Pascoe v Nguyen

[2007] FMCA 194

FEDERAL MAGISTRATES COURT OF AUSTRALIA

PASCOE v NGUYEN [2007] FMCA 194

BANKRUPTCY – Property – where the applicant trustee sought the sale of the property owned jointly by the bankrupt and the respondent and procedural orders regarding the sale and division of the net proceeds − where the applicant trustee and respondent registered as tenant in common − where the respondent resists the orders sought on the grounds she put the cash deposit moneys into the original property and therefore is entitled to a resulting trust considered by the High Court in Calverley v Green or a constructive trust identified in Muschinski v Dodds as a result of making all the mortgage payments − whether the evidence given by the respondent forms a basis for the implying of either trust − whether the applicants were legally married − whether the position of a married couple who make a joint purchase can be distinguished from non-married parties who make a joint purchase such that the court in the circumstances of this case should not impose the resulting trust or constructive trust on the trustee.

Bankruptcy Act 1966, s.30
Federal Magistrates Court (Bankruptcy) Rules 2006

Calverley v Green (1984) 155 CLR 242
Allen v Snyder [1977] 2 NSWLR 685
Muschinski v Dodds (1985-1986) 160 CL  R 583
Baumgartner v Baumgartner (1987) 164 CLR 137
Hibberson v George (1987-1989) 12 Fam LR 725 (NSWCA)
Miller v Sutherland (1990-1991) 14 Fam LR 416
Re Sabri; ex parte Brian v Australia & New Zealand Banking Group Limited (1996–1997) 21 Fam LR 213 at [230]
Lopatinsky v Official Trustee in Bankruptcy (2004) 31 Fam LR 267
Re Cummins; The Trustees of the Property of John Daniel Cummins, a bankrupt v Mary Elizabeth Cummins & Anor (2006) 80 ALJR 589
Sheludko v Sheludko [1972] VR 82

Applicant: SCOTT DARREN PASCOE AS TRUSTEE OF THE BANKRUPT ESTATE OF THANH Y NGUYEN

Respondent: LIEN THI KHUAT NGUYEN

File Number: SYG3351 of 2005

Judgment of: Raphael FM

Hearing dates: 26 & 27 October, 18 & 19 December 2007

Date of Last Submission: 12 February 2007

Delivered at: Sydney

Delivered on: 2 March 2007

REPRESENTATION

Counsel for the Applicant: Mr B Skinner

Solicitors for the Applicant: Thomson Playford

Counsel for the Respondent: Mr P Glissan

Solicitors for the Respondent: Australasia Legal & Migration Services

ORDERS

1. The land and buildings comprised in Certificate of Title Folio Identifier 24/7/5701 and known as 9 Rosemont Street, Punchbowl in the state of New South Wales (Land) be sold by the applicant as Trustee for sale, with all the obligations and privileges pertaining (including signing for and on behalf of the respondent any Contract for the Sale of the Land and any Real Property Act form of Transfer and determining the price at which the Land is to be sold) and the proceeds after payment of all expenses of and incidental to such sale to be divided equally between the Applicant and Respondent and that prior to distribution of the Respondent’s share, there be deducted from such share the Applicant’s costs of and incidental to this application.

2. For the purposes of giving effect to Order 1, the Respondent do all such things, acts and deeds and sign all documents to list for sale and sell the Land, and for that purpose, including but not limited to the following:

   2.1agree on a real estate agent(s) to be appointed to facilitate a sale of the Land;

   2.2agree on a sale or reserve price at which the Land is to be listed for sale;

   2.3deliver a signed Real Property Act form of Transfer (Form 01T v3-0) within 24 hours of being requested to do so by the applicant;

   2.4maintain the Land in a clean and presentable manner as required for the proper and effective marketing of the Land;

   2.5allow for an inspection of the Land on 24 hours notice of a request made by the applicant or agent for sale; and

   2.6give vacant possession of the Land on seven (7) days notice of a request made by the applicant or agent for sale or otherwise within four (4) weeks from the date contracts for sale of the Land have been exchanged.

