Peters v Lithgow Forge Pty Ltd

[2011] NSWSC 1185

Supreme Court

New South Wales

Medium Neutral Citation:	Peters v Lithgow Forge Pty Ltd [2011] NSWSC 1185
Hearing dates:	09/08/10, 10/08/10, 11/08/10, 12/08/10, 16/10/10 and 11/10/10
Decision date:	10 October 2011
Jurisdiction:	Equity Division
Before:	Slattery J
Decision:	See paragraph 143 of judgment.
Catchwords:	EQUITY - solicitor claims charge over real property in name of corporation to secure payment of a judgment for costs against a former client - shares in corporation transferred by client to his wife - real property of corporation mortgaged - solicitor seeks to set aside both the transfer and mortgage under Conveyancing Act, s 37A - client funds acquisition of property by corporation - HELD - solicitor has equitable interest by way of charge over the real property - mortgage but not transfer voidable under Conveyancing Act, s 37A - corporation holds property on resulting trust for client.
Category:	Principal judgment
Parties:	Plaintiff:- Rodd Andrew Peters T/as Rodd Peters Lawyers First Defendant:- Lithgow Forge Pty Ltd Second Defendant: Anthony John Wieland Third Defendant:- Rachael Allen Fourth Defendant:- Nicholine Wieland
Representation:	Plaintiff: M. Aldridge SC, P. Reynolds First and Second Defendants: S.B. Loughnan Third and Fourth Defendants: A. Blank Plaintiff: Rodd Peters Lawyers First and Second Defendants: Gibson Howlin Lawyers Third and Fourth Defendants: Watkins Tapsell
File Number(s):	2009/290828
Publication restriction:	No

Judgment

1. HIS HONOUR : Between 2006 and 2008, Mr Rodd Peters, practising as "Rodd Peters Lawyers" provided legal services to Mr Anthony Wieland. By January 2008 Mr Peters claimed that Mr Wieland owed him a substantial sum for unpaid professional fees and disbursements under their mutual costs agreement. Mr Wieland disputed the quantum of these fees which were assessed under the Legal Profession Act (2004) (NSW). On 25 July 2008 this Court issued a Certificate of Determination of those costs in the sum of $182,236.91. Judgment for Mr Peters was entered against Mr Wieland in the amount of the Certificate on 25 August 2008.

1. Mr Wieland lives in New Mexico, U.S.A. with his wife, Ms Rachael Allen, a U.S. citizen. When Mr Wieland instructed Rodd Peters Lawyers to undertake the legal work in question, Mr Wieland conducted business in Australia and was resident in this country. In mid-2008 he moved back to New Mexico, taking with him all the moveable assets of his business. The only property of value associated with Mr Wieland remaining in Australia is certain real property in Mort Street, Lithgow NSW ("the Lithgow Property"). To reduce the risk of identity theft the address and title details of this property is not reproduced in this judgment.

1. Lithgow Forge Pty Ltd not Mr Wieland is the registered proprietor of the Lithgow Property. In these proceedings Mr Peters seeks a declaration that he holds an equitable charge over the Lithgow Property to secure repayment of the costs judgment. He claims that Mr Wieland had authority to grant this charge over Lithgow Forge's property and did so in November 2008. Mr Peters seeks the appointment of a receiver to the Lithgow Property and consequential relief to realise its value and to satisfy the judgment for costs.

1. Mr Wieland opposes this claim, principally on the ground that no equitable charge was created in Mr Peters' favour over the Lithgow Property in November 2008. His contention is that the exchange of correspondence between himself and Mr Peters was insufficient to create such any interest by way of charge in the Lithgow Property.

1. Alternatively, Mr Wieland contends that Lithgow Forge entered into two transactions, one in 2006 and another in 2008, that defeat Mr Peters' claims. First, Mr Wieland says he transferred all his share capital in Lithgow Forge to his wife, Ms Allen, in July 2006 which she has owned beneficially ever since and that he was not in a position to grant a charge over the property in 2008. Second, Mr Wieland says as the sole director of Lithgow Forge he granted a mortgage over its assets in favour of his sister, Ms Nicholine Weiland in the sum of $600,000, which represents more than the full realisable value of the Lithgow Property.

1. Mr Peters seeks to avoid both the transfer and the mortgage. He contends that both transactions were alienations of property with the intention to defraud creditors and are voidable at the instance of any person thereby prejudiced: see Conveyancing Act 1919 s 37A(1) and Chen v Marcolongo; Chan v Lym International Pty Ltd (2009) 260 ALR 353. Mr Peters points to features of both the transfer and the mortgage that he alleges attract the application of Conveyancing Act , s 37A.

1. Mr Wieland claims the transfer was executed on 2 July 2006. Mr Peters' case is that the transfer was only notified to ASIC on 30 January 2009, three days after Mr Peters filed and served a creditor's petition on Mr Wieland on 27 January 2009. Mr Peters contends the transfer was created in late January 2009 to defeat creditors, not the date it bears in July 2006.

1. Mr Peters' claim to set aside the mortgage is based on its close proximity in time to another event adverse to Mr Wieland's financial interests. On 25 July 2008 the Certificate of Determination of Costs issued against Mr Wieland. The same day Lithgow Forge granted the mortgage to Ms Nicholine Wieland, for what Mr Peters alleges, was no consideration.

1. In response to this case Mr Wieland seeks to support both the transfer and the mortgage as genuine transactions, entered into without an intention to defeat creditors. He says the transfer to Ms Allen was effective to correct an error that he made at the time of incorporation of Lithgow Forge. Lithgow Forge, he claims, was always to be incorporated in Ms Allen's name with her as sole shareholder and director, not him; and that upon realisation of this alleged mistake he corrected it by executing the transfer of shares to his wife in July 2006. The later registration with ASIC of the transfer in January 2009 was the result, he says, of an oversight.

1. Mr Wieland also seeks to support the mortgage transaction. He says it was granted in consideration for his sister Ms Wieland, the general manager of the Wieland Heirs Family Trust, advancing funds in 2006 to purchase the Lithgow Property. He says that Ms Wieland made a mistake in signing the document advancing funds in her personal capacity rather than as the general manager for the trust. The mortgage was part of a transaction that was designed to remedy this situation.

1. Mr Peters has an alternative claim. If he fails on his Conveyancing Act , s 37A contention, he says Mr Wieland supplied the entire funds for the purchase of the Lithgow Property and that as a result Lithgow Forge holds the Lithgow Property on resulting trust for Mr Wieland. In reply to this Mr Wieland and Ms Allen say that the Wieland Heirs Family Trust funded the purchase and that no resulting trust arises.

1. Mr Wieland and the other defendants have a further answer to Mr Peters' resulting trust case. They contend that even if Mr Wieland funded the purchase of the Lithgow Property, his wife Ms Allen at all times controlled and owned the share capital of Lithgow Forge and the presumption of advancement should be applied to displace any inference of a resulting trust in his favour.

1. Mr Peters brings these proceedings as plaintiff. He joins Lithgow Forge as first defendant, Mr Wieland as second defendant, Ms Allen as third defendant and Mr Wieland's sister, Ms Nicholine Wieland as fourth defendant. The parties agreed upon the issues for determination. They reduce to questions of whether Mr Peters has an equitable charge over the Lithgow Property, whether either the transfer or the mortgage were dispositions in fraud of creditors and whether Mr Wieland in any event holds the Lithgow Property on resulting trust. The parties formulated the issues into the following more precise questions, which provide the structure for this judgment:-

"1. Whether the Plaintiff has an equitable charge or other interests in the property situated at 227 Mort Street, Lithgow ("Property").

2. Whether the transfer by Mr Wieland of all ordinary shares in Lithgow Forge to Ms Allen purportedly made on 2 July 2006 but notified to ASIC in January 2009 is an alienation of property with intent to defraud creditors and, if so, whether it should be voided or the interest held by Ms Allen in the Lithgow Property otherwise be declared to be held on trust for Mr Wieland.

3. Whether the mortgage granted by Lithgow Forge, through Mr Wieland, to his sister, Ms Wieland in respect of the Property on 25 July 2006 is an alienation of property with intent to defraud creditors and, if so, whether it should be voided pursuant to section 37A of the Conveyancing Act 1919 (NSW) or the interest held by Ms Wieland in the Property otherwise be declared to be held on trust for Mr Wieland.

4. Whether Mr Wieland or the Wieland Heirs Family Trust advanced the purchase moneys for the Lithgow Property and, if the former, whether Mr Wieland accordingly holds a resulting trust in the Lithgow Property."

1. This general background will be supplemented shortly with a more detailed chronology of the engagement of Mr Peters and enforcement action he took against Mr Wieland and Lithgow Forge. Otherwise the Court will deal with the facts related to each of these four identified issues, as each issue is considered.

1. At the commencement of the proceedings I indicated to the parties that I had met Mr Peters professionally when I was a barrister. I recalled that he had briefed me in two litigious matters in about the mid-1990s and that I have had occasional contact with him since that time in professional contexts, as I have had with many solicitors practising in this State. I indicated that so far as I recalled Mr Peters did not brief me as counsel after the mid-1990s. I have had and have no social contact with Mr Peters independent of these limited professional contacts. I indicated to the parties that I did not have any concern about my ability to hear the case by reason of this limited contact with Mr Peters. No party objected to my hearing the case.

1. These proceedings came before me in the duty list for an interlocutory contest as to whether or not a caveat that Mr Peters lodged on the title of the Lithgow Property in November 2008 should be removed or extended. That interlocutory hearing took place before me on 12 April 2010 and the Court gave judgment on 13 April 2010, extending the caveat under Real Property Act 1900, s 74K: Peters t/as Rodd Peters Lawyers v Lithgow Forge Pty Limited [2010] NSWSC 283.

1. These proceedings were conducted efficiently by counsel and solicitors on all sides. Mr Aldridge SC and Mr Reynolds appeared for Mr Peters. Mr Loughnan appeared to Lithgow Forge and Mr Wieland. Mr Blank appeared for Ms Allen and Ms Wieland.

Mr Peters and Mr Anthony Wieland

1. Mr Peters first met Mr Wieland through family connections. He went to school with Wieland's older brother Stuart about 30 years ago. As a result of this early contact Mr Peters knows all members of the Wieland family, including Mr Wieland's sister Ms Nicholine Wieland. Mr Peters initially took instructions from Mr Anthony Wieland in 2006 at his brother Stuart's request.

