b2 é2 JUDGMENT No 233 Ui ce + Boccccgceveneunece! weseeosenen® IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION NO, P, 1647 982 BANKRUPTCY DISTRICT OF THE 'STATE Oo. P OF 1 OF NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL TERRITORY RE: CHIN "HAN 'CHEW EX PARTE: 'PHILLIP WILLIAM AVERILL, HUGH JEREMY MIDDLETON ~ JOHN STANLEY BUCKLEY, -REUBERT EDWARD 'HAYES, ~ ROBERT DUVAL GOATLY and BARRY LAURENCE SMITH trading as Messrs, Lamploughs. RECEIVED 02 JUL 1999 CHEW PIN PIN eepERAL COURT OF | AUSTRALIA THE REGISTRAR-GENERAL IN AND FOR THE STATE PRINCIPAL eR TAY 'OF NEW SOUTH WALES REASONS FOR JUDGMENT EX_TEMPORE LOCKHART J. 21 DECEMBER 1982 This is an application for interlocutory injunctions by the members of a firm of stockbrokers trading as Messrs, Lamploughs ("the petitioning creditor") to restrain Chin Han Chew ("the debtor") and Chew Pin Pin ("Mrs, Chew who is the debtor's wife, from selling or otherwise disposing of a house known as 4 Carrara Avenue, Vaucluse ("the Carrara Avenue house") until further order, and at least pending the determination of a petition to sequestrate the debtor's estate, A brief curial history of the matter is called for. Barlier this year the petitioning creditor presented a petition No, 782 of 1982, to this Court to sequestrate the estate of the debtor. The act of bankruptcy relied on was that the debtor within six months before the presentation of the petition departed and remained out of Australia with intent to defeat or delay his creditors, That petition was presented on 15 July 1982. On 30 July this Court restrained the debtor and Mrs. Chew until further order oo (2 from disposing of the Carrara Avenue house, Leave was given to any party to apply on 24 hours notice to rescind or vary those orders. A further hearing of the application for interlocutory injunctions was adjourned to 3 August, On that day the orders were varied in certain respects. The further hearing of the application was adjourned on more than one occasion until it came on for hearing yesterday. In the meantime the petition came on for hearing before another Judge of this Court on 14 December 1982 and was then dismissed on the application of the petitioning creditor, When the hearing of-the application to continue the interlocutory injunctions commenced yesterday, counsel appeared for the petitioning creditor and for Mrs, Chew, but there was no appearance by or on behalf of the debtor. Counsel for Mrs. Chew submitted that the injunctions already granted were automatically dissolved immediately upon the dismissal of the petition, but submitted, in the alternative, that the Court should now dissolve the injunctions as the dismissal of the petition removed the basis for their existence and it would therefore be impossible or unnecessary to keep them alive, In my opinion the latter submission is well founded, Accordingly I would dissolve the injunctions previously granted. As to the costs of that earlier application for injunctive relief, they should be reserved, Indeed although these orders are not by consent, no party has taken any real exception to them. Yesterday counsel for the petitioning creditor was granted leave by me, without objection from counsel for Mrs, Chew, to file in Court returnable instanter an application seeking injunctions restraining the debtor and Mrs, Chew until further order from dealing with the Carrara Avenue house, and an injunction restraining the Registrar-General of New South Wales from registering or in any way processing for registration any dealing with that property. This application was made in petition 1647 of 1982, being a petition ~/3 presented to the Court by the petitioning creditor on 15 December 1982 and seeking a sequestration order against the estate of the debtor. The act of bankruptcy relied on is the failure of the debtor to comply with the require- ments of a bankruptcy notice served on him, The application has not yet been served on the debtor but was served during the course of the morning on the Registrar-General, It was contested by Mrs, Chew. Counsel for Mrs, Chew asked the Court to treat the application for injunctive relief as a final hearing, but I declined to do this because the application and the petition have not yet been served on the debtor and by its nature the application is for interlocutory relief pending the hearing and determination of the petition for sequestration and any appointment of a trustee of the debtor's estate that may then be made, Accordingly I approach this application as one for interlocutory relief. The Carrara Avenue house is registered in the names of the debtor and Mrs, Chew as joint tenants, It was purchased in their joint names in September 197°. It is common ground that it is a valuable property and on current market values may have a value in the vicinity