3. Pending the sale of the Land, and to the extent to which he is able, the respondent shall continue to meet one half of the mortgage instalments and meet all other outgoings (including electricity, gas, telephone and council rates) in respect of the Land.

4. In the event the respondent defaults in payment of any money pursuant to Order 3, then the appropriate adjustment and deduction shall be made from her share of the proceeds on completion of the sale of the Land.

5. That upon completion of the sale of the Land, the proceeds thereof be distributed in the following manner and priority:

   5.1First, in discharge of any mortgage or encumbrance now registered upon the title of the Land;

   5.2Secondly, in payment of agent’s commission, auctioneers and auction expenses and legal costs incurred upon the sale;

   5.3Thirdly, in adjustment of council rates, water rates and other statutory imposts appropriate and reasonable for a residential property of this nature; and

   5.4Fourthly, in payment of the applicant’s costs (professional and legal) per Order 6 below;

   5.5Fifthly, and subject to orders 1, 4 and 5.4 above, in payment of the balance, the remains to be divided equally between the applicant and the respondent.

6. Respondent to pay the costs of the applicant to be taxed if not agreed in accordance with the Federal Magistrates Court (Bankruptcy) Rules 2006.

7. These orders be entered forthwith.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG3351 of 2005

SCOTT DARREN PASCOE AS TRUSTEE OF THE BANKRUPT ESTATE OF THANH Y NGUYEN

Applicant

And

LIEN THI KHUAT NGUYEN

Respondent

REASONS FOR JUDGMENT

Introduction

1. In an amended application filed in court on 19 December 2006 the applicant, who is the bankruptcy trustee of Thanh Y Nguyen, sought a substantive order pursuant to s.30 of the Bankruptcy Act 1966 for the sale of land and buildings comprised in Certificate of Title Folio Identifier 24/7/5701 known as 9 Rosemont Street Punchbowl in the State of New South Wales and consequential procedural orders regarding the sale and division of the net proceeds.  The Rosemont Street property was purchased in the name of the bankrupt and the respondent in 1985 as joint tenants.  The joint tenancy was severed as a consequence of the bankruptcy of Mr Nguyen and the applicant trustee became registered as a tenant in common with the respondent on 4 July 2005.  The respondent resists the orders sought on the grounds that as she put up all the cash deposit moneys that went into the original purchase of the property she is entitled to a resulting trust of the type considered by the High Court in Calverley v Green (1984) 55 CLR 242, or a qualified resulting trust or an express trust of the kind recognised in Allen v Snyder [1977] 2 NSWLR 685, and that as she made all the mortgage payments thereafter she is entitled to a constructive trust of the type identified in Muschinski v Dodds (1985-1986) 160 CLR 583 and applied in Baumgartner v Baumgartner (1987) 164 CLR 137; Hibberson v George (1987-1989) 12 Fam LR 725 (NSWCA) and Miller v Sutherland (1990-1991) 14 Fam LR 416. Orders of this type were obtained against bankruptcy trustees in Re Sabri; ex parte Brian v Australia & New Zealand Banking Group Limited (1996–1997) 21 Fam LR 213 at [230] per Chisolm J and Lopatinsky v Official Trustee in Bankruptcy (2004) 31 Fam LR 267 per Moore J.

2. The applicant argues that the evidence as it came out over the four days of hearing in this matter do not establish either of the bases for implying these trusts and that in any event since the High Court decision in Re Cummins;The Trustees of the Property of John Daniel Cummins, a bankrupt v Mary Elizabeth Cummins & Anor (2006) 80 ALJR 589 the position of a married couple who make a joint purchase is now different from that of parties not in domestic relationships so that even if the factual basis for the imposition of the constructive and/or resulting trusts existed the court would not in the circumstances of this case impose them upon the trustee.