1. Mr Wieland's instructions to Mr Peters concerned litigation that Mr Wieland and a company he controlled, US Equipment Leasing Inc (USA) were conducting in this Court against another brother of Mr Wieland, Mr Peter Wieland. Mr Peters firm, Rodd Peter's lawyers was the solicitor on the record for Mr Wieland and his company, which were both defendants and cross claimants in the proceedings (proceedings 50147 2006). Mr Wieland informed Mr Peters that he owned a residential property in Glorietta, New Mexico. During the litigation Mr Peters corresponded with Mr Wieland either care of his Australian residential address in Lithgow (not the Lithgow Property) or at the other address in Glorietta.

1. Shortly after Lithgow Forge was incorporated in late June 2006 it acquired the Lithgow Property. The source of funding for the purchase was much disputed in the proceedings but the basic elements of the conveyancing were not in contest. Mr Tim Le Fevre, a Lithgow legal practitioner, acted as the solicitor for Lithgow Forge on the purchase. On 11 August 2006 Lithgow Forge was put in funds sufficiently to allow it to complete the purchase.

1. The litigation between Mr Wieland and his brother Peter seems to have been bitterly fought and became far more expensive than Mr Wieland originally anticipated. By October 2007 Mr Wieland was selling assets to raise funds to pay outstanding legal fees. It is self-evident from the correspondence in these proceedings that the amount of Mr Peters' fees contributed to Mr Wieland and Ms Allen losing confidence in him as a legal adviser. The present proceedings are not concerned with either the quantum or the reasonableness of Mr Peter's fees. After a fee dispute arose between the parties, a costs assessor decided under Legal Profession Act s 368(5) what fees Mr Peters could recover from Mr Wieland and his company, which resulted in the issue of the Certificate of Determination of costs dated 25 July 2006.

1. Mr Peter says, and this was not contested, that he ceased acting for Mr Wieland in January 2008 because Mr Wieland had negotiated a settlement of the Supreme Court proceedings with his brother, Peter and because Mr Peters' invoices for legal services remained unpaid. After that Mr Peters took a series of steps to recover his outstanding fees. Some of these have already been mentioned, the costs assessment process, the costs certificate of 25 July 2008, the costs judgment of 25 August 2008 and the alleged arrangement about the caveat over the Lithgow Property, which caveat was filed on 25 November 2008. But Mr Peters took other enforcement action after January 2008, which is relevant to the assessment of the issues joined between the parties.

1. By mid-2006 Mr Peters formed the view that Mr Wieland was attempting to relocate himself back to New Mexico. There was some justification for this view. US Equipment Leasing Inc (USA) ceased business in Australia by March 2008. Mr Wieland arranged for his company's assets and his personal effects to be sent by sea container transport to the USA in March April 2008, leaving the Lithgow Property and the shares in Lithgow Forge as apparently the only assets of substantial value connected with Mr Wieland remaining in this jurisdiction. Mr Peters was certainly unaware of any other assets and Mr Wieland did not declare any.

1. On 2 September 2008 Mr Peters searched on the Internet in respect of the Lithgow Property and found it was being advertised for sale for $795,000. The property was advertised without the intervention of an agent as a convent built in 1902 but which was now "a renovators and investor's dream, with downtown access". Ms Allen seems to have been instrumental in aspects of the sale as she was nominated as the point of contact for persons interested in making enquiries about it. The property was also described in these terms, "the owners of this property had originally planned to build their family here in what has now become a bedroom community for Sydney's hustle and bustle. There are great schools and public transportation into the city centre."

1. I accept Mr Peters' evidence that he was not told about the listing of the Lithgow property for sale before he discovered it from his own internet research. Rather, up to September 2008 Mr Peters was having regular conversations with Mr Wieland, in which Mr Peters requests for payment of his outstanding invoices were met with Wieland's statements to the effect "I will pay you as soon as I have the money" or "I will pay you as soon as I sell the two trucks" or some similar explanation for delay in payment.

1. Mr Peters' discovery the Lithgow Property was listed for sale led him to press Mr Wieland to agree to a caveat being placed on the title to the property to secure Mr Peters' fees. The correspondence about this is set out in detail under issue 1 below. But before this correspondence commenced, Mr Wieland e-mailed Mr Peters on 4 September 2008 at 10.37 and said, "It has never been our intention to neglect payment for your services. Right from the very beginning we have trusted you and our bills were always paid within a reasonable timeframe until the estimated budget was far exceeded. We are glad that the Bill has been assessed. Contrary to all your insinuations, I wish to make something very clear to you and that is: We want to co-operate with you and pay the bill ! As you can see the house has been listed so that we may pay your bill." (Emphasis in original) In this e-mail Mr Wieland also referred to speaking to a mortgage broker, Mr Kevin Lee about a mortgage loan "so that we can pay you off in full immediately". Mr Peters had in fact referred Mr Wieland to Mr Lee to assist him to raise finance. In the email Mr Wieland then added " it is my sincere wish to conclude this matter and as such am willing to fly out to Sydney to wrap everything up. I will keep you informed of Kevin Lee's timetable. All going well we will have you paid by the end of the month."

1. Payment did not take place in the near-term. That prompted Mr Peters to take further enforcement action. On 12 September 2008 he caused a Writ of Levy of Property to be issued in respect of Mr Wieland's last known residential address in Australia and in respect of the registered office of Lithgow Forge. Both writs were returned unsatisfied by 7 November 2008. Mr Peters then contacted Ms Sophie Hakailis, Mr Weiland's solicitor in Australia and said to her, "If he [Mr Wieland] does not give me a caveat to preserve the status quo until he pays me then I will need to take court action to preserve my position." After this conversation the correspondence, fully detailed in issue 1 below, resumed in relation to the caveat over the Lithgow Property. This correspondence resulted in a caveat being filed on 25 November 2008.

1. But that was not the end of enforcement action. Despite the existence of the caveat on the Lithgow Property Mr Wieland did not pay or make an offer to pay the judgment debt. On 16 January 2009 Mr Peters caused a creditor's petition to be filed against Mr Wieland in the Federal Magistrates Court of Australia (proceedings SYG 115 2009). Mr Wieland accepted service of the creditor's petition on 27 January 2009. On 30 January 2009 Mr Wieland notified ASIC of the transfer of 1000 shares in Lithgow Forge. On 5 February 2009 Mr Wieland proposed a kind of settlement to Mr Peters in a letter, which said, "I propose that both parties hold each other free and clear of all financial claims and ceasing (sic) all legal actions against each other as of this day of any kind as to this matter. You have ten (10) days to respond in writing upon receipt of this letter." This offer was not accepted.

1. Naturally, Mr Peters was very suspicious that the share transfer had been recently created and backdated to 2 July 2008 to take the transaction out of the "relation back" period set under the Bankruptcy Act 1966 (Cth), s115 in respect of the possible bankruptcy of Mr Weiland. Mr Peters' creditor's petition led to an active contest between the parties in the Federal Magistrates Court, with both sides filing affidavits. Mr Peters alleged that there were inconsistencies between Mr Wieland's affidavits in these proceedings and those sworn and filed in the Federal Magistrates Court. Eventually, Mr Peters agreed to dismissal of the creditor's petition on 2 June 2009, as he formed the view that it was unlikely to succeed on the particular basis upon which it had been framed, the return unanswered of the Writ of Levy of Property.

1. On 17 November 2009 Mr Wieland caused his lawyers, Gibson Howlin Lawyers to file and serve a Real Property Act s 74J Notice to Caveator of Proposed Lapsing of Caveat, which notice was served on Mr Peters on 4 December 2009. This notice was disputed which ultimately led to the contested application for extension of the caveat in the Court's duty list in March 2010.

1. I now turn to the four questions the parties posed for the Court's determination.

1. Does Mr Peters hold an Equitable Charge over the Lithgow Property?

1. By 25 August 2008 Mr Peters had a judgment for outstanding legal costs against Mr Wieland. In September 2008 he initiated negotiations with Mr Wieland to enforce this judgment. As part of these negotiations Mr Peters proposed lodging a caveat over the Lithgow Property. The first issue in the proceedings is whether those negotiations actually resulted in Mr Peters obtaining an equitable charge over the Lithgow Property. The parties negotiated wholly by email, so this issue is to be decided by an examination of the emails exchanged between them in the last quarter of 2008.

The Caveat Emails

1. The relevant emails commence in September 2008 with Mr Wieland acknowledging responsibility for paying the judgment debt and indicating to Mr Peters how he proposed to finance its payment. By an email dated 5 September 2008 Mr Peters said to Mr Wieland.

"Dear Rodd,

As I said in my previous eMail (sic), We do want to cooperate and get you paid.

Nicky has agreed to let St. George Bank have a priority first mortgage, she has also agreed to withdraw her mortgage in the event that St. George Bank wants a clear title.

If for some reason the loan doesn't work out then we will give your firm a first mortgage on the Lithgow Property."

1. In response to this Mr Peters responded on 6 September 2008, making clear that, encouraged though he was, he still wanted what he described as a "caveatable interest" in the property.

"Dear Anthony,

That (sic) encouraging news from you.

Can you let me know by Tuesday mid-morning (our time) whether you agree to giving us a caveatable interest - we would of course release the caveat on the earlier of payment and it will not interfere with your attempts to refinance the property to enable you to pay us. If you are not willing please let me know why not. You might let me know who your lawyer is so that I can liaise with him regarding the caveat."

1. The matter progressed little during the rest of September and October. Mr Peters returned to the subject on 13 November 2008 in an emailed letter he sent to Ms Sophia Haikalis the lawyer then acting for Mr Wieland.

"I refer to our various telephone discussions regarding this matter and note that while you were expecting to be in a position to make some payment proposal to us some weeks ago including the granting of a caveat in our favour, we have not heard anything further from you. We are becoming increasingly concerned about Mr Wieland's goodwill. We see he is attempting to sell the property and has granted a mortgage to his sister who is a solo mother an (sic) unlikely to have any means to lend your client such monies. If indeed Ms Wieland did advance real funds to your client he will no doubt be in apposition to pay the judgment?...

Absent you advising us that your client consents to this firm lodging a caveat over the real estate at Lithgow by close of business tomorrow Friday 14 November 2008, we will approach the court for the appropriate relief to secure the status quo in respect of the assets without further notice."

1. This email prompted a detailed response from Ms Haikalis on 17 November 2008 which took issue with the drafting of the form of the caveat which Mr Peters had forwarded to her.

1. Adopting the point of view that Ms Haikalis was taking an overly technical approach, Mr Peters took the unusual course of emailing his former client, Mr Wieland directly on 17 November 2008, rather than communicating through Mr Wieland's lawyer, Ms Haikalis. The email relevantly provided:-

"I was disappointed to receive correspondence from your lawyer attempting to score some technical points about the caveat. You need to put up a caveat to my satisfaction or I must proceed Anthony. Enough is enough."

