Pipkin, K.M. v Collins, H

Re: ROBERT WAYNE COLLINS (A BANKRUPT) AND KEVIN MICHAEL PIPKIN, TRUSTEE OF
THE
ESTATE OF ROBERT WAYNE COLLINS
And: HELEN COLLINS; NIGEL VIVIAN ROBERT COLLINS; NARITA YVETTE COLLINS AND
NADANA RENE COLLINS
No. 704 of 1984
FED No. 463
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE STATE OF SOUTH AUSTRALIA
Fisher J.(1)

CATCHWORDS

Bankruptcy - Settlement - Purchase of land in name of wife and children - whether purchase moneys a gift from third party - whether moneys misappropriated by bankrupt - motor vehicle registered in name of bankrupt's wife and children - whether transfer of title to motor vehicle effected by bankrupt - whether alleged gift of stereo equipment effective to pass title - whether unequivocal act of delivery.

Bankruptcy Act (1966) sub.s.120(1)

HEARING

ADELAIDE

#DATE 30:6:1989

Counsel for Applicants : Mr. R. Lawson Q.C. with Mr. I. Martirovs

Solicitors for Applicants : Martirovs, Kadis & Metanomski

Counsel for Respondents : Mr. J. Oks

Solicitors for Respondents : Jaak Oks

ORDER

The settlement of moneys made by Robert Wayne Collins ("the bankrupt") for and on behalf of the respondents and used in the acquisition by the respondents of the property situate at 2 Tobago Court West Lakes in the State of South Australia being the whole of the land comprised in Certificate of Title Register Book Volume 4100 Folio 15 was a settlement of property within the meaning of Section 120 of the Bankruptcy Act 1966 ("the Act") and is void as against the applicant.

The settlement of moneys made by the bankrupt for and on behalf of the respondents and used in the acquisition by the respondents of the property situate at Blue Sails Court West Lakes in the said State being the whole of the land comprised in Certificate of Title Register Book Volume 4180 Folio 759 was a settlement of property within the meaning of Section 120 of the Act and is void as against the applicant.

The respondents do transfer and assign to the applicant all their estate and interest in the said property at 2 Tobago Court West Lakes being the land comprised and described in Certificate of Title RB Volume 4100 Folio 15.

The respondents do transfer and assign to the applicant all their estate and interest in the said property at Blue Sails Court West Lakes being the land comprised and described in Certificate of Title RB Volume 4180 Folio 79.

That there be no order under paragraphs 7 to 14 inclusive of the application.

The parties be at liberty to speak to the minutes of this order and to apply generally.

The question of the costs of this application be reserved for further consideration.

Note: Settlement and entry of order is dealt with in Bankruptcy Rule 124.

JUDGE1

The applicant in this matter is the trustee of the bankrupt estate of Robert Wayne Collins ("the bankrupt"), who was declared bankrupt on his own petition on 20 December 1984. The respondents are the bankrupt's wife Helen Collins ("Mrs. Collins") and three children, against whom the applicant seeks declarations and consequential orders pursuant to s.120(1) of the Bankruptcy Act 1966 ("the Act"). This relief is sought in respect of certain alleged settlements of property by the bankrupt upon the respondents after or within two years prior to his bankruptcy.

