Stojanovski v Stojanovski

Solicitors: Polczynski Robinson (Fifth and Sixth defendants) Johnsons Solicitors (Fourth defendant) File Number(s): 2012/00089349 Publication restriction: Nil

Judgment

1. HER HONOUR: On 5 December 2018, I heard an application for summary judgment pursuant to r 13.1 of the Uniform Civil Procedure Rules 2005 (NSW) brought by notice of motion filed on 15 October 2018 by the fifth and sixth defendants in these proceedings, they being the trustees in bankruptcy (Trustees) of the first defendant (Robert Stojanovski). The present proceedings have a rather tortuous litigious history, to which I will refer shortly, but the Trustees' summary judgment application goes to a discrete issue as to the operation of s 120 of the Bankruptcy Act 1966 (Cth) in the particular circumstances which have arisen in this case; and was heard by me, separately from the plaintiff's claims in the proceedings, in the interests of the just, quick and cheap resolution of the real issues in dispute on the Trustees' claim.

The parties

1. The underlying dispute is a longstanding one between the plaintiff (Steven Stojanovski) and his brother, the first defendant (Robert Stojanovski), over an alleged testamentary agreement. Steven and Robert are the sole surviving children of the late Nada Stojanovski, who died on 20 January 2006, leaving a will dated 3 January 2006.
2. The second defendant, Jovanka Stojanovski, is Steven's former wife. As I understand it, she has taken no active role in the present proceedings. The third defendant, Jordan Stojanovski, is the executor of Nada Stojanovski's deceased estate and again, as I understand it, has taken no active role in the present proceedings. Further, in the latest iteration of the pleading (the fifth further amended statement of claim filed 25 June 2018), it is alleged (at [2AA]) that the third defendant (Jordan) has taken no active part in the administration of the will or the estate since he fully distributed the estate "as regards each of the gifts made in the will to the first defendant [Robert]" between 2006 and 2009.
3. The fourth defendant, Angelina Stojanovski, is the estranged (though not yet divorced) wife of the first defendant, Robert. She is the registered proprietor of the three parcels of land the subject of the present summary judgment application (to which I will refer as the Breakwell, Kemp and Morts properties).
4. The fifth and sixth defendants are the trustees in bankruptcy who were appointed to Robert's bankrupt estate on 30 June 2017 by order of the Federal Circuit Court. The sequestration order (Tab 1 of Exhibit A) noted, and it is not disputed, that the commencement date of Robert's bankruptcy was 25 March 2016.

Steven's claims

1. The genesis of the dispute between Steven and Robert relates to an alleged testamentary agreement that Steven sought after his mother's death to enforce (see the explanation given by Steven's Counsel, Mr Bevan, on 5 December 2018 - at T 10.19, when I made directions as to the ongoing conduct of the main proceedings before hearing the present application) and the entry by the two brothers into a deed of release in June 2009 to resolve their differences (T 10.20), which deed of release itself subsequently became the subject of dispute - to which I refer below.
2. In the fifth further amended statement of claim filed on 25 June 2018, Steven alleges that in about 1984 Nada purchased the Breakwell property (in Mortdale, NSW) and that she had a beneficial interest in the property at her death. As to the Kemp and Morts properties, Steven alleges that in early 1991 Nada and Robert jointly purchased a property known as the Kemp property (also in Mortdale); but that Robert held his interest in the property on resulting trust for Nada, as she paid all the loan repayments and he never made any financial contribution; and a similar allegation is made in respect of the Morts property, which Robert purchased in his own name allegedly on the agreement that Nada would be solely responsible for the purchase price and loan repayments, such that it is alleged that an express or resulting trust arose in Nada's favour of the whole property.
3. There is a fourth property the subject of Steven's claims (but not relevant to the present application), namely the Jersey property. It is alleged that Steven, Robert and Nada agreed in about February 1993 to purchase the Jersey property, to which they would make equal financial contributions and which they would sell for gain. (In the main proceedings, as I understand it, the Trustees have conceded the testamentary agreement claim and that the Jersey property is held on constructive trust for Steven and should be transferred to him - see T 13.29 - 14.49ff; but Robert himself does not concede that.)
4. Steven alleges that on 3 January 2006 Nada made certain promises about gifts after her death ([2C] of the fifth further amended statement of claim). It is alleged that Robert is in breach of his obligations under this "testamentary agreement" ([2CB]-[2CD]). It is also contended that the executor of Nada's estate, Jordan, has committed certain "testamentary contraventions" ([4BD]-[4BE]).
5. As indicated earlier, Steven and the first and third defendants (Robert and Jordan) entered into a deed of release. The deed was executed on 30 June 2009 and it led to the discontinuance of the proceedings then on foot (the 2007 proceedings to which I refer at [13] below) and the release of a family provision claim by Steven. In due course (see the history of the litigation set out below) on 16 November 2012 (Stojanovski v Stojanovski [2012] NSWSC 1338) Pembroke J held that the deed was null and void. In the fifth further amended statement of claim, Steven contends that he is entitled to a taking of accounts and restitution for benefits received by Robert in the period before that order was made; being benefits such as "the discontinuance of the FPA proceedings" which Steven contends Robert otherwise would not have had (see at [25] of the fifth further amended statement of claim).
6. Relevantly, for present purposes, in the fifth further amended statement of claim, Steven pleads (at [28B]-[28C]) that in May 2013 Robert and Angelina obtained an order (from the Family Court) for the transfer of the Breakwell, Kemp and Mort properties from the name of Robert to the name of Angelina, that order being in alleged contemplation of divorce; and that the transfer of Robert's interest in those properties was subsequently made, without consideration being provided. It is contended that this was an alienation of property with intent to defraud creditors ([28D]) and that the transfers are voidable at the instance of Steven and Jovanka ([28E]). In these proceedings Steven also seeks to press a family provision claim (out of time) for provision out of Nada's estate ([30A]-[30V]).

