_s tow Ae eee seen " A me saya EN ee arte OE ap rien eae CATCHWORDS BANKRUPTCY - Power to order taking accounts in respect of partnership involving bankrupt - Bankrupt partner under fictitious name - Effect of incorporation of company with shares un fictitious name ~ Referral of solicitor's conduct to Law Society and Prothonotary of State Supreme Court. Bankruptcy Act 1966, s.30 Partnership Act 1892 (NSW) s.33 In re Wordsworth (1889) 5 WN(NSW) 96 Keppie v. Law Society of the A.C.T. (1983) 62 A.C.T.R. 9 Obacelo Pty Ltd v. Taveraft Pty Ltd (unreported, Wilcox J., 13/6/86) Commissioner of Australian Federal Police v. Curran (1984) 55 A.L.R. 697 RE: ANGELO MICHAEL COVINO and MELITA COVINO (Bankrupts) EX PARTE: MAX CHRISTOPHER DONNELLY (Applicant); JOHN PHILIS, FAIRDINKUM TYRE SERVICE PTY LIMITED, ANGELO MICHAEL COVINO and MELITA COVINO (Respondents) W.1054 of 1983 Burchett J. Sydney 9 July 1986 Seatenlaheinecdiceeuten' aaetetenieaianen eee wre mp ee meee ee ery ae «eo eee a nee el ae ee i Led 'orc rRm®m ve dele tt Lal a THE COURT DECLARES THAT: (1) (2) (3) (4) (5) The interest purporting to be that of "Walter Jay Smith" in the partnership between the person using that name and the first respondent carrying on business at Minto in the State of New South Wales in the name of "Fair Dinkum Tyre Service" is an asset of the bankrupt estate of the third respondent. The issued share in the second respondent standing in the name of "Walter Jay Smith" 1s an asset of the bankrupt estate of the third respondent. The issued share in the second respondent standing in the name of "Angela Smith" is an asset of the bankrupt estate of the third respondent. The sum of $43,610.32 paid by Messrs. Caldwell & Associates, Solicitors, to the first respondent on or about 27th June, 1984 is an asset of the bankrupt estate of the third respondent. The sum of $9,500 deposited to the credit of the account of Walter Smith and J. Philis trading as Fair Dinkum Tyre Service by Messrs. Caldwell & Associates, Solicitors, at the Commonwealth Trading Bank, Campbelltown is an asset of the bankrupt estate of the third respondent. THE COURT ORDERS: (1) (2) (3) (4) That the Registrar make an inquiry and take an account of the share of the bankrupt estate of the third respondent in the profits and the assets of the said partnership. That the first respondent pay to the applicant such sum as may be ascertained upon such inquiry and account as the share of the bankrupt estate of the third respondent in the profits of the said partnership. The winding up of the said partnership and the distribution to the applicant of such sum as may be ascertained by the Registrar as the share of the bankrupt estate of the third respondent in the assets of the said partnership. (a) The first respondent by himself, his servants and agents be restrained from taking any step to sell, dispose of, deliver up or part with possession of any tyre retreading machinery, equipment or other asset of the business known as "Fair Dinkum Tyre Service", be that step a step taken or attempted aw oh IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES' AND THE AUSTRALIAN CAPITAL TERRITORY Judge Making Order: Date of Order: Where Made: Burchett J. 15 July 1986 Sydney No. W.1054 of 1983 eee ANGELO MICHAEL COVINO and MELITA COVINO Bankrupts EX PARTE: MAX CHRISTOPHER DONNELLY Applicant JOHN PHILIS First Respondent FAIRDINKUM TYRE SERVICE PTY LIMITED Second Respondent ANGELO MICHAEL COVINO Third Respondent MELITA COVINO Fourth Respondent MINUTE OF ORDER OF THE COURT : 3. to be taken for himself, for any partnership carrying on business in the name "Fair Dinkum 'lyre Service" or for the company known as Fair Dinkum Tyre Service Pty. Limited. ie dnt i oon Sed - ore (b) The first respondent by himself, his servants and agents be restrained from taking any step to pay or attempt to pay any sum of money comprising any part of the proceeds of sale of any tyre retreading machinery or equipment or other asset of the business known as "Fair Dinkum Tyre Service" or any other money which is the money of the said business or any partnership or company carrying on business in that name to any person. et a rte, ' (c) The first respondent by himself, his servants and t agents pay forthwith to the applicant upon its receipt by him any sum of money comprising any part of the proceeds of sale of any tyre retreading machinery or equipment or other asset of the business known as "Fair Dinkum Tyre Service" or any other money which is the money of the said business or any partnership or company carrying on business in that name. (5) That the third respondent pay to the applicant the sum of $43,610.32. (6) That the first and third respondents pay to the applicant the sum of $9,500. (7) That the first and third respondents pay the applicant's costs, including any reserved costs. (8) That liberty be reserved to the applicant to seek further relief. THE COURT DIRECTS THAT: The application relating to Gandeza Pty. Limited dated 23 August 1985 be listed for mention before me at 9-30 A.M. on 24 July 1986 for the fixing of a date for a hearing and for directions, the applicant to notify the solicitor for Gandeza Pty. Limited of this direction by 5-00 P.M. on Thursday, 16 July next. NOTE: Settlement and entry of orders is dealt with by