Fletcher v George
[2011] FMCA 553
•27 July 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| FLETCHER v GEORGE & ORS | [2011] FMCA 553 |
| BANKRUPTY – Debtor claims that assets including real property and chattels subject to trust – whether or not trusts created – uncontradicted evidence of debtor not necessarily conclusive – alleged equitable fraud by bank in advances made on real property – no evidence to demonstrate any basis in equity for claim against transferee – no basis to support claim against bank in alleged aid to transfer – claim mediation agreement induced by undue pressure or duress – claim certain chattels exempt property – s.116(2) Bankruptcy Act. |
| Bankruptcy Act1966 (Cth), ss.58, 116(2)(b), 116(2)(ba) Federal Magistrates Act1999 (Cth), s.17A Land Title Act1994 (Qld), ss.109(a), 179, 182, 184, 185 Property Law Act 1974 (Qld), ss.11(1)(b), 200 Trusts Act1973 (Qld) |
| Barnes v Addy (1873 – 74) LR 9 Ch App 244 Ford HAJ & Lee WA, Principles of the Law of Trusts, Thompson Law Book Co, 2006 |
| Applicant: | WILLIAM JOHN FLETCHER AS TRUSTEE FOR THE BANKRUPT ESTATE OF LAUREN KAY GEORGE |
| First Respondent: | LAUREN KAY GEORGE |
| Second Respondent: | DR PETER IRONSIDE PTY LTD ACN 008 126 387 |
| Third Respondent: | DR PETER DOUGLAS IRONSIDE |
| Fourth Respondent: | NATIONAL AUSTRALIA BANK |
| Fifth Respondent: | SUSAN WILSON |
| Sixth Respondent: | RICHARD SIEBERT |
| File Number: | BRG 709 of 2008 |
| Judgment of: | Burnett FM |
| Hearing dates: | 27, 28, 29 and 30 September 2010; 29 and 30 November 2010; 1, 2, 3, 6, 7, 8 December 2010 |
| Date of Last Submission: | 23 December 2010 |
| Delivered at: | Brisbane |
| Delivered on: | 27 July 2011 |
REPRESENTATION
| Counsel for the Applicant: | Mr Coulsen |
| Solicitors for the Applicant: | Holman Webb Lawyers |
| The First Respondent appears on her own behalf |
| Counsel for the Second Respondent: | Mr Galloway |
| Solicitors for the Second Respondent: | Bell Dixon Butler |
| Counsel for the Third Respondent: | Mr Galloway |
| Solicitors for the Third Respondent: | Bell Dixon Butler |
| Counsel for the Fourth Respondent: | Mr Morgan |
| Solicitors for the Fourth Respondent: | Thynne & Macartney |
| Solicitors for the Fifth Respondent: | Lewis & McNamara |
ORDERS
That the parties submit a minute of order giving effect to the terms of this judgment within seven (7) days of this order.
That in the absence of submission to the contrary which submission be made in writing within seven (7) days of these orders, the first respondent pay the costs of and incidental to the application including reserved costs to be assessed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRG 709 of 2008
| WILLIAM JOHN FLETCHER AS TRUSTEE OF THE BANKRUPT ESTATE OF LAUREN KAY GEORGE |
Applicant
And
| LAUREN KAY GEORGE |
First Respondent
| DR PETER IRONSIDE PTY LTD ACN 008 126 387 |
Second Respondent
| DR PETER IRONSIDE |
Third Respondent
| NATIONAL AUSTRALIA BANK |
Fourth Respondent
| SUSAN WILSON |
Fifth Respondent
| RICHARD SIEBERT |
Sixth Respondent
REASONS FOR JUDGMENT
Introduction
“Oh, what a tangled web we weave
When first we practice to deceive!”[1]
[1] Sir Walter Scott Marmion; A Tale of Flodden Field, Canto VI, XVII
In opening his cross examination for the fourth respondent, (NAB), its counsel asked of the bankrupt:
“Ms [George] is there anything that you will not say to try and keep hold of this house?”
Naturally the bankrupt answered she would not be dishonest and would be truthful. However as the evidence in this case demonstrates concepts of honesty and truth can be relative and value laden particularly when premised upon the delusional foundation that if a lie is stated often enough it may metamorphosise into truth. Here barely a truthful word passed from the lips of the bankrupt. In my view there was indeed nothing the bankrupt would stop at to avoid the Trustee doing his duty in lawfully realising the house and discharging her creditors.
In this case it is important to state my conclusion on the bankrupt’s credit at the outset and in particular that I can accept nothing the bankrupt said unless it is independently verified. My conclusion on that matter should be stated early and followed with the justification because this dispute has had deceit at its heart. This is not a case of subtleties, misunderstandings or one where findings of fact now open to be made may enliven a view that might generously sidestep the unpleasant task of concluding dishonesty. Questions of honesty and truthfulness were at the forefront in this application and once resolved lead to only one conclusion. The bankrupt’s claims must fail and the other parties are entitled to the relief they seek.
Background
The background facts which will shortly be restated were first addressed in Fletcher v George & Ors (No.6) [2009] FMCA 69. On that occasion I entertained an application for summary judgment pursuant to s.17A of the Federal Magistrates Act1999 (Cth). A number of issues were finally disposed of except factual issues identified in respect of paragraphs 3, 4 and 10 of the original application. However following an appeal, (George v Fletcher [2010] FCAFC 53), two other matters were remitted for trial. This proceeding deals with the matters in respect of which I was not prepared to award summary judgment as well as the two additional matters referred for trial by the Full Court.
At the time of her sequestration the bankrupt had in her possession various chattels including jewellery, household effects and antiques. In addition there was an unregistered horse float. None of these items were identified in her statement of affairs although clearly some of them including the jewellery were not of the kind subject to the limitations provided in s.116(2)(b) and (ba) of the Bankruptcy Act1966 (Cth). Both title to and entitlement to claims under s.116(2) of the Bankruptcy Act have to be determined upon this application.
In addition to the chattels to be considered, following remission from the Full Court for trial, an issue remains concerning interest in real property at Landing Place, Moggill, commonly known as the Moggill property. Collateral to that issue is an issue relating to the efficacy and enforceability of an agreement entered into by the bankrupt with the registered titleholder to the Moggill property which would see the property transferred to the Trustee’s interest subject to the satisfaction of the NAB’s claim.
For convenience I restate some of my earlier remarks made in Fletcher v George (No.6) [2009] FMCA 69 stating the relevant background facts.
Background Facts
The bankrupt’s difficulties commenced following a very acrimonious matrimonial proceeding. Following the trial she received a costs assessment in respect of legal costs incurred in the sum of approximately $111,000.00. She either could not or refused to pay her solicitor those assessed costs. The solicitor delivered a bankruptcy notice. In the meantime the bankrupt filed a debtor’s petition on 21 February 2006 and by operation of that petition her estate was sequestrated. From there her problems compounded. But first the history.
For many years prior to the relevant marriage the bankrupt worked in the banking industry. She lived in South Australia and had acquired four properties in her own right. It was said that at the time of her marriage she had at various times owned these four pieces of real estate in South Australia.[2] Although not strictly material to this application I note that in her matrimonial proceedings before Barry J in 2005 her evidence (which was accepted on that point) was that at that time she owned a property at Karsbrook with her first husband. There does not appear to have been evidence of the other three properties although I note there was reference in evidence by her to a unit. Evidence of the other holdings was not in dispute.
[2] Transcript dated 9 December 2008 page 85 line 24.
The realisation of her real estate holdings was said to have provided the source of funds which were eventually available to her and her second husband Dr George to purchase the former matrimonial home at Pullenvale. That property was purchased in 1998 and registered in her name. It was accepted by Barry J that the property was purchased solely in her name for appropriate reasons. Despite it being purchased solely in her name His Honour accepted and treated it as matrimonial property for the purpose of the property proceedings between the bankrupt and her former spouse although he did accept “a large proportion of the funds used as equity for the Pullenvale property came from the [bankrupt]”;[3] although “to the extent of $200,000.00 as claimed, I am unable to (find)”.[4]
[3] George & George [2005] FamCA 309 at [20].
[4] George & George [2005] FamCA 309 at [52].
After the bankrupt and her second husband separated in 2001 the bankrupt unilaterally liquidated the Pullenvale property realising a sum of approximately $743,000.00. She used part of the funds to acquire the Moggill property which was then vacant land.[5] The historical search reveals the registration of transfer occurred on 23 December 2003 and a certificate of title then issued.[6] A mortgage with the National Australia Bank was registered on 14 July 2004. This approximates with the date of contract for the construction of a house on the Moggill property. Although the bankrupt referred to the construction agreement as being executed in about June 2005 (T page 191 line 5) it seems likely that the reference to 2005 is in error as I note from the contract of sale to Dr Peter Ironside Pty Ltd (DPIPL) executed on 18 June 2005 that the “present use” of the property was noted as “residential” and it purported to provide for a long term lease-back arrangement. It is unlikely that such an agreement would have been concluded in the absence of the construction of the dwelling upon the property.[7]
[5] Affidavit William John Fletcher filed 29 October 2008 Exhibit WJF7 – pages 6 to 17 contract of sale dated 5 December 2003.
[6] Affidavit William John Fletcher filed 29 October 2008 Exhibit WJF7 – pages 1 to 3.
[7] Affidavit William John Fletcher filed 29 October 2008 Exhibit WJF7 – page 19.
From the chronology provided in the Family Court proceedings it is apparent the property was acquired prior to the resolution of that dispute and accordingly remained matrimonial property as defined.
As contended by the Trustee it is plain the bankrupt could not have had title of the Moggill property to convey to any third party interest in that property as trustee or otherwise at least until after the orders of Barry J made on 29 April 2005.
It follows that subject to the bankrupt’s claims concerning a trust the Moggill property, which by that time appears to have included the completed residence, was only from that time capable of disposition by the bankrupt but not before.
In June 2005 the bankrupt in her own right entered into a contract to sell the Moggill property to the second respondent (DPIPL) for a sum of $400,000.00. The contract was not subject to any encumbrances but did purportedly include provision for a 30 year tenancy agreement in her favour at a set rental.[8] The bankrupt contends that at the same time a collateral agreement to transfer the property back to her by DPIPL was also concluded.
[8] The Trustee challenges this transaction as he assets it was effected at a significant undervalue.
On 14 September 2005 a memorandum of transfer giving effect to a contract of sale dated 18 June 2005 was executed by the bankrupt as vendor. Shortly before this time on 27 August 2005 the hand written memorandum of transfer providing for a transfer of the Moggill property by DPIPL to the bankrupt in trust for Alexander George of a “fee simple life estate” (sic) was purportedly executed by DPIPL. It is to be noted that there was no formal contract in writing prepared in support of that transfer. The consideration was noted on the transfer to be “$400,000.00 (four hundred thousand dollars) on or before death”.[9] There was some debate about the nature of the interest transferred i.e. whether it was fee simple or merely a life interest but for present purposes that matter is not material and it will be addressed later.[10]
[9] Affidavit William John Fletcher filed 29 October 2008 Exhibit WJF6 – page 198.
