VASSILIADES Vs. VASSILIADES

JUDGEMENT

(1.) The two main issues in the appeal are: (1) whether the District Court and the Supreme Court were right in upholding the present respondents' claim that certain transfers and mortgages should be set aside (2) whether there were circumstances in the conduct of the trial before the District Court which entitle the appellant to object that the case had not been fairly tried. If the appellant were to succeed in whole or in part on the former issue, she would be entitled to judgment to that extent on the application. If she were to succeed on the latter issue, she would be entitled to an order for a new trial. The transfers and mortgages in question were granted to the appellant by her father Hadji Nicolas Vassiliades, who was adjudicated bankrupt on a petition filed by the appellant in September 1930. His trustee in bankruptcy was substituted for him in the proceedings, and is now respondent 2. Respondent 1, Artemis N. Vassiliades, a son of the bankrupt and a brother of the appellant, had obtained two judgments against his father, one dated 10 June 1937 for ?200 with interest and costs on two bonds, in an action commenced on 7 November 1935, the other dated 25th June 1938 for ?428 10s. with interest and costs in an action commenced by him on 12 November 1935. It is this latter action and judgment out of which these proceedings arise. The respondent having failed to obtain satisfaction for his judgment, on 24 April 1939 took out a summons claiming that the transfers and mortgages set out in schs. A, B, C and D all of which were executed in favour of the appellant, should be set aside "as effected with intent to hinder or delay" his father's creditors and in particular respondent 1. The appellant intervened in the summons as ex parte respondent. The respondent filed an affidavit setting out the grounds of his application, which was based on Law 7 of 188C Ss. 2 and 3, as amended by S. 2 of Law 10 of 1927. The sections in their amended form, are as follows : "2. (1) Every gift, sale, pledge, mortgage or other transfer or disposal of any movable or immovable property made by any person with intent to hinder or delay his creditors or any of them in recovering from him, his or their debts shall be deemed to be fraudulent, and shall be invalid as against such creditor or creditors; and, notwithstanding any such gift, sale, pledge, mortgage or other transfer or disposal, the property purported to to transferred or otherwise dealt with may be seized and sold in satisfaction of any judgment debt due from the person making such gift, sale, pledge, mortgage or other transfer or disposal. (2) In any application under the provisions of this law to set aside a transfer or assignment of any property made to any parent, spouse, child, brother, or sister of the transferor or assignor otherwise than in exchange for money or for other property of equivalent value or for good consideration the onus of proving that such transfer or assignment was bona fide and not made with intent to hinder or delay his creditors shall rest upon the transferor or assignor and upon the person to whom such transfer or assignment has been made. (3) No sale, mortgage, transfer or assignment made in exchange for money or other property of equivalent value shall be voidable, under the provisions of the law, unless the purchaser, mortgagee, transferee, or assignee shall be shown to have accepted it with knowledge that such sale, mortgage, transfer, or assignment was made by the vendor, mortgagor, transferor, or assignor with intent to delay or defraud his creditors, 3. Any gift, sale, pledge, mortgage or other transfer or disposal of any movable or immovable property deemed to be fraudulent under the provisions of S. 2 of this Law whether made before or after the commencement of an action or other proceeding wherein the right to recover the debt has been established may be set aside by an order of the Court, to be obtained on the application of any judgment creditor made in such action or other proceeding, and to the Court before which such action or other proceeding has been heard or is pending." The appellant opposed the application. But both before the District Court and the Supreme Court her opposition has been overruled and the transfers and mortgages have been set aside. In 1936 between 23 May 1936 and 20 June 1936 while respondent 1's two actions were pending against Hadji N. Vassiliades hereinafter called Vassiliades, Vassiliades executed eight transfers, all but one of immovable property and all in favour of the appellant. On 25 June 1936 one Hortovadji commenced an action against Vassiliades and another, and on the same day an interim order was made restraining Vassiliades from alienating his immovable property. Thereafter on 30 June 1936 Vassiliadas made in favour of the appellant a bond for ?86 payable on 1 August 1930 and on 23 July 1936, purported by contract to sell to the appellant moveable properties for ?792 and about the same period transferred to the appellant two mortgage bonds for ?50 each. Thus in the period between 23 May 1936 and 22 June, 1936, Vaasiliades transferred to the appellant, partly before and partly after the commencement of Hortovadji's action and while respondent 1's two actions were pending, properties of a total value, even if the assessed values were taken, of over ?2000. In addition to this extraordinary sequence of events, there was also evidence before the Courts which they accepted that the business of Vassiliades did not go well after 1920 and that his financial position at all times since 1920 had been serious and critical. There was other evidence to the same effect.

