Re Pope, Kerry Ambrose Ex Parte Jefferson, Philip Gregory & Anor v Pope, Sandra
[1996] FCA 595
•19 JULY 1996
CATCHWORDS
BANKRUPTCY - Property jointly owned by husband and wife - husband and wife separated, wife continued to reside in matrimonial home and to make mortgage payments - subsequent home purchased in wife's name - husband party to mortgage transaction and directs proceeds of settlement of jointly owned property to permit completion of purchase in wife's name - whether payment by direction a settlement within s120 of the Bankruptcy Act 1966 (Cth).
TRUSTS - whether constructive trust arose at time of separation - whether common intention that property be held by husband and wife in trust for wife - evidence that husband represented that he continued to have interest in property.
Bankruptcy Act 1966 (Cth): ss120,121.
Allen v Snyder [1977] 2 NSWLR 685; applied.
Muschinski v Dodds (1985) 160 CLR 583; referred to.
Calverley v Green (1984) 155 CLR 242.
RE KERRY AMBROSE POPE; EX PARTE PHILIP GREGORY JEFFERSON AND JAY ARSCOTT STEVEN THE TRUSTEES OF THE PROPERTY OF KERRY AMBROSE POPE v SANDRA KAY POPE and KERRY AMBROSE POPE
No QB 2024 of 1994
HILL J
SYDNEY
19 JULY 1996
IN THE FEDERAL COURT OF AUSTRALIA )
GENERAL DIVISION )
BANKRUPTCY DISTRICT OF THE ) No. QB2024 of 1994
STATE OF QUEENSLAND )
RE:KERRY AMBROSE POPE
EX PARTE:PHILIP GREGORY JEFFERSON and JAY ARSCOTT STEVENSON THE TRUSTEES OF THE PROPERTY OF KERRY AMBROSE POPE
Applicants
AND:SANDRA KAY POPE
First Respondent
KERRY AMBROSE POPE
Second Respondent
CORAM: HILL J
PLACE: SYDNEY (Heard in Brisbane)
DATED: 19 JULY 1996
MINUTES OF ORDER
THE COURT DECLARES THAT:
The payment of $46,250.00 by the bankrupt to Suncorp Building Society on or about 27 August 1993 was a payment made for and on behalf of the first respondent to enable the first respondent to acquire the said property and such payment constituted a settlement by the bankrupt upon the first respondent and as such was and remains void as against the applicants as trustees of of the bankrupt by virtue of s120(1) of the Bankruptcy Act 1966 (Cth).
The payment of $3,000 made by the bankrupt to Mike Karos Real Estate Trust Account, cheque 118076 dated 13 April 1993, detailed in the affidavit of Mr Stevenson sworn on 12 March 1996 and filed in these proceedings, was a payment made for and on behalf of the first respondent to enable the first respondent to acquire the said property and such payments constituted settlements by the bankrupt upon the first respondent and, as such, were and remain void as against the applicants as trustees of the property of the bankrupt by virtue of s120(1) of the Bankrtupcy Act 1966 (Cth).
THE COURT ORDERS THAT:
The first respondent pay to the applicants the respective amounts of $46,250 and $3,000 with interest.
The respondents pay the applicants' costs of the application including reserved costs if any.
Note:Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
GENERAL DIVISION )
BANKRUPTCY DISTRICT OF THE ) No. QB2024 of 1994
STATE OF QUEENSLAND )
RE:KERRY AMBROSE POPE
EX PARTE:PHILIP GREGORY JEFFERSON and JAY ARSCOTT STEVENSON THE TRUSTEES OF THE PROPERTY OF KERRY AMBROSE POPE
Applicants
AND:SANDRA KAY POPE
First Respondent
KERRY AMBROSE POPE
Second Respondent
CORAM: HILL J
PLACE: SYDNEY (Heard in Brisbane)
DATED: 19 JULY 1996
REASONS FOR JUDGMENT
Mr Philip Gregory Jefferson and Mr Jay Arscott Stevenson ("the trustees") are the trustees of the estate of Kerry Ambrose Pope ("the bankrupt") against whom a sequestration order was made on 3 October 1994. The act of bankruptcy upon which the creditors' petition was based was the failure to comply on or before 3 August 1994 with the requirements of a bankruptcy notice which had been served upon the bankrupt on 6 July 1994.