[10] It is interesting to note that the transfer is hand drafted. It proceeds on the premise that DPIPL is the transferor and that the transferee is the bankrupt as trustee. However DPIPL and Dr Ironside dispute this. They allege the words “Life interest” and “in trust for Alexander George” were added later. They say the intention was to convey beneficial interest to the bankrupt. The transfer predates the transfer by the bankrupt to DPIPL which transfer was executed on 9 September 2005. That transfer was made pursuant to a contract of sale dated 18 June 2005 (See Affidavit William John Fletcher filed 29 October 2008 Exhibit WJF7 pages 18 to 20). Given the relevant dates it appears these transactions were intended to be contemporaneous as the bankrupt alleges. The only transfer registered was that from the bankrupt to DPIPL which was registered on 20 October 2005. This matter is subject to discussion below. (See Exhibit WJF-7 page 1).
Only the transfer from the bankrupt to DPIPL was ever registered. The evidence does not suggest that any third party ever had notice of the unregistered transfer executed by DPIPL on 27 August 2005.
In the meantime relations between Dr Peter Ironside and the bankrupt’s sister, Susan Jane Wilson (formerly Ironside), soured. They separated and commenced property proceedings in the Family Court. The Moggill property formed part of the matrimonial estate in that proceeding. The bankrupt sought to intervene in those proceedings to protect her claimed interest. The interest claimed by the bankrupt was in respect of the Moggill property itself. That proceeding was ultimately resolved at mediation. All parties to this action except the NAB were parties to the mediation agreement.
The terms of the heads of agreement made the subject of orders of 26 February 2008 in the Federal Magistrates Court in the Ironside proceeding relevantly provided:
“2. (Dr Peter Ironside) shall do all acts and things reasonably necessary and whether in his personal capacity as director or as shareholder of (DPIPL) so as to ensure that the total mortgage debt secured by the National Australia Bank upon the property situate at 130 Land Place, Moggill in the State of Queensland is not more than $500,000.00…as at the date of sale contemplated by the heads of agreement.”[11]
[11] Affidavit William John Fletcher filed 29 October 2008 Exhibit WJF8 – page 1.
Otherwise the bankrupt as intervenor abandoned any claims “whether on her own account or as trustee with respect to the (Moggill) property.”[12]
[12] Affidavit William John Fletcher filed 29 October 2008 Exhibit WJF8 – page 1 and 3 Heads of Agreement.
Earlier the Trustee had become aware of the Ironside proceeding and the bankrupt’s intervention in it. The Trustee in turn intervened as the bankrupt’s trustee. As the Ironside proceeding was settled without need for judicial intervention the Trustee was able to negotiate a suitable outcome which involved the transfer of the Moggill property to him.[13]
[13] Affidavit William John Fletcher filed 29 October 2008 Exhibit WJF8 – page 2 and 4(d) Heads of Agreement
The bankrupt was also party to the Heads of Agreement and appears to have agreed its terms although she now contends otherwise.
By reason of the Heads of Agreement the Moggill property was transferred to the Trustee pursuant to a memorandum of transfer executed on 2 April 2008.[14]
[14] Affidavit William John Fletcher filed 29 October 2008 Exhibit WJF9 page 1.
However shortly after that time it appears the bankrupt recanted on her earlier position agreed by the Heads of Agreement and sought to lodge a caveat to prevent registration of the transfer.[15] In a letter written in support of the caveat[16] the bankrupt claimed the Moggill property ought to have been registered in the name of the bankrupt as trustee for Alexander George.[17]
[15] Affidavit William John Fletcher filed 29 October 2008 Exhibit WJF11 page 1.
[16] Affidavit William John Fletcher filed 29 October 2008 Exhibit WJF11 page 2.
[17] The allegation contained in the bankrupt’s letter is difficult to reconcile with the facts expressed in the memorandum of transfer. A contract of sale was executed on 18 June 2005 whereby it was agreed that the bankrupt would sell the Moggill property to DPIPL for $400,000 subject to terms. The contract made no reference to DPIPL holding the Moggill property as trustee or to the creation of any life interest. At best the contract between DPIPL and the bankrupt provided for the creation of a 30 year tenancy at a set rental of $269 per month.
The dispute in this case focuses upon that trust which the bankrupt maintains was settled in favour of her son. In that trust she says she settled all her property both real and personal upon trust for him and accordingly maintains there is nothing owned by her and available to her Trustee for her creditors.
Prior to these events the bankrupt also acquired various chattels. Much of the dispute concerning title to chattels was resolved at the summary hearing. However there remains in dispute title to a horse float, jewellery,[18] furnishings and personal effects.[19] Some of the furnishings and personal effects were the product of a bequest by the bankrupt’s late mother and other chattels came into her possession following orders made by the Family Court. In her statement of claim the bankrupt claims an interest in an unregistered horse float, household effects and jewellery. Reference is made to a “deed of trust dated 28/4/2000”. However the bankrupt also contends that trusts were orally created. The Trustee denies such trusts were created and wishes to put the bankrupt to proof on this issue.
[18] During the course of execution of a warrant a significant quantity of jewellery was removed. It was listed in an inventory prepared by the trustee and marked Exhibit 2.
[19] See George & George [2005] FamCA 309 at para [79].
Mrs George was a self represented litigant. Notwithstanding that matter she is no fledgling. She has now self represented in proceedings involving similar issues before this court, the Federal Court of Australia, the Full Court of the Federal Court, the Supreme Court of Queensland and the Queensland Court of Appeal. She is now a very seasoned litigant. She brings to bear her own reasonable intelligence. She informed the court that she was previously a high level executive with the ANZ Banking Group.[20] Until the events of recent years she lived a lifestyle commensurate with an individual who had achieved as she deposed. By reason of those facts I have no reason to disbelieve that part of her evidence although I am not entirely persuaded that she is indeed as experienced a banker as she sought to portray.[21]
[20] Transcript 29 September 2010 page 127 line 30
[21] For instance while she was keen to claim the mantle of an experienced banker she demonstrated a remarkable lack of appreciation and awareness of negative gearing and was quick to distance herself from knowledge of those matters. A surprising admission for a banker. See transcript 29 September 2010 page 293.
I am also satisfied that her native intelligence and experience including her experience of other litigation such as her involvement in the family law proceedings and some legal training undertaken by her in 2007 generated insight into areas that she would otherwise have had no knowledge of.
As I noted earlier the bankrupt subjected herself to sequestration by filing a debtor’s petition. That was done in advance of proceedings commenced by her principal creditor, a solicitor who acted for her in her matrimonial proceedings.
Her statement of affairs lodged at the time of her application recorded no assets. Arguably that was consistent with her protestation that she was insolvent and owned nothing as she had previously disposed of all her worldly possession by settling them upon a trust in favour of her son. Obviously however, for a bankrupt, she continued to enjoy her accustomed lifestyle. She continued to reside in a valuable acreage property in a leafy part of Brisbane and continued to maintain and ride competitively an extremely valuable dressage horse and continue with the upkeep of all necessary accoutrements required to pursue that pastime. All the while she appeared to have no visible means of financial support. She was unemployed and on her account insolvent.
Initial enquiries of her by the trustee suggested all was not as it seemed. First investigations revealed that the sale of the Moggill property by the bankrupt to her brother-in-law, her brother-in-law’s company, Dr Peter Ironside Pty Ltd was not effected at fair value but at an undervalue. However at that time because the trustee was unable to obtain further funding from the creditors he was unable to further his investigations. It seems plain that although there appeared to be evidence of an undervalued transaction the trustee was not prepared to pursue them without funds from the creditors. But for later events that may have been the end of the matter.
However in September 2007 the trustee became aware that the bankrupt sought to be joined in proceedings BRC9332/2007, the matrimonial proceedings concerning her sister, the fifth respondent Susan Jane Wilson and Ms Wilson’s former husband Dr Peter Ironside. Mrs George had sought to intervene on the basis that she had an interest in the property the subject of the proceedings, that property being the Moggill property.
It is not certain when the bankrupt first sought to intervene. However prior to correspondence between solicitors for Dr Peter Ironside and Ms Wilson it is plain the issue of the Moggill property was alive between them from at least April 2007. Dr Ironside wished to exclude the property from valuation and inclusion within the matrimonial pool (probably in recognition of the bankrupt’s right to repurchase the property) but Ms Wilson sought to have it included at fair value (see exhibit 88). In any event at that time there was no suggestion that the property was held on trust or at least that there was some trust in favour of any other party beyond the equity of redemption which arguably existed in favour of Mrs George on her own account.
However by October 2007 matters had clearly changed. In correspondence between the parties’ solicitors in the Ironside dispute, there first appeared documented a suggestion that the bankrupt asserted that the property was impressed with a “life interest” in favour of her son, Alexander, although that matter was at the time attended with considerable doubt. Clearly the prospect of the bankrupt being joined as a party in the matrimonial proceedings was something being actively considered at that time as the correspondence demonstrates. However it appears from the correspondence that the issue of joinder had perhaps no sooner arisen than was dismissed as exhibit 89, the letter of 17 October 2007 demonstrates.
That aside, the trustee in any event determined it be appropriate that he seek to apply to be joined as a party to those proceedings. That in fact occurred. It was then for the first time that the bankrupt asserted to anyone “that her son, Alexander George, and herself, had a life interest in the property and that the property was supposed to be held in trust for her son.”[22]
[22] Affidavit William John Fletcher filed 29 October 2009 paragraph 7
It was then that the bankrupt produced to the trustee the two purported trust deeds being the Trust Act 1973 Reprint 4A and the Trust Act 1973 Reprint 4B together with the form 1 transfer dated 27 August 2005. These documents she swore were original, true and gave rise to a trust that she asserted on behalf of her son.
From this time the bankrupt has asserted the Moggill property and all her other property was impressed with a trust in favour of her son. She has not missed any opportunity to assert that matter. Even her final affidavit in these proceedings boldly proclaims her position as “trustee”, swearing an issue which was then yet to be resolved by this proceeding.
In the proceedings before me she took great trouble to raise and argue at every opportunity in support of this assertion. Those instances included not only in argument with and submission to the court but also in evidence as a witness.
It is with that in mind and given my opening observations that I consider it appropriate at this time to address matters concerning her credit generally.
