Pattison, Paul Anthony (As Trustee of the Estate of Robert Graham Ansett) v Crosswell, Sherrie
[1998] FCA 264
•25 MARCH 1998
FEDERAL COURT OF AUSTRALIA
BANKRUPTCY - whether bankrupt was the beneficial owner of moneys used to purchase property - whether registered owner of property held the property on a resulting trust for the Official Trustee - whether bankrupt was able to pay his debts in conformity with s 120(2).
Bankruptcy Act 1966, ss 40(1), 55, 58(1), 115, 116(1), 120(2)
Trade Practices Commission v Ansett Transport Industries (Operations) Pty Ltd (1978) 20 ALR 31
Briginshaw v Briginshaw (1938) 60 CLR 336
Nelson v Nelson (1995) 184 CLR 538
Official Trustee in Bankruptcy v Alvaro (1996) 138 ALR 341
PAUL ANTHONY PATTISON (AS TRUSTEE OF THE ESTATE OF ROBERT GRAHAM ANSETT) v SHERRIE CROSSWELL, ROBERT GRAHAM ANSETT and JOSEPHINE ANNE ANSETT
VB 1078 of 1990
NORTHROP J
MELBOURNE
25 MARCH 1998
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VB 1078 of 1990
BANKRUPTCY DISTRICT OF THE STATE OF VICTORIA
RE:
ROBERT GRAHAM ANSETT
EX PARTE:
PAUL ANTHONY PATTISON (AS TRUSTEE OF THE ESTATE OF ROBERT GRAHAM ANSETT)
APPLICANTAND:
SHERRIE CROSSWELL, ROBERT GRAHAM ANSETT AND JOSEPHINE ANNE ANSETT
RESPONDENTSCOURT:
NORTHROP J
DATE OF ORDER:
25 MARCH 1998
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
The application be dismissed.
Either party have leave to make written submissions to the Court within 14 days if special orders with respect to costs is required. In the absence of such submissions, the Applicant will be ordered to pay the costs of the Respondent. Subject to any further order, the final orders of the Court will be dated as at the expiration of the 14 days from today.
That the time for any appeal be extended to 21 days from the date of any order being made with respect to costs.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VB 1078 of 1990
BANKRUPTCY DISTRICT OF THE STATE OF VICTORIA
RE:
ROBERT GRAHAM ANSETT
EX PARTE:
PAUL ANTHONY PATTISON (AS TRUSTEE OF THE ESTATE OF ROBERT GRAHAM ANSETT)
APPLICANTAND:
SHERRIE CROSSWELL, ROBERT GRAHAM ANSETT AND JOSEPHINE ANNE ANSETT
RESPONDENTS
INDEX TO REASONS FOR JUDGMENT
Introduction and statutory background 1 - 5
The Budget Group of Companies 5 - 8
The source of the moneys (Applicants’ version) 8
A.The Ansett Family Trust 8 - 12
B.The Rodisky Accounts 12 - 13
C.The $700,000 loan 13 - 16
D.Basis of Applicant’s Primary claims 16 - 17
Defences of Sherrie 17
A.Main Defence of Sherrie 17 - 18
B.Other Defences 18 - 22
The main issues 22
A.Whether Bob Ansett was the beneficial owner of the moneys
used to purchase the Noosa Property 24
(i) General 24 - 25
(ii)Evidentiary matters 25 - 29
(iii) Conclusion 29 - 30
(iv)Related matters 30 - 35
Orders and Comment 36 - 37
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VB 1078 of 1990
BANKRUPTCY DISTRICT OF THE STATE OF VICTORIA
RE:
ROBERT GRAHAM ANSETT
EX PARTE:
PAUL ANTHONY PATTISON (AS TRUSTEE OF THE ESTATE OF ROBERT GRAHAM ANSETT)
APPLICANTAND:
SHERRIE CROSSWELL, ROBERT GRAHAM ANSETT AND JOSEPHINE ANNE ANSETT
RESPONDENTS
COURT:
NORTHROP J
DATE:
25 MARCH 1998
PLACE:
MELBOURNE
REASONS FOR JUDGMENT
Introduction and statutory background
On 6 July 1990, Robert Graham Ansett (“Bob Ansett”) presented his own petition under s 55 of the Bankruptcy Act 1966. On the same day, the petition was accepted by the Registrar in Bankruptcy. Thereupon Bob Ansett became a bankrupt. As a result, by reason of s 58(1) of the Bankruptcy Act, all his property vested forthwith in the Official Trustee. The applicant is now the trustee in bankruptcy of the estate of Bob Ansett. Bob Ansett was discharged from bankruptcy as from 2 July 1995, but this application relates to matters in bankruptcy.
On 6 July 1990, Sherrie Crosswell, was the registered proprietor in fee simple of the land and house situated at 19 Crank Street, Sunshine Coast, Queensland (“the Noosa Property”). She is still registered as the proprietor of the Noosa Property. Sherrie Crosswell is the daughter of Bob Ansett. The applicant claims that Sherrie Crosswell, at all relevant times, held the Noosa Property on trust for Bob Ansett pursuant to a resulting trust. The applicant claims that on 6 July 1990, that interest constituted property of Bob Ansett and thus on his bankruptcy vested in the Official Trustee.
Alternatively, the applicant claims that Sherrie Crosswell became the owner of the Noosa Property pursuant to a disposition of property, being a settlement of property by Bob Ansett, as settlor, that came into operation within a period of five years before the commencement of his bankruptcy which, on the facts of this case, was 31 May 1990, being the date on which he had signed an authority under s 188 of the Bankruptcy Act. Relying on s 120(2) of the Bankruptcy Act, the applicant claims that the settlement is void as against him unless Sherrie Crosswell proves that at the time the settlement was made, Bob Ansett was able to pay all his debts without the aid of the property the subject of the disposition being the moneys provided by Bob Ansett to acquire the Noosa Property.
Other issues are raised by this application but the two mentioned are the primary questions to be considered before turning to those other issues although the evidence relating to some of those issues has relevance to the primary questions.
Section 58 of the Bankruptcy Act provided, in substance, that where a debtor becomes a bankrupt, the property of the bankrupt vests forthwith in the Official Trustee. Under s 116(1), and subject to the Bankruptcy Act, all property that belonged to or was vested in the bankrupt at the commencement of the bankruptcy, is property divisible amongst the creditors of the bankrupt. By reason of s 115(2), the commencement of the bankruptcy of Bob Ansett is deemed to be 31 May 1990 being the date he committed an act of bankruptcy described in s 40(1)(i).
Section 120(2) of the Bankruptcy Act, insofar as relevant for present purposes, provides that a settlement of property is, if the settlor becomes a bankrupt and the settlement came into operation within 5 years before the commencement of the bankruptcy, void as against the trustee in bankruptcy unless the parties claiming under the settlement prove:
“(a) that the settlor was, at the time of making the settlement, able to pay all his debts without the aid of the property comprised in the settlement;
and
(b) that the settlor’s interest in the property passed .... to the donee under the settlement on its execution.”
In s 120, the phrase “settlement of property” includes any disposition of property.
Sherrie became registered as the proprietor of the Noosa Property on 29 April 1987. The Noosa Property was acquired pursuant to the terms of a contract of sale of land dated 2 February 1987 entered into between Kenneth Charles Morrison as vendor and Sherrie as purchaser for the sum of $260,000. The deposit of $26,000 and the balance of purchase price (allowing for adjustments and other items) of $244,336.90 were paid to the vendor on 2 February 1987 and 3 March 1987 respectively. These amounts were paid to on behalf of the vendor by means of telegraphic transfers of money from a bank account in the name of Budget Rent A Car System Pty Ltd, commonly referred to as “BRACS”.
The applicant claims that in fact and in truth Bob Ansett was the beneficial owner of the moneys used to purchase the Noosa Property. An issue common to the two primary questions is who was entitled to the beneficial interest in the moneys used to acquire the Noosa Property. If Bob Ansett was so entitled, the applicant claims that the Noosa Property is held by Sherrie in favour of Bob Ansett pursuant to a resulting trust, and thus for the applicant. If there is no resulting trust, the applicant claims that the provision of the funds constitutes a disposition of property by Bob Ansett, as settlor, with the result that s 120(2) applies, the disposition taking place in February and March 1987 being within 5 years of the commencement of the bankruptcy on 31 May 1990. To succeed on either claim, the applicant has the onus of proving that in February and March 1987 Bob Ansett was the beneficial owner of the money used to acquire the Noosa Property.
