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FEDERAL COURT OF AUSTRALIA

Prentice and Anor v Cummins (No 6) and Ors

[2003] FCA 1002

Sackville J

24 September 2003 - Sydney

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Sackvill J.

AN ADJOURNED HEARING

   This is the adjourned hearing of proceedings in which the applicants (the Trustees) are the trustees of the bankrupt estate of John Daniel Cummins (the Bankrupt). The Bankrupt presented his own debtor's petition on 13 December 2000 and became bankrupt by virtue of the acceptance of that petition. At the time the petition was accepted, the Bankrupt was a senior counsel at practice at the Sydney Bar. His principal creditor was the Australian Taxation Office. Prior to lodging taxation returns in February 2000, in respect of the taxation years 1992 to 1999, the Bankrupt had not lodged any income tax returns since about 1955.

  2  The Trustees have applied, pursuant to ss 120 and 121 of the Bankruptcy Act 1966 (Cth) for orders and declarations that certain transfers of assets and payments of money by the Bankrupt are void as against them. The transactions attacked by the Trustees are:

 •  the transfer in 1987 to the second respondent (Mrs Cummins), the Bankrupt's wife, of the Bankrupt's interest in the matrimonial home at Alexander Street, Hunters Hill (the "Hunters Hill Property");

 •  the transfer in 1987 to the third respondent (Aymcopic), the trustee of the Cummins Family Trust, of the Bankrupt's 6,000 shares in Counsels' Chambers Ltd (the Shares); and

 •  the payment by the Bankrupt of various sums of money totalling $194,516.40 to Mrs Cummins over the period 1992 to 1999.

  3  In addition, the Trustees allege that:

 •  the Bankrupt beneficially held a share in the fourth respondent (Hospitality Hire) registered in his name at the date of his bankruptcy, and thus the share became vested in the Trustees on that date; and

 •  (as an alternative to the claim concerning the payments of $194,516.40) the Bankrupt lent Mrs Cummins the sum of $138,546.80, which sum had not been repaid by her at the date of the bankruptcy and thus is a debt due by her to the bankrupt estate.

  4  The first 3 days of the hearing of this matter took place almost 12 months ago, from 17-19 September 2002. At the close of the case in chief for the Trustees, the respondents submitted that they had no case to answer in relation to 3 of the Trustees' pleaded claims. The claims subject to the no case submissions related to:

 •  the transfer by the Bankrupt to Mrs Cummins of his interest in the Hunters Hill Property;

 •  the transfer by the Bankrupt to Aymcopic of the Shares; and

 •  the payment to Mrs Cummins of sums totalling $194,516.40.

  5  For reasons I gave in a separate judgment (Prentice v Cummins (No 4) [2002] FCA 1215), I ruled that the respondents could make no case submissions on those 3 issues, but only if they elected to call no evidence. Mr Brereton SC, who appeared with Mr Ashhurst for the respondents, made the election in circumstances that I described in that judgment: Prentice v Cummins (No 4), at [8]-[11].

  6  As I recorded in that judgment, there was some debate as to whether the ruling meant that the respondents' election required them to refrain from calling evidence in the proceedings on any cause of action, or whether they were required to refrain only from calling evidence in respect of the 3 causes of action on which the respondents proposed to make no case submissions. That debate was cut short by the Trustees' decision to consent to my hearing the no case submissions in the manner foreshadowed by Mr Brereton: that is, the Trustees consented to my entertaining the no case submissions on the basis that the respondents' election to call no evidence bound them only in relation to the 3 causes of action that were the subject of the no case submissions.

  7  In a judgment delivered on 5 December 2002 (Prentice v Cummins (No 5) (2002) 124 FCR 67; 51 ATR 400), I ruled that the no case submissions succeeded in relation to:

 •  the Trustees' claim that the transfer of the Bankrupt's interest in the Hunters Hill Property was void against them by reason of s 120 of the Bankruptcy Act 1966 (Cth); and

 •  the claims relating to moneys paid by the Bankrupt to Mrs Cummins (except for the claim that Mrs Cummins had failed to repay the loan of $138,546.80).