Narrative

1. Mr and Mrs Nguyen are of Vietnamese descent.  In August 1978 they went through a ceremony of marriage in Saigon. Although they have consistently maintained in a series of public documents, such as loan application forms and even an application to the Family Court of Australia, that they were legally married they now argue that for the purposes of these proceedings they were not because there is no record of their marriage held by the appropriate local authority in Vietnam.  Whilst it is the respondent’s assertion that she and her “husband” are not married, apart from the letter from Vietnam (Exhibit “2“) all the evidence put before this court was to the contrary including this extract from the transcript of the cross examination of the bankrupt:

   “MR SKINNER:   Did you and your wife get married on 17 August 1978 in Vietnam?

   THE INTERPRETER:   Yes, but we just wedded without any marriage certificate.

   MR SKINNER:   You were married before an official person in Vietnam in August 1978, were you not?

   THE INTERPRETER:   Correct, but without a marriage certificate.

   MR SKINNER:   And at the marriage ceremony your mother was present?

   THE INTERPRETER:   Yes.

   MR SKINNER:   And you and your wife regarded yourselves as officially married?

   THE INTERPRETER:   We consider ourselves husband and wife but without a marriage certificate.

   MR SKINNER:   When you came to Australia in 1979 did you tell the authorities that you were married?

   THE INTERPRETER:   Yes.

   MR SKINNER:   Please hold up your hand - your left hand.  Is that a wedding ring?

   THE INTERPRETER:  Yes.

   MR SKINNER:   And at all times since arriving in Australia you have regarded yourself as married, have you not?  You can put your hand down now.

   THE INTERPRETER:   Yes.  I think that I am married.

   MR SKINNER:   And you were interviewed by representatives of the trustee on 9 October this year, were you not?

   THE INTERPRETER:   Correct.

   MR SKINNER:   And you told the trustee that you were married in 1978 in Vietnam?

   THE INTERPRETER:   Correct.”

2. The respondent has not produced any evidence from an expert in Vietnamese law that the ceremony through which the parties agree they went constituted something less than a marriage. 

3. In 1979 the parties came to Australia and the bankrupt commenced working for a battery company.  During the early 1980’s two children were born to the family and the wife did not work.  On 8 July 1985 the bankrupt and the respondent exchanged contracts for the purchase of the 9 Rosemont Street property.  The property cost $67,300.00.  $37,300.00 was paid in cash and $30,000.00 was advanced by way of a Commonwealth Savings Bank of Australia home loan secured by a mortgage on the property.  The property was transferred into the joint names of the bankrupt and the respondent.  In the affidavits filed in this case and in her evidence the respondent was at pains to say that the bankrupt did not acquire any share in the beneficial ownership of the property.  However, she agreed that the property was put into their joint names and that was done because it was “the custom”.

4. At the time the property was purchased the respondent was not working.  She said in evidence that her mother was living with her and that her mother sold some jewellery and gave her the proceeds which she put together with jewellery that she owned and sold and with money borrowed from a friend and with her mother’s accumulated social security payments to come up with the $30,000.00 odd that was in the savings bank account at the time.  The savings bank passbook was not available. There is evidence of the receipt of the passbook by the Commonwealth Bank on 6 September 1985.  At that time the balance in credit was $30,581.10.  I accept that this is the sum that was used towards the purchase of the property.  What the respondent did not tell the court, until under questioning, was that she and the bankrupt received a home loan grant of $7,000.00 towards the purchase.  The respondent’s evidence about the makeup of the $30,000.00 in the Commonwealth Bank account contained a number of inconsistencies.  First of all she said that she sold jewellery and put the money into the bank account to the tune of over $30,000.00.  Then she said that the money was her money and the joint money from herself and her mother.  Then she said that her mother brought money from Vietnam and also sold jewellery for $3000 or $4000 and she put her mother’s pension payments into the account because she was the trustee for her mother.  Finally, she said that her own jewellery sales were only worth about $3,000.00 but she had savings from childcare of about $5,000.00 and she borrowed some money, stated to be $10 000, from a person identified as Ms Vu from Melbourne.  That evidence was given at the hearing on 26 October 2006.  At the hearing on

   
   