In attempting to satisfy this onus, the applicant faces a dilemma. He is placed in a quandary. The money used to pay for the purchase of the Noosa Property was money transferred from the bank account in the name of BRACS. At the time of the transfer, Bob Ansett claims that he was not the beneficial owner of the money. The evidence led by the applicant to support a finding that at the time of the transfer of the money, the disposition of property, Bob Ansett was not able to pay all his debts without the aid of the property comprised the subject of the disposition, has a tendency to support a finding of fact that at that time Bob Ansett was not the beneficial owner of the money. It is not necessary for the Court to make a finding identifying who was the beneficial owner of the money. The application will fail unless the Court makes a finding that at the crucial time, Bob Ansett was the beneficial owner. Despite the great mass of evidence led in this case, most of which was directed to the issue of whether, at the time of the disposition of the property, Bob Ansett was able to pay all his debts without the aid of the money paid for the Noosa Property, the evidence admissible as against Sherrie to prove Bob Ansett was the beneficial owner comes within a narrow compass. Further, evidence directed to establish Sherrie is a witness whose evidence should not be believed, appears to be irrelevant to the primary issue. It is possible there is no sufficient evidence to support a finding that Bob Ansett was the beneficial owner of the property. The ramifications flowing from such a finding may be extensive but here the fact to be proved, as against Sherrie, is that Bob Ansett was the beneficial owner. It is possible that the application could fail on this threshold issue.
Logically, Sherrie should have been the only person named as a respondent to the application. The applicant is claiming an entitlement to land registered in her name. The other two respondents are in occupation of the Noosa Property. Josephine Anne Ansett (Josie) is the wife of Bob Ansett and the step-mother of Sherrie. The activities of Bob Ansett and Josie form a vital part of the material relevant to the resolution of this application but that of itself does not require Bob Ansett and Josie to be parties. It appears that the reason Bob Ansett and Josie were joined as parties was to seek an order that they deliver up vacant possession of the Noosa Property. The true position is illustrated by the orders being sought by the applicant contained in minutes of proposed orders and declarations supplied by his counsel at the conclusion of the hearing, namely:-
“1.The Court declares that the land comprised in Certificate of Title Volume 2088 Folio 11 being the land situate at and known as 19 Crank Street, Sunshine Beach, Noosa in the State of Queensland and being Lot 603 on Registered Plan 48112 is property of the Bankrupt Estate of ROBERT GRAHAM ANSETT and is vested in the Applicant as Trustee of the said Estate.
2.Order the First Respondent SHERRIE CROSSWELL within 7 days deliver to the Solicitors for the Applicant the duplicate Certificate of Title to the land referred to in paragraph 1.
3.Order the First Respondent, SHERRIE CROSSWELL transfer the said land to the Applicant Trustee.
4.Order that within 7 days the Second and Third Respondents, ROBERT GRAHAM ANSETT and JOSEPHINE ANNE ANSETT deliver up vacant possession of the land referred to in paragraph 1 to the Applicant.”
The Budget Group of Companies
At all relevant times Bob Ansett was the chief executive officer of the Budget group of companies (“the Budget Group”). The major activity of the Budget Group was to conduct a car rental business under the name “Budget”. An interesting introduction to the nature of the car rental business in the latter part of the 1970’s is given in Trade Practices Commission v Ansett Transport Industries (Operations) Pty Ltd (1978) 20 ALR 31. Although not a party to those proceedings, Bob Ansett, as the chief executive officer of the Budget Group, gave evidence. No question of his credibility as a witness arose. His astuteness as a businessman and his optimistic nature and drive is encapsulated in the following extracts from the judgment appearing between pages 56 and 58:-
“The airport franchise expires at the end of June 1979. What is likely to happen then is considered later in these reasons for judgment. At the present time, all witnesses who were engaged in the car rental business and who gave evidence on this aspect of the case expressed views that the existence of the airport franchise was of vital importance and placed Avis in a preferred position to other car rental operators. After hearing and seeing Mr Robert Ansett in the witness box, I formed the opinion that his undoubted encouragement to the Commission to commence and prosecute these proceedings was mainly directed to an attempt to prevent an exclusive airport authority being granted to a single car rental operator from and after the end of June 1979.”
“On the evidence, I find that there exists strong and effective competition in the car rental market in Australia. Budget is planning to increase substantially its share in the market over the next few years. In all seriousness, Mr Robert Ansett claims that Budget will be number one in 1981. If the exclusive airport franchise is not continued after June 1979 and if Budget is able to conduct part of its business at airports, Mr Ansett believes that Budget will be able to increase its market share dramatically. On the evidence, I find that on a revenue basis, Budget is expanding its business at a percentage rate greater than that of Avis.”
It is not disputed that at all relevant times, Bob Ansett was the driving force of, and the dominating influence within, the Budget Group. He continued to attempt to expand the business activities of that group during the 1980’s at a time when many of the business activities of persons in business, although praised by the media, often exceeded the bounds of rationality. The Budget Group operated through a series of private companies with little capital backing in the form of ownership of property or accrued profits. Expansion was sought at all times and moneys were raised often without a full realisation of the inevitable consequences. Bob Ansett remained an optimist believing that the business success of Budget was assured, that its activities would continue to grow and that nothing could prevent the successful outcome of all its activities. Bob Ansett remained a dynamic leader. He took a broad overview of the Budget Group leaving the management of details to others. He ceased to be an optimist when the Budget business collapsed and he became a bankrupt in 1990.
Much evidence was led relating to the nature, finances and activities of a number of the companies in the Budget Group. In some respects, the application presented as an investigation of the activities of these companies and it was difficult to keep in mind the narrow issues involved in determining the primary question - was Bob Ansett the beneficial owner of the moneys used to purchase the Noosa Property. In order to determine that question, it is not necessary for the Court to consider or express an opinion on many other issues that arose in the course of hearing the evidence. For present purposes, it is sufficient to say that in many aspects, Bob Ansett did not always have regard to the difference in law between a corporate body and the natural person controlling that corporate body. In retrospect many of the transactions were completely reckless. The task of the accountants in trying to trace and reconcile these transactions was made difficult and in some cases impossible. The tracing of moneys in the equitable sense was not relied upon in the present proceeding.
In his evidence, Bob Ansett produced a chart depicting the Budget Group structure in August 1987. Although this chart shows the structure some 5 to 6 months after the time relevant to this application, it is a useful guide to use in understanding the evidence. The chart, with some modifications, is reproduced in these reasons.
(CHART)
(Electronic copy of chart unavailable.)
The Court accepts the evidence of Bob Ansett that the principal activity of the Budget Group was motor vehicle rentals. Between 1978 and 1983 the Budget Group grew from a relatively small participant in the Australian car rental market to become the largest car rental business in that market with a market share in excess of 50%. Budget Transport Industries Pty Ltd (BTI) was the company through which the Budget Group was owned and controlled. Budget Rent A Car Systems Pty Ltd (BRACS) was the main operating company of the Budget Group. It will be recalled that the moneys used to pay the purchase price of the Noosa Property came from the moneys in a bank account of BRACS.
The chart illustrates who could control the various companies in the Budget Group. Ultimately control was in the hands of Bob Ansett and Josie but in reality, Bob Ansett controlled the affairs of the companies through BTI. In particular, he controlled the affairs of BRACS including the authorisation of the payment of the purchase price for the Noosa Property.
The source of the moneys (Applicant’s version)
A. The Ansett Family Trust
By a deed of settlement dated 27 September 1982 entered into between Charles John Stevens, as settlor, and Rodisky Investments Pty Ltd (“Rodisky”), as the original trustee, a family trust in common form was created. Mr Stevens was a business associate and friend of Bob Ansett. Initially the trust fund comprised $50 provided by the settlor and thereafter all further moneys and property paid or transferred to the trustee together with investments made and accretions thereto. The income beneficiaries and the capital beneficiaries included Bob Ansett, his children, Josie and other members of Bob Ansett’s family. Rodisky subsequently became R G Ansett Investments No.1 Pty Ltd but generally the name Rodisky will be used to describe this company. R G Ansett Investments No.2 Pty Ltd was formerly known as Market Run Pty Ltd while R G Ansett Investments No.3 Pty Ltd was formerly known as Bella Domenica Investments Pty Ltd. This company will be called Bella Domenica.
The Group accounts of BTI and its subsidiaries for the year ended 30 September 1987 were audited by Coopers & Lybrand, chartered accountants. Those accounts do not include the accounts of Rodisky. The auditing work was carried out by Mrs Campbell-Drury, an accountant employed by Coopers & Lybrand. In addition, Mrs Campbell-Drury prepared the accounts of Rodisky for the year ended 30 June 1987 but those accounts were not audited. The figures for the group accounts were taken from the figures appearing on the main frame computer base of the Budget Group. Mrs Campbell-Drury gave evidence.
