Wentworth v Rogers - [2003] NSWSC 371

No judgment structure available for this case.

CITATION: Wentworth v Rogers & Anor [2003] NSWSC 371

HEARING DATE(S): 29/01/2002-08/02/2002, 15/03/2002, 22/03/2002, 25/03/2002-27/03/2003, 02/04/2002-05/04/2002, 02/05/2002, 10/05/2002, 22/07/2002, 11/11/2002, 06/02/2003 (further written submissions)

JUDGMENT DATE:
9 May 2003

JUDGMENT OF: Howie J at 1

DECISION: The summons is dismissed. I direct that verdict and judgment be entered for the defendants on the statement of claim. The plaintiff is to pay the defendants costs.

CATCHWORDS: Fraudulent Conveyances - Conveyances Fraudulent as Against Creditors - Mortgage by husband over interest in property to wife - whether fraudulent as against prospective creditor, a litigant in proceedings against the husband.

LEGISLATION CITED: Conveyancing Act 1919 - s 37A
Supreme Court Rules - Pt 13 rule 2
Supreme Court Act 1970 - ss 23, 88
Justices Act 1902 - s 41(6)
Bankruptcy Act 1966 - ss 6, 121, 122

CASES CITED: Brigenshaw v Brigenshaw (1938) 60 CLR 336
Australian Competition and Consumer Commission v Amcor Printing Papers Group Ltd [2000] FCA 17; (2000) 169 ALR 344
Bradshaw v McEwans Pty Ltd (HCA, 7 April 1951, unreported)
Wentworth v Rogers [1984] 2 NSWLR 422
Wentworth v Rogers (No. 5) (1986) 6 NSWLR 534
Wentworth v Rogers (No. 10) (1987) 8 NSWLR 398
Jones v Dunkel (1959) 101 CLR 298
Freeman v Pope (1870) LR 5 Ch App 536
Kang v Kwan [2002] NSWSC 1187
Re Cummins; Richardson v Cummins (1951) 15 ABC 185
Green v Schellner [2002] NSWSC 671
Re Symon: Public Trustee v Symon [1944] SASR 102
Silvera v Savic (1999) 46 NSWLR 124
Williams v Lloyd; Re Williams (1934) 50 CLR 341
Re Barnes; Ex parte Stapleton [1962] Qd R 231
PT Garuda Indonesia Ltd v Grellman (1992) 35 FCR 515
Middleton v Pollock; Ex parte Elliot [1876] 2 CH D 104
Gregg v Bromley [1912] 3 KB 474
Abignano v Wenkart (1998) 9 BPR 16,765
Alati v Wei Sheung [2000] NSWSC 601; 34 ASCR 489
Van Tri Huynh v Helleh Holdings Pty Ltd [2001] NSWSC 1162
Harkness v Partnership Pacific Ltd (1997) 41 NSWLR 204

PARTIES :
Katherine Wentworth v Gordon John Rogers & Anor

FILE NUMBER(S): SC 11094/95

COUNSEL: Plaintiff - Ms Wentworth in person
1st Defendant - Mr Rogers in person
2nd Defendant - Mr R. Lovas

SOLICITORS: Plaintiff - in person
1st Defendant - in person
2nd Defendant - Dorrough Smart Solicitors

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

HOWIE J

FRIDAY 9 MAY 2003

11094/95 Katherine WENTWORTH v Gordon John ROGERS & ANOR

JUDGMENT
Introduction

1 His Honour: In these proceedings the plaintiff seeks to have set aside certain transactions entered into by the defendants, Mr and Mrs Rogers, in respect of a farming property near Tamworth named “Te Mata”. The plaintiff, Ms Wentworth, contends that a deed, transfer and mortgage relating to that property were entered into by the defendants fraudulently for the purpose either of ensuring that she could not obtain satisfaction of any judgment for costs or damages made in her favour in this Court against Mr Rogers or in order to give Mrs Rogers priority if Mr Rogers became bankrupt. Reduced to its essence, the allegation made by Ms Wentworth is that the acknowledgement of indebtedness made by Mr Rogers to Mrs Rogers, set out in the deed and upon which the transfer and mortgage were based, is a sham.

2 At the hearing of this matter Ms Wentworth and Mr Rogers were unrepresented. Mr Lovas of counsel represented Mrs Rogers. The proceedings took place on a number of hearing days from 29 January 2002. The matter was reserved for judgment on 11 November 2002 but the plaintiff sought and was granted leave to file further written submissions. Those submissions were received from the plaintiff on 31 January 2003 and the second defendant replied by submissions filed on 6 February 2003. The first defendant was content to rely upon the written submissions filed on behalf of his wife. In total there were over 100 pages of written submissions placed before the Court by each of the plaintiff and the second defendant.

3 The present claim was commenced by a notice of motion arising in other proceedings between Ms Wentworth and Mr Rogers. Those proceedings were heard and determined by Mr Justice Sperling. During the course of hearing that matter, his Honour severed the subject matter of the notice of motion from the principal matter before him and ordered that the present proceedings be commenced by summons. The plaintiff duly complied with that order and ultimately the proceedings came before me.

4 When opening her case, the plaintiff identified the basis of the relief she sought as the inherent jurisdiction of this Court to protect its own processes. However, it became clear that in substance the claim was that there had been a fraudulent alienation of property and the plaintiff was seeking relief in the nature of that provided by s 37A of the Conveyancing Act. Therefore, over objection from Mrs Rogers, I granted the plaintiff leave to file a Statement of Claim seeking an order under that section and pleading the fraud alleged, see Supreme Court Rules Part 13 rule 2. As none of the parties sought trial by jury and it did not appear to me that it was in the interests of justice to require it, the matter was determined by judge alone notwithstanding the allegation of fraud; see s 88 of the Supreme Court Act.

5 Before reviewing the evidence and the issues raised in the hearing, I should mention two matters that are relevant to the task I am to undertake. Firstly, these proceedings are somewhat unusual in that, although there are significant factual disputes between the parties, it is not a case of word against word. Ms Wentworth’s evidence was given by way of affidavits in respect of which she was not cross-examined. The principal purpose of the affidavits was to place before the Court a large amount of material upon which she wished to rely to make out her case. Many of the statements made in the affidavits were subject to objection on the basis that they were argumentative, Ms Wentworth merely drawing inferences or conclusions from the material that she sought to place into evidence. A very significant part of these affidavits was not ultimately relied upon as evidence but was received by me as submissions made upon the evidence as to the financial arrangements of the defendants.

6 In substance the plaintiff is alleging that the defendants acted together to defraud her of the prospect of having any judgments or order made in her favour by this Court being satisfied from the assets of Mr Rogers. She has to prove, at least, that the transactions entered into by the defendants were not bona fide. She seeks to do that, firstly, by drawing inferences about the transactions, the timing of them and the circumstances in which they were made. Next she seeks to show that they are based upon a false premise, being that Mr Rogers was in debt to Mrs Rogers, that debt said to have arisen from the payment by Mrs Rogers of her husband’s legal expenses. Finally, she seeks to show that the conduct of the defendants thereafter, particularly in respect of the proceedings between her and Mr Rogers, shows that they had a guilty knowledge of the fraud perpetrated by them and continued in their attempts to frustrate the pursuit of her rights.

7 The resolution of this matter in favour of the plaintiff depends upon whether I am prepared to draw the inferences from the material before me that she wishes me to draw to the necessary standard notwithstanding evidence on oath by the defendants to the contrary. Insofar as I might have to form a view about the credibility of the defendants and, therefore, take into account their demeanour in the witness box, it would be unrealistic and unfair if I did not remain alive to the history and nature of the litigation between Mr Rogers and Ms Wentworth over the past two decades, the acrimonious relationship between the defendants and her, and the fact that they were cross-examined by Ms Wentworth personally in a manner which was, at times, at least confrontational.

8 This brings me to the other significant aspect of this matter: the onus and standard of proof. It is accepted that, because of the nature of the allegations made by Ms Wentworth, she has the onus of proving her case to the standard of proof discussed in Brigenshaw v Brigenshaw (1938) 60 CLR 336. In that case Dixon CJ stated, at 362:

9 In this case the plaintiff must satisfy me on the balance of probabilities, but with due regard to the seriousness of the allegations she makes against them, that the defendants have in effect conspired between themselves, and probably with others, to enter fraudulent property arrangements and to manufacture evidence to support them. Where, as here, the plaintiff’s case relies upon inferences to be drawn from primary facts, she will not succeed if the circumstances give rise merely to conflicting inferences of equal degrees of probability; Australian Competition and Consumer Commission v Amcor Printing Papers Group Ltd [2000] FCA 17; (2000) 169 ALR 344 at 361 and the cases therein cited. The evidence before the Court must give rise to a “reasonable and definite inference” in support of the plaintiff’s contention: Bradshaw v McEwans Pty Ltd (HCA, 7 April 1951, unreported).

10 In the present case, I approach the matter on the basis that the plaintiff must satisfy me to the appropriate standard that there is a reasonable and definite inference arising from the material of at least the following: that there was no agreement between the defendants that Mrs Rogers should pay her husband’s legal expenses; that she did not do so; and that Mr Rogers was not indebted to his wife as he acknowledged in the Deed supporting the transfer and mortgage of Te Mata. In particular, the inference must arise that documents purporting to support such an agreement and subsequent payments made by Mrs Rogers of her husband’s legal expenses are false and manufactured later than 1993 when the defendants became aware that Ms Wentworth might succeed in the litigation then before this Court.

11 In summary the plaintiff’s case is that sometime after the middle of 1993 the defendants agreed to take a course that would have the effect of depriving Mr Rogers of his legal interest in Te Mata thereby frustrating any attempt by the plaintiff to obtain satisfaction of any judgment she might obtain in this Court against that interest. According to the plaintiff the fraudulent scheme adopted by the defendants, aided by their then legal representatives, was as follows. They manufactured documents purporting to show that since 1981 there had been an agreement between the defendants that Mrs Rogers would pay her husband’s legal fees by way of a loan to him arising from each and every payment. In 1993 Mr Rogers prepared a list of the payments purportedly made by Mrs Rogers on his behalf and future payments that Mrs Rogers had agreed to make. In 1994 the defendants entered into a deed acknowledging the debt of $130,000 purportedly arising from the matters set out on the list and accumulated interest thereon. Mr Rogers agreed to execute a mortgage in favour of his wife over his share of Te Mata. This was accomplished by transferring the defendants’ interest in the property from joint tenants to tenants-in–common and then creating a mortgage over Mr Rogers’s interest in favour of his wife. At that time there was an existing charge on the property to the Legal Aid Commission in the sum of $131,700 secured by a caveat over Lot 71 and mortgages to the ANZ Bank.

12 The plaintiff does not simply assert that the defendants alone have been guilty of fraudulent conduct in these transactions. She asks the Court to find that a number of legal practitioners, who have at one time acted for one or other of the defendants, have committed one or more of the following; given false evidence, knowingly placed false evidence before the Court, obstructed the course of justice by withholding relevant documents, conspired to pervert the course of justice.

13 The plaintiff spent the greater part of her considerable cross-examination of the defendants investigating their financial affairs over the period from 1981 to 1994 in meticulous detail. A large number of documents, such as bank statements, cheque butts and passbooks were tendered in evidence. I had the distinct impression that the plaintiff had gained, by the time of the hearing at least, a much more detailed and extensive knowledge of the defendants’ financial affairs than they did.

14 It should be noted from the outset that the defendants’ financial position over the relevant period was complicated, not the least because of the financial pressures placed upon Mr Rogers by the legal proceedings in which he was involved with the plaintiff and the steps taken by him to finance those proceedings or by others to recoup monies from him as a result of them. The matter is also complicated because of the separate and somewhat independent financial arrangements and commitments of each of the defendants as a result of their earlier marriages. Further, the defendants were being asked during their evidence to reconstruct their financial affairs largely from a plethora of documents placed before them. Of course many of the apparent inconsistencies and gaps in their evidence might flow from the falsity of their assertion that Mr Rogers’s legal expenses were paid by his wife. On the other hand, they may be due to the fact that the defendants were being asked to recall, many years after the events in question, a large number of financial transactions and arrangements of a relatively complex nature.