   18 December 2006 she said that the first time she got the $30,000.00 was from her mother.

5. At the time the property was purchased the bankrupt was in full time employment and the respondent was raising her young family.  She suggested that she was able to bring some money into the family by looking after other people’s children and sewing and I accept that money may have come in from her mother’s benefits.  The respondent told the court that the reason that the property was placed into the joint names of herself and the bankrupt was because this was a requirement of the Commonwealth Bank.  No evidence to corroborate that statement was provided and it was not supported by the bankrupt.  The respondent’s evidence for her claim that there was at no time any intention that her husband should benefit in any way from his notional ownership of the property was supported by the allegation that he was an addicted gambler who never put any money into the household. 

6. Interestingly, the evidence concerning the bankrupt’s gambling was never contained in any of the affidavits filed in the court but only put in oral evidence.  Whilst I am prepared to accept that the bankrupt did gamble and in later years was quite heavily involved with other gamblers, the evidence relating to the position in 1980 to 1985, when the nest egg of $30,000.00 was being built up, is not satisfactory.  He initially told the court that he played the poker machines in pubs.  But he was later forced to agree that no poker machines were installed in pubs during those years and that must have been incorrect.  He then claimed that he gambled at the Mandarin Club in the city.  Whilst this is possible I could not be satisfied from his evidence that the respondent worked a full day as a process type worker, returned home to Punchbowl and then left almost immediately in order to gamble his money away at the Mandarin Club.  It seems to me that if the respondent was aware of her husband’s gambling habits and that those habits were as destructive as she says they were, it is inherently improbable that having found all the money for the deposit on the property and being prepared to make all the mortgage payments (because none of the husband’s wages went into the house at all) she would have allowed the property to remain in their joint names.  During the course of the bankrupt’s evidence I asked him how he was paid during those years.  He confirmed that he was paid weekly in cash.  He agreed that he came home with the cash money in his pocket on Thursday.  He agreed that his mother in law was generally in the house when he returned.  He claimed that he would get changed and go out to gamble.  He agreed that his wife and his mother in law were aware of his gambling habits.  I asked him whether or not his mother in law would ask him for some of the money he received from his wages and he said that she would not.  I find this inherently improbable.  The respondent has not satisfied me that during this period when she was not working and the bankrupt was he made no contribution whatsoever to be the expenses of the household which would have allowed her to add to the savings in the Commonwealth Bank account.

7. The following year, after the parties had bought the Punchbowl home, they applied to the St George Building Society for a second mortgage which they used to carry out improvements on the property.  At this time the respondent was still at home.  The second mortgage repayments were a minimum of $800.00 per month so the combined payments to the Commonwealth Bank and St George were $1,295.00 per month.  Although the respondent said she was working part time no evidence was led as to how much money she did earn during this period.  The respondent never explained how she repaid Ms Vu the $10,000.00 she allegedly borrowed from her for the deposit moneys.

8. In February 1987 the bankrupt changed jobs and became a machine operator with Acclaim Shelving Systems.  In July 1987 the respondent commenced work with Australia Post as a trainee.  She completed the training at the end of August 1987.  At that time the respondent was pregnant with her child who was born on 14 March 1988.  The evidence reveals that during that time the respondent’s net income for the year ended 30 June 1988 was $11,429.00 which was insufficient in itself to meet the mortgage payments, although she had claimed that she made all of them.

9. Thereafter the respondent remained with Australia Post in progressively more senior positions so that by 30 June 1993 her net income had risen to $24,955.00.  The bankrupt remained employed with Acclaim Shelving.  In November 1993 the respondent and the bankrupt took out a third mortgage over the property from HFS.  The amount borrowed is not known but the estimated monthly repayments were approximately $500.00.  If these monthly payments are added to the monthly payments under the first and second mortgages the total repayments are approximately $1,745.00 per month or $20,940.00 per year.  This was at a time when the respondent was claiming that she made all the mortgage repayments and that her husband contributed nothing to the household.  If this statement was correct it would mean that the household survived on approximately $100.00 per week for all its non mortgage expenses, a situation that I find improbable.