In addition Mr Gaiser gave evidence. He was an employee within the Budget Group. In addition to information contained in the main frame computer, Mr Gaiser kept records, including records relating to Rodisky, on a personal computer. Data contained in his personal computer was not necessarily contained in the main frame computer base. He gave information to Mrs Campbell-Drury to assist her in preparing the accounts of Rodisky and the audited accounts for the Budget Group.
The evidence establishes that BRACS acted as a banker with respect to moneys being held in the name of Rodisky. Rodisky had no separate bank account. Moneys received by Rodisky to be held pursuant to the Family Trust, and possibly for other purposes, were paid to BRACS and appeared in the accounts of BRACS as being a debt owing to Rodisky. BRACS paid interest on these debts at the rate of 17.95%. Moneys paid out by BRACS to or on behalf of Rodisky were treated as repayment of part of that debt or as an advance to the recipient. It is not clear whether Rodisky paid interest on the accounts so advanced.
The accounts of Rodisky were the counter-part to the accounts of BRACS relating to Rodisky, moneys being held by BRACS being shown as credits while moneys in excess of credits paid by BRACS to or on behalf of Rodisky were shown as debits.
The ascertainment of the relevant figures by Mrs Campbell-Drury with respect to the Rodisky accounts was a difficult task. From all of the evidence, certain findings are made. Counsel for Sherrie objected to the admissibility of the evidence leading to this finding as against her since she had no part in the financial affairs of BTI, BRACS or Rodisky. If, for no other reason, some of this evidence forms part of the res gestae relating to the payment of moneys by or on behalf of Sherrie for the purchase of the Noosa Property. Bob Ansett gave evidence on these matters. The objection highlights the difficulty of separating the many threads interwoven between the different issues raised by the parties. The evidence is directed to two issues. First to the person entitled to the beneficial interest in the property being the money used to purchase the Noosa Property and secondly inter alia, if Bob Ansett was the beneficial owner, was he, at the relevant time, able to pay all his debts without the aid of that property. Most of the evidence was directed to this issue. Much of the evidence is based on a reconstruction of accounts from information given by persons employed by the Budget Group. Much of this evidence may be inadmissible as against Sherrie.
The accounts of Rodisky were for the year ending 30 June as contrasted with BRACS the accounts of which were for the year ending 30 September. The accounts of Rodisky for the year ending 30 June 1987 show that there were two beneficiary accounts only, one in the name of Josie and one in the name of Bob Ansett. There were no accounts in the name of Sherrie or the other two children of Bob Ansett, namely Ron Ansett and Tim Ansett, or Grace Alderman, the mother of Bob Ansett. The beneficiaries’ current accounts show that as at 1 July 1986 Josie had a credit of $17,929, that she had drawings of $126,502 leaving a debit of $108,573 as at 30 June 1987. Bob Ansett, on 1 July 1986, had a credit of $415,000, a distribution of $55,420 and drawings of $568,991 leaving a debit of $98,571 as at 30 June, 1987. It is not clear what is the distinction between distribution and drawings but the distribution is treated as being moneys paid to BRACS for the benefit of Bob Ansett.
The following figures show the drawings debited to Bob Ansett in the accounts of Rodisky for the year ending 30 June 1987:
1 July 1986 - Opening credit $415,000.00
Drawings
6.08.86 50,000.00 Unknown withdrawal
7.10.86 150,000.00 Australian Galleries
7.19.86 3,000.00 Fee to Tricontinental
2.02.87 26,000.00 Deposit on property
20.2.87 20,000.00 To T. Ansett
3.03.87 244,336.90 Property purchase
31.3.87 (30,000.00) Deposit from R G Ansett
1.06.87 17,342.20 Payment of tax
29.6.87 88,312.00 Cheque to Fitzwalter$568,991.10$568,991.10
The payment disclosed of $20,000 to T Ansett appears to be to the son of Bob Ansett. The drawings of $26,000 and $244,336.90 on 2 February 1987 and 3 March 1987 represent the purchase price for the Noosa Property.
The difference between the opening credit, $415,000, and drawings after taking into account an amount of $55,420 treated as a distribution, is $98,571 being the debit showing in the accounts of Rodisky with respect to Bob Ansett. This means that Bob Ansett had been advanced $98,571 which had not been shown as a credit to him. The advance, presumably was by Rodisky. The drawings listed above show a credit of $30,000 but it is not clear whether that is a distribution. Further, there is no reference in the statement as to how the amount of $55,420, being the distribution, was constituted.
Leaving aside any distribution and deposit figures, it is apparent that on 3 March 1987 when the balance of the purchase price was transferred from BRACS bank account, the account in the name of Bob Ansett was in overdraft in the sum of $78,336. This means that Rodisky owed BRACS that sum of money. The applicant claims that most of the credit items shown in the Rodinsky accounts resulted from credits received from a deal involving Tricontinental Corporation Ltd (Tricontinental).
There is no direct evidence to show who gave prior authority for BRACS to transfer the deposit and balance of purchase price for the Noosa Property. It is clear it was transferred even though the full amount of the transferred sums exceeded the amounts held by BRACS for the benefit of Rodisky. There is a letter in evidence dated 2 February 1987 written on BRACS letterhead and signed by Mr Gaiser, as Group Treasurer, to “Mr R G Ansett, Rodisky Pty Ltd” as follows:-
“This is to confirm that Budget Rent a Car Systems Pty Ltd repaid $26,000 from the deposit account of Rodisky Pty Ltd on 2 February, 1987. The funds were telegraphically transferred to Richardson & Wrench Trust Account on the same date.”
It is to be noted that this letter states that the sum is repaid “from the deposit account of Rodisky Pty Ltd”. The $26,000 is the deposit paid for the Noosa property. The letter does not indicate who authorised the payment. On one view, the letter states that the money used had come from the account of Rodisky, not Bob Ansett.
There is no similar material relating to the telegraphic transfer of the balance of the purchase price from BRACS to or on behalf of the vendor of the Noosa Property. From all the material the Court draws the inference that the same procedure was adopted with respect to each transfer. As a result no inferences can be drawn as to the person who was beneficially entitled to the moneys so paid although it would seem that the account was treated as though Bob Ansett was beneficially entitled to that sum.
To complete this aspect of the material, it is noted that the agent for the vendor issued a receipt for the deposit of $26,000 showing it was received from “S Crosswell” as the deposit on the Noosa Property. The trust accounts of the solicitor for the vendor show the balance of purchase price $244,336.90 was received from “Crosswell S (Ansett)”. It is noted further that since the contract was in the name of Sherrie Crosswell as purchaser, it is not surprising that the receipts noted the moneys were received from Sherrie.
B. The Rodisky Accounts
The Deed of Settlement creating the Ansett Family Trust is in evidence but the parties directed little attention to its terms or application. Rodisky, under its various names, was the trustee under the Deed. Very little attention was directed to the activities of Rodisky. It appears to have had no activities other than being the trustee of the Family Trust. Its activities were controlled by Bob Ansett. As in so many instances the distinction between the company and its controller became blurred. The articles of association of Rodisky are not in evidence.
The need to understand the nature of the activities of Rodisky and the movement of money credited to it is important, but it must be remembered that all property, including moneys, received by Rodisky in all probability was held, and was required to be dealt with, by it in conformity with the terms of the Ansett Family Trust deed. In this regard, the Court has not had the benefit of full submissions by counsel. On the findings made, the purchase price for the Noosa Property was paid by BRACS from one of its bank accounts. The applicant contends that these moneys were moneys held by Rodisky from funds invested by it with BRACS augmented by moneys advanced to Rodisky by BRACS. In order to establish his case based upon the primary questions, the applicant has the onus of proving that Bob Ansett was the beneficial owner of the moneys paid by BRACS on behalf of Rodisky.
With respect to each primary question, the applicant claims that the purchase price for the Noosa Property was provided by Bob Ansett with moneys (or property) of which he was the beneficial owner. Put another way, the applicant claims that the Noosa Property was purchased by Bob Ansett who directed the vendor to transfer the property to Sherrie. This arose from the fact that the contract of sale was between the vendor and Sherrie as purchaser. Sherrie had signed all the necessary documents. Reliance was placed on opinions expressed in Nelson v Nelson (1995) 184 CLR 538 to support the contention that on the facts of this case Sherrie holds the Noosa Property on a resulting trust for Bob Ansett. Reference was made also to Official Trustee in Bankruptcy v Alvaro (1996) 138 ALR 341 per Wilcox and Cooper JJ at 355:
“As a general rule, a person who pays the vendor the purchase price of a property is entitled to the beneficial equitable estate in that property, although the legal title will pass from the vendor to the transferee.”
The applicant did not rely upon the Ansett Family Trust Deed to establish Bob Ansett was the beneficial owner of the purchase moneys. Reliance was placed on the Rodisky accounts and the existence of a loan of $700,000 by Bob Ansett to BRACS or to Rodisky. It is necessary to consider the evidence relating to this.
