Supreme Court New South Wales Medium Neutral Citation: Maria Bechara v Theodoros Haratsaris [2013] NSWSC 577 Hearing dates: 7 and 8 April Decision date: 26 April 2013 Jurisdiction: Equity Division Before: Rein J Decision: Orders the first and second defendants to pay the plaintiff's debt with freezing orders in place to continue until the plaintiff's debt is paid, or arrangements satisfactory to the plaintiff are made in lieu. Declare pursuant to s 37A of the Conveyancing Act 1919 (NSW) that the transfer of the first defendant's interest in the property comprised in Folio Identifier 1/308418 to the second defendant is void.Declare that the second defendant holds her registered title and interest in the property comprised in Folio Identifier 1/308418 as trustee for the first defendant. Order that the second defendant transfer, to the first defendant, the second defendant's currently registered title and interest in the property comprised in Folio Identifier 1/308418.Declare pursuant to s 86 of the Law of Property Act 1936 (SA) that the transfer of the first defendant's joint tenancy interest in the property comprised in Parent Title CT 5728-413 - allotment 503 DP 76543 to the second defendant is void.Declare that the second defendant holds her registered title and interest in the property comprised in Parent Title CT 5728-413 - allotment 503 DP 76543 as a joint tenancy between herself in her own capacity, and herself as trustee for the first defendant.Order pursuant that the second defendant transfer, to the first defendant as a joint tenant with the second defendant, the second defendant's currently registered title and trusteeship interest in the property comprised in Parent Title CT 5728-413 - allotment 503 DP 76543.Stay entry and execution only of each of orders 4 and 7 for a period of 90 days from the date of this judgment and orders.Order that the first and second defendants, or either of them by themselves their servants or agents, be restrained from taking any steps to sell, transfer, mortgage or further encumber the properties, or either property, made the subject of orders 2, 3, 5, 6 other than-(a) with the prior consent in writing of the plaintiff; or(b) for the purpose of complying with orders 4 and 7; or(c) until further order of the Court. Catchwords: CONVEYANCING ACT - whether assets transferred with the intention to defraud creditor - whether the second defendant can rely on the defence of a purchaser in good faith without notice of the first defendant's intention to defraud creditors Legislation Cited: Conveyancing Act 1919 (NSW) Law of Property Act 1936 (SA) Cases Cited: B v U [2012] NSWSC 1416 Briginshaw v Briginshaw (1938) 60 CLR 336 Huynh v Helleh Holdings Pty Ltd [2001] NSWSC 1162 Kang v Kwan [2002] NSWSC 1187; (2002) 11 BPR 20,623 Macquarie Bank Ltd v National Mutual Association of Australia Ltd & Ors (1996) 40 NSWLR 543 Marcolongo v Chen (2011) 242 CLR 546, (2011) 274 ALR 634; (2011) 85 ALJR 380; [2011] HCA 3 PT Garuda Indonesia Ltd v Grellman (1992) 35 FCR 515 Rejfek v McElroy (1965) 112 CLR 517 Wentworth v Rogers [2004] NSWCA 430 Category: Principal judgment Parties: Maria Bechara (plaintiff) Theodoros Haratsaris (first defendant) Denise Haratsaris (second defendant) Representation: Counsel: Mr Kelly SC; Mr Bates (plaintiff) Mr McCulloch SC; Mr Perla (first and second defendants) Solicitors: Bechara & Co (plaintiff) Clamenz Evans Ellis Lawyers (first and second defendants) File Number(s): 2012/154997 Judgment 1REIN J: The plaintiff, Ms Maria Bechara ("Ms Bechara"), is a solicitor who as the principal of Bechara & Company, acted for Mr Theodoros Haratsaris ("Mr Haratsaris") from 1999 to 2005 in proceedings brought by Mr Haratsaris against a Mr Vorillas in the District Court and the Court of Appeal, in respect of injuries suffered by Mr Haratsaris in a motor accident. 2During the period that Ms Bechara acted for Mr Haratsaris, there had been negotiations between Ms Bechara and solicitors acting on behalf of Mr Vorillas' insurer, NRMA Insurance Ltd, and even an offer of $280K (inclusive of costs) had been made by NRMA to settle the proceedings. In 2005, Ms Bechara decided to cease practising as a solicitor and informed Mr Haratsaris of this decision in April 2005. Mr Haratsaris appointed new solicitors, Messrs Pryor Tzannes & Wallis ("PTW") to act for him in connection with the proceedings and, shortly after, a further offer of $242K (inclusive of costs) was made by NRMA through its solicitors to PTW. Mr Haratsaris accepted the offer by a deed entered into on 17 May 2005. 3The net funds $172, 685.34 payable from the monies paid by NRMA, pursuant to the settlement, were paid to the account of Mrs Haratsaris on 1 August 2005. 4On 27 April 2005, Ms Bechara sent an itemised bill of costs ("the bill of costs") to Mr Haratsaris in respect of the work which she had preformed for Mr Haratsaris and enclosing a draft irrevocable authority for payment of her costs and a draft undertaking which she sought from PTW in connection with the matter. On 2 May 2005 she also sent a letter to PTW informing them of the fact that she had sent a bill to Mr Haratsaris and that she was seeking payment of it (Exhibit A1, p 360). PTW replied by letter of 27 May 2005 stating that they were seeking instructions from Mr Haratsaris (Exhibit A1, p 364). There were follow up letters from Ms Bechara to PTW but no authority or undertaking was ever provided by Mr Haratsaris or PTW, and although PTW were paid their costs out of the settlement monies Ms Bechara has never been paid. Ms Bechara was not informed of the deed of 17 May, or that the settlement monies had been received in August, and did not become aware of that fact until 22 September 2005 (Exhibit A2, p 403). 5Shortly after the settlement monies were received, on 29 August 2005, Mr Haratsaris transferred to his wife ("Mrs Haratsaris") his interest in a property at Christies Beach, Adelaide ("the Adelaide property") describing the transfer as a result of a gift to Mrs Haratsaris made with "love and affection and no monetary consideration whatsoever" which transfer was registered on 30 August 2005 in the Lands Titles Registration Office of South Australia. 6The defendants had earlier borrowed $100K, in 2003, in connection with the purchase of the Adelaide Property providing a mortgage to the Commonwealth Bank of Australia ("CBA") to secure the loan, and on 23 August 2005 the defendants paid $116K to CBA to discharge that mortgage. 7On 30 August 2005 Mrs Haratsaris executed a memorandum of mortgage over the Adelaide property in favour of RAMS to secure a loan of $143K made to her. 8On 22 February 2006 Mrs Haratsaris applied for a subdivision of the Adelaide property which was approved. 9On 19 March 2008 Mrs Haratsaris sold one of the two lots of the subdivided land to a third party who paid $240, 500 to Mrs Haratsaris. Ms Bechara claims that Mrs Haratsaris is a constructive trustee of the proceeds of sale. Mrs Haratsaris remains the owner of the other subdivided lot. 10Ms Bechara claims that the transfer by Mr Haratsaris of his interest in the Adelaide Property and the payment of the $172K into Mrs Haratsaris' account had the same purpose, namely to preclude her from recovering her fees. Ms Bechara asserts that the transfer was a transfer to defraud her as a creditor and hence that it should be struck down by s 37A of the Conveyancing Act 1919 (NSW) which is the following terms: (1) Save as provided in this section, every alienation of property, made whether before or after the commencement of the Conveyancing (Amendment) Act 1930, with intent to defraud creditors, shall be voidable at the instance of any person thereby prejudiced. (2) This section does not affect the law of bankruptcy for the time being in force. (3) This section does not extend to any estate or interest in property alienated to a purchaser in good faith not having, at the time of the alienation, notice of the intent to defraud creditors. Ms Bechara, alternatively, relies on an equivalent provision - s 86 of Law of Property Act 1936 (SA) which is in the following terms: (1) Every conveyance of property made with intent to defraud creditors shall be voidable at the instance of the party prejudiced thereby. (2) This section shall not extend to any estate or interest in property conveyed for valuable consideration and in good faith or upon good consideration and in good faith to any person not having, at the time of the conveyance, notice of the intent to defraud creditors. It was agreed that nothing turns on the distinction between the two legislative provisions, so I shall focus on s 37A since it is also relied on in relation to another transaction. 