The application before the Court is an application by the trustees seeking declarations that Mrs Sandra Kay Pope, the wife of the bankrupt, holds a one half share or interest in a property at 227 19th Avenue, Palm Beach, in the State of Queensland ("the 19th Avenue property"), in trust for them as trustees of the estate of the bankrupt, or alternatively that a payment of $46,250 said to have been made by the bankrupt to Suncorp Building Society ("Suncorp") on or about 27 August 1993 was either void against the trustees by virtue of s120(1) of the Bankruptcy Act 1966 (Cth) ("the Act"), or by force of s121 of the Act. Finally, the application seeks to set aside payments totalling $5,397 made by the bankrupt.
Mrs Pope, who is the registered proprietor of the 19th Avenue property, denies that she holds one half of it upon trust and denies that she is liable to pay either the $46,250 or the $5,397 (or any part thereof) to the trustees. In essence, the application is for the recovery from Mr and Mrs Pope of the amounts $46,250 and $5,397.
Mr and Mrs Pope were married on 1 February 1969. At some time thereafter they purchased, in their joint names, a house at Gunning in New South Wales. They sold that house somewhere around 1980 and after repaying a mortgage upon it had approximately $12,000 in cash available to them.
At around the same time as they sold that house, they purchased a block of land at Matipo Place, Palm Beach ("the Matipo Place property"), Queensland, the transfer to them being registered on 10 October 1980. Title was taken by
them as joint tenants. In the latter half of 1980 they built a house upon the land so that the total cost of the house and the land was approximately $48,900. To finance this amount they used the money from the sale of the Gunning property and borrowed, jointly, from Suncorp approximately $43,000.
At this time both Mr and Mrs Pope were working and there is no doubt that they intended at the time they purchased the Matipo Place property that their interest in it would be equal. Indeed it was not suggested otherwise. Such cash as they had used to purchase the Matipo Place property had been their joint property and they were jointly liable for payment of the moneys which they had borrowed form Suncorp to finance the purchase and building costs.
Some time in around February 1982 the marriage broke down. Mr Pope left his wife to live with another woman. I have little doubt that Mrs Pope was devastated and angry at this turn of events.
At the time Mr Pope was in the police force. From his appearance in the witness box it would seem that he is somewhat overbearing and that Mrs Pope was afraid of him. She lost weight and was sick and believed that her husband would be able to take her children from her. At that time there were two children to the marriage aged twelve and thirteen years. At some stage after the marriage had broken down, Mr
and Mrs Pope had a discussion about the house. It would seem Mr Pope was angry because he punched the wall and walked out. The evidence of the conversation is that there had been some argument concerning the house, following which Mr Pope said to his wife, "If you want the bloody house you pay." He may also have said, in this conversation, "and don't you dare take me to court". From that time on, and subject to the events in 1993, Mrs Pope lived in the house and paid the mortgage payments and other expenses of the property. Initially she was working, but lost her job around Christmas time. Thereafter she received a sole parent pension, had a part-time job and earned money also from doing casual ironing.
Some time after Christmas 1982, Mrs Pope had an interview with the Department of Social Security who suggested to her that her husband should pay her maintenance. She was apparently told that there could be an oral agreement for the payment of maintenance and as long as those payments were kept up there was no need for her to take her husband to court. She was advised that if the payments were not made she could obtain legal aid and take him to court. According to her evidence, they suggested that she ask him for $150 per week for the children. The figure arrived was said by her to be half the amount of the money which Mr and Mrs Pope were obliged to pay to Suncorp under the mortgage. Although there was some suggestion that Mr Pope thereafter paid half the mortgage payments to Suncorp, either directly or to his wife,
it is clear that this is not so. The agreement reached with his wife was clearly an agreement for maintenance. According to him the amount in question was not $150 per week, for this was an amount which he could not have afforded to pay. According to his evidence the amount he paid fluctuated, depending upon his ability to pay. Sometimes it was $100 sometimes it was $60. The effect of his evidence seems to have been that the amount in question was $75 per week. It may well be that Mrs Pope's evidence of $150 per week should really have been $150 per fortnight. But be that as it may, there is little doubt that the mortgage repayments fluctuated as interest rates rose and fell. The payments which Mr Pope made were not in any way related to the mortgage repayments, save that the initial figure, be it $75 or $150 per week, was suggested by the Department of Social Security, having regard to Mrs Pope's then commitment to Suncorp.