of $500.000,00 but that is a matter on which there is little information and nothing turns on the precise figure. On 12 November 1981 judgment was obtained against the debtor by a firm of stock and share brokers trading as Messrs, Ralph W. King and Yuill in the sum of $114,893.95 in the Supreme Court of New South Wales, In the course of his reasons for judgment Mr. Justice Yeldham said- in effect that he was not disposed to accept certain evidence given by the debtor. Although I will not traverse the issues in that case, they related to the lodgment of orders by the debtor with those stockbrokers said to be for a number of people including Mrs. Chew, and the debt arose out of the failure of the debtor to honour his obligations to that firm. vee /4 On 19 November 1981, a week later, a caveat was lodged on behalf of Mrs. Chew against the title to the Carrara Avenue house in which she claimed interest as sole beneficiary under a trust between the debtor as trustee and herself as beneficiary in respect of the debtor'sundivided one-half legal interest in the Carrara Avenue house, On 20 January 1982 the debtor executed a memorandum of transfer of his interest in the Carrara Avenue house in favour of Mrs. Chew. The transfer has not been registered, and it was to restrain the registration of it and to prevent any interest of the debtor in the Carrara Avenue house being dealt with that precipitatedthe earlier application and the current application, : I should add that there are other creditors of the debtor whose debts are substantial including the petitioning creditor who signed judgment against the debtor in the Supreme Court of New South Wales on 1 March 1982 in the sum of $179,474.84 and which is still unpaid, There is no evidence that the debtor has property in Australia or, indeed, elsewhere save his interest, if any, in the Carrara Avenue house. As this is an application for interlocutory relief, my approach to the case is, of course, to determine if the petitioning creditor has established a prima facie case in the requisite sense and if so, whether the balance of convenience favours the granting or refusal of injunctions, I make, of course, no final determination of any kind, I turn to the facts, many of which are not in dispute, The facts are somewhat extensive and I only propose to refer to those which are essential, though it does not follow that because I do not deal with certain facts I have overlooked them, I have, in fact, considered the whole of the evidence, Mrs. Chew is a citizen of Singapore who has over the years spent a lot of time in Australia. She first came here in 1954, She was a student for some time and married the debtor here in March 1957, He is also a citizen of 1/5 Singapore. The debtor is a medical practitioner who gained his qualifications in Sydney. Following their marriage the debtor practised in Sydney for one year and in Launceston for one year, In 1962 the debtor and Mrs, Chew returned to Singapore. There are five children of their marriage, three sons and two daughters, They have all been educated at schools in Sydney and more than one of them has attended or is attending tertiary institutions in this country. Mrs, Chew visited Australia frequently after her marriage and sometimes lived here and in Singapore during alternate months of the year. Mrs, Chew's case is that it was her own funds which were used to buy the Carrara Avenue house, that none of the debtor's funds were used for this purpose, and that he holds his legal interest in that house upon trust for her. Her counsel sought to support this conclusion on alternative bases as a resulting trust, an express trust or a constructive trust, It seems that Mrs, Chew's parents are persons of some wealth who gave her money and real estate which she has used judiciously and successfully. It is unnecessary to trace the history of the various investments made by Mrs, Chew. There is a body of evidence carefully documented and clearly presented which is relied on by her in support of her case. There is strong evidence that her funds and no others were used to purchase a home unit at Chatswood in December 1976, and that when it was sold in February 1977 the proceeds of sale were employed by her for other purposes to which I shall refer in a moment. A property in Kings Road, Vaucluse, was purchased, Initially it was intended by Mrs. Chew that the purchase be by a company, Five Star Investments Pty. Limited ("Five Star Investments") and a contract of sale naming it as purchaser was prepared, executed and exchanged, Five Star Investments is a company incorporated in Australia, Mrs, Chew and the debtor have been directors and shareholders since its incorporation, There have been from time to time other shareholders and, so far as I can glean from the oe /6 evidence, other