Rambaldi (Trustee) v Meletsis, in the matter of the Bankrupt Estate of Karas [2022] FCA 73

FEDERAL COURT OF AUSTRALIA

Rambaldi (Trustee) v Meletsis, in the matter of the Bankrupt Estate of Karas [2022] FCA 73 File number(s): VID 1279 of 2017

Judgment of: DAVIES J

Date of judgment: 7 February 2022

Catchwords: BANKRUPTCY AND INSOLVENCY – intention to defraud creditors – concerted plan – dishonest and fraudulent design – sale of property to new company vehicle to keep property beyond the reach of creditors – where proceeds diverted to a third party entity – traceable proceeds in the hands of third parties EQUITY – breach of directors duties – selling property at an undervalue without having property valued, advertised or marketed – failure to make genuine attempt to sell property for best possible price – delivering property without receiving purchase price – reducing purchase price using inflated liabilities – diverting cash proceeds to third party company associated with director and bankrupt – right in equitable compensation for breach of fiduciary duties EQUITY – breach of fiduciary duties – third party's knowing assistance of breach and knowing receipt of the benefits – participation in and knowledge of fraudulent design – right in equitable compensation TRUSTS AND TRUSTEES – where trustees of company in liquidation acquired causes of action from liquidator by deed of assignment – whether assigning right, title and interest in causes of action to trustees is limited to the company's right of indemnity – assigned causes of action are causes of action of the company which it could advance in its own right but for the deed of assignment - where company is trustee it is director's duty to act in accordance with trustee obligations – trustees entitled to claim relief TRUSTS AND TRUSTEES – whether the company has the power to assign the causes of action when upon liquidation the company is obliged to retire as trustee pursuant to trust deed – obligation to retire does not automatically effect retirement – trustees entitled to claim relief MORTGAGES – voidable discharge of mortgage – where discharge of mortgage for nil or inadequate consideration is void pursuant to ss 120-121 of the Bankruptcy Act 1966 (Cth) – where discharge of mortgage for nil consideration is an alienation of property with intent to defraud creditors and void pursuant to s 172 of the Property Law Act 1958 (Vic) EVIDENCE – consideration of the rule in Browne v Dunn (1893) 6 R 67 – where allegation not put to witness in cross-examination and witness unable to respond – valid notice given via express pleadings – no obligation to put matters formally identified to every witness PRACTICE AND PROCEDURE – pleadings – application to file amended defence – where amendment refused and defendant relied on unpleaded case – where party advanced case in defiance of ruling where facts raised in both examination-in-chief and cross-examination – supported by documentary evidence – both parties dealt with matters in final submissions – available to be considered