The history of the litigation between the respective parties

1. The following summary of the rather unfortunate history of the litigation in this and other Courts to the present date is drawn from information gleaned from Counsel for Steven, Mr Bevan, at the directions hearing held before I commenced hearing the summary judgment application; and from a brief review of the Court file. I do not make any findings here as to any disputed matters, but set out this review only for the purpose of an understanding of the background to the Trustees' present application.
2. Proceedings were first commenced in this Court in 2007 in relation to the dispute(s) within the Stojanovski family following Nada's death (proceedings no 3701/2007). Little need be noted about those proceedings save that it appears that they were discontinued as a consequence of entry into the deed of release in June 2009. That deed of release (or perhaps - since I have not reviewed its terms - only the transfer of certain property as provided for under that deed of release) was apparently subject to consent being obtained from Steven's estranged wife (Jovanka) by a certain date. That consent, it was subsequently found by Pembroke J, had been withheld by her - see below.
3. Further proceedings were commenced by Steven in this Court in 2012 (proceedings no 2012/0089349) seeking, among other things, declarations that Robert was not entitled to rely upon (or alternatively was estopped from relying on) cl 3.19 of the deed of release (which, as I understand it, related to the issue of Jovanka's consent) and that Steven was entitled to have the 30 June 2009 deed specifically performed and carried into effect. In the alternative, leave was sought for Steven to withdraw the notice of discontinuance filed in the 2007 proceedings or alternatively to commence and file a claim of the same or similar nature constituting a family provision claim by Steven for provision from the estate of his late mother, Nada.
4. The 2012 proceedings were listed before Pembroke J. On 30 October 2012, Pembroke J ordered that a separate question be heard in the proceeding, namely as to: "Whether by 30 September 2009, the consent of the second defendant (caveator) to the lodgement of the transfer referred to in Clause 3.1 of the Deed of Release dated 30 June 2009 had been obtained". (Jovanka had apparently by then lodged a caveat on the title to one or more of the relevant properties.) In November 2012, his Honour answered that question in the negative and, as noted, declared the deed of release null and void (see the account given at T 10.25 of the transcript of the directions hearing before me on 5 December 2018).
5. On 1 February 2013, Pembroke J fixed for hearing applications by Steven and Jovanka to bring family provision claims out of time.
6. Not long thereafter, on 1 May 2013, at a time when the 2012 proceedings in this Court, to which Robert was a party, were on foot (concerning, among other things, Steven's claim for an extension of time to seek provision out of Nada's estate and thus raising issues in relation to the interests Robert held in the Properties potentially being designated as notional estate of the deceased, Nada) and when there were other proceedings on foot to which the brothers were party (being proceeding commenced in the Sydney Registry of the Family Court between Steven and Jovanka, in which Robert had intervened), Robert and Angelina filed an application for consent orders in the Parramatta Registry of the Family Court (Exhibit A p 16). It is not clear why that application was filed in the Parramatta Registry of the Family Court when there were already proceedings involving some of the same family members on foot in the Sydney Registry.
7. The application provided, inter alia, for orders that Robert transfer to Angelina: his (half) interest as joint tenant in both the Morts and Breakwell properties and the whole of the Kemp property (of which he was the sole registered proprietor) (collectively, the Properties). The application made reference to the Family Court, Sydney proceedings but no reference to the claims made by Steven in the present (2012) proceedings.
8. On 7 May 2013, orders were made by a Registrar of the Family Court in the Parramatta Registry in the terms sought in the application filed by Robert and Angelina (the Family Court Orders), by sealing minutes of the consent orders that had been filed in the Registry (Exhibit A p 36ff). (There was thus no hearing as to the merits of any contribution claims by Angelina that might be said to have been reflected in the property adjustments for which the consent orders made provision.) Order 1 of the Family Court Orders required both parties to do all acts and things and sign all documents for Robert to transfer to Angelina all of his right, title and interest at law and in equity in the Properties.
9. On 31 May 2013, the following transfers of land were effected by Robert: by transfer AH772918, his interest as joint tenant in the Morts Property (the Morts Transfer); by transfer AH7792919, his interest as joint tenant in the Breakwell Property (the Breakwell Transfer); and by transfer AH779217, the Kemp Property (the Kemp Transfer) (collectively, the Transfers) (Exhibit A pp 7; 11; 15, respectively). In each case the transferee recorded on the Transfer was Angelina and in each case the Transfer recorded that it was made pursuant to an order of the Family Court (and no consideration for the Transfer was there specified, whether in monetary terms or otherwise).
10. On 9 August 2013, Pembroke J ordered that Angelina be joined as the fourth defendant to the 2012 proceeding.
11. As I understand it, it was after this that Steven first became aware of the transfer of the Properties to Angelina. Mr Bevan informed me at the directions hearing on 5 December 2018 that it was on the eve of the "second hearing" (which he described as the substantive trial in the testamentary agreement case) that it was discovered that the "estate property" had been transferred by Robert to Angelina (see T 10.28); and that it was subsequently discovered that consent orders had been made in the Family Court in Parramatta in relation to those transfers. Steven then lodged caveats over the Breakwell and Kemp properties (as I understand it, this occurred on or about 23 August 2013).
12. Lapsing notices were issued on the application of Angelina in relation to the caveats lodged over the Breakwell and Kemp properties and, on 30 September 2013, Steven commenced separate proceedings in this Court against Angelina (proceedings no 2013/294278) by way of summons seeking an order pursuant to s 74K of the Real Property Act 1900 (NSW) that the operation of the two caveats be extended until further order of the Court.
13. On 11 October 2013, Slattery J made an order granting Steven leave pursuant to s 74O of the Real Property Act to lodge further caveats on the Breakwell property and the Kemp property (see Stojanovski v Stojanovski [2013] NSWSC 1491). (Those proceedings, as I understand it, have been concluded other than as to the question of costs, which appears to have been left to be dealt with as part of the determination of the 2012 proceedings.)
14. On 28 March 2014, Pembroke J granted leave to Steven to amend his originating process in the 2012 proceedings.
15. On 2 May 2014, the matter came before the Expedition Judge and the matter was fixed for hearing before Sackar J for 5 days commencing 27 October 2014. (It is not clear from my brief review of the Court file what happened to that fixture.)
16. Meanwhile, an application was made by Steven to set aside the Family Court Orders pursuant to s 79A(1) of the Family Law Act 1975 (Cth). That section, relevantly, provides as follows: (1) Where, on application by a person affected by an order made by a court under section 79 in property settlement proceedings, the court is satisfied that: (a) there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information), the giving of false evidence or any other circumstance; or … the court may, in its discretion, vary the order or set the order aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside.
17. On 30 July 2014, Foster J in the Family Court heard that application on an undefended basis and made orders setting aside the Family Court Orders pursuant to s 79A.
18. On 3 September 2014, Angelina filed an application in the Family Court to set aside the orders made by Foster J. That application was dismissed by Le Poer Trench J on 18 May 2015 and costs orders were made against Angelina in relation thereto.
19. Pausing here, objection was made on the present application to any reliance being placed on any findings of fact in the above reasons for judgment (referred to at [19] and [20] of the affidavit affirmed 15 October 2018 by the Trustees' solicitor, Ms Claire Latham, and the relevant documents exhibited to that affidavit) to prove any fact that was in issue in those proceedings (see s 91 of the Evidence Act 1995 (NSW)) and an order limiting the use of those parts of the evidence was sought by Angelina. The Trustees expressly disavowed any such reliance on that evidentiary material.
20. It is relevant, however, to note that Angelina's solicitors have acknowledged, in correspondence with the Trustees' solicitors (see below at [52]), both that the Family Court Orders were set aside due to Robert and Angelina "failing to disclose the prospective and pending third party interest" of Steven and Jovanka on the Application for Consent Orders; and that the orders were set aside pursuant to s 79A(1)(a) of the Family Law Act (which is enlivened where there is a miscarriage of justice due to one or more of the matters there set out). Accordingly, leaving aside any question of fraud (which was not conceded by Angelina and cannot be proved by reference to the findings in the earlier judgments), it cannot be disputed that there was a failure to disclose information by Angelina that amounted to a miscarriage of justice for the purposes of s 79A(1)(a) of the Family Law Act. So much has been acknowledged by Angelina's solicitors and was not disputed on the present application.
21. Returning to the chronology in relation to the present proceedings, on 23 September 2015 Young AJA granted Steven leave to file and serve an amended statement of claim by no later than 15 October 2015 and made directions for the defendants to file any defences or amended defences by no later than 5 November 2015; and on 18 March 2016, Young AJA ordered Robert to file and serve by 29 April 2016 his defence to the third further amended statement of claim and ordered that Jovanka and Jordan be excused from appearing at the hearing of what was then the third further amended statement of claim. (This no doubt explains their current inactive role in the present proceedings.)
22. The matter was then listed for a five-day hearing commencing 28 November 2016 before Robb J. I am informed by Mr Bevan that, during the course of that five day hearing, Robb J questioned the standing of Steven to enforce the alleged testamentary agreement and that his Honour took the preliminary view that the representative of the estate was the proper plaintiff (not the beneficiary of the testamentary agreement being sought to be enforced). Mr Bevan informed me that, against the possibility that that view of the law was correct, leave was then sought to amend the pleading to include a claim for leave to enforce a testamentary agreement on behalf of the estate (see T 2.34ff); and it seems that at least in part the reason that the hearing was not completed within the 5 days that had been set aside for it was the time occupied in debate on the standing issue.
23. The hearing was then adjourned. By that stage of the proceedings, I am told, all the plaintiff's witnesses had been cross-examined and cross-examination of the first defendant (Robert) had been commenced but this had not been completed (see T 1.49; T 5.1). Nor has the hearing yet been completed, due it appears, to events connected with Robert's subsequent entry into bankruptcy (see below).
24. On 17 February 2017, Robb J granted Steven leave to file a fourth further amended statement of claim and ordered Robert and Angelina to file and serve their defences thereto by 21 April 2017. The matter was then listed for further evidence by Steven and the first and fourth defendants on 31 August and 1 September 2017. (The latter date was vacated on 31 August 2017.)
25. However, before the resumption of the hearing, on 30 June 2017 (as already noted) a sequestration order was made in relation to Robert and the Trustees were appointed to his bankrupt estate. I am informed that the Trustees took the view that Steven could not continue the proceedings without the leave of the Federal Court pursuant to s 58(3) of the Bankruptcy Act (see Mr Bevan's account of events at T 2.48). On 17 August 2017, orders were made permitting the filing of any motion by any party in relation to "the procedural consequences of the bankruptcy of the first defendant".
26. On 31 August 2017, when the matter had been listed for the resumption of the hearing, Steven moved on a motion filed on 25 August 2017 seeking, amongst other things, leave (again) to amend his pleading, an order joining the Trustees to the proceedings, and an order that "the trial" of the proceedings be stayed until he obtained a grant of leave from the Federal or Federal Circuit Court for leave under s 58(3) of the Bankruptcy Act to proceed against the Trustees. The matter was stood over for directions on 5 December 2017, on which occasion the proceeding was stood over until 20 June 2018.
27. An application was duly brought in the Federal Court by Steven for leave to continue the proceedings in this Court. That application came before Flick J, who granted such leave conditional on certain amendments to the relief sought in the proceedings (Stojanovski v Stojanovski [2018] FCA 580). I was informed by Counsel for Steven that the conditions were imposed to ensure that the monetary relief sought by Steven (if granted by Robb J) would not operate as a preference against other creditors of Robert under s 116 of the Bankruptcy Act (see T 3.1ff).
28. By notice of motion filed 6 June 2018 by Steven, an order was sought that the proceedings be listed for the resumed conduct of the part-heard trial before Robb J (prayer 2); and an order was sought that, in the event Robert Stojanovski fails to attend the trial on the resumed date, his defence be struck out pursuant to UCPR 14.28 and any affidavits sworn by him be rejected as inadmissible "pursuant to s 135" of the Evidence Act (prayer 4).
29. The matter then came back before Robb J and, on 20 June 2018, his Honour made orders pursuant to s 6(3) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) that these proceedings, including all special federal matters arising in them, be determined by this Court. His Honour also ordered that Steven have leave to file and serve a fifth further amended statement of claim (by which the Trustees were joined to the proceedings); ordered that the parties attend a mediation of the dispute; and adjourned prayers 2 and 4 of the motion filed 6 June 2018 to 5 September 2018.
30. On 4 September 2018, presumably because no mediation had yet taken place, Robb J ordered that the parties attend a mediation on 5 October 2018; and again adjourned the hearing of prayers 2 and 4 of the motion filed by Steven on 6 June 2018, this time for directions on 18 October 2018.
31. Presumably, the mediation ordered by his Honour was unsuccessful as the next step in the proceedings seems to have been the filing on 15 October 2018 of the Trustees' motion for summary judgment.
32. On 18 October 2018, Robb J ordered that Angelina communicate to the Trustees within 14 days whether the motion dated 15 October 2018 (for summary judgment) was to be resisted; ordered that Steven be excused from the hearing of that motion, if any; and listed the matter for further directions on 29 November 2018.
33. On 8 November 2018, the matter was then listed before me as part of a case management review of ageing matters in the general Equity Division list. On that occasion I set the summary judgment application down for hearing before me on 5 December 2018 (on the basis, as I have already noted, that the issue raised by it is a discrete issue capable of determination separate from and in advance of the resumption of the part-heard hearing before Robb J).
34. I listed the resumption of the part-heard hearing over a further five day period commencing 30 May 2019 before Robb J and directed that any interlocutory application by the plaintiff (as had then been foreshadowed) in relation to discovery be filed by 14 December 2018 and listed before his Honour for hearing on 11 February 2019.
35. I interpose to note that part of the delay in the resumption of the main hearing to date, as I understand it, is that the outcome of an appeal heard in the Federal Court of Australia in March this year (and on which judgment is reserved) may impact upon the conduct of the present case (insofar as it goes to the question of the correctness of the proposition in Boensch v Pascoe [2015] NSWSC 1882, applying Lewis v Condon (2013) 85 NSWLR 99; [2013] NSWCA 204, that all property owned by a bankrupt vests in the trustee in bankruptcy irrespective of whether or not it is owned beneficially).
36. For that reason, I made directions for Robert (who might, dependent on the outcome of this issue, have standing to argue the point that the Trustees in their defence have conceded - namely as to the testamentary agreement allegation - see T 13.16-14.18) to be notified of the listing of the hearing before Robb J commencing on 30 May 2019. A practical difficulty in that regard is that I am informed that Robert has consistently refused to disclose his residential address; has provided a post office box address that he has informed the Trustees is no longer used by him (though they note that documents posted there have not been returned to sender); and has nominated an email address for service but emails to that address have of late "bounced back" - see T 18.49-19.19. If Robert continues to prove elusive, then of course he runs the risk that the proceedings will be heard in his absence but in the meantime I made directions in an attempt to bring the listing of the matter to his attention.