  8  I further held that the respondents' no case submissions failed in relation to:

 •  the Trustees' claim that the transfer of the Bankrupt's interest in the Hunters Hill Property was void against them by reason of s 121 of the Bankruptcy Act 1966 (Cth); and

 •  the Trustees' claim that the transfer of the Shares was void against them by reason of s 121 of the Bankruptcy Act 1966 (Cth).

 The judgment in Prentice v Cummins (No 5) should be read with the present judgment.

  9  In view of the rulings I made in Prentice v Cummins (No 5) I set the matter down for a further hearing to resolve any outstanding issues. Because of the difficulty in obtaining dates convenient to counsel, the adjourned hearing was not listed until 26 May 2003. Unfortunately, because of supervening court commitments, it was necessary for me to vacate that date. The earliest date convenient to the parties that could be found thereafter was 8 September 2003.

THE ISSUES

  10  After judgment was delivered on the no case submissions, the respondents filed a motion that the claims for relief in paras 1, 2 and 4-9 of the Further Amended Application be heard and determined separately from the claims in paras 10-15 thereof. The object of this motion was to separate the Trustees' claims relating to the Hunters Hill Property and the Shares (as to which the respondents had elected to call no evidence) from the remaining causes of action (as to which the respondents had made no such election). The particular forensic concern that the respondents appeared to have in mind was the possibility that Mrs Cummins, whom the respondents proposed to call on the remaining causes of action, might be cross-examined on issues relevant to the claims relating to the Hunters Hill Property and the Shares. By separating the 2 categories of causes of action the respondents presumably wished to ensure that Mrs Cummins could go into the witness box without the Trustees being able to elicit evidence from her that might have supported their case in relation to the transfers of the Hunters Hill Property and the Shares. They may also have been concerned that evidence in chief given by Mrs Cummins on the remaining causes of action might be used against the respondents in relation to the causes of action in respect of which they had elected to call no evidence.

  11  At the resumed hearing, the respondents accepted that, given my reasoning on the no case submissions, no further issues remained to be determined in respect of the Trustees' claims to have satisfied s 121 of the Bankruptcy Act 1966 (Cth) in relation to the transfers of the Hunters Hill Property and the Shares. That is, they accepted that the Trustees had established, in terms of s 121 of the Bankruptcy Act 1966 (Cth), that each asset would probably have been available to creditors had it not been transferred and that the Bankrupt's main purpose in transferring the assets was to prevent them from becoming divisible among his creditors. However, the respondents disputed that the Trustees were entitled to the full measure of relief they had claimed. In this respect, they made 2 submissions.

  12  First, the respondents contended that the Trustees were not entitled to a 50% share in the Hunters Hill Property, as they had claimed, but only a 24.19% interest. It was common ground that immediately prior to the 1987 transfer the Bankrupt was registered as joint proprietor with Mrs Cummins of the Hunters Hill Property. The respondents submitted, however, that I should find that Mrs Cummins had contributed $23,500 of the purchase price of $31,000 paid for the Property in 1970 and that the Bankrupt contributed only $7500. It followed, so they argued, that the Bankrupt held only a 24.19% beneficial interest in the Property (7.5/31). That is, the Bankrupt held his legal interest as joint tenant on a resulting trust for Mrs Cummins and himself in the proportion of 8/15.5 (51.62%) and 7.5/15.5 (48.38%) respectively. On this approach, even if the 1987 transfer of the Bankrupt's interest in the Hunters Hill Property was void as against the Trustees, they were entitled to relief only in respect of a 24.19% share of the beneficial interest in the Property.