11Ms Bechara did not take any action in respect of the unpaid fees for a long time. However, on 1 May 2009 Ms Bechara commenced proceedings in the New South Wales District Court against Mr Haratsaris in respect of the bill of costs. 12On 2 July 2009 Mr Haratsaris filed his defence in the District Court. 13On 21 October 2010 judgment was entered in the District Court against Mr Haratsaris in the amount of $118, 870.33 plus an amount for interest of $55, 882.08 amounting to a total of $174, 752.41 ("the judgment debt"): see Exhibit A, p 629. Although Mr Haratsaris had filed a defence he did not take an active role in defending those proceedings thereafter and the matter was heard ex parte by Murrell DCJ, with her Honour noting that she was satisfied Mr Haratsaris had notice of the hearing. 14Within weeks of Mr Haratsaris having filed his defence in the District Court proceedings a property acquired by Mr Haratsaris in 2008 was transferred by him to Mrs Haratsaris as trustee of the Haratsaris Family Trust ("the Trust"). The stated consideration payable by Mrs Haratsaris was $550K: see Exhibit A2, p 537. 15The property in question, which I shall describe as "the Belmore Property", was one which had been transferred to Mr Haratsaris by his mother in early 2008 for a consideration of $1. Mr Haratsaris shortly after the transfer subsequently obtained a loan for $205,668.58 from First Mortgage Home Loans Pty Ltd ("First Mortgage") which was secured by the Belmore Property. 16On 22 July 2009 Mr Haratsaris arranged to discharge the mortgage to First Mortgage by repayment of the loan monies. 17On or about 27 August 2009 Mr Haratsaris transferred his interest to Mrs Haratsaris for the purported consideration of $550K and the transfer was registered on that date. Mrs Haratsaris applied for and obtained a loan in the amount of $300K from ANZ and that amount, or $250K of it, was used to repay the first Mortgage debt by Mr Haratsaris. By letter dated 13 July 2009 Ms June Hoskin, a registered conveyancer, on behalf of Mrs Haratsaris, advised the bank that Mrs Haratsaris would not be contributing any further funds to the purchase other than the loan proceeds "as she already has an interest in the property as spouse of the vendor": see Exhibit A2, p 538. 18Ms Bechara claims that the Belmore Property transfer, like the Adelaide Property conveyance, was designed to defeat her position as a creditor and should also be set aside by virtue of s 37A of the Conveyancing Act 1919 (NSW). 19It is clear that as at August 2005 Mr Haratsaris' only significant asset was his interest in the Adelaide Property and his entitlement to the balance of the settlement proceeds from his personal injury claim. By transferring his interest in the Adelaide Property to his wife and by directing that all of his personal injury settlement monies be paid to his wife, he left himself with no assets. Mr Haratsaris was then, and is now, in receipt of a disability pension although he has, according to his evidence, been conducting business as a developer: see T87.3-5 and T147.20, see also T114 and Mrs Haratsaris' evidence at T40.1, T44.32, T46.10 and T50.7 and see his affidavit verifying his defence in the District Court proceedings at Exhibit A2, p 520 and his affidavit in these proceedings, Exhibit A1, p 129, [81]-[84] and Mrs Haratsaris' affidavit, Exhibit A1, p 115, [36]-[38]. 20If Mr Haratsaris was aware that Ms Bechara claimed he owed her money for her fees, a matter to which I shall return, he may well have believed that Ms Bechara had decided not to pursue him for those fees, since from the second half of 2005 to mid 2008 he had received no communication from her. 21For a transfer of land to be voidable under s37A there are these elements which need to be established: (1)Alienation or transfer of property by a debtor, (2)The alienation or transfer was carried out with intent to defraud creditors and (3)The person seeking to set aside the transfer has been prejudiced. 22There was no dispute by the defendants that (1) has been met. There was agreement that Marcolongo v Chen (2011) 242 CLR 546, (2011) 274 ALR 634; (2011) 85 ALJR 380; [2011] HCA 3 provides the appropriate guidance in relation to (2) and (3). 23The plurality in Marcolongo (French CJ, Gummow, Crennan and Bell JJ) examined the history of s 37A of the Act, and analogous legislative provisions, and held that the statute should be given a liberal construction and that "defraud" should be read as "delay, hinder or [otherwise] defraud": see [19], [32] and [56]. It was not necessary to show that the debtor wanted creditors to suffer a loss or that the debtor had a purpose of causing loss, rather, "it was necessary to show the existence of an intention to hinder, delay or defeat creditors and in that sense to show that accordingly the debtor had acted dishonestly" (emphasis added): see [32]. 24In Marcolongo Mrs Marcolongo was a next door neighbour who had a claim against Lym in respect of the building works carried out on Lym's property, which at the time of the sale by Lym to Mr Chen, had not yet been the subject of adjudication in the District Court. Mrs Marcolongo did subsequently obtain judgment for $388K plus costs against Lym. 25In Marcolongo, Mr Chen had encouraged or procured Ms Yang to sell the property to him in haste and at a relatively low price ($15M), telling her that there were outstanding claims against his company Lym International Pty Ltd ("Lym"), and that if she did not do that Lym would suffer a big loss and have its assets frozen. 26In Marcolongo French CJ, Gummow, Crennan and Bell JJ observed at [56]-[57]: [56] ... But the provision in special condition 33(b) for application of the balance of the proceeds to debts owed by Lym and related entities of Lym, and the evidence as to the lack of arrangements for Mr Chen to pay that balance, shows the deterioration to the position of Mrs Marcolongo that inevitably ensued. It is no answer, as it was no answer in Re Fasey; Ex parte Trustees, that there had been no delay and hindrance occasioned by the transaction because eventually she might have had some recovery for any judgment she recovered and costs. [57] The second point is that s 37A requires a finding, which Hamilton J made, of intent to achieve the proscribed prejudice. The section does not postulate a mixture of motives from which there must be extracted what is identified as a predominant intent to defraud. Further, as Stephen J indicated in his discussion in Barton v Deputy Federal Commissioner of Taxation, a provision such as the Elizabethan Statute does not require for its operation that the proscribed intent to defraud be the sole intent... and at [322] approved of a what was said by Russell LJ in Lloyds Bank v Marcan [1973] 1 WLR 1387 at 1390-1391: I am not sure what is meant by a perfectly innocent defeat, hindrance or delay. It must be remembered that in every case under this section the debtor has done something which in law he has power and is entitled to do; otherwise it would never reach the section. If he disposes of an asset which would be available to his creditors with the intention of prejudicing them by putting it (or its worth) beyond their reach, he is in the ordinary case acting in a fashion not honest in the context of the relationship of debtor and creditor. And in cases of voluntary disposition that intention may be inferred. Also relevant is [25]: [25] The point sought to be made in the text of Halsbury attached to footnote (c) may be expressed by saying that it would be the duty of the judge to direct a jury that they might infer an intention by the settlor to defeat or delay creditors, even in the absence of direct evidence of that intention, where this outcome was the necessary consequence of a voluntary settlement. In this way, it was easier to infer a dishonest intention if the conveyance were voluntary than if it were made for consideration. Evidence that the conveyance was voluntary does not replace the requirement of proof of intent by a distinct category where constructive fraud, with notions of constructive knowledge or notice as understood in equity, would suffice for the application of s 37A. Rather, the evidence is that species which has sufficient weight to entitle the fact finder to decide an issue (here the necessary intent) in favour of the moving party, although the fact finder is not obliged to do so and other evidence given may be decisive to the contrary. 