Mrs George’s Credit
As I noted at the outset the outcome of this proceeding turns significantly upon the evidence of Mrs George. She did not impress me. For reasons which I will detail I considered her evidence to be highly unreliable and in many instances, untruthful. I was compelled to these conclusions because in many respects her evidence was simply inconsistent with reliable documentary evidence. Often times her evidence provided a spin or gloss upon documents to afford a construction that suited her case. Even putting aside Mrs George’s inability to distinguish between evidence and argument the fact remains that in many instances her over reach in this regard was such that I had no confidence through the course of the proceedings that anything she informed me of, particularly when said to be supported by documentary material, was indeed so supported. A review of her testimony compared with documents bears this matter out. In other respects and for reasons which will be expanded upon below I formed the view that she was simply dishonest.
Before reaching this conclusion I gave careful consideration to her situation. In particular to the fact that she was a self represented litigant who, because of her relative disadvantage, may simply have been misunderstood and misinterpreted. I am satisfied that this is not the case. For reasons which I will explain I have concluded that in her unashamed ambition to preserve this property she was prepared to do or say anything to achieve that outcome. Not only did she alter documents herself but she sought to suborn witnesses such as her former husband. She is a litigant who as Mr Morgan suggested in cross examination would do anything to keep possession of the house. I will deal with specific matters as appropriate to issues that are required to be addressed within these reasons but I will at the outset address general matters directed to the evidence of Mrs George.
As a matter of general observation Mrs George was extremely argumentative. In her mind a trust had been settled and she exercised every possible opportunity through the course of her evidence as well as argument to reinforce that point. It was, as I have earlier observed, a case where Mrs George seemed to be of the view that the more frequently a matter was stated, the more truthful that matter would become. The fact remains her case was relatively straightforward. Accepting that premise much of Mrs George’s consistent need to reinforce the existence of a trust seemed redundant. However not content with a simple statement she engaged in continuous argument with counsel premising answers to relatively straightforward questions upon her insistence that she had created a trust.
It followed that instead of making relatively innocuous concessions to the stated matters, for instance evidence in documents, she engaged in debate and argument with counsel in the course of cross examination only ultimately to be confronted with the need to make the concession required. For instance when cross examined about the absence of any evidence of a trust before her proceedings the Family Court which were then subject to appeal it was put to her that there was “not a scintilla of evidence that Moggill was held for your son pursuant to the trust you declared on the day of his birth”.[23] It took argument and intervention on my part before 20 lines later the concession was made.
[23]Transcript 28 September 2010 page 164 line 10.
Likewise a short time later it was put to her that she did not tell anyone that the Moggill property was the subject of a trust. She commenced to provide an unresponsive answer before being forced to again concede that matter in the negative. In each instance the answers ought to have been a self evident “no”. The trial record of the Family Court proceeding had it been required would have established conclusively the matters put to her and ultimately conceded. There was no need for debate in respect of that matter and the only reason I conclude that Mrs George sought to engage in debate was because she hoped to deflect the attention of counsel from what would otherwise have been the obvious answer.
Likewise Mrs George was cross examined about a letter which issued to her from the Office of State Revenue on 18 September 2008[24] which letter referred to a telephone conversation had between her and a member of that office, Mr Bruce Cassidy. Mr Galloway sought to cross examine her about the matter stated in the letter but despite clear questions Mrs George did not directly answer questions but rather sought to embark upon the making of statements which could be interpreted as being advantageous to her case such as her unsolicited observations that on the day of attending at that office she “took 3-4 documents”.[25] Again it took over half a page of argument between Mrs George and Mr Galloway before Mrs George ultimately conceded his proposition that there was no evidence from the Office of State Revenue that she had ever sought to lodge and stamp any trust deeds with that office. Likewise at page 193 to 195 of the transcript it can be seen that the process of extracting the ultimate admission from Mrs George that prior to the alleged production of these trust deeds to Mr Cassidy they have never been produced to any other person. A concession which was tortuously extracted.
[24] Affidavit Lauren Kay George filed 22 September 2010 at page 335
[25] Transcript 28 September 2010 page 178 line 25
In a similar vein but on another subject, Mrs George had considerable difficulty in answering questions about her statement of affairs. For instance when questioned about the answer given as to whether or not she owned or was buying property and her subsequent answer to the question as to whether she was renting and then in turn the question about her previous address, Mrs George simply engaged in argument in response to questions that were properly put. When ultimately she was pressed in respect of an answer concerning her occupation which was clearly incorrect, she responded by noting that in that regard she “lacked attention to detail”. Without descending into detailed analysis, many like illustrations appear of this patent inability to simply answer questions in circumstances where the answer was inarguably apparent on the face of the document the subject of cross examination. See for instance cross examination in respect of the contract of 18 June 2005;[26] cross examination concerning the witnessing of the transfer forms before Mr Lethbridge;[27] cross examination concerning the execution of the Heads of Agreement reached mediation on 19 February 2008;[28] and the matters touched upon there.[29]
[26] Transcript 29 September 2010 T284-285; T294-295; P312.
[27] Transcript 30 September 2010 page 331 – 332; page 337 – 339.
[28] Affidavit William John Fletcher filed 29 October 2008 annexure WJF 8
[29] Transcript 30 September 2010 at page 356 – 357.
In other respects Mrs George simply misconstrued and/or over reached in her restatement of documents. In the ordinary course if such were to occur on one or two isolated occasions a benign view of that matter would be open. However in this case Mrs George’s overstatements were far from benign. She had in her mind that she had created a trust and sought to construe and in many respects distort the plain words of others to advance her case.
Here are some illustrations: she was cross examined at length concerning her appeal against the original judgment obtained in the Family Court which was clearly adverse to her. She was plainly unhappy that a finding had been found that her former husband held a property beneficially for his mother. She was also unhappy because she was directed to pay a sum of $31,000.00 to her former husband. If that sum was not paid then the former husband had a right to sell the Moggill property. Ultimately the appeal was settled by consent orders which involved dismissing the substantive appeal seeking to set aside the primary orders made by the trial judge and agreeing to two further orders, one involving a discharge of an order that she pay her former husband’s costs and second, that her former husband pay her spousal maintenance. In no other respects could it be said that the appeal was successful. Notwithstanding those matters Mrs George insisted upon her having succeeded on the appeal. Significantly the appeal in the Family Court proceedings was completely irrelevant to her application except for a point that Dr Peter Ironside and the other parties sought to make in the course of submissions concerning a possible source of knowledge on the part of Mrs George about the nature of trusts and how they might be exploited to her advantage. She had no need to engage in debate on this issue but once having done so she then simply misstated in the plainest possible way the effect of the appeal.
It was not a win for her as she sought to project it and I still remain mystified as to why she would assert she had won an appeal which was settled by consent orders.
Mrs George was cross examined about a draft notice of stamp duty assessment[30] forwarded to her under cover of a letter dated 18 September 2008.[31] The notice of assessment relates to a transaction dated 14 September 2005 where the parties were identified as LK Cordes/A George and Dr Peter Ironside Pty Ltd. It noted the consideration of $466,378.00 in respect of a transfer of duty to a property with an assessment of $14,799.00. Assessment comments included “life interest in property at 130 Landing Place Moggill. Life interest calculated on property value of $480,000.00.” She was asked about that letter but responded:
“This document is in reference to the life deed, and the date of the transaction that they are referring to is the valuation on the Moggill property of $480,000.00 and by memory I believe it’s dated 19/9/2005.
It refers to my attendance at their office on 20 November 2007 and on that day I took 3 – 4 documents”.[32]
[30] Affidavit Lauren Kay George filed 22 September 2010 annexure page 333.
[31] Affidavit Lauren Kay George filed 22 September 2010 annexure page 335.
[32] Transcript 30 September 2010 page 179 line 26.
The document makes no reference to her attendance although one assumes she did attend the Office of State Revenue at some stage but more particularly makes no reference to the production of 3 – 4 documents. Notwithstanding the absence of any reference to trust deeds Mrs George insisted through the course of subsequent cross examination that she attended with trust deeds. The clear inference Mrs George wanted to be drawn was that the receipt by her of this letter was confirmatory of her having attended the stamps office with the alleged trust documents in her possession and that they were as she asserts shown to the relevant officer. As the letter of 18 September 2008 from the Office of State Revenue made plain the original instrument creating the instruction was required to be produced. They had not been produced to that date and never were. The documents are simply not evidence of that and ultimately that matter was conceded by Mrs George.
A similar issue arose in relation to the sale of the property to DPIPL. In her evidence Mrs George was insistent that what was sold was a mortgage. That was plainly her wishful view. The facts however are different as the Memorandum of Transfer which was in due course registered plainly demonstrates.[33] The transfer plainly nominates the transferor as Lauren K. Cordes and the transferee as Dr Peter Ironside Pty Ltd. The consideration was noted at $400,000.00. That transfer was duly registered. Notwithstanding that plain fact Mrs George insisted upon her having sold “the mortgage” and that Dr Ironside had bought “a mortgage”.[34]
[33] Affidavit William John Fletcher filed 19 October 2009 annexure WJF 7 page 18.
[34] Transcript 30 September 2010 page 257.
Other instances of documentary misconstruction and overreaching can be found in her cross examination concerning her written application for her debtor’s petition[35]. In her debtor’s petition the bankrupt set out in the background to her insolvency in a box entitled “If other reason not listed please specify”. She was cross examined about the detail provided. The basis for her insolvency appears to have been reasonably clearly expressed. However despite that matter in cross examination the bankrupt contended the words were not clear[36] and in fact she wrote the words seeking to convey a message that she wanted to set aside the bankruptcy.[37] This was her statement of affairs filed with her debtor’s petition! Later she was cross examined and sought to contend in evidence in the face of all the contrary documentation to assert that she only sold the NAB mortgage over the Moggill land to DPIPL.[38]
[35] Transcript 30 September 2010 page 266.
[36] Transcript 29 September 2010 page 255 line 35
[37] Transcript 29 September 2010 page 254 line 15
[38] Transcript 29 September 2010 variously between page 256 line 30 to page 264
Further evidence of overreaching can be found in contentions on Mrs George’s part that the conveyancers erred in the preparation of transfers for registration by failing to prepare a transfer which arranged for the re-transfer back of the Moggill property to her in her capacity as trustee.
The letter from Barrell & Co Solicitors[39] says nothing of sort. It is plain from a reading of the letter that Mrs George approached Barrell & Co in November 2007. She showed them two transfers, one which was ultimately registered and the other being a “transfer of the same lot from Dr Peter Ironside Pty Ltd executed by the transferee on 24 August 2005”. The author then proceeded to note “there is a correctional error for one registration 70970927, being an oversight on the part of the solicitor who prepared the documents”. Plainly Mrs George had made a complaint to the author of the letter who in response to her complaint in turn wrote to the Office of State Revenue. Although Mr Barrell nor Mr Blacklock the author of the letter of 20 November 2007 were called to give evidence one assumes they accepted Mrs George’s complaints at face value and without challenge to her. There is nothing in the tone of the letter to suggest the letter’s author, Mr Blacklock, had any personal knowledge of the matter. Those facts are a far cry from her contention in evidence that by doing so there was an admission of liability on their part that the original transfer did not record her alleged instructions. There is no such admission contained in the letter. That was purely a matter of interpretation by Mrs George and one which she sought to advance in favour of her contention that it had always been the position in August 2005 that a trust existed. For reasons which are explored below I do not accept that to have been the case.[40]
[39] Affidavit Lauren Kay George filed 22 September 2010 page 479
[40] Transcript 30 September 2010 at page 364.