15 Many of the arguments relied upon by the plaintiff concern the legitimacy or otherwise of certain arrangements entered into by the defendants or the effects of those arrangements on the entitlements of each of them to assets owned by them or the business partnership into which they entered. For example, a question was raised by the plaintiff in her written submissions about the legal effect of the two variations of the partnership agreement. But I do not believe I should be concerned with those matters except insofar as they might support the plaintiff’s contention that the defendants had conspired against her. For the plaintiff to succeed she must prove a fraudulent scheme on the part of both defendants aimed at defeating her interests, and not simply the proposition that Mrs Rogers might not be able to prove that she had any legally enforceable claim against Mr Rogers if he chose to dispute it.

16 In these circumstances it seems to me that the outcome of these proceeding will largely depend upon whether the plaintiff can show that certain documents relied upon by the defendants are fraudulent rather than upon a microscopic examination of financial transactions entered into by them over a period of almost fifteen years. It would be unrealistic not to expect that there would be missing documents, gaps in the evidence, and inconsistencies in accounts and explanations of these transactions over such a period. Further, the defendants are not accountants or financial institutions from whom a high degree of efficiency in recording their financial transactions and arrangements might be expected. Nor are they required to answer to the plaintiff for any or all arrangements they entered into between themselves even if the effect were to put one of them in a more advantageous position over the other.

A brief history of the litigation between the parties

17 In order to understand the nature of the allegations made by Ms Wentworth and the background of the impugned transactions, it is necessary to set out in some little detail the history of the continuing litigation between Ms Wentworth and Mr Rogers. It is not intended to refer to all of the interlocutory and related proceedings that have taken place in the more than two decades during which proceedings of one form or another have been on foot.

18 On 17 June 1981 summonses were issued on behalf of Ms Wentworth against Mr Rogers relating to informations for offences of assault and buggery allegedly committed by him upon her on 27 January 1977. At the date of the alleged offences Mr Rogers and Ms Wentworth were husband and wife. Committal proceedings were heard in respect of those offences in the latter part of 1981 and on various dates throughout 1982. On 2 November 1982, the magistrate found that there was a prima facie case but refused to commit Mr Rogers for trial, his Worship having formed the view that no reasonable jury would convict him. The magistrate, thereupon, dismissed the informations and discharged Mr Rogers under s 41(6) of the Justices Act 1902.

19 Ms Wentworth took proceedings in the nature of mandamus in this Court contending that the magistrate had no power to refuse to commit a defendant for trial once he had found that a prima facie case existed. On 31 August 1983 Begg CJ at CL dismissed the summons. On 8 October 1984, an appeal against that decision was upheld by the Court of Appeal, see Wentworth v Rogers [1984] 2 NSWLR 422. The magistrate was directed to consider the informations according to law. As a consequence, when the matter came back before him, his Worship committed Mr Rogers for trial in the District Court.

20 In the meantime, on 13 December 1982, Ms Wentworth lodged a statement of claim in this Court seeking damages for personal injuries arising from the allegations that formed the subject matter of the criminal proceedings against Mr Rogers.

21 Mr Rogers stood trial in the District Court on the charges for which he had been committed. On 26 July 1985, after counsel’s addresses and without the trial judge summing-up the case, the jury acquitted Mr Rogers of all charges.

22 In August 1985 Mr Rogers was given leave to commence proceedings in this Court by way of cross-claim against Ms Wentworth for malicious prosecution in respect of the allegations contained in the summonses issued in 1981. On 2 September 1985 these proceedings and Ms Wentworth’s claim were joined.

23 During November and December 1985 Maxwell J and a jury heard the competing claims. On 20 December 1985, the jury returned verdicts in favour of Mr Rogers on both the claim and the cross-claim. Mr Rogers was consequently awarded $571,000 in damages and costs.

24 Ms Wentworth unsuccessfully attacked the verdicts on the basis they were procured by fraud, see Wentworth v Rogers (No 5) (1986) 6 NSWLR 534. However, she was ultimately successful on appeal and both verdicts were set aside on 6 March 1987, see Wentworth v Rogers (No 10) (1987) 8 NSWLR 398. The matters were returned to the Common Law Division for retrial.

25 In 1992 Ms Wentworth recommenced proceedings for her claim for damages. On 10 September 1993 the matter was placed into a call-over list. On 27 October 1993 the matters were set down for hearing on 26 April 1994.

26 On 4 March 1994 an application by Mr Rogers to have the proceedings adjourned for 12 months on the grounds of prejudicial publicity was refused. He was also advised on that date that he would not receive legal aid for any further proceedings.

27 On 4 April 1994 Sully J severed the cross-claim from Ms Wentworth’s action. His Honour and a jury then heard the personal injury claim and on 24 June 1994 a verdict was given in favour of Ms Wentworth in the sum of $2,000. Sully J ordered that Mr Rogers pay half Ms Wentworth’s costs.

28 On 11 October 1994 by notice of motion Ms Wentworth sought to have the cross-claim dismissed and the property transactions, which are the subject of the present proceedings, set aside. On 17 October the matter came before Bruce J who stood it over to 24 October before the list judge.

29 On that date the matter came before Loveday AJ. There was no appearance by Mr Rogers and, after receiving evidence from Ms Wentworth and Mr Russo, a barrister who was then acting on her behalf, his Honour dismissed the cross-claim for want of prosecution. His Honour was of the belief that Mr Rogers had at that time no interest in pursuing the matter.

30 On 31 October 1994 Mrs Rogers was joined as a defendant to the application to set aside the property transactions.

31 On 15 November 1994, on the application of Mrs Rogers, Bruce J granted an adjournment of the hearing of the application. The basis of the adjournment was principally the medical condition of Mrs Rogers. She was not in attendance but an affidavit made by her was filed and her then solicitor, Mr Oliver, gave evidence in support of the adjournment. The transcript of these proceedings is in evidence before me.

32 On 12 December 1994 Mr Rogers sought an order setting aside the dismissal of the cross-claim. On 13 December 1994 Ms Wentworth sought an order for a permanent stay of the cross-claim.

33 On 10 March 1995 the matters came before Hulme J in relation to the issuing of subpoenas and answers to notices to produce. Mr Lovas produced some material on behalf of Mrs Rogers. At that hearing Mr Rogers gave evidence and was cross-examined by Ms Wentworth as to his compliance with the notice to produce in respect of documents held by him. The transcript of those proceedings is in evidence before me.

34 On numerous dates from 23 March 1995 through to 24 April 1996 Sperling J heard proceedings relating to Mr Rogers’s application to set-aside the order dismissing the cross-claim. As I have already indicated, during this hearing his Honour separated the current proceedings from that relating to the reinstatement of the cross-claim. By consent of the parties, evidence given before Sperling J is before me. Mr Rogers has relied solely upon the evidence given by him in those proceedings as evidence-in-chief in his case before me.

35 On 10 September 1996 Sperling J set aside the order made by Loveday AJ and dismissed an application by Ms Wentworth for a permanent stay of the cross-claim. On 20 December 1996 Sperling J made a further order dismissing an application by Ms Wentworth to dismiss the cross-claim. Orders were made that both Ms Wentworth and Mr Russo, the barrister acting for Ms Wentworth before Loveday AJ, pay the costs of Mr Rogers on an indemnity basis.

36 On 12 June 1997 the Court of Appeal refused leave to Ms Wentworth to appeal against the orders made by Sperling J. On 21 October 1998 the Court of Appeal, differently constituted, dismissed a further application by Ms Wentworth to appeal against the orders made by Sperling J. On 29 October 1999 the Court of Appeal dismissed an appeal against the order for costs made against both Ms Wentworth and Mr Russo.

37 Ms Wentworth has made an application for special leave to appeal to the High Court against the judgments of the Court of Appeal to which I have just referred. That application had not been heard at the date of this judgment.

38 There have been a large number of interlocutory hearings in relation to both the present matter and the cross-claim before different judges of this Court in the years 2000 and 2001. Every aspect of the litigation between the parties is hotly contested. Notwithstanding that proceedings in respect of the cross-claim were commenced over 20 years ago, the hearing of that matter is still outstanding because of the application for special leave in the High Court.

A chronology of the domestic and financial arrangements of the defendants including payments for legal fees to Mr Rogers

(a) Pre 1981

39 The following chronology contains some highly significant facts that are in dispute before me. Those matters have been indicated and I will return to discuss them later in more detail.

40 The assaults by Mr Rogers upon Ms Wentworth allegedly took place on 29 January 1977. In March of that year the defendants met one another.

41 Mr Rogers and Ms Wentworth were divorced in 1978. Until their separation they lived in a house in Victoria Road, Bellevue Hill. In respect of their matrimonial proceedings Mr Rogers instructed Mr Lloyd a solicitor of the firm Henry Davis York. Mr Twigg, a barrister, was instructed to advise and appear for Mr Rogers.

42 At this time Mrs Rogers was divorced from her husband, Mr Rochford. Their former matrimonial home was in Dalmeny Road Northbridge. After Mr and Mrs Rogers were married on 14 April 1979, they resided at the Dalmeny Road property.

43 From 1979 to September 1982 Mr Rogers worked for Radio Rentals. Over the same period Mrs Rogers worked on a part-time basis for a senator in the Federal Parliament as a telephonist and typist.

(b) 1981

44 In June 1981 Mrs Rogers inherited an estate that included a unit at Killara, a half share of a boat, and some furniture. The value of the estate was between $90,000 and $100,000. On 15 June 1981 estate duty of $12,500 was paid.

45 Between 1980 and 1983 Mrs Rogers paid Mr Rochford $80,000 for his half share of the Dalmeny Road property. The defendants’ evidence is that $40,000 was paid by Mr Rogers by way of gift or loan.

46 On 17 June 1981 the house in Bellevue Hill was sold. Fifty per cent of the proceeds, about $180,000, was to be received by Mr Rogers. On this same date the summonses were issued on behalf of Ms Wentworth alleging criminal offences against Mr Rogers. He was required to attend the Local Court on 15 July 1981.

47 Mr Rogers had by July 1981 committed himself to purchase Te Mata. He had the expectation of receiving his share of the property in Bellevue Hill. Mrs Rogers was not at that time working, and she had little income for the year before September 1981 apart from interest earned on money in a bank account. However, she would anticipated that she would eventually have the benefit of the property in Dalmeny Road and the unit, which she had inherited, commenced producing income from rent in September of that year.

48 [Disputed by Ms Wentworth] In about early July Mrs Rogers agreed in a conversation with her husband to give his financial assistance to defend the proceedings instituted by Ms Wentworth. Mr Rogers in the same conversation promised to repay his wife whatever money she expended on his behalf.

49 [Disputed by Ms Wentworth] On 8 July 1981, Mrs Rogers’s birthday, Mr Rogers prepared what purported to be an indemnity in favour of his wife for any “legal costs or flow ons” paid by Mrs Rogers and interest “in relation to any litigation between the said Gordon John Rogers and Katherine Wentworth”. Mr Rogers agreed to “reduce his share in any or all jointly owned property by the value of the legal costs and interest paid by Toni Rogers”. The document was signed by Mr and Mrs Rogers and witnessed by Andrew Findlay, a family friend. According to Mr Rogers’s evidence, the document was intended to confirm the promise made verbally by him to repay his wife any money expended by her for his legal expenses in defending the charges brought by Ms Wentworth. Mrs Rogers gave evidence that she also understood the document to have had this effect. I shall henceforth refer to this document as the 1981 indemnity and I will return to it in some detail later in this judgment.

50 In September the defendants accompanied by their two children and two of their parents went on a two or three week holiday to Fiji. Although the plaintiff suggested that the holiday would have cost $10,000, there was no evidence at all as to the amount expended on the trip.