C. The $700,000 loan
On the basis of the affidavit of Bob Ansett sworn on 7 May 1994 and filed in this matter, it would appear that the amount of $415,000 being the opening credit of Bob Ansett in the accounts of Rodisky for the year ending 30 June 1987 consisted primarily of the balance of the sum of $700,000 paid by Tricontinental on 29 June 1985. There has been no attempt to trace that money in any equitable sense. There is no other sustainable evidence to suggest any other source of the $415,000. The payment was made by Tricontinental, according to the affidavit, in connection with an arrangement negotiated during the years 1984 and 1985 under which Tricontinental advanced $5,000,000 to BTI. Under the arrangement, Tricontinental acquired an equity holding in BTI by acquiring 1,000 redeemable preference shares in BTI at a premium of $4,999 each share. This was part of a restructuring of BTI. The redeemable preference shares appear in the Budget Group Structure Chart as representing the 1% interest of Tricontinental in BTI. Under the arrangement, the articles of BTI had to be amended and in addition the managing director of Tricontinental Holdings, Mr Ian Johns, was to be appointed to the board of BTI. Also, under the arrangement, Bob Ansett, or a company or companies associated with him, was to receive the sum of $700,000. The arrangement was completed on 29 June 1985. To some extent, this aspect of the arrangement is supported by a letter to Bob Ansett from BRACS dated 12 July 1985 signed by Glenn Brown, the Chief Accountant of BRACS, in the following terms:-
“Bob:
I confirm acceptance of your deposit of $700,000.00 with Budget Rent a Car System Pty Limited on 1 July 1985. The terms and interest rates applicable to this deposit are as follows:
Term: At 24 hour call.
Interest:Same rate as Tricontinental Short-Term Facility, current rate being 17.95%”
This evidence may not be admissible against Sherrie.
In his affidavit, Bob Ansett said that on 1 July 1985 the sum of $700,000 “was placed on deposit in an account over which I had control in BRACS”. Apart from the Rodisky accounts, no other account was identified as being the account into which the money was paid.
In giving evidence, Mrs Campbell-Drury produced two documents each dated 1 October 1985 but not signed which she had obtained in the course of dealing with the accounts of Rodisky and BTI. She had endorsed on each document the words “This is not what happened” but has no clear recollection of the person who told her this. Each is a copy document. Each is headed “Agreement”. The first is in these terms:-
“ROBERT GRAHAM ANSETT agrees to lend R0DISKY INVESTMENTS PTY. LIMITED the sum of Seven Hundred Thousand Dollars ($700,000) or such sum as shall be agreed in writing between the parties. Loan will be repayable in 30 days upon demand. Interest rate will be that charged by the Tricontinental Group of Companies under their Facility with Budget Transport Industries or such other rate as may be mutually agreed in writing.
Dated : 1 October, 1985
The Common Seal of )
RODISKY INVESTMENTS PTY. LIMITED )
was hereunto affixed in accordance )
with the company’s Memorandum )
and Articles of Association. ) SignatureR. G. ANSETT Signature ”
The second is in these terms:-
“RODISKY INVESTMENTS PTY. LIMITED agrees to lend BUDGET TRANSPORT INDUSTRIES PTY. LIMITED the sum of Seven Hundred Thousand Dollars ($700,000) or such other sum as shall be agreed in writing between the parties. Loan will be repayable on demand after 30 days’ notice. Interest rate will be that charged by the Tricontinental Group of Companies under their Facility Agreement with Budget Transport Industries Pty. Limited or such other rate as may be mutually agreed in writing.
Dated : 1 October, 1985
The Common Seal of )
RODISKY INVESTMENTS PTY. LIMITED ) Signature
was hereunto affixed in accordance )
with the company’s Memorandum ) Signature
and Articles of Association. )The Common Seal of )
BUDGET TRANSPORT INDUSTRIES PTY. LIMITED )
was hereunto affixed in accordance )
with the company’s Memorandum )
and Articles of Association. ) Signature”
The common seal does not appear on either copy.
There is no creditable evidence to support a finding that either agreement was acted upon. The Court cannot rely upon either agreement.
At the hearing, Bob Ansett, in giving evidence, said that as a result of evidence which had been given, his belief was that the $700,000 was in truth paid by Tricontinental to Bella Domenica. That company had control of BTI, see the Budget Group Structure Chart. On the basis of this evidence, and the retraction of the relevant part of the affidavit of Bob Ansett, it was contended that the applicant had not proved that Bob Ansett was the beneficial owner of the moneys used to purchase the Noosa Property. Whatever was the true position, it is clear that Bob Ansett treated the $700,000 as being under his control to be expended in any way he desired. He dealt with it as if it were his property. This is a further illustration of the fact that Bob Ansett did not always recognise the distinction between a company and the person, himself, who controlled the company.
In his affidavit, Bob Ansett said that the account into which the $700,000 was paid, was the source of the funds “from which I made the cash gifts to my children”. The funds from which the deposit and balance of purchase price was drawn were in the name of BRACS but entered on the Rodisky account.
D. Basis of Applicant’s Primary claims
On these facts, the applicant contends that Bob Ansett paid for the Noosa Property out of his own moneys but had the property transferred into the name of Sherrie. As a result, Sherrie held the Noosa Property on trust for Bob Ansett.
Alternatively, the applicant contends that the disposition of the property by which the Noosa Property was acquired in the name of Sherrie occurred in February and March 1987 was made within 5 years before the commencement of the bankruptcy of Bob Ansett on 31 May 1990. As a result, the applicant contends that the disposition of that property in favour of Sherrie is void, as against the applicant, by reason of subs 120(2) of the Bankruptcy Act.
Defences of Sherrie
A. Main Defence of Sherrie
Although Sherrie was employed in the Budget Group, she had no knowledge of the financial set up of the companies comprising the group nor of the financial affairs of her father, Bob Ansett. Bob Ansett, his wife Josie, the step mother of Sherrie, and Sherrie formed a close-knit family group to a large extent living their lives under the influence of Bob Ansett. The brother of Bob Ansett, John Ansett, a solicitor, was employed within the Budget Group and formed part of the Ansett family group. Bob Ansett was a very dynamic and persuasive person. He had a pleasant personality and was able, to a very large extent, to encourage other persons to do his bidding, Sherrie merely carried out the wishes and directions of her father. The influence of her father was strengthened by the fact that Sherrie was married to Brent Crosswell, a well known Victorian Football League football player. Mr Crosswell had come from Tasmania. He was a school teacher. He had a strong public image as a footballer. He had played with a number of clubs in the Victorian Football League. At relevant times, he played football with the North Melbourne Football Club. At relevant times, Bob Ansett was the President of the committee of that Club. All this engendered the close family ties between Bob Ansett, Josie and Sherrie. Josie and Sherrie, despite being step mother and step daughter, enjoyed a very close relationship. Sherrie was provided by Bob Ansett with a superior motor car for her own use and appeared to enjoy a busy, but glamorous, life as an officer of the Budget Group. Although apparently not being able to command large sums of money as illustrated by the type of housing in which she lived, she lived a very comfortable life. She had no concern about where the money was coming from to support the life she was leading. She was part of the existing activities of Budget, the leading car rental business in Victoria and also in other States. Life was very exciting. She did not turn her mind to what assets were owned by her father and whether he had money or not. She signed documents at the request of Bob Ansett, John Ansett or other persons within the Budget Group. She was not concerned with the financial position of the Budget Group. She believed her father would look after her interests. Her future looked rosy.
The main defence relied upon by counsel for Sherrie was that the applicant had failed to prove that Bob Ansett was the beneficial owner of the money used to purchase the Noosa Property in her name. Sherrie could not give any direct evidence on this issue, but it should be noted that at all relevant times she thought that Bob Ansett had provided the purchase money. In one sense this was correct since it was Bob Ansett who had directed that BRACS send the purchase price by telephonic transfer from its bank account to the vendor of the Noosa Property. This, however, does not assist in determining whether at that time Bob Ansett was the beneficial owner of that money.
To a very great extent, the main defence does not depend upon the evidence of Sherrie. However, if the defence succeeds it will not be necessary for the Court to determine the other defences. I have used the expression “to a very great extent” since the applicant relies upon events which occurred after the purchase of the Noosa Property as evidence to support the view that in truth Bob Ansett was the “owner” of the Noosa Property. The evidence does not assist in the determination of the main defence.
At this stage, it is sufficient to say that if the main defence succeeds, that will be the end of the matter.