1. Mr Peters' blunt approach had its effect. Mr Wieland emailed back two days later, on 19 November 2008 at 2.17am.

"Rodd,

I will instruct my lawyers to proceed.

Anthony"

1. After thus securing Mr Wieland's general agreement to proceeding this way, Mr Peters forwarded this correspondence with Mr Wieland to Ms Haikalis the same day, 19 November 2008 at 12.25pm.

"Dear Sofia,

Below is an email exchange with Anthony Wieland for your information.

We are currently preparing court processes against Anthony as you would appreciate in the circumstances. Barristers and lawyers in both jurisdictions are briefed and acting and I will not do anything to halt that action until I have a caveat to my satisfaction or payment to my satisfaction."

1. Mr Peters was cross-examined about this email and asked what barristers and lawyers had been briefed "in both jurisdictions" and he was not able to give a very satisfactory answer. But that does not affect, it seems to me how this correspondence should be construed objectively.

1. Later the same day, 19 November 2009 at 1.39pm, Ms Haikalis requested that a duly completed and amended caveat be forwarded for her client's execution. She said, " Dear Rodd, Please forward a duly completed caveat (in the form as previously submitted but with items (A) - (F) and (H) completed for execution by our client. Kind regards, Sophie ". These letters were a reference to the information boxes (for caveator, title and other details) on the front page of the standard form caveat, which were incomplete.

1. On 24 November 2008 at 3.56pm Mr Peters forwarded the completed form of caveat, together with its annexure, the executed form which is set out later in these reasons. At the same time Mr Peters explained the future course that he expected to be followed.

"I now attach a revised caveat together with annexure.

In the first instance I require immediate email confirmation that your client agrees to the granting of the caveat. If your client agrees I shall then lodge the caveat without it being executed by your client, but would ask that he execute same as soon as reasonably possible and return same to our offices. Written email confirmation by your firm will be used as the basis of the express agreement referred to in the caveat.

Please confirm by close of business today that your client will proceed this way.

I have indicated that once your client has granted the caveat that I will discuss a resolution of the matter including time for payment and the amount to be paid".

1. Ms Haikalis replied quickly. On the same day, 24 November 2008 at 4.15pm, she emailed Mr Peters back-

"Dear Rodd,

I note receipt of your email at approximately 4pm today.

As you are aware, my client resides overseas. Although I will seek instructions immediately, prior experience tells me that I will not get a response until late tomorrow.

The confirmation you seek is with respect to proceeding on the basis that, once agreed, you lodge the caveat ASAP without my client's signature, then it is safe to say that this process will be acceptable to my client.

Kind regards,

Sophie"

1. Mr Peters also responded quickly. The last paragraph of Ms Haikalis' letter had sensibly sought clarity in Mr Peters' email of 3.56pm. The last sentence of Ms Haikalis' email commencing "the confirmation you seek...." was Ms Haikalis stating back to Mr Peters her understanding of what he was offering. This explains Mr Peters' final response by email at 4.21pm, which commences with his words of reaffirmation that she correctly apprehended his purpose, "That is my suggestion". Signalling a "more amiable" approach Mr Peters then responded with the following:-

"Dear Sofia

That is my suggestion. Hopefully you can get a telephone or email response this afternoon from Anthony so that I can lodge the caveat first thing tomorrow and then Anthony's signed version of the document can follow up after that and we can otherwise deal with things on a more amiable basis.

Regards Rodd Peters"

1. By saying, "That is my suggestion" Mr Peters was confirming that he would proceed on the basis that, as Ms Haikalis described it "Once agreed, you lodge the caveat ASAP without my client's signature, then it is safe to say that this process will be acceptable to my client". Although not perfectly expressed, the sense of what Ms Haikalis was saying was that once it was clear that her client had agreed to lodge the caveat then Mr Peters could take that course without actually having a version of the caveat with her client's signature because even then it would still be "safe to say" that this process was acceptable to Mr Wieland.

1. Here Mr Peters was inviting Lithgow Forge's solicitor, Ms Haikalis, to participate in a procedure to give a "telephone or email response this afternoon from Anthony", which would allow him to "lodge the caveat first thing tomorrow". The suggested procedure was for Ms Haikalis to "get a telephone or email response this afternoon from Anthony". But exactly what response would permit him to lodge the caveat Mr Peters did not make clear.

1. Mr Wieland received the amended caveat over the Thanksgiving long weekend. His email back to Ms Haikalis acknowledged its receipt and promised further action.

"We received the email with Caveat etc. tonight. (Your Tuesday Lunchtime). We will return all to you via PDF and hard copy via FEDEX on our Monday 1st."

1. Ms Hakailis sent this email from her client to Mr Peters on the afternoon of 25 November 2008, adding in her email to him:-

"Dear Rodd, Please see the email received from our client earlier today. As suggested therein, the earliest we expect to receive the signed document is Monday 1 December 2008. Kind regards, Sophie"

1. This conveyed to Mr Peters Ms Haikalis' not unreasonable belief that her client was proposing to sign the document and sent it to her. After he read Ms Haikalis' email Mr Peters also expected to receive a signed document, as he explained in his reply to her. But strictly he did not have a clear answer to the request in his 24 November 2008 3.56pm email, "I require immediate email confirmation that your client agrees to the granting of the caveat". So Mr Peters seized the moment and sent back this email.

"OK Sofia

I take it that is an acceptance of the terms of the caveat. I will go ahead and register it in anticipation of receiving the signed document."

1. Ms Haikalis did not dissent from his proposed course in any email or telephone call before Mr Peters lodged the caveat. In my view, Mr Peters' course was a reasonable one as it is difficult to interpret Mr Wieland's statement "we will return all to you via PDF and hard copy..." with Ms Haikalis' words, "we expect to receive the signed document" as anything other than Mr Wieland declaring that he would sign and return the document, because he agreed with its terms.

1. Mr Peters signed the form of caveat, dated it 25 November 2008 and lodged it that day in what he thought was the then agreed form. The form of caveat sent to Ms Haikalis and Mr Wieland which he lodged had an annexure describing the estate or interest claimed in the Lithgow Property in the following terms:-

"Schedule 1 - Estate or Interest Claimed

An express agreement that the registered proprietor shall not register any dealing in respect of the Land unless and until it has the written consent of the Caveator, which consent may be withheld until payment to the Caveator of the amount due under New South Wales Supreme Court Judgment dated 25 August 2008 (14330/2008), or such other sum which may be agreed between the parties.

Executed on 25 November 2008

__________________________

Anthony Wieland

Director

Lithgow Forge Pty Limited

[ACN ]

[Signed] Rodd Peters

________________________

Rodd Andrew Peters

Caveator"

1. Thus, Schedule 1 to the caveat, which was included in an annexure to the caveat provided for the possibility of Mr Wieland signing but it was unsigned in that respect. It was only signed by Mr Peters. Not only did Mr Wieland not sign the form of caveat lodged, but he did not send the signed form of caveat to Mr Peters. This generated further correspondence between the parties about three weeks later.

1. On 14 December 2008 Mr Peters emailed both Mr Wieland and Ms Haikalis.

"Dear Anthony and Sofia

I have not received the signed caveat which I was expecting from you now 14 days ago. Further I have received no response to my request for a response last week on this matter.

I have no option other to now commence the appropriate action." (sic)

1. Ms Haikalis responded by email on 15 December 2008 supplying a scanned PDF copy of the caveat, showing it to be signed by Mr Wieland.

"Dear Rodd,

I refer to the string of emails appearing below and advise that we are now instructed that the original, signed form of Caveat has been posted and is en route to Australia. Hopefully the US snow falls and the holiday season don't delay its arrival any more than is expected.

In the meantime, attached is a scanned copy of the said signed form of Caveat.

Kind regards,

Sofie"

1. The scanned copy of the caveat that Ms Haikalis sent was in identical terms to the one Mr Peters had lodged, except for the form of Mr Wieland's signature above his signature block. The original hard copy signed version never arrived. Mr Wieland did not send it, as he later admitted in evidence.

1. This course of events resulted in a curious state of affairs at the time that Mr Peters lodged the caveat. Mr Peters did not then have a signed copy of the form of caveat he was lodging. But he expected one would be signed and sent to him. He did not have a simple commitment from Mr Wieland personally that he regarded Lithgow Forge as presently bound to the terms of the agreement expressed in Schedule 1 to the caveat. But he had in Mr Wieland's email (received via Ms Haikalis) the statement "we will return all to you via PDF and hard copy via FEDEX on our Monday 1 st ". He also had her statement that she expected to receive a signed version but not via FEDEX on our Monday 1 st " for another five days. She too gave no formal acceptance of Mr Peters terms.

1. But in my view Mr Peters' suggestion had redefined the terms of the communications. Mr Peters had indicated in his final 4.21pm email that "a telephone or email response this afternoon from Anthony" would allow him "to lodge the caveat first thing tomorrow". He was signalling that he would treat an email response from Mr Wieland as an authorisation to lodge a caveat. It was not unreasonable for him to treat Ms Haikalis' forwarding Mr Wieland's email to Mr Peters as "an email response this afternoon", sufficient to authorise him to lodge the caveat in the form already communicated, and thereby to indicate Mr Wieland's acceptance of the terms of Schedule 1. Mr Peters' earlier 3.56pm email the same day appears to have been crafted to produce an agreement as soon as possible to allow him to act upon a satisfactory emailed reply. When that reply came his confirmatory statement back "I take it that is an acceptance of the terms of the caveat" was also a not unreasonable interpretation of the situation.

1. Given Mr Peters' suggestion as to the way to proceed, Ms Haikalis' act of forwarding her client's email, which itself promised the return of signed copies, communicated sufficient commitment from Mr Wieland for Mr Peters to lodge a caveat in the agreed terms. As a result of this email exchange there was, in my view, an agreement made between Mr Peters and Lithgow Forge in the terms of Schedule 1 to the caveat at the time it was lodged.

1. Even if the view were to be taken that there was no agreement in the terms of Schedule 1 when Mr Peters lodged the caveat on 25 November, those terms were agreed when on 15 December 2008 Ms Haikalis forwarded the scanned PDF copy of the caveat, signed by Mr Wieland. In evidence, Mr Wieland acknowledges that it was his signature on the PDF copy that came into Ms Haikalis' possession. On this scenario the agreement described in the form of caveat was not made for several weeks after lodgement. Nevertheless the agreement existed by the time the caveat was sought to be extended in March 2010 and in my view exists now.