51 On 4 November 1981 Mr Rogers purchased Te Mata, for $110,000. The defendants held the property as joint tenants. Mr Rogers considered that his wife’s half interest in the farm had been a gift from him to her. The property contained two lots of about 100 acres: Lot 71 on which a dwelling house was later built, and Lot 72, which remained as a paddock or farm. The defendants later purported to operate the property as a hobby farm.

52 [Disputed by Ms Wentworth] Shortly after this time Mr Rogers contributed $40,000 from the sale of the Bellevue Hill property toward the purchase of the Dalmeny Road property as a gift for his wife. Mrs Rogers gave evidence that she believed that it was a loan to her and that she repaid it probably from the sale of the boat and a motor vehicle. She did not hand any money repaid by her to Mr Rogers and it may possibly have been paid in legal fees to Henry Davis York, but she could not remember.

53 Committal proceedings against Mr Rogers commenced in November 1981 and continued on various dates over the next 12 months.

54 On 6 January 1982, Mr and Mrs Rogers entered into a Deed of Partnership in relation to the farming of Te Mata. The terms of the Deed deemed the partnership to have commenced on 14 December 1981. The Deed provided that the partners were entitled to the capital and property of the partnership in equal shares, “unless or until otherwise agreed”. The capital of the partnership was stated as $100.

55 On 29 January 1982 Mrs Rogers commenced work on a part-time basis for Economic Secretariat Pty Ltd. For the tax year ending in 1982 she earned $3,818. Mr Rogers for that year disclosed an income of $25,728.

56 On 30 September 1982 Mr Rogers ceased employment with Radio Rentals. He received a lump-sum payment of about $5,000. A short time later he went to Tamworth in order to build a house on the property. It was a kit home paid for in part by his mother. He commenced receiving social security benefits on 29 November 1982 and these payments continued to March 1986 with an interruption between March and December 1985 when he undertook casual work for TAFE. These benefit payments were paid into a cheque account in his name.

57 Sometime towards the end of 1982 Mrs Rogers sold a boat for between $32,000 and $34,000. She had initially owned a half share in the vessel and in 1981 inherited the other half share.

58 On 2 November 1982 the magistrate dismissed the criminal charges against Mr Rogers.

59 On about 14 December 1982 the plaintiff commenced civil proceedings against Mr Rogers for damages as a result of the alleged assaults upon her which were the subject of the criminal proceedings.

60 Later that month Mrs Rogers moved to Tamworth and let the property in Northbridge. She continued to work for the senator on a part-time basis. Also in this month she exchanged contracts for the sale of the unit at Killara.

(d) 1983

61 On 28 January 1983 Mrs Rogers sold the Killara unit for about $69,000.

62 Between January and May 1983 a number of payments were made to the solicitors, Henry Davis York, and a barrister, Mr Twigg, on behalf of Mr Rogers. There was a considerable dispute about these payments and who made them. I shall return to consider them in detail later.

63 In February 1983 Mr Rogers applied for legal aid in respect of the proceedings in the Supreme Court arising from his discharge by the magistrate in the committal proceedings. Mr Rogers was informed by his solicitor, by telegram, that legal aid would be granted on condition that he provide a charge in favour of the Legal Aid Commission over his interest in Te Mata.

64 In June 1983 the Northbridge property was transferred to Mrs Rogers as a consequence of a deed of settlement entered into between her and her former husband. Thereafter Mrs Rogers was the owner of that property which was unencumbered.

65 [Disputed by Ms Wentworth] On 30 July 1983 Mr Rogers signed a document purporting to indemnify Mrs Rogers “for any lien by the Legal Aid Commission on any and all jointly owned property by reducing his share of any and all jointly owned property by the amount of the Legal Aid lien”. The document went on to state that the agreement was “in addition and complementary to that covering legal costs or flow ons paid by Toni Rogers resulting from legal action between Katherine Wentworth and Gordon John Rogers”. The document purports to have been signed by Mr and Mrs Rogers and witnessed by Mr Findlay. I shall henceforth refer to this document as the 1983 indemnity and I shall consider it in detail later in this judgment.

66 In September 1983 the Legal Aid Commission entered into a Deed of Charge with Mr Rogers in respect of his interest in Lot 71. Notwithstanding Mrs Rogers’s interest in the property she did not sign, or formally consent to, the charge over the property.

67 At this time Mr Rogers was in receipt of unemployment benefits while Mrs Rogers was employed and also receiving income from the Dalmeny Road property. His taxable income for the year was $7,941 but he also received the sum of $5,000 in 1982 as severance pay. Mrs Rogers’s income was declared at a little over $6,000.

68 On 10 August 1983 Mr Rogers received the sum of $6,100 from his former employer in settlement of a wrongful dismissal claim. This sum was paid into a temporary overdraft account with the State Bank.

(e) 1984

69 In January 1984 the defendants entered into a variation of the partnership agreement to provide that the entitlement to the partnership property should be, as to Mr Rogers, one quarter and, as to Mrs Rogers, three quarters.

70 During this period Mr Rogers received some payments from the Department of TAFE. His income for the tax year ending in June 1984 was $438 but he had also received the sum on account of the wrongful dismissal claim in August the year before. Mrs Rogers’s income was disclosed for taxation purposes as $4,590.

(f) 1985

71 Mr Rogers’s income for the 1985 tax year was shown as a loss of $1,049. Mrs Rogers’s income for that year was $10,827.

72 On 19 June Mr Rogers gave a further charge in favour of the Legal Aid Commission over his interest in Lot 71.

73 On 16 July the defendants borrowed $30,000 from the State Bank, the loan being secured by a mortgage over both lots of Te Mata. This amount was purportedly borrowed to pay legal fees to Mr Shand QC on behalf of Mr Rogers. Mr Shand was appearing for Mr Rogers at the trial of the charges brought against him by Ms Wentworth. The amount borrowed was paid directly to Henry Davis York solicitors. I shall return to the circumstances surrounding the borrowing of this sum and the repayment of the money borrowed as the plaintiff disputes the defendants’ evidence about it.

74 On 24 July, during the trial of Mr Rogers on the charges brought by Ms Wentworth, Mr Fitzwilliam Wentworth, her brother, handed Mrs Rogers a cheque for $6,000 to “help you blokes get through this”. Mrs Rogers gave evidence that she believed it was a gift to the two of them. Part of the proceeds of the cheque was used to upgrade her motor vehicle.

75 On 31 July Henry Davis York acknowledged receipt of $30,000.

76 On 2 August Mrs Rogers paid $5,000 into the State Bank loan account. She had received that sum from a friend, Mrs McCallum, through Mrs Rogers’s mother and she believed it was a gift to her.

77 On 12 August Mrs Rogers paid $2,450 being the balance of the proceeds from Mr Wentworth’s cheque into the State Bank loan account. On the same date Mr Rogers filed a cross-claim in proceedings in the Supreme Court alleging malicious prosecution by Ms Wentworth in respect of the criminal proceedings.

78 On Christmas Eve Mr Findlay lent Mr Rogers the sum of $15,000 to pay legal fees for Mr Burbidge QC. The loan was made interest free and to be repaid on 24 December 1988. Henry Davis York acknowledged receipt of $15,000 on 30 January 1986. [Disputed by Ms Wentworth] Mrs Rogers gave evidence that she told Mr Findlay that she would repay the loan.

(g) 1986

79 On 14 March 1986 Mr Rogers received the last of his social security payments. His income for this tax year was $196. Mrs Rogers’s income was declared at just over $13,000.

80 On 19 May a further charge was created over Mr Rogers’s interest in Lot 71 in favour of the Legal Aid Commission.

81 [Disputed by Ms Wentworth] In June Mrs Rogers drew a cheque with which to pay Henry Davis York the sum of $3,233.42. This payment will be considered in more detail later.

82 [Disputed by Ms Wentworth] On 18 July Mrs Rogers withdrew $3,540.65, which was a sum that Mr Rogers had been ordered by this Court to pay to Ms Wentworth. I shall return to this matter later.

83 In October Mr Rogers received $9,952.89 from the estate of his grandfather. The sum was used to reduce the principal owed under a mortgage to the State Bank.

84 [Disputed by Ms Wentworth] On 12 November Mrs Rogers withdrew $5,000 to pay Mr Findlay in respect of his loan to her husband. On 24 November, Mr Findlay endorsed the loan agreement with the payment of $5,000.

85 On 13 November Mr Rogers made an affidavit setting out his financial affairs for proceedings in the Supreme Court. He stated that his only significant asset was Te Mata, his gross income was $190 per week, and his domestic expenses totalled $225 per week. He also stated that Mrs Rogers was working and that she was deriving rental income from the Dalmeny Road property, which was valued at $190,000. He listed as debts, the amount of $20,000 to the State bank, $85,000 in legal fees and the loan to Mr Findlay, and an unspecified amount due to the Legal Aid Commission.

(h) 1987

86 During this year and the latter half of 1986 Mr Rogers did some work for the Chamber of Commerce in Tamworth on an hourly basis and earned $9,753 gross for the 1987 tax year. Over the same period Mrs Rogers had a gross income declared of $18,500.

87 On 6 March the Court of Appeal ordered the retrial of the claim brought by Ms Wentworth and that costs of the first trial were to abide the result of the second trial, see (1987) 8 NSWLR 398.

88 On 4 June there was a further variation of the partnership agreement between the defendants, the result of which was that Mr Rogers’s entitlement was reduced to 5 percent and Mrs Rogers’s increased to 95 percent.

89 On 8 December Henry Davis York rendered a fee note to Mr Rogers for $104,160.41.

(i

) 1988

90 During this tax year Mr Rogers earned $9,697 gross from the Chamber of Commerce in Tamworth. For the same period Mrs Rogers’s income was declared at $12,935.

91 In November Mrs Rogers drew a cheque for $6,000 but left the particulars on the butt blank. I shall return to this matter later when dealing with the list of payments of legal expenses drawn up by Mr Rogers in 1993.

92 On 23 December Mr Findlay extended his loan to Mr Rogers indefinitely.

(j) 1989

93 During this year Mr Rogers earned about $10,161 gross from the Chamber of Commerce in Tamworth. Mrs Rogers’s income was declared at $35,385.

94 On 27 January 1989 Henry Davis York obtained judgment in the District Court against Mr Rogers for $69,659.22 including interest.

95 [Disputed by Mrs Wentworth] On 17 April Mrs Rogers withdrew $4,950 from the joint account and together with another $50 paid that sum to Mr Findlay who was with her in the bank when the money was withdrawn. The payment was made towards repayment of his loan to Mr Rogers. On that date Mr Findlay endorsed the loan agreement with the payment of $5,000.

96 On 5 June 1989 Henry Davis York caused a bankruptcy notice to issue against Mr Rogers for the balance of the sum claimed on the fee note which was, with accrued interest, $71,105.92. An agreement was entered into for repayment of the money outstanding by $2,000 a year. The repayment of the money claimed under this agreement is dealt with later in this judgment.

97 On 3 November Mrs Rogers withdrew $4,000 from her account to pay Mr Findlay and receipt of that sum was endorsed on the loan agreement on 6 November.

98 On 22 November Mrs Rogers withdrew a further sum of $1,000 from her account to pay Mr Findlay and a receipt for that sum was endorsed on the loan agreement on 23 November.

99 On 30 November Mrs Rogers withdrew $30.00 from her account to pay Phillip Fox, affirm of solicitors who had acted for Mr Rogers in proceedings involving Ms Wentworth.

(k) 1990

100 During this year Mr Rogers earned $8,246 gross from the Chamber of Commerce in Tamworth. For the same tax year Mrs Rogers gross income was $39,197.

101 On 7 February Mrs Rogers withdrew from her account the sum of $2,000 for payment to Henry Davis York.

102 On 12 September the defendants entered into a mortgage with the National Mutual Royal Bank for the sum of $20,000. The Legal Aid Commission, which held a caveat over Lot 71, consented to the registration of the mortgage.