It would seem from the evidence that on occasions Mr Pope made payments direct to Suncorp. These occasions seem to have been when his wife asked him to do that because she had not made the payment on time. It may be interpolated here that all the difficulties which the present case bring to Mrs Pope might well have been avoided had she sought legal advice back in 1982 and acted upon it. But, whether because she was afraid of her husband or otherwise, she did not do so.
From the time of the separation in 1982 Mrs Pope, at least, considered the house to be her property. She was in sole possession of it and lived there with her children. Mr Pope, she says, did not come into the property without her express permission.
In 1986 Mr and Mrs Pope had a brief reconciliation. She says that he did not move back into the house. Whether that was or was not the case, they had another child who was born on 2 November 1986.
The evidence then moves to around 1990. Mrs Pope was very close to her husband's mother. Indeed, their relationship was more one of mother and daughter than mother-in-law and daughter-in-law. The mother-in-law lived in Goulburn. According to Mrs Pope, the mother-in-law made a decision in 1991 that she would move from Goulburn to live with Mrs Pope on the Gold Coast. The mother-in-law's health had deteriorated and they discussed selling the Matipo Place property and the purchase of another property on flat ground close to shops and transport.
In cross-examination Mrs Pope was somewhat vague as to the time this conversation with her mother-in-law had taken place. In her oral evidence she placed it as taking place in 1990, in one affidavit she wrote 1992 and in another 1991. I doubt that much turns upon the date. It is clear that there
was such a conversation and that thereafter, from time to time, Mrs Pope and her mother-in-law put aside some money to meet the ultimate expenses of buying a new house. So from time to time the mother-in-law would give Mrs Pope some money which was placed in a small tin. According to Mrs Pope's evidence, she too put money into this tin from savings, largely from the cash amounts she received for doing casual ironing, babysitting and housework. According to Mrs Pope she had accumulated some $6,000 by 1993. On one occasion the mother-in-law had won $500 in scratch lotto and this had also gone into the tin.
It may be said here that according to her income tax return for the year ended 30 June 1993 Mrs Pope had a gross income of $8,678, made up of salary and wages income of $8,413 and "business and investment income" of $265. This so-called "business and investment income" represented interest from two bank accounts totalling $265. Mrs Pope had no cheque account. No income from casual ironing, babysitting etc was returned by her. Even if there were small amounts of such income, Mrs Pope's capacity to save was extremely limited.
Some time in 1992 Mrs Pope placed the Matipo Place property with an agent for sale. In the result a contract was exchanged on 8 April 1993 for the sale. Mrs Pope was of course a party to that contract, as was her husband. The contract was for a sale to a third party. The purchase price
under the contract was $143,000 with a deposit of $7,000 and provided for completion forty days from its date. Time was not, however, made of the essence of the contract in respect of completion.
Seven days after exchanging the contract of sale, Mrs Pope entered into, in her own name, a contract for the purchase of the 19th Avenue property on 15 April 1993. The purchase price was $155,500 and there was to be a deposit of $10,000, of which $3,000 was payable forthwith and the balance on 18 May 1993. The purchase contract was conditional upon completion of the sale of the Matipo Place property and also was conditional upon finance being obtained from Suncorp to the extent of $55,000.
There was a hitch in the conveyancing transactions because apparently Suncorp had lost the title deed to the Matipo Place property. This delayed the completion of the Matipo Place sale until August 1993. To enable Mrs Pope to complete the purchase of the 19th Avenue property, Suncorp advanced $60,000 (intended to be a term loan over a period of years presumably), and a bridging loan of $92,500. In respect of both loans, the borrowers were the bankrupt and Mrs Pope. Ultimately, a new title deed of the Matipo Place property was obtained and the sale of that property effected. According to the settlement statement, the amount receivable on settlement
was $136,023.88, excluding the $7,000 deposit. On settlement the solicitors paid out the following amounts:
*To Suncorp $123,955.91
*To the solicitors $ 895.00
*To Mr Pope $ 7,039.61.
*To Mrs Pope $ 4,133.36
Totalling$136.023.88
The amount of $123,955.91 paid out to Suncorp, represented repayment of the bridging loan of $92,500 and repayment of the amount of $31,455.91 owing in respect of the mortgage on the Matipo Place property.
In accounting to Mr and Mrs Pope their solicitors said:
"The balance of the net proceeds has been divided equally between you and you will each receive the sum of $7,039.61."
That equality arose because the estate agent accounted to Mrs Pope for the balance of deposit after commission in an amount of $2,906.25.
Mr Pope's participation in the transaction will have been noted. He was obviously a necessary party to the sale transaction. He was a joint borrower with his wife, both in
respect of the bridging finance and the ultimate finance for the new property. Mrs Pope sought to explain this by saying that her husband only assisted so that he could help his mother who was to reside in the house and who was at that time in bad health and who in fact died subsequently in January 1995.
Mrs Pope sought to explain the fact that her husband had received what the solicitors referred to as half of the net proceeds by saying that she made a decision to pay him this amount "as a gesture of goodwill". She said in her affidavit
"I thought it fair that I reimburse him roughly what the Matipo property owed him up to 1982. This decision which I made did not in any way alter the agreement which we had made in 1982. In fact, I id [sic] not even discuss the matter with him. It was just something I decided at the time I would do for him."
Mr Pope's participation was not as passive as this evidence might suggest. In addition to the payments of various amounts totalling $5,397, to which I will return, there seems little doubt that Mr pope participated as well in instructing the solicitors. Mrs Pope conceded in cross-examination that her husband had done most of the speaking to the solicitors. She said she told her husband what she wanted and then he would talk to the solicitors. It was Mrs Pope's evidence that although it was she who told the solicitors how to split the cheques so that her husband would receive half, in all other respects he had dealt with the solicitors.
Mr Pope's evidence was at total variance with that of his wife. According to him, it was Mrs Pope who had the vast majority of the dealings with the solicitors. He said the only time he attended the solicitors was to sign a couple of forms, despite the fact that earlier in cross-examination Mr Pope had said that he associated with the solicitor on a regular basis.
I do not accept Mr Pope's evidence. I think it is more probable than not that it was Mr Pope who did most of the negotiations with the solicitors. While it does not follow from that that it was not Mrs Pope who suggested the division of $7,000 to each of them, some doubt must be cast over this. The failure to call the solicitor permits me to conclude that his evidence would not have assisted Mrs Pope.
Mr Pope's involvement also included his drawing various cheques to do with the purchase of the 19th Avenue property. The first cheque he drew was for $3,000, being the deposit for that property. Curiously, his cheque account, upon which this cheque was drawn, shows the drawee of the cheque as merely "cash". The impression this might give is that the cheque was drawn to cash for $3,000 and then spent. In fact it was in favour of the estate agent. It may or not
be coincidental but the bank statement showing this cheque was never given by Mr Pope to the trustees. The trustees became aware of the payment when they obtained records from the estate agent.
Mr Pope also drew upon his own bank account cheques in the amount of $1,550 to purchase a bank cheque for stamp duty on the purchase and two cheques, one for $633 and one for $214 in favour of Suncorp for loan application fees in respect of that property. Prima facie therefore, these payments were payments made by Mr Pope on behalf of his wife to assist her with the purchase of the 19th Avenue property. The payments were made on the following dates:
1.13.4.93 $3,000.00
2.21.5.93 $ 214.00
3.21.5.93 $1,550.00
4.16.4.93 $ 633.00
Mr Pope's involvement in this way is sought to be explained by evidence given by each of Mr and Mrs Pope that Mrs Pope had no cheque account and that she wished amounts to be paid by cheque so that she could have a record of them. Thus she asked her husband to draw the relevant cheques, giving him cash in the relevant amounts which she had taken from the tin in which she had placed the contributions made by her mother-in-law and herself. In her affidavit evidence,
Mrs Pope referred to an arrangement which she had with her husband that on odd occasions when she needed a cheque she would give him money in cash and he would write a cheque for her. She says that in each case she had given her husband cash in exchange for the cheques the subject of the present dispute. Mr Pope's evidence (marginally different) was that the arrangement was that he would draw a cheque and his wife would reimburse him for the amount.
It is clear that by the time Mr Pope drew the cheque for $3,000 he was in very serious financial difficulties. In November 1992 he had received an invoice of $160,000 from Ampol in respect of the service station business he was conducting and had no expectation that that amount could be paid. His bank account deposit records for April and May do not permit there to be identified any amount of cash of $3,000 deposited, at least on or around the date the cheque was drawn in favour of the estate agent. Mr Pope's evidence was initially that he had put the $3,000 in the bank with the day's takings when it was received by him. But that is not substantiated by the deposit records. When this was pointed out to him, he was asked whether he carried the money around in cash. He denied that, but said occasionally it went into the safe as he might not have been repaid the money by his wife for two or three days. He was unclear whether he had received the cash before writing the cheque or after. Later he said that not all of the money may have gone into his
account, but rather that he may have used at least some small amounts to purchase goods for the shop. However, his bank records of the time indicated withdrawals of cash, which one would not imagine he would have made if he was carrying $3,000 in cash around with him. This is but one of the matters which weigh heavily against his credit. I shall deal later with others.
The records of Mr Pope's business are such that one could clearly not rule out the possibility that the smaller amounts at least were received by him in cash from his wife and included with the daily bankings.
Although Mr and Mrs Pope were not living together in 1993 when the transactions to which reference has been made took place, they resumed cohabitation in September 1994 when Mr Pope apparently asked his wife if he could live together with her in the house as a boarder as he was unemployed and had no money. She says that they resumed a marital relationship in October 1995.
Mr Pope was not an impressive witness. I think it is probable that the cheque for $3,000 was deliberately drawn by him in cash to divert attention from it. I think that he has deliberately gone out of his way to present a picture of being a passive participant in the transactions of sale and purchase about which the case is concerned, when I think it is clear and I would so find that he was not merely active but dominantly active in them. I have no doubt at all that it was Mr Pope and not his wife who instructed solicitors and I think it more probable than not that the solicitors merely assumed that any cash balance should be divided between them, rather than that express instructions were given by Mrs Pope to that effect. In this respect I do not accept her evidence.
Mr Pope was at pains to convey to the Court the impression that he never considered the property to be his after 1982. No doubt it was necessary that he do so for the purposes of the case. However, twice in dealings with finance companies, he had made reference to his joint ownership of the house and thus held himself out as part owner. The first such reference is to be found in an application to the National Australia Bank on 4 July 1989 in which Mr Pope, as is normal, completed a balance sheet of his assets and liabilities which he signed. That document shows as an asset the house worth $160,000 and a liability to "SGIO" (the initials of the previous name of Suncorp) of $35,000 with repayments of $520 per month. The second such reference was a preliminary application for finance with the Commonwealth Bank dated 14 May 1991 in connection with Mr Pope becoming a self-employed service station proprietor of the business which he currently managed. That document refers to Mr Pope having a joint liability with his separated wife to Suncorp which his wife was pay and his being entitled to a half share, the property being valued at $120,000 and his half share being $60,000.
Faced with these applications, Mr Pope said that, in respect of the National Australia Bank application, the inclusion of his interest in the house was to "make the application look a bit better than actually it was going to". He said, however, that the manager, who was a cousin of his, knew the true position. That was inconsistent with evidence that apparently Mr Pope had given in an examination under s.77C of the Act when he was unable to give any explanation at all for why he referred to his interest in the house.
Mr Pope was unable to give an explanation as to why he had referred to his half share in the Matipo Place property as being an asset in the other application. His only response was, "I suppose only to make it look a little bit more impressive on a loan application". He said he was not in the habit of making loan applications look more impressive.
I have formed the view that in giving his evidence Mr Pope went out of his way to give evidence that he believed would further the case of his wife and thus insulate for her the moneys or interest in the 19th Avenue property, as the case may be, from the reach of creditors.
Mrs Pope is in a somewhat different position. Her position evokes sympathy, although it does not follow that I would accept merely on the basis of sympathy everything she says. I do accept that she and her mother-in-law did save some money and that this was placed in a tin. I accept further that she did give money to her husband to draw cheques in respect of the house purchase. However, on balance I do not think that it is likely that there was $6,000 in the tin. In part, at least, the fact that it was a very small tin, even if the notes were of large denominations, makes it difficult to accept that there was as much as $6,000 in it. Nor do I accept that she gave her husband the initial $3,000 deposit. I think it is more likely than not in the circumstances that Mr Pope, aware of his insolvent position, paid the amount of $3,000 deposit on behalf of his wife and then attempted to disguise it. I accept that the other amounts were reimbursed by Mrs Pope to her husband.
I turn now to consider the legal consequences of what happened.
The first claim in the trustees' application that Mrs Pope holds a one half share in the 19th Avenue property on behalf of the estate can clearly not be accepted. Indeed this was ultimately conceded by counsel for the trustees. If anything is clear, the intention was that Mrs Pope be the beneficial owner of the 19th Avenue property. Mr Pope was in dire financial straits and teetering on the brink of bankruptcy. Any suggestion that the intention was that he have a beneficial interest in the property in those circumstances would be unlikely. Indeed it would be of the essence that Mrs Pope be the beneficial owner of the property. Further, it was never put to any witness that there was any intention on the part of Mrs Pope that she be trustee of that property.
Once it is accepted that the estate has no interest as such in the 19th Avenue property, it is clear that the only claim the trustees can have is in respect of a disposition of $46,250 made at the time of completion of the sale of the Matipo Place property when Mr and Mrs Pope would have directed the solicitors acting for them to make payment of this amount to Suncorp. It is no large step to infer such a direction, as the solicitors could not properly have made the payment to Suncorp other than at the direction of Mr and Mrs Pope who instructed them.
It is the trustees' case that the $46,250 was money beneficially owned by Mr Pope. It is the case for the respondents that this money was beneficially owned by Mrs Pope. If the money was beneficially owned by Mr Pope and the disposition occurred as it did in August 1993, it is clear from the evidence and accepted by the respondents that at that
time Mrs Pope was perfectly aware that Mr Pope was hopelessly insolvent.
The case therefore turns upon the question whether the consequence of what happened in 1982 was that thereafter Mr Pope held his half interest in the Matipo Place property upon trust for his wife. If he did, then there can be no doubt that the $46,250 belonged to her. If, on the other hand, the consequence of the transaction was to leave unaffected the beneficial ownership of the property, then the amount of $46,250 was clearly his property.
It is the case for Mrs Pope that the events of 1982 brought into existence what counsel referred to as a "common intention constructive trust", so that notwithstanding that there was nothing in writing between the parties, such as might otherwise be required by s11(1) of the Property Law Act 1974 (Qld), to make a disposition of an equitable interest in property effective, Mr Pope was thereafter bound to hold the Matipo Place property upon trust for his wife absolutely.
At the heart of Mrs Pope's case is the submission that there was in 1982 a common intention on the part of both Mr and Mrs Pope that the Matipo Place property would belong solely to her and that she would thereafter make all payments in respect of it. So it is said that Mrs Pope, on the faith of this common intention acted to her detriment so that, it is submitted, it would be inequitable for Mr Pope now to assert an interest in the property.
The respondents rely upon the well-known decision of the New South Wales Court of Appeal in Allen v Snyder [1977] 2 NSWLR 685. That case is authority for the proposition that a constructive trust will arise where there is a common intention of trustee and beneficiary that property be held by the one upon trust for the other, and the circumstances are such that it would be unconscionable for the legal owner to rely upon the Statute of Frauds (or its more modern equivalent) to defeat the beneficial interest. The relevant common intention is as to ownership of the property. It may be express or inferred from conduct. Allen v Snyder was significant in rejecting a line of decisions in the United Kingdom commencing with Heseltine v Heseltine [1971] 1 WLR 342 which suggested that a constructive trust may be imposed whenever justice and good conscience required it. It is now clear law in Australia, following the affirmation of Allen v Snyder by the High Court in Muschinski v Dodds (1985) 160 CLR 583 (see, for example, per Gibbs CJ at 594) that it will be necessary for a court to find (expressly or by inference) a common intention of the parties, and that such a common intention not found can not be imputed to them.