Applicable Legal Principles and Analysis

1. The law as to the creation of equitable mortgages and charges may be concisely stated. The elements of an equitable mortgage and a charge were defined in the well known decision of the English House of Lords in Swiss Bank Corporation v Lloyds Bank Limited & Ors [1982] AC 584 at 594-595:-

"An equitable mortgage is created when the legal owner of the property constituting the security enters into some instrument or does some act which, though insufficient to confer a legal estate or title in the subject matter upon the mortgagee, nevertheless demonstrates a binding intention to create a security in favour of the mortgagee, or in other words evidences a contract to do so: see Fisher and Lightwood's Law of Mortgage , 9th ed. (1977), p. 13. An equitable charge which is not an equitable mortgage is said to be created when property is expressly or constructively made liable, or specially appropriated to the discharge of a debt or some other obligation, and confers on the chargee a right of realisation by judicial process, that is to say, by the appointment of a receiver or an order for sale: see Fisher and Lightwood , p. 14."

1. An equitable charge may take the form either of an equitable mortgage or of an equitable charge other than by way of mortgage. The caveat does not purport to create an equitable mortgage. No words of mortgage are used. Nor indeed are any words of charge. But in the caveat the Lithgow Property is expressly or constructively made liable or specifically appropriated to the discharge of the identified costs judgment debt entered on 25 August 2008.

1. A key element in the definition of an equitable charge in the Swiss Bank Corporation Case is the special appropriation of the property to the discharge of a debt or other obligation. In its terms Schedule 1 to the caveat gives Mr Peters' control over the disposal of the Lithgow Property which amounts in my view to a specific appropriation of the Lithgow Property to the discharge of the costs judgment debt. The words in Schedule 1, the "registered proprietor shall not register any dealing in respect of the land unless and until it has the written consent of the caveator," define the control Mr Peters proposed to exercise over the Lithgow Property. But this control could only be exercised through Mr Peters withholding his consent to sale, on the limited grounds that payment (or compromise) of the costs judgment sum had not taken place. The appropriation occurs through Mr Peters gaining control over the sale of Lithgow Property for the limited purpose of the payment of the judgment sum.

1. But the same conclusion may also be said to follow from the mere grant to Mr Peters of authority to lodge the caveat. In Troncone & Ors v Aliperti & Ors (1994) 6 BPR 13,291; (1994) NSW ConvR 55-703, the Court of Appeal stated what may be taken to follow from the grant of an authority to lodge a caveat over land held under the Real Property Act . The principle was expressed in the following passage in the judgment of Mahoney JA:-

"A caveat cannot be entered against land unless the caveator has the relevant proprietary interest in the land: see Real Property Act 1900, s 74F(1) ("a legal or equitable estate or interest in land"). Therefore, unless there be evident an intention to the contrary, the grant to the creditors of an authority to lodge a caveat on the relevant property carried with it by implication such an estate or interest in land as was necessary to enable that authority to be exercised. There was, in the present case, no intention to the contrary. Indeed, it might be thought to involve deception or worse if Mr Aliperti had intended to authorise the lodgment of a caveat but to withhold the creation of the interest in the land necessary for that to be done."

1. McLelland CJ in Eq applied this principle in Coleman v Bone (1996) 9 BPR 16,235. There his Honour summarised the principle as: where A grants to B an authority to lodge a caveat in respect of a property of A, that grant carries with it by implication such estate or interest in the property as is necessary to enable that authority to be exercised. Where the authority to lodge a caveat in connection with an obligation by A to pay money to B, in the absence of sufficient indications to the contrary, the implication is that the estate or interest granted is an equitable charge to secure payment to B of that money.

1. Lithgow Forge agreed to authorise Mr Peters to lodge the caveat before Mr Peters did so on 25 November 2005. The principles stated in Troncone's case and Coleman v Bone are sufficient to imply that this grant of authority by Mr Wieland on behalf of Lithgow Forge carries an estate or interest that enables that authority to be exercised, namely an equitable charge to secure payment to Mr Peters of the costs judgment debt.

1. Mr Loughnan argued that the exchange of emails was not intended to form a binding agreement. He took the Court to the emails of 5 September 2008 and 13 November 2008 and submitted that the motivation for the agreement being made at that time was expressed by the parties to be mere "goodwill". It is true, expressions of "goodwill" do appear in the correspondence. But there is more than just that in the parties' communications, particularly Mr Peters' emails from 19 to 25 November, which contain demands for action and the intimation of consequences that will follow if no agreement to lodge a caveat is forthcoming. These are not mere expressions of goodwill. Mr Peters' final email of 24 November at 4.20pm is clearly trying to capture legal certainty out of the vagueness of Mr Wieland's previous response.

1. Alternatively, the defendants contend the correspondence constitutes a mere agreement to lodge caveat and it does not create an equitable charge. The potential merit in this argument is that Mr Peters nowhere uses words of charge in his emails or in annexure A to the caveat. But a difficulty for the argument is that it makes little sense to make such an agreement when the caveator did not need the consent of Lithgow Forge for the simple task of lodging a caveat. Why make an agreement for something that can be done without agreement? By Real Property Act , s 74F(6) the registered proprietor may give consent to dispense with the requirement to serve notice of the caveat on the registered proprietor. But the registered proprietor's consent is not otherwise necessary for a caveator to file a caveat. Moreover, there is little point in such an agreement unless the parties intend the charge to create some interest in the Lithgow Property. The correspondence in my view is more consistent with an intention to create a caveatable interest, than it is with a mere agreement to lodge a caveat.

1. I conclude on the first issue that Mr Peters holds an equitable charge over the Lithgow Property as security for the discharge of the costs judgment debt.

2. Was the Share Transfer an Alienation of Property with intent to Defraud Creditors?

1. The second issue is whether Mr Wieland's transfer of the ordinary shares in Lithgow Forge, purportedly made to Ms Allen on 2 July 2006 was an alienation of property with intent to defraud creditors and voidable under Conveyancing Act , s 37A. To answer the question the Court must examine (1) the circumstances in which Mr Wieland gave instructions to Rodd Peters Lawyers for the incorporation of Lithgow Forge in the last week of June 2006, and (2) the circumstances in which Mr Wieland and Ms Allen say that the transfer from him to her took place the following week. The case against them is that there was no transfer the following week but that the instrument of transfer was wholly manufactured sometime after July 2008 after Mr Wieland realised that Mr Peters was pressing enforcement action for his unpaid legal fees. In this section the Court finds that Mr Wieland did transfer the shares to Ms Allen on 2 July 2006 as he and she both say and not later. The Court concludes that the transfer is not voidable under Conveyancing Act , s 37A.

Setting Up Lithgow Forge

1. There is a contest as to what instructions Mr Wieland gave Mr Peters' firm about the setting up of Lithgow Forge in late June 2006. At the firm I find that Ms Catherine Cho took these instructions, not Mr Peters himself. I infer from her evidence Mr Wieland gave instructions to her on behalf of the firm that he, not Ms Allen would own the shares in Lithgow Forge legally and beneficially. Mr Wieland denies having a conversation with her from which this inference may be drawn, although he agrees that he had some communication with her. But having heard her account, I accept that it is correct.

1. Ms Cho's account is both internally consistent and highly probable. Mr Peters had involved Ms Cho early in June 2006 in incorporating two companies other than Lithgow Forge for Mr Wieland, US Equipment Pty Ltd and Austruck Pty Ltd. Upon their incorporation and in conformity with Mr Wieland's instructions, Mr Wieland became the sole director, secretary and shareholder of both those two companies on the instructions he gave the firm. The firm had an established relationship with a shelf company provider Thrifty Corporate Services. Based upon Ms Cho's evidence I am satisfied that to execute Mr Wieland's instructions she followed her usual practice with Thrifty Corporate Services to set up US Equipment Pty Ltd and Austruck Pty Ltd. This involved obtaining the consent of the intended director or company secretary and shareholders to their respective appointments and their ownership of shares by having them sign a form entitled "Employment Details", recording their consent. Her usual practice also included obtaining a signed consent from the occupier of the intended registered office of the company. She ordinarily sent these materials on to Thrifty Corporate Services which in turn would provide the completed corporate documents back to the firm for collection by the client. Mr Wieland's instructions for both US Equipment Pty Ltd and Austruck Pty Ltd were given to Mr Peters who relayed them to Ms Cho. These instructions provided the template for Mr Wieland's later instructions to Ms Cho in relation to Lithgow Forge.

1. I accept Ms Cho's account that on Wednesday, 28 June 2006 Mr Wieland called and asked her to set up Lithgow Forge. The account that she gives of this conversation in her affidavit was substantially the same as that that she gave in oral evidence. There are minor differences, but they were not material. Ms Cho presented to the Court as a credible and competent professional. The essential elements of her account, which I accept, were: Mr Wieland asked her to incorporate a company in the name of "Lithgow Forge Pty Ltd"; she questioned Mr Wieland about the proposed number of shares in the company and "in whose name" the company would be registered; he said to her in reply "the same as the previous companies you have incorporated for me", being a reference to what she had done for him with US Equipment Pty Limited and Austruck Pty Limited; Mr Wieland asked Ms Cho to have the company incorporated by Friday of that week but he was unable to come into the office within time to sign the forms to send them to Thrifty Corporate Services; so Ms Cho offered to fax the signed forms to him for him to "check to see if they are correct"; and, she did so at the fax number he supplied to her.

1. Ms Cho's file note of 28 June 2006 of her instructions from Mr Wieland is consistent with her oral evidence. She recorded her instructions in a logically abbreviated form thus, "all details same as other company". The form she prepared, Mr Wieland signed and faxed back to her, indicated his consent to being a sole director, the secretary and the holder of 1,000 ordinary shares in the proposed company, Lithgow Forge. The form provided for a proposed shareholder to indicate whether the shares were not held beneficially and no such indication was placed on the form. Ms Cho acted quickly and prepared these documents for him. The fax back from him with the signed documents was returned by 4.30pm on 28 June, 2006. Ms Cho's note of her instructions, which I accept as an accurate record, indicates that she only received the initiating phone from Mr Wieland with his instructions at 3.00pm that day, 28 June 2006.

1. Mr Wieland requested Ms Cho that the shares in Lithgow Forge be registered in his name, the same way as for the other two companies. But he was in a hurry and probably did not think much about his instructions. When he signed the form and faxed it back to Ms Cho he indicated that was what he wanted and Ms Cho carried it out. Mr Wieland appeared to be an intelligent and capable businessman with a sufficient appreciation of the legal niceties to be able to instruct Ms Cho appropriately if he did not want the shares held in his name.