103 On 11 December the loan of $20,000 from the State Bank was refinanced through the National Mutual Royal Bank. This bank ultimately became the ANZ Bank.

(l) 1991

104 During the 1991 tax year Mr Rogers earned $9,958 gross from the Chamber of Commerce in Tamworth. Mrs Rogers’s gross income for the same period was declared at $45,296.

105 On 4 February Mrs Rogers withdrew $2,000 from her account for payment to Henry Davis York.

106 On 4 December the house at Dalmeny Road Northbridge was sold for $510,000.

107 [Disputed by Ms Wentworth] On 18 December Mrs Rogers withdrew $6,000 to return the money given to her by Mr Wentworth in July 1985. I shall deal with this matter later.

(m) 1992

108 During the 1992 tax year Mr Rogers earned $20,115 gross from the Chamber of Commerce in Tamworth. For the same period Mrs Rogers’s gross income was $44,193.

109 On 4 February Mrs Rogers withdrew $2,000 from her account for payment to Henry Davis York.

(n) 1993

110 Mr Rogers’s income for the 1993 tax year was declared at $2,394 gross. Mrs Rogers’s gross income for the same period was declared at $38,116.

111 Mr Rogers was advised in September that the proceedings in this Court were being listed for call-over on 27 October. At about this time Mr Rogers, who had been represented by Phillips Fox, informally sought advice from a solicitor, Mr McLean.

112 By 23 September the amount secured by charge over Mr Rogers’s share in Te Mata in favour of the Legal Aid Commission was $131,700.

113 [Disputed by Ms Wentworth] In October 1993, at his wife’s request, Mr Rogers prepared a handwritten document setting out the amounts paid by Mrs Rogers for legal expenses on his behalf. The document asserts that Mrs Rogers was owed $45,976.25 as repayment of these expenses. I will deal with the circumstances in which the list came to be made in detail later.

114 At this time Mrs Rogers was contemplating a separation from her husband and told him that she wanted the debt “locked in”, by which she meant in some way to formalise and secure the debt arising from her payment of his legal fees.

115 About this time there were discussions about putting Lot 72 on the market. The defendants’ evidence was that this was because Mrs Rogers wanted to formalise the arrangement made by the 1981 and 1983 indemnities and she hoped to be repaid the monies outstanding to her from the sale. Further, they were not making any money from the business.

116 On 24 October there was a current affairs programme aired on television that made some reference to Ms Wentworth’s allegations against Mr Rogers and he considered that his case might have been prejudiced by it. A letter was sent to this Court on 27 October seeking a stay of the proceedings for a period of 12 months. On that day the matter was listed for hearing on 26 April 1994. On 28 October the Supreme Court wrote to Mr Rogers advising him of the hearing date. Mrs Rogers gave evidence that she was unaware of these matters or indeed of the revived litigation.

117 On 21 October Mr MacLean noted instructions he received from Mr Rogers including that the “bottom block to be sold to repay Toni” and “documents evidencing loans in existence probably held by Andrew Finlay (sic) Pt McQ who lent me money which Toni repaid (at both weddings)”.

118 On about 30 November Mrs Rogers handed the list of payments prepared by her husband to her solicitor, Mr Oliver, with instructions for him to arrange for the transfer of the interests of the defendants in Te Mata from joint-tenants to tenants-in-common. Mr Rogers instructed Mr MacLean, “What Tony Oliver is coming up with on behalf of Toni Rogers is fine by me”. These matters will be referred to later.

(o) 1994

119 For the 1994 tax year Mr Rogers’s gross income was declared at $441. For the same period Mrs Rogers’s gross income was declared at $50,372.

120 By 19 January Mr Rogers had retained Mr MacLean to act for him and to seek an adjournment of the hearing by reason of the television programme. On that date Mr Mclean wrote to Mr Oliver, Mrs Rogers’s solicitor, asserting that he had heard from Mr Oliver that:

Mrs Rogers is not prepared to further hazard her finances either by way of contributing to the legal costs or by way of leaving her assets at risk

121 By letter dated 18 February 1994, Mr Oliver wrote to Mr MacLean stating that his instructions were that, with interest, the total amount due to Mrs Rogers was $130,022.11. The details set out in the letter are similar to those contained in Mr Rogers’s list of October 1993. Mr Oliver requested that Mr Rogers sign an acknowledgement of debt for that amount.

122 On 28 February the application by Mr Rogers to vacate the trial date was stood over to 4 March 1994.

123 On 3 March Mr MacLean wrote to Mr Oliver indicating that his client did not dispute the amount claimed. He also sent two undated, apparently alternative, transfer documents bearing the signature of Mr Rogers.

124 On 4 March Mrs Rogers signed one of the transfer forms. Also on that date the Court refused Mr Rogers’s application for an adjournment. Further by letter dated that date the Legal Aid Commission informed Mr Rogers and his solicitor that aid was refused, apparently because his assets and income exceeded the threshold for aid. On 9 March the Commission indicated that the previous grant of aid had been exhausted.

125 On 15 March Mr MacLean advised Mr Oliver that the transfer had been stamped but consent to the transfer was required from the Legal Aid Commission and the ANZ Bank.

126 On 30 March Sully J severed the claim and cross-claim and set down the claim for hearing on 14 June.

127 On 6 April the firm of Henry Davis York wrote to Mrs Rogers regarding the outstanding debt to that firm.

128 On 12 April Mr Oliver sent to Mr MacLean a deed and mortgage for execution by Mr Rogers. These were signed on 22 April and returned to Mr Oliver on 26 April. Sometime after this date Mrs Rogers signed them.

129 On 12 July the Legal Aid Commission consented to the registration of the mortgage.

130 On 23 September Mr MacLean wrote to the barrister then acting for Ms Wentworth indicating that Mr Rogers intended to put his affairs into the hands of the receiver in bankruptcy once Ms Wentworth’s costs were ascertained.

131 Before leaving this chronology, I should note that Lot 72 of Te Mata was sold in November 2001 for $120,000, the net proceeds being $115,89119. This Court has retained this sum pending resolution of these proceedings.

Case for the plaintiff

132 As I have already indicated, Ms Wentworth relied upon two affidavits made by her and which, after numerous objections had been taken and determined, were read into evidence. Ms Wentworth was not required to give oral evidence and was not cross-examined. Those affidavits attached a large amount of material by way of annexure. In addition, Ms Wentworth relied upon a large number of documents including transcripts of proceedings in this Court relating to the litigation between her and Mr Rogers. Included in this material were documents that had been exhibits or MFIs in the proceedings before Mr Justice Sperling.

133 In effect the plaintiff’s case is that, from an examination of the banking records of the defendants and their financial and employment history over the relevant period, Mrs Rogers was not in a position to pay her husband’s legal expenses and did not in fact do so. She contends that the documents prepared by the defendants to evidence the agreement were not made at the time, or in the circumstances in which, the defendants state that they were and that to this extent they are fraudulent. Her allegation is that these documents were prepared no earlier than 1993 when the re-trial of her claim was listed for hearing. She argues that there was no suggestion of any agreement between the defendants of the type now asserted until the end of 1993.

134 In particular the plaintiff contends that payments of Mr Rogers’s legal expenses came from accounts largely funded by him notwithstanding that they might have been joint accounts. Similarly she maintains that repayments made of a bank loan of $30,000, obtained to pay counsel’s fees, were made from funds of Mr Rogers. Insofar as those payments came from accounts operated by Mrs Rogers, it is submitted that the Court should conclude that she held the funds in those accounts in trust for Mr Rogers. In the alternative the plaintiff claims that, if Mrs Rogers made payments on behalf of her husband, they were made to repay a debt that arose when Mr Rogers paid $40,000 to Mr Rochford as part payment for his interest in the Dalmeny Road property.

135 The plaintiff claims that the only asset of substance owned by Mr Rogers was his interest in Te Mata. She asserts that she has outstanding claims for the payments of costs arising from various proceedings in this Court and that the purpose of the transactions, which she seeks to set aside, was to leave Mr Rogers with no interest of any value in Te Mata.

Case for Mrs Rogers

136 An affidavit by Mrs Rogers dated 29 January 2002 was read. Further, she was permitted to adopt in the witness box a statement that she had made shortly before the hearing commenced. Both the affidavit and the statement annexed documents upon which Mrs Rogers relied, including pages from passbooks of various bank accounts, chequebook entries and deposit slips. In particular Mrs Rogers annexed to her affidavit the 1981 and 1983 indemnity documents. Mrs Rogers also annexed the handwritten list of payments prepared by Mr Rogers in October 1993. In addition, Mrs Rogers sought to rely upon documents and transcripts either tendered by Ms Wentworth or tendered on her own behalf including exhibits and MFIs in the proceedings before Sperling J. Mrs Rogers also tendered various documents connected with the partnership agreement with her husband relating to Te Mata.

137 Mrs Rogers’s evidence was that in the first two years of their marriage, both she and Mr Rogers had their own legal expenses arising from their divorces and each was individually responsible for the payment of those expenses out of his or her own resources. However, generally speaking, the income from salary or social security payments was used for the upkeep of the family. Mrs Rogers stated that she never considered the payment of Mr Rogers’s legal fees as part of the living expenses of the family.

138 As a result of a settlement with her former husband, Mrs Rogers received a half share of their matrimonial home. In the period between 1980 and 1983 she paid him $80,000 to buy out his share in the property. Mr Rogers gave her money to make the first payment of $40,000 but she could not recall when the second payment was made or how it was funded. She also was the beneficiary of an estate comprising, in part, a unit in Killara from which she received rent of about $430 per month until the property was sold in 1983.

139 Mrs Rogers maintains that from 1981 until 1993 she lent her husband various sums of money by paying legal fees or associated expenses on his behalf. She did not keep specific records of these loans but noted some payments in bank passbooks. She paid these sums relying upon the 1981 and 1983 indemnity documents. She referred to the list of payments made by Mr Rogers in October 1993 and stated that she had no doubt that she had lent her husband more than was set out in that list but that adequate records had not been retained to itemise those payments.

140 In July 1985 the defendants borrowed $30,000 from the State Bank to pay the fees of Mr Shand QC incurred on behalf of her husband. The money was paid directly to Henry Davis York, Mr Rogers’s then solicitors. Mrs Rogers’s evidence was that she accepted responsibility for repaying this loan and paying interest due because she was working and her husband was unemployed. The fees, charges and repayments of that loan were paid from her money until about mid 1996. Again she says that she made the payments relying upon the two indemnity documents. Her evidence was that money was borrowed from time to time under the loan in order to pay other legal fees. Mr Rogers paid almost $10,000 in reduction of the loan in October 1986. In 1990 it was replaced with a loan for $20,000 with the ANZ Bank. The loan was ultimately repaid in October 2001

141 A statement made by Mrs Rogers, Exhibit D2.1, contains a schedule of payments that she claimed to have made between December 1982 and February 1992 on behalf of her husband’s legal fees, together with what she asserted were the banking records that supported the payments. By the end of the evidence in these proceedings, it was conceded by Mrs Rogers that two payments made to reduce the loan account, that is $5,000 and $2,450, and contained in the list in D2.1 were no longer put forward as loans made by Mrs Rogers to her husband. The first of those amounts was the money received from Mrs MacCallum and the second was the residue of the money given to the defendants by Mr Wentworth. Although the plaintiff submitted that further claims of payments appearing in D2.1 had also been withdrawn, I do not believe that they were. However, Mrs Rogers accepted that some of the documents provided to support the payments did not in fact do so.