The subject matter of this application includes two residential properties, "Tobago Court" and "Blue Sails". The former is occupied by the respondents, the latter by Mrs. Collins' mother. The respondents are the registered proprietors of both properties. On 27 November 1987 Forster J. granted an interlocutory injunction restraining the respondents from dealing with these two properties.
This application also concerns certain items of personal property; a Mercedes Benz car, a Gemini car, some Bang and Olufsen stereo equipment and four items of jewellery. In his closing address however counsel for the applicant indicated that he did not press claims in respect of either the Gemini car or the jewellery.
It is convenient first to deal with the Tobago Court property of which the respondents became the registered proprietors on 8 May 1984. Mr. Dercho, the land agent instructed to sell Tobago Court in 1984, gave evidence concerning that transaction. The purchase price for the property was $175,000, of which $30,000 was paid by an ANZ bank cheque made out in favour of Mr. Dercho's trust account. The bankrupt handed the cheque to Mr. Dercho after inspecting the property. Mr. Dercho recalled that the contract named as purchaser "R.W. Collins and/or nominees", but he could not produce the contract.
Mr. Miers, the land broker for both purchaser and vendor in respect of the Tobago Court transaction, was also unable to produce the contract. Mr. Miers gave evidence to the effect that settlement did not occur on the date proposed in the contract, due to the bankrupt's lack of funds. He advised the bankrupt to seek independent legal advice, and the bankrupt subsequently retained a solicitor, Mr. Edgley, to conclude the matter. A notice to settle dated 2 April 1984 from Mr. Miers to "Robert Wayne Collins and/or nominees" indicated that the contract was signed on 8 February 1984, and that settlement was due to have been effected on 14 March 1984 but had not taken place. Settlement did in fact take place on 4 May 1984 and it was the source of the moneys used to effect settlement which was in dispute in this case.
The bankrupt's then solicitor Mr. Edgley produced on subpoena a trust account ledger card from his firm Poveys in the name "Collins Credit Aust U.K. U.S.A." (referred to below as "Collins Credit"). That name was a business name first registered by the bankrupt's company, Collins Credit Corporation (Aust) Pty. Ltd. on 2 December 1983 and transferred to the bankrupt personally on 8 December 1983. The balance purchase price for Tobago Court of $146,306.30 was paid on 4 May 1984 from the Poveys' Collins Credit trust account to the ANZ Bank to provide a bank cheque in favour of the vendor. That was one of a number of withdrawals made from that account on that day and succeeding days. The money from which these withdrawals were made was received into the trust account (as the first entry under the Collins Credit name) earlier on 4 May 1984. The entry read "Rec telegraphic transfer - Phillips & Rossi Solicitors/London (client money rec'd from overseas) 04 May 84" and was in the amount of $401,590.71.
It was the applicant's case that this sum of $400,000 odd was money sent to the bankrupt, probably arising from a business transaction overseas, and that the money was used by the bankrupt to "settle" (inter alia) Tobago Court on the respondents. The respondents' case however is that the money was predominantly a gift to Mrs. Collins or the respondents generally made by an overseas business associate of the bankrupt, a Dr. Guilbaut. It is clear that the $30,000 deposit for Tobago Court was paid before the receipt of the $400,000 from overseas. The bankrupt admitted that the deposit had been paid out of his own money, although he said that this was on the basis that Dr. Guilbaut was eventually to provide the money to pay for the house. In this regard it may be noted that one of the withdrawals on 4 May 1984 from the $400,000 was a sum of $30,000 in favour of Collins Credit (effectively the bankrupt). The bankrupt did not however suggest that this withdrawal was in satisfaction of the $30,000 deposit previously provided.
The applicant's case relied on the evidence of Mr. Edgley (the bankrupt's solicitor at the relevant time) that the bankrupt's expressed intention was to make a gift of the money for Tobago Court for the benefit of the respondents. The applicant also relied on evidence that the bankrupt treated the $400,000 as his own money. In this regard it is relevant to reproduce the terms of two authorities to withdraw money from the subject trust account, prepared by Mr. Edgley and signed by the bankrupt on 4 May 1984 and 7 May 1984 respectively.

"I ROBERT WAYNE COLLINS the proprietor and owner of the business name COLLINS CREDIT AUST., U.K. & U.S.A. do hereby instruct you to make the following payments out of my moneys paid to your trust account from the trust account of Philip Ross & Co., Solicitors, London via the Midlands Bank, Baker Street, London, namely:-

1. Bank cheque to W. Krahne in the sum of $146,306.30 re: purchase of house at West Lakes.

2. J.D. Miers in the sum of $387.50 re: costs and disbursements re: purchase of house at West Lakes.

3. B.E.A. Motors in the sum of $58,800.00 re: purchase of car

4. Mercantile Credits Limited in the sum of $20,302.61 re: payout of lease on car.

5. Collins Credit Aust. U.K. & U.S.A. in the sum of $30,000.00

6. F.C.A. in the sum of $32,450.00 re: payment on account personal guarantees.

7. Commissioner of Stamp Duties in the sum of $5,930.00 on account Stamp Duty on transfer of house at West Lakes.

DATED this 4th day of May 1984

(Signed)

R.W. Collins."

"I refer to the authority for payment dated the 4th day of May 1984 and hereby authorise and instruct you to make the following further payments from your trust account by way of bank cheques:-

1. Mr. M.L. Harlock in the sum of $50,000-00 and being by way of loan.

2. A.A.I.B. in the sum of $30,000-00 and being by way of loan.

3. Collins Credit Aust. U.K. & U.S.A. in the sum of $19,500-00.

and by way of trust cheque:-

4. Lands Titles Office in the sum of $350-00 and being registration fee re: transfer of house at West Lakes.

I further authorise you to apply the sum of $170-00 towards disbursements incurred by your office and the sum of $7,000-00 towards your fees. DATED this 7th day of May 1984.

(Signed)

Robert Wayne Collins."