1. Mr Wieland says that he had a detailed conversation with Mr Peters in late June 2006 in which he explained to Mr Peters that Ms Allen wanted to buy a house in Australia and that she had her heart set "on the old convent in Lithgow" and further that he sought Mr Peters' advice on whether it would be best for Ms Allen to acquire the Lithgow Property in her own name or in a corporate vehicle. He says Mr Peters advised him to hold it in a company name and that after consulting Ms Allen he went back to Mr Peters and said "Rodd, would you get a company set up and call it Lithgow Forge Pty Limited. Rachael likes the name and wants me to be the director." The company was set up as sole director company. Finally he says that Mr Peters agreed to do this. Mr Peters denies having this conversation with Mr Wieland. For the reasons that are explained in the next section, I accept that Ms Allen was keen to have control of Lithgow Forge Pty Limited. But I am not persuaded that other than in passing Mr Wieland made that clear to Mr Peters. Had he done so, Mr Wieland would have been more inclined to complain later to Mr Peters about the error Mr Peters had made. But Mr Wieland did not complain later. Mr Wieland gave his principal instructions to incorporate Lithgow Forge to Ms Cho.

The Transfer of Shares - Mr Ted Luna

1. Mr Wieland and Ms Allen flew back to the USA on Friday, 30 June 2006. They say Mr Wieland transferred the shares to Ms Allen as soon as they got back on Sunday, 2 June 2006. Mr Ted C Luna from Santa Fe, New Mexico claimed he was a witness to the share transfer which he said occurred at his home in New Mexico on 2 July 2010. Mr Luna did not travel to Australia for the hearing but was cross-examined by video link from Albuquerque, New Mexico. Despite some technical problems with the video link on the day of his evidence I formed a clear impression of him and was able to make judgments as to his credibility.

1. I accept Mr Luna's account, as recorded here, of his witnessing the execution of the share transfer of 2 July 2006. He says he dated the transfer on 2 July 2006 in his handwriting. He seemed genuinely confounded by the suggestion that the date of execution of the transfer could have been any other date. He would not accept the possibility that the share transfer could have taken place in 2007 or 2008.

1. He signed the document on an informal, but to him memorable, occasion. Ms Allen and Mr Wieland were then living in Glorietta, New Mexico, which is not far from his home in Santa Fe. She telephoned him and arranged for them to call around to see him. At this meeting he recalls discussing plans for the 4 th of July national holiday two days later. He recalls a general discussion about Mr Wieland's and Ms Allen's proposal to purchase a house in Lithgow.

1. Two particular aspects of his recollection of the conversation stand out, the presence of his dogs and an exchange of gold coins. Both of these matters of detail contributed to my acceptance of his account and of him as a witness. Mr Luna gave a real and not invented account of an informal Sunday conversation during a friendly social visit to his house, during which he remembers his two French poodles playing.

1. The other prominent feature of Mr Luna's testimony about this occasion was his description of Ms Allen handing over gold coins to Mr Wieland as consideration for the transfer. His memory of this event was that "the transfer was made very rapidly", but he did remember it. I accept Mr Luna's evidence about the gold coins despite, the challenge to his testimony based on a document he had before him at the time of giving his evidence, a document entitled "Receipt for and Acceptance of Consideration" ("the Receipt"). This document was also dated July 2006 and recorded Mr Wieland's acceptance from Ms Allen of two US$50.00 Double Eagle Gold coins described as "the Lawful money of the United States of America". The document also recorded the fair market value of US$625.00 for coin on that day of acceptance. The Receipt was signed by Mr Wieland as seller and by Ms Allen as buyer. Mr Luna recognised his signature on the document as witness.

1. When he gave evidence Mr Luna had his affidavit of 16 July 2010 with him. But it emerged in the course of his cross-examination that he also had the Receipt, which was not referred to anywhere in his affidavit. How he received this extra document was explored with him in cross-examination. Counsel suggested that Mr Luna may have recently received it from Mr Wieland. But I find that it had not been given to him recently by anybody. I accept his evidence that he had kept the document, or a copy of it, himself since the 2 nd July 2006.

1. It was not necessary for Mr Wieland to have given Mr Luna another copy of the Receipt in order to explain Mr Luna's present possession of it. Whilst his retention of this document from such an informal transaction may seem to be odd, it is not improbable. He was a long-standing acquaintance of Ms Allen. He was asked to witness the share transfer in a ceremony that Ms Allen clearly communicated to him was of some importance to her. He was a senior man with a professional background as an architect, for whom keeping some record from even a social transaction of importance to a friend would not have been out of place.

1. The exchange of gold coins during the share transfer was sufficiently unusual that this feature of the transaction was likely to assist Mr Luna's recollection of the whole event. Mr Luna has seen gold coins exchanged for value on other occasions. But the last time before he gave evidence he could recall that such an exchange occurred was "probably about a year or two ago". So this event remained an unusual one for him. Although the exchange of gold coins itself was not referred to in Mr Luna's affidavit, which had been sworn in New Mexico, that does not diminish my acceptance of his evidence.

1. Moreover, no plausible reason for Mr Luna to embroil himself in an alleged web of deception was advanced. He was certainly a friend of Ms Allen. But I am not prepared to find that he lied for her by inventing a meeting with Ms Allen and Mr Wieland that he well knew did not take place. Recognising the difficulties the Court has of assessing credibility by videolink, he did not appear to the Court as someone who would so such a thing. Mr Luna wrote the date 2 July 2006 on the share transfer. He did not falsely backdate the share transfer for Ms Allen and Mr Wieland. His very preparedness to give evidence and be cross-examined by video link from New Mexico makes such an inference improbable.

1. Mr Luna's evidence becomes an important anchoring point for the contested evidence in the proceedings about the execution of the share transfer. There are unsatisfactory features in Mr Wieland's account that a mistake was made about the ownership of shares in Lithgow Forge when the company was incorporated. So his version is much assisted by the Court's acceptance of Mr Luna's evidence. But it is also assisted by the Court's acceptance of Ms Allen's evidence on the same subject.

The Transfer of Shares - Rachael Allen

1. Rachael Allen's evidence made up for the deficiencies in her husband's account of the events from 29 June 2006 to 2 July 2006. Not only did she give a coherent account of the events of that period but she explained why her husband's account had appeared less than adequate. Except in one area I accept her evidence as an accurate account of the share transfer on 2 July 2006. Her role in relation to the mortgage is analysed separately.

1. Her evidence solves a central puzzle about the share transfer. On the defendant's case there seemed to be no good reason why Mr Wieland would transfer the shares in Lithgow Forge to Ms Allen as soon as he returned to New Mexico, especially when he had not made any apparent efforts to instruct Ms Cho that the shares be placed in her name when Lithgow Forge was being incorporated. The company then had no assets, so a motivation for an urgent share transfer as soon as Mr Wieland arrived back in the USA was not at all apparent. If Rodd Peters Lawyers had made a mistake and just not followed Mr Wieland's instructions to put the shares in his wife's name Mr Wieland could not give any adequate explanation of why he had not simply complained to Ms Cho about the error and had the firm charge it at the firm's expense. Mr Wieland seemed to be incapable of giving any adequate explanation of why he took the course he did of a transfer to Ms Allen rather than going back to Ms Cho.

1. Ms Allen was the one who insisted on the transfer. She had known Mr Luna since 1997. When she started doing some contracting work for him, including upgrading the irrigation and landscaping installed at Mr Luna's house in Santa Fe. Mr Luna and Ms Allen remained in regular contact and she continued to do occasional work for him. When Ms Allen married Mr Wieland in June 2005, Mr Luna maintained contact with them on weekends and holidays. Whilst neither Mr Luna nor Ms Allen described one another as a "close friend", Ms Allen respected and trusted him.

1. Mr Luna might be a friend of Ms Allen's but I do not accept that she had procured him to lie for her by stating that the share transfer had been executed long before it actually was. When it was suggested to her in cross-examination that she could have had execution of the share transfer witnessed by a nearby bank officer, Betty Weisman, who had witnessed execution of other documents associated with the US Trust, Ms Allen replied "I would just say that I believe in professionalism and I believe in professionals and that is why we went to Ted Luna because I believe he is a trustworthy professional and I don't know Betty Weisman". I accept that is why Ms Allen went to Mr Luna. She could trust him to later remember and tell the truth about the transfer, and affirm that the transaction had actually occurred then if ever it was challenged.

1. I accept that Ms Allen did pay for the transfer to her of the 1000 shares in Lithgow Forge using two double eagle gold coins in Mr Luna's presence at the same time as she signed the share transfer. She was able to give a sensible account of the provenance of the gold coins: Mr Wieland had given her a box of silver and gold coins on the night of their wedding, including these coins. She used them over time and she had them with her. She brought them to the visit to Mr Luna to be handed over in front of him. She wanted this to be a formal business transaction, rather than merely a gift from her husband. The reasons for this were complicated.

1. Ms Allen did not trust Mr Peters. She said this repeatedly throughout her evidence and I accept that it was both in 2006 and at the time of the hearing her genuinely held view. The precise reasons for her lack of trust in him were not explored in evidence but they arose from Mr Peters' conduct of litigation against Mr Wieland's brother. I do not need to decide whether or not that lack of trust was justified. Insufficient detail of the litigation was before the Court for that to be determined and I was not invited to determine it. But I accept that Ms Allen had strong reservations about her husband's retention of Mr Peters to conduct that litigation.

1. Her view of Mr Peters was partly coloured by her then circumstances. She and Mr Wieland were married in June 2005. Within 12 months she found herself in Australia with Mr Wieland assisting him to investigate an alleged theft of his substantial fortune. Her compelling assessment of her general outlook in July 2006 was "but I have to say at the time when you'd been stolen from on such a large magnitude I personally don't trust anyone at that point". When it was suggested to her that she did not even trust her husband at that point, she answered with careful precision, responding " my answer is I wanted to trust him ". In my view, Ms Allen was not sure who she could then trust. But one of the people who she did trust was Mr Luna and that is why she arranged for the share transfer to be witnessed in his presence.

1. Ms Allen was ready to admit that part of her reaction to Mr Peters was intuitive. But she was so uncertain, not only of Mr Peters, but of all her husband's dealings that she insisted that the shares be transferred out of his name on an urgent basis. Her explanation for this insistence was "I felt that might have been instinctive". I accept her explanation that she had these suspicions and I find that she became the driving force for the transfer. In the end the transfer took place because she wanted it to happen. Understanding this explains many of the other inconsistencies in the evidence especially that of Mr Wieland. It explains why Mr Wieland did not attempt to fix the problem through Ms Cho. I infer from my findings here that his wife did not want him to do that.