27The parties are agreed that the sole issues in this case are whether the transfers were made by Mr Haratsaris with the requisite intent and whether Mrs Haratsaris can rely on the exception in s 37A(3) in relation to the Belmore property. It was common ground that included in "creditors" are contingent or prospective creditors: see Kang v Kwan [2002] NSWSC 1187; (2002) 11 BPR 20,623. It was accepted by Mrs Haratsaris that she could not rely on s 37A(3) or s 86(2) of the South Australian legislation because she had not provided valuable consideration for the transfer of the Belmore property. 28Mr and Mrs Haratsaris deny that they had an intention to defeat Ms Bechara as a creditor and I have, pursuant to a timetable put in place at the end of oral submissions, received detailed submissions on the question of the defendants' credibility. I will refer to what each of the defendants say to explain their actions but before doing so I think it is appropriate to observe that, prima facie, the combined effect of: (1)The transfer of Mr Haratsaris' settlement money to the sole account of his wife. (2)The transfer of the Adelaide Property interest from Mr Haratsaris to Mrs Haratsaris without valuable consideration. (3)The transfer of the Belmore Property to the Trust in August 2009, that property having being received by Mr Haratsaris in 2008 from Mr Haratsaris' mother. (4)The timing of these transfers (i.e. in the case of the Adelaide Property within a few weeks of the payment of the settlement monies and in the case of the Belmore Property within weeks of Mr Haratsaris having filed his Defence). (5)The fact that the Trust never did pay Mr Haratsaris the full amount of the stated consideration of $550K. bespeak, with nothing more, a very calculated attempt to deprive Ms Bechara of any assets from which she could recover a judgment for costs, should she obtain one, which as August 2005 she had made clear she would seek and, again, as at 1 July 2009 she had clearly indicated she wished to do. 29Mr Kelly submitted on behalf of Ms Bechara that the Court can infer that a person intended the natural consequence of his or her actions. The natural consequence of both transfers was that they, at different times, left Mr Haratsaris with no assets. 30It was submitted by Mr McCulloch that the allegations made by Ms Bechara involve an allegation of, essentially, a conspiracy to commit fraud "which must be established in accordance with the Briginshaw standard" a reference to Briginshaw v Briginshaw (1938) 60 CLR 336 and see particularly pp 360364 per Dixon J. 31I accept that an allegation that a debtor has taken steps to "delay hinder or otherwise defraud" (per Marcolongo) is an allegation of dishonesty and its seriousness must be borne in mind in determining whether Ms Bechara has established, on the balance of probabilities, the requisite intent under s 37A(1): see Rejfek v McElroy (1965) 112 CLR 517, 521-522 per Barwick CJ, Kitto Taylor, Menzies and Windeyer JJ. However, Ms Bechara does not have to establish a conspiracy to commit fraud. Rather what she has to establish (and she has the onus) is that Mr Haratsaris transferred his property with the intent to defraud one or more of his creditors. 32In this context I should deal with the question of the onus of proof in respect of s 37A(3). The defendants' closing submissions ("DCS") at [78] assert that Ms Bechara bears the onus of proof that Mrs Haratsaris was not, at the time of the alienation, a purchaser in good faith without notice of the intent to defraud creditors and cites Huynh v Helleh Holdings Pty Ltd [2001] NSWSC 1162, [28] per Hamilton J. Huynh does provide authority for that proposition: see [18] and [28]. A different view, however, has been taken in B v U [2012] NSWSC 1416, a case relied on by Ms Bechara. As Pembroke J pointed out in B v U, whilst there are cases which have adopted the approach urged by the defendants, such as Huynh and cases mentioned at [18] of Huynh, the later decision of the Court of Appeal in Wentworth v Rogers [2004] NSWCA 430 expressed a different view noting that cases such as PT Garuda Indonesia Ltd v Grellman (1992) 35 FCR 515 were concerned with different legislative provisions: see [64] - [65]. Hodgson JA, with whom Santow JA and Hislop J concurred, said that whilst the onus of establishing the requisite intent in the alienor is on the plaintiff, the onus under s 37A(3) is "on the person asserting its protection": see [66]. It follows that the onus lies on Mrs Haratsaris to establish that she is entitled to the protection of s 37A(3). 33Mr Haratsaris' defence in these proceedings and his affidavit had a number of elements: (1)In his defence, in answer to paragraph 16 of Ms Bechara's statement of claim that he had received the solicitor client bill on or about 29 April 2005, he denied that allegation: see Exhibit A1, p 35, [16]. That defence was verified by affidavit: see Exhibit A1, p 38. (2)In his affidavit of 6 December 2012, Mr Haratsaris said he did not recall receiving the bill of costs "either in the mail or by Registered Post"(Exhibit A1, p 126, [57]). (3)He claimed that in late 2004 he had told his accountant that he and his wife wanted to start their own company importing building materials and massage tables and that he needed funds. He says that in 2004 his accountant, Mr Rick Bayer from LBH Accountants, told him that he would have difficulty raising finance and that if he could not obtain finance he could transfer his share to Denise. He says that he tried to obtain a loan from CBA but was unsuccessful: see Exhibit A1, p 128, [77]-[79]. He says: 77. At the time of transferring my interest in the Adelaide property to my wife, there was no reason or intention to defraud anyone. 78. I was not aware at the time that I had any creditors other than CBA, as mortgagee of the Adelaide property prior to the transfer. 79. I was also considering instructing my solicitors to sue the Plaintiff for handling my personal injury claim negligently. He also said that "Aussie Money" was his wife's business and that with the transfer of the Adelaide property to her she was greatly assisted in her ability to raise capital. He said his involvement in the business was limited to "being on the phone, making orders and organising the deliveries" see Exhibit A2, p 129, [82]. (4)The Trust was set up because "we wanted to ensure our assets would be protected for Denise and the children, should anything go wrong in the business": see para 84 of his affidavit. Denise was appointed trustee of the Trust and the beneficiaries were their children: see Mrs Haratsaris' affidavit, Exhibit A1 p 116, [45] (5)His mother had transferred the Belmore Property to him because she had been diagnosed with breast cancer (see Exhibit A1, p 129, [89]-[90]). He obtained advice from Ms Vicki Tzortzis of James Lawyers, and this occurred on 16 April 2008. He intended to transfer the property to the Trust, as his mother wanted the property to go to Mr Haratsaris' children, but he did not undertake this straight away. He obtained a loan and granted a mortgage. The mortgage of approximately $250K was repaid