142 On 30 November 1993 Mrs Rogers attended the home of Mr Oliver, her solicitor, and gave him instructions in the following terms (Ex L):

Contact Duncan. Confirm letters of indemnification. I wish to safeguard my assets. Would you arrange for ownership to be transferred from T in C to J T so that the ownership can be varied to reflect the indemnification and arrange for the sale of Lot 72 (attached) so that I can realise my assets. Legal Aid lien is on Lot 71 (House Block) State Bank over both Lots

Duncan

T in C

J T

143 It was her evidence that what she referred in evidence as “the 1994 transaction”, that is the deed transfer and mortgage, arose from the list prepared by Mr Rogers and these instructions to her solicitor. It was upon her initiative and at her instigation, and not that of her husband, that the list and subsequent arrangements concerning Te Mata were prepared. She said that her intention, initially at least, was to “legally formalise and register” the accumulated debts owed to her by her husband and to ensure repayment of them from the proceeds of the sale of Lot 72. Ultimately the 1994 documents, which are the subject of these proceedings, were prepared by her solicitor and presented to her. She believed that the transaction comprising the deed, transfer and mortgage secured the money she had paid out on her husband’s behalf and were based upon the indemnity documents.

144 In an affidavit of March 1995 Mrs Rogers stated that she had lent her husband “at least $45,975.00 by paying some of his debts”. In an annexure to that affidavit she set out the following payments as being made by her:

6,000.00

45,975.00

However, she believed that she was also entitled to interest on the payments made by her and that the amount of $130,000, being the principal sum in the mortgage, was determined by the solicitors for her and her husband and was appropriate.

Case for Mr Rogers

145 Mr Rogers’s case was presented by way of evidence that he had given before Sperling J in March and October 1995 touching upon the subject matter of the present proceedings and before his Honour severed the present application from the application by Mr Rogers to set aside the dismissal of the cross-claim by Loveday AJ. He was cross-examined at length on that occasion by Ms Wentworth on the very matters about which he was cross-examined before me.

146 He stated that from the sale of his former matrimonial home he purchased Te Mata and also gave $40,000 as a gift to his wife to help her pay for her half share of the Dalmeny Road property. He derived no benefit himself from that property.

147 His evidence was that he typed the two indemnity documents himself. He said that he understood the 1981 and 1983 indemnities amounted to promises to repay his wife by giving her his entitlement to Te Mata in lieu of any money that she had spent on his behalf. He described them as “deeds of loan”.

148 He gave evidence that in 1993 when his wife was “doing the books” she asked him to make up a list of the money she had spent on his legal bills. He made the list from bills or payments that he could identify at the time while his wife was overseas and presented it to her on her return. He believed at the time, and still believes, that he owed her more money than that appearing on the list that he prepared

149 He stated that he intended the transactions, into which he entered in 1994, to repay the money he owed his wife as a result of her paying his legal fees and because of the two indemnity documents. He did not concern himself with the amount of the mortgage because their solicitors determined it as being appropriate and he believed that he owed his wife more than could be identified by him. He believed that the consequence of the transactions was that he effectively transferred his share in the property to his wife. If the property were sold $131,000 was to be paid to the Legal Aid Commission and the rest of the proceeds of his half interest would go to Mrs Rogers to a total of $130,000.

The indemnity documents

(

a) The 1981 indemnity

150 This document, Annexure “A” to Mrs Rogers’s affidavit, appears to be typewritten except for the date and what purports to be the signatures of the defendants and Andrew Findlay appearing on it. It is as follows:

The indemnification agreement made [8th July 1981].
Between Gordon John Rogers and his wife Toni Rogers. Said Gordon John Rogers agrees to indemnify Toni Rogers for any legal costs or flow ons paid by Toni Rogers and interest at State bank overdraft rate current as of todays (sic) date, in relation to any litigation between said Gordon John Rogers and Katherine Wentworth. Said Gordon John Rogers agrees and promises to reduce his share in any and all jointely (sic) owned property by the value of legal costs and interest paid by Toni Rogers.

This document is to ensure that Toni Rogers is not dissadvantaged (sic) financially by any litigation between Gordon John Rogers and Katherine Wentworth.

151 The authenticity of this document is of central importance in determining these proceedings. If I were satisfied that the document is not what it appears to be or did not come into existence in the way that the defendants swore that it did, not only would the credit of the defendants be effectively destroyed but also the plaintiff’s case, that there was a fraudulent arrangement between them, would be well advanced. Such was the importance of this and the other indemnity document to the resolution of the issues before me, that at a very late stage in the proceedings I gave the plaintiff leave to uplift the documents and have them inspected by document examiners. I will discuss the result of those inspections shortly.

152 The defendants gave consistent evidence that the document was produced by Mr Rogers on the date shown on it, that is 8 July 1981. This was Mrs Rogers’s birthday and it was being celebrated in Sydney. Mr Findlay, a neighbour from Tamworth, was present and all three signed the document on that occasion. Mr Rogers said that he had typed the document on a typewriter belonging to his wife. He produced that typewriter late in the proceedings. The typewriter was also inspected by a document examiner at the behest of the plaintiff and I shall refer to the results of that investigation shortly.

153 It will be recalled that the summonses had been issued against Mr Rogers in June 1981 and, as a consequence, he was to appear at the Local Court on 15 July of that year. Mr Rogers gave evidence that he was distressed by the prospect of these proceedings and was concerned about his ability to pay for the costs of defending the matters. Mrs Rogers gave evidence that there was at this time a conversation in which Mr Rogers expressed his concern as to his capacity to pay for his defence. Mrs Rogers said: “I’ll help you with the money I got from the inheritance”. To which Mr Rogers stated: “OK, but I’ll pay you back”.

154 I note that evidence of this conversation was given, for the first time, in an affidavit of Mrs Rogers filed on the morning that the hearing commenced. Ms Wentworth has submitted that the evidence is a last minute fabrication to give authenticity to the 1981 indemnity document. By itself this evidence has little weight.

155 Mr Rogers gave evidence that he prepared the document upon a typewriter owned by his wife without any assistance and in his own words. When he presented it to Mrs Rogers and asked her to sign it he said, “This is so I will pay you back any money you pay on my behalf for legal fees.”

156 There was a deal of cross-examination about the wording used in the document, in particular why Mr Rogers used the word “indemnify” and what he meant by that term. There was also cross-examination relating to the fact that there was no joint property at the time of the production of the document. Mr Rogers’s evidence was that he intended by the document to safeguard any money spent by his wife on his account for legal fees by the use of his interest in the property, Te Mata, that they were then about to purchase. Mrs Rogers’s evidence was that she understood it to be a promise to repay any money she expended for her husband’s legal fees.

157 As I have already indicated, Ms Wentworth argues that I would be satisfied to the requisite degree that the document was not prepared in July 1981 but at a much later date when the defendants were concocting evidence to support the transfer and mortgage of Te Mata. She cannot specify when this was but on her case it was many years after 1981 and probably later than September 1993. In order to support this submission the document was subjected to expert examination by Mr Holland of Scientific Document Services Pty Limited. The findings in relation to this document can be summarised as follows:

(a) The document was prepared upon the typewriter tendered by Mr Rogers.

(b) The same pen was used to write the handwritten date and the three signatures upon the document.

(c) The paper used was the same as a sheet found with the typewriter when it was tendered.

(d) The same paper was used for the preparation of the 1983 indemnity.

158 An examination, for the purpose of comparison, was made of the signature of Mrs Rogers appearing on the document and her signature appearing on other documents over a period of time after 1981. A report prepared by Mr P. Westwood, Handwriting and Questioned Document Examiner, of 5 June 2002, stated that there was “limited support for the conclusion” that the signature of Mrs Rogers appearing on the 1981 indemnity was written “sometime after January 1982”. He later examined further material provided to him and in a report dated 17 July 2002, he concluded that, having regard to the formation of the letter “g” in what purports to be Mrs Rogers’s signature on a document dated 26 January 1983, the opinion he expressed in his earlier report should be amended to read “sometime after January 1983”.

159 This finding is in my view of little assistance to the plaintiff. Mr Westwood was guarded as to any conclusion that could be drawn about the date of the signature because of the limited material available to him upon which he could form his opinion. I would not be prepared on his report to form any view as to when Mrs Rogers signed the 1981 document. She was never questioned about the appearance of her signature on that or any other document. In any event, there is nothing to suggest that she signed the document as late as 1993 or 1994 as she must have done on the plaintiff’s case.

160 Putting the issue of her signature to one side, there is nothing in the objective evidence that suggests that the 1981 indemnity was prepared in 1993 or 1994 as the plaintiff asserts that it was. I could not possibly conclude from the reports of the examination of the document that the defendants’ evidence about it was false to any standard. To the contrary, it seems to me that in all likelihood the document was prepared at or close to the date appearing on it.

161 Further, the wording of the document appears to me to suggest that it was prepared other than as part of a fraudulent scheme entered into by the defendants and their solicitors many years later. Certainly it does not seem to me to be the sort of document that one would expect to be prepared if the defendants were attempting to ensure that they could justify the transfer and mortgage of Te Mata. It seems to me, on its face, to be what Mr Rogers said it was, a somewhat clumsy attempt to protect Mrs Rogers’s interest in the property that was about to be purchased as the family home. Of course the maker of the document could have been clever enough to misuse legal terminology, make errors of fact and insert spelling mistakes in order to make the document appear to be the work of a non-lawyer with limited spelling and typing skills, but that does not seem to me to be a realistic scenario. Assessing the document on its face and taking into account the findings of the document examiners, I am not persuaded that the document is fraudulent, as the plaintiff contends it is.

162 Mr Westwood’s examination also revealed that there was a partial impression of a handwritten date “thirtieth of July 1983” appearing on this document, suggesting to him that this document was beneath another document when that date was inserted on the upper document. I shall return to this finding when considering the 1983 indemnity document shortly.

163 Of course, if the 1983 indemnity document were, as the plaintiff asserts, not what it appears to be and made at a later date than appears on the face of the document, that finding would itself have an impact upon any determination made about the 1981 document. It is necessary then to consider the 1983 document.

(b) The 1983 indemnity

164 By June 1983 the magistrate hearing the committal proceedings had dismissed Ms Wentworth’s informations against Mr Rogers and proceedings had commenced in the Supreme Court challenging that decision. About 1 June 1983 a telegram was received by Mr Rogers from his solicitor indicating that legal aid had been granted for the proceedings which were to commence before Begg J on 6 June and stating:

Conditions of aid charge over Tamworth for the amount of the costs interest free repayable only upon sale of Te Mata if you sell estimated costs $1000 all up please confirm okay regards

165 Mrs Rogers gave evidence that her husband showed her the telegram and told her “legal aid wants a lien on the farm”. She understood that a debt was to be created over Te Mata and it was to be repaid when the property was sold. On 25 July 1983 Mr Rogers created a charge over his interest in Lot 71 to the Legal Aid Commission.

166 The defendants’ evidence is that towards the end of July of that year Mr Rogers produced a typed piece of paper and asked his wife to sign it. He said that he had prepared it “in regard to the legal aid lien on the farm” and that he wanted to make sure that she was not out of pocket because of his legal fees. The defendants gave evidence that the document was signed by them and witnessed by Mr Findlay on 30 July 1983. The document,

167 Annexure “C” to Mrs Rogers’s affidavit, is as follows:

This Indimnification (sic) agreement made [thirtieth of July 1983]
Between Gordon John Rogers and his wife Toni Rogers.
Said Gordon John Rogers agrees and promises to indemnify Toni Rogers for any lien by the Legal Aid Commission on any and all jointly owned property by reducing his share of any and all jointly owned property by the amount of the Legal Aid lien.

This indemnification agreement is in addition and complimentary to that covering legal costs or flow ons paid by Toni Rogers resulting from legal action between Katherine Wentworth and Gordon John Rogers.

168 As with the other indemnity document, the plaintiff’s case is that this document is fraudulent in that it was not prepared, signed or witnessed on the date appearing on the face of the document or in the circumstances to which the defendants have testified. In effect the plaintiff maintains that this document was prepared at the same time as the 1981 document and at a time very much later than its date, probably in 1993 or 1994, although she suggested in her written submissions that it might have been prepared as late as 1995.