The present application

1. The present application is, as indicated above, the Trustees' motion filed 15 October 2018 for summary judgment against Angelina. The Trustees seek declarations that the transfers to Angelina of the Morts, Kemp and Breakwell properties are void against the Trustees, by reference to s 120 of the Bankruptcy Act. The Trustees also seek: 1. an affidavit setting out the rents, profits and benefits received by Angelina in respect of the various properties; 2. an account in respect of those rents, profits and benefits received; 3. the appointment of the Trustees as receivers in respect of any rent being paid in respect of various properties; and 4. an order for costs against Angelina, including on an indemnity basis.
2. Section 120(1) of the Bankruptcy Act provides that: 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 transfer took place in the period beginning 5 years before the commencement of the bankruptcy and ending on the date of the bankruptcy, and (b) the transferee gave no consideration for the transfer or gave consideration of less value than the market value of the property.
3. In the present case, there is no dispute that Robert's bankruptcy commenced on 25 March 2016 and that each of the Transfers occurred on 31 May 2013, thus in the period commencing 5 years before the commencement of Robert's bankruptcy. As noted, each of the Transfers provides that the transfer is made "pursuant to" the Family Court Orders. No consideration is specified on any of the Transfers. It is also not in dispute that, on 30 July 2014, an order was made by the Family Court setting aside the Family Court Orders pursuant to s 79A of the Family Law Act.
4. The Trustees submit that, as the Family Court Orders have been set aside, each of the Transfers has been effected for no consideration and thus, pursuant to s 120 of the Bankruptcy Act, each of the Transfers is void as against the Trustees.
5. By letter dated 31 October 2018, the solicitors for Angelina notified the Trustees' solicitors of her opposition to the relief sought in the notice of motion. In that letter, Angelina's solicitors stated, among other things, that: 3. We note that the Family Court Orders were set aside pursuant to section 79A(1)(a) due to our client and the Bankrupt failing to disclose the prospective and pending third party interest of Steve [sic] Stojanovski and his former spouse Jovanka on the Application for Consent Orders.
6. They also advised that there had been "no other determination of the property proceedings" between their client and the bankrupt arising out of the breakdown of their marriage and that they had received instructions to institute family law proceedings on behalf of their client under Part VIII of the Family Law Act. (By the time of the summary judgment hearing there was no indication that any such proceedings had yet been commenced.)
7. The Trustees' position is that the value of any contributions said to have been made by Angelina for the purpose of any claim under the Family Law Act (to be determined at a time when the marriage has come to an end) constitutes no consideration for the purposes of s 120 of the Bankruptcy Act (referring to Official Trustee in Bankruptcy v Lopatinsky [2003] FCAFC 109 at [79] (Official Trustee v Lopatinsky); Official Trustee in Bankruptcy v Mateo [2003] FCAFC 26 at [66] (Official Trustee v Mateo)); and, in essence, that it is disingenuous for Angela to seek (and it would be perverse for Angelina to be permitted) to rely on the making of Family Court Orders (since set aside) that were procured by a miscarriage of justice in order to resist the present claim.