Order 36 of the Federal Court Rules. qe oe Se ine we re ee ee en - fey wee 7 SP WI On tem ST ee eete PPT Ph at IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL TERRITORY No. W.1054 of 1983 ANGELO MICHAEL COVINO and MELITA COVINO Bankrupts EX PARTE: MAX CHRISTOPHER DONNELLY Applicant JOHN PHILIS Respondent FAIRDINKUM TYRE SERVICE PTY LIMITED Second Respondent ANGELO MICHAEL COVINO Third Respondent MELITA COVINO Fourth Respondent REASONS FOR JUDGMENT BURCHETT J. The evidence in this case tells a rather squalid tale of fraud. The respondents, Angelo Michael Covino and Melita Covino are husband and wife, and both are bankrupt. The applicant, who 2. is the trustee of Lheir respective eslales, seeks a number of orders on the footing that Mr Covino, during a period commencing when his banruptcy was impending and continuing after it, in concert with the respondent John Philis, constructed a false identity, in the name Walter Jay Smith, as a camouflage for his property and business interests. In 1982 Mr and Mrs Covino were defendants to a claim for almost three hundred thousand dollars brought as a commercial cause in the Supreme Court of New South Wales. They received advice that their defences could not succeed. A letter to Mr Covino from his then solicitor (who was not the solicitor now acting for him) dated 1 March 1982 contained the following amazing advice: "Tt w2rll now be obvious to you that you and your wife will sustain judgment against you, on the personal guarantee actions. That will inevitably lead to your Bankruptcy. In the time avallable to you we reiterate that you ought liquidate all your assets and apply the proceeds where they can not' be traced. Whilst this is a matter for your own decision we would suggest that consideration even be given to re-locating yourselves and to a large extent new identities will be needed to be assumed, as 1f you do not your whereabouts could be traced by the Official Receiver or Judgment Creditor through eléctoral role (sic), car registration and licence searches." ° On 10 August 1982 judgment was in fact entered against Mr and Mrs Covino. That judgment was to lead to the bankruptcy of Mr and Mrs Covino on 21 November 1983 pursuant to bankruptcy wee oe eee aptone Nae eae A A, Om Nepean Mm Ow Le Ree 0 3. notices served 14 May 1983 and petitions filed 5 September 1983. By a document consisting of two pages, the first of which is dated 24 December 1982 though the second bears the date 22 February 1982, signed by Mr Covino as a director of a company Kaqu Pty Ltd, that company, by its directors Mr and Mrs Covino, purportedly sold "to John Philis and Walter Smith ali retreading machines." Curiously, the second page, which 1s in the form of an invoice, has in its heading the words: "Sold to John Philis & Partner", and does not mention Walter Smith. The price shown is $10,000. There 1s added the following: "Consideration will also be given for moneys owing by Kagu. From time to time for truck tyres which Kagu will buy from John Philis and Walter Smith." I take these two vague and ungrammatical sentences to indicate that it was not proposed that any money would change hands at the time of execution of the document, but that the price of $10,000 would be satisfied by set-off against purchases of truck tyres. Although Melita Covino's name appears on the document, it contains no signature purporting to be hers, a matter of interest in view of other evidence to be discussed. Despite the terms of the agreement, a receipt issued, also dated 24 December 1982, for $10,000 as received by Kagu Pty Limited from "Fairdinkum Tyre Service (J. Philis)". There is, too, in evidence an unexplained further receipt for $24,000 dated 30 May 1983 (or possibly 30 August 1983 - the writing 1s unclear) which refers to J. Philis and W. Smith and appears to relate to the same sale. Few ewes — Sanne serra fens o, Fp camps om oat ane The evidence is that Mr Covino was a principal of a company, De Angelo's Tyre and Wheel Services Pty Limited, which conducted a business of retreading and selling tyres, and of Kagu Pty Limited which may at some stage have taken over the business of the former company. This business had been operating under his management at least since 1968, but in January 1983 a new business name appeared at 48 Blaxland Road, Campbelltown, next door to the premises originally occupied by De Angelo's Tyre and Wheel Services Pty Limited. The new name was Fairdinkum Tyre Service. That name was registered under the Business Names Act 1962 (NSW), originally as a business name of John Philis and Suzanne Pintley. Suzanne Pintley was Mr Covino's secretary. She gave evidence, which I accept, that she signed documents, including documents relating to this registration, at Mr Covino's request and on his behalf. As at 15 June 1983, according to a "Statement of Change in Persons in Relation to Whom Business Name is Registered" filed 29 July 1983, this registration was changed to delete the name of Suzanne Pintley and substitute the name Walter Jay Smith of 19/20 Rolfe Street, Mascot. A bank account was opened at Commonwealth Trading Bank of Australia Campbelltown on 14 July 1983 in the names John Philis and Walter Jay Smith, | trading aS Fairdinkum Tyre Service. A further document from the bank's file dated 7 