Harrison v Ponting
[2011] FMCA 680
•2 September 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| HARRISON v PONTING & ANOR | [2011] FMCA 680 |
| BANKRUPTCY – Application by the Trustee for possession of the property. |
| Bankruptcy Act 1966, ss.5, 58, 77, 81(17), 129, 134 Evidence Act 1995, ss.59, 64, 68, 75 Family Law Act 1975, s.90SB Federal Magistrates Court Rules 2001, rr.13.07, 13.09, 13.03B(2)(c), 13.03A |
| Bray v F Hoffman-La Roche Ltd [2002] FCA 243; (2002) 118 FCR 1; (2002) 190 ALR 1 Calverley v Green [1984] HCA 81; (1984) 155 CLR 242; [1984] FLC 91-565; 56 ALR 483; (1985) 59 ALJR 111; 9 Fam LR 940 Carr v Finance Corporation of Australia Ltd (No.1) [1981] HCA 20; (1981) 147 CLR 246; 34 ALR 449; (1981) 55 ALJR 39 Hall v Nominal Defendant [1966] HCA 36; (1966) 117 CLR 423; [1966] ALR 705; (1966) 40 ALJR 102 Jobson v Beckingham (1983) 9 Fam LR 169 Licul v Corney [1976] HCA 6; (1976) 180 CLR 213; (1976) 8 ALR 437; (1976) 50 ALJR 439 Nelson v Nelson [1995] HCA 25; (1995) 184 CLR 538; (1995) 132 ALR 133; (1995) 70 ALJR 47 Re Holland; Ex parte Official Trustee in Bankruptcy (1985) 5 FCR 165 Richardson v Gill [1997] NSWSC 489 |
| Applicant: | BRETT RICHARD GEOFFREY HARRISON AS TRUSTEE OF THE BANKRUPT ESTATE OF RICKY ALLAN PONTING |
| First Respondent: | RICKY ALLAN PONTING |
| Second Respondent: | ANNE GENNENE LAWTON |
| File Number: | LNG 14 of 2011 |
| Judgment of: | Riethmuller FM |
| Hearing date: | 18 July 2011 |
| Date of Last Submission: | 18 July 2011 |
| Delivered at: | Melbourne |
| Delivered on: | 2 September 2011 |
REPRESENTATION
| Counsel for the Applicant: | Ms Sutherland |
| Solicitors for the Applicant: | Page Seager |
| Counsel for the Respondents: | There being no appearance by or on behalf of the Respondents |
IT IS DECLARED THAT:
The Second Respondent, ANNE GENNENE LAWTON holds the entirety of her interest in the property situated at 29 Chaffey Street, Gladstone in Tasmania, more particularly described in Certificate of Title Volume 63096 Folio 2 (‘the Property’) on trust for the benefit of the Applicant BRETT RICHARD GEOFFREY HARRISON (AS TRUSTEE OF THE BANKRUPT ESTATE OF RICKY ALLAN PONTING).
ORDERS
The Second Respondent execute any document on her behalf necessary to give effect to the transfer of her interest in the Property to the Applicant within 7 days.
In the event that the Second Respondent neglects or refuses to execute any document necessary to give effect to the transfer of her interest in the Property to the Applicant as ordered herein, that the Registrar of the Federal Magistrates Court be appointed to execute such document on behalf of the Second Respondent and do all acts and things necessary to give validity to the operation of the document.
The First and Second Respondents deliver up possession of the Property to the Applicant within 28 days.
The First Respondent be served personally with a copy of these Orders within 10 days.
The Second Respondent be served with a copy of these Orders by posting them to her at her last known address, and care of her former solicitors within 7 days.
Liberty be reserved to the Second Respondent to make an application to set aside or vary any or all of the declaration and orders (1) to (5) herein within 28 days.
One half of the costs of and incidental to this Application be paid to the Applicant by the Second Respondent and one half be met from the bankrupt estate.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
LNG 14 of 2011
| BRETT RICHARD GEOFFREY HARRISON (AS TRUSTEE OF THE BANKRUPT ESTATE OF RICKY ALLAN PONTING) |
Applicant
And
| RICKY ALLAN PONTING |
First Respondent
| ANNE GENNENE LAWTON |
Second Respondent
REASONS FOR JUDGMENT
Background
On 10 September the First Respondent was declared bankrupt and the applicant was appointed Trustee of the bankrupt estate (‘the Trustee’). The bankrupt and the Second Respondent, Ms Lawton, are the registered proprietors of a property situated at 29 Chaffey Street, Gladstone in Tasmania as joint tenants (‘the property’). The Trustee lodged a caveat over the property on 17 November 2010 and transferred the part of the property that was owned by the bankrupt to the bankrupt estate on 15 March 2011. However, the Trustee’s attempts to remove Ms Lawton from the title have been unsuccessful to date.