(2.) The law of Cyprus as stated in the sections cited above makes the intent of the transferor the crucial test for deciding whether the transfer or disposal is to be deemed to be "fraudulent." The fraud contemplated is not what has teen called "moral" fraud; but consists in the intention of the transferor to "hinder" or "delay" (that is something less than "prevent") his creditors. Whether or not that intention exists, must be decided as an inference of fact from considering all the circumstances of the case. Here the embarrassed position of Vassiliades over a period of years, the actions against him and the judgments recovered and unsatisfied and in addition the most remarkable sequence of substantial conveyances within so short a period of time constitute very strong evidence. Vassiliades gave evidence but the Judge refused to credit anything he said. The appellant herself gave no evidence at all, in the witness box at the trial. Statements she made in an affidavit to show that the unsigned transactions were bona fide and for consideration were referred to, but rejected by the Courts. There was in their Lordships' judgment ample evidence for the conclusion of both Courts below that the transactions were not bona fide. It is true that under S. 2 (1) of the Act the onus is on the party seeking to set aside the transfers to prove his case, but the Courts below have considered the case on the footing that the onus so lay. Their Lordships also here proceed on the same view and arrive at the same conclusion as the Courts below. A question was raised as to the exact effect of the words "good consideration" in S. 2 (2) which deals with transfers as between certain members of a family, otherwise than in exchange for money or other property of equivalent value or for good consideration. Good consideration in this statute, it was conceded, means something more than natural love and affection. It was said that even if it was accepted in respect of the two bonds included in Sch. D that there was no valuable consideration, there was "good" consideration because the transfer was by way of dowry, which it was said was good consideration like marriage consideration. The Courts below held this suggestion irrelevant because the appellant was neither married nor on the point of being married. There could thus be no question of applying in the appellant's favour S. 2 (2) which shifts the burden of proof and places the onus of proving bona fides on the transferor and transferee because the conditions of sub-s. (2) had not been fulfilled. But the Courts below have dealt with all the transfers on the footing that respondent 1 had to prove that the conditions of S. 2 (2) and (3) were established, and that the onus throughout was on him. The decision that respondent 1 had satisfied this onus which was arrived at by the Courts in Cyprus, the Judges of which have a knowledge of local conditions and habits which their Lordships do not pretend to possess, is not one which they would lightly interfere with. But they feel satisfied on a consideration of all the evidence and documents that it is a right conclusion, and that the judgment should be affirmed.

(3.) But it is still necessary to consider the application of the appellant for a new trial on the various grounds suggested. These can best be considered separately. The first objection is that the judgment appealed from is a nullity on the ground that the acting President of the District Court was not competent to sit but was disqualified because he had been Official Receiver when the petition against Vassiliades was filed and had expressed an opinion ad-verse to the appellant in another case. This objection alleges bias and want of impartiality on the part of the Judge. It is a most serious objection, the effect of which, if it is sustained, is that the trial must be held to have been coram non judice and the judgment a nullity. The simplest type of bias is where the Judge is shown to have any pecuniary interest in the result of the proceedings : in that case it will be held at once that he is disqualified, however small the interest and however clear it may be that his mind could not have been affected. A striking illustration of this type is afforded by (1862) 8 HLC. 789,1where that fact that the Lord Chancellor who presided at the hearing in the House of Lords had inadvertently failed to disclose a small interest he had in the respondent company was held to vitiate the judgment of the House. But there are other circumstances which may be relied upon as justifying an objection that a Judge is disqualified for bias. It is then a question of substance and fact whether the objection is good. In (1894) 1 QB 750,2Lord Esher at p. 759 explained the criterion for rejecting the objection to be "not that any perversely minded person cannot suspect him but that he must bear such a relation to the matter that he cannot reasonably be suspected of being biased."