October 1983 records that John Philis and - Walter Jay Smith constitute "the firm of Fairdinkum Tyre Service Pty Ltd" (sic). It proceeds: "we have authorised Angelo Michael Covino, John Philis and Walter Jay Smith any two to ot a "oA eg mae ea rere Ae 5. sign whose signaLlure(s) is/are at [Cool hereol an the name of the said firm...". The document purports to be signed by Mr Covino as an authorised signatory other than a partner, and by W. Smith and J. Philis as partners. A further bank account, with Commonwealth Savings Bank of Australia at Mascot, was opened in the name of Walter Jay Smith of 19 Rolfe Street, Mascot on 28 July 1983. It was operated from time +o time between that date and 16 July 1984. Between 15 July 1983 and 18 June 1984 there was a large number of transactions in the account with the Commonwealth Trading "Bank of Australia at Campbelltown, to which I have referred, including numerous cheques signed W. Smith and also signed with the signature of Mr Covino or in some cases the signature of John Philis. These transactions reflected a business, actively carried on under the management and control of Mr Covino. A document entitled "Memorandum and Articles of Association of Fairdinkum Tyre Service Pty Ltd" was brought into existence bearing the date 19 October 1983. The subscribers are shown as Angela Smith of 48 Blaxland Road, Campbelltown (the address of the Fairdinkum Tyre Service business, which was however an address at which no such person as Angela Smith was known) and Walter Jay Smith of 19 Rolfe Street Mascot. The eats ew ceweee ee ee oe that reve ye et ss torge aaliiee e Be Mei LS paras 6. document purports Lo bear the signatures of these two persons witnessed by one Christopher Venter. Mr Venter gave evidence before me that he had, at the request of Mr Covino, written the signature "A. Smith" where that signature appears on the Memorandum and the Articles of Association. At the time he did so the document was otherwise blank. Mr Venter was an employee at Fairdinkum Tyre Service. Apart from Mr Venter, there were two other employees at Fairdinkum Tyre Service who gave evidence, Mr Covino's secretary over a total period, involving some breaks, of many years up until May 1983, Mrs Suzanne Pintley, and a junior office assistant, Elizabeth Buckley, aged eighteen years, who worked there between September 1983 and May 1984. None of these three employees had ever met Walter Jay Smith. I found all of them credible witnesses. Miss Buckley, whose duties included doing the banking, gave evidence that she had seen Mr Covino write the Signature Smith on cheques. She identified his signature on numerous cheques, and she identified the signature W. Smith as being the signature which she had seen Mr Covino affix to cheques. She also identified the signature of Mr Philis on cheques. In addition, she identified the handwriting of Mr Covino on a large number of the cheques. The evidence indicates. that the normal practice was for a number of cheques in the chequebook to have the signature W. Smith on them as blank cheques. Mr Covino would then write out a cheque, and sign it with his own signature, so that the cheque would then bear two me ee ee ee - 7s orm. = - 4 wre ringer ee de Ino ed. Ce ee oss en sae terda 7. signatures. But occasionally an error would occur, and an alteration would follow, necessitating further signatures. It was on such occasions that Miss Buckley had seen Mr Covino write the signature W. Smith. She specifically recalled one of these occasions, although she was unable to fix the date of it. There were several cheques tendered which could have satisfied her description of what occurred. The unavailability of Mr Smith was inherently likely to lead to difficulties, and Miss Buckley said there were queries about him from the bank: yet he never appeared. Miss Buckley also gave evidence identifying a signature "M. Covino" upon certain cheques drawn on an account at the Westpac Bank at Campbelltown in the name M.A. Covino. She recalled an occasion when Mr Covino was writing: — "I do remember him one day signing and I did not see. I just knew he was writing. Then he gave me this cheque and said 'Rush down to the bank and get that'." She said: -- "I remember looking at it and thinking 'M. Covino - that is a bit strange', becausé 'he always signed A. Covino." The effect of her evidence, as I understood it, was that she had - not actually seen the signature M. Covino affixed, but she had seen Mr Covino writing on the cheque, which he had then given to her to take urgently to the bank, and which she had noticed was signed M. Covino. She also, in the course of her duties, lodged deposits into the M.A. Covino account. i et ee a iT Pat Mr Venter gave evidence concerning two occasions on which a cheque was urgently required. He gave Mr Covino a blank cheque form, and then about ten or twenty minutes later received back from Mr Covino, on each of those occasions, the completed cheque bearing Mr Covino's signature and also the W. Smith Signature. During the period of delay Mr Covino had remained in the office. In cross-examination, he said: "I have never met anybody described as Walter Jay Smith." He was then asked: "you would therefore have no suspicion in your mind at all in relation to the authenticity of