Henry, Re D. Silva, Ex Parte B. v English, A

LIMITED DISTRIBUTION

CATCHHORDS

BANKRUPTCY - Application by trustee for surplus funds upon

sale of land by mortgagee

- Claim made

by former de facto wife

of bankrupt - Whether land held by bankrupt in trust €or

former de facto

W ife - Inconsistent evidence

of former de

facto wife

- Significance of Deed of Settlement in relation

trust property.

Bankruptcv Act 1966

W.685 of 1983

Re DAVID HENRY:	Ek parte BRIM R SILVIA v ANNE ELIZABEIli
ENGLISH
Wilcox J Sydney
5 June 1986

LIMITED DISTRIBUTION

IN THE FEDERAL COURT OF AUSTRALIA	)
1
GENERAL DIVISION	)
BANXRUPTCT DISTRICT OF
THE STATE OF NEW SOUTH WALES AND	)
)
THE AUSTRAGIAN CAPITAL TERRITORY	1

RE: DAVID HENRY

Bankrupt

M PARTE: PIAN R SILVIA

Applicant Trustee

AND:	ANNE ELIZAEETH ENGLISH
Respondent

CORAM :	RILCOX J
PLACE:	SYDNEY
DATE:	5 JUNE 1986

MINUTES OF ORDER

RE:	DAVID HENRY Bankrupt

M PARTE: m1AN R SILVIA

Applicant Trustee

AND:	ANNE ELIZABETH ENGLISH
Respondent

CORAM:	WILCOX J	.
PLACE:	SYDNEY
DATE:	5 JUNE 1986

There is before the Court

an application made

Brim Raymond Splvia, the trustee of the bankrupt estate of

David Henry. Hr Henry was made bankrupt on 25 July 1983. The

... . -

._,

.'. .

* *

- -

application concerns the beneficial ownership

of a sum of

$9,712.17 which represents a surplus following the sale

mortgagee by the National Australia Bank

of a property at Port

Douglas in North Queensland which

is identified as lot 63 on

registered plan 26859 being situate in *elk Street, Port

Douglas.

That parcel of land

was purchased for the

sum of

$20,000.00 pursuant to a contract entered into by the bankrupt

Borne time in

August 1982. which contract was apparently

settled in about November 1982.

The National Bank made

a loan

of $15,000.00, the borrower being named as the bankrupt, David purchase price of $20,0Q0.00, hence the surplus in relation to which the application arises.

The relief sought in the original Application dated

19 March 1986

was €or an order that the National Australia

Bank be ordered to make available to the trustee the funds

held in an account styled B R Sylvia, trustee

for the bankrupt

estate of David Henry, in which account the relevant

sum of

money is held. Subsequently leave was given to the applicant

to amend his Application	so as to seek certain declaratory
relief.

THE COURT DECLARES THAT:

(a)

The respondent, Anne Elizabeth English,

has no

interest in the

funds realised from the sale

of land

-	at Port Douglas comprised	in Certificate of Title
Volume N939 Folio 46.

The applicant, Brian Raymond Silvia, as Trustee for

the Bankrupt, David Henry, is entitled

o the funds

realised from the sale

of the said land.

AND THE COURT ORDERS THAT:

The respondent, Anne Elizabeth English, pay

to the

I’

applicant, Brian Raymond Silvia,	his costs of this
application.

NOTE :	Settlement and entry	of orders is dealt	with by
Bankruptcy Rule 124.

.. .

m -

- -

3 .

A 'claim is made

to the subject

sum by Anne Elizabeth

English, the former de facto wife

of the bankrupt. It appears

that Miss English lived with the bankrupt for a period

about eight years from 1976 to early 1984. During that time

business m 5 commenced under the name

of Oriental Pacific.

Trading Company: This business was apparently concerned with the wholesaling of fashion accessories and perhaps other

articles of accoutrement.

The business name uaa registered

under that name

on 15 May 1980.