10. In 1994 the bankrupt bought a Mazda motor vehicle for approximately $10,000.00.  He paid for this himself.  In or about April 1995 the respondent and the bankrupt remortgaged the property paying out the CBA, St George and HFS by way of a first Westpac mortgage.  At that time the total debt on the property was $95,824.41.  The repayments under the new mortgage were approximately $800.00 per month or $9,600.00 per annum and the respondent’s income at that time was $29,249.00 net.  On 30 August 1996 the bankrupt acquired a Ford Festiva motor car which he paid for himself.  He paid for a Mazda MX6 purchased on 26 June 1997, at a time when his income was $24,324.00.

11. In November 1999 the bankrupt stopped working for Acclaim because of a work related injury.  He went on to workers compensation.  In August 2001 his workers compensation claim was redeemed by way of a payment of approximately $50,000.00 which was paid first into his key card savings account on 3 August 2001 and later on the same day transferred into the respondent’s passbook account.  It was out of that account that the $800.00 per month mortgage repayments were paid. 

12. It is around this time that the bankrupt appears to have started a business cashing cheques for gamblers.  He denied this at first as did his wife but between November 2001 and June 2002 he banked a total of $408,064.91 into a Commonwealth Bank account.  The existence of the business was later admitted.  The bankrupt’s tax return did not reveal any income earned from these deposits either by way of interest or commission.

13. In March 2003 the respondent and the bankrupt readjusted their Westpac affairs by taking out another mortgage which paid out the first loan.  In the mortgage application the applicant and the bankrupt were described as co applicants and as being married. Around this time there is evidence of large scale deposits and withdrawals of round sums of cash e.g. 14 March 2003 $50,095.04, 3 April 2003 $5,000.00, 8 April 2003 $5,000.00, 13 August 2003 $20,000.00, 8 September 2003 $10,000.00, 2 January 2004 $10,000.00.  Documents also reveal that between July 2002 and June 2003 the bankrupt banked a total of $526,869.10 into a CBA account.  It was suggested, and denied, that this was the proceeds of a cheque cashing business.  Between July 2003 and December 2003 a further $298,016.16 was paid into that account.  The total deposited into that account over a two year period was $1,232,950.17. 

1. The bankrupt entered into an agreement with Cash Stop, a company in the cheque cashing business.  In mid 2003 a number of cheques which the bankrupt negotiated through Cash Stop were dishonoured and Cash Stop sought to recover the money from the bankrupt.  On 17 September 2003 the bankrupt agreed with Cash Stop to pay it $58,491.75.  He did not do so. On 20 January 2004 Cash Stop obtained judgment against the bankrupt in the sum of $63,411.68 which formed the basis of the bankruptcy notice and the petition.  It is fair to say from the bankrupt’s evidence that he has never accepted his liability for this debt. Indeed his conduct after the judgment reveals a desperate attempt to place such assets as he had out of the reach of that company.  On 14 February 2004 he transferred the registration of his two motor vehicles to other members of his family.  On 24 February 2004 the bankrupt and the respondent applied for consent orders in relation to the property at the Family Court in Parramatta.  Both parties (who were nominally separately represented) swore affidavits in support of that application stating that they were married before a village headman in August 1978.  Requisitions on the application were sent out by the Registrar of the Family Court and the application was not proceeded with.  Had it proceeded it would have had the effect of transferring the ownership of the bankrupt’s undivided share into the hands of his wife.  On 19 July 2004 a bankruptcy notice was served on the bankrupt and on 27 July 2004 the applicant lodged a caveat against the title of the Punchbowl property.

2. The applicant has prepared an analysis of the passbook account 22280077638 in the name of the respondent compared to deposits made to the Westpac account 690387 in the name of the respondent and the bankrupt between 1 April 2003 and 31 March 2005.  It was into the Westpac account that payments under the mortgage were to be made.  The analysis indicates that $8,700.00 was withdrawn from the respondent’s account but $10,015.00 was paid into the Westpac account.

