Wentworth v Rogers

Case [2004] NSWCA 430

NEW SOUTH WALES COURT OF APPEAL

CITATION:    Wentworth v. Rogers & Anor. [2004]  NSWCA 430

FILE NUMBER(S):
40474/03

HEARING DATE(S):             5 and 6 October 2004

JUDGMENT DATE:               25/11/2004

PARTIES:
Katherine Wentworth - appellant
Gordon J. Rogers - 1st respondent
Toni Rogers - 2nd respondent

JUDGMENT OF:      Hodgson JA Santow JA Hislop J   

LOWER COURT JURISDICTION:             Supreme Court - Common Law Division

LOWER COURT FILE NUMBER(S):        CL 11094/95

LOWER COURT JUDICIAL OFFICER:   Howie J

COUNSEL:
Mr. S. Robb QC with Ms. V. Culkoff for the appellant
Mr. R. Lovas for the 2nd respondent

SOLICITORS:
Russo & Partners, Arcadia for appellant
Beazley Singleton, Sydney for 1st respondent
Dorrough Smart, Sydney for 2nd respondent

CATCHWORDS:
CONVEYANCING - Fraudulent conveyances - Deed by husband acknowledging debt to wife, and associated mortgage over husband's property - Whether fraudulent as against prospective creditor - Whether wife a purchaser in good faith - Onus of proof

LEGISLATION CITED:
Conveyancing Act 1919 (NSW) s.37A
Bankruptcy Act 1996 (Cth) s.121

DECISION:
Appeal dismissed with costs.

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40474/03
CL 11094/95

HODGSON JA
SANTOW JA
HISLOP J

Thursday 25 November 2004

WENTWORTH V. ROGERS & ANOR.

Judgment

  1. HODGSON JA:  On 9 May 2003, Howie J, in proceedings brought by the appellant Ms. Wentworth against the respondents Mr. and Mrs. Rogers, dismissed the summons, directed a verdict and judgment for the respondents on the Statement of Claim, and ordered Ms. Wentworth to pay their costs.  Ms. Wentworth appealed to the Court of Appeal from those orders, and also from other orders not now requiring consideration. 

  2. On 27 October 2003, Howie J revoked the costs order previously made, and made more specific orders for costs, still generally requiring payment of costs by Ms. Wentworth. 

    CIRCUMSTANCES

  3. The proceedings in substance sought orders setting aside certain transactions between Mr. and Mrs. Rogers as being alienations of property made with intent to defraud creditors, within s.37A of the Conveyancing Act 1919, which is as follows:

    37A       Voluntary alienation to defraud creditors voidable

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

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

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

  4. An understanding of the issues is assisted by a brief history.

  5. There has been lengthy litigation involving Ms. Wentworth and Mr. Rogers arising out of events that occurred on 29 January 1977, at a time when they were still married.  A jury verdict on 24 June 1994 in the proceedings between them established, as between them, that these events amounted to an unlawful assault by Mr. Rogers on Ms. Wentworth.

  6. Mr. Rogers and…

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AGLC
Wentworth v Rogers [2004] NSWCA 430
Case
[2004] NSWCA 430
Decision Date

CaseChat Overview and Summary

In this matter before the Court of Appeal, Ms. Wentworth was the plaintiff, and Mr. and Mrs. Rogers were the defendants. The dispute concerned a deed acknowledging a debt from Mr. Rogers to his wife and an associated mortgage over Mr. Rogers's property. Ms. Wentworth alleged that this deed and mortgage constituted a fraudulent alienation of property, intended to defeat her claim as a prospective creditor.

The central legal issue before the primary judge was whether Ms. Wentworth could prove, on the balance of probabilities, that the deed and mortgage were a sham, entered into by the defendants with the intent to defraud her. Specifically, the court was required to determine if there was no genuine agreement for Mrs. Rogers to pay her husband's legal expenses, if she did not in fact make those payments, and if Mr. Rogers was not genuinely indebted to his wife as acknowledged in the deed. The court also considered whether Mrs. Rogers was a purchaser in good faith and the onus of proof in establishing these elements.

The primary judge reasoned that the defendants were entitled to arrange their financial affairs as they saw fit, including designating income as joint or individual and agreeing between themselves who would bear the responsibility for particular expenses. The judge found that even if funds were paid from a joint account or traced to one defendant, this did not necessarily mean the funds belonged to that defendant. The judge concluded that if an agreement existed for Mrs. Rogers to use her identifiable funds to pay Mr. Rogers's legal expenses, the court should uphold that agreement, even if a third party like Ms. Wentworth argued otherwise based on the source of funds.

The appeal was dismissed with costs.

Orders

Orders of the court

Appeal dismissed with costs.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

The orders sought in these proceedings were originally sought by an application in the Court of Appeal in September 1994; and these proceedings themselves were commenced in the Common Law Division by summons on 30 March 1995. They were heard by the primary judge over many days between 29 January 2002 and 6 February 2003. DECISION OF PRIMARY JUDGE The primary judge said early in his judgment that reduced to its essence, Ms. Wentworth’s case was that the acknowledgement of indebtedness was a sham. He noted that in substance the claim was that there had been a fraudulent alienation of property, and that Ms. Wentworth was seeking relief in the nature of that provided by s.37A of the Conveyancing Act. He also said this: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. …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. The primary judge considered submissions based on financial records produced by Mr. and Mrs. Rogers to the effect that the legal fees of Mr. Rogers had not been paid by Mrs. Rogers, so that the payment of these fees could not have given rise to a debt from Mr. Rogers to Mrs. Rogers, or have been believed to do so. However, the primary judge dealt with those submissions inter alia on the following basis:189 In those circumstances there does not seem to me to be any reason why the defendants could not themselves, as between themselves, determine what income would be designated as being joint money or as belonging to either one of them and into which account income should be placed at any particular time. Nor does it seem to me to be unreasonable that they might themselves, as between themselves, determine that one person would accept the burden or responsibility for particular expenses from an income which had, notionally at least, been designated as belonging to one or other of them. It might be that a dispute could later arise between them as to these arrangements and the lack of any strict accounting records might give rise to difficulties of proof of the arrangements if such was necessary. It might be that complicated questions could arise as to what legal or equitable interest each held in their joint or individual assets at any given time. 190 But it does not necessarily follow that, because funds are paid out of a joint account, those funds must be regarded as being jointly owned, or, if paid out of the account in the name of one of the defendants, that it should necessarily be treated as money belonging to that defendant. Nor does it follow, that, if at any particular point in time the source of the apparently joint funds can be traced to one particular defendant, those funds should be regarded as necessarily belonging to that defendant. Yet that type of reasoning is the basis for much of the plaintiff’s argument that funds apparently paid towards Mr Rogers’s legal expenses were paid by Mr Rogers himself and not by Mrs Rogers. If it is accepted that there was an agreement that certain funds would remain identifiable as belonging to Mrs Rogers whenever they were received and to whichever account they were paid, and if it were agreed by Mrs Rogers that she would use her funds to pay Mr Rogers’s legal expenses, there is no reason why, at the behest of the plaintiff, this Court should find that, contrary to that agreement, the payments, were in fact made by Mr Rogers from his own money.

Ratio Decidendi

Legal Principle Established

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