169 During cross-examination, it was put to the defendants that the document was prepared using a computer and a dot matrix printer. Ms Wentworth asserted to Mrs Rogers that the document was prepared using the 1981 document as a template. At one stage the plaintiff even suggested to Mrs Rogers that this and the 1981 document were prepared on the same machine that prepared the partnership agreement and the loan agreement with Mr Findlay.

170 This document was subjected to examination at the same time and by the same document examiner who prepared the report on the 1981 indemnity

document. The results of that examination can be summarised as follows:

(a) The document was prepared upon the typewriter tendered by Mr Rogers.

(b) It is highly probable that the same pen was used to write the handwritten date and the three signatures upon the document.

(c) The ink used was from a ballpoint pen and was manufactured between 1979 and 1982 and it was commercially available prior to 1983.

(d) The paper used was the same as that used for the 1981 indemnity document and a sheet found with the typewriter when it was tendered.

(e) No date could be identified for the preparation of the document or the handwriting and signatures upon it.

171 I have earlier noted Mr Westwood’s finding that suggests that, when this document was dated, the 1981 document was beneath it. His report was tendered very late in the proceedings and after the oral evidence had concluded. There was no application made by any party to have either of the defendants recalled for questioning about that finding. But the fact that the 1981 document might have been present when the 1983 document was signed does not necessarily indicate any impropriety on the part of the defendants. To the contrary, it seems to me to be quite understandable that the 1981 indemnity document, which is referred to in the 1983 document, would be present when the second document was signed.

172 The findings of the document examiner seem to me strongly to support the account given by the defendants that this document was signed in 1983. The date of manufacture of the ink is consistent with the document being signed in that year. I think it highly unlikely in the extreme that a biro manufactured in 1983 would be used to sign a document over a decade later. The fact that the paper used in both documents is similar and, is also similar to paper found with the typewriter, does not seem to me to contradict the account given by the defendants, particularly as the paper was found in the typewriter case. The objective evidence relating to this and the 1981 indemnity suggests that this document was prepared and signed on a different occasion than that when the 1981 indemnity document was prepared and signed.

173 Mr Westwood also examined the signature of Mrs Rogers appearing on this document but, on the limited material he had available for comparison, he found that the signature was consistent with the date of the document.

174 As with the 1981 indemnity, the wording of the document does not suggest to me that it was prepared as part of a conspiracy formed many years later to invent a basis to justify the transfer and mortgage of Te Mata. There was cross-examination of Mr Rogers as to his knowledge of what it was that the Legal Aid Commission required in respect of the property and his understanding of the words “charge” and “lien” in 1983 and later. The plaintiff relies on the use of the term “lien” in that document as supporting her argument that it is was made some years later, but I do not find that to be convincing especially in light of the objective evidence. I appreciate that it is not inconceivable that the defendants had the guile to produce these documents in a way that gives them the appearance of being amateurish attempts to produce legal documents by a person with little understanding of their legal effect. But it seems to me to be highly unlikely.

175 If it is accepted, as I do, that the 1983 indemnity document is probably genuine, there appears to be no reason to doubt the legitimacy of the 1981 indemnity document, despite any concerns about Mrs Rogers’s signature raised by Mr Westwood’s finding. The proceedings have been conducted on the basis that either the two documents are genuine or they were both prepared in 1993, 1994 or as late as 1995.

176 The plaintiff asserted that a document that appeared to be a note taken by Mr Oliver, Mrs Rogers’s solicitor, of a telephone conversation on 6 January 1994 contained the genesis of these documents. That note referred amongst other things to agreements dated “8/7/81” and “13/7/83”. There was no cross-examination of Mrs Rogers about this document. However, the plaintiff contends that this document is proof that there was a plan on foot to fabricate agreements bearing those dates. In my view it offers no such inference at all, but is simply a mistaken note of the date of existing documents.

177 I have taken into account, when considering these documents and assessing as best I can whether they are genuine or fraudulent, that the defendants did not call the person who witnessed their signatures, Mr Findlay. No explanation was forthcoming for that failure. I am prepared to infer that his evidence would not have assisted the defendants. But it does not follow that I should for that reason alone or in conjunction with other evidence relied upon by the plaintiff find that they were fraudulent. In my view the objective evidence supporting the defendants’ evidence about the documents is compelling if not overwhelming.

178 The plaintiff submitted that I should conclude that the typewriter was tendered after Mrs Rogers’s evidence concluded because she was not prepared to lie about it having been the instrument used to prepare the documents. This submission sits uncomfortably with the allegations made by the plaintiff against Mrs Rogers of repeated acts of perjury and the swearing of a false affidavit as to her medical condition to be used in other proceedings.

179 I do not believe that the circumstances of the defendants in 1981 or 1983 tell against the documents being made at that time. I do not accept that the fact that Mr Rogers was apparently in a sound financial position in 1981 and that Mrs Rogers was at that time without significant income, leads to the inevitable inference that the 1981 document cannot be genuine because the defendants could not have formed an agreement that Mrs Rogers would pay her husband’s legal fees. She had an expectation of both capital and income that to some extent proved to be correct. I do not have any difficulty accepting that Mr Rogers was intending to purchase Te Mata and establish a family home at the time he learned of the proceedings with their attendant legal expenses. I do not find fanciful the idea that he would wish to provide for his family out of his income and assets as far as possible and not expend them on legal proceedings resulting from an earlier marriage. Although I do not uncritically accept the evidence of the contents of the conversations said to have been held at the time the agreement was reached, I do not reject their import as being improbable. It should also be noted that, although the 1981 indemnity document is dated in July of that year, the first payment made under the agreement to which a claim relates is December 1982 when Mrs Rogers had assets available to her.

180 Although it is unnecessary for me to come to a positive view about the authenticity of the documents in order to determine these proceedings, I believe that they are genuine.

Mr Rogers’s 1993 list of payments

181 The evidence of the defendants was that in September of 1993, just as she was about to go overseas and at a time when she was preparing accounts and other material for her accountant, Mrs Rogers asked her husband to prepare a list of “what I have paid to, or for, you in relation to legal fees”. Mr Rogers agreed to do so. While his wife was absent, he examined the banking records that he had available to him and extracted what he believed to be instances of payments made on his behalf or for his benefit by Mrs Rogers in connection with his legal expenses. Mr Rogers’s evidence was that the transactions he listed were not the total payments made by his wife on his behalf. Mrs Rogers gave similar evidence stating that she understood that the items listed were those that could be ascertained by Mr Rogers.

303 Mrs Rogers gave evidence that her only instructions to Mr Oliver was the note she wrote, Exhibit L, together with the list drawn up by Mr Rogers and a bundle of documents, the contents of which she can no longer recall. She denied seeing Mr MacLean’s letter of 19 January or Mr Oliver’s letter of 18 February before she signed the deed and mortgage. I am asked to reject that evidence, but I am not persuaded that I should do so.

304 It is clear from Exhibit L that Mrs Rogers had little understanding of what was to occur although she understood that there had to be a change in the title to the property in order to secure her loan. She gave evidence that she believed there would be some formal document such as a mortgage prepared and that there needed to be a change in the title of the property. What understanding she had about the arrangements came from Mr Rogers and his understanding came from discussions he had with Mr MacLean. It is clear that Mr Oliver, acting on the note, did contact Mr MacLean and they discussed the matter. It is a reasonable inference that Mr MacLean would have made his suggestions as to what steps might be taken notwithstanding the formality of the letter of 19 January. I cannot see why Mr Oliver would necessarily have to speak to Mrs Rogers again after receiving Exhibit L in order to produce the letter of 18 February or that, if he did not do so, he was acting without instructions by producing the Deed and the Mortgage for Mrs Rogers to sign.

305 The plaintiff alleges the following in respect of the preparation of the deed and mortgage: Ex L was not prepared in 1993 nor was it given to Mr Oliver at that time; Mr Oliver’s letter of 18 February 1994 was not written on that date; a handwritten note of Mr Oliver dated 6 January 1994 apparently referring to the indemnity agreements but with the dates “8/7/81” and “13/7/83” is evidence of an intention to fabricate indemnity agreements bearing those dates; the letter of Mr MacLean dated 19 January 1994 is a forgery having a different typeface than any other document on that firm’s file; other letters produced from that firm are forgeries because they have a different type face or because of inconsistent “computer generated numbers”. Yet there is no allegation in the amended statement of claim, filed on 4 April 2002 the fifteenth hearing day, of a conspiracy between the defendants and their solicitors to defraud the plaintiff and none of these specific allegations are particularised. Rather the particulars assert facts to the contrary. For example, the particulars in respect of allegation 43(j) assert that Mrs Rogers gave her solicitor instructions on 30 November 1983 an assertion that is contrary to the first allegation made above. In any event, there is no evidentiary basis to support these allegations.

306 The plaintiff relies upon a comparison of the chronology of the proceedings in this Court with a chronology of the actions taken in respect of the preparation of the documents and argues that the one must have influenced the other. I do not see why, on the plaintiff’s arguments, certain documents had to be prepared or signed or the ultimate agreement put into place simply because of some decision made in the course of the proceedings. I acknowledge that there is some temporal coincidence between the Court proceedings and the arrangements involving Te Mata, but I do not believe that these should dictate that the preparation of the documents was fraudulent.

307 In her written submissions of 20 September 2002, the plaintiff constructs a scenario to fit with the chronology of the court proceedings that is based upon speculation rather than inference and is without any real evidence to support it. In any event it assumes findings of fact that I am not prepared to make, such as the effect of the revived litigation upon Mrs Rogers’s equanimity or an expectation on the part of the defendants that the plaintiff would be successful in her litigation. She also draws upon assertions that were denied by the defendants and for which there is no evidentiary support, such as a letter being written by Mrs Rogers to the Court. Further, she states as a fact allegations that were never put to the defendants or raised during the hearing, for example that the defendants were going to use the proceeds of Lot 71, in part at least, to fund the future litigation, that Mrs Rogers “insisted on being compensated for the fact that there was a charge of L[egal] A[id] C[omission] for $132,000 over Lot 71” and that the transfers and mortgages were only to be executed if Mr Rogers could avoid the revival of the litigation.

308 I am not persuaded that there is anything in the circumstances surrounding the instructions given by the defendants to their solicitors or otherwise in the preparation of the deed and mortgage that should lead me to disbelieve the evidence of the defendants in that regard or to find that the arrangements were fraudulent.

(h) subsequent conduct of the defendants

309 The plaintiff relies upon the conduct of the defendants in seeking to have the current proceedings frustrated by adjournment applications, failures to comply with orders for production and the like as showing that the fraudulent conduct of the defendants in 1993 and 1994 has continued to the present. It was put to the defendants that in 1994 they sought to frustrate the plaintiff of any entitlement to seek satisfaction against Mr Rogers’s interests in Te Mata and they have continued to do so by the conduct of these proceedings.

310 Having regard to the history of the litigation between the parties, it comes as no surprise to me that there have been delays, adjournment applications and disputes about every conceivable aspect of the on-going litigation, including the present proceedings. I would not be prepared to draw any conclusion or inference arising from the conduct of the proceedings by either side. No doubt much of what has occurred has been the result of advice given to one or other of the defendants by their legal advisers. In any event, it does not follow that, simply because a party may endeavour to delay the resolution of a dispute before the court, the party believes that it has no merit or that the other party must succeed.

311 I have considered other facts and circumstances arising after the 1994 transactions were completed and which are relied upon by the plaintiff as part of the material that proves that the documents were fraudulent. However, they do not, to my mind, throw any light upon the questions or issues raised in these proceedings. In particular, they do not cast any doubt upon the findings I have made or my conclusions as to the conduct of the defendants. In my view the plaintiff’s case flounders on documents and transactions which I believe are genuine.