By way of affidavit the Trustee gave evidence of the information that he had obtained from the bankrupt.
The Trustee recounts information he received from a solicitor that he engaged to make further enquiries. The solicitor advised the Trustee that the bankrupt is a resident of Tasmania. Approximately eight weeks prior to the purchase of the property and whilst on holiday in Queensland the bankrupt met and developed a relationship with Ms Lawton. Following Ms Lawton’s decision to relocate, the parties resided together in Tasmania for approximately six weeks and during this period they decided to purchase the property. The bankrupt purchased the property for $36,000 and registered Ms Lawton as a co-proprietor on the basis that this would be a long-term relationship. However, around three weeks after the parties moved into the property Ms Lawton ended the relationship and returned to Queensland. Her parting words to the bankrupt were to the effect “I hope that you are happy with your house, you can pay all the bills”. The bankrupt advised the Trustee that Ms Lawton made no financial contributions towards the purchase of the property nor towards any loan repayments, insurance, rates or otherwise. The bankrupt made loan repayments on a fortnightly basis from his pension account with the Commonwealth Bank. The bankrupt advised the solicitor that following receipt of an ex gratia payment from the State Government in 2004, he utilised part of the funds to discharge a mortgage on the property.
The bankrupt also advised the Trustee that he had previously sought to remove Ms Lawton’s name from the title to the property. The Trustee obtained a copy of correspondence from a law firm previously engaged by the bankrupt which revealed Ms Lawton’s claim for an entitlement of $50,000 before she would relinquish her interest.
Ms Lawton maintained this claim when the Trustee sought her cooperation in transferring her interest. By correspondence to Ms Lawton, dated 2 December 2010, the Trustee asserted that she held no equitable interest in the property but invited her to provide evidence that may support her purported interest. Otherwise, the Trustee requested that Ms Lawton to execute a Transfer in favour of the Trustee of her interest in the property. On 16 December 2010 Ms Lawton’s solicitors responded, indicating that their client would cooperate with a sale of the property provided she received one half of the sale proceeds. By letter dated 23 December 2010 the Trustee queried Ms Lawton’s solicitors as to whether she had any financial arrangement or made any contributions to the property. On 31 December 2010 Ms Lawton’s solicitors repeated their client’s demand and provided no evidence of any financial contributions. By letter dated 5 January 2011 the Trustee pointed out that the solicitors had avoided the issue and again requested them to articulate the basis of Ms Lawton’s entitlement. On 24 January Ms Lawton’s solicitors effectively stated that they would not respond to any further correspondence unless their client’s condition was accepted.
Ms Lawton’s solicitors have now ceased acting on her behalf. The Trustee’s solicitors sent a letter to Ms Lawton indicating that if they were not contacted either by herself or her solicitors by 4 March 2011 they would take further action without notice. By 4 March there was no response and the Trustee initiated proceedings in this Court.
The bankrupt also advised the Trustee that he was in a relationship with another woman, Ms Nicole Dwyer, for approximately 15 years and they had two children together. The parties occupied the property for some time during the course of their relationship. Ms Dwyer has claimed an interest in the property. In her letter to the Trustee, which is attached as an exhibit to the Trustee’s affidavit, she states she had worked and “put about all of any income” she received into the property. An affidavit of service filed on 21 July 2011 shows that she has been served with a copy of the Trustee’s application and supporting affidavit material. Ms Dwyer has not been joined as a party to this proceeding, nor sought to intervene.
The evidence is largely hearsay, being what the bankrupt told the Trustee and double hearsay, being what the solicitor told the Trustee the bankrupt told her). Hearsay is generally not admissible: s.59 of the Evidence Act 1995. No foundation has been laid for the exception provided in s.64 of the Evidence Act 1995, nor a notice given to invoke the exception in s.68.