directors. It is not entirely clear as to the role it has performed in the Chew family affairs, but it seems that one of its purposes was to act as a trust company of what has been called in the evidence, the "Chew family trusts". One deed of settlement is in evidence before me and it emerges from a perusal of that deed that a trust was established in January 1979 in which Five Star Investments was to act as trustee, and Mrs, Chew was appointed what is called by the document as "the protector", The details of the document are irrelevant, but it is plain from the instrument that Mrs, Chew has very large powers conferred upon her as protector including a power of appointment and removal of trustees. Funds totalling approximately $130,000.00 were paid by Mrs. Chew from more than one source to Five Star Investments to enable the purchase of the Kings Road property to proceed:and to be purchased by the company. I am satisfied for the purpose of this interlocutory application that the sum of $130,000.00 or thereabouts was her money when it came to the company and that the debtor had no claim to it. What happened to the moneys after that is importa Mrs, Chew changed her mind on advice from either her accountants or lawyers, or both, about the identity of the purchaser, She decided that the purchase shou be by herself and the debtor and not by Five Star Investments, I will not go into the reasons for the change of mind but it seems that at least one of her advisers thought that the company would be liable to New South Wales land tax if it became the purchaser, whereas a natural person would not, The contract with Five Star Investments was cancelled with the vendor's concurrence and a fresh contract was prepared showing Mrs, Chew and the debtor as purchasers, The sale was completed and registered in their eae fT joint names, Five Star Investments' books and balance sheets from 1977 to 1981 inclusive record the receipt of the sum of about $130,000,00 as being capitalized in the sense that Mrs, Chew and the debtor and certain other persons became shareholders in the company subscribing capital for 13,000 shares at $1 each at a premium of $9 each. As Mrs, Chew and the debtor purchased the Kings Road property in place of the company, the books and the balance sheets record a loan by the company to Mrs, Chew and the debtor in the sum of about $130,000, The precise figures do not matter and indeed there is a little conflict in the books as to this precise figure but I think nothing turns on that. Thus, notwithstanding that Mrs, Chew was the sole source of the $130,000 paid to Five Star Investments, that company, Mrs, Chew and the debtor thereafter acted, until recently, consistently with the view that the moneys became the property of Five Star Investments resulting in an advance to Mrs. Chew and the debtor which they used to acquire the Kings Road property in their joint names, Mrs, Chew signed the balance sheets for the years 1977 to 1981 which reflected this position and I am satisfied that she knew full weil] what she signed and its significance. She did make some attempt in cross- examination to deny that she knew what she was signing and that what she did sign was only one or two pages of the balance sheets on which her signatures appeared and that the other pages were not before her at the time, but there is other evidence which I accept to the contrary, including evidence of her former accountant. I do not suggest that Mrs, Chew's evidence has been necessarily misleading. It may well be that she has convinced herself that that was the position as she has reflected upon this case over the years since, At any rate I am satisfied that I should, however, on matters where her evidence is uncorroborated, exercise some care before accepting it, ++ /8 Mrs, Chew is a shrewd and capable business woman and it is most important to her that she succeeds in her contention that the debtor's interest in the relevant properties are held upon trust for her, The Kings Road property was sold in 1979 and a little later a contract was executed to purchase the Carrara Avenue house and that purchase was completed in October 1979, As I have said, it stands in the name of both the debtor and Mrs. Chew. The source of funds to enable that property to be purchased I need not refer to except to say that a large part of it represented the proceeds of sale of the Kings Road property. It does seem on the evidence that something over 50% of the purchase price of the Carrara Avenue house was provided by Mrs. Chew so that, although she and her husband are registered as joint tenants, their equitable rights to the property are not necessarily 50% each, assuming the debtor has some equity therein, I make no final findings, however, at all in relation to this as it depends on the ultimate hearing. All I