1. I accept that Ms Allen had clearly asked her husband to put the shares in her name. Whether Mr Wieland did not clearly understand that message or whether the decision to set up Lithgow Forge on 28 June 2006 so close to their return to United States on 30 June 2006 meant he forgot his wife's request, perhaps does not matter. In my view, Mr Wieland treated his instructions to Ms Cho rather routinely, as though Lithgow Forge was to be one of his other companies, without really attending to his wife's specific requests that the shares be in her name.

1. He either did not notice that or did not recall his wife's request when he picked the documents from the firm before going to the airport. I accept Ms Allen's evidence that she noticed at the airport that the Lithgow Forge shares were in her husband's name and not hers. She raised it with him. There was not much they could do at that point, as they were about to board a plane. Mr Wieland had much trouble explaining in evidence why he did not simply ring Mr Peters office and ask for the documents to be redone. His evidence on this was very unconvincing. At one point, when pressed about this, he suggested that he had spoken to Mr Tim Le Fevre, the solicitor in Lithgow who was acting for Lithgow Forge on the conveyance of the Lithgow Property to it. I do not accept this explanation. It does not appear in any affidavit that he swore. It seemed to have been plucked out of the air to reduce pressure on Mr Wieland under this part of the cross-examination. There is no evidence of any written communication from Mr Le Fevre about this subject.

1. I find that Mr Wieland was embarrassed about his failure efficiently to convey his wife's instructions to the firm when setting up Lithgow Forge. When the moment came to sign the fax with formal instructions to Ms Cho he did not make it clear. He could not ring the firm and blame them for the error because, in my view he really suspected that he could be partly at fault for not communicating the request clearly. He decided not to communicate with the firm about this.

1. But he was reinforced in this by his wife's views. The failure to put the shares in Lithgow Forge in Ms Allen's name also confirmed her feeling of unease about Mr Peters. Her view was that Mr Peters had disregarded Mr Wieland's initial instructions to put the shares in her name. But I have found in fact that he had not made this clear to Mr Peters at all. Ms Allen explained her failure to fix the error with the firm in this way "I did not have a good feeling of him [Mr Peters] in the beginning, I don't want to tell Rodd Peters, I don't want him to know". Whether the feeling was well grounded or not she explained the context made it clear why she held it so firmly:

"I am saying that this transaction is private. In this particular context we have just had $2 million stolen. When somebody does something against us such as this, putting the shares in Ant's name versus mine, I just don't have a good feeling. I believe that I have made it very clearly clearly known to Anthony my feelings about Rodd Peters in several ways and this I suggest to you is one of those ways".

In the result neither Ms Allen nor Mr Wieland wanted to go back to Mr Peters about the mistake.

1. This also largely explains Mr Wieland's failure to notify the change in shareholding to ASIC until 2009. This was an embarrassing issue that, as a newly married man, Mr Wieland did not want to revisit. He did not think about it much again. Ms Allen was satisfied that she had the shares in her name. Ms Allen was not versed in the niceties of trust or company law. She did not push for the transfer to be notified to ASIC. The escalation of the dispute with Mr Peters and getting his affairs in order upon a change of accountants, is what prompted Mr Wieland's registration of this transfer to ASIC. In my view, that is why notification was sent to ASIC in January 2009 when it was, not because the documentation was created shortly before notification to ASIC.

1. There was no ambiguity about Ms Allen's determination to have control over Lithgow Forge. She wanted the shares in her name, to have a part of her husband's business life and "to have some control over the property, because I was looking at having a family". She wanted her own house in Australia. When Ms Allen discovered that the shares had gone into Mr Wieland's name she is the one who "put up a red flag". I accept the correctness of her evidence when she said, "I believe that the urgency came from me because like I said I wanted to have those shares."

1. But there is one aspect of Ms Allen's evidence about the share transfers that I do not accept. Ms Allen said that at one stage she was present at "two short or brief conversations regarding the share ownership of Lithgow Forge" where her husband mentioned to someone at the firm that she would like to be the shareholder. She thought that an employee of the firm Mr Jesper Martens was involved in one of these conversations. I do not accept this for several reasons. Mr Martens disagrees that any such instructions were given and I believe his evidence. Lithgow Forge was incorporated in a rush in the last two days before Mr Wieland and Ms Allen left for overseas. There seemed little opportunity for such a conversation to take place. And if the conversation had occurred, I have little doubt that the firm would not have misunderstood what Ms Allen wanted.

1. Mr Peters advances a number of arguments to support the backdating of the share transfer. Most of them have been dealt with in the course of my findings in this section about what actually happened. But Mr Peters made a number of other points that in my view were not persuasive. First, Mr Peters points to the evidence of Mr Kevin Lee, the mortgage broker to whom Mr Peters referred Mr Wieland. I accept Mr Lee's evidence that Mr Wieland told him (Mr Lee), in what must be 2008 that Lithgow Forge was "his company". And I further accept that Mr Wieland never told Mr Lee that Ms Allen owned the company. Indeed Mr Lee's notes show that he recorded Mr Wieland as saying to him (Mr Lee) that Mr Wieland owned 100% of the shares in Lithgow Forge. But in my view the explanation of this is that Mr Wieland did not distinguish between his own and his wife's ownership of shares when dealing with third parties such as Mr Lee. Secondly, Mr Peters refers to Mr Martens evidence that Mr Wieland referred to the Lithgow property as "my house" and "the house I bought in Lithgow". The simple explanation for this is that Mr Wieland was not very careful about how he described the Lithgow Property to third parties.

1. This is not entirely surprising because, apart from ensuring that the share capital of Lithgow Forge was transferred into her name, Ms Allen did very little to control how her husband dealt with the assets of Lithgow Forge on her behalf. She did not take any office in the company itself. She left him as director and secretary. There were no other employees. There is no evidence of her ever intervening with any third party, for example when Mr Wieland was negotiating with Mr Peters in the last quarter of 2008, to say that Mr Peters should deal with her or that Mr Wieland's authority to negotiate was limited in some way.

3. Was the Mortgage an Alienation of Property with intent to Defraud Creditors?

1. The next question is whether Lithgow Forge's grant of a mortgage through the agency of Mr Wieland to his sister, Ms Nicholine Wieland, over the Lithgow Property on 25 July 2007 was an alienation of property with intent to defraud creditors voidable under Conveyancing Act , s 37A(1). Mr Peters' case was that the creation of a mortgage the same date as the issuing of the costs certificate on 25 July 2006 raises grave suspicion that the transaction was with intent to defraud creditors. In this section the Court examines the various explanations of this transaction and concludes that it was an alienation of the property with intent to defraud creditors and is voidable under Conveyancing Act , s 37A. First it is necessary to examine the elements of the mortgage transaction.

The Mortgage

1. On 25 July 2008, the day that the Costs Certificate issued Mr Wieland executed a mortgage and a loan agreement behalf of Lithgow Forge with his sister, Ms Wieland. The parties to the mortgage were Lithgow Forge as mortgagor and Wieland as mortgagee. Mr Wieland signed the mortgage in his capacity as sole director/secretary of Lithgow Forge. Ms Wieland's signature as mortgagee was witnessed by her de facto partner Mr Gary Durrant. The mortgaged property was the Lithgow Property. New South Wales Stamp Duty was paid for an advance under the mortgage of $600,000. If the mortgage is valid there is little doubt that, as Mr Peters contends it has the effect diminishing the net value of the assets available to Lithgow Forge by $600,000 and consequently the value of the shares in Lithgow Forge by approximately $600,000.

1. The mortgage was said by the defendants to have been executed simultaneously with a written loan agreement of the same date. The form of loan agreement was made between Ms Wieland "as general manager for the Wieland Family Heirs Trust of Concho Arizona USA ("the US WFH Trust") , as lender and Lithgow Forge as borrower. It provided: for the advance of $600,000 secured over the Lithgow Property; for drawdown under the loan agreement to occur on the date of the agreement or "such other date or dates as the lender and borrower agree in writing"; for the payment of interest at 12% for 2 years and thereafter 15%; and for the grant of a first mortgage over the Lithgow property to secure the advances under the loan agreement.

1. There were many unsatisfactory features of the mortgage and the loan agreement. But the worst of them was the evidence of Ms Wieland herself, the alleged mortgagee signatory. In contrast to Ms Allen I found her to be a most unsatisfactory witness whose evidence was barely credible. In fact, she gave every indication of not wanting to be in the witness box at all, of having no understanding whatsoever of the transactions in which she was nominally involved; of having little or no belief in the truth of what she said, and of really acting out of some kind of misplaced loyalty to her brother. Unless independently verified by objective or other credible evidence I did not believe anything that she said. Apart from the points Mr Peters' counsel advanced, Mr Wieland's attempts to show that the mortgage was a genuine transaction between the Arizona (US) based WFH Trust were impaired by Ms Wieland's incapacity to give support to the mortgage as a genuine transaction.

1. In my view the mortgage was entered into with an intention to defeat or delay creditors, and specifically Mr Peters. In my view the mortgage was not a genuine transaction at all. Although I have found that by July 2008 Ms Allen owned all the shares in Lithgow Forge, I infer that the mortgage transaction was still one that was important to Mr Wieland for defeating his creditors for two reasons. First it could be anticipated that as Lithgow Forge held the only substantial asset connected with Mr Wieland remaining in Australia, the Lithgow property, once the costs assessment process was finished Mr Peters would be likely to ask for security over that property. But further, in issue 4 below I find that Mr Wieland himself, not the US WFH Trust, was the source of the funding for the purchase of the Lithgow property and it was therefore likely that creditors would allege that he held a beneficial interest in that property, as indeed occurred in issue 4. I draw these conclusions because I largely accept Mr Peters case about the unsatisfactory features of the mortgage. The problems with it are the following.

1. The timing of the mortgage transaction strongly indicates an intention to defeat or delay creditors. I am prepared to accept that Mr Wieland, who was then in the United States, did not know that the Costs Certificate had just issued at the time that the mortgage was executed. But he was well aware that Mr Peters had applied for an assessment and a costs assessor would soon deliver a determination.

1. Mr Wieland alleged in his affidavit to the Federal Magistrates Court and in his first affidavit to this Court that Ms Wieland, not the US WFH Trust provided financial assistance for the purchase of the Lithgow property. The distinction is an important one. Mr Wieland is a person who well understands the distinction. I find it difficult to understand how he could make a mistake such as this, if the mortgage was a genuine security recording an advance from the US WFH Trust. He said in his first affidavit that the Lithgow property "was acquired with financial assistance from my sister". In my view if Mr Wieland had put genuine thought into a genuine mortgage transaction securing an advance from the WFH Trust then he would have described the transaction correctly in his early evidence. In my view the mortgage does not record a genuine advance from the WFH trust. Ms Wieland was in no position to advance the funds herself and did not claim to have done so.