by Mrs Haratsaris out of the funds she received from the ANZ Bank in July 2009. The transfer to the Trust was in line with the original and innocent establishment of the Trust well before the Belmore property was transferred. (6)He says that he did not tell his wife about the District Court proceedings until he received a bankruptcy notice based on the District Court judgment. (7)He says that he did not know that a hearing date for the District Court claim had been allocated and he did not know that judgment been entered against him until he was served with the bankruptcy note. 34Mrs Haratsaris position in her Defence and affidavits had these elements: (1)She did not know that Ms Bechara had served a bill of costs on her husband and far as she was concerned whatever was owing would have been taken care of by the new solicitors: see T41.50, see her affidavit at Exhibit A1, p 111, [8] and p 117, [59]. (2)She did not know that Mr Haratsaris was a debtor to Ms Bechara when he transferred the Adelaide interest. (3)Mr Haratsaris did not tell her that he had been sued by Ms Bechara in the District Court so that when the Belmore Property was transferred she did not know that Ms Bechara was a creditor. (4)Her affidavit evidence about the establishment of the Trust was that its purpose was as "part of a long term plan to ensure that should anything go wrong in the Aussie Money business, or any of the other businesses in which we were involved, that the trust would hold assets for the benefit of our children" see her affidavit, Exhibit A1, p116, [45] and see T37.1-12 Mr Haratsaris' credit 35Counsel for the plaintiff, by their closing submissions, attacked Mr Haratsaris' credit and submitted that the Court should not accept him as a witness of truth. 36The defendant' closing submissions on credit ("DCOC") submitted that: (1)Mr Haratsaris is a simple person who, like his wife, "did not have the required intention to deceive the plaintiff": see [2] of DCOC but also see T176.21 when Mr McCulloch said he was not saying Mr Haratsaris was simple. (2)He concedes that his memory as to events 7 years ago is not reliable and he suffered significant injuries in the motor vehicle accident including memory loss (see Exhibit A1, p 120 and T99.16 - 29). (3)He concedes in cross examination that his solicitors must have received the bill of costs (T84.32-4) but he maintained that he did not recall receiving the bill of costs and could not recall his solicitors asking him to sign an undertaking to pay the plaintiff's costs. (4)The fact that he admitted in his affidavit 4 years later that he was served with the bill of costs did not render his evidence, that he could not recall receiving the bill of costs, untrue. (5)His evidence was that he did not understand what the word "served" meant at the time of verifying his defence in the District Court proceedings: see T89.14-22. (6)There is no evidence that the first defendant personally received the bill of costs. (7)He always intended to pay Ms Bechara something for the work she performed on his behalf (T91.48 and T112.25-29) "however he was under the apparent misapprehension that his solicitors were taking steps to have her bill of costs checked and assessed" the bill was "in question" and he instructed PTW to communicate with Ms Bechara in terms of her bill (T92.1-7, T97.48-50, T107.34-35) and his solicitors wanted to get the bill assessed due to its size (T.94.34-39). Mr Haratsaris was "willing to meet any costs associated with the assessment". 37I do not think that Mr Haratsaris is a reliable or honest witness. I say that for a number of reasons but I shall start with his assertion in his affidavit (see [33](3) above) that when he transferred the Adelaide Property the only creditor of which he was aware was CBA. 38That assertion requires acceptance that, as at the date he transferred the Adelaide property, he did not know that Ms Bechara was a creditor for any amount. To support that contention he first denied having received the bill of costs (and the letter enclosing it). That denial was inconsistent with the admission, verified on oath, in the District Court proceedings that he had been served with the bill of costs: see the statement of claim (Exhibit A2, p 470, [8]) and the defence (Exhibit A2, pp 517-518, [5]), and the evidence that the letter enclosing the bill of costs had been sent by registered post to him. 39When Mr Haratsaris saw the evidence from Ms Bechara that she had sent the letter of 27 April 2005 and bill of costs by registered post, he recanted from a denial of having received the bill and retreated to the statement the he could not recall having received it. That assertion remained at odds with his admission in the District Court defence that he had received it. The bill of costs was 180 pages long and contained a claim for a total of $118K - more than half of the net figure Mr Haratsaris was to receive from the settlement. 40Another problem for Mr Haratsaris was that PTW had written to Ms Bechara by letter of 12 July 2005 (see Exhibit A1, p 385) stating: We note your account was forwarded to our client under a contingency costs agreement 41And Mr Haratsaris was forced to concede (see T100.36-41) that the account referred to in the letter was the bill of costs. 42Mr Haratsaris agreed that his solicitors did get a copy of the bill of costs: T84.32-T.85.7 and at T88.7-42, T89.14-28, and he seemed to accept that he knew about the bill of costs because he either received it in the post or possibly received it from his solicitors. He said he thought "served" meant that not only had he received it but also he had signed for it (T88.30-43, T89.1428) and he said he did not "think he understood" rather than that he did not understand what the word meant in contrast to the submission referred to at [36](5) above. 43Mr Haratsaris agreed that he needed to know how much Ms Bechara's bill was so he could properly consider the offer made by the NRMA: see T82.44-48 and T83.36-46 44On the morning of the second day of the hearing (at T104.15-20) Mr Haratsaris said that he did not open letters from the plaintiff after he changed solicitors but "used to present the sealed envelopes that were sent [to him] to Pryor Tzannes and Wallis". Not only is that implausible, it is inconsistent with his sworn defence in these proceedings since if it were true that he did not open documents received by him from Ms Bechara he could not honestly deny having received any particular document. I accept Mr Kelly's submission that Mr Haratsaris' assertion that he did not open letters from Ms Bechara was an invention designed to deal with the predicament the previous day's cross examination had exposed. 45The further dimension is that once it is accepted that PTW were aware of Ms Bechara's bill, as they clearly were, and once they had told Ms Bechara that they would seek instructions, and clearly obtained Mr Haratsaris' instructions about the settlement and settlement process (as Mr Haratsaris admitted they did do: see T93), the irresistible inference is that they did before, or at the time, seek instructions from Mr Haratsaris about Ms Bechara's costs, whether he was willing to pay the claimed costs or some portion of them and whether he was willing to provide the authority and to instruct PTW to give the undertaking sought by Ms Bechara. Indeed Mr Haratsaris instructed PTW to find out why he was "paying so much for something she hasn't completed for me": see T91.50-T92.10. It is also likely that Mr Haratsaris not only instructed PTW not to agree to provide the undertaking, and that he would not provide an authority, but also that he instructed PTW not to respond to Ms Bechara's letter, or to advise her of the settlement and the receipt of the funds in August, although that conclusion is not necessary in determining whether Mr Haratsaris knew of Ms Bechara's claim. 