Finally, in terms of whatever it takes, there were some incidents through the course of the trial which amply demonstrated to me that Mrs George would stop at almost nothing to achieve her desired outcome. For instance early in the trial and in the course of re-examination of her former husband the following evidence was elicited:
“MR COULSEN: Mr George, the – you had contact with Mrs George today before giving evidence today? --- A text message came in the process of this morning or trying to get in the shower to get here.
Have you got that text message in your phone? --- Yes.
Could you access the text message and read the text message into the record, please? --- It’s one of three, I guess, I’ve received in the last week or so.
Are all three on your phone? --- Yes, they are.
HIS HONOUR: Read them all, then.
MR COULSEN: Read them all on to the record, please? --- The first one says – on September 17, 11.06:
I assume your solicitor will be objecting to your subpoena to testify against your own child. You can’t be forced to attend by way of subpoena against your own child or former spouse? LG?
Coming the 11th – September 17 at 11.18:
PS –
I presumes it means “please” or “PS” –
if you appear in court they will join you like they did my sister and go to you the court costs which is why they want you there – courts ruled in our sons’ favour and awarded them no costs against me as a consequence of my win.
And 11.55, September 27, which is this morning:
Pls –
“please” –
don’t come. If you do, just tell them the fed courts have upheld your son’s trust was destroyed by way of family court orders n you –
this is shorthand –
have no knowledge to give court since April 2002. Have a good trip overseas.
I’m not going overseas.”
Mrs George never sought to protest the truth of that evidence although she did want to further “cross examine” Mr George in respect of those matters.
Other instances included statements made by Mrs George concerning the evidence she anticipated to lead from various witnesses she had subpoenaed or proposed to subpoena. For instance the evidence of Ben Ironside, Alan Lethbridge neither of whom came up to proof on the evidence she expected of them.
The matters discussed above are not the only instances where I found the bankrupt’s testimony to be incredible. Many more instances can be identified and their non-inclusion is simply because of the inutility in doing so. The bankrupt’s evidence was littered with instances of downright dishonesty, deceit, distortion and illogicality. As a self represented litigant she presented significant challenges to the court. Often her thoughts, arguments and evidence were irrelevant. The volume of material she produced was unending. Much of the material she produced had no relevance. Likewise the bankrupt had to be closely controlled in the trial. Every effort was made to keep her relevant to the issues and ensure she properly discharged her obligation to put her case to relevant witnesses. Intervention by the court was designed to efficiently achieve that outcome; not to constrain her rights as she undoubtedly felt.
Any failure to deal with any specific issue is not by oversight but rather because its inclusion would simply be duplicitous of an issue already addressed and in respect of which its examination from another angle would not have added or distracted to the ultimate outcome given that the principal issues in the proceeding have been addressed and findings made in respect of them.
Trusts
In her further amended statement of claim (statement of claim) Mrs George alleges trusts in respect of the subject property. They were summarised by the Trustee in his submissions as being:
a)The 1997 trust;
b)The May 2002 trust;
c)The December 2003 trust;
d)The June 2005 agreement;
e)Paragraph 11(2) trust; and
f)The resulting and constructive trust.
In addition to those trusts she also alleges a trust was established by oral settlement on 27 September 1997 and operation of various wills prepared by her between 1993 and 2005.
Oral Trusts
Mrs George asserts that she declared an express trust on 27 November 2007 “by way of parole at the Wesley Hospital situated in Auchenflower Brisbane”.[41] When pressed in cross examination about the form and circumstances of this alleged trust Mrs George stated that:
“At the time of Alexander’s birth, several months beforehand I turned my mind to the trust, which is why I had Matthew execute that document to protect it and make sure the property was in my name.” [42]
[41] Affidavit Lauren Kay George filed 22 September 2010 paragraph 3
[42] It should be noted in passing that this document instances another occasion where Mrs George construes documents to mean what she wants them to mean rather than what they actually say.
The reference to the document was to his will which is discussed below. She stated that she expressed to her child (upon his birth – no other particulars were provided) that this was his property and this was his home for life (being I expect a reference to the Pullenvale property which was where Mrs George then resided).[43] In the course of cross examination she ultimately conceded that she could not recall the exact words.[44] Surprisingly however she subsequently was quite adamant that the expression she used in paragraph 4 of her affidavit which contained the words she is said to have expressed in the settlement were the words she used.[45] Although a small point it again highlights the inherent unreliability of any uncorroborated evidence given by Mrs George. Any reasonable person would have simply conceded given the passing of time it is possible that her recollection of the form of words may be inaccurate.
[43] Transcript 28 September 2010 at page 145 – 146.
[44] Transcript 28 September 2010 at page 146 line 37.
[45] Transcript 28 September 2010 page 149 line 37.
Notwithstanding that matter no other witness including Mr George corroborated her evidence on this point. It is well settled that a court is not required nor obliged to accept the uncontradicted evidence of a witness. In Re Hope: Ex parte Carter (1985) 59 ALR 609 Spender J was considering a case not dissimilar to that before me now. There the former spouse of a bankrupt purported to claim the bankrupt held an interest in property on trust for her. Plainly the bankrupt did not give evidence at the hearing and there was no other evidence to corroborate the applicant’s claim. That was understandable given that the applicant contended it was an arrangement reached between she and the bankrupt inter se. In dealing with a submission that the uncontradicted evidence of common intention that existed between the applicant and the bankrupt in that instance as to transfer must be accepted by the court as conclusive his Honour concluded:
“Uncontradicted evidence was sometimes given this operation in the older cases but the position is that a court in an appropriate case is not obliged to accept such evidence: see Cole v Commonwealth [1962] SR (NSW) 700 Taylor v Ellis [1956] VLR 457; and Re Gear (Deceased) [1964] Qd R 528 At 535 of that last case, Hart J said:
‘Whether uncontradicted testimony should be accepted or not in my opinion must depend on all the circumstances of the case including its inherent probability and the possibility of calling evidence in denial.’”
In this case there ought to have been at least one witness to this declaration that being Mr George. He does not support anything Mrs George says. Mr George impressed me as a reasonably forthright and honest witness. Although I appreciate he has been embroiled in bitter matrimonial proceedings with Mrs George concerning both property and custody of their child he did not impress me as a witness who could be seen to enjoy any material advantage from the outcome of this proceeding. Indeed arguably his support of Mrs George’s application would favour him, not the contrary. He says he was not informed of any trust and I accept as a fact he was not. That was because no trust was ever settled as was contended by Mrs George.
In reaching that view I am also satisfied that in the circumstances it is inherently improbable that such a trust was ever settled. As a former banker Mrs George would have appreciated the need for documentation particularly of matters pertaining to property as documentation is central to prudent and reasonable banking practice. As this case demonstrates and as will be explained later in the judgment, there is ample documentation in respect of matters which later came into issue between the parties following Mrs George becoming alive to the need to document matters to support her contention. As I later find she only developed an appreciation of the need to make this specific claim in about October 2007. From that time a relevant documentary trail commences. Everything prior to that time is premised upon Mrs George’s statements of expressed oral intention. Alternatively they arise because of her egregious misconstruction of such documents as did exist to support her contention (the allegation of events surrounding the creation of wills provides an illustration of this matter).
I find that there was no express oral trust settled on 27 November 2007 or on any other occasion and I expressly reject any evidence by Mrs George to the contrary.
Will Trusts
Although not pleaded in her statement of claim Mrs George alleges an express trust was created by various wills prepared by her.[46] Those wills include a will executed on:
a)29 December 1987;[47]
b)16 March 1990; [48]
c)17 February 1992.[49]
d)28 April 2000; [50]
e)27 August 2005; [51] and finally a will executed on
f)21 March 2006. [52]
[46] Affidavit Lauren Kay George sworn 5 November 2008 at paragraph 1 the applicant deposed that “on 5 December 2003 I purchased a property and built a home and trust for my son Alexander George. The name on the title was Lauren Kay Cordes. Refer annexure (a) [which is not included in the exhibit]. The trust arrangement was declared in my will.”
[47] Affidavit Lauren Kay George filed 22 April 2010 at page 125 - 126
[48] Affidavit Lauren Kay George filed 22 September 2010 page 124 – 128.
[49] Affidavit Lauren Kay George filed 22 September 2010 page 129 – 131.
[50] Affidavit Lauren Kay George filed 22 September 2010 page 119 - 123
[51] Transcript 9 December 2008 page135 line 5 – although not strictly proven reference is made in submissions to the will alleged to have been executed on that date and is referred to in these reasons for completeness and in the absence of any denial made by the bankrupt;
[52] Affidavit Kathryn Mary Whalan filed 17 November 2008 – Annexure KMW2 page 229.
Except for the wills predating 1997, each of the wills had a common provision providing that upon her death her real property was to be transferred to a trust for the benefit of her son, Alexander George. Each will varied in the expression of the terms of the testamentary trust but in principle that intention remained intact. That is to say a trust was to be created to hold her real property for the benefit of her son Alexander George.
In respect of the wills predating 1997, Mrs George contended that they demonstrated an intention based upon discussions she had with her then husband that he would have no claim on any of the property and that the property would be for the benefit of her child which at that time had not been born or in the event that something happened to him that the property would go to her nieces and nephews.[53] It is evident from the judgment in the matrimonial proceedings that there was some dispute between the parties about when Mr and Mrs George commenced cohabitation. In any event even if cohabitation commenced in 1990 as Mrs George asserts her 1990 will does not as she asserts support the establishment of any trust.
[53] Transcript 28 September page 136 lines 1 to 5.
Nor does Mr George’s will assist as Mrs George asserts. His will (exhibit 25) includes the standard provision providing for a bequest of his estate to Mrs George and in the event of her death any child who should survive him. There is a further provision providing for bequests in the event that Mr George is survived by neither Mrs George or any child. Contrary to her assertion in evidence[54] the evidence does not support her contention that there was any agreement concerning settling of property on trust for an unborn child. Nor does it demonstrate any intention on Mr George’s part to create a trust as was asserted by Mrs George.
[54] Transcript 28 September 2010 page 135 from line 20
In addition the post 1997 wills also made provision for the bequest of chattels to the bankrupt’s son. These chattels variously included motor vehicles, livestock and jewellery.