Items 1, 2 and 7 on the 4 May authority and item 4 of the 7 May authority are clearly related to the Tobago Court transaction. However the remaining withdrawals were all for the bankrupt's personal benefit. Dealing with the 4 May authority, item 4 refers to the payout of a lease of a Mercedes Benz car used by the bankrupt (although the lessee was named as Hotel and Cafe Supplies). The bankrupt traded in that car on a new Mercedes Benz registration UMK307, the balance being provided by item 3. Item 6 refers to payout of personal guarantees given by the bankrupt.
Turning to the 7 May authority, item 1 refers to a loan to a business associate of the bankrupt, Mr. M.L. Harlock. Item 2 refers to a loan to A.A.I.B. (the Australian Association of Independent Business), of which the bankrupt was a member, and item 3 was effectively a payment to the bankrupt. The disbursements and fees totalling $7,170 were sums due to Poveys by the bankrupt. Neither of the authorities refer to money in the trust account being Mrs. Collins', nor do they indicate that the bankrupt was acting as agent for Mrs. Collins in dealing with the money. Indeed the 4 May authority refers to the bankrupt's instructions "to make the following payments out of my moneys paid to your trust account from the trust account of Philip Ross & Co.".
The respondents' contention that the $400,000 was a gift from a third party to Mrs. Collins relies primarily on the evidence of the bankrupt. The bankrupt described his business activities at the relevant time as "merchant banking", albeit principally a one or two-man operation. He conducted his business through Collins Credit Corporation (Aust) Pty. Ltd, and subsequently (following criminal convictions which prevented him being a director) operated personally under the Collins Credit business name.
It is not clear from the evidence what were the full extent of Collins Credit's activities. The bankrupt gave evidence concerning one field of activity, namely as a "middle-man" for international gold transactions. He explained that as a middle-man for a seller of gold (or more accurately, certificates of title to gold), he would meet and negotiate with a buyer's middle-man. Vast quantities of gold he said were involved, worth in some cases hundreds of millions of dollars. The respective middle-men would negotiate the terms of a transaction, ensure that the other party was capable of meeting its obligations, and make arrangements for settlement. Each middle-man would receive a commission representing a tiny fraction of the purchase price. On the bankrupt's evidence very few of these transactions ever came to fruition.
Dr. Guilbaut, who resides in France, was a buyer's middle-man with whom the bankrupt negotiated a number of gold transactions. The bankrupt had frequent contact with Dr. Guilbaut in 1983 and 1984 by telephone, telex and in person. In addition to business contacts, the bankrupt visited Dr. Guilbaut and his secretary/translator Ariane several times socially when in London. He stated that he and Dr. Guilbaut had a very good rapport.
These visits occurred during a stage when the bankrupt was separated from his wife and children, following the loss of the matrimonial home in consequence of a mortgagee sale. The evidence of both the bankrupt and Mrs. Collins was that Mrs. Collins was only prepared to reconcile their marriage if the family could live in a house in her name which was secure and could not be taken away from them.
The bankrupt said that at one of their meetings in London he asked Dr. Guilbaut if he could provide some funds to enable such a reconciliation. Dr. Guilbaut allegedly indicated that he could make $400,000 available. Some $60,000 of that was to be used to maintain the bankrupt's business, and the balance was to be gifted to Mrs. Collins and the children. It was alleged to be Dr. Guilbaut's idea that the balance be given directly to the family rather than to the bankrupt to be applied in their favour.
The bankrupt produced a telex from Dr. Guilbaut to himself which he alleged referred to the gift of $400,000 and supported the respondents' case in this regard. The telex read as follows:
"Dear Bob,

I. THIS IS TO CONFIRM THAT I WILL BE IN THE POSITION TO DELIVER YOU WITH A BANK DRAFT OF FOUR HUNDRED THOUSAND DOLLARS. I AM SUBSTITUTING MYSELF TO OUR DEAR JOHN PERESTRELLO WHO IS WORKING HARD AND WITH COURAGE IN OUR COMMON INTEREST. I WOULD LIKE YOU TO KNOW THAT HERE, WE WORK AS A TEAM. FURTHER, I AM PUTTING UP THIS SUM I AM RECEIVING TO THE DISPOSAL OF OUR SUCCESS. UPON RECEIPT, COULD YOU PLEASE HAVE THE ONE TON - CERTIFICATES SENT TO I.B.T.C., TIME BEING OF ESSENCE. THANKS BOB.