B. Other Defences
On the basis that Bob Ansett was the beneficial owner of the money used to purchase the Noosa Property, the applicant claims that Sherrie, as the registered owner, holds the property under a resulting trust on trust for the applicant. Counsel for Sherrie denies this conclusion and contends that if those facts are proved and Bob Ansett paid for the Noosa Property with his own money, he purchased the property in the name of his daughter and by applying the presumption of advancement, Sherrie holds the property absolutely and not subject to any trust.
Apart from any presumption, counsel for Sherrie raises the defence that the money used to purchase the property was a gift to her by her father. This defence has a number of features which, to some extent, may be inconsistent. Essentially, whether Sherrie was entitled as beneficial owner to part of the money used to pay the purchase price for the Noosa Property, the balance being provided by way of loan by her brothers and grandmother, or whether the whole of the purchase money was provided by Bob Ansett, the legal consequences may be the same. In this context, much time was spent during the course of the hearing on evidence and submissions concerning events which occurred about Christmas 1984 when Bob Ansett indicated to his children that he would be receiving a large sum of money in the near future and was proposing to make a gift of various amounts to his children. The intention is illustrated by a handwritten notation on a Christmas card given by Bob Ansett and Josie to Sherrie in December 1984:-
“ Christmas 1984
Dear Sherrie
This is to be a Christmas with a difference. Instead of the usual gaily wrapped presents Josie and I are giving you a $100,000. which can be used for whatever purpose you wish -
Go out and indulge yourself, if you wish, or put it away for a rainy day.
The fund will be available in a few weeks.
Meanwhile our love for a very special Christmas.
Dad & Josie”
On any view, the funds did not become available until mid 1985. On its face this notation refers to a gift from “Josie and I” and is signed “Dad & Josie”.
On the assumption that the whole or part of the purchase price for the Noosa Property was provided from money of which Bob Ansett was the beneficial owner, even if Sherrie was entitled to $100,000 when the funds became available to Bob Ansett in mid 1985, this defence depends upon a variation of a theme. The payment was a gift of money from Bob Ansett and possibly Josie which, on any view, could not have been perfected before the end of May 1985. Alternatively, the purchase of the Noosa Property in March 1987 in the name of Sherrie gave rise to a presumption of advancement which prevents the presumption of a resulting trust in favour of the applicant.
At this stage, it is important to keep in mind the crucial dates:-
6 July 1990 - Bob Ansett became bankrupt
31 May 1990 - Commencement of bankruptcy
31 May 1985- Commencement of 5 years before commencement of bankruptcy under s 120(2) of the Bankruptcy Act.
February-March 1987 - Purchase of Noosa Property
June 1985- Earliest date when, possibly, the funds became available in conformity with note on the Christmas Card 1984.
The following comments are made. Accepting for present purposes that the notification on the Christmas card constituted an intention to make a gift of $100,000 to Sherrie, it was dependent upon moneys coming within the disposition of Bob Ansett and Josie at some time in the future. The gift could not be perfected before that date. On any view of the evidence, the moneys did not come within the disposition of Bob Ansett until June 1985 being a date after the commencement of 5 years before his bankruptcy. In these circumstances, the gift to Sherrie would be void as against the applicant unless Sherrie proved that at the time the gift was perfected, Bob Ansett was able to pay all his debts without the aid of the money constituting the gift. At the very earliest this would be in June 1985 i.e. within the 5 year period. On another view, the date would be February-March 1987 with the purchase of the Noosa Property. In either event, the applicant has the onus of proving that Bob Ansett was the beneficial owner of the money given by way of gift for the purchase of the Noosa Property. At the hearing, counsel concentrated on the period February - March 1987 as the relevant period, not June 1985.
It is noted further that the payment of the deposit and balance of purchase price with respect to the Noosa Property in February and March 1987 were beyond the 2 year period referred to in s 120(1) of the Bankruptcy Act. The same comment would be appropriate if the gift to Sherrie was at an earlier date.
On this analysis, the whole of the issue relating to whether the facts establish that Sherrie holds the Noosa Property under a resulting trust in favour of the applicant is, subject to subsequent matters, of no legal or practical consequence. At the present stage, the Court can put to one side the consideration of the evidence relating to a special arrangement which Sherrie claims supports the view that the purchase monies came from monies owned by her two brothers, her grandmother and herself.
The third line of defence contended for by counsel for Sherrie was that in any event, she had proved on the balance of probabilities, that at the time of the purchase of the Noosa Property, Bob Ansett was able to pay all his debts in conformity with s 120(2) of the Bankruptcy Act.
Some general observations are made with respect to this defence. Since he became a bankrupt in July 1990, Bob Ansett has been the subject of many investigations by accountants and pursuant to legal processes and administrative processes with respect to his own affairs and with respect to the affairs of the Budget Group. The whole structure of the Budget Group collapsed. All were insolvent. The task of unravelling the affairs of the companies has been extremely difficult and complex. The tasks of the liquidators of the companies and the task of the applicant, as trustee in bankruptcy of the estate of Bob Ansett, have been extremely onerous and difficult. For practical purposes, it has not been appropriate to pursue claims of a civil nature against the companies or Bob Ansett. Criminal proceedings were initiated against Bob Ansett. Bob Ansett was the subject of public examinations under the Bankruptcy Act. As a result, an enormous amount of evidentiary material was in existence, much of which appears to have been led by the applicant in this case apparently in an attempt to deny a case that may be put by Sherrie that at the time of the disposition of the property, Bob Ansett was able to pay his debts in conformity with s 120(2) of the Bankruptcy Act.
As part of his case, the applicant led extensive evidence, both by way of affidavit material and by oral evidence, directed to the question of whether Bob Ansett was able to pay his debts in conformity with s 120(2) of the Bankruptcy Act. The witnesses were cross-examined at length. Some of this evidence was directed to whether Bob Ansett was the beneficial owner of the money used to purchase the Noosa Property. In addition the respondents relied on evidence led both orally and on affidavit directed to the issue under s 120(2) of the Bankruptcy Act.
At the time of the hearing of the application a number of other matters were in issue but most of these matters were not pursued in final submissions. To a large extent, the hearing took on the appearance of a royal commission. The Court had difficulty in confining the evidence to matters relevant to the issues. It was clearly a case of the material swamping the case and tending to confuse issues rather than clarifying them. As a result, the evidence extended far and wide. It was a case of information overload giving rise to difficulties in excluding irrelevant material.
The position was not assisted by the fact that the applicant had named three persons as respondents. In truth one respondent only, Sherrie, should have been joined. In the result, the three respondents were represented by the same counsel instructed by the one solicitor. On most issues, Bob Ansett and Josie gave some evidence relating to the main issue but presented as parties to all issues. This was so particularly with respect to Bob Ansett. He was treated by the applicant as the villain, being a liar whose evidence could not be believed. This aspect will be considered later in these reasons. The Court formed the view that the parties had become emotionally involved. The exasperation of the applicant can be understood but it is important that the legal representatives of the parties are able to stand back from their clients to enable a dispassionate presentation of the issues to the Court.
The main issues
There are two main issues to be considered:
(A)Whether Bob Ansett was the beneficial owner of the moneys used to purchase the Noosa Property in the name of Sherrie.
(B)If no to (A), the application will fail.
(C)If yes to (A),
(i)did Sherrie hold the Noosa Property on a resulting trust for the Applicant. If no,
(ii)at the time of the purchase, February and March 1987, was Bob Ansett able to pay his debts in conformity with s 120(2) of the Bankruptcy Act.
In considering issue 5(A), certain facts critical to its determination must be kept in mind. These facts are accepted. The funds used for the payment of the deposit and the balance of the purchase price for the Noosa Property were transferred from a bank account of BRACS to the bank account of the vendor’s agent or solicitor. This was done pursuant to a contract of sale entered into between Sherrie as purchaser and the vendor. There was no evidence to show whether at the relevant time BRACS’s bank account was in credit or in debit. There has been no attempt to trace, in the equitable sense, monies going into and monies going out of the bank account. BRACS was the company operating the rental business of the Budget Group of Companies. Prima facie, money paid out of the BRACS’s bank account would be the money of BRACS. It is accepted that BRACS operated its bank accounts as an account holding moneys (whether notionally or otherwise) for other persons including Rodisky possibly as a trustee. The letter from Mr Gaiser, the Group Treasurer, suggests the deposit of $26,000 was taken notionally, from the account of Rodisky with BRACS. Rodisky was the trustee of the Ansett Family Trust, and this notional payment does not, by itself, greatly assist the applicant. It is noted further that the receipts for the money were in the form of acknowledging receipt from Sherrie. The contract was in the name of Sherrie and the title issued in the name of Sherrie. Sherrie was a beneficiary under the Ansett Family Trust, as was Bob Ansett. Bob Ansett was the person who controlled the activities of Rodisky as well as, for the present purposes, BRACS. The transfer of funds by BRACS does not, of itself, support the conclusion that it represented moneys owned by Bob Ansett.