Insofar as the wills are contended to create trusts the first point to make is that a will by which a testamentary trust could be established does not have any operation until the will maker is dead. For a trust to be created two essential characteristics must exist. First there must be an intention to settle property upon trust. Secondly the intention must be manifest by a disposition of the property beyond the recall of the settler. While the expression of the will may indicate an intention to dispose it does not of itself, without more, effect any disposition beyond the recall of the settler, at least while she is alive. Indeed, as was submitted by Mr Morgan for the NAB at the summary hearing, until the bankrupt is dead her property is hers beneficially to deal with by her will. Arguably her various wills reflect this matter and constitute an admission by her of her entitlement and capacity to deal with such real estate and chattel holdings which in this case typifies the contradictory positions often advanced by the bankrupt. A matter I will comment upon again later.
The bankrupt’s assertion of a trust premised upon the provisions of her various wills do not establish any trust in respect of that property. Respectfully, her submissions fail to appreciate the significance of irrevocable disposition. It follows in my view that as a matter of law no trust was effected by any disposition manifest in any will.
The 1997 trust
At paragraph 2 of the amended statement of claim filed 15 July 2008 the bankrupt pleads that “a clear effectual resulting trust in fee simple” was established by way of deed of transfer for the benefit of Alexander (the 1997 trust). This matter was reflected in the amended statement of claim filed 19 December 2008 at paragraph (2)(e)(xviii) as follows:
“(xviii) The resulting trust dated 27/11/97 was declared by parole on this date and further declared in writing by trust deeds dated 11/5/2002 and 5/12/2003 and those trusts deeds disclosed above in part 2 along with affidavits dated 26 September 2008.”[55]
[55] The documents referred to in the pleading are various land transfer forms.
Despite numerous requests made of the bankrupt no trust deed dated 1997 has ever been produced by her. She has been afforded numerous opportunities to present such a deed which she maintains exists. However despite the presentation of such opportunities no deed has been submitted by her. In the absence of documentary evidence, at its best, her case must be that the trust was one purported to have been created orally. If so it must fail in law, at least in respect of real property settlements. Section 11(1)(b) Property Law Act 1974 (Qld) (“the Property Law Act”) requires that with respect to the creation of interests in land by parole a declaration of trust respecting land must be manifested and proved by some writing signed by the person able to declare the trust. The evidence demonstrates a total failure of form in respect of this alleged declaration.
In any event the bankrupt claims that this declaration of trust is also by way of her will. If so, for reasons I have earlier addressed, I do not consider any will does in fact give rise to a trust in these circumstances In any event for reasons that follow I do not accept the bankrupts’ evidence on this point. I am satisfied any evidence by her that she expressed an oral intention to create a trust is a complete fiction and constitutes a recent fabrication.
May 2002 Trust
The bankrupt says that on 1 May 2002 she endorsed a copy of the then current reprint of the Trusts Act1973 (Qld) (“the Trusts Act”) (Reprint 4A) with the following words:
“Property trust 130 Airley Road Pullenvale Queensland 4069 Lauren Kay Cordes as trustee for Alexander William George dated 1st May 2002 holding a life interest of mother/child referred to as above dob 4/7/1964 and _/11/1997 respectively.
1-2-2002 Lauren Kay Cordes
___________________ _______________
dated Signed Trustee”[56]
[56] Affidavit William John Fletcher filed 28 October 2008 WJF6 at page 1. It is possible that part of the full text has not been copied into the exhibit.
As is addressed below an endorsement of-like effect was also made on a reprint of the Trusts Act 1973 (Qld) Report 4B. That endorsement was purportedly made on 5 December 2003. The only evidence concerning the provenance of those documents came from Mrs George. Neither of those documents were produced to any party associated with these proceedings until they first appeared after the Trustee’s appointment and argument arose in the Ironside’s matrimonial dispute in October 2007.
Mrs George swore that these documents were created on the date that they bear and that they were created to manifest her intention to create a trust in respect of all her assets including real property initially held by her in May of 2002 and subsequently to reflect a slight change in circumstances in December 2003. In cross examination she said that her declaration in trust was in writing and that “it’s an acceptable form of a trust deed which was accepted by the Commissioner of Stamp Duties”.[57] Notwithstanding Mrs George’s wishful observations about the form being acceptable by the Commissioner of Stamp Duties there was no independent evidence to demonstrate any such forms had ever been produced to him, nonetheless in a form acceptable to him.
[57] Transcript 28 September 2010 page 172 line 42
In cross examination she said that the first instrument dated April 2002 came into being at the time she and her former husband separated. She said that at the time she did not have the funds to pay for a solicitor so she “did a very cheap and nasty form of a trust deed”.[58] The purpose of the second trust was to address the sale of the Pullenvale property and purchase of the Moggill property. In the course of cross examination it transpired that neither of these deeds were shown to any person by Mrs George until she says they were produced to the Commissioner of Stamp Duties in November 2007.[59] This was a most extraordinary statement particularly given that between the time of the purported creation of these documents and November 2007 Mrs George had been embroiled in property proceedings in the Family Court concerning the very property she claimed to be the subject of the trust.
[58] Transcript 28 September 2010 page 182 line 18
[59] Transcript 28 September 2010 page 194 line 20
Under cross examination she stated that the trusts were not disclosed in those proceedings because she was not aware that she had any obligation to make such disclosure.[60] It must be remembered that in the family law proceedings Mrs George was represented by both solicitors and counsel. Her solicitors and counsel would have been more than amply aware of the bankrupt’s obligations in relation to disclosure. I note that from a judgment in those proceedings it is apparent that no issue was raised concerning the property being held in trust. There is no reason to believe that the proceedings which were conducted on her behalf were conducted otherwise than competently and that in the course of taking instructions her solicitors and counsel were careful to accurately record the instructions given and request appropriate disclosure.
[60] Transcript 28 September 2010 page 190 line 4
As Mrs George’s conduct in this trial has amply demonstrated, Mrs George is far from shy when it comes to articulating her case. If a trust deed had existed which would have served to exclude from the matrimonial estate the former matrimonial home which she claims was owned beneficially for her son, I am satisfied that she would have taken every effort to advance that matter in her cause. I am satisfied by that reason alone that these documents did not exist at the time of the matrimonial proceedings in the Family Court.
But that is not the end of it. The form of the trust deeds themselves are curious. They are documents clearly printed from the Queensland Legislative website. Reprint 4A was reprinted in force as at 1 March 2002 and Reprint 4B as at 4 March 2003. They are each the relevant reprints for the date on which each is said to have been signed. Perhaps the most curious aspect of this is that temporally current versions of the various legislative instruments were downloaded by the bankrupt, a person with no legal background. Arguably this fact might lead an inference in her favour that they were in fact downloaded and executed as she swore.
The reprints are readily available on the Queensland legislation website and available to any person particularly someone who has had some basic training in legal research. As it happens Mrs George was undertaking a course in legal studies at the Griffith University in 2007. Although she did not provide particulars of the course being undertaken beyond stating it was a Masters program with some emphasis in mediation I consider it is reasonable to infer that in the course of those studies she was introduced to the Queensland legislative website. The website is sufficiently well designed to enable its intuitive use such that anybody who wished to obtain access to a reprint of an enactment relevant to a particular period of time would have little difficulty in doing so. For reasons which I will address shortly Mrs George had such motive. However before doing so it is worth noting a number of other matters relevant to the production of these two documents.
Mrs George eschewed any knowledge of the capacity to print off legislation current at certain dates.[61] Yet earlier in her evidence she admitted that she had access to copies of the Trusts Act on her computer and that she had printed off a copy of it although she was extremely vague in the details.[62] In particular it seemed curious that she had “downloaded the Trusts Act so many times over the years”[63] and stated that she had emailed to her solicitors copies of downloads of the Trusts Act[64] but yet only two versions were produced. Of course it could be that Mrs George does have other copies in her possession but because they have not been requested of her she has not turned them in. That is entirely consistent with the evidence she gave before the court and reflective of her general attitude to disclosure.[65]
[61] Transcript 28 September 2010 page 191 line 23
[62] Transcript 28 September 2010 pages 184 – 187
[63] Transcript 28 September 2010 page 185
[64] Transcript 28 September 2010 page 191 line 30
[65] Transcript 28 September 2010 page 192 line 23
Further, grounds as to the provenance of these documents and their authenticity in terms of date is to be found in their presentation. The original documents were included as exhibits in the Supreme Court proceedings but are now marked as exhibit 91 in this proceeding. Close examination of the documents reveals they are plainly written in the same handwriting, that being that of Mrs George. More particularly the reprints are in loose format suggesting they have been computer generated and laser printed. Each is marked only on the first page. The handwriting in each instance is in similar black ink and despite the fact that reprint 4B was completed approximately 18 months after reprint 4A their physical appearance in terms of wear appears to be identical. There is no marking to discount the possibility that these documents were in fact generated and printed on the same occasion.
Significantly however the motive for generating a document supporting an assertion of trust is revealed as having its genesis in events in October/November 2007. That is a time after which, it seems likely, she would have had reason to assert these trusts despite that assertion being in contradiction of her earlier position on title.
However before proceeding to those events it is important to identify one other relevant fact which I am satisfied bore upon the mind of Mrs George. In the course of her matrimonial dispute with her husband there was a particular dispute in relation to an interest in a property known as Baronda Park. An issue arose as to Mrs George’s interest in that property which her husband contended was property held by him on trust for his mother. In his judgment Barry J at paragraph 23 discussed that particular property and the basis for his finding that the husband held his interest in that property on trust for his mother. There is no need for me to explore those matters in any detail in this instance. What is significant however is that Mrs George’s knowledge of trusts would have been enlivened from her involvement in those proceedings. It is interesting to note that in this case she seeks to assert a trust in terms not dissimilar to the trust that was asserted by Mr George in the proceedings against her.
Moving forward then to late 2007 Mrs George’s sister, the fifth respondent Ms Wilson was embroiled in matrimonial proceedings with her now former husband Dr Peter Ironside. In mid 2005 Mrs George had agreed to transfer her interest in the Moggill property to a company associated with Dr Ironside. This transaction is discussed in greater detail below. However in late 2007 Mrs George became aware that by reason of the property proceedings involving her sister and her sister’s former husband an issue arose between them concerning the inclusion of that property in their matrimonial estate for division between them. She had of course transferred that property to Dr Ironside’s company and the transfer registered its interest. Nothing on the title deed reflected a collateral agreement which the bankrupt and DPIIPL had for the re-conveyance of the property to her subject to conditions. At that time she asserted the property was held in trust. She was at this time a bankrupt and had not disclosed this matter to her trustee. Accordingly it would have been of some significance to her to assert that she had no beneficial interest in the property against which the trustee could enforce the creditor’s rights. Against that background claiming the settlement of a trust in favour of her child, if accepted, would avoid the property being made available for her creditors. It should be noted here that her original claims were for a life interest for her child. However that subsequently evolved into a trust claim.