SORRY . . . THE DRAFT SENT BY REGISTERED MAIL-COURIER, WILL MOST PROBABLY BE IN MY HANDS BY FRIDAY 30.03.84. IN THE EARLY AFTERNOON. IF THERE IS NO DELAY WITH THE COURIER, HOPEFULLY FOR MONDAY. I WILL BE SENDING A KEY-TESTED TELEX TO ADVISE YOU OF THE DETAILS REGARDING ITS DELIVERY TO YOUR AGENT (ALL DEPENDING ON THE TIME IT WILL TAKE TO ARRIVE HERE AT FIRST). II. WITHOUT ANY GUARANTEE, I HAVE A POSSIBILITY QUITE SERIOUS FOR A CONTRACT OF 2000 M.T. (TWO THOUSAND) AT A DELIVERY RATE OF 50 M.T./ WEEK, DURING 40 WEEKS. CAN I CONTINUE WITH THE NEGOCIATIONS / IN THE EVENT IT IS SUCCESFULL, COULD YOU DELIVER CONSIDERING THE AMOUNT? AS FROM YOUR AGREEMENT, 15 DAYS WOULD BE NEEDED IN ORDER TO OBTAIN THE CONTRACT AND THE CLIENT'S DEPOSIT. COULD YOU ANSWER BY RETURN - QUITE IMPORTANT. III. THIS NOW, IS TO SUM UP THE QUANTITIES I BELIEVE WILL COME OUT AND WHICH I COMMITED TO :

(A) 1 CONTRACT OF 500 M.T. THROUGH BANKERS TRUST, DELIVERY 25 M.T./WEEK

(B) 1 CONTRACT OF 500 M.T. THROUGH BANKERS TRUST, 1ST DELIVERY 200 M.T., 15 DAYS LATER 100 M.T., 15 DAYS LATER 200 M.T. AGAIN

(C) 1 CONTRACT WITH THE FRIEND I ALREADY MENTIONED TO YOU : 1ST DELIVERY 15 M.T. 40 M.T./ WEEK DURING THE FOLLOWING 20 WEEKS.

(D) THE OTHER REQUESTS, NOTHING REALY SERIOUS TO MY POINT OF VIEW - TAILS OF THE KIND YOU HAVE EXPERIENCED. IV. WITHIN 48 HOURS I WILL BE SENDING YOU THE DRAFT OF THE CONTRACT FOR THE AVAILABILITY YOU HAD MENTIONED (3,500 M.T.), MEANWHILE YOU WILL BE RECEIVING THE 6,400,000 U.S.D., YOU WILL HAVE THE TIME TO PERUSE IT. A NICE WEEK-END TO YOU WITH YOUR FAMILY. KIND REGARDS TO MAX.

ALFRED,

. . . . AND ARIANE."

The emphasis appeared on the document as tendered.
For a number of reasons I am unconvinced that this document supports the respondents' case. First, the $400,000 referred to in the first paragraph was, on the bankrupt's own evidence, US dollars rather than Australian dollars. The bankrupt admitted that at that time $400,000 Australian was worth approximately $375,000 US.
In this regard, Mr. Edgley gave evidence of a telephone call to a solicitor at Philip Ross & Co (Solicitors in London) confirming that $400,000 Australian was to be paid into the Poveys trust account. He telephoned to confirm that the money belonged to and could be used by Mr. Collins. The brief telephone note from which Mr. Edgley refreshed his memory referred to a sum of $375,000 US. Furthermore the ANZ Bank credit advice produced by Mr. Edgley in relation to the receipt of $401,590.71 (Australian) into the Poveys trust account also bore the marking "USD 374523.50".
Secondly, the date of the telex, 3 March 1984, is some two months prior to the receipt of the $400,000 (Australian) into Poveys trust account. On these bases alone it may be concluded that the $400,000 sum referred to in the telex is unrelated to the sum received into Poveys' trust account on 4 May 1984. The bankrupt admitted that none of the other transactions referred to in paragraphs II-IV ever came to fruition.
Even accepting that the $400,000 in the telex is the $400,000 received into Poveys' trust account, the telex provides no support at all for the proposition that the money was a gift from Dr. Guilbaut to Mrs. Collins or the respondents generally, independent of any business transaction with the bankrupt. The remainder of the first paragraph indicates exactly the opposite.
First there is the reference to Dr. Guilbaut "substituting" himself to John Perestrello, who on the bankrupt's evidence was another middleman involved in gold transactions. Then there is the reference to "this sum" being "put up to the disposal of our success", and the request that the one ton certificate be sent to IBTC upon receipt. (The bankrupt explained ITBC to be the International Bank and Trust Corporation, a merchant bank with an office in London, of which John Perestrello was a director, Dr. Guilbaut managing director and Ariane London manager). The bankrupt's evidence was that the above remarks in the first paragraph of the telex referred not to the $400,000 mentioned in the first sentence but to the receipt of a different sum (some $700,000) for a different transaction. He added that the $700,000 was referred to in some other telex which he could not locate.
This telex was the only document produced by the bankrupt to support his contention that Dr. Guilbaut had gifted money to Mrs. Collins, despite the bankrupt's admission that he and Dr. Guilbaut corresponded frequently by telex on business matters. The bankrupt however alleged that the gift from Dr. Guilbaut to his wife was intended to be embodied in a Deed of Gift to be drawn by Mr. Edgley. Despite several requests, that document was not prepared. Mr. Edgley said he could not give any reason for this other than it was not a high priority and pressure of work had led to it being overlooked. His understanding however was that the deed was to evidence a gift from the bankrupt as donor to the respondents for the purpose of purchasing Tobago Court. Even though the deed was to be drawn subsequent to settlement of that property, it was intended as further comfort to Mrs. Collins.
Mrs. Collins was called to give evidence but was unable greatly to assist the respondents' case because of her limited involvement with the alleged gift from Dr. Guilbaut. She never met Dr. Guilbaut, nor had she contacted him before or after the alleged gift in order to thank him for his generosity. She did however discuss the transaction with Mr. Edgley, to satisfy herself that the money to purchase Tobago Court was "legal" and that the house could not subsequently be taken away from her. Her understanding of the transaction from her discussion with Mr. Edgley was that the money arose from a business transaction and that it was being gifted directly from Dr. Guilbaut to her. Whether the business transaction was one involving the bankrupt as well as Dr. Guilbaut was a matter on which her evidence in cross-examination was cautious and at times contradictory. She said:

"So you were aware that Dr. Guilbaut had provided $175,000 for the purchase of Tobago Court and $119,000 for Blue Sails Court? --- Right.

And you understood that to be a gift from Guilbaut to yourself? --- Yes

Was there any reason why Dr. Guilbaut would make gifts of that magnitude to you? --- No.

Your understanding was this, was it not: that this money would otherwise be payable to your husband but that he had diverted the money from Guilbaut direct to you; that was your understanding, was it not? --- No, not really because ---

Your understanding was that Guilbaut and your husband were involved in a business transaction together? --- Right.

And that, as a result of that business transaction, your husband was entitled to certain moneys from Guilbaut; is that right --- Yes

That your husband had told Guilbaut, in effect, "Do not pay me, pay my wife." That was what you understood - is that what you understood? --- No. I guess I did not think about it.

Although Mrs. Collins did not assent to this final question, the proposition therein accords closely with her counsel's approach earlier in the hearing, when cross-examining Mr. Edgley -

"With respect to the transaction which resulted in the $400,000 odd being lodged in your firm's trust account, you were aware that that related to a gold transaction? --- Well, my advice at that time - my instructions at that time from Mr. Collins was that it related to completed transactions and that it was part of fees that had been earned by him and to which he was entitled.

Mr. Collins would not have used the words that you have now said to the court, would he? --- No. Perhaps more likely he would have said words to the effect of: these are moneys coming in on a gold transaction in which I have been involved? --- He did quite specifically state that they were moneys that belonged to him as a result of completed transactions. He did not say to you that these moneys were moneys coming in as a result of a gold transaction in which he had been involved but which were going to be for his wife and family? --- No. I cannot recall him saying that."

There are a number of features of Mrs. Collins' evidence which do not support the proposition that the $400,000 odd received into Poveys trust account represented, in whole or in part, a gift from Dr. Guilbaut to Mrs. Collins and the respondents generally, independent of any business transaction with the bankrupt and not being an amount otherwise owing to the bankrupt. The first matter was Mrs. Collins' almost complete lack of contact with Dr. Guilbaut (other than to take several phone messages for her husband), both before and after the arrival of the $400,000. She stated in cross-examination that she did not want the money for the new house to come from her husband because she could not be sure that the money would be legally obtained. She was however apparently happy to accept money from Dr. Guilbaut, knowing nothing about how he derived the money, and knowing nothing of him personally, in circumstances where the money was, in a practical sense at least, procured by her husband. Indeed she stated in an affidavit dated 17 March 1988 that she could not recall the name of the business colleague of her husband who had provided the funds for the Tobago Court house. Her explanation in cross-examination that this memory lapse was due to her distress at the issue of these proceedings I find unsatisfactory, especially as the proceedings had been issued almost three months earlier.
At one stage in his cross-examination of Mr. Edgley, counsel for the respondents asked a series of questions apparently directed to a quite different proposition regarding the $400,000. The suggestion seemed to be that the $400,000 was never the legal property of the bankrupt, not because it was a gift from Dr. Guilbaut to Mrs. Collins, but because the bankrupt had misappropriated the funds from Collins Credit Corporation (Aust) Pty. Ltd, prior to its liquidation. Mr. Edgley admitted that Finlaysons, solicitors, had written to Poveys on several occasions making claim to a sum of $400,000 from Collins Credit Aust Corp Pty Limited, although that claim was later withdrawn. In addition, Price Waterhouse, the liquidator of Collins Credit (Aust) Corp Pty. Ltd. wrote a number of letters to Poveys seeking particulars of a transaction involving a sum of $400,000 (US). Thus it might be said that there is some evidence that the $400,000 received into Poveys' Collins Credit trust account and used to purchase Tobago Court was not money which the bankrupt was entitled to apply for his or the respondents' benefit. There is a distinct possibility on the other hand that the claims were in respect of the $400,000 (US) referred to in the telex produced by the bankrupt. As I have indicated above, I am not convinced that the moneys referred to in that telex had anything to do with the $400,000 (Aust) odd received into the Poveys' trust account. I indicated to counsel for the respondents during the hearing that I would not be making any finding that the $400,000 in dispute belonged to another party, for example Collins Credit Corporation (Aust) Pty. Ltd. The matter before me is the question whether the bankrupt settled money or property on the respondents within the meaning of s.120(1) of the Act. Were I to find against the respondents, and a third party later claimed that the subject money or property had in fact been misappropriated from it by the bankrupt, then that must be pursued by a discrete claim against the applicant trustee.
The only other evidence to support the respondents' "gift" story was contained in two affidavits of Mr. Harlock, a former business colleague of the bankrupt. Despite Mr. Harlock's inability to attend for cross-examination, I admitted the two affidavits, subject to certain objections by the applicant's counsel. The first affidavit deposed to discussions in London in August 1983 between Mr. Harlock, Dr. Guilbaut and the bankrupt.