that cheque that you gave evidence of earlier today that you gave to Mr Covino and got back twenty minutes later, duly signed by Mr Smith?" He replied: "There is no doubt 1n my mind that that cheque was not signed by Mr Smith." He was then asked: "You can enlighten the Court as to who signed it?" and replied: "TI did not see Mr Covino sign it, but I recall giving it blank and getting it back with two signatures on." 7 He was asked: "In fact you never saw Mr Covino sign any cheque with the signature Smith - that is correct too is it not? You have never seen him do that?" He replied: "I cannot 100% say that I have." OO = Tae ae "aren > hy ot a aye mer ere wos Mr Venter recalled that, on each of these two occasions when he D had handed a blank cheque form to Mr Covino and received it back with the Smith signature on 1t, Mr Covino had said something to the effect "that he would get into trouble from Mr Smith for doing such a thing, but because of the urgency of the cheque, that is the reason he had done it." Mr Venter also gave evidence of being asked by Mr Covino on a number of occasions to give Mr Philis the chequebook to take home. Mr Philis brought the chequebook back containing a number of the Smith signatures. The evidence of each of the three witnesses to whom I have referred makes it clear that it was Mr Covino who directed and managed the business, and that Mr Philis was involved, ina capacity which could be described as that of a leading hand or foreman, in the rebuilding of truck tyres. Mrs Pintley gave evidence identifying a very large number of documents, particularly cheques, bearing the W. Smith signature. In each case, she said that she recognised that Signature as writing of Mr Covino. She also identified his writing on other portions of very many of the cheques. In addition, she identified the signature of Mr Philis, and numerous signatures of Mr Covino in which he had signed his own name. She also identified the M. Covino signature, to which I referred when Sant een eor-- a ete wee —. ve eR ee OMT FN ee ome te Re te le a <P ee 10. discussing the evidence of Miss Buckley, as being in the handwriting of Mr Covino. She was cross-examined at considerable length, and in very great detail, concerning her identification of these various signatures. - I was left with the clear impression that Mrs Pintley is extremely familiar with Mr Covino's handwriting, and that her evidence was reliable. It was sometimes expressed rather forthrightly. At one point in cross-examination she was asked about her identification of what was described as "a shortened signature" on certain exhibits, and she answered: - "T did it because I know his handwriting. He could be writing them upside down in the toilet, and I would still know his handwriting. I know his handwriting because I saw it every day. He wrote letters to do this and that ~ whether it is shortened, written slowly or in a hurry, it is ail the same." By the last comment I think she meant, not that the writing looks the same in every signature, but that she knew each way he wrote, and it was all the same to her in the sense that it was all easily recognisable as his. Mrs Pintley also gave evidence of an occasion in about 1981, well before the events with which this judgment 1s particularly concerned, when Mr Covino telephoned a transport company concerning an advertisement for the position of Transport Manager, in which he was interested. She said he gave the name Walter Smith. ae ee are eye en 5 + arate ol a il. In the case of Mrs Pintley, having regard to the many years during which she had worked for Mr Covino, it is I think particularly significant that she had never met Walter Jay Smith, and that the person she recognised as "the boss" at Fairdinkum Tyre Service was Angelo Covino. Evidence was led from a handwriting expert, Mr Paul Westwood. I found Mr Westwood an impressive witness. He has had some seventeen years experience in the examination of suspect documents, during ten years of which he was the Officer in Charge of the Document Examination Bureau of the Australian Federal Police. He holds the degree of Bachelor of Laws and has pursued specific studies in document examination in various institutions un the United States, Canada, the United Kingdom and Europe. He 1s presently the Chief Document Examiner for the Department of Immigration and Ethnic Affairs, having particular responsibilites in respect of counterfeit travel documents. Mr Westwood was asked to examine the cheques, and various other documents in evidence, bearing the W. Smith signature, and also those bearing the signatures identified as Mr Covino's. He said in cross-examination that 1t was correct' that he was of the opinion that the Smith signature was not a genuine signature at all. In chief he had put the matter rather more elaborately. He said that the Smith signature showed an evolution within a short period of time, a mere twelve months, ween - ee Aer A Ss amet st ener ne eT OR me ee 12. which suggested to him very strongly that it was not a genuine Signature. This was because, although development and change in ' a signature is not uncommon, the development exhibited by the Smith signature, in such a short period, was altogether unusual. He demonstrated, by assembling examples of the signature