  13  Secondly, the respondents accepted that, given my reasoning on the no case submissions, the Trustees were entitled to relief insofar as Aymcopic retained the Shares or the proceeds of the sale of any Shares. However, the respondents pointed out that 2000 of the 6000 Shares had been sold prior to any demand being made by Aymcopic, yielding proceeds of $177,154. Moreover, prior to any such demand, Aymcopic, as trustee of the Cummins Family Trust, had distributed $57,144 of the proceeds to a beneficiary of the Trust. It followed, so Mr Brereton argued, on the authority of Brady v Stapleton (1952) 88 CLR 322, that the Trustees could not recover the sum of $57,144 so distributed.

  14  The issues that arose on the adjourned hearing were the following:

 (i)  Whether the issues should be separated in the manner sought by the respondents in their motion.

 (ii)  The quantum of the Bankrupt's beneficial interest in the Hunters Hill Property at the date of the transfer of his interest to Mrs Cummins.

 (iii)  Whether the Bankrupt was beneficially entitled to the share held in his name in Hospitality Hire as at the date of his bankruptcy.

 (iv)  Whether the Trustees are entitled to recover from Aymcopic the sum of $57,144 distributed to a beneficiary of the Cummins Family Trust prior to any demand being made by them in respect of the Shares.

 (v)  Whether Mrs Cummins was indebted to the Bankrupt at the date of the bankruptcy in the sum of $138,546.80.

  15  It should be noted that, in determining the form of any relief that may be appropriate, the parties had agreed prior to the original hearing on a regime for the sale of the remaining 4000 Shares by Aymcopic and of the Bankrupt's joint interest in the Hunters Hill Property. The proceeds of sale were held by the respondents' solicitors on trust pending the outcome of the proceedings. I was informed that the proceeds of sale of the half share in the Hunters Hill Property amounted to $1,077,397. I was not told the amount yielded by the sale of the 4000 Shares.

EVIDENCE

  16  At the adjourned hearing, Mr Brereton read 3 affidavits by Mrs Cummins, an affidavit by Mr Moore, who was Mrs Cummins' accountant until the early 1980s, and an affidavit by Mr Russell, the respondents' solicitor. Mrs Cummins and Mr Moore were cross-examined. In view of the respondents' election to call no evidence on the Trustees' claims relating to the Hunters Hill Property and the Shares, it was common ground that the respondents' evidence in chief was admitted only on the causes of action relating to the share in Hospitality Hire and the loan allegedly due by Mrs Cummins to the Bankrupt. (It may be that the evidence in chief adduced by the respondents on the remaining causes of action could have been relied on by the Trustees to the extent that it supported their case on the causes of action subject to the respondents' election. However, Mr Coles QC, who appeared with Mr Newlinds for the Trustees, did not invite me to take into account any of Mrs Cummins' evidence in the causes of action relating to the Hunters Hill Property or the Shares.)

  17  Mr Moore's evidence primarily related to the instructions he had received from Mrs Cummins in 1980, when the M Cummins Family Trust was established. There was no significant challenge to the accuracy of his evidence. Not surprisingly, however, Mr Moore's recollection of events which occurred 23 years ago was somewhat vague and he could add little to such contemporary documentation as was in evidence.

  18  Mrs Cummins was not seriously shaken in her cross-examination. While she was imprecise on some matters and perhaps unconsciously understated her contemporary understanding of commercial concepts, I think that she was a truthful witness. I would accept her evidence unless there is a particular reason for thinking that she was mistaken in her recollection of events.

  19  I should note that Mrs Cummins gave evidence that she and the Bankrupt separated in February 2002, largely in consequence of the events leading up to her husband's bankruptcy. This evidence was adduced by the respondents in order to rebut any suggestion that an adverse inference should be drawn against them on the Hospitality Hire issue by reason of their failure to call evidence from the Bankrupt as to whether he held his share in Hospitality Hire on trust for Mrs Cummins.