"We were confident that a transaction would come to fruition and the said Mr. Collins asked the said Dr. Guilbaut if he could advance certain moneys to his wife as a sign of his bona fides in the matter. The said Mr. Collins explained that he had separated from his wife and he wanted to effect a reconciliation and that this could be effected if certain moneys could be transferred to Australia in order that the said Mr. Collins' family could acquire a home. The said Dr. Guilbaut agreed to such a course of action."

The second affidavit attempted to put a gloss on this passage as follows:

". . . the moneys which I say were to be advanced to the wife of the said Mr. Collins were to be provided by way of gift direct from the said Dr. Guilbaut to Mrs. Helen Collins. Any interpretation of my earlier affidavit to the contrary was not intended."

I place very little reliance on the first passage, as it is clearly hearsay. It is also ambiguous as regards the nature of the "advance" to be made, and I can not rely on the second passage to clarify this. In addition, Mr. Harlock was not a disinterested witness in these proceedings as on the bankrupt's evidence the $50,000 loaned to him by the bankrupt in May 1984 has not been fully repaid and was not included in the bankrupt's statement of affairs.
In the circumstances of all the evidence outlined above and my assessment of the credibility of Mr. Edgley, the bankrupt and Mrs. Collins, I am satisfied that the purchase of Tobago Court on 4 May 1984 constituted a settlement of property by the bankrupt on the respondents within s.120(1) of the Act. In so finding I rely on the evidence of Mr. Edgley, whom I found to be an honest and credible witness with no particular interest in the outcome of the proceedings. On the other hand I found the bankrupt a most unsatisfactory witness and most of his evidence wholly unacceptable. His unreliability was typified by a letter dated 26 March 1984 which he sent to Mr. Miers, the land broker involved in the Tobago Court purchase following the failure of settlement on 14 March 1984. That failure was due to the bankrupt's lack of funds. However in his letter to Mr. Miers, the bankrupt alleged that he had attended the Lands Title Office to complete settlement, had served the vendor with notice of the vendor's default and had duly placed the funds back into "an interest bearing situation 30 days call at our bankers". In cross-examination the bankrupt agreed that Mr. Miers' endorsement at the bottom of letter, "absolute rubbish" correctly described its contents.
I reject as highly improbable the bankrupt's evidence that Dr. Guilbaut made a gift of $400,000 both to him ($60,000) and the respondents ($340,000) in order to support his business and his marriage. In my opinion if that money did originate from Dr. Guilbaut, it is most probable that it arose from some business transaction with the bankrupt and was thereby owing to the bankrupt, either personally or as agent. Whether the bankrupt accepted the money on his own behalf and then applied portion to his wife, or whether the bankrupt directed Dr. Guilbaut to pay Mrs. Collins direct does not in my opinion matter. Both circumstances would amount to a settlement of property within the meaning of s.120(1) of the Act. The evidence of Mrs. Collins I have remarked on above. I am not convinced that she was deliberately attempting to mislead the court; her cautious and oblique manner was understandable given the nature of her interest in the proceedings. However to the limited extent that her evidence supported the bankrupt's "gift" story I cannot accept it.
I turn now to the second residential property the subject of these proceedings, "Blue Sails". It is not disputed that the respondents became registered proprietors of the property on 31 July 1984. The house was purchased as a residence for Mrs. Collins' mother, who presently resides there.
The trust account ledger card produced by Mr. Edgley in relation to the Tobago Court property indicates that by 8 May 1984 (some 4 days after the $400,000 was received from Phillips & Ross solicitors), the account balance was reduced to $394.30. The next entry reads "Rec MH Gustin & Gen Concession Co. via Ist Interstate Bank of Alaska (Telegraphic Transfer) (Settlement moneys) 22 May 84" in the amount of $166,168.16. On 23 May, a sum of $160,000 was withdrawn from the trust account and paid to the account of Collins Credit at ANZ Bank.
On that same day a sum of $160,000 was credited to an account entitled "Collins Credit" at R.E.I. Building Society. There were two accounts in this name at R.E.I. one designated "trust account" and the other "general account". The bankrupt admitted that this $160,000 was the same sum as received from MH Gustin by Poveys and paid to ANZ Bank.
There were numerous debits and occasional credits to the R.E.I. account after that date, but by 23 July 1984 the balance in the account had been reduced to $2,719.11. The next entry (on the following day) was a credit of $526,071.43. The bankrupt stated that this money was sent by his attorney in the United States, a Mr. Greaves, and arose from a transaction with a Mr. Devlin. On the bankrupt's evidence Mr. Greaves transmitted approximately one million dollars (Aust) in all, $526,071.43 into one of the R.E.I. Collins Credit accounts and the balance into another account with the R.E.I.