If this information came as a result of a s.81 examination, notes of what the bankrupt had said would be admissible under s.81(17) of the Bankruptcy Act 1966 which provides:
(17) Notes taken down and signed by a person in pursuance of subsection (15), and the transcript of the evidence given at the examination of a person under this section:
(a) may be used in evidence in any proceedings under this Act whether or not the person is a party to the proceeding; and
(b) shall be open to inspection by the person, the relevant person, the trustee or a person who states in writing that he or she is a creditor without fee and by any other person on payment of the fee prescribed by the regulations.
However, the information provided by the bankrupt in this case appears to have been information required under s.77 of the Act. Thus, s.81(17) is of no assistance to the applicant.
The hearsay rule does not apply to interlocutory proceedings: s.75, Evidence Act 1995. The exception also applies to hearsay upon hearsay, provided the sources of the information are set out. As Merkel J said in Bray v F Hoffman-La Roche Ltd [2002] FCA 243; (2002) 118 FCR 1; (2002) 190 ALR 1 at [117]:
In my view, there is no proper basis for importing a requirement that s 75 is limited to first hand hearsay as defined in s 62 for the purposes of Div 2.
Summary judgement and default judgement applications are both well recognised forms of interlocutory proceedings: see generally Hall v Nominal Defendant [1966] HCA 36; (1966) 117 CLR 423; [1966] ALR 705; (1966) 40 ALJR 102; Licul v Corney [1976] HCA 6; (1976) 180 CLR 213; (1976) 8 ALR 437; (1976) 50 ALJR 439; and Carr v Finance Corporation of Australia Ltd (No 1) [1981] HCA 20; (1981) 147 CLR 246; 34 ALR 449; (1981) 55 ALJR 397.
The court has a broad power to grant summary judgement if the conditions set out in r.13.07 of the Federal Magistrates Court Rules 2001 are satisfied. However, r.13.09 specifically provides:
13.09 [Application] An application for judgment or for an order that a proceeding be stayed or dismissed must be made by filing an application in accordance with the approved form.
As the applicant has not made application for summary judgement, r.13.09 prevents them proceeding down that path in the circumstances of this case.
Default judgement is available under r.13.03B(2)(c) which relevantly provides that:
13.03B [Orders on default] …
(2) If a respondent is in default, the Court may:
…
(d) give judgment or make any other order against the respondent; or
…
The respondent, having filed no document, and have not appeared nor defended the proceedings in any way, is clearly in default, as the term is defined in r.13.03A, which provides:
13.03A [When a party is in default]
…
(2) For rule 13.03B, a respondent is in default if the respondent:
(a) has not satisfied the applicant's claim; and
(b) fails to:
(i) give an address for service before the time for the respondent to give an address has expired; or
(ii) file a response before the time for the respondent to file a response has expired; or
…
(iv) file and serve a document required under these Rules; or
…
(vii) defend the proceeding with due diligence.
Whilst not articulated in the applicant’s outline or submissions, the lack of admissible evidence can lead only to the conclusion that the applicant was seeking a default judgement. I therefore proceed to determine whether I should grant a default judgement for the orders sought by the applicant.
The Law
Section 134(1) of the Bankruptcy Act 1966 sets out the powers of the Trustee:
134 [Powers exercisable at discretion of trustee [see Table B]]
(1) Subject to this Act, the trustee may do all or any of the following things:
(a) sell all or any part of the property of the bankrupt;
…
(j) bring, institute or defend any action or other legal proceeding relating to the administration of the estate;
...(emphasis added)
The Trustee may apply to the Court for directions in relation to a matter arising in connexion with the administration of the bankrupt estate: see section 134(4). Under section 129 of the Bankruptcy Act 1966 the Court can enforce the Trustee’s ability to take possession of the bankrupt’s property upon the Trustee’s application:
Division 4—Realization of property
129 [Trustee to take possession of property of bankrupt]
(1) The trustee shall forthwith take possession of all the property of the bankrupt capable of manual delivery, including all deeds, books and documents of the bankrupt.
(2) The Court may, on the application of the trustee, enforce possession accordingly. (emphasis added)
The definition of “the property of the bankrupt” is found in section 5 of the Act:
5 [Interpretation] (1) …
the property of the bankrupt, in relation to a bankrupt, means:
(a) except in subsections 58(3) and (4):
(i) the property divisible among the bankrupt’s creditors; and
(ii) any rights and powers in relation to that property that would have been exercisable by the bankrupt if he or she had not become a bankrupt; and
(b) in subsections 58(3) and (4):
(i) the property, rights and powers referred to in paragraph (a) of this definition; and
(ii) any other property of the bankrupt.