The applicatfon for

registration which

was lodged by

Miss &gllsh stated that she

was the proprietor

of the business and that

it had commenced

on 28 March 1980. The records of the Corporate Affairs Commission indicate that on 28 April 1981 a statement of

change in persons in relation

t vhomr the bueiness name

was

registered was.filed. This document stated that

Miss English

had ceased to carry on the business under the business name

and that David Henry was carrying on the business. There was

no subsequent document in relation

to the business

so that at

the period with which this matter was concerned the business

continued to be carried on under a name in respect	of which Mr
Henry was the registered owner.

According to Mids English she and Mr Henry visited

North Queensland about July 1982, perhaps shortly before the

beginning of July.

They returned in late July or early

August. During their first visit Miss

English had become

, attracted to the notion of buying

a block of land in the Port

P -

- -

Douglas area and had inspected the land in Whelk Street

which

was subsequently purchased. However, as I understand her

evidence, she had not then made any

firm decision to purchase

that allotment. Upon the return visit she puraued the matter

of purchasing a block

of land and in early Augunt a decision

was made that

the land would be

acquired.

As I have said, the

contract was signed in August but the contract does not

Include a date.

The loan funds were supplied

by the National Bank

pursuant to an application which

was dated 4 August 1982 and

- --

. -

which was signed by both Mr Henry and Miss English,

she using

€or that purpose the surname of Henry.

The application sets

out particulars of the financial position

of the applicants,

those particulars being intended

t o be read as referring to

Henry rather than

to Hiss English.

The employer is stated as

being Oriental Pacific and the position held

I s stated as

being Sales Manager. Against the inquiry €or name and title oi superior is inserted the words, "A. Ebglish - proprietor of

firm".

Against the inquiry, is wife

or husbapd employed, the

answer, "No" is supplied. The document sets out two

statements as to earnings which are mutually inconsistent.

Against a figure for salarplwages per annum I s inserted the

figures $45,000.00 but the net take-home pay per

month is

stated as $2,700.00.

On a follwing page the name of the

"prime income earner" is h m

as Dsvid Henry. The clear

impression to be gained by anybody reading this application

1;~

. ,

5 .

that Mr Henry is the primary income earner in the family and

that h.e did so pursuant to employment as Sales Manager of

firm known as Oriental Pacific conducted by

Miss Engllah.

The evidence given in this case is inconsistent with

any such picture. Miss English has said that in fact

Mr Henry

had lost Interest in

the business of Oriental Pacific by early

1982 and had decided

to commence (L scuba diving businesa. The

scuba diving business not only returned no income

to the

family during the

period early 1982 to late 1982 but in fact

required the injection

of capital from

Miss English's earnings

in the business formerly conducted by Oriental Pacific.

I use

the word "formerly" because

Miss English denies that the party

carrying on the business as of August

1982 was still Oriental

Pacific. She said that she carried

on the business under her

own name, although payments were normally made either in cash

or by cheques in favour of

D Henry.

Mr Henry had a bank

account, namely an account

at the

National Bank, Spit Junction Branch, but Miss English had no

account herself. According to her evidence, her earnings from

the business were of the order of 42,500.00 to 43.000.00 per

month and she was the support of the family, there being two

young children as well

as Mr Henry and herself. Miss English

claims that she paid the initial deposit

of $2.000.00 by

moneys raised from

a Bankcard account which she was permitted

to open by the manager

of the National

Bank, Spit Junction.

She says -- and this clearly appears to be accurate

-- that

she was able to borrow

$2,000.00 on Bankcard and that that

amount was paid into the bank on

12 October 1982. There has

been tendered In evidence

a receipt issued by the

bank of that

date acknowledging a receipt

on account of David Henry of

$2,000.00

for, “Deposit for land, Port Douglas. Settlement

impending. Held in trust until settlement”.

I have some

difficulty in reconciling

the details

of that receipt with the

evidence of Hiss English that she paid the

$200.00 holding

deposit in August and subsequently

she paid a separate

sum of

$1,800.00.