Withdrawals from the R.E.I. account were made by cash or Westpac bank cheque as the drawer required. A number of the withdrawals from the R.E.I. Collins Credit account, subsequent to receipt of the $526,000 odd, are relevant. First, on 24 July 1984 $11,900 was withdrawn to B.W. Carey Pty. Ltd. trust account, being deposit for the Blue Sails property. Then on 25 July 1984 $10,076.00 was withdrawn, to complete payment for certain Bang & Olufsen stereo equipment, a $20 deposit having earlier been paid. Also on 25 July $115,000 was withdrawn and paid to Thuruna (No.2) Pty. Ltd, in relation to the purchase by the bankrupt of a unit in North Adelaide. On 26 June a sum of $126,822.20 was withdrawn and paid to Poveys Trust Account. That sum was applied in three ways; $111,008.20 was placed in a Poveys' trust account named H. Collins and described "Re: Purchase from Lorraine", which provided moneys due on settlement for the Blue Sails purchase; $5,858.00 was placed in a Poveys trust account named "Thuruna (No.2) Pty. Ltd" for payment of stamp duty Lands Titles Office fees on the North Adelaide unit; and the balance of $9,956.00 was paid to Poveys in part satisfaction of costs and disbursements owing by Collins Credit, that is, the bankrupt.
As with Tobago Court, the contract for purchase of Blue Sails was not produced into evidence. However, (again as with Tobago Court) the bankrupt admitted that the contract had been signed R.W. Collins and/or nominee, and signed prior to any written authority from the respondents to enter into the contract. Settlement on Blue Sails occurred on 26 July 1984, and on that day a transfer to the respondents was effected (with the bankrupt signing as father and lawful guardian for the respondents other than Mrs. Collins).
The Blue Sails transaction clearly constitutes a settlement within the meaning of s.120(1) of the Act. Whether the bankrupt gave the respondents the money for the house, or paid himself but had the transfer made out in favour of the respondents, makes no difference (Re: Hermann; Ex parte The Official Assignee (1916) 16 SRNSW 264). It is clear from the Poveys' and the R.E.I. account records that the purchase price for Blue Sails was not paid from the $400,000 received into Poveys trust account on 4 May 1984 - that had been earlier exhausted by the purchase of Tobago Court and by the bankrupt's personal use of the balance funds. Rather it was paid for from the $526,000 odd received into the R.E.I. Collins Credit account from Devlin via Greaves. The bankrupt admitted that Devlin had subsequently instituted legal proceedings to reclaim the moneys sent to Collins Credit, but as I have stated earlier, this is not the forum for determination of possible third party claims to property dealt with by the bankrupt. The bankrupt had control and possession of the amount necessary to purchase Blue Sails and thus made a disposition of property within sub.s.120(8) of the Act.
The bankrupt's evidence was that the purchase price for Blue Sails was paid from the $400,000 gift from Dr. Guilbaut. That was not the case, as I have indicated. The suggestion that Dr. Guilbaut was willing to gift moneys to the respondents not only for a family home but for a home for the bankrupt's mother-in-law (to be held by the respondents as an investment), only adds to the inherent improbability of the gift story.
I turn now to consider the applicant's claim in respect of the Mercedes Benz motor vehicle. On 4 May 1984, the day on which the $400,000 was received into Poveys trust account, the bankrupt purchased a Mercedes Benz sedan registered number UMK307 from BEA Motors for $76,330. He traded in another vehicle and paid the balance purchase price of $58,800 by trust account cheque from the Poveys "Collins Credit" trust account (see item 3 of authority dated 4 May 1984 set out above). The vehicle was registered in the bankrupt's business name on 4 May 1984. On 30 October 1984 however the registration was changed, naming as the owner of the vehicle the four respondents. The date of acquisition of vehicle by the new owners was stated to be 8 August 1984. That was one week after Devlin issued proceedings against the bankrupt seeking a Mareva injunction in respect of the $1,000,000 claim.
When Mr. Collins was declared bankrupt on 20 December 1984, the Mercedes Benz car was not included in his statement of assets. In July of the following year, the car was traded in at BEA Motors on another Mercedes Benz, registration number UHG567. A trade in of $62,600 was allowed, leaving a balance purchase price of $32,700. That sum was provided by L.N. Virba, the bankrupt's secretary at Collins Credit. The basis on which the money was provided by Miss Virba was not adequately explained by the bankrupt, other than to say that he had asked her to provide the money and that she had done so.
The invoice for the purchase of the UHG567 Mercedes Benz was made out to the respondents, as was an invoice for certain equipment installed in the car. In addition a vehicle delivery slip dated 19 July 1985 was signed by the bankrupt on behalf of the respondents. Sometime in 1986 the UHG567 Mercedes Benz was sold by the bankrupt to raise money for legal fees.
The applicant seeks a declaration that the Mercedes Benz UMK307 purchased by the bankrupt on 4 May 1984 was settled on the respondents (within the meaning of s.120 of the Act) on about 8 August 1984. In my opinion however no such settlement has been proven and the property in the vehicle remained in the bankrupt. The change of registration into the names of the respondents does not of itself have the effect of transferring ownership of the vehicle, although it may afford some evidence to that effect. Subsection 20(2a) of the Motor Vehicle Act (1954) (S.A.) states,