Angelina's submissions

1. For Angelina, it is submitted: first, that the Trustees' reliance on s 120 of the Bankruptcy Act is misconceived because the impugned Transfers were effected pursuant to court order and therefore do not satisfy the requirement under s 120 that there be a transfer of property "by a person"; and, second, that there is limited utility in granting the relief sought in circumstances where Angelina has evinced an intention to seek orders under the Family Law Act, which will arguably affect the ownership of the subject properties, and where the Trustees' evidence fails to disclose the extent (if any) to which the re-transfer of the subject properties is required for the payment of creditors and/or the proper administration of Robert's estate. In that regard, objection was taken to what was described as late evidence of a "curative nature" - see T 23.47, i.e., after the filing of Angelina's submissions, as to an asserted awareness on the part of the Trustees' of the existence of an unsecured creditor claiming around $188,000 - see T 25.39. I read that evidence (at 2 of Ms Latham's 5 December 2018 affidavit) solely as an assertion and, given its vagueness and generality I can place little weight on it and, in the event, I do not rely on that evidence for the conclusions I have reached on the present application.
2. It is noted that the power to order summary judgment (primarily derived from r 13.1 of the Uniform Civil Procedure Rules 2005) should be exercised with great care and is only enlivened where it can clearly be established that there is no real question to be tried; the applicable test being that which was applied by the High Court in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; [1964] HCA 69.
3. It is submitted for Angelina that, in the present case, there are complex legal issues which are not appropriate for determination on a summary judgment application. By way of example, it is said that the issue as to the application of s 120 of the Bankruptcy Act calls for a consideration of statutory construction which as a matter of principle, is generally dealt with at final hearing. In particular, it is submitted that: … the question of whether or not there is a complete failure of consideration in the context of s 120 is a complex factual and legal matter which necessarily recognises the tension between inter alia estoppel, forbearance to sue and the operation of the Family Law regime.
4. As to the first of the two arguments advanced for Angelina in resisting the present application, reliance is placed on the distinction for the purposes of s 120 of the Bankruptcy Act between a transfer effected by a person and a transfer effected by order of a court, having regard to the reasoning of the Full Court of the Federal Court in Official Trustee v Mateo; in particular the reasoning of Merkel J at [132]-[133]; [135], as follows: [132] In Harris v Caladine (1991) 172 CLR 84 Brennan J at 104, citing de Lasala, observed that a consent order, though made in accordance with the party's contract, takes effect as an order of the Court and is enforceable as such, rather than as a contract to be sued on in a separate action. Dawson J (at 124) also referred to de Lasala and stated that in the case of an application under s79, even if there is a consent amounting to a contract, that is not enough of itself to entitle the parties to an order because the "requirements of the section must be satisfied." Dawson J stated that "it is the order itself which is of legal significance". [133] It follows from the foregoing that when the Family Court makes an order by consent under s 79(1) of the Family Law Act altering the interests in property of the parties to a marriage the alteration, and the consequential vesting of the equitable estate or interest in the property in the transferee, take effect by reason of the Court order and not by reason of the consent of the parties, even if that consent amounts to a contract between them. ... [135] It may have been arguable that the transfer of property pursuant to a court order is a transfer by a court and that the court is "a person". Section 22(1)(a) of the Acts Interpretation Act 1901 (Cth) provides that, unless the contrary intention appears, "person" includes a body politic or corporate as well as an individual. However, as was explained by Lindgren J (with whom Jenkinson and Kiefel JJ agreed) in Kizon v Palmer (1997) 142 ALR 488 at 505-506 authority favours the view that the word "person" does not encompass a reference to a "court". In any event, in the context of ss 120 and s 121 of the Bankruptcy Act, it is clear that the transferor must be an individual who may become a bankrupt. It must follow that a transfer of property by a court is not a transfer by a person. [136] Accordingly, an alteration of a property interest by reason of an order of the Family Court, whether made by consent or otherwise under s 79 of the Family Law Act, which transfers an equitable estate or interest in the property to a party to the marriage is not "a transfer of property by a person who later becomes a bankrupt" to another person for the purposes of ss 120 and 121 of the Bankruptcy Act.
5. It is submitted that s 120 of the Bankruptcy Act thus has no operation where the transfer is predicated on an order under s 79 of the Family Law Act and that what was recognised in Official Trustee v Mateo was that the interests of third party creditors should be addressed by an appeal to the Full Family Court or an application under s 79A of the Family Law Act setting aside or varying the relevant order. I interpose here to note that the latter course has already successfully been taken in the present case. However, for Angelina, it is argued that once this is done (i.e., the relevant order has been set aside), it does not necessarily follow that s 120 "would somehow be re-enlivened". Rather, it is submitted, the point to be taken from Official Trustee v Mateo is that s 120 is not an appropriate means through which to attack any impugned transactions which flow from a s 79 Family Law Act order, whether it is set aside or otherwise.
6. It is submitted that the practical solution available to the Trustees in the present case is that which was considered by Wilcox J in Official Trustee v Mateo, namely a two-step process: the first step being the setting aside of the orders; and the second step being new orders under s 79 of the Family Law Act, reference being made to what his Honour said at [74]: [74] … If the Family Court is to deal, on their merits, with the issues mentioned to us, it will be necessary for it to have, before it, an application by the Official Trustee pursuant to s 79A of the Family Law Act. If that application is successful, it is likely that the Family Court will make new and different orders under s 79 of the Family Law Act, presumably leaving greater assets in Mr Mateo's hands, as between himself and his wife and children, than under the earlier order. Those assets would be property divisible among creditors, by virtue of s 116 of the Bankruptcy Act. [emphasis added]
7. Pausing here, it is not clear that what his Honour was there contemplating was that the trustee might itself make an application for an order under s 79 of the Family Law Act adjusting the interests of the parties to the bankrupt's marriage; or whether what his Honour was contemplating was that the trustee make an application pursuant to s 79A to set aside the orders and that if such an application (pursuant to s 79A were to be successful) then there would (either then or in due course) be a hearing on the merits as a result of which new and different orders under s 79 would be made. Here, of course, there was no hearing on the merits as to appropriate orders to be made under s 79 of the Act; all that happened was that there was a decision (on an undefended basis) under s 79A to set aside the consent orders that had been made, without any orders being made in substitution or in lieu thereof under s 79.
8. As to the second argument advanced by the Trustees, Angelina points to the recent decision of Parker J in Nguyen v Corbett (No 2) [2018] NSWSC 441, a case concerning the interaction of s 37A of the Conveyancing Act 1919 (NSW) and the Family Law Act. It is noted that his Honour there gave consideration to the manner in which s 37A ought to be construed, having regard to its object (namely, to reverse transfers so as to ensure that creditors are not defrauded), and traced through the nature of such relief from first principles with particular reference to the Statute of Elizabeth 13 Eliz 1 c 5, concluding that a proper application of s 37A calls for orders which serve to nullify the relevant transaction(s) only to the extent necessary (see at [20]-[21]): [20] Section 37A does not expressly provide that an offending alienation is void only against the alienor's creditors. At first blush, the language of s 37A suggests that where a transaction is caught by the section, the Court would make an order declaring the transaction void, and, where property has been transferred under the transaction, ordering the property re-transferred back: cf Houvardas v Zaravinos [2013] NSWSC 387 at [133]. [21] Such an order may, no doubt, be appropriate in the usual case where the property is insufficient to satisfy the creditors' claims. But I do not think that s 37A requires the Court to reverse the whole of the transaction even where there will be, or may be, a surplus. In Silvera v Savic (1999) 46 NSWLR 124, Hodgson CJ in Eq said, (at [72]): What s 37A says is that the "alienation" is "voidable". In my opinion, where an application is made under s 37A to the Supreme Court, that Court can achieve the effect of avoiding the alienation by such measures as seem appropriate in the particular case.
9. For Angelina, it is argued that the relief under s 37A is "of the same species" as that available under s 120 of the Bankruptcy Act and hence that the analysis in Nguyen v Corbett (No 2) would apply equally to "the practical application" of s 120 of the Bankruptcy Act. It is submitted that the Trustees have not put forward satisfactory evidence as to the extent to which it is necessary to render the impugned transfers void in the interests of creditors. (Reference is also made in this context to what was said by Barrett J (as his Honour then was) in Green v Schneller (2002) 11 BPR 20,935 at [101].) It is submitted that in the present case there is no cogent evidence as to the necessity and utility of the transfers in the specific context of the administration of Robert's bankrupt estate; and that, in the vernacular, the Court would be "flying blind" (T 46.8) in terms of re-transferring the Properties where it is said to be unclear as to their utility, having regard to the quantum of creditors, or as to how it is that all the Properties would need to be transferred for the proper administration of the bankrupt estate (see T 46.10).
10. It is further said that Angelina is in the process of preparing an application to the Family Court. An undertaking was proffered on her behalf (T 48.6-48.8) to prosecute any such application expeditiously. It was also suggested in this context (T 49.26-49.28) that Angelina could proffer an undertaking not to deal adversely with the properties until some later time, although that later time was not formulated beyond noting that "there would need to be some sort of sunset date and some recourse to the trustees".

The Trustees' response

1. In response to the above submissions, the Trustees argue that the decision in Official Trustee v Mateo does not assist Angelina in circumstances where the Family Court Orders have been set aside pursuant to s 79A of the Family Law Act. It is submitted that, as the Orders have been set aside, it cannot be said that the transfers are merely a transfer of the bare legal interest, the market value of which must be nil by reason of those court orders (as was the case in Official Trustee v Mateo). Rather it is submitted that the Transfers constitute a transfer of all of Robert's legal and equitable interest in the Properties for no consideration. It is submitted that Angelina cannot be entitled to rely upon her own conduct (in obtaining the Family Court Orders by way of a miscarriage of justice) to ground a defence to a claim under section 120 of the Bankruptcy Act (see T 31.43-32.11; T 51.1; T 51.45).
2. The Trustees accept that, as Robert's former wife, Angelina may be entitled to make a claim pursuant to the Family Law Act for an adjustment of interests as between herself and the Trustees in respect of the Properties. However, it is submitted that such a right or the existence of such a claim does not constitute consideration provided in respect of the Transfers for the purposes of s 120 of the Bankruptcy Act. It is further submitted that it is not open to Angelina (in circumstances where the Transfers are expressly stated to have been made pursuant to the Family Court Orders) now to seek to re-characterise the Transfers as having been made in consideration for some claim under the Family Law Act.
3. It is noted that no evidence has been served by Angelina as to any contributions made by her in respect of the Properties for the purpose of any claim under the Family Law Act but, in any event, it is submitted that if such contributions were made, their value is to be determined at the time when the marriage came to an end (such that, to the extent any such contributions constitute consideration, they are past consideration and therefore no consideration for the purposes of s 120 of the Bankruptcy Act).
4. As to the question of the utility of the orders now sought, the Trustees submit that there is no defence available to s 120 on the basis of utility. It is pointed out that s 120 is not concerned with the sufficiency or otherwise of the bankrupt's property to meet the claims of creditors; and that what the section provides is simply that if a transfer is for less than market value then the property should be transferred back to the trustee.
5. It is submitted that the concept of transferring so much of the property as is necessary to deal with the creditors' claim(s) cannot apply in a situation where (unlike was the case in Mateo) there is a bankruptcy and there are the statutory requirements applicable on a bankruptcy (see T 52.43). For the Trustees it is submitted (see T 52.46) that: The proper course is to bring the property into the bankrupt estate and allow the trustees to administer that property properly in accordance with the Bankruptcy Act, and if that does result in the end in an annulment of the bankruptcy and distribution of the surplus to the bankrupt well then so be it, but be [sic; scil we] can't make any assumptions, and particularly in circumstances where we have ongoing proceedings where there is some question about how these properties are ultimately to be dealt with, in light of assertions by the plaintiff in respect of these properties, and assertions as to family provision claims, and whether these properties form part of the estate potentially open to family provision orders et cetera.
6. The Trustees thus submit that no defence to the s 120 claim can succeed, and that the case is an appropriate one for summary judgment. As to the undertakings proffered (or foreshadowed to be proffered, as the case may be), the Trustees maintain that those do not address their concerns as to their statutory duties as trustees in bankruptcy and note the uncertainty of the future progress of any Family Court application brought by Angelina (and of this litigation).