in date order, the way in which the signature had changed from an initial . simple and laboured signature to a very much more complex, and indeed extremely unusual, signature adorned with unnecessary flourishes. He expressed the opinion that when the signatures were viewed chronologically it was apparent that all of the Smith. signatures were signed by the same person. Mr Westwood was also shown two postcards and a letter, — almost. entirely written in what appears to be the Greek language — —and bearing Greek postage stamps, but also having the Smith Signature affixed to them. It was suggested, as I understand it, on behalf of the respondents that these might indicate that Mr Smith was in fact a Greek migrant who had returned to Greece, and was thus unavailable. On this basis, a letter had been written, shortly before the hearing, by the applicant's solicitors to the respondents' solicitors requesting information concerning Mr Smith's present whereabouts and offering, if he is in Greece, to obtain his evidence on commission. It was conceded that this letter had brought no response, but it was not suggested that there had been any repudiation of the contention that Mr Smith was a Greek migrant. A translation into English of the documents zn Greek was indeed tendered on behalf of the respondents. eee ee ee < - at ta + —-~ oe SR aes weet 8 ed eo oC es oT art + sere 13. According to the translation, the letter represents the writer as having arrived in Greece four weeks before its date, ie 9th October 1984, and as having found great changes there. It suggests that the writer had been an illegal immigrant, and had bought a factory with the addressee, who is John Philis. The letter (as translated) also includes the following: "You told me over the 'phone that I sign a letter of mine and send to you as they do not believe I exist. I am sending you this letter with my signature enclosed herewith; furthermore if you look behind the stamps on the envelope you will see my signature there too. «eee Give my regards to Angelo and I wish everything turns out well." The letter had commenced: "Dear friend and partner John". The letter is signed with the Smith signature, which has also been written at least three times on the envelope, both under and over the stamps. The postcards, too, are signed with the Smith signature, one being addressed to John Philis and the other to Angelo Covino (spelled Cavino). Mr Westwood expressed the view that these documents were contrivances. He did not think that the person who wrote the signature was the person who produced the Greek writing. Nor did he think that the word "John", which appears in Latin hand printing, was written by the writer of the Greek, although it could have been written by the person who wrote the signature. He had had previous experience of the device of affixing a weg ears at ee re, tno at See eee ee eee, 14. Signature above and below postage stamps as a means of seeking to gstablish that a document had been prepared abroad. The Greek letter and postcards are indeed most curious documents. There was no evidence, apart from them, to suggest that the Smith signatures belonged to a Greek. If an illegal immigrant from Greece had wished to melt anonymously into the Australian community, he would have been most unlikely, one would think, to have adopted a name so inconsistent with the accent and appearance he would probably have had. In any case, if Walter Jay Smith was in fact a returned Greek migrant, who had been in communication with the respondents after questions had been raised as to his existence, it seems improbable that the applicant's offer to obtain evidence from him in Greece would have met with no response. Mr Smith, mute, is a persuasive witness. Like the absent Baal (1 Kings 18) who kindled Elijah's mockery, Silent as a stone despite all appeais, he should have answered if he existed. For in that case he had interests to defend. Neither Mr Philis nor Mr Covino was called to give evidence before me. The applicant tendered some evidence given on examination by Mrs. Covino, which was admitted without objection, but she was not called by the respondents either. Mr Westwood was unable to identify the Smith signatures and the various signatures purporting to be A. or M. Covino as having been written by the one person. He said they could have been written by the one person, and in relation to two different Be en seen eee eee - oa ~_ —. tli Minette a ae alice AY AAS eee rw le to weed Ger 15. signatures purporting to be A. Covino he drew attention to a similarity between the documents concerned which appeared to suggest they were prepared by the same person. But he did not consider a positive opinion could be arrived at. I do not think there is any inconsistency between the evidence of Mrs Pintley and the opinion of Mr Westwood to which I have just referred. Mr Westwood was speaking of the conclusions that might be drawn simply from a comparison of signatures, being in themselves very small samples of handwriting, at least some versions of which on the applicant's case had been deliberately produced with differences between them for purposes of disguise. Mrs Pintley was speaking, not as an expert, but as a secretary of many years standing intimately acquainted with the various