46By letter of 7 October 2005 (see Exhibit A1) PTW responded to a further letter of Ms Bechara of 28 September 2005 in which Ms Bechara noted the recent advice from PTW (22 September 2005) that the matter had settled and wanted to know what Mr Haratsaris' instructions were as to payment of the bill of costs: see Exhibit A2, p 404. The letter of 7 October from PTW puts beyond doubt the fact that Mr Haratsaris was fully aware of Ms Bechara's claim, and that he discussed those claims with PTW. It might be said that since the October letter post dates the receipt and transfer of the settlement monies to Mrs Haratsaris and the transfer of the property it does not demonstrate knowledge of Ms Bechara's claims before settlement and before transfer, but I do not think it all likely that instructions on the topic were obtained only after the letter of 28 September since Ms Bechara had already corresponded with Mr Haratsaris and PTW in April, May, June and July of 2005: see Exhibit A1 pp 360, 362, 364, 365, 366, 384 and 385. Further it was not Mr Haratsaris' evidence that he only learnt of Ms Bechara's claims after the transfers. His defence was that he never received the bill of costs, and later that he did not recall having received it. 47In answer to the submission that there is no evidence the bill was actually received by Mr Haratsaris I think that there is ample evidence to support that finding: (1)The letter was sent by registered post to Mr Haratsaris at his home address (2)PTW acknowledged that Mr Haratsaris had received the bill of costs (see Exhibit A1, p 385 and p 364). (3)Mrs Haratsaris admitted that he had been "served" with the bill of costs, (4)Mr Haratsaris said that he had instructed PTW to raise the question of Ms Bechara's bill with her: see T91.50-T92.10. and in his oral evidence he simply stated that he did not recall having received it and later said that he recalled having received letters from Ms Bechara which he did not open. 48Once the inference is drawn that PTW did discuss Ms Bechara's fees with Mr Haratsaris, and I think it must be, it must follow not only that Mr Haratsaris was fully cognisant that Ms Bechara was claiming that he owed her $118K for her costs but that that amount should be paid to her from the monies received from the NRMA. I am unable to accept as truthful Mr Haratsaris' assertion that he did not discuss the bill with anyone and that he did not know that Ms Bechara was a creditor of his. Nor do I believe him when he says that he did not tell his wife that he had received the bill or that Ms Bechara was claiming money from him. Of course, that also involves a conclusion about Mrs Haratsaris' credibility but for reasons, which I shall outline, I do not think she was a credible witness either. 49The version of events recounted in Mr Haratsaris' evidence to which reference is made in the DCS is at odds with his defence as verified and largely not referred to in his affidavit, and the DCS do not refer to the switch to a claim that he did not open letters from Ms Bechara and its effect upon his credibility. 50Whilst it is true that Mr Haratsaris asserted his memory has been adversely affected by the motor accident and that he had some memory loss (see T99.19-34) no medical evidence was tendered in support of that condition or as to how reliable his memory is now of the events of 2005. He did not refer to any memory problems in his affidavit and I am not persuaded that his stated difficulty in remembering matters that were, or might be, adverse to the factual assertions he had made, had any genuine basis. 51There is no evidence that supports Mr Haratsaris' assertion that he instructed PTW to obtain an assessment of costs or that he was willing to pay some amount. Exhibit 1 communicates an offer that Mr Haratsaris will not proceed with his professional negligence claim in return for Ms Bechara abandoning her claim for costs, and contrary to Mr McCulloch's submissions at T175, is not consistent with willingness to pay any amount for costs: see [36](7) above. In paragraph 17 of the defence in these proceedings Mr Haratsaris asserted that his solicitors attempted to contact the plaintiff to have costs assessed for which no evidence was provided. 52The statement of claim in these proceedings alleges that Mr Haratsaris received the bill of costs which he denied. By the District Court Statement of Claim Ms Bechara alleged that he was served with bill of costs. I am unable to accept his explanation for having admitted in 2009 that he has been served with the bill of costs was that he did not understand what "served meant". First, the sum total of his position now is that he may have received the bill of costs but he does not know whether he did because, he says, he did not open letters from Ms Bechara. I do not accept that evidence because it is implausible and was advanced only when he was confronted with clear evidence that his solicitors had acknowledged that he had received the bill of costs, but if I were to accept it would explain why he admitted that he was "served" with a document which he said, in his defence in the current proceedings, he did not receive. In the Statement of Claim in this Court, Ms Bechara alleged that Mr Haratsaris had "received" (not "been served with") the bill of costs which in defence, as I have noted, he denied. 53Mr Haratsaris also said that when he sold the Belmore Property to the Trust he did not believe that he had creditors or owed money to anyone other than to First Mortgage. Of course, by that time he had received the District Court Statement of Claim from Ms Bechara and knew that she was claiming more than $150K from him. Mr Haratsaris had paid Ms Bechara nothing, not even for disbursements paid by her on his behalf. Even if he thought that her bill was excessive, or that he had some answer to her claim by way of cross claim, she was clearly at least a contingent creditor whose claims as a creditor would be defeated if he transferred the Belmore property out of his own name and into the Trust. 54 Another area of evidence which undermined Mr Haratsaris' credibility was his evidence that the transfer of the Belmore Property was to give effect to his mother's wish that the family home should go to his sons. That assertion is inconsistent with the Deed of Family Arrangement dated 28 February 2008 (Exhibit A3, p 28) being the solicitors notes of her attendance of Mr Haratsaris and his mother on 16 January 2008 (see Exhibit A3, p 19). Those notes record that Mr Haratsaris' mother wanted two specific bequests of money to her other grandchildren included in her will (see Exhibit A3, p 74) and nothing is said about her wishing the house to be given to Mr Haratsaris' children. Rather what is noted is that it is to be transferred to Mr Haratsaris. Mr Haratsaris borrowed money from a bank using the Belmore Property as security as soon as it was transferred to him (T184) yet the defendants' evidence was that Mr Haratsaris was not an attractive candidate for finance: see T170.7. 55Mr Haratsaris paid $22K for stamp duty for the Belrose Property to be transferred to himself (see T121.29-30). There was no reason why the property could not have been transferred directly to the Trust if that was Mr Haratsaris' mother's wish, and it was only after Mr Haratsaris received the District Court Statement of Claim that he set about transferring the Property to the Trust: see T124.34 - 39. He admitted that the receipt of Ms Bechara's claim was a big disappointment to him (T121.45-47) and that when he had transferred that property he had no assets left (see T133.26-28). He said that he did not attend a conference with his mother and her solicitor (see T117.45T119.6 and T121.5-15) but according to the solicitor's bill (see Exhibit A3, p 22), and solicitor's notes for 16 January 2008 (Exhibit A3, p 19), he did so. 56I do not accept the submission that Mr Haratsaris is simple. He is, by trade, a qualified electrician and he has been involved in land development. In the witness box he did not appear to me simple at all - if anything I would describe him as crafty. Mrs Haratsaris' credit 57It was submitted by counsel for the plaintiff that Mrs Haratsaris ought not be accepted as a witness of truth, it being submitted that: (1)"She shifted her ground rather than give candid evidence about what was said to her by her husband in relation to the plaintiff's costs" (see para 5 of the plaintiff's submissions on credit ("PSOC") where examples were given). (2)That she rarely gave a direct answer and was generally evasive. (3)Her evidence "was replete with inconsistencies and answers made up on the run" (see the PSOC, p 13, [C]). 