Determination

1. Rule 13.1(1) of the UCPR provides: (1) If, on application by the plaintiff in relation to the plaintiff's claim for relief or any part of the plaintiff's claim for relief: (a) there is evidence of the facts on which the claim or part of the claim is based, and (b) there is evidence, given by the plaintiff or by some responsible person, that, in the belief of the person giving the evidence, the defendant has no defence to the claim or part of the claim, or no defence except as to the amount of any damages claimed, the court may give such judgment for the plaintiff, or make such order on the claim or that part of the claim, as the case requires.
2. A party will not be denied a hearing on the merits unless the absence of a defence is clearly demonstrated (see Ottavio v Hayvio Pty Ltd [2011] NSWSC 1125) having regard to the test stated by Barwick CJ in General Steel Industries Inc v Commissioner for Railways (NSW) at 129 (there by reference to the plaintiff in an action) that: … the plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his lack of a cause of action - if that be the ground on which the court is invited, as in this case, to exercise its powers of summary dismissal - is clearly demonstrated. The test to be applied has been variously expressed; "so obviously untenable that it cannot possibly succeed"; "manifestly groundless"; "so manifestly faulty that it does not admit of argument"; "discloses a case which the Court is satisfied cannot succeed"; "under no possibility can there be a good cause of action"; "be manifest that to allow [the pleadings] to stand would involve useless expense"…
3. It is recognised that there is a heavy burden on a party seeking summary judgment (see Bendigo and Adelaide Bank Ltd v Williamson [2017] NSWSC 939 at [10]); and that a very clear case is required and the power is one that should only be sparingly used (see Dey v Victorian Railway Commissioners (1949) 78 CLR 62 at 91; [1949] HCA 1; Webster v Lampard (1993) 177 CLR 598 at 602-603; [1993] HCA 57; Air Services Australia v Zarb [1998] NSWCA 7; Cosmos E-C Commerce Pty Ltd v Sue Bidwell & Associates Pty Ltd [2005] NSWCA 81 at [37]-[38]). However, discrete questions of statutory construction not involving findings of fact (complex or otherwise) are examples of instances where resort to the summary judgment procedure may be warranted (as, in my opinion, is the present case). I am not persuaded that the issues relating to the application of s 120 of the Bankruptcy Act in the present case involve the making of findings as to any disputed issues of fact and I cannot see that the question of statutory construction would be any different were it to be left to be dealt with on the resumption of the part-heard hearing.
4. The Trustees' claim has been brought in the form of a cross-claim in the main proceedings (to which Angelina is the fourth defendant). However, the issues arising on that claim are discrete from the main proceedings and the question of statutory construction does not require any determination of questions of fact which will arise in the main proceedings, making it an appropriate case to consider this application separately to the rest of the proceedings. The position of the Trustees in this regard is also relevant. The Trustees emphasise that the bankrupt estate "does not have any assets in its name, any assets within the estate" and has no income (see T 33.43). It is submitted that this is a situation which "cannot be allowed to continue while these proceedings inch their way towards a final conclusion". There is force to that submission particularly in light of the ongoing delay in completion of the hearing of the main claim in the proceedings.
5. Turning then to the question of construction that has arisen, it is true that ss 120 (titled "Undervalued transactions") and 121 ("Transfers to defeat creditors") of the Bankruptcy Act, which are often referred to together, similarly provide that a transfer by a person who later becomes a bankrupt to another person is void against the trustee in the transferor's bankruptcy if certain conditions exist. However, as noted by the authors of Keay's Insolvency (Michael Murray and Jason Harris, Keay's Insolvency, (9th ed, Thomson Reuters, 2016)) (at [5.20]), s 120 focusses on the effect of the debtor's transaction on the creditors, who have lost out by the fact that the asset has been transferred, whereas s 121 focusses on the purpose of the transfer (that is, the main purpose) (see at [5.60]). Only s 120 is relied upon by the Trustees here.
6. In Anscor Pty Ltd v Clout [2004] FCAFC 71, to which Angelina's counsel referred, Lindgren J made a number of observations (at [43]) regarding the interaction of s 120 and the other provisions of the Bankruptcy Act (particularly the vesting provisions), including: that "void" in the expression "void against the trustee" means "voidable"; that where the trustee in bankruptcy elects to avoid a transfer, pursuant to s 120 or one of the other provisions, the trustee is entitled, for the purpose of identifying and realising the property of the bankrupt, to have the transfer of property by the debtor treated as not having occurred and the debtor as having continued to own the property following the transfer until it vests in the trustee - if it does so vest; that where a debtor becomes a bankrupt, there vests forthwith in the trustee in bankruptcy "the property of the bankrupt", that is, the property that belonged to, or was vested in, the bankrupt at the commencement of the bankruptcy; that the vesting in the trustee in bankruptcy does not take place upon the commencement of the bankruptcy - rather, it takes place forthwith upon the debtor's becoming a bankrupt; and lastly, of present relevance, that where property the subject of a transfer made void by s 120 still exists in specie as at the commencement of the bankruptcy, it will vest in the bankruptcy forthwith upon the debtor's becoming a bankrupt if it also still exists then. (I note that the other members of the Full Court - Wilcox and Moore JJ, agreed with Lindgren J but expressly declined to join in those particular propositions, considering it was not necessary to do so to resolve the appeals.)
7. I turn then to the decision in Official Trustee v Mateo. Given the weight placed on that decision by Angelina, it is useful to outline briefly the decision, before I explain why I consider the decision to be distinguishable from the present case.
8. In Official Trustee v Mateo, the Family Court had made consent orders under s 79 of the Family Law Act on 22 June 2000, which included an order that within 28 days the husband transfer to his wife his interest in the home and that wife pay certain amounts to the husband and become responsible for certain amounts. The transfer of the property was registered on about 10 August 2000. The husband became bankrupt on 10 April 2001. Subsequently, the trustee issued a notice to the wife asserting that she had received property from the bankrupt as a result of a disposition of property that was void against the trustee under s 120 of the Bankruptcy Act and requiring her to pay the trustee a sum equivalent to the bankrupt's interest in that property (see at [16]). At first instance, in seeking to uphold the notice, the trustee relied on s 120 and s 121 of the Bankruptcy Act (in the alternative), but, in the Full Court, the trustee relied only on s 121.
9. The wife was successful in having the notice set aside at first instance and in the Full Court, although the Full Court gave different reasons. The primary judge (Tamberlin J) had concluded that s 120 did not render the transfer void because it could not be said that no consideration was given for the transfer; this being because full faith and credit should be given to the orders of a superior Australian court, being the Family Court; and because the wife's contribution and work in the joint enterprise comprised in the marriage and bringing up of a family were not less than the market value of the property transferred to her (see Mateo v Official Trustee in Bankruptcy [2002] FCA 344 at [28]; [32]).
10. It was not essential for the Full Court to consider whether the contributions of a party to a marriage could amount to consideration within the meaning of s 120(1)(b). (However, the Full Court did consider that proposition later, in Official Trustee v Lopatinsky, and rejected it: see at [100]-[102] (Whitlam and Jacobson JJ).) Wilcox J made clear that he disagreed with the approach of Tamberlin J (at [71]), but nonetheless dismissed the appeal, saying that the "fundamental problem" for the trustee was that "the critical divesting event is the Family Court's order under s 79 of the Family Law Act, and that event lies outside the reach of s 120 or s 121" (at [69]); and that the appropriate course was for the trustee to bring an application under s 79A, in the Family Court, to have the orders set aside (at [70]).
11. Branson J stated that it was "crucial" 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" (at [100]). Her Honour observed that nothing in the Family Law Act indicated that the interests of an unsecured creditor of one of the parties to the marriage should be preferred to those of the other spouse and any children; for which reason it was unlikely in her Honour's view that the legislature intended s 121 of the Bankruptcy Act to render void an order under s 79. Her Honour then said (at [102]) that "[a]n alteration of the interests of the parties to a marriage in property by court order does not, in my view, constitute 'a transfer of property by a person … to another person' within the meaning of s 121(1)".
12. Branson J considered that, in the particular case there before the Court, "the order itself vested in the wife all of the husband's beneficial interest in the matrimonial home". Her Honour said that the transfer of the beneficial interest was therefore not a transfer of property "by a person who later becomes a bankrupt": it was rather "a transfer of property by court order" (see at [102]). Her Honour then addressed (at [103]ff) certain arguments specific to s 121 of the Bankruptcy Act.
13. The third member of the Court, Merkel J, (at [134]) also addressed the meaning of the phrase "transfer of property … by a person". His Honour's earlier conclusion (at [133]) that when the Family Court makes an order by consent under s 79(1), "there is a vesting of an equitable estate or interest in the property in the transferee", had the result that there was no "transfer of property by a person who later becomes bankrupt" because the relevant transfer "was brought about by the order of the Family Court, rather than by a transfer … by the bankrupt" (at [134]). Merkel J went on to say (at [135]): [A]s was explained by Lindgren J (with whom Jenkinson and Kiefel JJ agreed) in Kizon v Palmer (1997) 142 ALR 488 at 505-506 authority favours the view that the word "person" does not encompass a reference to a "court".
14. Merkel J also gave the additional reason (at [139]-[140]) that if ss 120 and 121 were capable of avoiding an order under s 79, a question about the usurpation of judicial power of a superior court would arise. That additional reason clearly has no bearing on the question I am called to decide here, as the Family Court itself has set aside the orders of May 2013, so no question of usurpation could arise.
15. The statements in each of their Honours' respective judgments in Official Trustee v Mateo to the effect that a transfer by a court cannot be a "transfer … by a person" for the purposes of s 120(1) were strongly relied upon by Angelina in the case before me.
16. In Kizon v Palmer (1997) 142 ALR 488 (to which Merkel J referred in Official Trustee v Mateo) at 505, Lindgren J (with whom Jenkinson and Kiefel JJ agreed) said: Authority also favours the view that the word "person" does not encompass a reference to a court. In Canadian Pacific Tobacco Co Ltd v Stapleton (1952) 86 CLR 1, Dixon CJ said, with respect to the prohibition in s 16(2) of the Income Tax and Social Services Contribution Assessment Act 1936 (Cth) against officers' divulging or communicating certain information "to any person", that courts "would hardly be called persons" (at 6).
17. However, the feature which distinguishes Official Trustee v Mateo, and which is in my view material, is that the court order which here authorised the Transfers (or, as explained in the reasons of Merkel J, vested an immediate equitable interest in Angelina), Order 1 of the Family Court Orders has been set aside. I therefore proceed to consider that aspect of the matter, before returning to Official Trustee v Mateo.
18. In considering what effect, if any, an order under s 79 which has been set aside might have, it must be recognised at the outset that the Family Court is a superior court of record (see s 21(2) of the Family Law Act). Therefore, as a matter of general principle, its judgments and orders are valid until set aside (see e.g. Attorney-General v Kowalski [2014] SASC 1 at [203], cited in Halsbury's Laws of Australia at [325-11025]).
19. There could therefore be no argument (nor did the Trustees contend) that the 7 May 2013 Family Court Orders were void from the beginning by reason of the non-disclosure which affected them. Rather, the said orders were voidable. The distinction between the two has been repeatedly drawn, to the effect that, if an act is void, then it is in law a nullity; it is "not only bad, but incurably bad", and every proceeding which is founded on it is also bad; whereas if an act is only voidable, then a further order of the court is required setting it aside, which the court will do if justice requires it (see MacFoy v United Africa Co Ltd [1962] AC 152 at 160).
20. The orders being voidable rather than void, the question then arises whether, once the Family Court did make an order setting aside the 7 May 2013 order, it then ceased to have effect for all purposes (or, to put it another way, whether the setting aside of the order takes effect such that it is treated for present purposes as never having been made). In Halsbury's Laws of Australia it is said (in footnote 1 to paragraph [325-11025]): … A judgment reversed is the same as no judgment: MacIntosh v Lobel (1993) 30 NSWLR 441 at 459 per Kirby J, CA(NSW) (referring to R v Drury (1849) 3 Car & Kir 190 at 199; 175 ER 516 at 520 per Coleridge J).