styles of writing his signature, including the Smith signature and the M. Covino signature, which her evidence indicates Mr Covino had adopted. I should add that one style of signature, which according to other evidence was used by Mr Covino, was not recognized by Mrs Pintley. It was either not used while she was his secretary, or not sufficiently for her to have become familiar with it. I think this otherwise curious fact confirms my view of the nature of her evidence regarding Mr Covino's signatures, and also confirms her honesty in refusing to identify what she did not actually recognise, though she could easily have inferred it was written by Mr Covino. Mrs Pintley receives strong support from the evidence of Mr Venter and Miss Buckley, to which I have already referred. So far as the Smith signature wee ees —o— ——— a ee ene een Lt peep ee ger eg iP, ae SA ON pA OR ag ee TA ana 16. ltself is concerned, both the extraordinary invisibility of Mr Smith at the business in which he was supposed to have been concerned as a partner, and the strong opinion of Mr Westwood, provide additional support for her evidence. The respondents obtained leave to have a handwriting expert in Court during the evidence for the applicant, but did not call her in their case. I have reached the clear conclusion that the identity of Walter Jay Smith was a fiction concocted by Mr Covino in order to attempt to deceive his creditors and his trustee. It was a mask behind which was the face of Mr Covino. I have had regard to the seriousness of such a conclusion, which ought not to be reached lightly, but I do not think there is any doubt about it. So far as the signature M. Covino is concerned, this was employed in respect of the bank account styled M.A. Covino. Mr Covino's correct initials are A.M. But Mrs Covino's full name is Melita Covino. The evidence upon examination of Mrs Covino 18s clearly to the effect that this account was not hers. Indeed, what she asserted strongly was that she had never had a bank poe Go eS 'account, that she had never signed any cheques, and that she had never in her entire life been to any bank. Her statements "con£izm the conclusion I should have reached, even without them, from the other positive evidence to which I have already referred, that the signature M. Covino was written by Angelo Covino, and that the bank account in respect of which it was signed was Mr Covino's, with his initials reversed. When a Mr Bp ge gg en ee aed Tha DS eR oe Seem " in aieciell alot nichdet Ld the to ee 17. Covino, introduced by Mr Angelo Michael Covino's accountants, arranged an interest bearing deposit for one month at the State Bank Burwood on 24 December 1982, he did so in the name Michael Angelo Covino, and signed a specimen signature, which is characteristic of the M. Covino signatures, having a very unusual long final stroke as part of the initial letter. There is evidence which I accept to show that the source of over $30,000 paid into the M.A. Covino account at Westpac Campbelltown in late January 1983 was moneys, received from the same accountants of Mr Covino, which had constituted that interest bearing deposit. These facts provide circumstantial support for the conclusion that the M.A. Covino account belonged to Mr Covino, who simply reversed the initials of his given names to disguise the account. The application, as amended, 1s brought by the trustee against John Philis, Fairdinkum Tyre Service Pty Ltd, Angelo Michael Covino and Melita Covino. It seeks firstly, a declaration that the interest purporting to be that of Walter Jay Smith in the partnership between the person using that name and John Philis, carrying on business at Minto in the State of New South Wales in the name of "Fairdinkum Tyre Service", is an asset of the bankrupt estate of Angelo Michael Covino. It has not been suggested that John Philis was not a real partner so far as his own share in the partnership was concerned; the claim made is . limited to the interest purportedly held by Walter Jay Smith. In my view, I should make the declaration which is sought. Consequently upon that declaration, orders are sought for an anemia e ie: aon ie OM 18. enquiry to be had and an account to be taken in respect of the profits and assets of the partnership, and for an order that John Philis pay such sum as may be ascertained, in respect of the share of the bankrupt estate of Angelo Michael Covino, and an order in respect of the winding up of the partnership. I think it is within my jurisdiction under s.30 of the Bankruptcy Act 1966 to make each of these orders, and no submission was put to the contrary. I regard the orders sought aS appropriate, in the circumstances of this case, on the basis that the enquiry is to be had before the Registrar and the account is to be taken by him. Similar orders were upheld by the Full Court of the Supreme Court of New South Wales in In Re Wordsworth (1889) 5 W.N.