Possibly the strongest evidence adverse to the interest of Sherrie on this point is that contained in the affidavit sworn by Bob Ansett on 7 May 1994 and filed herein. In that affidavit Bob Ansett deposes to the facts that at Christmas 1984 he advised his children that he could be giving them some money from the proceeds of a share transaction. He told Sherrie that she would be receiving $100,000. He told Ron that he would be receiving $100,000. He told Tim he would be receiving $50,000. He told his children he would deposit the money when he received it on deposit with BRACS at 17.95% interest. Bob Ansett deposed that on 1 July 1995 the sum of $700,000 being part of the monies due to him following the Tricontinental share issue was placed on deposit in an account “over which I had control in BRACS”. He deposed to the fact that the money he had promised his children was included in that amount. A letter on BRACS letterhead dated 12 July 1985 and signed by Glenn Brown, Chief Accountant, addressed to Bob Ansett confirmed “acceptance of your deposit of $700,000 with Budget Rent a Car System Pty Limited on 1 July 1985. The terms and interest rates applicable to this deposit are as follows:
“Term: At 24 hour call
Interest:Same rate as Tricontinental Short-Term Facility, current rate being 17.95% ”
Bob Ansett deposed that the $700,000 “included the gifts of money I made to my children at Christmas 1984”. This suggests that the whole of the $700,000 should not be treated as being owned by Bob Ansett. At the same time it places a limit on the amount of the interest of Sherrie. In any event, it suggests the deposit was to be in the name of Rodisky. The $700,000 cannot be traced through the bank account of BRACS.
A. Whether Bob Ansett was the beneficial owner of the moneys used to purchase the Noosa Property
(i)General
By the time the final submissions commenced, it was obvious that there was a major dispute of fact between the applicant and Sherrie namely whether the money used to purchase the Noosa Property was money owned by Bob Ansett. Final submissions were directed to this issue. It is accepted that Bob Ansett authorised the payment, but the issue is whether he was the owner of the moneys. Put another way, did he have a beneficial interest in the money. The applicant carried the onus, on the balance of probability but having regard to the seriousness of the nature of the case; see the principles expressed in Briginshaw v Briginshaw (1938) 60 CLR 336, to prove Bob Ansett was the beneficial owner of the money used to purchase the Noosa Property. The registered proprietor, Sherrie, is perfectly entitled to dispute and contest the fact by claiming that the applicant has failed to satisfy the onus of proof with the result that the application must fail. It is not for Sherrie to prove who was the beneficial owner of the money used to purchase the Noosa Property. Accordingly, the Court turns to consider whether the applicant has proved, on the balance of probabilities, that in February and March 1987 Bob Ansett was the beneficial owner of the moneys used to purchase the Noosa Property.
A. (ii) Evidentiary matters
It is accepted that the money was paid by electronic transfer from a bank account in the name of BRACS. Of itself, this fact would tend to suggest Bob Ansett was not the beneficial owner of that money. As a result, the applicant was forced to rely upon the accounting records of BRACS and the other companies in the Budget Group. It is fair to say that these records, at all relevant times, are not clear and to a large extent their nature and effect depend upon a detailed examination by an accountant, Mrs Campbell-Drury. Originally, it was not directed to finding facts which supported a finding that Bob Ansett was the beneficial owner of the moneys used to purchase the Noosa Property. The audit was directed to the much larger task of trying to unravel the financial affairs of the Budget Group all of which had failed in a most spectacular way. The professional credibility of Mrs Campbell-Drury can not be challenged. Some of her conclusions and opinions are challenged. In particular, the opinion that the financial records, including some reconstructed by her, established that Bob Ansett was the beneficial owner of the relevant moneys. A more detailed reference will be made to the relevant accounts later.
In oral evidence given at the hearing Bob Ansett said that after hearing other material put before the Court, he had formed the view that the relevant moneys were not owned by him. In giving this evidence he retracted statements contained in an affidavit he had sworn at an earlier time, namely that he had purchased the Noosa Property using moneys of which he was the beneficial owner. This led counsel for the applicant to develop a strong attack upon the credibility of Bob Ansett and to suggest he was not a witness of truth. Part of this attack was based on the long history of examinations and proceedings involving Bob Ansett and the affairs of the Budget Group during which it had never been suggested that the purchase price was not from moneys beneficially owned by Bob Ansett. To some extent, this aspect of the attack is double edged insofar as the applicant is seeking to rely upon the statements given by Bob Ansett on earlier occasions. In any event, a finding that the oral evidence given by Bob Ansett is not to be believed, does not, by itself, prove that at the relevant time he was in fact the beneficial owner of the moneys constituting the purchase price. The applicant has the onus of proving that. A rejection of a denial does not prove the opposite. This is merely an illustration of the well known example that where a witness swears that on a certain day he was not in Rome and is disbelieved, the fact of disbelief does not prove he was in Rome. Other evidence is required to prove his presence in Rome on that day.
Counsel relied also on subsequent facts as tending to prove that, at the time of the purchase, Bob Ansett was the beneficial owner of the money used to purchase the Noosa Property. These facts included the claims made by Sherrie that the purchase price came from moneys owned by her, her brothers, and her grandfather. Counsel for the applicant relied also on a complicated series of events relating to the dealings by Bob Ansett and Josie with respect to their home in Melbourne and, their involvement in the refurbishing of the Noosa Property which was used, originally as a holiday home, but later became their permanent residence. However, the Court is of the opinion that none of these matters assist in determining the essential question of fact namely whether in February and March 1987 Bob Ansett was the beneficial owner of the money transferred from the bank account of BRACS to the vendor of the Noosa Property.
Reference has been made already to the fact that the Ansett family was a close knit family. Many informal arrangements were made affecting the interests of individual members without consideration being given to the legal requirements that could be involved. This is not an unusual feature of members of a family who live in harmony with each other. This is so particularly when the parents, albeit one being a step mother, are concerned to the best of their ability to ensure the well being of the children.
The evidence relevant to the crucial time must be considered having regard to the attitude by which Bob Ansett treated the Budget Group as if they were his own. Reference has been made already to this feature, an inability to distinguish between himself and his companies. In reality he controlled the companies. Even though Mr Hamley through his company Hamley Investments Pty Ltd ,had influence with Bob Ansett, in substance the Budget Group was owned and controlled by Bob Ansett. He treated them as his and as a result did not ensure the accounts were always in a proper form and always constituted a true record. This is illustrated starkly by the accounts of Rodisky. There appears to have been no attempt to apply the terms of the family trust in any formal or legal way. Bob Ansett signed documents when requested often, in the opinion of the Court, without a full realisation of their legal effect. He relied upon employees of the Budget Group. Bob Ansett was the front man involved in many other activities, for example, the North Melbourne Football Club and the formation of a company to run that Club. In doing this he engaged in a number of dubious transactions including shares being held on secret trusts by, among others, members of his family. This merely illustrates the powerful personality of the man and his ability to induce others to do his bidding not only with respect to the Budget Group but in other areas as well. He had a charisma which he used to great effect. He was not concerned to distinguish between what he owned personally and what was owned by the companies. He believed that what was owned by the Budget Group was owned by him personally. He lived and acted accordingly.
It is true that many formal legal documents were signed by him to give effect to his legal relationship with the Budget Group but, in the opinion of the Court, were treated by him as being legal technicalities which should not hinder his activities in promoting his companies. As a result, he was unable to see the reality of the financial difficulties confronting the Budget Group. He was determined the appropriate company should go public. He pursued that objective at a time when, on any rational view, the float was impossible. The Budget Group was facing certain failure and liquidation.
All these factors, however, do not assist in determining the issue of fact of whether Bob Ansett was the beneficial owner of the moneys used to purchase the Noosa Property. It can be accepted that it would be easy for Bob Ansett to say the money belonged to him. It can be accepted that it would be easy for him to say that the property and assets of the Budget Group belonged to him. But these views are not sufficient to justify a finding of fact that the moneys used to purchase the Noosa Property belonged to or were beneficially owned by Bob Ansett.
It must be remembered that Sherrie is registered as the proprietor of the Noosa Property. Prima facie she is the owner of that property. If the Noosa Property had been registered in the name of Bob Ansett, prima facie it would have been his property. Upon his bankruptcy, prima facie, that property would have vested in the Official Trustee and form part of his estate to be administered by his trustee in bankruptcy. Any other person claiming to be entitled to the Noosa Property would have had the onus of proving that the Noosa Property, in law or in equity, was not the property of Bob Ansett. In the circumstances of this case, the only person likely to take this course would be the liquidator of one or other of the Budget Group. The issue would be which of the creditors, those of Bob Ansett or those of the company, should have the benefit of the Noosa Property. This example is given to illustrate the need to consider the material relevant at the time of the purchase of the Noosa Property.
