have indicated, Mr Greer was released from prison on 8 September 1996. According to the judgment of Burchett J earlier referred to, on 11 June 1996 Mr Greer committed an act of bankruptcy by reason of his failure to comply with the bankruptcy notice issued by the Deputy Commissioner in relation to a Supreme Court judgment in the sum of $2,035,563.37. According to the judgment of Burchett J, one of the issues for determination in the bankruptcy proceedings was that of Mr Greer's solvency. On 2 June 1998 Mr Greer swore an affidavit in the bankruptcy proceedings as to his assets and liabilities. In that affidavit Mr Greer stated (38) that he considered that he had an interest in the Beecroft property. Although his solicitor had advised him that the matter of his interest in the property was not free from doubt, he considered that the value of his interest in the Beecroft property was approximately $230,000. The affidavit continued: "4. My valuation of my interest in the Beecroft property is based on my recollection of my understanding with Mr John Duffy and also my recollection of monies applied to purchase the property. It is my recollection that I provided approximately 85% of the funds John Duffy applied to purchase the property, and to meet acquisition costs. The arrangement with Mr John Duffy was that we would share equally in any profit attributable to the increase in value of the property. The property is valued at $320,000." 12 On 23 June 1998 Mr Greer swore a further affidavit in the bankruptcy proceedings. In that affidavit Mr Greer asserted that he acquired an interest in the Beecroft property (approximately $110,000 in 1982). That affidavit gives some detail as to the accumulation of funds by Mr Greer and the making of two or three transfers of funds to John Duffy from September 1979, to late 1981/early 1982. The affidavit continued: "11. In late 1981/early 1982 John Duffy and I had decided that he would purchase a property using the funds I had transferred to him and we would do it up and split any profit made on resale. 12. I had held concerns that if I was to purchase a property in my name with the funds that I had been accumulating it may not appear consistent with my taxation records and business affairs. Some of the funds I had accumulated may not have been declared in tax returns I had lodged over the years." In par 31 of that affidavit Mr Greer rejected the Australian Taxation Office's ("ATO") assertion that John Duffy does not exist. 13 As already indicated, a sequestration order was made on 25 June 1998. Burchett J rejected Mr Greer's contention that he was solvent. On 28 January 1999 Mr Greer swore a statement of affairs (7) in which he swore that his assets consisted of a box trailer valued at about $250.00 and an electrician's licence valued at about $110.00, bringing his total assets to $360.00. There was no reference in this statement to the Beecroft property. 14 On 19 April 1999, in proceedings in the Common Law Division of the Supreme Court of NSW, Simpson J ordered that: "1. Pursuant to s 22 of the Criminal Assets Recovery Act 1990 the interests in property of John Duffy in the property specified in the Schedule hereto be forfeited to, and vest in, the Crown. 2. Pursuant to s 138(1) of the Real Property Act 1990 the Registrar General create and issue a new Certificate of Title for the property specified in Part One of the Schedule hereto." The property described in Part 1 of the Schedule was the Beecroft property. Section 23(1) of the Criminal Assets Recovery Act 1990 (Cth) provides that on an assets forfeiture order taking effect in relation to an interest in property, the interest is forfeited to the Crown and vests in the Public Trustee on behalf of the Crown. Those proceedings were not served upon Mr Duffy as the NSW Crimes Commission had certified that reasonable efforts to effect personal service of documents relating to the proceedings would be unsuccessful. Notice of the proceedings was published in the Sydney Morning Herald on 14 April 1999. 15 On 8 November 1999 Mr Greer proceeded by way of motion in the forfeiture proceedings in the Supreme Court seeking an order that he be permitted to bring an application to prevent the forfeiture to the Crown of the Beecroft property (3). The matter was heard before Simpson J on 6 December 1999 (132). During the course of argument (144) Mr Fitzgibbon, counsel for Mr Greer responded to a question by her Honour as follows: "Her Honour: Is it your case that Mr Greer is John Duffy? Fitzgibbon: No." Counsel asserted that Mr Greer says that the Beecroft property is his (145), or at least (146) that he had an interest in the property. 