(N.S.W.) 96. Further declarations are sought in respect of the issued shares in Fairdinkum Tyre Service Pty Ltd, to which I have already referred. It w21l be recalled those shares are in the names of Walter Jay Smith and Angela-Smith. I should add to what I have recounted that, one week before the date of the Memorandum and Articles of Association, the solicitors whose firm name appears on them wrote a letter dated 12 October 1983 addressed tos "The Manager, Fairdinkum Tyre Service Pty Ltd, C/- Mr A. Covino, 48 Blaxland Road, CAMPBELLTOWN" . eye RE fe re pee memeeenge oo a ee ae eee eT Oe at meno 19. The letter referred to the formation of the company and to a recent attendance by Mr Covino at the solicitors' office. It noted there were to be amendments to the Memorandum and Articles of Association and sought advice at an early date. No reference at all is made, either in the letter or on the solicitors' instruction cover, to anyone named Smith; the instructions concerning the formation of the company and the amendments to the Memorandum and Articles appear to have come only from Mr Covino. The Memorandum and Articles themselves contain some-handwriting which was identified in evidence by Mr Venter as being Mr Covino's. This handwriting is the name "Walter Jay Smith" written under the Smith signature, Mr Venter's own name written as Chris Venter, and the date 19 October 1983. There are also un evidence a photostat copy of a return of allotment of shares, lodged 18 January 1984 in respect of Fairdinkum Tyre Service Pty Limited, and a Notice in relation to Registered Office lodged on the same day, each dated 16 November 1983, and bearing the Signature A. Smith purporting to be the signature of Angela Smith. Each of these signatures A. Smith appears to me to be in the same handwriting as the signatures A. Smith on the Memorandum and Articles, which Mr Venter said he wrote at the request of Mr. Covino. Mr Venter gave evidence that he did sign A. Smith on other documents, at Mr Covino's request, as well as on the Memorandum and Articles of Association. I have no difficulty in concluding that Angela Smith was another fraudulent concoction by Mr Covino, that he alone was ey gq i re ooo a ny os "_ ~_— ape "hae e ae OE Be eee CORPS CREE Rol es ie 20. responsible for the arrangement to incorporate the respondent Fairdinkum Tyre Service Pty Limited, and that any shares issued in the names Walter Jay Smith and Angela Smith are vested in the applicant as trustee of Mr Covino's estate. JI do not think the mere fact that Mr Covino endowed his own fictitious persona Walter Jay Smith with a fictitious wife enables any inference to be drawn that the share in the name Angela Smith belonged to Mrs Covino, and is now held by the applicant as trustee of her estate. Such a view would involve hitching the presumption of advancement to the traces of a fraud in a quite incongruous way. I appreciate that my conclusion may have consequences for the validity of the steps taken to incorporate the respondent company (though, as to this, see s.549 of the Companies Code), and I reserve liberty to the applicant to seek further relief in respect of it, 1£ so advised. It may be, and the question was not explored before me, that neither the business carried on by the partnership, nor any other asset, was ever transferred to the company. In that event, problems relating to the company would be academic. A further problem is raised, by the Application, in respect of a property near Dubbo, known as Blue Star. On 10 February 1983, a contract was entered into by which a Mr and Mrs Endacott sold this property for $44,000 to a purchaser whose name was inserted in ink into the typed-up contract form as "Walter Smith C/- P.O. Box 429, Campbelltown". This is the address of Mr wr aew we ee Ce Se, 2 ee ' crt se ee 21. Covino as written on the postcard purportedly sent to him by W. Smith from Greece. The evidence of Mr Gase, who had sole conduct of the purchase as a managing clerk in the office of the solicitors for the purchaser, Messrs O'Reilly and Booth, was that "initially the instructions came from Mr Angelo Covino who was to be the purchaser of that property". After about six weeks, there was a change of instructions. Mr Gase was told that Mr Smith wanted to take over the purchase. He never met Mr Smith, his instructions being "to contact Mr Covino as the contact point for Mr Smith". It was to Mr Covino that he gave the contract document, receiving it back signed W. Smith. The deposit of $6,600 was paid to Mr Gase's farm by a cheque dated 27 January 1983, drawn on the M.A. Covino account at Westpac Campbelltown, a a Signed with the M. Covino signature which I have held to be in the handwritingof. Mr Covino. The receipt issued by the solicitors referred to "Covino purchase from Endacott". Further sums of $440, $771.50, and $819 appear to have come during May- and June 1983 from the same source in order to meet respectively enguiry fees, stamp duty, and a final balance due on settlement. The bulk of the moneys required for settlement came from a cheque dated 30 May 1983 from FGC Insurance for $36,550 payable to Kagu Pty Limited, which was endorsed to the solicitors by an endorsement signed by Mr Covino (Mr and Mrs Covino were the directors of Kagu Pty Limited). The source of that cheque was an insurance claim by Kagu Pty Limited (also signed by Mr Covino) in respect of a theft of tyres in January 1983. The proper conclusion is that Mr Covino had provided funds, either his own, ww as aan = a ese ae Oe td a tele eT 22. or partly his own and partiy procured under some arrangement of loan or otherwise with a company he controlled, in order