say at this stage of the case is that it seems that Mrs, Chew may have an equity in the property of something in the order of 70%. Of course, she may succeed in establishing that she has the whole beneficial interest in the Carrara Avenue house. There is evidence of a conversation between Mrs, Chew and the debtor early this year after the debtor got into financial difficulties which might suppor in due course her contention that there was an express trust of the Carrara Avenue house based on the actual common intention of Mrs. Chew and the debtor: see Allen _v. Snyder 1977 2 N,S.W.L.R. 685 (at pp, 690 and 692). There is other evidence to which I have been referred by counsel for Mrs. Chew which on a final hearing may support her argument as to the existence of an express trust, or a resulting trust, or a constructive trust, It may be in due course that she will establish that the advance of about $130,000.00 to the debtor and herself from Five Star Investments became in equity her funds to the exclusion of the debtor. I say nothing about this - it can abide the result of the final hearing ~- except wee /D to say the role played by the company in the whole matter, coupled with the fact that no assertion of a trust appears to have been made until very soon after the judgment was obtained against the debtor in the Supreme Court litigation decided by Yeldham J. on 12 November 1981 which was closely followed by the lodging of the caveat over the Carrara Avenue house and the execution of the memorandum of transfer of the debtor's interest in favour of Mrs, Chew all lead me to treat Mrs, Chew's case at this stage of the proceedings with some caution. It is common ground that although the ultiamte onus of proof lies against the petitioning creditor to establish its prima facie case, the evidentiary onus lies with Mrs. Chew because of the registration of the title to the Carrara Avenue house in the joint names of the debtor and Mrs, Chew. In my view for the purpose of these interlocutory proceedings, that latter onus has not been discharged. Accordingly, I am satisfied that there is a prima facie case in the requisite sense established by the petitioning creditor, but I wish to mak it perfectly clear that by saying this I am in no way prejudging the ultimate - result of this case, Although I think a prima facie case has been established it is possible on the final hearing that Mrs, Chew will succeed in her contention As to the balance of convenience, I need not refer to this at any length, It was discussed between counsel and myself and I think the balance of convenience plainly lies in favour of granting interlocutory relief, There is no evidence of any assets here of the debtor other than his interest in the Carrara Avenue house. I know that he has financial problems here and I must look to the interests of creditors of the debtor as well as the interests of the debtor and Mrs, Chew. I am satisfied that the Court has jurisdiction to grant interlocutory relief and although some suggestion was made in argument to the contrary it was not supported by authority and I reject it. +. /10 The 1. -10- Court Notes that the applicants by their counsel give the usual undertaking as to damages; Notes that the applicants by their counsel undertake to prosecute the petition herein with diligence and expedition; Court orders that: Except as provided for in paragraph 6 hereof the firstnamed respondent by herself and her servants or agents, be restrained until the further order of the Court from dealing with, or permitting to be dealt with, or disposing of, or permitting to be disposed of the interest of the debtor as joint tenant in the land comprised in Certificate of Title Volume 12278 Folio 4 and being the premises known as 4 Carrara Avenue, Vaucluse in the State of New South Wales (hereinafter referred to as "the land"); Except as provided in paragraph 6 hereof the debtor by himself, his servants or agents, be restrained until the further order of the Court from dealing with, or permitting to be dealt with, or otherwise disposing of, or permitting to be disposed of the interest of the debtor as joint tenant in the land, The secondnamed respondent by himself, his servants or agents, be restrained until the further order of the Court from registering any dealing with the interest of the debtor as joint tenant in the land, If the first respondent and the debtor agree to lease the land upon terms to be agreed between the applicants, the debtor and the first respondent, no breach of any of these orders will occur Leave be given to any party to apply on two (2) days' notice eee /1l -ll- for rescission or variation of these orders, 8. Costs be reserved, 9, The further hearing of the application be adjourned until the 28th day of March 1983. u i. ine soy cf the nerein cf nis honsur