16 Mr Greer gave evidence on that application. In cross-examination he said (149): "Q. When was the last time you saw Mr Duffy? A. Many years ago now. I can't recall even the year let alone the month. Many years. Q. Before you went to gaol? A. Yes. Q. Do you know where he is now? A. The last I heard he was in Melbourne. Q. From whom did you hear that? A. His mail, I was advised the mail coming, to the Beecroft address, it was forwarded to the Melbourne Post Office. Q. Who advised you of that? A. He did when I last spoke to him. Q. Which was when? A. Some time prior to going into custody, yes." 17 On 5 May 2000 Simpson J ordered that the Notice of Motion taken out by Mr Greer should be summarily dismissed (157). Her Honour said that Mr Greer was confronted with three difficulties. First, there is no assets forfeiture order relating to any property of Mr Greer. Mr Greer in his evidence did not claim any identity with John Duffy and indeed claimed that he had lent money in 1982 to Mr Duffy to purchase the real estate. Mr Greer is not therefore, a person whose interest in the property was forfeited by the assets forfeiture order, and he is not a person entitled, by s 25(1), to make an exclusion application. Second, the evidence was insufficient to show that Mr Greer had a proprietary interest in relation to the Beecroft property (164). Third, the application was made out of time, and having regard to the conclusions which her Honour had reached, to grant an extension of time would be a futility. Her Honour made it clear (164) that she was proceeding upon the basis that whilst there was evidence that some federal authorities believed that John Duffy and George Greer are one and the same person, Mr Greer denies this, and that denial must be accepted for the purposes of the proceedings, as there was no evidence to establish the contrary proposition. 18 Thereafter correspondence ensued between the present applicant and the NSW Crimes Commission apparently provoked by an enquiry from the Land Titles Office as to which takes priority - vesting in the Official Trustee in Bankruptcy or vesting in the Public Trustee. On 18 August 1999 agreement was reached between these authorities that the Public Trustee would become registered as the proprietor of the Beecroft property, and would hold the net proceeds of the sale of that property in trust pending the outcome of proceedings which had been foreshadowed on behalf of the Official Trustee in Bankruptcy. The Australian Government Solicitor (33) had foreshadowed Federal Court proceedings which would be cross vested to the Supreme Court, to be joined with the forfeiture proceedings. 19 On 6 December 2000 the present application was lodged. No application has been made to cross vest the proceedings to the Supreme Court. Mr Greer was named as first respondent. He did not appear when the matter was called on for hearing on 18 July 2001, and for reasons which I then gave, I acceded to the applicant's request that the matter should proceed in his absence. The Public Trustee was joined as the second respondent, and it lodged a submitting appearance. 20 In addition to the matters to which I have already referred, the following materials were relied upon by the applicant in support of its contention that John Duffy and Mr Greer are one and the same person. On 23 March 1984 Barclays Australia Ltd drew a cheque for $351,162.10 in favour of J. Duffy (46). On 23 March 1984 Jaggard Coins Australia Pty Limited raised an invoice in relation to a cash sale of Australian Mint sovereigns for $351,140.50. It may be that this invoice bears a signature purporting to be that of K Clarke. In the applicant's contention that is another alias adopted by Mr Greer. Mr Dick, the general manager of Jaggard's informed Mr Everton, a taxation officer, that the purchaser of those coins introduced himself as "George" but offered no further information such as a surname or address (43). Amongst the documents taken from the Beecroft property when the search warrant was executed on 27 August 1987 was: "1 Jaggard Coins Australia receipt for $351,140.50 for gold coins." 21 On 19 May 1986 Jaggard Coins recorded a cash purchase of Australian sovereigns for $295,665.00 (49). On 30 May Jaggard drew a cheque in favour of J Duffy for the sum of $250,000.00, and on 13 June 1986 Jaggard drew a cheque in favour of TriContinental group of companies for $45,665.00. The first of those cheques is endorsed in favour of TriContinental by a signature purporting to be of that of J Duffy (125). The signature is quite different from that of J Duffy which was endorsed on another cheque for $483,607.90 drawn in his favour by TriContinental on 3 September 1987 (57). The two cheques were credited to an account kept in the books of TriContinental styled: "Mr J Duffy C/- Mr Greer 33 A'Beckett Street GRANVILLE NSW 2142." Amongst the documents seized from the Beecroft premises when the search warrant earlier referred to was executed, was: "1 Jaggard Coins receipt for $295,665 for sovereigns." 22 The facts as I have so far recounted them have largely been drawn from documents attached to the affidavit of Mark George Edgar Findlay sworn on 1 December 2000, although that material was expanded in some respects by subsequent affidavits. I am satisfied that a copy of this affidavit was served on the respondents. Much of the material attached to that affidavit is not in a form in which, if objection were taken to it, would be admissible in the present proceedings. As neither respondent has appeared, the affidavit was read without objection, although I raised with the applicant's counsel the issue of admissibility. 