21. By the same token, it might be said that an order which is set aside is the same as no order. That said, it has been recognised in a number of contexts that a judicial order which is voidable rather than void may continue to have effect for certain purposes. In that regard, the footnote in Halsbury's extracted above continues as follows: Equally, acts done in accordance with a judgment, afterwards reversed, are protected and proceedings brought to completion before its reversal are not avoided: Commissioner for Railways (NSW) v Cavanough (1935) 53 CLR 220 at 225; 35 SR (NSW) 340; [1935] ALR 304 per Rich, Dixon, Evatt and McTiernan JJ. See also Re Goldburg (No 2); Ex parte Page [1912] 1 KB 606 at 610 per Phillimore J; Little v Lewis [1987] VR 798, SC (VIC), Full Court; Re Zagoridis; Ex parte Q'Plas Group Pty Ltd (1990) 27 FCR 108 at 118; 98 ALR 718 per Spender J; Ross v Lane Cove Council (2014) 86 NSWLR 34; [2014] NSWCA 50 at [64] per Leeming JA. However, such protection is confined to judicial orders and does not extend to actions undertaken in performance of an executive order or warrant: Kable v New South Wales (2012) 193 ALR 719; 268 FLR 1; [2012] NSWCA 243 at [42] per Allsop P.
22. In State of New South Wales v Kable (2013) 252 CLR 118; [2013] HCA 26, in the context of a case concerning a claim for damages for false imprisonment, malicious prosecution and abuse of process, the High Court held that orders of a superior court of record are valid until set aside even if made in excess of jurisdiction (see [32]-[33] in the judgment of the plurality, French CJ, Hayne, Crennan, Kiefel, Bell and Keane JJ, with whose conclusion, writing separately, Gageler J agreed), noting that the roots of that doctrine lie in the nature of judicial power. On being set aside, the order is spent but it is not void ab initio. Gageler J (at [51]-[52]) distinguished between the invalidity ab initio of a law that was beyond power and the factual existence of a thing done in the purported but invalid exercise of a power conferred by law, noting that the factual existence of that thing might be the foundation of rights or duties that arise by force of another, valid, law or might have led to the taking of some other action in fact (which action might then have consequences for the creation or extinguishment or alteration of legal rights or legal obligations, which consequences do not depend on the legal force of the thing itself).
23. As indicated by the authorities cited above, a cause of action which takes as its foundation a challenge to an act done pursuant to a judicial order which was, at the time, in force, will not succeed. (For example, an action in trespass where the trespassor acted under lawful authority: see Ross v Lane Cove Council (2014) 86 NSWLR 34; [2014] NSWCA 50 at [64] per Leeming JA.) However, that seems to me a different proposition to the proposition that, on an application by a trustee in bankruptcy under s 120 of the Bankruptcy Act, after the relevant order has been set aside, for a declaration that a transfer of property is void as against the trustee, the transfer of property is not to be taken to be a "transfer of property by a person" within the meaning of s 120(1) by reason of the fact that it was effected pursuant to a judicial order which has since been set aside (for having been procured in circumstances which give rise to a miscarriage of justice).
24. In the former category of case, it is clearly important to protect the acts of persons who acted under an apprehension that they had authority to act in the way they acted. In the latter category of case, it is difficult to see what interest would fall to be protected in that way. Admittedly, a transferee might have received property and also given property in return under the court orders; but if that is the case, the transferee would have rights against the transferor following from the very fact that the orders have been set aside; and s 120(4) of the Bankruptcy Act provides that "[t]he 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", which ought to cover this contingency. In the present case, it is conceivable that an argument would arise as to the retention by Angelina of rents, profits or benefits (if any) received prior to the Family Court Orders being set aside but such an argument could have less force once the Family Court Orders were set aside, and in any event, any such argument (none here being raised) might be dealt with by an appropriate carve-out of orders for an account of rents, profits or benefits so obtained.
25. In the present case, until set aside the Family Court Orders for the transfer of the Properties, as orders of a superior court of record, would be taken (on the reasoning in Official Trustee v Mateo) to have operated to transfer an equitable interest in the properties to Angelina on 7 May 2013 (i.e., at the time the consent orders were made). However, as indicated above, the question is whether the making of orders which have subsequently been set aside pursuant to s 79A(1)(a) means that, for the purposes of s 120 of the Bankruptcy Act, when one comes to determine whether the Transfers are void as against the trustee in bankruptcy, the transfer of the Properties should now be understood to be a "transfer by a court", as described in Official Trustee v Mateo.
26. The effect of the setting aside of the Family Court Orders (as having been procured by a miscarriage of justice) should in my opinion be understood as having the effect that each transfer of title to the Properties on 31 May 2013 cannot now be understood to have operated as a transfer by the Court (though it would have been understood as such until such time as the Family Court Orders were set aside) but rather should now be understood as having been a transfer "by a person" (Robert) (acting in accordance with a Court order that had been improperly obtained by him and his wife Angelina and which was liable to be set aside). Were the position to be otherwise, it would be open to someone in Angelina's position (as the Trustees pointed out) to rely upon his or her own wrongdoing or misconduct as the foundation for resisting the relief here sought. (In saying this, I am not referring to any question of fraud, which has not here been sought to be established, but on the wrongdoing involved in the failure to disclose that gave rise to the miscarriage of justice.) So understood, the facts that Robert later became bankrupt within the relevant time and that the Transfers were ones for which no, or no adequate, consideration was given bring the matter within s 120(1); and the Transfers are void against the Trustees (in the sense that the word "void" is here to be understood, as discussed above).
27. In the Trustees' written submissions (at [22]), reference was made to another route by which the same conclusion might be reached. As already noted, one of the points emerging from Official Trustee v Mateo is that the effect of an order under s 79 of the Family Law Act is to transfer an equitable interest in the subject property immediately to the transferee; and that (in the case of real property under the provisions of the Real Property Act) it is the registration of the transfer which transfers the legal title to the transferee. One of the early authorities for that proposition appears to be Craven v Official Trustee in Bankruptcy (Supreme Court (NSW), Needham AJ, 26 July 1991, unrep) where Needham AJ said that an order under s 79 "creates an equitable interest in the land which could be enforced just as a contract of sale could be enforced"; but see more recently, Jones v Daniel [2004] FCAFC 278 at [14] (where Moore J concluded that the majority in Official Trustee v Mateo had made a clear statement that an equitable interest was transferred by the order).
28. Those authorities were distinguished by Jagot J (with whom Siopis J agreed) in Ellison v Sandini Pty Ltd [2018] FCAFC 44; 354 ALR 484 (at least in part on the basis that the property concerned there was not real property, but shares in a publicly listed company) (see at [115]-[116]); Jagot J there expressing the view (at [118]) that "the effect of an order under s 79 will depend on the terms of the order and the nature of the property". It is therefore to be noted that no universal statement on this point was there made. To similar effect, Allsop J (as his Honour then was) had said in Jones v Daniel (at [20]): … It would perhaps have been clearer if the immediately dispositive effect of the orders here had been identified expressly. Nevertheless, the orders here, though not expressly dispositive, made as they were against the background of s 79 and in light of the reasoning in Mateo, should be taken to have the effect found by the primary judge.
29. If, as discussed in Mateo, on the making of the s 79 orders in May 2013, the equitable interest in the property vested in Angelina - and Robert retained only a bare legal title to the Morts, Kemp and Breakwell properties; then on the transfer of legal title to Angelina, her (separate) equitable interest would have been extinguished in accordance with ordinary principles, as equity does not recognise an interest in someone who also holds the legal title.
30. The alternative argument raised on the Trustees' written submissions is thus that, although the legal title transferred in the latter transaction would have nominal value only, no consideration was provided for the transfer. Hence, the argument runs, that transfer (of legal title) is void against the Trustees by operation of s 120. If so, then as stated in Anscor Pty Ltd v Clout at [43], the Trustees are entitled to have the transfer treated as not having occurred and the debtor as having continued to own the property (here, the legal title which was transferred by the Real Property Act transfer) following the transfer until it vests in the trustee. This would mean that Robert would be treated as always having owned the legal title. Further, Angelina can no longer make claim to be an owner of those properties in equity, because, the s 79 orders having been set aside, she would be unable to obtain relief in a court of equity to compel the execution of a transfer (see Craven v Official Trustee in Bankruptcy).
31. If this reasoning is correct, the present order under s 120 is only necessary in order to render void the transfer of the legal title. However, such alternative reasoning is difficult to reconcile with the conclusion reached in Official Trustee v Mateo, and in any event it is not necessary to form a concluded view on this issue given my conclusion at [96] above that the Transfers in question (once the Family Court Orders were set aside) should, for the purposes of s 120 of the Bankruptcy Act be understood as transfers by a person (Robert), not "transfers by a court" in the sense explained in Official Trustee v Mateo.
32. As to the second basis on which Angelina resisted the relief sought by the Trustees (the utility argument), I do not consider that the decision in Nguyen v Corbett (No 2) is of assistance. The situation there was distinguishable from the present. This is not a case where it is alleged by the Trustees that there has been an alienation of property to avoid creditors (i.e., it is not a s 37A case) and it is clear that in Nguyen v Corbett (No 2) the transferor was not a bankrupt. The operation of s 120 is to render void particular dealings as against the trustee in bankruptcy. The trustee in bankruptcy has duties in relation to the administration of the bankrupt estate. I consider there to be force in the Trustees' submissions that they have a duty to administer the bankrupt estate and that this requires them to preserve the property of the bankrupt for that purpose. The fact that there may ultimately be a surplus of assets over liabilities to creditors does not diminish the Trustees' present duties.
33. The solicitor for the Trustees points out that there are presently caveats registered on properties so that there can be no dealing with property in terms of its sale, pending the resolution of the proceedings and the removal of the caveats lodged by Steven. Ms Latham acknowledges that Angelina may be entitled to make an application in the Family Court for a property adjustment as between herself and Robert but submits that this does not prevent the transfer of the Properties back to his bankrupt estate at this stage. It is submitted that (T 54.7): In those circumstances, we would say what would happen is that the properties are transferred over. They would remain subject to the restrictions imposed by caveats, however, in the meantime, the trustees would have the benefit of being able to collect rental proceeds and the like in respect of properties, and once the claims that have been made by the plaintiff have been resolved one way or the other then there can be orders to deal with the resolution of the matter. What we say is that the outcome which we say should flow in the substantive proceedings is that these properties do not go to the plaintiff, and the plaintiff effectively doesn't have any interest in the properties.
34. I have concluded that the transfers in question are void as against the Trustees and I am not persuaded that orders for the re-transfer of the Properties should not be made. That said, I am conscious that this judgment will be handed down after the close of the Law Term and that there may be practical difficulties in Angelina obtaining advice and/or taking steps consequent upon the orders I propose to make over the Court vacation. I therefore propose, subject to the filing of an undertaking by Angelina not to deal with the Properties adversely to the Trustees' interests in the meantime, to defer the operation of the orders for transfer of the Properties until a date in the new Law Term. If events should make it necessary for a more timely transfer in the interim then it would be open to the Trustees to restore the matter before the vacation duty judge for that purpose.