58Counsel for the defendant accepted that the second defendant was a poor witness "when it came to answering questions succinctly, directly or clearly": see [33] of ("DSOC"). It was submitted in the DCOS however that that does not mean that she was not a witness of truth or credit. It was also put that "she is a simple lady who is well versed with building matters but not legal matters": see the DSOC, [17]. Whilst it is true that a witness' failure to answer questions succinctly, directly or clearly does not lead necessarily to the conclusion that he or she is not truthful it is a relevant matter in assessing her credibility. I do not accept that Mrs Haratsaris was a simple lady - not only did she have a background in building administration working as an accounts payable clerk with a national construction firm but she commenced a business as a massage therapist, and at the same time sought to set up a business both in importing and has been involved in subdivision and development for a number of years. Nor did I gain the impression from her evidence in the witness box that she was simple. 59Her claim that her husband did not tell her about the bill of costs gained support from his evidence that he had never received a bill, but once that claim was destroyed one is left with the extreme unlikelihood that he did not tell her that Ms Bechara had claimed $118K out of any settlement monies. This is particularly so in a context where, even on her evidence, her husband told her that he was contemplating suing Ms Bechara in respect of the way Ms Bechara had handled the case (see T40.22-27), and on his evidence he discussed the proposed settlement in the personal injury action with her (see T92.42 - T93.19), although Mr Haratsaris said she could not recall this. Her claim that Mr Haratsaris did not tell her that Ms Bechara had commenced proceedings in 2009 against him because of her father's illness and that she did not have any inkling that Ms Bechara had ever had or made any claim against Mr Haratsaris until he was served with a bankruptcy notice was undermined by her own evidence (see T60.50 - T.62.40): Q. So you would have his Honour believe that your husband kept as in effect secret from you the fact that he was being sued? A. Absolutely because it has been a massive issue for us now because we have never kept a thing from each other. This was quite shocking for me and actually has created quite big problems because even though I understand why now he did it, it took me a long long time to accept it. Q. You say, do you, that he told you when a bankruptcy notice arrived? A. Yeah, I remember when someone came to the door. Q. You mean he did not tell you that the bankruptcy notice had been served? A. In 2012 he told me that. He said, "Maria bankrupted me." I said, "I beg your pardon. How can it be? She hasn't been in our lives for seven years" or whatever it was at that time. Q. Who was the person who came to the door? A. I just heard someone, ding dong and next minute, I was told that it was Bechara. That's why I was even in shock to hear her name again and then when I have questioned him, "Why didn't you tell me? Why would you keep something like that from me? It is not a small thing" he said, "There's no way because" HIS HONOUR. Q. "There's no way" what? A. Sorry? Q. He said, "No way"? A. That there was no way he was going to tell me because at the time, as I was saying, I was looking after my father, I was closing my clinic and then I fell pregnant. A few weeks later my father passed away. Q. Are you just adding this? I am interested in what you say your husband said to you? A. About Bechara. Q. At the time when you say you learnt for the first time that he was about to be made or was in the process of being made bankrupt by Miss Bechara, what do you say he said to you? A. "Bechara is trying to bankrupt me." Q. You said what? A. "Are you kidding me? You have" Q. He said? A. Yeah and then I said, "How can that be?" You know what I mean and then he said, "Look" and I said, "I thought" I was just confused. Q. Don't tell me about what you thought. I am interested in what was said. You were in the middle of telling us what you said when your husband said to you that, "Yes, she is trying to make me bankrupt?" A. I said, "How? Why? For what?" Q. He told you. What was his answer to your question? A. "She is saying there are fees that haven't been paid." I said, "What do you mean? I thought you said it was all paid. I thought you said it was done. It was dealt with back in 2005" so I was just I felt deceived and then I felt a little bit guilty because obviously I was not in a very good frame mind. Q. You said to your husband, "I thought you said it was paid back in 2005." When did he tell you that? A. I thought it was finished. I thought we finished. Q. You said, "I thought you said it was paid back in 2005." When did he tell you previously that he had paid it? A. Well, what I meant, I said like, "The court case was final back in 2005. It was over. We are never going to hear from her again." Q. That's different from what you just said a moment ago? A. In what way? Q. I thought you said, "It was paid back in 2005." That's what you told him? A. Yes. I assumed it to be over. She has been paid. Q. Isn't that different from what you said? I thought you said it was paid? A. Yeah because back then I guess he did not specifically say, "I have paid Maria" or "I have paid this, everything. There is nothing." How can I explain? Q. I am not interested in your thoughts. I am interested in what was said? A. Sorry? Q. Do you now tell me you did not say to your husband these words "I thought you said it was paid back in 2005"? A. No, I'm kind of it isn't exact word for word what I said. I can't remember exactly what I said on that day because it was just so look, I was like I'd been hit in the head with a shovel. That's how it felt. I only thought like I was, I was dumbfounded. I had just I don't know whether I was more in shock that she was back in the picture or the fact that I didn't know about it. I don't know whether I was more in shock about or more hurt by it. In retrospect, it's understandable if you saw how, the way I was mentally I guess if you want to call it, yeah. (emphasis added) 60The assertion that she said to her husband "I thought you said it was all paid" was recanted when she realised that her comment to her husband was inconsistent with her evidence that Ms Bechara's bill of costs was never mentioned to her in 2005: see T60.50-T62.40. I do not accept that Ms Bechara had any misunderstanding as to what she had been asked. 61Her oral evidence concerning the receipt by her of the $172K out of the settlement monies paid by NRMA was evasive and unpersuasive. It is difficult to accept that she did not know that such a large amount of money had been paid into her account and for what purpose. 62I accept that there is an inconsistency between the PTW note of 1 August 2005 (Exhibit A3 p 11), which records an instruction to a clerk in PTW to deposit the $172K amount into Mrs Haratsaris' account, and the letter the following day (Exhibit A1, p 395), which states that a cheque for the same amount is enclosed, but I do not accept that this accords with Mrs Haratsaris' statement as to her understanding that a cheque was received "which may or may not have subsequently been banked into her account" (the DCS, [28]). What is important is that by 2 August 2005, the net proceeds had been banked into Mrs Haratsaris' account. In her affidavit and in contrast to her lack of clarity is her oral evidence, Mrs Haratsaris said she did receive the funds: see Exhibit A1, p 111, [7]. 