1. The only reason that the mortgage was expressed to be in Ms Wieland's name (either beneficially or as trustee) was to distance the source of the funds for the purchase of the Lithgow property from Mr Wieland himself. Nothing that Ms Wieland said gave the Court the impression that Ms Wieland played any role as general manager or otherwise in the US WFH Trust: she could not recall doing anything in that role; she signed whatever her brother sent to her; she knew nothing of the funding of the purchase of the Lithgow Property; and she was not a trust decision maker. If the US WFH Trust was the mortgagee in this transaction I would have expected her to know some of these things.

1. By mid 2008, a solicitor Mr Peter Kemp was advising Mr Wieland in relation to the mortgage and the loan agreement. Mr Wieland was giving instructions to Mr Kemp to create security documents to record aspects of transactions, which had occurred two years previously. Mr Wieland's correspondence with Mr Kemp about the mortgage provides further cause to doubt the mortgage was genuine. Mr Wieland represented to Mr Kemp when the loan agreement and mortgage were being drafted that they were connected to an advance not by the US WFH Trust but by an Australian trust of a similar name, which throughout these reasons I will refer to as "the AUS WFH Trust". In this correspondence with Mr Kemp, in my view Mr Wieland was referring to the the AUS WFH Trust not its US counterpart. I do not accept as credible his explanation that what would appear to be references to the AUS WFH Trust in his correspondence with Mr Kemp were typographical errors. Again, if Mr Wieland had been involved in genuine transaction involving an advance by the US WFH Trust he would not have made an error such as this.

1. There are many other problems with the mortgage that need only be mentioned. Although it was clearly recording an advance made two years earlier, nothing on the face of the mortgage or the loan agreement indicates that fact. The defendants claimed that the mortgage and loan agreement were connected with a Promissory Note transaction but it is difficult to make sense of the promissory note itself or how it logically connected with the loan agreement. Unusually the mortgage does not referred to the loan agreement, something that might be expected in a genuine transaction. I was not satisfied from the defendant's evidence that there was any adequate explanation to account for an advance of $600,000 and specifically the component of that of $150,000 said to have been for repairs to the Lithgow property. Problems with this evidence were especially evident in Ms Allen's testimony.

Ms Allen's Evidence in relation to the Mortgage

1. Ms Allen's evidence is unsatisfactory about the mortgage transaction. To the extent she was involved in the mortgage she has a very poor understanding of it. Although she thought that $150,000 of the $600,000 was said to be for carrying out works to the Lithgow Property, she agreed no works had actually been carried out. But she sought to explain that the reason for that was that she and her husband were so busy with the litigation against Mr Wieland's brother being conducted by Mr Peters, they had no time to complete any renovations to the Lithgow Property. If that were right then it is difficult to see why two years later when Mr Wieland is documenting the advance with Mr Kemp that an unexpended figure of $150,000 is included in the advance.

1. Ms Allen regarded the signing of the promissory note for $600,000 in evidence as beyond the scope of her business understanding. She could contribute nothing to assist the Court on that subject.

1. I accept Ms Allen's evidence that she did verbally authorise her husband to use moneys to expend on the Lithgow Property rather than her being involved in detailed documentation. I accept that her practice was to speak to her husband about the Lithgow Property to discuss what she expected would happen financially in relation to the property and then to leave the detail and all the documentation to him. Indeed that is the way that she dealt with her financial interest in Lithgow Forge - she left it up to her husband to manage. I find that her business understanding was not so great that she could scrutinise minutes and other legal documents being prepared for funding the purchase of the Lithgow Property. Rather she was content to be told what the effect of documents was and whether they fulfilled her wishes. In such matters she generally trusted Mr Wieland to carry through her requests. In the result I do not think that Ms Allen's evidence assists the defendants' case on the question of the validity of the mortgage.

Legal Principles and Conclusion

1. Conveyancing Act , s 37A provides:-

"37A Voluntary alienation to defraud creditors voidable

(1) Save as provided in this section, every alienation of property, made whether before or after the commencement of the Conveyancing (Amendment) Act 1930, with intent to defraud creditors, shall be voidable at the instance of any person thereby prejudiced.

(2) This section does not affect the law of bankruptcy for the time being in force.

(3) This section does not extend to any estate or interest in property alienated to a purchaser in good faith not having, at the time of the alienation, notice of the intent to defraud creditors."

1. The provision has recently received consideration from the High Court in Marcolongo v Chen [2011] HCA 3; the case was concerned with whether or not it was necessary to establish actual dishonest intent to defraud creditors or whether it brought into play notions of constructive fraud. That question does not arise here. In my view for the reasons expressed Mr Wieland had an actual and dishonest intention to defraud his creditors at the time that he entered into the mortgage on behalf of Lithgow Forge. The mortgage is voidable under Conveyancing Act , s 37A.

4. Does Lithgow Forge Hold the Lithgow Property on Resulting Trust for Mr Wieland?

1. There are two parts to this last question the parties posed. The first question is whether Mr Wieland or the Wieland US WFH Trust paid for the Lithgow Property. If it was Mr Wieland, Mr Peters contends that it was paid in circumstances that give Mr Wieland the benefit of a resulting trust in the Lithgow Property. The second question only arises if Lithgow Forge holds the Lithgow Property on resulting trust for Mr Wieland. If so the question is whether there is any room for the operation of the presumption of advancement which would displace the inference of a resulting trust in Mr Wieland's favour, so his wife, Ms Allen, is entitled to the property.

1. First it is necessary to state the applicable legal principles and analyse the contentions about the funding of the purchase of Lithgow Forge's purchase of the Lithgow Property.

Applicable Legal Principles

1. The High Court stated the law with respect to resulting trusts in Napier v Public Trustee (WA) (1980) 32 ALR 153 in which Aicken J (with whom Steven, Mason and Murphy JJ concurred) at 158: -

"The law with respect to resulting trusts is not in doubt. Where property is transferred by one person into the name of another without consideration, and where a purchaser pays the vendor and directs him to transfer the property into the name of another person without consideration passing from that person, there is a presumption that the transferee holds the property upon trust for the transferor or the purchaser as the case may be. This proposition is subject to the exception that in the case of transfers to a wife or a child (including someone with respect to whom the transferor or purchaser stands in loco parentis ) there is a presumption of advancement so that the beneficial as well as the legal interest will pass. Each of the presumptions may be rebutted by evidence."

1. For a resulting trust to arise it is necessary for "a purchaser" to pay the vendor and direct the transfer of the property into the name of another: see Jacob's Law of Trust , seventh edition, Lexis Nexis Butterworths, 2006, [1210]. The principles stated by Aicken J in Napier's case were reaffirmed by Deane J in Calverley v Green (1984) 155 CLR 242 at 266.

1. Although I have found that the share transfer occurred for valuable consideration on 2 July 2006 and well before Lithgow Forge was required to meet the obligations of its creditors, Mr Peters' alternative case is that Mr Wieland funded the purchase of the Lithgow Property and Lithgow Forge holds it on trust for him. Mr Peters claims access to that claimed equitable interest.

1. Resulting Trust - The Defendants' Case. The defendants say that the US WFH Trust was the source of funds to purchase the Lithgow Property. They say that the US WFH Trust was established by a Contract and Declaration of Trust executed by a settlor and trustees on 28 March 2001. The trust instrument was in evidence (Exhibit 7) - a contract and declaration of trust. Mr Wieland was the settlor, and when the trust was originally constituted three trustees were appointed, Nora Lynn Moore, Gail Bybee and Mr Wieland himself. The amount settled under the trust deed was "$21 in lawful silver and other valuable consideration". The quantum of the "other valuable consideration" was not specified in the deed and it had not been established in the evidence.

1. Mr Wieland says, and I accept, that in early April 2002 he travelled to Australia. When he did so he says, and I accept, that he brought a large quantity of gold coins to this country with him, being US "double eagle" gold coins, which had a face value of USD$68,000, although their bullion value was considerably more than that.

1. The defendants say that these gold coins were assets of the US WFH Trust. They cite in support of that contention a document entitled "a Contract to Purchase Real Property and a Corporate Entity (the "Contract to Purchase") dated 22 April 2002 (Exhibit 8)". This Contract to Purchase was apparently made between Mr Wieland, as managing trustee of the US WFH Trust and his mother, CarolWieland, acting as the sole director of C.A.N.S. Pty Limited, and as a director of a company P.R. Wieland Pty Limited. The central structure of the transaction represented by this Contract to Purchase was that C.A.N.S Pty Limited proposed to sell a property in Villawood for $1.2 million and to sell two shares in P.R. Wieland Pty Limited for the sum of $150,000. The document is obscure but it is to be inferred that Mr Wieland as the managing trustee of the US WFH Trust was the proposed purchaser of these assets and that he had five years to complete their purchase. But in the meantime the US WFH Trust was obliged to provide security which was provided for by clause 4 of the Contract to Purchase, which was as follows:-

"4. Whereas, Anthony Wieland her eldest Son, the Managing Trustee of the Wieland Family Heirs Trust a united States contractual trust agrees to provide on behalf of the Wieland Family Heirs Trust an Australian contractual trust to be created, as security the sum of $68,000.00 US Dollars in gold coins, face, value, being 1,360 ounces of fine gold in coins, to guarantee and secure the purchase over the time of the said property and the shares of the corporate entity. Said security shall remain in the care, custody and control of Carol Wieland until such time as it shall be returned in accordance with this contract (Said Gold coins have an Australian dollar value at this time of approximately $764,000.00)"

1. Under clause 21 of the same document Mr Wieland's mother acknowledges receipt of gold coins with a face value of USD $68,000. The apparent obligation of clause 4 was that these coins were to remain as security with Mrs Wieland until they "shall be returned in accordance with this contract". Clause 5 of the Contract to Purchase gave the purchaser 5 years to complete the purchase and upon the payment of $400,000 to Mrs Wieland as director of C.A.N.S Pty Limited, the security deposit described in the Contract to Purchase could be returned. Finally, the Contract to Purchase also appears to explain the creation of an Australian trust which is described in these reasons as the AUS WFH Trust. Clause 18 of the Contract to Purchase contemplates that the US WFH Trust will cause to be created an Australian contractual trust which will be a resident holder of the property in shares purchased in accordance with the Contract to Purchase.

1. There is virtually no written material in evidence to explain how this Contract to Purchase was actually performed as between Mr Wieland and his mother.