Account for rents and profits/appointment of receivers of the rental for the properties

1. Turning then to the balance of the relief claimed, the Trustees argue that Angelina has improperly been registered as the sole proprietor of the Properties since the commencement of Robert's bankruptcy on 25 March 2016. The Trustees have obtained searches of a real estate website (www.onthehouse.com.au) which indicate (though not relied on by the Trustees as expert valuation evidence) that the respective Properties have a not insignificant value.
2. The Morts Property has been rented by Angelina to a tenant for approximately eight years. The Kemp Street Property is also currently rented. Accordingly, the Trustees submit that Angelina has received rental income, and continues to receive rental income. in respect of the Morts and Kemp Properties to which she is not entitled. The Trustees do not know the rental charged by Angelina in respect of either of those properties. The Trustees understand that Angelina currently resides at the Breakwell Property, but do not know if that property has previously been rented.
3. The Trustees have obtained a search of a real estate website (www.realestate.com.au) as to the market rental payable in respect of properties in Mortdale, on the basis of which they estimate that Angelina may currently be receiving total rental of approximately $1,200 per week in respect of the Morts Property and the Kemp Property.
4. The Trustees seek: 1. the provision by Angelina of an affidavit specifying the rents, profits and benefits received by her in respect of each of the Properties, and 2. an order that Angelina account to the Trustees in respect of 1. a one-half share of all rents, profits and benefits derived from the use or occupation of the Morts Property; 2. a one-half share of all rents, profits and benefits derived from the use or occupation of the Breakwell Property; and 3. all rents, profits and benefits derived from the use or occupation of the Kemp Property, in the period since 25 March 2016 (being the commencement of the bankrupt's bankruptcy).
5. In circumstances where Angelina has not provided any accounts to the Trustees in respect of rental she has received since the commencement of the bankruptcy on 25 March 2016 and has not paid any amounts received in respect of this rental to the Trustees, the Trustees are concerned that rental proceeds which ought properly be paid to the Trustees are being received and dissipated by Angelina to the detriment of Robert's creditors and that, absent an order appointing them as receivers in respect of the rental being paid in respect of the Properties, Angelina will not properly account to the Trustees in respect of the rental to which they are properly entitled.
6. It is noted by the Trustees that, pursuant to s 67 of the Supreme Court Act 1970 (NSW), the Court has the power to appoint a receiver in any case in which it appears to the Court to be just or convenient to do so. The Trustees submit that the jurisdiction to appoint a receiver is quite general and in terms unlimited and that it is exercised to protect the legal rights of a party from serious damage pending the determination of those rights.
7. It is submitted that it is in the interest of all creditors of the bankrupt that the Trustees receive any rental being paid in respect of the Properties to which they are entitled and that it is inappropriate for Angelina to continue to receive the rental in respect of the Properties pending the determination of any family law claim she may wish to bring in respect of the Properties (in circumstances where no such claim has yet been commenced and there is a real risk that rental currently being received will be dissipated pending the outcome of any family law claim). The appointment of the Trustees as receivers in respect of any rental being paid in respect of the Properties is therefore sought.

Determination

1. In this regard, I consider that the appointment of the Trustees as receivers of the rental is warranted and that Angelina should be required to file an affidavit setting out the rents, profits and benefits received in respect of the Properties in the period from 25 March 2016.
2. However, in circumstances where Angelina has foreshadowed a Family Court application which her Counsel has confidently assured me is likely to result in an adjustment as between Angelina and Robert pursuant to s 79 of the Family Law Act, I consider that the relief sought by the Trustees in terms of an accounting to them for those past rents, profits and benefits should await the determination of the family law claim that Angelina has instructed her lawyers to commence on her behalf (subject to the undertaking given by her through her Counsel to prosecute that claim expeditiously).
3. Rents, profits and benefits from the date of the making of these orders is, however, a different matter. The Trustees, as receivers of the rental, should in my opinion be entitled to commence (and to continue) to receive those moneys unless and until a different outcome is warranted following the determination of any family law claim made by Angelina (and also having regard to the final determination made in the present proceedings as to the claims by Steven and Jovanka). I will make orders accordingly.