63By her affidavit evidence and, initially her oral evidence, Mrs Haratsaris gave the impression that she has been in attendance when advice was given by an accountant but when pressed for the details, it became apparent that she has not been. 64Mr Haratsaris admitted that he had directed the settlement proceeds to be deposited into her account. His claim that the wife's account was an investment account T113.6-26 is irrelevant - it was not money to which Ms Bechara would have access. 65I have referred at [17] above to the explanation given on behalf of Mrs Haratsaris as to why the only money she was paying for the purchase of the Belmore Property was the mortgage debt, of approximately $250K, owed to ANZ bank by Mr Haratsaris. Mrs Haratsaris claimed that, since she was Mr Haratsaris' wife, she had an interest in the property and therefore did not have to pay, in effect, for her half. That contention has a number of difficulties: (1)The property was not purchased by her in her own right but rather as trustee of the Trust. As trustee she had contracted to pay $550K and she has not done so. (2)In the evidence before me, Mr and Mrs Haratsaris both sought to assert that the property was given to Mr Haratsaris by his mother on trust for the children. If the property was held in trust, Mrs and Mr Haratsaris never had any beneficial interest. Mrs Haratsaris' evidence at T57.27-T58.20 was as follows: Q. Wasn't there a documented agreement between Theo and his mother concerning, amongst other things, this particular property? A. Which document are you speaking about? Q. I am suggesting that there was an agreement, a written agreement between Theo and his mothers about what was going to happen to this property? A. A written agreement. Q. Yes? A. I am not sure. Q. You are not sure. Is this right, that you trusted Theo with the job of doing whatever he thought necessary to be done to get this property into the trust so that it might be protected from other claims? A. You see that to me, that house is none of my business, not none of my business. That's from his Mum. I never put the house in the equation. Do you know what I mean? Q. No I don't I am afraid. Explain to us what you mean by "the equation"? A. As she said, "Put it in the boys' names so they are kind of set" so the initial transfer, basically, yeah, I probably should have looked into it more. I should have now in hindsight looked at everything a little bit, yeah, I should have looked through everything a lot more thoroughly. Q. You confided the entire task of doing whatever Theo thought appropriate to be done to protect this asset to Theo? A. Yes, yes. Q. And from time to time he spoke with lawyers on your behalf? A. To set up trusts and things like that, is that what you mean? Q. I am talking about this transfer? A. Yes. Sorry, yes. Q. And is this right: You did not have anything to do with the mechanics of it. You left all of that to Theo? A. Yeah, he went with the lawyer and his Mum. That was their business. That was a other and son thing. Q. And you were happy for him to do whatever needed to be done to get that property into the trust in your name as trustee of the trust to protect it from other claims? Whatever they might be? A. In the future I guess so, yeah. (emphasis added) (3)At T63.41 she said that to her the transfer was "just another transaction" and she was not concerned about whether the Belmore property was put into the Trust or not: see T63. 66The answer at T57.42-44 (in bold above) and what is recounted at [64](3) is entirely inconsistent with her claim that she had an interest in the Belmore property. For reasons I have already explained, I do not accept that Mr Haratsaris received the Belmore Property on trust from his mother and the unreliability of the defendants is demonstrated by this material. 67Further, the fact that only half of the stated consideration was paid, notwithstanding the terms of the contract, and the failure to insist on payment before the transfer, is not consistent with Mrs Haratsaris being a bona fide purchaser for value. The fact that Mr and Mrs Haratsaris received assistance from a solicitor does not assist the defendants to establish the contrary. 68The DCS seek to rely on delay by Ms Bechara as "corroborative evidence against a finding of the requisite intent": see the DCS, [39]. The delay relied on is that between the despatch of the April 2005 letter enclosing the bill of costs and the 29 August when the Adelaide Property was transferred. I cannot accept that argument and for the following reasons: (1)It is not the defendants' case that they knew Ms Bechara was claiming her costs but the absence of any communication in that period led them to think she had abandoned her clam - their case is that they did not know about her claim. (2)The period asserted to be "delay" is relatively short. (3)More importantly the absence of any communication was, I infer, a result of the failure to inform Ms Bechara that a settlement deed had been entered into in May and the absence of any advice to her that the money was about to be paid. Ms Bechara was not told the settlement had occurred until 22 September 2005, i.e. after the payment had been made. (4)I do not accept that Mr Haratsaris could infer from anything that was said or done, or not said or done, that Ms Bechara had abandoned her claim to her costs. The letter of 7 October 2005 does not raise any such suggestion (and nor could it in my view). 69A related point made in the defendants' closing submission is that the defendants maintain that if it is held that Mr Haratsaris was aware of the debt the requisite intent should not be found as Mr Haratsaris "was both considering suing the plaintiff for negligence and was under the belief that his solicitors were negotiating or looking to have her fees assessed": see [33] of the DCS. I cannot accept that contention for the following reasons: (1)It was not Mr Haratsaris' evidence that the reason that he did not pay Ms Bechara's fees was because he was considering suing her for negligence. (2)He did give evidence that he thought his solicitors were negotiating to have her fees assessed and, although that was part of his explanation for not believing she was a creditor, it was not offered in his affidavit. (3)His claim that he was considering suing her for negligence does not preclude Ms Bechara being a creditor. Indeed he never did sue her for negligence. His claim, that he thought that his solicitors were negotiating to have her fees assessed, was not supported by any evidence and the letter of 7 October 2005 is not consistent with that claim. Even if it were correct, it would not establish that Ms Bechara was not a creditor but rather impacts only on the amount of her claim. Incidentally the two asserted basis are to some degree internally inconsistent and they are both inconsistent with Mr Haratsaris' primary position in the defence and affidavit that he did not know she was a creditor. 70The defendants contend that there is no evidence that supports Ms Bechara's contention that the Trust was created specifically for the purpose of protecting the family assets from past creditors such as the plaintiff: see the DCS, [45]. I do not accept the submissions and the for the following reasons: (1)It is wholly predicated on acceptance of the defendants as reliable witnesses which I am unable to do. (2)The timing of the establishment of the Trust encourages the view that it was connected with an attempt to shield Mr Haratsaris from any claims by the creditors, although I accept that it was not in fact used for that purpose in 2005. (3)The contention that the Trust was set up solely to deal with future creditors of Aussie Monies should anything "go wrong with the business" (see T185.18) was undermined by the absence of any use of the Trust for that purpose. The only property placed in the Trust was the Belmore property. The only large debt of which there is any evidence (other then bank loans) is Ms Bechara's debt. 71Even if the Trust was established in 2005 for a legitimate purpose the relevant question is how was it used in 2009. There can be no doubt that the transfer to the Trust in August 2009 had the effect of depriving Mr Haratsaris of his sole asset at that time and hence depriving Ms Bechara of the prospect of recovery. 