(i) summary of factual findings

312 The plaintiff has failed to satisfy me that the defendants entered into the fraudulent scheme that she set out to prove. I am satisfied that there was an agreement in place from 1981 to the effect that Mrs Rogers’s interests in Te Mata would not be jeopardised by the cost to Mr Rogers of the litigation involving Ms Wentworth. In 1981 there was an understanding between the defendants that Mrs Rogers was not going to be disadvantaged by the costs of litigation involving Ms Wentworth. It was part of that understanding that, if Mrs Rogers expended her funds in paying legal fees for her husband, she would be recompensed for those payments with interest and, if necessary, out of Mr Rogers’s interest in the family property, Te Mata.

313 I am satisfied that after 1981 Mrs Rogers took on the responsibility for the payments of her husband’s legal fees either by funding payments directly or by servicing loans taken out to pay them. There was an agreement that Mr Rogers’s income would generally be expended in maintaining the family and Mrs Rogers would fund the payment of legal costs and associated expenses. I am not satisfied that Mrs Rogers lacked the funds or expectation of funds to either make or honour that agreement.

314 In 1983 that understanding was extended to ensuring that Mrs Rogers was not to be prejudiced by Mr Rogers’s liability to the Legal Aid Commission.

315 It may have been the case that at any given time prior to 1993 the defendants had not been concerned to determine how Mrs Rogers’s interests would be protected and no occasion had arisen to give effect to the 1981 understanding. It may be that they never contemplated the occasion for a reckoning and the necessity of some action being taken to repay Mrs Rogers until 1993. But I am satisfied that it was always the intention of the defendants that, at the end of the day, Mrs Rogers was not going to be out of pocket because of Mr Rogers’s involvement in litigation with the plaintiff.

316 I am satisfied that Mr Rogers was in debt to his wife in 1993 for monies paid out in connection with the payment of legal fees arising from his litigation involving the plaintiff. I am unsure of the actual extent of that indebtedness because of the poor accounting practices of the defendants and the passage of time between the understanding and the determination of the amount owing. But I am not persuaded that in 1993, when he prepared the list, Mr Rogers was other than negligent in his determination of the amount of that debt. In other words, I am not satisfied that the preparation of that list was fraudulent in the sense that Mr Rogers knew that his wife was not entitled to repayment of the money specified in the list. Nor was the acknowledgment of debt or the consequential mortgage fraudulent in that sense.

317 I am satisfied that Mrs Rogers was not a party to the making of the 1993 list. I am not persuaded that, insofar as the list contained errors, that Mrs Rogers was aware of those errors or believed that she was not entitled to the amount of money set out in the list and which was later the subject of the acknowledgment of debt and the mortgage. I am satisfied that the list was made at the request of Mrs Rogers and that when she received it she sought to secure both her past and future payments in accordance with what she believed was promised under the 1981 agreement.

318 I am not persuaded that there was any impropriety in the preparation of the deed and mortgage or that I should reject the evidence of the defendants in that regard. There is no evidence to support any suggestion now made that there was a conspiracy between the defendants and their legal representatives to defraud the plaintiff.

(B) The law

(a) Fraudulent alienation of property

319 Section 37 A of the Conveyancing Act is as follows:

Conveyancing (Amendment) Act 1930

320 In Freeman v Pope (1870) LR 5 Ch App 536 at 540, in respect of the original statute from which this provision arose, the statute of Elizabeth,

Lord Hatherley LC said:

321 The plaintiff relying upon this provision has submitted that the transaction encompassing the deed, transfer and mortgage entered into by the defendants amounted to an alienation of Te Mata, or at least Mr Rogers’s interest in that property, with an intention to defraud her, she being then at least a potential creditor of Mr Rogers. The fraudulent intent relied upon is that the defendants knew that there was no debt that could justify the mortgage given to Mrs Rogers and that those transactions amounted in effect to a gift to her in order to put Mr Rogers’s interest in the property beyond the reach of the plaintiff.

322 It seems to have been conceded before me that the plaintiff was a creditor for the purposes of 37A albeit that in 1993 she may have been only a potential or prospective creditor pending the resolution of the proceedings ultimately determined before Sully J. This concession is in accordance with the meaning that has been given to the word “creditors” in s 37A, see Kang v Kwan [2002] NSWSC 1187 at [187] - [188].

323 Counsel for Mrs Rogers has argued that the section has no operation for two reasons: firstly, the section can catch neither the deed nor the transfer, as neither is an “alienation of property” and, secondly, that, as Mrs Rogers was a creditor of Mr Rogers, any alienation of his interest in the property was by way of giving a preference to a creditor and, for that reason alone, there was no intention to defraud creditors within the terms of the section. I do not accept the first of those arguments.

324 "Alienation" is not defined for the purposes of s 37A but has been interpreted as a “parting with property” and includes a “parting with some interest in the property”; Re Cummins; Richardson v Cummins (1951) 15 ABC 185. Barrett J in Green v Schellner [2002] NSWSC 671 treated “alienation” within the terms of the section as synonymous with “transfer” in the analogous Bankruptcy provisions. In In Re Symon: Public Trustee v Symon [1944] SASR 102 at 108 Mayo J said:

325 In Green v Schellner, above at [28], Barrett J stated:

"It is necessary now to say a few words about the meaning of “alienation” in s 37A. It is, in my view, synonymous with “transfer” in the analogous Bankruptcy Act provision, with the result that the following observation of Tamberlin J in Mateo is relevant: “In my view, the ‘transfer’ in this matter consisted of the whole transaction ranging from the signing of the consent orders on 18 April 2000 through to the completion of the transfer of the interest on or about 10 August 2000. There is no basis on which to isolate the making of the consent orders from the ‘transfer’ which took place and rely only on the formal instrument of transfer.”

326 In my opinion the alienation in the present case included the deed, transfer and the mortgage. The purposes of the three documents, taken together, was to achieve the result that Mr Rogers’s interest in Te Mata should be subject to a mortgage in favour of his wife for the sum of $130,000. The deed contained an acknowledgment of the debt to which the mortgage related and the transfer of the property effected a change in the nature of the defendants’ jointly held interest in the property for the sole purpose of Mr Rogers granting his wife a mortgage over his half interest in the property. The deed contained the terms of the mortgage for repayment of principal and for interest.

327 In any event it has been held that the Court has power under s 37A to take what steps are necessary to void the alienation if it falls within the section. In Silvera v Savic, above, Hodgson CJ in Eq said at [72]:

328 The section applies to an alienation made “with intent to defraud creditors”. A real intention to defeat or delay creditors must exist if the alienation is to be set aside: Williams v Lloyd; Re Williams (1934) 50 CLR 341 at 372. There must be established actual fraud “that is an actual intention to defeat or defraud creditors”: Re Barnes; Ex parte Stapleton [1962] Qd R 231 at 237. But it is not necessary to bring actual proof of the state of mind of the alienor and such an intention may be inferred from all the circumstances of the alienation including its nature, the state of affairs of the alienor at the time of the alienation and the purported justification for it: PT Garuda Indonesia Ltd v Grellman (1992) 35 FCR 515 at 523. An intent to defraud may be readily inferred where the alienation is by way of gift and there was no consideration passed from the recipient of the property. It may also arise where there was consideration for the alienation but it is less than the true value, although the value of the consideration is only one of the relevant factors to be taken into account. In the present case, although an inference of an intent to defraud might have arisen from the timing of the alienation and the content of the list drawn by Mr Rogers, I am not prepared to draw it in light of the findings I have made.

329 As I have already indicated, I am satisfied that at the relevant time Mrs Rogers was a creditor of her husband for payments made in relation to his legal fees. In effect the alienation of the property achieved by the 1994 transactions was to give Mrs Rogers a preference as a creditor over the plaintiff. It has been generally accepted that a transaction operating to give another creditor preference is not voidable under the section: Middleton v Pollock; Ex parte Elliot [1876] 2 CH D 104 at 108.

330 In Gregg v Bromley [1912] 3 KB 474 the plaintiff in certain proceedings brought against Mr Hay assigned to her husband any benefit she may have derived from certain other litigation in which she was then involved. At the time of the assignment she was in debt to her husband under security of a mortgage over her property. The assignment was made at the request of her husband as further security for her outstanding debts to him and further loans. The proceedings against Mr Hay failed and a costs order was made against the plaintiff. However she was successful in the other proceedings and obtained a sum in damages and for costs. Mr Hay then sought to recover his costs from the damages awarded to the plaintiff but was met by the assignment made by the plaintiff to her husband. It was held that the assignment to the husband was made for good consideration and was not voidable under the statute of Elizabeth.

331 In the Court of Appeal, Vaughan Williams L.J. proceeded on the basis that “mere preference of one creditor over another does not bring the case within the statute of 13 Eliz. c. 5, even though the parties may have been minded to defeat a particular creditor”. Fletcher Moulton L.J., who found that the sole purpose of the assignment was a deliberate attempt to prefer the husband to other creditors, stated:

332 This and other cases were considered by Cohen J in Abignano v Wenkart (1998) 9 BPR 16,765 and applied by him. In that case, despite the fact that his Honour found that the transaction, with which he was concerned, being a mortgage of an unencumbered asset to the defendant’s company, had been taken to avoid paying a creditor, a person who had obtained a judgment against the defendant in this Court, the transaction fell outside the scope of the section. His Honour was not prepared to find that the mortgage was not given as security for genuine loans made to the defendant by the mortgagee and so, even though the mortgage was given in order “to thwart the prospects of the plaintiffs recovering the amount of their judgment”, it amounted to a preference to another creditor and not a voidable alienation under s 37.

333 Glegg v Bromley and Abignano v Wenkart were cited with approval by Young J in Alati v Wei Sheung [2000] NSWSC 601; 34 ASCR 489. His Honour stated that he considered generally correct a submission that it is not acting contrary to that section for a person to prefer to pay some creditors over others, or to cause some creditors to be made into secured creditors, but that the conduct struck down by the section is preferring oneself to the general body of creditors. A similar submission supported by the same authorities is referred to with apparent approval by Hamilton J in Van Tri Huynh v Helleh Holdings Pty Ltd [2001] NSWSC 1162. In Kang v Kwan, above, Santow J referred to both Glegg v Bromley and Abignano v Wenkart when determining that the particular transaction, which he was considering, fell within the ambit of the section rather than being “a mere preference of one creditor over another”.

334 The plaintiff submitted that the judgment of Cohen J should not be followed as it is inconsistent with the decision of the Court of Appeal in Harkness v Partnership Pacific Ltd (1997) 41 NSWLR 204, and in particular the judgment of Priestly JA. But that decision was not concerned with s 37A but rather s 122 of the Bankruptcy Act and seems to me to have no bearing upon the present matter. By reason of s 6 of the Bankruptcy Act, there is no need to prove an intent to defraud creditors as a class under s 121 of that Act, as there is under s 37A: PT Garuda Indonesia Ltd v Grellman, above, at 525. Despite the plaintiff’s submissions to the contrary, I do not believe that the provisions of the Bankruptcy Act are engaged simply because it was reported that Mr Rogers threatened to “go bankrupt” upon taxation of the plaintiff’s costs.

335 On my findings Mrs Rogers was a creditor of Mr Rogers from some time after 1981. There was in 1993 outstanding loans made by her to Mr Rogers in respect of the payment of monies under the 1981 indemnity agreement. The effect of the transactions in 1994 was to give a preference to Mrs Rogers over other unsecured creditors including the plaintiff, who was at least a prospective or future creditor. As I have already indicated, I am not persuaded that I should reject the account given by Mrs Rogers as to the circumstances surrounding the making of the list of payments in 1993 and, therefore, that I should find that it was motivated by the recommencement of the plaintiff’s proceedings. It follows, or so it seems to me, that I am not persuaded that the alienation in Mrs Rogers’s favour of her husband’s interest in Te Mata was performed with an intent to defraud creditors under s 37A.

336 But even if I were persuaded by the timing of the transactions, and statements allegedly made by the defendants to their legal representatives that Mr Rogers at least acted with an intention of giving a preference to Mrs Rogers to ensure that the property was put beyond the reach of the plaintiff, that would not necessarily amount to an intention to defraud creditors under the section, particularly if the preference was given for valuable consideration.

337 In Glegg v Bromley, above at 492 Parker J observed that, in the authorities on the Statute of Elizabeth, it is not always clear whether judges are dealing with the operative part of the statute or with the proviso. This is so when attention is given to the absence or presence of valuable consideration. There is a discussion in that case as to the status of security given for an antecedent debt, that is where there is apparently an absence of consideration moving from the preferred creditor for the giving of security by the debtor. An antecedent debt is not itself valuable consideration supporting an alienation attacked under the section and it was on this basis that the security was set aside in the court below. However, the Court of Appeal held that the additional security provided by the debtor to the creditor, her husband, was given for good consideration where it was the result of pressure brought to bear by the creditor. In such a case, the court will infer further forbearance by the creditor on the giving of the additional security and such forbearance amounts to valuable consideration for the alienation.

338 If it were necessary to consider whether there was valuable consideration given by Mrs Rogers for the mortgage, either to rebut the inference of an intent to defraud creditors or under the proviso of the section, I would find that it existed. The demands made by Mrs Rogers after she obtained the list on returning from overseas was that her debt be repaid from the sale of Lot 72 or secured in some way in accordance with the 1981 agreement. The list referred to both past and future payments by Mrs Rogers and the security was in respect of both classes of payments, that is an antecedent and a future debt. There is nothing to rebut the inference that the giving of security resulted in a forbearance by Mrs Rogers in respect of the antecedent debt and security for further payments. I am not persuaded that she was not a purchaser for value of the interest conveyed to her.

339 Once the plaintiff’s allegation of a fraudulent agreement is not made out, there seems to me to be no basis upon which to find, if it were necessary to do so, that Mrs Rogers had notice of the fraudulent intention of her husband. I have indicated that I do not accept that Mrs Rogers was party to the making of the list. I accept her evidence that, when she returned from overseas, she took the list without checking its accuracy against the source documents but relying upon her husband. I would not be persuaded that Mrs Rogers did not fall within the proviso, even if it were necessary to consider it.

340 Clearly I do not find that the transactions in 1994 were a sham whatever meaning might be given to that term. I believe they were what they were intended to be: security for past and future payments made by Mrs Rogers on her husband’s behalf. Mr Rogers was intending to mortgage his interest in Te Mata and that is what he did. The transactions have to be considered in the family relationship and it does not seem to me to be significant that there were no terms as to the payment of interest or the repayment of the principal. Although Mr Rogers considered that he had relinquished his interest in Te Mata to his wife, he did not in fact do so: he retained a half share as tenant-in-common. But it does not follow from that fact alone that the arrangement was a voidable alienation. Nor does the mortgage fall within the ambit of the section simply because the property remained the family home and that Mr Rogers was entitled to enjoy occupation of the property, even when his wife left him in the home for a short period because of the matrimonial difficulties. Although this is a matter relied upon by the plaintiff it was never the subject of investigation during the proceedings. I am not satisfied that Mr Rogers retained the benefit of the interest that he purported to transfer to his wife, so giving rise to a fraudulent alienation for the purposes of the section.

341 The plaintiff relied in her additional submissions on the decision of Santow J in Kang v Kwan, a decision to which I have briefly referred. That was a decision based upon its own facts that bore some similarities to the present. The plaintiff had succeeded in proceedings in the District Court for the recovery of money owed to him for work performed on the property of the defendants in those proceedings. However, he was frustrated in recovering his damages and costs because of a mortgage granted by the defendants over their property to a close personal friend and business associate. The mortgage was given as security for a loan purportedly made by the friend to the defendants before the proceedings in the District Court. The defendants also sold the property to a third party and paid part of the proceeds to the friend purportedly in repayment of the loan and transferred the balance out of Australia, leaving nothing from which the plaintiff could have his judgment satisfied. The plaintiff brought proceedings before Santow J to have the mortgage set aside under s 37A. The plaintiff argued that the mortgage was fraudulent and a sham as a result of a conspiracy entered into by the defendants and the friend to prevent him from recovering the money owed to him. The plaintiff sought other relief of an equitable nature including an equitable lien or charge over property later purchased by the defendants’ friend.

342 Santow J set aside the mortgage and granted other relief sought by the plaintiff. These orders were based upon his finding that the arrangements between the defendants and the friend were fraudulent and that the mortgage was a sham. He found that the defendants and their friend had entered into a common enterprise to defeat the plaintiff’s claims. These were findings of fact made by his Honour on the evidence before him, relying amongst other things, on his impressions of the veracity of the evidence given by the defendants’ friend. While, generally speaking, there may have been some similarities in the facts and arguments raised before his Honour and those raised before me, the particular facts and circumstances surrounding the preparation of the mortgages in each case were very different. I do not intend to indicate where the facts differ, as it would be a completely fruitless exercise to do so. But one significant difference was that before Santow J there was no evidence to prove the existence of the loan at the time it was purportedly made. In the present proceedings I have found otherwise by reason of the 1981 and 1983 indemnity agreements.

(b) other bases for relief sought

343 Although the plaintiff initially relied upon the inherent jurisdiction of the Court to protect its processes from abuse and s 23 of the Supreme Court Act, those were not matters that loomed large in her submissions except as an aid to the Court setting aside the transactions under s 37A. On behalf of the second defendant it was argued that no cause of action for substantive interference in property rights arose under the Court’s inherent jurisdiction.

344 I believe that, having regard to the manner in which the matter was ultimately argued by the plaintiff and in light of the findings that I have made, it is unnecessary to determine whether the Court has jurisdiction to set aside the transactions independently from the power contained in s 37A. The basis for the relief sought under s 37A and under the inherent power was substantially the same: the existence of a fraudulent agreement between the defendants to frustrate Ms Wentworth from obtaining any of the fruits of the proceedings brought by her in this Court. I do not believe it matters whether she is considered to be a potential creditor under s 37A or a litigant under the protection of the Court. I can see no basis upon which the plaintiff would fail in proceedings taken under s 37A, either because there was no proof of a fraudulent intent or because Mrs Rogers fell within the proviso of that section, and yet be entitled to succeed by reason of the exercise of a discretion arising under the inherent jurisdiction of the Court or s 23. The plaintiff did not indicate how such a result might arise on the facts in this case, if at all, and in her final written submissions seemed to accept that s 37A provided her with the relief she sought if the facts as she alleged them to be were made out. In any event, on the findings I have made there would be no basis for the exercise of the Court’s inherent jurisdiction.

345 The plaintiff, relying upon the decision in Kang v Kwan, has sought equitable relief similar to that granted by Santow J. That relief was never sought in the summons or the statement of claim. In any event on my findings no such relief is justified, even if there might have been some basis upon which the plaintiff could have sought that relief albeit that she was merely a potential creditor at the time of the transactions.

346 The plaintiff alleged in her amended statement of claim of 4 April 2002 that any money lent by Mrs Rogers to pay her husband’s legal fees should be treated as a repayment by her of loans made by him. She relied upon Mr Rogers’s payment of $40,000 to help pay for the Dalmeny Road property and she submitted that the Court should find that Mrs Rogers’s half interest in Te Mata was a loan to her of half the purchase price notwithstanding that Mr Rogers said it was a gift. This latter submission was made notwithstanding that the plaintiff made no attempt to rebut the presumption of advancement that Mrs Rogers enjoyed in respect of the interest in the property given to her. However, in her submissions of September 2002, the plaintiff apparently abandoned this basis of her claim because she submitted that the Court should find that, contrary to the manner in which the cross examination appeared to have been conducted, Mr Rogers never made any payment in respect of that property and Mrs Rogers paid the whole of the $80,000 out of her own money with the sale of the Killara unit. I accept that Mr Rogers intended to make a gift to his wife of both the half interest in Te Mata and a $40,000 payment on the Dalmeny Road property. In any event the plaintiff’s allegation throughout the hearing was unwaveringly that Mrs Rogers made none of the payments claimed. There is nothing in the evidence to support the setting aside of the deed and mortgage on this ground even if it is maintained.

Orders

347 The summons is dismissed. I direct that verdict and judgment be entered for the defendants on the statement of claim. The plaintiff is to pay the defendants costs.

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Last Modified: 05/13/2003

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Citations

Wentworth v Rogers [2003] NSWSC 371

Most Recent Citation

Wentworth v Rogers [2009] NSWSC 1038

Cases Citing This Decision

2

Wentworth v Rogers (No 1) [2016] NSWSC 283

Wentworth v Rogers [2009] NSWSC 1038

Cases Cited

18

Statutory Material Cited

5

Briginshaw v Briginshaw [1938] HCA 34

Australian Competition and Consumer Commission v Amcor Printing Papers Group Ltd [2000] FCA 17

CITATION:	Wentworth v Rogers & Anor [2003] NSWSC 371
HEARING DATE(S):	29/01/2002-08/02/2002, 15/03/2002, 22/03/2002, 25/03/2002-27/03/2003, 02/04/2002-05/04/2002, 02/05/2002, 10/05/2002, 22/07/2002, 11/11/2002, 06/02/2003 (further written submissions)
JUDGMENT DATE:	9 May 2003
JUDGMENT OF:	Howie J at 1
DECISION:	The summons is dismissed. I direct that verdict and judgment be entered for the defendants on the statement of claim. The plaintiff is to pay the defendants costs.
CATCHWORDS:	Fraudulent Conveyances - Conveyances Fraudulent as Against Creditors - Mortgage by husband over interest in property to wife - whether fraudulent as against prospective creditor, a litigant in proceedings against the husband.
LEGISLATION CITED:	Conveyancing Act 1919 - s 37A Supreme Court Rules - Pt 13 rule 2 Supreme Court Act 1970 - ss 23, 88 Justices Act 1902 - s 41(6) Bankruptcy Act 1966 - ss 6, 121, 122
CASES CITED:	Brigenshaw v Brigenshaw (1938) 60 CLR 336 Australian Competition and Consumer Commission v Amcor Printing Papers Group Ltd [2000] FCA 17; (2000) 169 ALR 344 Bradshaw v McEwans Pty Ltd (HCA, 7 April 1951, unreported) Wentworth v Rogers [1984] 2 NSWLR 422 Wentworth v Rogers (No. 5) (1986) 6 NSWLR 534 Wentworth v Rogers (No. 10) (1987) 8 NSWLR 398 Jones v Dunkel (1959) 101 CLR 298 Freeman v Pope (1870) LR 5 Ch App 536 Kang v Kwan [2002] NSWSC 1187 Re Cummins; Richardson v Cummins (1951) 15 ABC 185 Green v Schellner [2002] NSWSC 671 Re Symon: Public Trustee v Symon [1944] SASR 102 Silvera v Savic (1999) 46 NSWLR 124 Williams v Lloyd; Re Williams (1934) 50 CLR 341 Re Barnes; Ex parte Stapleton [1962] Qd R 231 PT Garuda Indonesia Ltd v Grellman (1992) 35 FCR 515 Middleton v Pollock; Ex parte Elliot [1876] 2 CH D 104 Gregg v Bromley [1912] 3 KB 474 Abignano v Wenkart (1998) 9 BPR 16,765 Alati v Wei Sheung [2000] NSWSC 601; 34 ASCR 489 Van Tri Huynh v Helleh Holdings Pty Ltd [2001] NSWSC 1162 Harkness v Partnership Pacific Ltd (1997) 41 NSWLR 204
PARTIES :	Katherine Wentworth v Gordon John Rogers & Anor
FILE NUMBER(S):	SC 11094/95
COUNSEL:	Plaintiff - Ms Wentworth in person 1st Defendant - Mr Rogers in person 2nd Defendant - Mr R. Lovas
SOLICITORS:	Plaintiff - in person 1st Defendant - in person 2nd Defendant - Dorrough Smart Solicitors