Section 58 is concerned with the vesting of property of the bankrupt upon bankruptcy.
While Ms Lawton was registered as a joint tenant, the bankrupt’s bankruptcy severed the joint tenancy and the parties became tenants in common. In Re Holland; Ex parte Official Trustee in Bankruptcy (1985) 5 FCR 165 Fisher J stated:
6. It is always open to a joint tenant to destroy the joint tenancy by severance, thereby converting the estate into a tenancy in common. Severance is achieved in a number of ways, and in particular by alienation, wholly or partially and whether such alienation be voluntary or involuntary. An example of an involuntary alienation is the bankruptcy of one of the joint tenants and the consequent vesting of his interest in his trustee - See Megarry & Wade the Law of Real Property 4th Edition pages 404-5, Morgan v Marquis [1853] EngR 887; (1853) 9 Exch 145 at pages 147,148; [1853] EngR 887; 156 ER 62 at page 63. Re Butlers Trusts (1888) 38 ChD 286. It follows that at least in equity the joint tenancy in Torrens System Land (i.e. land under the Real Property Act) is severed as between the bankrupt and the other joint tenant or joint tenants; Kerr Australian Lands Titles (Torrens) System p.463. (emphasis added)
The real issue in this case lies in the operation of the principles governing the presumption of a resulting trust, and the presumption of advancement. The complex issues that the law in this area can produce are discussed in detail Glister, J ‘Is There a Presumption of Advancement?’ [2011] SydLawRw 2; (2011) 33(1) Sydney Law Review 39.
The bankrupt provided the entirety of the purchase price. In Calverley v Green [1984] HCA 81; (1984) 155 CLR 242; [1984] FLC 91-565; 56 ALR 483; (1985) 59 ALJR 111; 9 Fam LR 940 Gibbs CJ stated:
[3] Where a person purchases property in the name of another, or in the name of himself and another jointly, the question whether the other person, who provided none of the purchase money, acquires a beneficial interest in the property depends on the intention of the purchaser. However, in such a case, unless there is such a relationship between the purchaser and the other person as gives rise to a presumption of advancement, i.e., a presumption that the purchaser intended to give the other a beneficial interest, it is presumed that the purchaser did not intend the other person to take beneficially. In the absence of evidence to rebut that presumption, there arises a resulting trust in favour of the purchaser. (emphasis added)
I note the Trustee’s affidavit at paragraph [10] states:
[10]
…
(f) When he returned to Tasmania with the Secondnamed Respondent, they resided together at his parents’ property for about six weeks;
(g) During the timeframe referred to above, the Respondents decided to purchase the Property;
…
(l)He [the bankrupt] elected to register her name on title as a co proprietor because he believed that their relationship had longevity; (emphasis added)
The registration of title in joint names is the only evidence to suggest an intention on the part of the bankrupt to confer a beneficial interest on Ms Lawton. However, in Calverley v Green [1984] HCA 81; (1984) 155 CLR 242; [1984] FLC 91-565; 56 ALR 483; (1985) 59 ALJR 111; 9 Fam LR 940 Deane J stated:
[9] The weight to be given to a presumption of a resulting trust in the resolution of what is essentially an issue of fact may vary in accordance with changing community attitudes and with the contemporary strength or weakness of the rationale of the rule embodying the presumption (see, e.g., Snell's Principles of Equity, 28th ed. (1982), at p.183 and the cases there cited, and per Mahoney J., Doohan v. Nelson (1973) 2 NSWLR 320, at pp 325-326). The generalization that a presumption of resulting trust "should not give way to slight circumstances" (see above) can no longer properly be accepted as an unqualified rule. Indeed, in a case where a presumption of resulting trust or a "presumption" of advancement applies in circumstances where the relationship between the parties does not, as a matter of modern experience, provide any firm rational basis for presuming either intention to retain the beneficial interest or an intention to confer it on the other party, the presumption may be found to be of practical importance only in those cases where the evidence, including evidence of the actual relationship between the parties, does not enable the court to make a positive finding of intention (cf. per Gibbs J. in Napier, at p 2 and per Lord Upjohn, Pettitt v. Pettitt [1969] UKHL 5; [1969] UKHL 5; (1970) AC 777, at pp 813-814).