23 Given the generally probative nature of the materials in question, it seems to me that I should receive Mr Findlay's affidavit and documents attached to it for whatever rationally persuasive power they may have. I do not think that the adoption of that course is inconsistent with the principles as to the status of evidence not objected to - see Cross on Evidence (6th Australian Edition), assuming those principles apply to proceedings which are effectively ex parte. I have noticed that in Spencer v VMD Packaging Pty Ltd [2001] NSWCA 118 Hodgson JA criticised the use of an unsworn expert's report in District Court proceedings. His Honour said: "The report was unsworn and therefore was hearsay and, in my opinion, it should not have been admitted in evidence at the ex parte hearing unless it fell within some exception to the hearsay rule. The mere fact that the hearing was ex parte, and for that reason no objection was made to the hearsay material, does not in my opinion justify the admission of hearsay material." But that was a decision on the particular facts of that case which does not lay down any matter of general principle. 24 Insofar as the materials attached to Mr Findlay's affidavit consists of affidavits filed in other proceedings, I would give leave to the applicant pursuant to Order 33 rule 5 to read those affidavits in these proceedings. I also take the view that I should infer from the failure on the part of either respondent to appear or to answer Mr Findlay's affidavit, that the basic facts referred to therein are not bona fide in dispute, hence I should dispense with compliance with the rules of evidence pursuant to Order 38 rule 3 of the Federal Court Rules to the extent necessary to permit the applicant to rely upon that affidavit in proof of those facts. There is nonetheless an issue as to whether those facts are sufficient to establish that John Duffy is an alias for Mr Greer, or as to whether those facts are sufficient to establish that Mr Greer has an equitable interest in that property. 25 The substantial contest in these proceedings is between the Official Receiver on the one hand, and Public Trustee on the other. If there is a John Duffy who has a legal or equitable interest in the Beecroft property then it has been forfeited to Public Trustee pursuant to the order of Simpson J. If Mr Greer has an interest in that property derived from his dealings with Mr Duffy in 1982 then that interest has vested in the Official Receiver pursuant to s 58(1) of the Bankruptcy Act 1966 (Cth) ("Bankruptcy Act"). If John Duffy is simply an alias for Mr Greer then either Mr Greer's interest is forfeited to the Crown by virtue of Simpson J's order or it vests in the Official Receiver pursuant to s 58. In the former situation there may be a priorities issue as between the Official Receiver and the NSW Crimes Commission, having regard to Mr Greer's earlier bankruptcy. However, whatever view one takes of the facts, the contest is substantially one between the Official Receiver and Public Trustee. Nonetheless I think that it is proper to approach the evidentiary question in the way that I have indicated, as NSW Crimes Commission is on notice of these proceedings (apart from the fact that the Public Trustee is a respondent) and the Greer/Duffy situation has been investigated by the Commission. 26 There is also evidence from Mr Findlay in his affidavit of 29 June that on 14 June 2001 he sent a letter to every "J Duffy" appearing in the Sydney white pages telephone directory, which included the following: "The Official Trustee in Bankruptcy is endeavouring to find out whether a person known as John Duffy having an interest in 5 Blackwood Close Beecroft exists. Accordingly if your name is John Duffy and you claim to have had an interest in the property or it's proceeds, you are requested to contact me by 5 pm Friday 22 June 2001 on (02) 8233 7886 or by facsimile (02) 8233 7892. If I am not contacted the proceeds of sale of the property claimed by the Official Trustee, will be distributed in accordance with the Bankruptcy Act as the bankrupt's divisible property. If you know nothing of this matter, please disregard this letter." No response was received to any of those letters. But it should be recalled that, according to Mr Greer, when he last heard of Mr Duffy, he was in Melbourne. 27 At the conclusion of the hearing on 18 July 2001 the applicant sought an adjournment to adduce further evidence, and I acceded to that application. The matter was stood over until 23 August 2001. On that occasion Mr Greer appeared, he having been notified of the adjournment. Notification of the adjournment was also given to the NSW Crime Commission and the Public Trustee, but neither appeared on the adjourned date. 28 A further affidavit by Mr Findlay of 20 August 2001 was read at the adjourned hearing. That affidavit established that as at 14 January 1999, water rates of $8,123.85 were owing in respect of the Beecroft property, the account for which was addressed to "Mr J Duffy" at the Beecroft property. The outstanding debt was paid after the sale of the property. The affidavit also established that the Australian Electoral Commission had advised: "A search of electoral rolls for New South Wales from 1 January 1982 to date has failed to find anyone by the name of John Duffy (d.o.b. 1 May 1942 ) enrolled to vote for 5 Blackwood Close, Beecroft or anywhere else in that State." 29 The source of the information "(d.o.b. 1 May 1942)" does not emerge. Why the search was confined to electoral rolls for New South Wales does not emerge. Neither of those limitations on the search field was contained in the Notice to Produce Information pursuant to s 77C(1)(a) of the Bankruptcy Act which was the catalyst for the advice from the Australian Electoral Commission. 30 The applicant sought a further adjournment of the proceedings to adduce further evidence, to which I acceded. Thereafter evidence was produced that: