| maintenance at least since the bankruptcy having apparently been | place where they are kept and maintained, the cost of their |
| met by the respondent. The respondent was married to the bankrupt on 17 January 1987 but it appears that they were known to and had a relationship with each other for some time prior to that date. |
| The first of the vehicles in issue in these proceedings is one familiarly known as an MGA, which is a sports car. The evidence establishes that this vehicle was given to the respondent by the bankrupt as a birthday present either in October 1984 or 1985. The respondent's birthday is on 3 October and it appears that the |
| MGA was given to her as a birthday gift on that day in one of |
| those two years. Its presentation appears to have been accompanied by a degree of unusual flamboyance in that it was said to have been wrapped in a canopy with a big red ribbon, the ribbon having been attached or placed around the vehicle and the canopy by the bankrupt's then secretary. |
| The second vehicle in issue in these proceedings is a 1984 model Saab. The circumstances of the presentation of that vehicle are accompanied by a little more doubt but it appears that this was presented to the respondent by the bankrupt in September 1987 and given as a birthday present for that year. The circumstances of |
| apparently had the use of a Holden Statesman vehicle which was | its being given were that the respondent had, prior to that time, | |
| her husband's and which she used to do her shopping. She apparently did not feel it appropriate to do the shopping in the MGA . |
| The bankrupt withdrew the use of the Statesman from his wife so as to use it for his own purposes and hence bought her the Saab to be used for purposes for which the MGA was apparently thought to be too ostentatious. Both of these vehicles were at relevant times registered in the bankrupt's name. As I understand the evidence, these registrations were not changed to the respondent's name until after the appointment of the applicant as receiver of the bankrupt's estate. These transfers of registration were of course obtained at the relevant time upon the signature of the bankrupt. |
| So far as the racehorses are concerned, it appears that the respondent had nothing to do with their original purchase but that the bankrupt, when obtaining and registering his own interest in the horses, also registered an interest in the name of the respondent. Each of them appears to have had a one quarter share in these racehorses and these ownerships were registered with the Australian Jockey Club. |
| The evidence does not establish who owns the balance of the 50 per cent in these racehorses, but since about June 1988 the respondent has been paying for their maintenance. There | apparently are three or four other partners in the ownership of | these racehorses but it is not clear whether they are also | |
| contributing to their maintenance. |
| The issue that arises in these proceedings is whether by reason of section 120 the ownerships of the vehicles and the racehorses by the respondent should be declared to be void as against the applicant as trustee in bankruptcy. The application of the trustee is for declarations to that effect and for orders that the respondent deliver up the two vehicles and execute all necessary documents to vest in the applicant the title of the vehicles and her interest in the racehorses. The applicant apparently has no appetite for the delivery of the racehorses to his office which may only serve to indicate that accountants do not provide racehorse stables among the many other services that they render to the community these days in their city premises. |
| There is a cross application made by the respondent but, as it seems to me, no part of that application is necessary for or adds anything to the current proceedings. In substance the respondent seeks a dismissal of the applications for declarations and orders. She primarily argues that this dismissal should follow from the failure of the applicant to make out the case which he advocates. The case is proved in the comparatively unusual way of tendering against the respondent her own words. This came in the form of a selection of the transcript of her evidence given in the section 81 examination conducted in this bankruptcy and an affidavit which she filed in the Family Court referable to this property. |
| There are some inconsistencies between those pieces of evidence. | For example, the transcript reveals that the MGA was presented to | |
| her in October 1984 whereas in the affidavit it is said to be 1985. She is also able, in the affidavit, to give a little more detail about it than she was able to give in the section 81 examination, including the purchase price. The affidavit was sworn on 22 June 1988, just 5 days after the registrations of the MGA and the Saab were transferred from the bankrupt to the respondent. Another discrepancy is that the transcript reveals that the Saab was a 1984 model whereas the affidavit describes it as a 1982 model and, again, a little more detail is able to be given including the purchase price. |
| However, the principles which section 120 require me to apply do not turn on these differences. Sub-section (1) of section 120 declares as void against the trustee any settlement of property which was not made before and in consideration of marriage or made in favour of a purchaser in good faith and for valuable consideration. On the evidence before me, these settlements of property have nothing to do with marriage and there is no assertion anywhere that they were purchased in good faith or for valuable consideration. |
| Sub-section (1) exempts from invalidity a settlement made on or for the spouse or children of the settlor of property that has accrued to the settlor after marriage in right of the spouse of the settlor. This provision, set out in pararaph (b), has no relevance to these proceedings and no argument has been directed |
| toward it. Hence it is not necessary to take into consideration |
| the remaining part of sub-section (1) which would require that if |
| the settlor becomes a bankrupt and the settlement came into operation after or wlthin two years before the commencement of bankruptcy, the settlement would be void as agalnst the trustee in the bankruptcy. |
| Sub-section (2) deals with settlements other than those which are dealt with by sub-section (1). It provides that if the settlor becomes a bankrupt and the settlement came into operation after or within 5 years before the commencement of the bankruptcy, a settlement is void against the trustee in bankruptcy unless parties claiming under the settlement prove certain things. Even assuming that the MGA was presented to the respondent as a gift in October 1984, and this is the earliest date to which the evidence refers, the bankruptcy took place within a 5 year period after that. It is therefore necessary to consider whether the party claiming under the settlement here, which is the respondent, has proved the matters set out in paragraphs (a) and (b) of sub-section (2). |
| These are (a) that the settlor, who is here the bankrupt, was at the time of providing the gifts, able to pay all his debts without the aid of the property concerned, and (b) that his interest in the property passed to the trustee of the settlement or to the donee under the settlement upon its execution. It does appear, and I will assume for the purposes of argument, that the second of these provisions has been established, namely, that whatever interest was held by the bankrupt in the property at the |
| time the gifts passed to the respondent. | |
| Hence the real question to be determined here is whether the bankrupt was able to pay all his debts at the relevant time without the aid of the property in the settlement. There is no evidence on this matter at all and the section imposes a requirement that this matter be proved by the respondent. The respondent's counsel argued that it is necessary that there be clearly proved that the goods were in fact the property of the bankrupt at the time when the gifts were made. I think there is much to be said for this argument but I cannot see that any doubts have been raised here about that matter. The circumstances revealed by the evidence would, if inferences are available to be drawn, contradict the possibility that the bankrupt was not the owner of the relevant goods at the time. |
| The MGA was given in 1984 or 1985. It was therefore for almost 4 years, if the 1984 date is correct, or 3 years if the 1985 date is correct, registered at the Department of Transport in his name. In June 1988 the registration of the ownership was transferred to the respondent. It is not conceivable that such an ostentatious motor car would be likely to have been allowed to occupy the streets of Sydney over a 4 or 5 year period if it were otherwise than owned by the registered owner at the time. |
| So far as the Saab is concerned, the evidence means that there was a period of something of the order of 8 months during which time it was registered in the name of the bankrupt and thereafter it has been registered in the name of the respondent right up to |
| not conceivable that this vehicle was not property owned by the | the present time, some 14 or 15 months further on. Again it is | |
| bankrupt at the time when the gift was said to have been made. |
| SO far as the racehorses are concerned, the names of both the bankrupt and the respondent have apparently been registered with the AJC for some 18 months and there are some other partners who apparently own the balance of the 50 per cent in these horses. Again it is not conceivable that this situation would have been allowed to persist if there was any doubt or dispute about the ownership of the bankrupt. |
| For those reasons I am satisfied that at the time of the making of the settlement, the bankrupt was in fact able to transfer to the respondent as donee the respective goods as gifts. However, I am completely unable to come to any affirmative conclusion, required by paragraph (a) of sub-section (2) to be proved by the respondent, that the bankrupt was at the time of the making of the respective gifts able to pay all his debts without the aid of the property comprised in the settlement. |
| Even assuming that in October 1985, as sworn to by the respondent in her affidavit in the Family Court of 2 2 June 1988, the MGA sports car which she says was then in a restored condition was purchased for about $16,000, I am completely unable to conclude as to what its value would then have been in real terms or what its value would have been at the time when the bankruptcy took place or at the time when the registration of the ownership was transferred to the respondent. Obviously, to some extent the |
| value would depend upon the condition in which the vehicle was at | the time and other matters including the state of the market in | |
| cars of that vintage and type and from whom and on what terms it was purchased. There is no evidence before me as to what that value was and therefore no evidence as to what effect the ownership of the vehicle would or might have had on the asset position of the bankrupt at the time the gift was made. Nor do I know what his assets were at that time. |
| Equally I am quite unable to estimate either at the time of its purchase or at the time of the transfer of registration or of the bankruptcy, what the value was of the Saab vehicle which was purchased in 1987 for some $17,000. Again, I cannot possibly say what effect that would have had or might have had on the liquidity and solvency of the bankrupt when the gift was made. The same can be said with even greater emphasis about the racehorses about which I am supplied with no information at all in this regard; the purchase price even of a one quarter or one half share has not been made known. All I know about the horses is that one of them had some barrier trials at some time or other but what success was enjoyed and what precisely is their present value has never been revealed. It is therefore obvious that I could not possibly say whether at the relevant time the bankrupt was able to pay all his debts with or without their being counted in his assets. |
| For these reasons it seems to me that the trustee's application must succeed. I therefore declare that settlement by the bankrupt upon the respondent in or about October 1987 of a Saab GLI Saloon of 1982 or 1984 manufacture, registered number MID256, |
| is void as against the trustee in bankruptcy. I further declare | |
| that the settlement by the bankrupt upon the respondent in October 1984 or October 1985 of a red coloured MGA sports car, registered number HUA529, is void as against the trustee in bankruptcy. I further declare that the settlement by the bankrupt upon the respondent in or about October 1987 of a one quarter interest in each of two racehorses named Sir Quest and Maribu's Phantom is vold as against the trustee in bankruptcy. |
| I order that the respondent deliver up to the applicant forthwith or on a date to be arranged between the parties the Saab and MGA motor vehicles referred to and do all other things necessary to transfer the title of the said vehicles to the applicant. With regard to the racehorses I order that the respondent do all things necessary to transfer the title and her interest in the horses to the applicant. |
| Before dealing with the issue of costs, I should deal with one other matter raised in the course of these proceedings. The proceedings today commenced with an application on behalf of the respondent for an adjournment of these proceedings. The ostensible ground for the adjournment was that an application for legal aid had been made, it is said, in June to the Attorney-General for assistance with legal costs for the respondent. |
| There is provision in section 305 of the Bankruptcy Act for the Attorney-General to give assistance in respect of legal costs but as it seems to me, that section would not apply to the |
| application of the applicant. In any event, the Attorney-General | application made by the respondent or to her resistance to the | |
| had not passed upon this application by today and the respondent applied for an adjournment to permit the decision by the Attorney-General to be forthcoming. |
| In response to my request for details of what was sought to be argued for which the financial assistance of the Attorney-General |
| was being sought, I was advised that it was hoped or proposed to advance an argument that involved a consideration of the relevant roles and jurisdictions of the Family Court and the Bankruptcy Court. On one aspect of this argument, Mr Justice Davies gave a judgment on 30 June 1989. My attitude to the adjournment was that first of all, it did not appear likely that the Attorney-General would, both by reason of section 305 and the judgment of Mr Justice Davies, grant the assistance, and secondly, that there was no suggestion made when the matter was fixed for hearing today, as I am informed, that there was an application for costs outstanding before the Attorney-General which would be relevant to the determination of this matter. |
| It also seemed to me that too much time had already gone by in this matter without a hearing and it seemed impossible to determine the relevance of any argument concerning the applicability of the Family Law Act and any possible jurisdiction of the Family Court that might be allowed to be exercised without hearing the evidence. Hence I refused the adjournment but gave leave for it to be renewed at a later time. |
| Having heard the evidence, in accordance with the leave which I | reserved at the commencement of the proceedings, counsel for the | repsondent renewed the application for an adjournment. I should | |
| formally note that I refused that application. I can see no basis upon which the Family Court or the Family Law Act would have any likely interest or involvement in these proceedings which cannot be or could not be adequately dealt with in the Bankruptcy Court. To the extent to which there might be any conflict or possible dual jurisdiction, it seems to me that the Bankruptcy Act provides for the type of relief sought by the applicant and that no basis has been made out for postponing any longer the exercise of that jurisdiction that clearly exists. |
| On the question of costs, the trustee seeks the costs of the proceedings, while the respondent argues that no order for costs should be made so that each party would bear his/her own costs. I can see no reason in this case for departing from the usual consequence that costs follow the event of the litigation. In those circumstances I order that the respondent pay the trustee's costs of the proceedings. |
| At the conclusion of the proceedings on which I have just given judgment, the applicant sought directions concerning the remainder of the application which in form at least is paragraphs 7 to 15. I note that paragraph 15 has been mistyped for a second paragraph 11 on page 4 which I shall change now. |
| The balance of the application was not fixed for hearing today but obviously has relation to the proceedings which have just been concluded. In general terms, the balance of the application |
| deals firstly with a number of items of personal property, then | some real estate in paragraphs 9, 10 and 13, and then with some | |
| ancillary proceedings in paragraphs 11 and 12, and for an account and an inquiry both of which would presumably be dealt with by a registrar. |
| There does not seem to be any particular reason why this Court should not exercise jurisdiction in relation to the personal property set out in paragraph 7 of the application but as all or most of it is or was presumably contained in the real property referred to in paragraphs 9 and 10, it is fairly sensible that these items be dealt with together. |
| The problem is that the real estate which is obviously the major item in financial terms, is also the subject of proceedings in the Family Court. From the discussion which has taken place over the application for directions, it has become clear that whilst there may be something to argue here that there was a section 120 settlement allegedly made in favour of the respondent, the respondent may under the Family Law Act have an entirely different interest in this property. This would arise out of her contribution to the marriage in matrimonial and allied terms unrelated to ordinary financial considerations but with, in the opinion of the Family Court, a quantifiable interest thereby accruing to the respondent. |
| The applicant has referred me to two cases in the Family Court which I have not had the opportunity yet of considering, plus the |
| Court's decision in Swain and a more detailed consideration to | fact that I would also want to give attention to the Full Federal | |
| the views of Mr Justice Davies in these very proceedings in the judgment to which I earlier referred. I will certainly give attention to these and any other appropriate authorities before ruling on whether directions should be now given and if so what they ought to be. |
| However, they give rise to the type of situation that arose in Swain, only in a more difficult framework than the facts of that case created. The problem is that this Court may not be able finally to rule on the respective interests in the real property concerned. For its part, the Family Court may also not be able finally to resolve the issues that may arise between the parties in connection with that property. |
| The question might also arise as to whether there is some form of constructive trust which the respondent can establish in respect of the whole or part of those premises. This conjures up the possibility of at least three sets of proceedings over the same property in three different places. This is, of course, a wholly undesirable result which recent legislation and arrangements between the States and the Commonwealth have been designed to avoid. |
| ~t seems to me that the parties should attempt to resolve by agreement at least the forum in which all these matters can be decided at the one tune. All rights of appeal will, of course, be preserved and will exist if a first instance decision is | desired to be tested but it seems to me that it is highly | desirable, in the interests of these parties and for that matter | |
| all the other creditors in whose names the applicant is litigating, to have these matters all determined in one place at the one time. Hence, whilst formally marking the matter part heard and giving consideration in the meantlme to the cases to which I have been referred and any others which I am able to find with a view to resolving this matter, I shall not formally yet reserve my decision so as to permlt the parties to consider the steps that might be available to bring about a sensible expeditious and least-cost resolution of this dispute. |
| I shall therefore adjourn the matter part heard to 9.30 am on 26 September so as to permit a consideration of what I have just said and on that day a decision will be made about what should happen to the proceedings including the application by the applicant for directions in respect of the balance of the application. |