The applicant has relied on various accounts of various companies in the Budget Group. The primary accounts are those set out earlier in these reasons being the Rodisky accounts for the year ending 30 June 1987. In his affidavit sworn 19 February 1996, Bob Ansett makes reference to the Ansett Family Trust Accounts and the accounts of Rodisky for the years ending 30 June 1986, 1987, 1988 and 1989 respectively and for the current accounts. The accounts were prepared by Coopers & Lybrand and are highly qualified. They have not been audited. Bob Ansett refers to the accounts of Rodisky for the year ending 30 June 1987 which show that the beneficiaries of the fund were Bob Ansett and Josie. No other persons were listed as beneficiaries under the trust. The amounts show that during the year Bob Ansett received $55,420.00 as a distribution and drawings amounting in the sum of $568,991. The opening credit was $415,000 and the closing debt was $98,571. The accounts as extracted by Mrs Campbell-Drury show a payment to Tim Ansett, a beneficiary under the Ansett Family Trust.
The accounts were signed as a true record by two directors of Rodisky, Bob Ansett and Josie. Rodisky was a $2 company. It is noted that Bob Ansett disclosed income he had received with respect to monies received under the Family Trust. He disclosed those amounts in his tax returns. Apart from Josie, no other person was shown as a beneficiary or as having received income from the Family Trust.
This affidavit was sworn by Bob Ansett in relation to the issue of whether, at the relevant time of the payment of the purchase price, he was insolvent. The affidavit discloses, which is not disputed, that Bob Ansett gave personal guarantees for the repayment of moneys lent with respect to interests he had including the North Melbourne Football Club and other companies. This supports the view that in reality Bob Ansett was an uncritical optimist with an unreal vision of the future of the Budget Group and that he treated the affairs of the Budget companies as if they were his personal affairs which he was prepared to guarantee personally. They show the unreality of the whole position. Notes to the Rodisky accounts for the year ending 30 June 1986 show that Rodisky had contingent liabilities amounting to millions of dollars when it had no assets apart from its rights of indemnity from the beneficiaries of the Family Trust. The contingent liabilities were with respect to indemnities given by Rodisky in relation to loan and credit facilities given to BRACS including a Debtor Finance Facility, the latter amounting to $13,000,000.
The details of the payments made by BRACS to or on behalf of Bob Ansett during the year ending 30 June 1987 were prepared by Mrs Campbell-Drury. She obtained the information included in the statement, set out earlier in these reasons, from a number of different sources. In reality the statement is a reconstruction of figures extracted from a number of different sources. They constitute figures but there is no satisfactory audit of the figures in the sense of what was being paid, from what source they were paid and for what purpose they were paid. From all the facts, the Court is prepared to infer that at all relevant times the relevant bank account of BRACS from which the money came was in debit. The figures given constitute a construction of events designed to give a degree of authenticity to what in reality was a structure of instability, an unreality apparent in the whole of the financial structures of the Budget Group of companies.
A. (iii) Conclusion
The Court is not prepared to find, on the balance of probabilities, that the moneys provided by BRACS for the purchase of the Noosa Property were moneys owned by Bob Ansett or were moneys to which he was entitled to use as his own. The Court does not accept as correct the statements made from time to time by Bob Ansett that the money was his. The moneys may have been owned by Rodisky as trustee, but even this is in doubt. The accounts of the Family Trust do not accord with the entitlement of the various beneficiaries. The accounts cannot be relied upon to support findings adverse to Sherrie.
Such a conclusion depends on a mixture of fact and law. For the reasons already given, the Court has formed the view that Bob Ansett did not distinguish between his private affairs and the affairs of the Budget Group. All the affairs and property of the companies were treated by him as being his to be used for any purpose he considered appropriate. He wanted a house to be used as a holiday home for the members of the Ansett family and in particular for Sherrie and her family. He wasn’t concerned about who paid for the house. The Budget Group could supply the money. It was, according to him, his money even if in truth it belonged to one of the companies. The various accounts could be prepared to cover any reality, they could not be relied upon to give a true and accurate account.
The Noosa Property was purchased in the name of Sherrie. She was married. She had children. To a large extent she would benefit most from the existence of the Noosa Property. The property was used as a holiday house for some years. Sherrie had another child and was unable to make use of the property. Bob Ansett and Josie, from their joint bank account, improved the property and its furnishings. It was only after the collapse of the Budget Group and the bankruptcy of Bob Ansett that Bob Ansett and Josie began using the Noosa Property as their permanent residence. It was only after the applicant placed a caveat on the Noosa Property that formal arrangements were made for the letting of the property by Sherrie to Bob Ansett and Josie. As stated earlier none of these subsequent events assist the Court in determining whether the purchase price for the Noosa Property was from moneys owned by Bob Ansett.
A. (iv) Related matters
Counsel for the applicant sought to rely upon the statements of account of Rodisky and of the Family Trust each of which had been signed by Bob Ansett and Josie as being accurate and correct. Based on these accounts, counsel claimed that Rodisky, in its capacity as trustee of the Family Trust, owed Bob Ansett $415,000 on 30 June 1986. In fact the Court is unable to place any weight on these accounts. They formed part of a fabric where the true position was hidden by the formal documents. This applied to all the accounts of the Budget Group. In particular there was no evidence to show any deliberate decision by Bob Ansett, as the person controlling Rodisky, to exercise the powers of Rodisky with respect to the beneficiaries of the Family Trust. Bob Ansett was expending money without any attempt to determine whether the money belonged to one of the Budget Group of companies or to beneficiaries under the Family Trust. As far as he was concerned, the money belonged to him irrespective of who in fact was the beneficial owner of the money.
With respect to the telegraphic transfer of the money for the purchase of the Noosa Property, the position was stated by counsel for the applicant as being treated and recorded as a drawing by Bob Ansett against his loan account with Rodisky, see the applicant’s Chronology. This suggests that the amounts were prepared at a later date to satisfy acts already completed. In the view of the Court, they do not establish proof of what in fact happened. In any event, the accounts cannot be used as evidence against Sherrie on the issue of whether the money used to purchase the Noosa Property was in fact and in law, moneys owned by Bob Ansett.
Counsel for the applicant sought to rely on letters written by Bob Ansett to a friend in the United States of America, a Mr Dale Soderstrom. Mr Soderstrom had been a family friend for many years. The three letters are dated 27 January 1987, 8 February 1987 and 4 January 1989. The last letter is wrongly dated 4 January 1988; a mistake not uncommonly made in the early part of a new year. The first letter is written on a personal basis which makes it clear that Bob Ansett and Josie are close personal friends of Mr Soderstrom. A number of comments are made about the affairs of the Budget business. Two paragraphs of that letter are set out:-
“Since returning to Australia, Josie and I have been to Tasmania for a few days (business), Queensland, Sydney and Albury. All this travel was planned late last year enabling me to get around to as many Budget offices as possible at the start of this calendar year. In Queensland we are looking very seriously at buying a property that fronts onto the beach at Noosa (60 miles north of Brisbane). If we acquire this property it will mean selling our unit in Surfers Paradise which doesn’t really worry us as the Noosa property is much nicer and more secluded. At the moment it’s eyeball to eyeball negotiations with the vendor but I suspect it will come off during the next week.
Your analysis of the best years in your life are interesting and really don’t surprise me. Perhaps the differences that occurred in our individual careers is that I chose to uproot myself from the American culture in 1965 and cast out with little to lose in a whole new country. So whilst I would identify 1947 through to ‘51 as very good years and likewise ‘52 through to ‘56, mine would also include 1965 through to ‘67, 1974 through to ‘78 and in 1979 when we broke the airport monopoly and doubled the size of the business, bringing in another historic year. I’d have to say that from that date onwards every year has had some enormous plusses and excitement for me. Accordingly, I have no doubt that 1987 is perhaps going to also hold some pleasant surprises and new challenges.”
Counsel refers to and relies on the use of the word “we” in relation to the possible purchase of the Noosa Property as showing that Bob Ansett intended to use his own money to buy that property. If anything, the word “we” refers to Bob Ansett and Josie. In the opinion of the Court, the word “we” cannot be used as an admission or as evidence against Sherrie that the purchase price of the Noosa Property was to be provided by moneys owned by Bob. It is part of the normal extrovert mode of expression commonly used by Bob Ansett to describe the family without any intention of descending into details of ownership of moneys. If anything it is merely puff to describe what was happening.
The reference to the unit in Surfers Paradise is of interest. It had been purchased many years previously by Bob Ansett as a possible home for his mother who was moving from the United States of America to live in Australia. She decided to live in Melbourne. The unit was used as a holiday place by the Ansett family. It was sold in September 1987 for the sum of $200,000. After paying off a mortgage and expenses, the balance of the purchase price $112,830.82 was paid into the joint bank account of Bob Ansett and Josie.