Calverley v Green remains authority for the proposition that the presumption of advancement does not apply to defacto spouses. Indeed, the one dissenting judge in that decision (Murphy J) took the view that there should be no presumptions of advancement at all. However, in Nelson v Nelson [1995] HCA 25; (1995) 184 CLR 538; (1995) 132 ALR 133; (1995) 70 ALJR 47 the High Court extended the presumption of advancement to include transfers from a mother to children. Toohey J specifically referred to the obligations on parents (in gender neutral form) in the Family Law Act 1975 in support of the extension of the presumption of advancement to mothers with respect to children.
Since Nelson’s case, the Family Law Act 1975 has been amended to provide duties of defacto spouses toward each other, at least with respect to maintenance and the availability of orders for the adjustment of interests in property. This may lead one to contemplate the potential development of the law in this area, and particularly whether Calverley v Green remains good law in this respect in light of the defacto relationships provisions in the Family Law Act 1975. Before exploring this question further it is appropriate to review the facts to determine if it is a real issue in these proceedings.
The parties’ relationship was a short term relationship: the property was purchased only eight weeks after the parties met. The bankrupt bore sole responsibility for the loan repayments and ultimately discharged the mortgage. There is no evidence before the Court to indicate that Ms Lawton made any financial contributions or that she contributed to the upkeep of the property. Ms Lawnton has not provided evidence of contributions, even within the broader meaning of that term as it appears in the Family Law Act 1975. The relationship was before the amendments to the Family Law Act 1975.
On the scant evidence, it appears that the relationship may have arguably fallen within the definition of a defacto relationship: s.4AA. However, the evidence in this case does not show a defacto relationship of such quality as to entitle either spouse, prima facie, to relief under the Family Law Act 1975 in that it lasted less than 2 years, did not involve children, and would not involve any substantial contributions or significant injustice if it were not covered by the Family Law Act 1975 provisions, nor is there any suggestion that the relationship was registered under a prescribed law: s.90SB of the Family Law Act 1975. Thus, even if Nelson’s case can be read as casting doubt on Calverley v Green with respect to defacto spouses (in light of Part VIIIAB of the Family Law Act 1975) this is not a case involving spouses within that definition.
I therefore find that the presumption of advancement does not operate in this case.
It is clear that the Trustee made several attempts in obtaining further information that may tell against the presumption of a resulting trust, to determine if Ms Lawton held an interest in the property, but none was forthcoming. Ms Lawton’s parting words to the bankrupt “I hope that you are happy with your house, you can pay all the bills” does not support an understanding on her part that she holds any equitable interest in the property. The bankrupt’s evidence is equivocal, and somewhat closer to an intention that she have an interest of some form whilst they were together, than a gift of legal title.
At best, the case may have an appearance similar to the facts in Jobson v Beckingham (1983) 9 Fam LR 169 (McLelland J, SC NSW), although without the agreement to marry, where the presumption of a resulting trust was not rebutted. In Richardson v Gill [1997] NSWSC 489 Young J (as he then was) said:
Furthermore, if in contemplation of marriage or in contemplation of a long marriage, property is given by a woman to a man, then there is usually a presumption of resulting trust; see eg the decision of McLelland, J in this Court in Jobson v Beckingham (1983) 9 Fam LR 169.
I therefore conclude that the presumption of a resulting trust arises, that there is no presumption of advancement in this case, and that the presumption of the resulting trust is not rebutted on the material before me.
Conclusion
I therefore find that on the limited material before me the Second Respondent appears to have held her share of the property on a resulting trust for the bankrupt. The bankrupt’s beneficial interest vested in the Trustee on sequestration. The Trustee is therefore entitled to orders for the transfer of the property to the Trustee and consequential orders to allow for the realisation of the asset. It is therefore an appropriate case to exercise the court’s discretion to grant a default judgement.
I am not satisfied that the applicant requires all of the orders sought, nor that it is appropriate to make all of those orders. In effect the Trustee only requires a declaration with respect to the title of the Second Respondent, and orders to effect a transfer and delivery up of possession. Thereafter the applicant Trustee ought to deal with the property in the same manner as any other property of the bankrupt whilst administering the estate. Out of an abundance of caution I will make orders that the Second Respondent make any application to set aside or vary the orders within 28 days, during which the property will be preserved: this appears to me to strike a reasonable balance between the rights of the applicant to recover the property and the rights of the Second Respondent in the event that she seeks set aside this judgement.
I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of Riethmuller FM
Date: 30 August 2011
2
13
4