1. The defendants case is that Mr Wieland gave possession of the gold coins to his mother and she put them in her safe.

1. The defendants claimed that the transaction referred to in the Contract to Purchase did not proceed. But the Australian trust, the AUS WFH Trust, was created in April 2003. The deed in evidence as to the Australian trust (Exhibit P) shows it to be a discretionary trust created on 23 April 2003 with the settlor being Neil Ernest Scott, the trustee's being Mr Wieland and his brother Peter, with Mr Wieland as the appointor and the original settled sum being $10. Mr Wieland says that between March and June 2004 he retrieved the gold coins from his mother because she did not want to store them in the house anymore and Mr Wieland and his sister, Ms Wieland, decided to put the coins in a safety deposit lock box at the Commonwealth Bank in Martin Place, Sydney. Mr Wieland says that they remained there until 2006 when he and his sister collected them and took them to a bullion dealer, Jaggards where they were turned into cash, the proceeds of sale of which were deposited into a Westpac trust account, conducted by Mr Wieland as trustee for the US WFH Trust. It is from this Westpac Account that Mr Wieland says that all the funds came to purchase the Lithgow Forge property.

1. It is not necessary to detail every one of the transactions on the Westpac Bank Account. But some of the funds for the purchase were drawn directly from this account and others were paid to the Perth Mint for the purchase of gold before the monies were repaid into the Westpac Account and then applied to the purchase of the Lithgow Property. The precise steps by which that occurred were the following:-

(a) On 30 June 2006 Mr Wieland drew, from the Westpac Account the sum of $22,000.00, being the 5 % deposit for the property (plus $10,000.00 for a bank cheque fee). That sum was paid to LJ Hooker Lithgow.

(b) On 30 June 2006 the sum of $50,000.00 was paid to the Perth Mint, from the Westpac Account. On 5 July 2006 $300,000.00 was paid to the Perth Mint from the Westpac Account. On 6 July 2006 a further $450,000.00 was paid to the Perth Mint.

(c) As at 10 July 2006, the account at Perth Mint had a cash balance of $800,000.00. Mr Wieland purchase 946.017 ounces of unallocated gold that day, leaving a cash balance of $0.72 at the Mint. Whether this and similar transactions was on Mr Wieland's own account or for the US WFH Trust is the matter in issue.

(d) On 3 August 2006 Mr Wieland sold 530 ounces of this unallocated gold. After that transaction the cash balance at Perth Mint stood at $438,920.22.

(e) On 10 August 2006 Mr Wieland transferred the sum of $438,920.22 from the Perth Mint account to the Westpac Account.

(f) On 11 August 2006 Mr Wieland transferred the sum of $437,000.00 from the Westpac Account to the bank manager of Lithgow Forge, also at Westpac.

(g) Lithgow Forge paid the aforesaid $437,000 into the trust account of its solicitor, Mr Le Fevre, which funds were then used to settle the purchase of the Property.

Resulting Trust - The Plaintiff's Case & Conclusion

1. Although the Westpac Account was conducted in the name of US WFH Trust, there are many reasons doubt that the funds where those of the US WFH Trust. The case put on behalf of Mr Peters that the funds were those of Mr Wieland himself is persuasive for the following reasons.

1. First, the objective evidence of dealings with the gold coins that Mr Wieland brought into the country in 2002 founds the inference that he was the beneficial owner of the 900 ounces of USD $50 double eagle coins. On 5 August 2002 Mr Wieland filled out a "International Currency Transfer Report" in which he declared that he was carrying these coins on his own behalf and he declined to answer a question that he was acting on behalf of any organisation in bringing this currency into Australia.

1. Secondly, the currency was not held in Australia as one might expect if it were the funds of the US WFH Trust, of which Ms Wieland was the general manager. Mr Wieland said that his sister took the gold to the safety deposit box at the Commonwealth Bank. But she had no memory of doing this herself. Nor could she support his having taken anything heavy such as 900 ounces of gold to open the safety deposit box with her brother. Whatever was in the safety deposit box I infer that Mr Wieland treated it as his own.

1. Thirdly, it is true that some funds passed into the Westpac Account in the name of a trust. Mr Wieland says that this was the US WFH Trust not the AUS WFH Trust. But Mr Wieland's evidence was so unreliable, I am not prepared to use it to infer that it was the US WFH Trust that controlled this bank account. Mere use of the Westpac Account as a conduit for the payment of funds, does not establish those funds were funds of the US WFH Trust, especially in circumstances where the defendants did not produce to the Court any accounts showing what sums had been settled on the US WFH Trust and showing whether those funds included the precise gold coins Mr Wieland brought to Australia and explaining all other amounts deposited into the Westpac Account. For example, a sum of $449,234 was paid by "Anthony Wieland" into the Westpac Account. Mr Wieland was asked to explain this deposit in cross-examination. He had extraordinary difficulty in doing so. After a lengthy pause he said that the money came from "an account that belonged to the Trust". I have no confidence in this answer. This sum became part of what was deposited with the Perth Mint. The operation on the Westpac Account is further complicated by the fact that the funds that were in it included funds of Mr Wieland's company US Equipment Leasing Inc (USA).

1. Fourthly, the Perth Mint Account documents were in the name "Anthony Wieland" and he was the only person authorised to operate the account. The Perth Mint documents do not support either Ms Wieland, the General Manager of the US WFH Trust, or the then co-trustee, Mr Reeves, having any capacity to operate on this account. Moreover, I accept Mr Lee's evidence that Mr Wieland told him that Mr Wieland had funds in Western Australia in gold bullion.

1. Fifthly, even when the gold bullion at the Perth Mint was sold down and the proceeds pushed back through the Westpac Account to Lithgow Forge to fund the purchase, much of the internal evidence shows these funds were sourced and applied by "Anthony Wieland", including the payment of $437,000 from the US WFH Trust Westpac Account to the Westpac Account for Lithgow Forge, and the sum of $435,530 paid to Le Fevre and Co on 14 August 2006. If these were trust funds it would be expected the then trustee, Mr Reeves, or Ms Wieland would have joined in in these transfers. I infer that Mr Wieland was treating these funds as his own at that point. I do not accept any of his evidence that he regarded the funds or was treating them, as trust funds of the US WFH Trust.

1. Finally, the Contract to Purchase does not assist the defendants to infer that the funds were funds of the US WFH Trust for several reasons. The Contract for Purchase refers to the deposit of 1,360 ounces of gold coins as security for the purchase. There is much evidence of Mr Wieland having significant quantities of gold coins in his possession from time to time. I am not prepared to infer on the basis of Mr Wieland's evidence that the gold coins that he left with his mother are the same ones that were sold and used to fund gold purchases at the Mint. It is also quite unclear on the evidence how Mr Wieland got the gold coins back from his mother consistently with the Contract to Purchase so that he could deal with that gold.

1. All of this might have been explained if proper accounts for the US WFH Trust or the AUS WFH Trust were produced. But they were not. I conclude that the funds that Mr Wieland used to fund the purchase of the Lithgow Property were funds that he both regarded and treated as his own. And I reject the defendants' contention that they were funds of the US WFH Trust. Notwithstanding that Lithgow Forge was controlled by its shareholder Ms Allen in August 2008, the purchase price of the Lithgow Property was wholly funded by Mr Wieland from his own funds. From this I conclude that Lithgow Forge held the property on resulting trust for Mr Wieland, subject to any argument as to whether the presumption of advancement arises.

1. The defendants contended that as Mr Wieland and Ms Allen had married in June 2005 that the presumption of advancement applied. But the difficulty with the defendants' arguments about the presumption of advancement is that it applies when a husband makes the purchase in the name of his wife or a father in the name of the child or other person to whom he stands in loco parentis : Calverley v Green (1984) 155 CLR 242 at 247 per Gibbs CJ. The cases all involve the application of the presumption in the circumstances where the purchase is made in the name of the wife or child: see for example Crichton v Crichton & Ors (1930) 43 CLR 536 and Fadden v Deputy Federal Commissioner of Taxation (1943) 68 CLR 76; (1943) HCA 20. Neither the research of counsel nor my own could find a case such as the present where the presumption was successfully applied where the purchase was in the name of a company controlled by a wife or child and I do not think it applies. Mr Wieland did continue to exert some degree of control over the funds as a director of Lithgow Forge, even though he was removable by his wife as shareholder. In any event much of his conduct detailed in these reasons showed a desire on his part to keep control of assets with which he dealt. Apart from the presumption of advancement I would not be prepared to infer that the funding of the Lithgow Property by Mr Wieland amounted to an unqualified gift of the purchase price to his wife. The defendants' presumption of advancement therefore fails.

Conclusions and Orders

1. In the result therefore, the Court has found that Mr Peters holds an equitable charge over the Lithgow Property to secure the payment to him as judgment creditor of the sum due from Mr Wieland as judgment debtor on the costs judgment entered on 25 August 2008. Mr Peters has sought to avoid two transactions under Conveyancing Act , s 37A, one the transfer of shares in Lithgow Forge on 2 July 2006 and the other Lithgow Forge's 25 July 2008 mortgage of its assets. I have found that Mr Peters is entitled to avoid the mortgage transaction on this basis but not the share transfer. I have found that the mortgage was a sham but the share transfer was not.

1. The final issue between the parties is whether Lithgow Forge holds the Lithgow Property on resulting trust for Mr Wieland because of his funding of Lithgow Forge's acquisition of the Lithgow Property. On that issue I have found that Lithgow Forge does hold the Lithgow Property on resulting trust for Mr Wieland. Ms Allen and Mr Wieland claimed that the inference of a resulting trust that might otherwise have been drawn in Mr Wieland's favour should be displaced by the presumption of advancement. But I find that this claim is not made out. The presumption of advancement does not apply where funds are advanced for the benefit of Lithgow Forge rather than for the benefit of Ms Allen herself, even though I have found that at the time of purchase she controlled Lithgow Forge. The authorities do not go so far as to apply the presumption of advancement for a spouse's benefit in such circumstances.

1. For that reason Mr Peters' claim succeeds. I direct the parties to bring in short minutes of order within seven days to give effect to these reasons. The resulting trust point on which Mr Peters has succeeded was only added to the pleadings on the first day of the hearing. This may lead to costs arguments, notwithstanding Mr Peters' success. A party may also seek other special costs orders. For this reason I will direct the parties to exchange any submissions in relation to costs within seven days of today and to appoint a time to put supplementary oral argument about issues of costs at 9.30am one morning in the week commencing 17 October 2011.

1. The Court orders and directs:-

1. Direct the parties to bring in short minutes of order by Monday, 17 October 2011 to give effect to these reasons.

2. Direct the parties to file and serve any written submissions on costs by Monday, 17 October 2011 and to contact my Associate this week with a view to fixing a time to hear supplementary oral argument on issues of costs at 9.30am one morning in the week commencing 17 October 2011

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Decision last updated: 10 October 2011