3. Not surprisingly, both the respondent and the bankrupt were subject to prolonged cross examination.  It was the bankrupt’s case that he was a gambler and that there had never been any intention that he would have any interest in the property.  He told the court that apart from one or two shopping outings on which he paid for items he never made any contribution to the family finances which supported himself, his wife, his mother in law and three children over a period of almost 20 years.  He claimed to have gambled all of his money away except that which was necessary for him to purchase the motor vehicles and run them.  The respondent’s evidence mirrored that of the bankrupt save that she had considerable difficulty in explaining the use of her bank accounts.  At one stage she claimed that she made money by lending money to people whom she knew, in particular a doctor, and that his repayments to her were the source of many of the credit entries in her bank book.  This doctor did not give evidence.  She claimed that she was part of a Hui scheme at work.  The Hui scheme is a South East Asian version of the Starr-Bowkett Schemes whereby a number of people make small deposits which one or more members of the scheme can then access as larger lump sums.  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.  The respondent was also reluctant to admit that the bankrupt was running a cheque cashing business or that after his dispute with Cash Point he began to utilise her account for that purpose. 

Discussion

1. I have hinted at the legal analysis that will be required should I accept in whole or in part the respondent’s claim to have financed the Punchbowl property.  It is therefore necessary to discuss first whether those are assertions that I can accept.  The first question that must be decided is whether or not the parties were married.

Were the parties married?

1. I accept that the parties went through a traditional marriage ceremony in Vietnam in 1978.  I am of the view that in the absence of any evidence that the type of ceremony was not considered to be a valid marriage in that country I am entitled to apply the presumption of validity discussed in detail by Crockett J in Sheludko v Sheludko [1972] VR 82. In that case his Honour found that the presumption should be particularly applied:

   “The more so since the ceremony deposed to by the petitioner was followed by almost 19 years of interrupted cohabitation during which, wherever they lived, they established a reputation as man and wife.  Further, during this period the respondent has persistently and consistently (on occasions by declaration) averred that he is married and married to the petitioner.  He has at all times held her out as his wife. …”

   The same could be said for the bankrupt.  He has told the court he thought he was married.  He has told government departments and mortgagees that he was married.  He has even told the Family Court of Australia that he was married.  I am not prepared to abandon the presumption just because there exists a letter from Vietnam indicating that there was no entry of the marriage in a register in a place nominated by two people whose evidence it will become clear I am unable to accept.  Insofar as it matters to the outcome of this case I propose to proceed on the basis that the parties were legally married.

Did the respondent put up the whole of the deposit moneys

1. The respondent claims that she put up the whole of the deposit moneys.  But by the time the case had concluded it was clear that she did not because at least $7,000.00 was provided by a government grant to both of the parties.  I have already discussed the evidence in relation to where the money was alleged to have come from.  I do not consider the respondent to be a reliable witness.   I have already expressed my views about the improbability of the conduct of her husband in relation to financial matters that was allowed to proceed for well over twenty years.  Whilst I am prepared to accept that the respondent may have had some jewellery when she arrived from Vietnam I do not know that it was not bought by her husband and expected to be treated as family property.  It could have been a convenient way to transport family savings.  I am not making a finding that this is the case but merely indicating that these possibilities exist and it is therefore difficult for me to make a finding on the balance of probabilities that the money represented by the jewellery was hers and hers alone.  In the same way I am not satisfied that the money given to her by her mother was money that could be said to truly belong to the respondent.  It is to be remembered that the mother lived in her daughter and her husband’s house.  She received board and bread.  She may have allowed her daughter the use of her pension moneys but at least part of this must have gone to her own upkeep.  Again, the mother remained living with the family when they moved to the new house and had she been alive she may have argued that she was also entitled to a declaration of a resulting trust along the principles set out in Calverley v Green.  I am not making such a finding but the existence of this possibility is another factor militating against a finding on the balance of probabilities that the money all belonged to the respondent.  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. 

2. 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. 

Did the respondent pay all of the mortgage payments?