The $2,000.00 suggests that nothing

had been paid

until a point very close

to settlement. However, this may not

be a matter

of particular moment.

There has also been produced a receipt dated 8

October 1982 issued by the bank, acknowledging the receipt on

account of David Henry

of $4,000.00, the details of which are

described as follows8 “Part deposit on land. Settlement

due

11.10.82.

Held In trust until then”. It seems to be clear

that the bank did in fact advance $15,000.00 pursuant to the

application of 4 August 1982.

Of this advance, $14,000.00

. . I

approximately was required in order to complete the purchase.

No doubt there were some incidental expenses borne

out of the

remainder of the loan.

The source of the $6,000.00

contributed in the	name of Mr Henry is therefore a matter of
some importance.

As 1 have said, the evidence indicates that

Miss

English did in fact raise

$2,000.00 by Bankcard advance

and

that this

uas the amount paid into the bank on

L2 October.

However, it appears that on

29 November 1902

MY Henry paid out

of his account

to Miss English's Bankcard account the

sum of

$2,022.00.

The only inf erence

I can draw is that this was

intended to repay the debit in the Bankcard which had been

IncurreU in order

to provide Q2.000.00

needed for the

deposit.

Co&equently, nothing much turns

on the fact that

the

QZ,000.00 was originally contributed

by a loan arranged in

her

own name by

Miss English.

_c_

.. -.-

-/--

As to the other

$4,000.00. the explanation given

I. I

Miss English.yaw&t this came from cash that she was holding

at home. She claimed that her custom was

to keep large sums

of money at home

€or use as (required. Her claim

uncorroborated.	No evidence has been adduced from her former
de facto husband	or from any officer of the bank, or indeed,

from anybody else who can confirm that she	was the source of
the $4,000.00.

The critical question in the case

i whether I accept

Hiss English's evidence that she

was the main breadwinner

the family and that he moneys used for the

$4,000.00 payment

and for the repayment

of her Barikcard loan were her

own

earnings or the earnings of her husband.

I have already

.~	referred to the fact that the evidence she	has given in these
. . .

* -

8 .

proceedings is totally inconsistent with the information put before the bank at the time. It seems to me somewhat unlikely

that the

bank would have been given such misleading

information.

The manager of the bank must have had a

substantial knowledge of

the financial affairs

of the couple.

I think it is unlikely that

Mr Henry and Miss English would

have set out to mislead him in such a blatent manner

as would

be required for

the information given

to the Court to be

accepted as correct.

Secondly, it is

of aome significance that in

a letter

written by the solicitors €or Miss English

to the solicitors

for the trustee on

22 May 1985 the statement

was made in

regard to Oriental Pacific Company:

"Our client had very little knowledge

of the

company's operations and did not

achieve any

financial gain in her

position as director."

- -	The reference to "director" is inappropriate for a registered

business name but

I think that the import of

the statement is

that Misa

English disclaimed any active participation in the

affairs of that business. By contrast, her evidence in this

case is that, although Mr Henry had taken Over the

proprietorship of the business in April

1981, she had

been the

person responsible €or

the conduct of the business at least

throughout 1982.

According to her evidence, it was her

efforts which had earned the not inconsiderable return

achieved by the business during that period.

I cannot

reconcile that evidence with the statement made by her

9 .

solicitors, as she acknowledges, on her instructions. The

picture that was given. both to the bank and through the

solicitors before these proceedings commenced. was

of a

trading operation conducted entirely by Mr Henry

and in

relation to which she had

no function, or certainly no active

business function. The picture she

has given here is

herself running the business, earning the income

and actually

subsidising Mr Henry.

I think that the more reliable picture

is that given

by the

- earlier documents,

and I do not accept

the evidence that

she has given.

By way of an alternative, the solicitor for Miss

English relies upon

a document called

a Deed of Settlement to

the Anne English Trust.

"'his document was tendered in

evidence. It is a lengthy deed of settlement, following a

familiar form used for family trusts. The document shows the

date of making the deed as being 1 July 1982.

The settlor is

, ,

John Alexander

Coddrington who,

according

to Miss

English, is

an accountant. !be trustee is Mr Henry and the named

beneficiary is Hiss English. The original settlement

a m was

$10.00.

The schedule Includes

a reference to the land at Port

Douglas, against the line "trust property". However,

the deed

does not itself deal in

any direct way with this property.

The only provision in the deed which would seem

to have

anything to do with this land

I s contained in cl.Zl(d) which

is a clause conferring upon the trustee an additional power,

inter W, to purchase real estate. It is remarkable that a

. ..

* -

10.

property which was sufficiently significant

to be included in

the trust property is not the subject	of some specific
provision in the deed.

One other remarkable characteristic

of the deed

i s

the date on

which it is alleged to have been executed. I have

already indicated that the contract

to purchase this parcel

land was not entered into until August and that, according to

Hiss English's evidence, she did not settle upon the purchase

of this land until either late July

or early August. Under

those circumstances, it seems

to me highly unlikely that on 1

July the parties executed

a deed of settlement referring to

this particular parcel of land.

If there was some concern to

/--

protect Hiss

English, I should have thought-that

the normal

------

course would

be for the parcel of land to

be secured by a

contract

and

a deed of trust then executed. To reverse the

order of

these events seems to

g to unnecessary trouble if,

as would

have been quite

possible, the vendor in the meantime

I r .

I .

sold the

property to someone else.

W-.

The deed was stamped; but only with

a nominal 30

cent stamp duty and

the stamp bears no date.

Hr Coddrington

has not given

any @videnee a8 to the making or date of the

deed, although

he executed the deed as settlor. The

explanation given

for entering into the deed

is that Miss

English had no credit rating and consequently that she and

Henry had been advised that the land should be taken in

* -

11.

Henry's name. If

the purpose was

so limited, I would have

thought that

a document specific to this parcel of land would

have been more appropriate, but

it is possible that

Coddrington chose

to use a general form

of the deed

and

nothing turns upon that. However,

I am not satisfied that

the

deed was executed at any relevant time. Nor am I satisfied

that, in making the payments for

the property which

he did in

fact make, Mr Henry purported to do so as trustee

of the

settlement as distinct from

on h i s own account.

L I have some sympathy for the position

in which Hiss

English finds herself. Her relationship with

Mr Henry has

broken up.

The parcel of land which she wished

to acquire has

had to be sold and she

finds herself without

any claim to the

surplus which was made. Howevcr, an entitlement to recover the sum must depend upon her satisfying the Court that Mr

Henry was a trustee of that property

on her behalf.

I do not

think that such

a claim has been made

out. Accordingly X

propose to accede to the application for the trustee.

I make

the following declarations:

1. That the respondent, ANle Elizabeth English, has no interest in the funds realised from the sale of the

land at Port Douglas comprised in Certificate

Title Volume N939 Folio 46; and

* -

12.

- -

2. That the applicant, Brim Raymond Silvia, as Trustee

for the Bankrupt, David Henry,

is entitled to the

funds realised from the sale of the said land.

I order that the respondent, Anne Elizabeth English

pay to the applicant,	Brim Raymond Silvia, his costs of this
application.

I certify that this and the eleven

(11)

preceding pages are

a true copy of

the Reasons for Judgment of

his Honour

Mr Justice Wilcor.

Associate:	vrm-b%z A . I+-	-
Date :	25 June 1986

Counsel for the Applicant

- -	Trustee:
Solicitors for the

Mr J E Thomson

Applicant Trustee:

Messrs Cotter Roberson

& Webb

Appearance €or the Respondent: Mr M Saunders, Solicitor

Solicitors for the Respondent:

Messrs Forsters

Datets)

hearing:

5 June 1986

. 1.

. -

[1986] FCA 247

6 May 1986