Costs

1. Finally, the Trustees seek their costs of this summary judgment application on an indemnity basis. They relied on their written submissions in that regard.
2. The Trustees point to the communications that have been exchanged in advance of the present application in an attempt to avoid the incurring of unnecessary costs.
3. On 1 September 2017, the Trustees' solicitors sent a letter to Angelina's then solicitors (Foulsham & Geddes) seeking her consent to the re-transfer of her interests in the Properties to the Trustees; that letter setting out in detail the basis for the Trustees' contention that the Transfers were void. The letter put Angelina on notice that the Trustees would rely on it on the question of the costs of any application brought by the Trustees in respect of the re-transfer of the Properties.
4. On 12 September 2017, Angelina's then solicitors responded - declining to consent to the re-transfer of the Properties and asserting that the bankrupt was solvent at the time of the Transfers such that a defence would be available to Angelina under s 120 of the Bankruptcy Act.
5. On 4 October 2017, the Trustees' solicitors sent a further letter to Angelina's then solicitors, pointing out that a defence of solvency under s 120(3) of the Act was not available as the Transfers took place less than four years before the commencement of the bankruptcy (as is now conceded). The letter again put Angelina on notice that the Trustees would rely on it on the question of the costs of any application made requiring the re-transfer of the Properties.
6. On 31 October 2018, following the direction by Robb J that Angelina notify the Trustees whether she resisted the application and the grounds of resistance, Angelina's present solicitors (Johnsons Law Group) wrote to the Trustees' solicitors stating that the notice of motion would be resisted and referring to the existence of a claim by Angelina pursuant to the Family Law Act as the grounds of resistance.
7. On 8 November 2018, the Trustees' solicitors sent a letter to Johnsons Law Group setting out the basis on which it was asserted that the existence of any claim pursuant to the Family Law Act did not provide the fourth defendant with a defence to the cross-claim. The letter put Angelina on notice that the Trustees reserved the right to rely on the letter in seeking indemnity costs in respect of the notice of motion if she were to continue with her opposition to the notice of motion or the relief sought by the cross-claim.
8. The Trustees argue that they have repeatedly set out in detail the grounds of their claim under s 120 of the Bankruptcy Act and that, notwithstanding this, Angelina has consistently refused to re-transfer the Properties and has continued in her opposition to the relief sought by the Trustees.
9. It is submitted that Angelina's conduct in continuing to oppose the relief sought by the Trustees has been unreasonable and has unnecessarily increased the costs of these proceedings (and has resulted in further delays in resolving these proceedings in contravention of her duties as a litigant pursuant to s 56 of the Civil Procedure Act 2005 (NSW)). Hence the claim for costs on an indemnity basis.

Determination

1. I have read the correspondence to which the Trustees have referred. My conclusion in this regard is that there should be a costs order in favour of the Trustees but that it should not be on an indemnity basis. I am not persuaded that Angelina's conduct in resisting the relief sought on the summary judgment application is so unreasonable (or her arguments on the summary judgment application so untenable) as to warrant an indemnity costs order (applying the principles articulated in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd [1988] FCA 364; 81 ALR 397); and hence I consider that costs should simply follow the event.

Conclusion

1. For the above reasons, I make the following orders: 1. The Court declares that transfer AH772918 dated 31 May 2013 (the Morts Road Transfer) is void against the fifth and sixth defendants/cross-claimants pursuant to s 120 of the Bankruptcy Act 1966 (Cth) (the Bankruptcy Act). 2. Subject to Order 22 below, on or before 8 February 2019 the fourth defendant/cross-defendant is to deliver to the fifth and sixth defendants/cross-claimants a transfer in registrable form of her interest in the property with folio identifier 2/16261 and known as 169 Morts Road, Mortdale, NSW 2223 (the Morts Road Property) to herself and the fifth and sixth defendants/cross-claimants as tenants in common in equal shares, along with the certificate of title to the Morts Road Property. 3. If the fourth defendant/cross-defendant fails to comply with Order 2, the Registrar of the Court is to execute the transfer referred to therein on application by the fifth and sixth defendants/cross-claimants. 4. The Court declares that, pending the registration of the transfer referred to in Order 2, the fourth defendant/cross-defendant holds her interest in the Morts Road Property on trust for herself and the fifth and sixth defendants/cross-claimants as tenants in common in equal shares. 5. The Court declares that transfer AH772919 dated 31 May 2013 (the Breakwell Street Transfer) is void against the fifth and sixth defendants/cross-claimants pursuant to s 120 of the Bankruptcy Act. 6. Subject to Order 22 below, on or before 8 February 2019, the fourth defendant/cross-defendant is to deliver to the fifth and sixth defendants/cross-claimants a transfer in registrable form of her interest in the property with folio identifier 17/253820 and known as 41 Breakwell Street, Mortdale, NSW 2223 (the Breakwell Street Property) to herself and the fifth and sixth defendants/cross-claimants as tenants in common in equal shares, along with the certificate of title to the Breakwell Street Property. 7. If the fourth defendant/cross-defendant fails to comply with Order 6, the Registrar of the Court is to execute the transfer referred to therein on application by the fifth and sixth defendants/cross-claimants. 8. The Court declares that, pending the registration of the transfer referred to in Order 6, the fourth defendant/cross-defendant holds her interest in the Breakwell Street Property on trust for herself and the fifth and sixth defendants/cross-claimants as tenants in common in equal shares. 9. The Court declares that transfer AH772917 dated 31 May 2013 (the Kemp Street Transfer) is void against the fifth and sixth defendants/cross-claimants pursuant to s 120 of the Bankruptcy Act. 10. Subject to Order 22 below, on or before 8 February 2019, the fourth defendant/cross-defendant is to deliver to the fifth and sixth defendants/cross-claimants a transfer in registrable form of her interest in the property with folio identifier auto consol 8640-197 and known as 17 Kemp Street, Mortdale, NSW 2223 (the Kemp Street Property) to the fifth and sixth defendants/cross-claimants, along with the certificate of title to the Kemp Street Property. 11. If the fourth defendant/cross-defendant fails to comply with Order 10, the Registrar of the Court is to execute the transfer referred to therein on application by the fifth and sixth defendants/cross-claimants. 12. The Court declares that, pending the registration of the transfer referred to in Order 10, the fourth defendant/cross-defendant holds her interest in the Kemp Street Property on trust for the fifth and sixth defendants/cross-claimants. 13. On or before 1 February 2019, the fourth defendant/cross-defendant is to serve on the fifth and sixth defendants/cross-claimants an affidavit setting out all rents, profits and benefits derived by her from the use or occupation of each of: 1. the Morts Road Property; 2. the Breakwell Street Property; and 3. the Kemp Street Property in the period since 25 March 2016. 1. Pursuant to s 67 of the Supreme Court Act 1970 (NSW), the fifth and sixth defendants/cross-claimants are appointed with effect from the date of these orders as receivers in respect of any rent being paid in respect of the occupation of: 1. the Morts Road Property; 2. the Breakwell Street Property; and 3. the Kemp Street Property. 1. For the purpose of Order 14, the fifth and sixth defendants/cross-claimants have all of the rights and powers of the fourth defendant/cross-defendant in respect of the use or occupation of: 1. the Morts Road Property; 2. the Breakwell Street Property; and 3. the Kemp Street Property including the rights and powers of the fourth defendant/cross-defendant pursuant to any residential tenancy agreement or other agreement entered into in respect of the use or occupation of those properties. 1. The reasonable costs and expenses properly incurred by the fifth and sixth defendants/cross-claimants in the performance of their duties and the exercise of their powers as receivers are to be paid from any rental received in respect of the use or occupation of: 1. the Morts Road Property; 2. the Breakwell Street Property; and 3. the Kemp Street Property. 1. The fourth defendant/cross-defendant is to pay the costs of the fifth and sixth defendants/cross-claimants in respect of the Cross Claim and the notice of motion dated 15 October 2018 on the ordinary basis. 2. Stand over the fifth and sixth defendants/cross-claimants' application for an account of the rents, profits and benefits derived from the use or occupation of the Properties for the period from 25 March 2016 to the date of these orders, pending the determination of any application that is brought and prosecuted expeditiously by the fourth defendant in the Family Court of Australia pursuant to s 79 of the Family Law Act 1975 (Cth) (the Family Law Act). 3. Note the undertaking of the fourth defendant/cross-defendant proffered to the Court to prosecute expeditiously any such application to the Family Court of Australia for relief pursuant to s 79 of the Family Law Act. 4. Liberty to the fifth and sixth defendants/cross-claimants to apply on 3 days' notice to reinstate their application for an account of the past rents, profits and benefits derived from the fourth defendant/cross-defendant's use or occupation of the Properties (for the period from 25 March 2016 to the appointment of the Trustees as receivers in respect of the rental for the Properties), on the determination of any application in the Family Court of Australia of the kind referred to in Orders 18 and 19 above or otherwise in the event that the fourth defendant/cross-defendant does not bring or prosecute such an application expeditiously. 5. Note that the time period allowed in Orders 2, 6 and 10 is conditional upon the fourth defendant/cross-defendant filing in the Court by 19 December 2018 an undertaking not to deal with the Properties adversely to the Trustees' interests in the period between the date of these orders and 8 February 2019. 6. Order that if no undertaking of the kind contemplated by notation 21 above is filed in the Court by 19 December 2018, then the dates specified in Orders 2, 6 and 10 are to be (and to be taken as) amended to 24 December 2018. 7. Note that the proceedings are listed on 11 February 2019 before Robb J for hearing of any interlocutory application by the plaintiff for discovery in the part-heard proceedings and otherwise stand the matter over for directions before Ward CJ in Eq on 12 February 2019 at 9.30am.

Amendments 17 December 2018 - Amendment to 5th and 6th Defendant in coversheet DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 17 December 2018