1. It is the respondent’s claim that she paid all the mortgage payments under all the mortgages that were obtained on the property.  According to her story her husband was an inveterate gambler who contributed nothing whatsoever to the household, bought himself a series of motor vehicles and apart from the very occasional family trip to the supermarket, made no financial contribution to the family and little personal contribution.  Notwithstanding this characterisation of her husband she has been married to him and lived with him as a married woman since 1978.  She has taken part in raising further moneys on the security of her home jointly with him.  She has taken an extensive and expensive trip to Vietnam with him.  She has allowed her bank accounts to be used by him for the deposit of very large sums of money in connection with what is claimed to be his cheque cashing business.  Knowing that she was not married she has connived in applications to the Family Court claiming that she was in order to obtain orders which would have the effect of defeating her husband’s creditors.  Her evidence concerning her financial activity appeared to change in order to meet the moment.  Her story about making money by lending money to a doctor friend was unconvincing.  The doctor was never called to corroborate the story.

2. Another area of concern in relation to the respondent’s testimony regarding her payment of the mortgage was her inability to explain how she could have made those payments during the years when the trustee had established that those payments either exceeded or were very close to her net wages.  It seems to me that for a very significant period of time there must have been other contributions to the family finances to ensure that the mortgage payments were made and that the family was clothed, fed, lit, heated and entertained.  It is not an unreasonable inference to draw that such money would have been supplied by the bankrupt from his weekly earnings.  In those circumstances payments of the mortgage cannot be separated out and assigned to the respondent’s exclusive benefit. 

3. The actions of the bankrupt and the respondent in relation to the Cash Stop debt also reflect upon their general credibility.  At page 66 of the transcript of 18 December 2006 there commences a cross examination of the bankrupt in relation to Cash Stop:

   “MR SKINNER:   On 14 February 2004, that is within the following month, [of Cash Stop obtaining a judgment against him] you transferred two motor cars that were registered to you to other people, did you not?

   THE INTERPRETER:   First of all, these two cars - first of all my wife and I put the name in the registration for the two cars, but after that I saw the problem so I transferred the two cars into my children.

   MR SKINNER:   The problem was, Mr Nguyen, that you did not want to pay Cash Stop the money, which you agreed to pay back to it.  Isn’t that the case?

   THE INTERPRETER:   It was because I am just a victim.  Cash Stop trapped me into this.  Why did you not cash Mr Ghani?

   MR SKINNER:   And 10 days after you transferred the two motor cars you filed an application in the Family Court to transfer the property in which you live to your wife, did you not?

   THE INTERPRETER:   I was not successful.

   MR SKINNER:   No, I know you were not successful but you tried, did you not?

   THE INTERPRETER:   I tried because Cash Stop threatened to put me into jail and asked me to pay money.

   MR SKINNER:   And, the reason - that is the reason you were trying to get consent orders from the Family Court of Australia at Parramatta?

   THE INTERPRETER:   Yes, because Cash Stop pressured me.  They wanted to put me into prison and asked me to pay the debt.

   MR SKINNER:   The reason that you transferred two motor cars and made an application to the Family Court was to avoid paying Cash Stop?

   THE INTERPRETER:   It is not that I do not want to pay them.  It is just because they threatened to get my house.”

4. It is perhaps significant that the bankrupt refers to the property as “his house”.  He does not refer to it as “his wife’s” house.  The impression I am left with from this exchange and from other evidence of both the respondent and the bankrupt is that all these steps had one motivating factor which was not to allow Cash Stop the fruits of its judgment. At page 136 in the transcript of 18 December 2006 there is a short exchange between myself and the bankrupt:

   “HIS HONOUR:       You just don’t think you owe Cash Stop money do you?

   THE INTERPRETER:   Correct.

   HIS HONOUR:   So you would be prepared to do anything in order to avoid paying Cash Stop the money because you think they have cheated.  Is that what you think?

   THE INTERPRETER:   Correct.”