The second paragraph from the letter of 27 January 1987 as set out above, is of interest. It refers to what followed from the judgment in the Ansett case cited at the beginning of these reasons. Again, Bob Ansett uses the word “we” in a strange context. The paragraph also shows the extreme optimism Bob Ansett had with respect to the future of the Budget Group.
The second letter is of a very personal nature also. Reference is made to the Americas Cup race held in Freemantle that year and to personalities attending the event. Reference was made to his son Ron in Perth and his bright future, a future which in fact failed (a typical unreal optimism of Bob Ansett). Reference was made to the refurbishing of the Noosa Property and the proposed visit by Mr Soderstrom later that year. The letter refers also to the purchase of the Noosa Property as follows:-
“We have also purchased a house right on the beach at Noosa on the Sunshine Coast. I think we discussed it with you briefly when in the States but it’s a magnificent beach home in a truly key position. This will mean selling our unit in Surfers over the next few months.”
Bob Ansett appears to have forgotten that he had mentioned the possibility of obtaining this house in his letter of 27 January 1987. The third letter also was of a very personal nature. In the letter he refers to the holiday being held at the Noosa Property and “our first week of holidays”. For reasons given with respect to the other two letters, the applicant cannot receive support from the terms of this letter.
Counsel for the applicant made a detailed attack on the credibility of the witnesses Sherrie, Tom and Tim as well as Bob Ansett and Josie. The attack based upon the evidence given by these witnesses and the submissions made by counsel for Sherrie that she had paid for the Noosa Property using moneys she was entitled to pursuant to the “gift” given in December 1984, loans from her brothers, also provided from the “gifts” to them at the same time. Notional interest on the amounts the subject of the gifts was based, it was argued, on the view that the gifts, having been made, Rodisky should have allocated, notionally, interest on the amounts of the gifts to the recipients. The amounts of the gifts together with interest thereon should have been allocated by Rodisky to the recipients of the gifts. It is not necessary for the Court to form an opinion on this issue. The fact that the claim is made illustrates the artificial nature of the financial arrangements and accounting practices of the Ansett Group and the exercise of the powers conferred on Rodisky as the trustee of the Ansett Family Trust.
Finally, reference is made to what was described by counsel for the applicant as the “$700,000 smoke-screen”. This is the matter introduced in paragraph 3. C. of these reasons, the $700,000 loan. There is force in the submissions made by counsel for Sherrie.
In attacking that submission counsel for the applicant relied upon the relevant accounts of the Budget Group and the accounts of the Ansett Family Trust as well as the evidence relating to the “gifts” of Bob Ansett to his children. These factors formed the initial defence relied upon by Sherrie. She, however, was neither a party to nor involved in the transactions within the Budget Group including the accounts of Rodisky with respect to the Ansett Family Trust. The nature of the accounts are so unsatisfactory that little reliance can be had on them. The tracing of the $700,000 was not attempted.
In order to support the defence that the $700,000 was in fact paid to Bella Domenica, reference was made to the fact that the shares acquired by Tricontinental were in fact those previously in the name of Bella Domenica but the books of account of that company do not show the transfer of shares to Tricontinental in consideration of the transfer of $700,000, paid by Tricontinental to either Rodisky or Bob Ansett. In fact, reference is made to a larger sum.
Counsel for the applicant attacked the basis of the change of evidence by Bob Ansett to support this defence. He contended that the accounts of Rodisky should be taken at their face value, that the new defence was speculation only and should be rejected. In support of this issue, the applicant called a Mr Colin Wight, a chartered accountant to give expert evidence in relation to the source of the $700,000. The relevant reference to this material appears at pages 500 to 518 of the transcript. The material relied on by Mr Wight included references to documents showing the shareholding in BTI by Bella Domenica, Hamley Investments Pty Ltd and the introduction in 1985 of the share holdings of the Budget employees and Tricontinental; c/f the Budget Group Structure Chart. According to the Chart, the shareholdings amounted to 101%. Although Ian Johns became a director of BTI, possibly Tricontinental had no voting rights in BTI. This whole aspect arose in connection with the unusual dealings entered into with respect to the shareholdings by the Budget employees, the money coming from Tricontinental for the benefit of the Budget Group and in particular BTI. The $700,000 forming the smoke screen came from the same source. This matter need not be pursued further. The evidence illustrates the unsatisfactory nature of the accounting records of the Budget Group. It discloses the completely artificial nature of the financial affairs of Bella Domenica. It illustrates the fact that Bella Domenica was in truth completely insolvent even without taking into account its contingent liabilities amounting to millions of dollars arising from indemnities and other sources of liabilities. It illustrates the fact that the records do not satisfactorily show how the share transfer to Tricontinental was effected and left uncertain who was entitled to the shares. It highlights the fact that at all relevant times no attempt was made to distinguish between the personal rights of Bob Ansett and the rights of companies over which he had control. What was owned by one was considered to be owned by another. The opinion expressed by Mr Wight is set out:-
“Question:..... from an accounting perspective how could the money be taken from Bella Domenica and treated in some way and paid to Mr Ansett ? .... I would have to speculate. There are a couple of possible ways.
Firstly it could simply be an error that somebody had not drawn the distinction between Mr Ansett and Bella Domenica. The second possibility is that it short cut a number of events wherein Bella Domenica and its ultimate shareholders might have passed resolutions to vest that money in Mr Ansett, and so that entry simply short cut all of those entries.
Could it have been lent by Bella Domenica to Mr Ansett ? --- It’s possible, but that’s not reflected by the pieces of paper that I have.
And are the pieces of paper that you have - that you have referred to, consistent with the money being paid to Mr Ansett as beneficial owner? --- Not paid. There’s a distinction between paid and credited to a loan account. They certainly reflect that over a million dollars was credited to the loan account of Mr Ansett.”
This evidence was given at a time when a general objection as to admissibility of this type of evidence as against Sherrie had been taken. This evidence and the speculation of Mr Wight supports the unreliability of the evidence to support a finding that Bob Ansett was the beneficial owner of the money used to purchase the Noosa Property. Rodisky appears to have had no part in these transactions.
This defence is more than a smoke screen. The Court does not need to consider this defence. The application is to be decided on the first defence raised by Sherrie being that expressed in paragraph 5A.
Orders and Comment
In the result, the application is dismissed. On one view, it is a pity that the applicant fails on what some persons may describe as a legal technicality. Such a view is completely wrong. Under the system of jurisprudence under which the Court operates, often called the adversarial system, the person making a claim, normally, has to establish the facts to support the success of the claim. In this context, the Courts have developed the legal principles relating to the onus of proof. The Court has the duty to apply those principles. On taking office in the Federal Court, a judge must swear or affirm that he or she will do right to all manner of people according to law without fear or favour, affection or ill-will. In this case the Court is required to apply the law including the law of evidence. The application has not been decided upon a legal technicality.
It is a pity that the hearing of this application, and its determination, has taken so long. To some extent this has arisen because insufficient attention had been given to the true nature of the legal issues involved. This aspect has been referred to earlier in these reasons. The real and substantial issue was who had the beneficial interest in the Noosa Property. This was an issue between the applicant and Sherrie. There is much to be said for the view that Sherrie should have been the only named respondent to the application. The joinder of Bob Ansett and Josie was unnecessary. Their legal position depended upon the outcome of the main issue between the applicant and Sherrie. The rights claimed by the applicant against the Noosa Property were protected by a caveat.
The joinder of Bob Ansett and Josie as respondents confused the issues and greatly lengthened the period of the hearing of the application. Their presence as parties clouded questions of admissibility of evidence as against Sherrie.
It is a further pity that the many other factual and legal issues arising in the application do not call for consideration by the Court. To consider those matters, it would be necessary to assume facts which have been found not to have been proved. The Court declines to do that.
The orders of the Court are that the application be dismissed. If any party wants special orders with respect to costs, that party should make written submissions to be supplied to my associate within 14 days. If no submissions are made within that time, the Court will order that the applicant pay the costs of the respondents. The Court will also order that the time for any appeal be extended to 21 days from the date of any order being made with respect to costs.
I certify that this and the preceding thirty-six (36) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice R M Northrop.
Associate:
Dated: 25 March 1998
Counsel for the Applicant: Mr J Delany Solicitor for the Applicant: Cornwall Stoddart Counsel for the Respondent: Mr G Bigmore QC and Mr M Galvin Solicitor for the Respondent: J M Smith & Emmerton Date of Hearing: 19, 20, 21, 22, 23 August 1996,
5, 6, 9, 10, 11, 12, 13 December 1996Date of Judgment: 25 March 1998
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