72Mr Kelly submitted that Mr Haratsaris' claim that his mother wished to transfer the Belmore property in order to avoid a claim by Mr Haratsaris' sister in law was ridiculous (see T187 - T188), and there was no articulation of what claim it was that the sister in law had, or might have had, which Mr Haratsaris' mother would be protecting herself against. 73In relation to the Belmore transfer, it was submitted that Mr Haratsaris could have transferred his interest at any time after April 2008 and that he did not do so even after the proceedings were commenced against him May 2009. The DCS, at [66], state: Instead he chose to wait a period of months, until August 2009. That behaviour does not exhibit a dishonest intent. The likely reason why Mr Haratsaris did not transfer the Belmore Property between April 2008 and May 2009 is readily apparent, namely that he did not think that Ms Bechara was going to pursue him as he had heard nothing since 2005. The "delay" between May 2009 and August 2009 is very short and arrangements had to be made with RAMS to obtain the replacement loan (which apparently was already in train in July 2009). 74The real significance of the delay between April 2009 and May 2009 is that it undermines Mr Haratsaris' contention that his mother wanted his sons to have the Belmore property. He only set about transferring the Belmore property when he was served with the District Court Statement of Claim. This second transfer, at a time that Ms Bechara's claims were again pending, is itself a significant matter in considering the overall conduct of Mr Haratsaris. No application to set aside the judgment of the District Court (or appeal from it) has ever been launched by Mr Haratsaris - his lack of involvement in the proceeding coincides with the transfer of the Belmore property. 75The DCS assert that the Adelaide transfer was solely connected with the attempt to raise capital for Aussie Business. It is asserted that the documents at page 118 of Exhibit A3 supports the defendants evidence to this effect. There are a number of difficulties with the defendants arguments and they are: (1)The documents do establish that an attempt was made to refinance in February 2005 and a valuation was conducted at that time. This of course precedes the receipt of the bill of costs but there is no independent evidence which establishes that the application was refused or why. Although Mr McCulloch indicated that a reference to evidence that the loan was rejected would be provided later (see T171.39) it was not provided. (2)The document at Exhibit A3, p 118 is a file note of RAMS, it states: Client seeks to refinance and raise additional funds for personal use. The property will be transferred solely [semble] in her name and not in her husband's name Not only does the note say nothing about the bank requiring the property to be transferred into Mrs Haratsaris' name, it describes the funds as being for personal, not business, use. (3)The contention that banks will not lend to someone, i.e. Mrs Haratsaris, because the security proffered is owned by her husband, who is on a disability pension, is fanciful. Banks regularly lend to X where security is provided by Y and what they do is ensure (or endeavour to ensure) that Y consents to the use of the property even though Y is obtaining no benefit. Indeed, Mr Haratsaris was able to obtain a loan himself on the security of the Belmore Property. 76In the PCS, in [12] and [13], reliance is placed on Mrs Haratsaris' evidence that she entrusted the entire task of effecting the transfer to her husband on her behalf and that, as her agent, his conduct is her conduct even though it was fraudulent, reliance being placed on: Macquarie Bank Ltd v National Mutual Association of Australia Ltd & Ors (1996) 40 NSWLR 543, 611 E-F. I do not think it is necessary to have resort to that principle because I am not satisfied that Mrs Haratsaris was a bona fide purchaser for value for the reasons I have previously indicated. 77For reasons previously given, I am not satisfied that Mrs Haratsaris did not know that Ms Bechara was a creditor of Mr Haratsaris and that the transfer was designed to defeat her as a creditor. Indeed, I am satisfied, on the balance of probabilities, that she did know both matters, although her knowledge is not relevant to the Adelaide property transfer since she does not rely on s 37A(3) or its South Australian equivalent. 78I was left, at the end of the cross examination of Mr and Mrs Haratsaris, firmly persuaded that the impression gained, and recited at [28] above, reflected what actually occurred and it follows that I am comfortably persuaded, on the balance of probabilities, and notwithstanding the seriousness of the finding that the transfer of the Adelaide Property, the Belmore Property and the transfer of the proceeds of the personal injury settlement were transferred out of Mr Haratsaris' hands to Mrs Haratsaris and to the Trust in order to ensure that Ms Bechara did not obtain payment of whatever money was due to her for her costs and disbursements. Defence under s37A(3) 79To succeed under s 37A(3), Mrs Haratsaris must establish that she was a bona fide purchaser in good faith without notice of Mr Haratsaris' intention to defeat his creditors by the transfer of the Belmore Property. Mrs Haratsaris has not persuaded me that she meets the criteria for s 37A(3) because: (1)The balance of the purchase price which she agreed to pay has never been paid. (2)Her claim that she did not need to pay because she had a half interest in the property is not made out given that she was purchasing the property not in her own right but as trustee, and is inconsistent with the Contract for Sale: see Exhibit A2, p 537. (3)She did not pay the full amount of the stated consideration and yet Mr Haratsaris transferred the Belmore property to her. (4)In view of my conclusion on onus, Mrs Haratsaris has failed to satisfy me that she did not know of Ms Bechara's claim, or of Mr Haratsaris' intent in transferring the Bechara property. I am satisfied that she knew in 2005 that Ms Bechara was owed money by her husband and that her husband had never paid any money to Ms Bechara. I am satisfied that when the Trust received the transfer of the Belmore property in 2009 Mrs Haratsaris knew, therefore, that Ms Bechara had never been paid and that the purchase of the transfer was to put that property out of the reach of Ms Bechara. Orders 80Having found the requisite intent to make a finding under s 37A, the next question is what orders should now be made. The parties were in agreement that rather than ordering Mr Haratsaris to transfer either or both the remaining lot from the Adelaide property or the Belmore property over to Ms Bechara, the Court should follow the course taken in Marcolongo at first instance by Hamilton J and B v U by Pembroke J. That is, to allow Mr and Mrs Haratsaris time to pay out Ms Bechara's debt with the freezing orders in place to continue until Ms Bechara's debt is paid or, I assume, arrangements satisfactory to Ms Bechara are made in lieu. I shall invite counsel to formulate the precise orders which they agree should be made. Referral 81I have referred to the fact that Mr Haratsaris has, since his motor vehicle accident, been receiving a disability pension and yet, even on his own and his wife's evidence, he has been involved since 2005 at least in property development and assisting his wife with the Aussie Money business. I do not express any concluded view as to whether Mr Haratsaris has in fact been claiming entitlements on a false basis but I shall give consideration as to whether or not a copy of this judgment and the transcript containing the evidence should be provided to the Department of Human Services so that the Department can, if so advised, consider the matter further. ********** 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: 16 May 2013