5. In his evidence the bankrupt said that his wife knew he was a gambler and that he knew that the house belonged to his wife and that his wife would always give him any amount of money that he wanted.  Yet when the final loan was taken from Westpac he did not tell the bank that he did not own the house and the house was only owned by his wife.  He explained this by saying that if his wife borrowed money by herself she might not have got the money.  But at the time the loan was taken out the respondent wife was the only person in the family earning any money.  She had had a regular job at Australia Post for nearly twenty years.  The bankrupt by contrast was then an invalid pensioner.

6. In the light of the testimony given by the bankrupt I am unable to accept his assertions concerning either the ownership of the house or his total abrogation of his family responsibilities in favour of his gambling habit.  It is interesting that he carried on a business cashing cheques for other gamblers.  This required him to hold large sums of cash at any one time.  It seems to me that it would require a considerable amount of discipline for an addicted gambler to run this type of business and not to utilise the cash obtained to gamble himself. The Cash Stop judgment was not related to the bankrupt’s own cheques but those of third parties to whom he had advanced money.  There is no independent evidence of irregular or reckless conduct by the bankrupt with regard to the over $1,000,000.00 that passed through the accounts whilst he was conducting this business.  To my mind that would be unusual in an addicted gambler.

7. The conclusion that I have come to is that neither the respondent nor her husband, the bankrupt, have been able to satisfy me on the balance of probabilities that the respondent herself made all payments towards the mortgages on the property in a way which would exclude the presumption of a joint domestic enterprise.  Their evidence was unreliable and tailored to fit the claims being made.

The resulting or constructive trusts

1. If I had accepted the evidence of the bankrupt and the respondent concerning the payment of the deposit and mortgage moneys I would have been obliged to make findings as to the existence or otherwise of a Calverley v Green style trust and to opine upon the affect on that case of the decision of the High Court in Cummins.  Because I have found that the parties were married and because I am not satisfied that the full amount of the deposit moneys or even any significant part of them came from the wife (there being no independent evidence as to the source of funds) I am satisfied that the usual rules confirmed by the High Court in Cummins will apply.  Mr Skinner in his helpful written submissions says:

   “[117]The Court in Cummins noted that the case concerned the traditional matrimonial relationship and approved of the following passage from Professor Scott: -

   It is often a purely accidental circumstance whether money of the husband or of the wife is actually used to pay the purchase price to the Vendor, where both are contributing by money or labor to the various expenses of the household.  It is often a matter of chance whether the family expenses are incurred and discharged or services are rendered in the maintenance of the home before or after the purchase.

   [118]    The Court went on to agree with, adopt and apply the following principle: -

   Where a husband and wife purchase a matrimonial home, each contributing to the purchase price and title is taken in the name of one of them, it may be inferred that it was intended that each of the spouses should have a one-half interest in the property, regardless of the amounts contributed by them.

   [119]    The Court further held: -

   That reasoning applies with added force in the present case where the title was taken in the joint names of the spouses.

   [120]The approach of the High Court is clearly applicable to the facts of the present case.”

   I would adopt these submissions.

2. In regard to the payment of the mortgages which might have given rise to a constructive trust (although Mr Skinner disputes this in relation to a married couple on the authority of Cummins) I am again unable to find that the applicant made those payments independent of the general household expenses.  I am unable to find that there was ever any intention of the parties that by making mortgage payments the applicant was to secure for herself an exclusive interest in the property.

3. In the light of my findings as to the evidence or more accurately lack of it the respondent’s claim cannot be established even if the law relating to the matter was as she maintains.  In those circumstances the applicant must succeed in obtaining the orders he seeks for the sale of the property and the respondent shall pay his costs to be taxed if not agreed in accordance with the Federal Magistrates Court (Bankruptcy) Rules 2006.  In the amended application the applicant seeks orders that the respondent pay his costs on an indemnity basis and that the respondent pay the trustee’s costs. If the applicant wishes to further agitate those applications he may approach my associate for a hearing date.

I certify that the preceding thirty-two (32) paragraphs are a true copy of the reasons for judgment of Raphael FM.

Associate: 

Date: