Nguyen v Pascoe

[2007] FCAFC 181

FEDERAL COURT OF AUSTRALIA

Nguyen v Pascoe [2007] FCAFC 181

BANKRUPTCY – former wife of bankrupt claimed whole beneficial interest in property on resulting trust

EVIDENCE – adverse credibility findings against appellant and bankrupt were open at first instance – no appellable error

Bankruptcy Act 1966 (Cth), s 30

Calverley v Green (1984) 155 CLR 242 referred to
Fox v Percy (2003) 214 CLR 118 applied

LIEN THI KHUAT NGUYEN v SCOTT DARREN PASCOE AS TRUSTEE OF THE BANKRUPT ESTATE OF THANH Y NGUYEN
NSD 474 OF 2007

JACOBSON, BENNETT & COWDROY JJ
13 NOVEMBER 2007
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 474 OF 2007

ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

BETWEEN:	LIEN THI KHUAT NGUYEN Appellant
AND:	SCOTT DARREN PASCOE AS TRUSTEE OF THE BANKRUPT ESTATE OF THANH Y NGUYEN Respondent

JUDGES:	JACOBSON, BENNETT & COWDROY JJ
DATE OF ORDER:	13 NOVEMBER 2007
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The appeal be dismissed, with costs.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 474 OF 2007

ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

BETWEEN:	LIEN THI KHUAT NGUYEN Appellant
AND:	SCOTT DARREN PASCOE AS TRUSTEE OF THE BANKRUPT ESTATE OF THANH Y NGUYEN Respondent

JUDGES:	JACOBSON, BENNETT & COWDROY JJ
DATE:	13 NOVEMBER 2007
PLACE:	SYDNEY

REASONS FOR JUDGMENT

THE COURT:

1. On 2 March 2007, Raphael FM made orders under s 30 of the Bankruptcy Act 1966 (Cth) for the sale of a residential property at 9 Rosemont Street, Punchbowl.  The property was purchased in July 1985 by Mr Thanh Y Nguyen and Mrs Lien Thi Khuat Nguyen as joint tenants.  Mr Nguyen was made bankrupt in October 2004 by a sequestration order of this court.  The order under s 30 of the Act was obtained on the applicant of Mr Pascoe as trustee of the bankrupt estate. 

2. Mrs Nguyen resisted the orders on the ground that she contributed the whole of the cash deposit for the property and paid all of the mortgage instalments.  She claimed to be entitled to the whole of the beneficial interest in accordance with the principles stated by the High Court in Calverley v Green (1984) 155 CLR 242. 

3. The learned Federal Magistrate comprehensively rejected Mrs Nguyen’s claim.  His Honour made very strong credit findings against Mr and Mrs Nguyen, each of whom gave evidence at the hearing. 

4. Notwithstanding this, Mrs Nguyen seeks to appeal against his Honour’s orders.  Her counsel accepted that in order to succeed on the appeal, it was necessary for the court to set aside the Federal Magistrate’s factual findings.  He accepted that findings of fact made by a trial judge, based on the credibility of a witness, may only be set aside on appeal in accordance with the principles stated by the High Court in Fox v Percy (2003) 214 CLR 118.

5. Consistently with this, Mrs Nguyen’s counsel accepted that it was not sufficient for him to establish an alternative hypothesis to that which was accepted by the Federal Magistrate.  The gravamen of counsel’s attack on the judgment was that in a number of respects his Honour’s factual findings either misstated the evidence or were fundamentally flawed. 

6. In an effort to make good these propositions, Mrs Nguyen’s counsel identified three factual findings which were said, either individually or cumulatively, to vitiate his Honour’s rejection of Mrs Nguyen’s claim. 

7. There were two essential planks to the claim made by Mr and Mrs Nguyen before his Honour.  The first was that although they went through a ceremony of marriage in Vietnam in 1978, they were not legally married because there was no record of their marriage held by the appropriate local authority in Vietnam. 

8. The second plank was that the property was placed in the joint names of Mr and Mrs Nguyen because that was a requirement of their lender, the Commonwealth Bank of Australia, but it was not their intention that Mr Nguyen have any beneficial interest.  This was because he was an addicted gambler who put no money into the purchase or into the household to meet the mortgage repayments. 

9. The substance of Federal Magistrate Raphael’s findings against Mr and Mrs Nguyen can be found at [22] of his Honour’s reasons.  For convenience, we will set out that paragraph in full:

   The actions of the respondent (and the bankrupt) in relation to the existence or otherwise of their marriage reveals a couple who are prepared to trim their stories to achieve the most advantageous result. According to them they were prepared to admit marriage to the government departments, courts and lenders with whom they dealt whilst knowing all along that this was false. When it became more convenient as a result of legal advice not to be married they made every effort to establish that this was the case. This is not the action of people whose evidence should be readily accepted. I would not accept any evidence of the respondent unless it was corroborated by other credible evidence. The respondent has not satisfied me to the necessary standard that the moneys which were used to pay the deposit on the Punchbowl property were hers or that it was at all times the intention of the parties that the property should belong to her.

10. Counsel for Mrs Nguyen attacked the finding as to the parties’ marital status on the footing that he eventually conceded their marriage for the purposes of the proceedings.  This concession was made belatedly.  It does not answer the proposition that his Honour’s finding as to the credibility of each of Mr and Mrs Nguyen’s evidence was based upon his assessment of their testimony in the witness box. 

11. The three factual findings which were said to contain misstatements or fundamental flaws all dealt with the question of the funding of the deposit on the property, and the payment of the mortgage instalments. 

12. The first finding dealt with the payment of a substantial part of the deposit out of a savings bank passbook.  Mrs Nguyen’s counsel attacked Federal Magistrate Raphael’s findings because his Honour did not expressly state in his reasons that the passbook was in the sole name of Mrs Nguyen. 

13. We reject this submission.  In our view, it is plain from the reasons set out at [6], [7] and [8] that his Honour proceeded on the basis that the passbook was in Mrs Nguyen’s name.  That was why he considered in some detail the evidence which Mrs Nguyen put forward to explain the sources of the funds in the account. 

14. His Honour referred at [6] to the inconsistencies in Mrs Nguyen’s evidence about the makeup of the $30,000 in the passbook account. 

15. His Honour went on at [8] to accept that Mr Nguyen did gamble and that in ‘later years’ was heavily involved with other gamblers.  However, he found that the evidence about the position between 1980 and 1985, when the ‘nest egg’ was accumulated, was quite unsatisfactory. 

16. These findings were reasonably open on the evidence. 

17. The second finding which was attacked dealt with what was called the Hui scheme.  Mrs Nguyen gave evidence about her memberships of the scheme in an effort to explain the source of certain deposits made to her passbook account during the period February 2004 to February 2005.  Those amounts did not come from Mrs Nguyen’s wages, but were applied, at least in part, toward payment of mortgage instalments on the property. 

18. Mrs Nguyen was on notice from the first day of the hearing before Raphael FM that the source of these deposits in her passbook was an issue.  Initially she said in cross-examination that she had lent moneys to a friend of hers who was a doctor, and that the deposits were repayments of the loan. 

19. However, upon the resumption of the hearing, nearly two months later, Mrs Nguyen claimed that the deposits into her account came from the Hui scheme. 

20. It is evident from his Honour’s remarks at [18] that he understood the nature of the Hui scheme.  However, Mrs Nguyen’s counsel challenges his Honour’s finding that:

    Try as I might, I was unable to understand how the respondent actually made money from her involvement in these schemes.  She certainly did not make any declaration of such income in her tax return.

21. We were taken in argument by counsel for Mr Pascoe to the lengthy portions of the transcript on the topic of the Hui schemes.  It is plain that Mrs Nguyen’s evidence on this topic was quite unsatisfactory. 

22. Nevertheless, counsel for Mrs Nguyen points to the apparent distinction between a Hui scheme and a profit-making enterprise or undertaking, which counsel submits was overlooked in his Honour’s judgment.  In our view, nothing turns on this.  It is apparent from an examination of the transcript that his Honour’s overall views of Mrs Nguyen’s credibility was that he did not accept her evidence about the Hui scheme. 

23. In re-examination, Mrs Nguyen was asked if she had made money from her participation in the Hui scheme.  All his Honour intended to say about this topic was that he could not understand Mrs Nguyen’s evidence, as to how she obtained funds from the schemes, and that if she had, any such income was not disclosed in her tax return. 

24. The third finding which Mrs Nguyen’s counsel attacked was the finding about a loan from Ms Vu.  Mrs Nguyen claimed to have borrowed $10,000 from Ms Vu which was said to have been applied toward the deposit on the property. 

25. His Honour dealt with the claim about Ms Vu at [9] and [21].  He said at [9] that Mrs Nguyen did not explain how she repaid Ms Vu the $10,000 allegedly borrowed from her.  He also said at [21]:

    Another constituent of the deposit moneys was the loan from Ms Vu. The evidence concerning this was vague in the extreme. There was certainly no evidence as to how Ms Vu was repaid if she was. Given the views I shall express about the respondent’s evidence generally the story about this loan is not one which I am prepared to accept.

26. Mrs Nguyen’s counsel argues that the finding that Mrs Nguyen did not explain how she repaid Ms Vu misstates the evidence.  It is true that Mrs Nguyen gave evidence that she paid her friend back in instalments, and ‘a little bit’ from the first home owner’s grant.  But as with her evidence about the Hui schemes, she was on notice that this was an issue to be addressed at the resumption of the hearing.  Once again, her evidence was vague and quite unsatisfactory. 

27. Indeed, on the first day of the hearing before Raphael FM, Mrs Nguyen was put on notice that she should provide an affidavit to Ms Vu to corroborate her evidence.  Nearly two months later, all Mrs Nguyen could say was that she had a letter from Ms Vu which “maybe tomorrow I bring to you.”  Even then, no letter was ever produced. 

28. His Honour’s remark about the absence of evidence of repayment of the loan went to the question of whether the loan from Ms Vu was ever made.  There was no error in his Honour’s remarks and findings at [9] and [21].  The finding that he was not prepared to accept Mrs Nguyen’s evidence about the loan from Ms Vu was open to him.

29. Mrs Nguyen’s counsel raised two other challenges to his Honour’s findings.  The first of these challenges was as to his Honour’s finding that he was not satisfied that Mr Nguyen made no contribution whatsoever to the expenses of the household. 

30. There is no substance in this ground.  In order to obtain a finding that Mr Nguyen made no contribution, it would have been necessary for Mrs Nguyen to establish that she paid the entirety of the mortgage instalments.  His Honour found, amongst other things, that for the year ended 30 June 1988, Mrs Nguyen’s net income was insufficient to meet the mortgage payments, although she claimed that she made all of them.  

31. The second of these challenges was to his Honour’s finding that Mrs Nguyen connived in an application to the Family Court which would have had the effect of defeating Mr Nguyen’s creditors.  This finding appears at [23].  It commences with the words, ‘knowing that she was not married, she has connived...’ 

32. Attention was drawn to the seriousness of the finding and the level of satisfaction required to make it out, but again, there is no substance in the attack.  All that his Honour meant by the prefatory words was that upon the assumption she was not married, which was the case she sought to make before Raphael FM, she knowingly participated in a false application to the Family Court.  This finding was reasonably open. 

33. It follows, in our view, that no appellable error has been demonstrated in his Honour’s factual findings. 

34. There is no substance in the submission made to us by Mrs Nguyen’s counsel, that the evidence of Mr and Mrs Nguyen was uncontradicted by other evidence.  That will almost always be so in this type of proceeding, because the factual issue relates to the intention of the parties at the time of the transaction and to their contemporaneous actions. 

35. The task before Raphael FM was to determine whether to accept the evidence of Mrs Nguyen that she contributed the whole of the deposit and all of the mortgage instalments.  Plainly, his Honour did not have to accept the evidence of Mr and Mrs Nguyen.

36. Raphael FM refused to accept Mr Nguyen’s evidence that he totally abrogated his family responsibilities.  He refused to accept that Mrs Nguyen contributed all of the deposit and 100 per cent of the mortgage instalments.  The matters to which his Honour referred provided a credible explanation of how Mr and Mrs Nguyen funded those payments as a joint domestic enterprise. 

37. His Honour was not bound to accept an alternative hypothesis. Moreover, as is conceded, even if an alternative hypothesis were open on the evidence, no appellable error would be revealed in rejecting it. 

38. The appeal must be dismissed with costs. 

I certify that the preceding thirty-eight (38) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Jacobson, Bennett & Cowdroy.

Associate:

Dated:        28 November 2007

Counsel for the Appellant:	Mr P R Glissan
Solicitor for the Appellant:	Lofitis Chegwidden
Counsel for the Respondent:	Mr B J Skinner
Solicitor for the Respondent:	Thomson Playford
Date of Hearing:	12 November 2007
Date of Judgment:	13 November 2007