While I am unable to make any findings as to when the two purported trusts are said to have come into being I am satisfied that neither of those documents have the provenance as claimed by Mrs George. I am satisfied the documents are documents which were fabricated by Mrs George some time in late 2007 after she became aware of the issue involving the Moggill property in the matrimonial dispute between her sister and her sister’s former husband and before their ultimate production in November 2007.[66] Accepting that Mrs George did attempt to settle the Moggill property upon trust for her son at that time the purported settlement is inoperative. By operation of s.58 of the Bankruptcy Act the property had already vested in her trustee and from the point of her petition was beyond her capacity to settle the property upon trust.
[66] Transcript 28 September 2010 page 194 line 20
Even if my findings as to Mrs George’s credit and matters flowing from that were to be impeached I consider the trusts would fail in law in any event for formal reasons.
At the outset the Trustee contended each of the purported trusts failed because of the uncertainty of its objects and particularly because it stated the trustee holds the property, not on trust for the beneficiary, but rather the beneficiary holds a life interest in the property. I agree with that submission. The difficulty identified is highlighted by the words employed which on their face seem to provide for the granting of a life interest to the bankrupt’s son over property held by the bankrupt in some capacity as trustee.
Moreover there is no vesting date: that may give rise to issues concerning the perpetuity period. Further, what is to happen with the child’s interest received under the trust? No consideration appears to have been given to what happens when his interest ceases. There is no remainder or gift over. Land must always be the subject of ownership. The settlement fails to address that consideration. Finally it seeks to transfer the fee simple and life estate to the same person.
In any event there is real doubt that the expression satisfies the requirements of s.11 of the Property Law Act irrespective of the purported granting of any life interest.
As noted earlier in the background facts this property was acquired during the course of the bankrupt’s marriage solely in her name.[67] It was accepted by Barry J that she had made a significant financial contribution to it. Importantly however it did form part of the matrimonial estate prior to its sale by the bankrupt. To that extent the bankrupt’s former spouse also held an interest in the property. Accordingly it was not solely hers to dispose of.
[67] Affidavit William John Fletcher filed 28 October 2008 WJF24 at page 6 – Transfer registered 11 March 1998.
It is plain that the bankrupt’s husband asserted his interest for in September 2003 he lodged a caveat to prevent the bankrupt from transferring the property following her unilateral determination to sell it. His grounds of claim noted in the caveat were:
“The caveator is the beneficiary of a constructive resulting or implied trust. The caveator is the former husband of the registered proprietor, Lauren Kay George. There is a Family Court proceedings for property settlement currently on foot and yet to be resolved. The caveator is also a joint borrower in respect of the land and is entitled to an account in that regard.”[68]
[68]Affidavit William John Fletcher filed 28 October 2008 WJF 24 at page 21.
As further noted in the background facts the sale ultimately was permitted to proceed. Consequently on 7 November 2003 the transfer of the bankrupt’s estate in the Pullenvale property was recorded in favour of an unrelated third party Felicity Ann Hill on that date. For that to have occurred all encumbrances including the former husband’s caveat were necessarily released.
However importantly for present purposes the bankrupt effected an unencumbered transfer of the estate alleged to have been the subject of the trust purportedly created on 1 May 2002. That is to say, despite any arguments concerning her entitlement to create any trust because of questions of her own entitlement.
The Trustee denies that any such trust was ever created because no complete and perfect gift was made. As was submitted by the Trustee and supported by the other respondents the bankrupt’s attempt to create a trust without the conveyance of the legal estate into the trust was fatal to the claim. That is despite any purported conveyance of the equitable estate to the trust.
In this case in May 2002 the bankrupt attempted to dispose of the Pullenvale land by purporting to create a trust in favour of her son. Putting aside her capacity to do so because of the interest claimed in the estate by the bankrupt’s former husband the purported gift was never perfected because the bankrupt transferred her interest to a third party. As a rule equity will not perfect an imperfect gift. An examination of the relevant provisions of the Land Title Act1994 (Qld) (“the Land Title Act”) inform of the requirements for perfection of such a gift. First, the trustee of an interest may only have that interest registered by registration of an instrument of transfer of the interest to the person or trustee: s109(a). From that it follows the registered Trustee of the interest would enjoy the vesting of the estate: s182, and the consequent benefits of indefeasibility: ss184 and 185. Additionally for present purposes such a person could rely upon the fact of registration as conclusive evidence of that matter: s179.
Irrespective of any interest claimed by the bankrupt as trustee for her son she cannot enjoy the benefit of those provisions as she has never satisfied them.[69]
[69] Affidavit William John Fletcher filed 29 October 2008 Exhibit WJF 24 page 22 – Historical Title Search. In particular an examination of the Land Title Register demonstrates the absence of registration of any trustee’s interest.
In Principles of the Law of Trusts[70] the learned authors stated at [3120]:
“…Where S, acting gratuitously, expresses an intention of creating a trust by transfer to a trustee, but all the steps in the legal process for transfer of the legal title, being steps to be taken by the intending settlor and, in some cases by other persons, are not taken, then, according to common law, no proprietary interest would yet be vested in the trustee. …If the matter rested there, no trust would have been created and the attempted transaction would create no rights against S.”
[70] HAJ Ford & WA Lee, Principles of the Law of Trusts, Thompson Law Book Co, North Ryde, 2006.
In this case it is clear that there was a failure to undertake all the necessary steps required at law to effect a transfer and registration of the bankrupt’s interest to the purported trust as are required pursuant to the provisions of the Land Title Act.
The bankrupt says however that it was her intention to effect such a conveyance. It follows that it is arguable on her case that in equity, at least, rights were sought to be and were created in favour of her son in respect of the Pullenvale property. She says such a transfer was to have immediate effect.
In those circumstances there only can be an effective gratuitous transfer once the donor has done all those things prescribed by statue or the common law for the transfer of the legal title that have to be done by the donor and cannot be done by anyone else; see s.200 of the Property Law Act. Again the learned authors of Principles of the Law of Trusts summarised the principle as follows:
“If an intending settlor attempting to establish a gratuitous trust by transfer of a legal title does not take those steps to satisfy the legal requirements for transfer to the intended trustee that only he or she can take, the intended trust never comes into existence. The property remains with the intending settlor unaffected by any trust referable solely to an attempted transfer.”[71]
[71] Ford & Lee (supra) at [3140].
Insofar as the purported 2002 trust is concerned it is uncontroversial that no steps were ever taken to satisfy the legal requirements for transfer to the intended trustee. In fact the bankrupt transferred the property for consideration to a third party, Felicity Ann Hill. If that conduct alone was not sufficient to demonstrate there was no intention in equity to effect a conveyance in favour of a trust for Alexander George then that conduct clearly achieved that outcome in law.
There was no trust created by the 2002 document as asserted.
If it was the bankrupt’s intention to simply gift the Pullenvale property to her son outright that outcome was not achieved. For the gift to have been effective there would have to be registration prior to transfer to a third party: Cope v Keene.[72] That did not occur in this case.
[72] (1968) 118 CLR 1
No issues of “accessorial” involvement of the third party arise in this instance. It follows no gift was made.
For completeness the bankrupt’s submissions on this point were not helpful. Although she noted the gift rule she did not address the Trustee’s submission that her transfer of the estate to the third party extinguished any claim that could have been advanced on behalf of any trust.
December 2003 Trust
In December 2003 part of the proceeds of the Pullenvale property were applied by the bankrupt to the acquisition of the Moggill property. The bankrupt entered into a contract to purchase the Moggill property on 5 December 2003. There was no suggestion of any third party having an interest in that property together with her at that time or that she purchased the property in her capacity as trustee.
On the same date as the contract to purchase that property was executed the bankrupt says she endorsed a copy of the then current reprint of the Trusts Act (Reprint 4B) with the following words:
“Property trust agreement amendment original trust agreement dated 1 May 2002.
Lauren Kay Cordes as trustee for Alexander William George property trust lot 13 Survey Plant 145714 County of Stanley Parish of Moggill dated 5 December 2003 holding life interest of mother and child on the above property --- Lauren Kay Cordes.”
The bankrupt contends that this effected a variation of the May 2002 trust in particular by the substitution of the Moggill property for the Pullenvale property as the relevant trust property.
As with the May 2002 trust I simply do not accept her evidence on this matter for the reasons stated above. In any event, even were my findings impeached I have earlier found the declaration of trust alleged to have occurred on 1 May 2002 was ineffective. No trust came into being for reasons I have outlined above. It follows no “rollover” occurred in the manner purported by the bankrupt.[73]
[73] Bankrupt’s submission filed 19 December 2008 page 9.
The Trustee however concedes in his submission that concerning the Moggill property the bankrupt’s efforts at declaration of trust in that instance were clearer. It was submitted for the Trustee:
“…The wording is clearer than the earlier declaration, the wording still appears to lead to the conclusion that there is a trust of which Lauren Kay Cordes is the trustee for her son and that as trustee she was granted a life interest in the Moggill property.”[74]
[74] Exhibit 7 para 60.
Notwithstanding the Trustee’s concession on this matter many of the defects noted with the May 2002 Trust also exist with this instrument. There are real doubts that the necessary requirements are satisfied for the purported trust at first instance. Mr Morgan for the Bank submitted the terms of the alleged trust are uncertain and cannot be given effect to. He noted for instance that there was no vesting period as well as there being no ultimate disposition of the property. This he contended would cause the purported trust to fail because it contravened the rule against perpetuities.
Despite this effort the declaration still failed to comply with the requirements of s.11 of the Property Law Act as it still appears to constitute no more than a mere nomination of the bankrupt’s child as a recipient of benefits. It does not constitute a disposition.[75] At best the declaration acknowledges the existence of a trust without more.
[75] Danish Bacon Co Ltd Staff Pension Fund Trusts, In re [1971] 1 WLR 248
It also suffers the same defect as the May 2002 trust in that it seeks to transfer the fee simple and a life estate to the same person.
Even accepting this effort by the bankrupt prima facie succeeded in the creation of a trust ultimately the question remains as to whether it ultimately failed for want of form, particularly its failure to satisfy the requirements of s.200 of the Property Law Act.
If it is accepted that an effective trust was created on 5 December 2003 the question remains as to whether or not there remains an interest in equity in favour of the bankrupt as trustee. No such interest exists at law because the property was registered in the name of the bankrupt without reference to the trust.