The first question to be determined therefore is whether the words used by Mr Pope in the conversation with his wife and in the context in which that conversation occurred, suffice as a common intention on the part of them both that from that time he should hold his interest in the Matipo Place property upon trust for his wife.
It does not seem that Mr Pope had that intention at all. His applications for finance in later years show that he at least contemplated that he still had a half interest in the property. Certainly the arrangement was that his wife could live in the property and that she would pay the mortgage payments, but that is far from determining that it was his intention that thenceforth he would have no interest in the property at all and would be a mere trustee for his wife. I do not accept his evidence that he included the interest in the Matipo Place property in his finance applications merely to make those applications "look ... better". I think he believed he had an interest in those properties and included that interest properly in the applications. To find otherwise would be to suggest that he had some fraudulent intent as against the financiers and I would not readily draw that conclusion.
If Mr Pope lacked the necessary intention, a fortiori the common intention as to beneficial ownership could not exist even if the words used at the time were capable of suggesting such an intention.
The difficulty in cases such as the present is that reliance is sought to be put upon words used many years earlier taken out of context. I have no doubt that the context of the discussion indicated that Mr Pope had no concern in what was to happen to the house, for he had moved in with another woman. In the circumstances the words used rather suggest his lack of interest than an intention on his part that such equity as he had in the place should pass to his wife. I would accordingly not find the necessary express intention.
Nor do I think the conduct of the parties thereafter necessitate a finding of common intention. It is true that Mrs Pope paid the mortgage payments thereafter as well as other expenses on the property. She was living in it and was liable, jointly and severally, with her husband upon the mortgage in any event. In the circumstances I do not think that, given the lack of express intention on the part of her husband, any inference can be drawn of an express intention formed thereafter from her paying moneys which she was liable to pay.
It follows therefore that I am of the view that there was no constructive trust of the kind discussed in Allen v Snyder created in 1982 or thereafter. It is not suggested that any form of resulting trust arose by force of Mrs Pope paying the mortgage payments and indeed the decision of the High Court in Calverley v Green (1984) 155 CLR 242 would tell against any such submission.
The consequence is that a disposition was made by Mr Pope on or about 27 August 1993 when moneys owed to Mr Pope were paid at his direction on behalf of his wife to Suncorp. Such a disposition was made within two years of the commencement of the bankruptcy and constituted a settlement within the meaning of that expression in s120 of the Act. No suggestion arises in the evidence that there was any consideration for the payment and it is clear that at the time the payment was made (although this would not seem relevant) Mrs Pope had full notice of her husband's perilous financial situation.
The payment is accordingly void as against the trustees pursuant to s120 of the Act and in consequence the trustees is entitled to a declaration to that effect as well as an order against Mrs Pope requiring her to pay the money to them.
The question of whether the other payments can be set aside is more difficult. The trustees have the burden of proof of showing these payments fall either within s120 or s121 of the Act. I do not think that the trustees have satisfied that burden with respect to the moneys, other than the $3,000. With respect to the other amounts, as I have already indicated, I think that it is more probable than not that Mrs Pope did accumulate funds, either from earnings or from her mother-in-law, which she gave to her husband to draw cheques. However, with respect to the amount of $3,000, I am satisfied on the balance of probabilities that Mrs pope did not give moneys to her husband to reimburse him in this amount but rather that he paid the deposit for her. This is indeed quite probable because even if the marital relationship was not current at that time, the house was being purchased in part so that Mr Pope's mother could live in it. That coupled with Mr Pope's attempts to hide the transaction lead me to the conclusion that he was not reimbursed for it.
The payment of $3,000 by way of deposit was likewise a settlement within the meaning of that expression in s120 and being made within two years of the bankruptcy is also void against the trustees. The trustees are entitled to a declaration in respect of this amount as well, and orders that Mrs Pope pay the amount to the trustees.
I certify that this and the
preceding twenty-three (23) pages
are a true copy of the Reasons
for Judgment herein of his Honour
Justice Hill.
Associate:
Date: 19 July 1996
Counsel and Solicitors A Phillipides instructed by
for Applicants Bennett & Philp
(the Trustees):
Counsel and Solicitors D Hawes instructed by
for First Respondent: Baxter & Associates
Dates of Hearing: 20-21 June 1996
Date Judgment Delivered: 19 July 1996
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