"Where an application to register, or renew the registration of, a motor vehicle falsely states the name of the owner of the vehicle, any registration of the motor vehicle pursuant to that application shall be void and of no effect."

The evidence of Mrs. Collins was to the following effect; that she was not aware that the UMK307 Mercedes Benz was registered in her name and her childrens' names until she received a renewal notice for the registration. She thought that she received this after the car had "gone". She further said that she was not involved in any of the sales of the Mercedes Benz cars and did not sign any documents or transfers of registration in relation to those cars; she thought the vehicles were her husband's. Essentially this evidence was unchallenged by the applicant, although it did not coincide with the bankrupt's evidence. He stated that the UMK307 Mercedes Benz registration was transferred into the respondents' names on the advice of Mr. Edgley that this was necessary if the car was to be included in the Deed of Gift. That is, that the car had been purchased from the $400,000 allegedly gifted by Dr. Guilbaut and was intended as an investment for the respondents. For the reasons given above I reject the bankrupt's evidence in this regard.
In the circumstances, it would appear to follow that the UMK307 Mercedes Benz car was at all relevant times the property of the bankrupt. The consequence of the non-disclosure of this asset in the bankrupt's statement of affairs and the subsequent disposal of the car are not matters for me to determine in these proceedings.
Turning finally to the Bang and Olufsen stereo equipment, this was purchased on 25 July 1984 for $10,096. A $20 deposit was paid on 23 July and the balance purchase price was paid on 25 July by the bankrupt by bank cheque from the R.E.I. Collins Credit account. The stereo equipment was delivered to and remains at the Tobago Court property. The bankrupt stated that it was a gift to the second and fourth respondents. In this regard I note that those respondents were born on 4 August 1967 and 4 August 1971 respectively.
Despite the bankrupt's statement that he made a gift of the stereo equipment to the second and fourth respondents, I am not satisfied that sufficient evidence has been placed before me on which to base a finding that a transfer of property was so made. In particular, even if the bankrupt had expressed words of gift in the presence of the second and fourth respondents, of which there was no evidence, there was also no evidence of an unequivocal act of delivery. This latter requirement is necessary and is particularly onerous in a domestic situation, as Pearson LJ. found in Re Cole (1964) 1 CH 175 at p 192

". . . an act to constitute delivery must be one which in itself shows an intention of the donor to transfer the chattel to the donee. If the act in itself is equivocal - consistent equally with an intention of the husband to transfer the chattels to his wife or with an intention on his part to retain possession but give to her the use and enjoyment of the chattels as his wife - the act does not constitute delivery."

As the delivery of the stereo equipment to the Tobago Court property was equally consistent with either the bankrupt retaining possession but giving use or intending a gift of the equipment to the second and fourth respondents, I am not prepared to find that a settlement of the equipment was made within s.120(1) of the Act.
It follows that I do not make any order in respect of either of the motor vehicles referred to in the application or in respect of the jewellery and the Bang and Olufsen stereo equipment. I make the orders sought by the applicant in relation to the two dwellinghouses and will hear the parties on the question of costs.

[1989] FCA 463

30 JUNE 1989