More recently however the bankrupt contends that she was induced into that contract by duress. Accordingly she seeks resort to equity for relief against that bargain. However the test for whether or not equity will intervene in contract was succinctly summarised by Gibbs CJ in Commercial Bank of Australia Ltd v Amadio (1982-1983) 151 CLR 447 where at 459 his Honour said:
“A transaction will be unconscientious within the meaning of the relevant equitable principles only if the party seeking to enforce the transaction has taken unfair advantage of his own superior bargaining power, or of the position of disadvantage in which the other party was placed. The principle of equity applies “whenever one party to a transaction is at a special disadvantage in dealing with the other party because illness, ignorance, inexperience, impaired faculties, financial need or other circumstances affect his ability to conserve his own interests, and the other party unconscientiously takes advantage of the opportunity thus placed in his hands”: Blomley v Ryan (1956) 99 CLR 362 at 415.”
For reasons which I have outlined above I do not accept the bankrupt’s evidence in respect of any matters which are uncorroborated. The only evidence of duress acting upon the bankrupt is that evidence by her. I reject it. The evidence otherwise demonstrates that the bankrupt was not ignorant or inexperienced in respect to contractual transactions. She had entered into any number of real estate contracts and negotiated their terms on occasions prior to any mediation. There was nothing to suggest that her faculties were impaired on the date of mediation or that there were any other circumstances that affected her ability to prosecute or protect her own interests. There is no evidence that any other party unconscientiously sought to take advantage of any opportunity that her individual circumstances such as her bankruptcy placed in their hands. Indeed the contrary is the case. Given the facts as they were on the date of the mediation not only was this outcome the only inevitable outcome but it was the most favourable outcome because the sum negotiated to be paid by DPIPL through Dr Ironside was a sum of $500,000.00 which was sufficient to discharge the National Bank mortgage and affect a re-conveyance of the property to the bankrupt’s trustee free of all encumbrances.
The bankrupt’s complaints that she was denied legal representation or that her lawyers were denied attendance at the mediation was not borne out in the evidence. Furthermore she did not lead any evidence as to any action of the Trustee or his lawyers which would constitute duress. She did not claim she did not understand the document she was signing or its effect. At best her evidence was that she later complained to her friend Mr Siebert some time after the mediation that she was unhappy. Even accepting that position she did not inform Mr Siebert of any alleged duress. Indeed it is clear that in the days following the mediation the bankrupt did everything possible to give effect to the Heads of Agreement. That included independently of the Trustee obtaining PAMD forms for two agents and making appointments for them to act in the sale.[100]
[100] Affidavit William John Fletcher filed 29 October 2008 WJF 15
I reject the bankrupt’s complaints that she entered into the Heads of Agreement in circumstances of duress.
Claim against National Australia Bank
In her somewhat discursive amended statement of claim an allegation was made that the present registered mortgage held by the National Australia Bank ought be set aside as being void because of the conduct of Dr Peter Ironside, DPIPL, and the National Australia Bank who she alleged acted as accessories to DPIPL’s alleged breach of trust in permitting the Moggill property to be used as security for the loan advanced.[101]
[101] The bankrupt’s claims are contained in an amended statement of claim filed 23 December 2008. Given the bankrupt was the only party making substantive allegations in the application she was directed to file a form of statement of claim which in fact proved to be a statement of claim adapted from a similar statement of claim made in respect of proceedings which she commenced in the Supreme Court of Queensland seeking relief in her capacity for trustee for Alexander William George. Given the bankrupt’s discursive style a pleading of some form was considered necessary to assist the parties in appreciating the claims made against them and limit her otherwise broad ranging assertions.
As Mr Morgan for the NAB noted in his oral submissions the bankrupt’s contentions appear to enliven a claim under the principles of Barnes v Addy.[102] That is accepting the NAB’s interest was registered it’s interest could only be defeated by fraud: s.184(3); s.185(1)(a) Land Title Act 1994.
[102] (1873-74) LR 9 Ch App 244
In this instance there is no evidence of fraud on the part of any party leaving the bankrupt open only to pursue her compliant on the basis of the second limb in Barnes v Addy (supra), the assistance limb, whereby she alleged that the NAB assisted a trustee or fiduciary with knowledge of a dishonest and fraudulent design on the part of the trustee or fiduciary.[103]
[103] Farah Constructions v Say-dee Pty Ltd (2007) 230 CLR 89 at 159
In particular she alleged that the NAB was complicit in a breach of trust by Dr Ironside because, given that an internal valuation of the land to be subject to mortgage was required, things were arranged for an external valuation so as “not to tip her off” that DPIPL was in the process of mortgaging the property.
In particular the bankrupt alleged that DPIPL used the Moggill property as security for a loan of $750,000.00 being in excess of the $400,000.00 she says was agreed as a limit. She contended DPIPL, Dr Ironside and the NAB conspired to permit the use of the property as security for these large loans. Further she alleged this was done with the bank’s knowledge that the reversion in the Moggill property was beneficially owned by her child.
Her allegation was that Dr Ironside asked for one loan in one amount but that in order to avoid scrutiny and internal valuations the NAB drew a sum of $750,000.00 or $850,000.00 down over a series of smaller loans.[104] She contended that various bank employees were parties to a fraud in breaking the loan down into smaller amounts. When questioned in cross examination as to whom of the NAB’s employees were engaged in this conspiracy Mrs George responded that she did not “know them all off by heart. There is 8 of them, I think”.[105]
[104] Transcript 30 September 2010 page 399 at line 5
[105] Transcript 30 September 2010 page 399 at line 35
Mrs George subpoenaed a number of officers from the NAB to provide evidence. Needless to say none of the NAB officers were able to provide any evidence of any such conspiracy or any other arrangement whereby sums to be advanced to DPIPL were arranged so as to minimise the prospect of the usual prudential NAB practices. The relevant documentation subpoenaed from the NAB and introduced into evidence left no doubt in my mind that the advance made by the NAB to DPIPL was one made by the NAB to DPIPL without regard to any other interests. By that I expressly find the NAB had no knowledge of any purported trust. For reasons I have earlier expressed there was no trust nor was there any suggestion of any trust. In this regard documents from the NAB affirm my findings concerning there being no trust.
It ought be noted that it is entirely serendipitous that the NAB was the bank for both the bankrupt and DPIPL. At different times those parties entered into loan transactions with the NAB. The loan transactions were entirely legitimate and conducted on commercial terms and in accordance with conventional practice.
The initial facility granted by the NAB to assist the bankrupt in the acquisition of the Moggill property demonstrates that at the time she acquired that property and sought an advance from it in order to do so she did so in her own right both legally and beneficially. There was no suggestion of any trust.[106] Each of these documents are the relevant applications including stamp duty mortgage concession declarations in respect of the advance for the purchase of the Moggill property. In each instance the material demonstrates the bankrupt made application in her own right for the advance and claimed the relevant interest in the property the subject of the advance was an interest wholly owned by her. In particular, I note the declaration for the home/first home mortgage concession where the bankrupt claimed in her own name the full interest being acquired in the property without reference to any trust.
[106] See exhibits 30, 31, 32, 33, 34, 35, 36 and 37.
The bankrupt subsequently applied for finance to construct the dwelling upon the property. That application was made commencing January 2005. As with the acquisition of the land the bankrupt applied to the NAB for a mortgage including making application for a home/first home mortgage stamp duty concession in the course of which she made no reference to any trust. She claimed and represented herself as having full legal and beneficial interest in the property. Again in the application she claimed full beneficial interest in the property.[107]
[107] See exhibit 37 Customer Particulars Loan Application. See also exhibits 38, 39, 40, 41 and 42.
Insofar as the subsequent release of that mortgage was concerned the bank documentation evidences the bankrupt’s instructions to it to receive “in exchange for the approximate settlement amount of $380,000.00 plus or minus adjustments” a surrender of the mortgage provided in respect of 130 Landing Place Moggill. A series of “letter of instruction – surrendering deeds” commencing with the copy faxed 2 September 2005 at 1607 hours and concluding with the final coped faxed 21 September 2005 at 1041 hours maintained that position.[108] Nothing in the instructions suggest that the property was held on trust or that the funds that were to be received upon settlement in excess of the sum required to discharge the mortgage were to be received and held by the bankrupt in trust. A notation on the letter of instruction faxed 21 September 2005 at 1041 hours was that in respect of the loan account the account was to be closed, the balance reduced to nil and the remainder of funds were to be paid to the bankrupt’s solicitor.[109] Documentation maintained by the NAB including documentation relevant to the payment of building contractors under the building loan indicate all invoices were directed to the bankrupt personally. Again no reference appears in respect of any holding by the bankrupt in trust.
[108] Affidavit Lauren Kay George filed 22 September 2010 page 1041
[109] At exhibit 43.
Overall the documentation held by the NAB in respect of its dealings with the bankrupt are consistent with my earlier finding that the bankrupt held the property both legally and beneficially in her own name and that no trust existed in respect of the property. Other material raised by the NAB including customer particulars reports (exhibits 80 and 83) were consistent with that position.
Mr Garland the bank officer who completed the bankrupt’s initial application for finance swore that had there been a trust involved then there would have been some reference in his comments because of the need for another supporting application or other documents to go with the file in respect of that matter.[110] Further when cross examined about the form of trust deeds in this case (affidavit of William John Fletcher annexure WJF6) Mr Garland stated that he had never seen them before. He indicated in his evidence that he had seen trust deeds before and knew what they looked like. So much is not surprising. However as has been earlier discussed, the form of these purported trusts were somewhat exceptional. In the context of questions concerning those particular purported trust deeds he noted that he would have queried as to why he needed them and as to the relevance of those documents in the transaction that was being undertaken had such documents been presented to him by the bankrupt. Given the truly unusual nature of these purported trust deeds I am satisfied as to the accuracy of Mr Garland’s evidence on these matters. His evidence fortifies my earlier finding that no such deeds were ever in existence at the time of the bankrupt’s application for finance the subject of this discussion.
[110] Transcript 6 December 2010 page 99 line 1
Nor was the bankrupt’s case assisted by those employees of the NAB who recall her. Mr Craig Wood was a “partner” with the National Australia Bank more commonly known as a Business Banking Manager. He had some recall of the bankrupt’s approach to the bank for a loan to build a house on the Moggill property. He completed some of the documentation in conjunction with the bankrupt in particular exhibits 38, 39 and 83. He said that he was never at any time told by the bankrupt that the property was held in trust by her for her son Alexander.[111] Further he said that had he been informed the property was held in trust he would have referred the matter to the bank’s legal department.[112] He remained the bankrupt’s Business Manager until the loan was subsequently paid out. I accept his evidence on these matters unequivocally.
[111] Transcript 7 December 2010 page 235.
[112] Transcript 7 December 2010 page 236 line 9
In respect of the advance by the bank to DPIPL the bank produced Janelle Fletcher, a former employee of the bank who had the customer banking relationship on behalf of the bank with Dr Ironside and DPIPL. She was familiar with the transaction involving DPIPL’s acquisition of 130 Landing Place Moggill and the advance made by the bank in support of that acquisition. In evidence the only trust that she had any knowledge of was a family trust favouring Dr Ironside. When it was suggested that Dr Ironside may have been holding the property on trust for the bankrupt or her son her response was “definitely not at all”.[113] I have no hesitation in accept as reliable the evidence of this impartial witness.