to purchase an investment property for himself, but had caused the purchase to be made in the name of the fictitious identity he had adopted. Had Mr Smith been a real person, the attempted circumvention of the rights of creditors would still have failed, by virtue of the doctrine of resulting trust. The Biue Star property was resold to a purchaser named Blythe for $55,000 by a sale completed on 27 June 1984. The authority to pay the balance of purchase moneys on settlement directed payment to John Philis as attorney under power of Walter Smith. He acknowledged in writing receipt of $43,610.32. On settlement $38,110.32 was paid by a bank cheque payable to Walter Smith, $1,129.25 was paid to the solicitors for the vendor and $9,500 was paid into Commonwealth Trading Bank Campbelltown to the credit of Walter Smith and John Philis trading as Fairdinkum Tyre Service. A cheque dated 29 June 1984 _ For $5,500, representing deposit, was made payable to W. Smith. The total of $38,110.32 and $5,500, that is $43,610.32, found its way into the account in the name Walter Jay Smith at Mascot referred to early in this judgment, and was withdrawn as to half of it, the same day, and as to the balance by a series of withdrawals over the ensuing two or three weeks. I infer it was withdrawn by Mr Covino. The story of the power of attorney is of some interest in the context of this case. The solicitor who had carriage of aay en ne eee te De Ce ene Te ey ladies etetteli ad inal Samal --m~ 23. the sale, a Mr Battersby, gave evidence that he-did not meet Mr Smith, but someone giving the name Walter Smith telephoned iunstructions to act on the sale, and to prepare a power of attorney in favour of John Philis. Mr Smith said he would telephone once a week about the matter, but in fact communications with Mr Battersby thereafter were through John Philis, though a message slip was on 9 April left for him to telephone "Angelo... re Contract for Sale of Land at Dubbo". At the time Mr Philis collected the form of power of attorney, he told Mr Battersby, by way of explanation, that Mr Smith was in Melbourne. But in fact the power of attorney, which 1s dated 11 April 1984, was witnessed by a justice of the peace who gave acceptable evidence that someone, of whom he had no recollection, had approached him at the counter of the Court office at Campbelltown to witness the document and had there signed 1t in his presence. The signature was the Smith signature. _ The bankruptcy of Mr Covino had supervened well before the sale of the Blue Star property. Accordingly, when the $9,500, part of the sale price, was paid into the partnership bank account, the partnership, in which I have found John Philis's real partner was Mr Covino, had been dissolved by s.33 of the Partnership Act 1892 (NSW). _|It is appropriate to order dJohn Philis and Angelo Michael Covino to pay this sum to the applicant as trustee of the estate of Mr Covino. The amount of $43,610.32 should also be repaid to his trustee by Mr Covino. mn nar ea ey -— nm Pe YI ee ee Sonn a Ty lait oad 24. I direct that short minutes of orders be brought in at 9-30AM next Tuesday 15 July 1986 to reflect my findings. I€ particular orders in respect of interest on moneys ordered to be paid are sought, they should be included so that their propriety can be debated. Unless the undertaking to the Court given by Mr Philis is extended, I propose to grant an injunction until final disposal of the matter to protect partnership assets, and in any case the short minutes should also make provision for their preservation. The costs should be borne by the first and third respondents. Before finishing these reasons, there are two further matters I should mention. In the first place, I have referred to a solicitor's letter written to Mr Covino before he had taken any of the steps with which the application is concerned. I think a copy of that letter, with a copy of these reasons, should be referred to the Law Society of New South Wales and .also to the Prothonotary of the Supreme Court of New South Wales. I direct the Registrar accordingly. I note that in Keppie v. Law Society of the A.C.T. (1983) 62 A.C.T.R. 9 at 21 the Full Court of the Supreme Court of the Australian Capital Territory expressed the view that the conduct of a solicitor who was not a party to the proceedings "should be considered by the Law Society". Similarly, in Obacelo Pty Ltd v. Taveraft Pty Ltd (unreported, 13/6/86) Wilcox J. drew the attention of the Law Society of New South Wales to the conduct of a solicitor witness. See also Commissioner of Australian Federal Police v. Curran (1984) 55 A.L.R. 697 at 704. \ 25. The other matter relates to the conduct of Mr Covino and Mr Philis. When I reserved judgment, I invited their counsel to make submissions as to why, if I concluded the applicant had proved his case, I should not refer the facts to the Director of Public Prosecutions. I have received written submissions, which I have considered. The conclusion to which I have come is that I should direct the Registrar, as I do, to forward a copy of these reasons to the Director. I certify that this and the preceding twenty-four (24) pages are a true copy of the Reasons for Judgment herein of his Honour Mr. Justice Burchett. , tok Alcea Associate Dated: 9 July 1986.