[113] Transcript 7 December 2010 page 225 line 47
In addressing the bankrupt’s specific complaints Ms Fletcher explained the valuation procedure. She noted that at the time the bank’s policy was that in respect of property worth less than $1.5M a drive by valuation would be sufficient. She made the observation that internal valuations were extremely rare and applied only to property over $1.5M. She said that when she issued a valuation request it was in respect of a simple valuation.
She informed the court that the first dealing she ever had with the bankrupt was following the receipt of an email on 2 October 2007 (exhibit 46). That email raised for the first time the bankrupt’s assertions that “the minor by the name Alexander William George d.o.b. 27/11/97 maintains a life interest in this property”. It also asserted that “Dr Peter Ironside therefore holds this interest in trust for the minor and is fully aware that as of 18/6/05 he is unable to convert, sell or mortgage without the consent of the trustee”.
Subsequent to that Ms Fletcher received an email on 5 October 2007 and another on 11 October 2007 (exhibits 49 and 51) from the bankrupt asserting her interest as trustee and in particular that the NAB had been negligent in respect of the completion of mortgage documents and had assisted DPIPL in effecting a fraud upon the trust. Ms Fletcher had no knowledge of any trust. In the course of cross examination the bankrupt informed the court she did not intend to put any questions to Ms Fletcher in relation to whether or not she knew of the trust that was asserted by the bankrupt to exist.[114]
[114] Transcript 7 December 2010 page 231 line 13
There was no evidence from any officer of the bank that any trust of the type purported to exist by the bankrupt existed. The reason for the absence of evidence is simple – it is plain. No such trust existed. As I have earlier determined that is entirely consistent with the balance of evidence of the evidence in this case. Given no trust existed the NAB’s conduct in progressing DPIPL’s application for finance in support of its acquisition of the property was entirely proper. No fraud arose. The bank’s interest in the property was registered and held subject only to the interest of DPIPL, the titleholder; s.184(1) Land Title Act. There was no fraud in respect of DPIPL’s registration of its interest which contaminates any interest held by the NAB. Nor did any other equity arise from any act of the registered proprietor in respect of which it was alleged the NAB was said to be complicit; s.185(1)(a). It follows the bankrupt’s complaints against the NAB fail and the quality of its registered interest remains unimpeached.
Chattels
Many of the chattels including livestock and vehicles were disposed of in the summary judgment application determined in December 2009; George v Fletcher & Ors (No.6) [2009] FMCA69. However there remained outstanding a dispute in respect of:
a)An unregistered horse float;
b)Jewellery;
c)Furnishings and personal effects.
In summary the bankrupt contended that all of these chattels were held by her on trust for her son. Being chattels there were not subject to the formal requirements provided for by s.11 of the Property Law Act. Concerning these items the bankrupt says they were settled upon trust for her son by oral disposition made at the time of her birth and which were restated at various later times. I have addressed the bankrupt’s evidence concerning the creation of trust by parole or otherwise earlier in this judgment. I do not accept that at any time prior to her having become an undischarged bankrupt that she did in fact settle any trust in favour of her son or for that matter any other person in respect of any chattels including those which have been nominated above. While plainly she sought to do so after having become an undischarged bankrupt any such attempts were rendered inutile by her bankruptcy; see s.58 Bankruptcy Act.
It follows that the jewellery which was taken into possession by the trustee in bankruptcy and which is now in the Court’s possession but which otherwise is listed in exhibit 2 has vested in the trustee. Likewise the unregistered horse float and the household and personal effects. These too are in the possession of the trustee. The bankrupt however contends that these assets are in any event protected property pursuant to s.116(2) of the Bankruptcy Act.
Concerning the horse float the bankrupt contends it is exempt by operation of s.116(2)(c). Broadly the bankrupt contended that she generated income by the conduct of a dressage training business. While there was some evidence adduced to support this contention from her friend Richard Siebert I do not accept his evidence on these matters. Mr Siebert has a very close association with the bankrupt which has undoubtedly influenced his ability to provide the court with reliable and impartial evidence in respect of these matters. It was plain from the interaction between Mr Siebert and the bankrupt not only through the course of evidence but in the course of events that occurred in the well of the court before and after his giving evidence that his association with the bankrupt is closer than that which is disclosed in his affidavit. My assessment of him was that he was completely spellbound by her. That could be the only explanation for the particularly partial affidavit which appears to have been sworn by him, clearly quite uncritically. For instance on the one hand he asserts independence but yet on the other he swore to issues which were curious insofar as his interests were concerned. See for instance his claim for reimbursement of agistment fees for his horse “until it is safe to return her to the Moggill address”. A curious claim if indeed Mr Siebert were to have an arm’s length relationship with the bankrupt. In such an event one would expect that Mr Siebert would be paying agistment to the bankrupt and so notionally there would not be any loss. Likewise Mr Siebert’s claims for “loss of reputation for statements made by the trustee in his enquiries throughout the equine industry to parties such as Dr Kym Palmer”. Dr Palmer is a beneficiary noted in one of the earlier versions of the bankrupt’s wills. Again the statement bears a curious flavour given his alleged independence. Likewise his claims in paragraph 15 of his affidavit for $40,000.00 from the trustee in exchange for which he would supply a filly to the trustee. He claims he is not able to sell the filly “as a result of the defamation against us both”, the reference being to he and the bankrupt. To like effect are the comments in paragraph 26 of his affidavit in addressing the trustee’s execution of his duties as “unprofessional defamatory and potentially costly of both myself and Ms George”. An unnecessary and gratuitously partial statement for a so-called independent witness.
I am not satisfied that Mr Siebert is truly impartial and independent and that his evidence can be relied upon. In the circumstances I reject it. The only testimony supporting the bankrupt’s assertions that she conducts a business and requires the horse float for the conduct of that business is her own. I reject it and accordingly I am not satisfied that the property is protected by s.116(2)(c). In my finding it has vested in the trustee.
The bankrupt also contends for the return of property taken by the trustee in the nature of antique furnishings, china and silverware removed from the Moggill property. In the course of trial complaint was made by the bankrupt concerning the trustee’s removal of all furnishings including basic furnishings and household effects. Following that complaint certain basic items were released to her with the trustee retaining only the more valuable furnishings including the antiques. No formal inventory of that material has been prepared and so I am unable to rule on specific items beyond noting that generally those kinds of chattels do not fall within the ambit of that which is protected by operation of regulation 6.03(3). I make no ruling beyond indicating that in respect of any antiques silverware and other like chattels it is unlikely that they would fall within the prescription provided by regulation for protected property. I will adjourn this part of the application to hear parties on specific orders.
Finally the bankrupt’s jewellery. Upon entering the property shortly after orders were made permitting entry pursuant to a warrant, the trustee recovered a considerable quantity of jewellery. In all, 104 items were recovered. Many of the items were of considerable value. For instance diamond rings which were accompanied by valuation certificates for insurance purposes; see exhibit 3. The only personal property exempt pursuant to s.116(2)(ba) relevant in this case are items of personal property having sentimental value. The only witnesses to sentiment on the part of the bankrupt is the bankrupt herself. For reasons that I have earlier outlined I do not accept her as a reliable witness. However having regard to some of the items which were recovered by the trustee I am prepared to accept on balance there may be a justifiable element of sentiment associated with them by reference to ordinary standards. In the course of cross examination of the bankrupt following the recovery of the various items of jewellery listed in exhibit 3, the bankrupt stated that the only thing she wanted back was her mother’s watch, an item that was separately bagged and tagged. I accept that the chattel of this kind may have sentimental value for the bankrupt and accordingly I am satisfied this chattel is protected by operation of s.116(2)(ba).[115]
[115] Transcript 5 November 2008 page 29 line 35
In summary I find that the bankrupt’s jewellery, except for a watch which was her late mother’s, her furnishings and other household chattels which have not already been delivered into her possession and the unregistered horse float are property which have vested in the trustee and are not exempt pursuant to s.116(2) of the Bankruptcy Act.
Conclusion
The bankrupt’s trustee seeks to progress the winding up of her estate which comprises an interest in real property and valuable chattels. The bankrupt however claimed she held all such property in her capacity as trustee for her only child.
I do not accept any evidence of the bankrupt where it is not corroborated by any reliable and independent source. I find no trusts as alleged ever were settled and all her property vested in her trustee in bankruptcy following her filing the debtor’s petition.
The real property had been transferred by the bankrupt to the second respondent DPIPL prior to her bankruptcy. The transfer was effected to defeat the claim of a potential creditor, her ex-husband. The transfer was subject to an agreement to retransfer the title in that property to the bankrupt. In order to finance that transaction DPIPL borrowed funds and provided the property as security to the fourth respondent, the NAB.
The NAB’s advance and acceptance of the property of security was undertaken at arms length. Notwithstanding allegations by the bankrupt to the contrary there was no fraud by the NAB, nor did it aid or assist DPIPL or any other person in perpetrating a fraud against the interests of the bankrupt in financing this transaction.
Ultimately the reconveyance of the property by DPIPL became an issue for resolution between the third respondent, Dr Ironside and the fifth respondent, Ms Wilson in their matrimonial proceedings. They agreed in the course of resolving their matrimonial affairs that DPIPL reconvey the property to the bankrupt by conveyance to her trustee. In doing so the mortgage debt to NAB was to be discharged. This arrangement was formalised in a Heads of Agreement document concluded following a mediation on 19 February 2008 in the Ironside’s matrimonial dispute. Each of the parties to this proceeding, except the NAB were parties to the mediation agreement.
The bankrupt contended she was unconscientiously compelled to enter into this agreement by the conduct of the other parties. I reject her evidence on that matter and find she entered into the agreement voluntarily, fully aware of its effect.
The agreement ought be given effect to. The bankrupt lodged a caveat to prevent the registration of the Trustee’s transfer. It has also prevented the NAB from exercising its security. By reason of my findings the caveat must be removed and the Trustee’s interest registered.
Finally there were various chattels alleged by the bankrupt to be the subject of a trust in favour of her child. I reject any such trust was settled. Her chattels have vested in the trustee except for a watch the bankrupt claims was her late mother’s.
Orders
I direct the parties submit a minute of order giving effect to the terms of this judgment within seven (7) days of this order.
In the absence of submission to the contrary which submission be made in writing within seven (7) days of these orders, I direct the first respondent pay the costs of and incidental to the application including reserved costs to be assessed.
I certify that the preceding two hundred and thirty-one (231) paragraphs are a true copy of the reasons for judgment of Burnett FM
Date: 27 July 2011
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