  20  In Prentice v Cummins (No 5), I concluded that the respondents' no case submissions had to fail even if it was not open to me to draw adverse inferences against them by reason of their failure to adduce evidence from the Bankrupt as to his purpose in making the transfers. However, I held that the absence of the Bankrupt from the witness box enabled me, on the principle of Jones v Dunkel (1959) 101 CLR 298, to accept more readily inferences I would otherwise draw from the evidence. I took that view because I regarded the Bankrupt as within the respondents' camp. That conclusion, in turn, was founded on an admission in the pleadings that Mrs Cummins had lived with the Bankrupt as his wife since 1964. There was no evidence, at that stage of the proceedings, inconsistent with the admission contained in the pleadings.

  21  Mrs Cummins' evidence at the adjourned hearing showed that in fact her marriage to the Bankrupt had broken down before the first hearing. That does not mean, however, that my rejection of the no case submissions (to the extent that they were rejected) was founded, in a relevant sense, on a false factual assumption. It is fundamental that courts act on the evidence before them. At the time the no case submissions were determined, there was no evidence to contradict the allegation admitted on the pleadings that Mrs Cummins had lived with the Bankrupt as his wife since 1964. In the absence of any application to withdraw the admission, or any evidence to the contrary, the no case submissions had to be addressed on the basis of the facts admitted by the pleadings.

Issue 1: the respondents' motion

  22  After hearing argument on the respondents' motion, I indicated that I proposed to dismiss it and I would give reasons later. As it happens, the particular forensic concerns that gave rise to the motion proved to be unfounded, in the sense that Mr Coles did not seek to cross-examine Mrs Cummins on any matter relevant to the quantification of the Trustees' claim in respect of the Hunters Hill Property and did not invite me to take account of her evidence on the causes of action relating to the Hunters Hill Property or the Shares. The question of severance of the causes of action in the proceedings therefore became largely academic. Nonetheless, I shall briefly state my reasons for dismissing the motion.

  23  The respondents submitted that the causes of action relating to the Bankrupt's share in Hospitality Hire and to the loan allegedly due by Mrs Cummins to the Bankrupt were distinct from the claims founded on s 121 of the Bankruptcy Act 1966 (Cth). According to Mr Brereton, the election made by the respondents required the case on the s 121 claims to go to the Judge, as the finder of fact, with no further evidence from either party. This, he said, followed from the fact that the Trustees had closed their case in chief in relation to those claims.

  24  The difficulty with this submission, in my view, is that it was the respondents who made the election to call no further evidence. The Trustees were not asked to make and did not make any such election. There appears to be no reason in principle why, assuming the joinder of the causes of action to be proper, counsel for the Trustees could not seek to adduce evidence relevant to any of the issues in the proceedings by way of cross-examination of a witness called by the respondents. This would include cross-examination on issues relevant to the causes of action in respect of which the respondents made their election. Mr Brereton did not identify any such reasons, nor did he cite any authority to support his contention.

  25  The general principle is that a witness called by a party can be cross-examined by the other party on any matter relevant to an issue in the proceedings. This was the practice of common law courts and was adopted by courts of equity. Thus in Mayor and Corporation of Berwick-Upon-Tweed v Murray (1850) 19 LJ Ch 281 at 286, Knight Bruce VC upheld a submission that:

   

the practice now pursued in the courts of equity was assimilated to that of the courts of law, and it was established that when one party should examine a witness on any points whatever, the opposite party might cross-examine that witness upon any other point he should think fit.

 See, too, Morgan v Brydges (1818) 2 Stark 314; 171 ER 657; J D Heydon, Cross on Evidence (6th Aust ed, 2000), at [17500].

  26  In R v Chin (1985) 157 CLR 671, Dawson J explained (at 686) the position in a criminal trial as follows:

   

Cross-examination, including the cross-examination of an accused person by the prosecution, may extend to all matters in issue, whether or not they were the subject of evidence in chief by the witness. Thus, apart from any unfairness which may arise from a failure to observe the general requirement that the prosecution should, during the conduct of its case, lead all the available evidence upon which it wishes to rely, there is no reason why it should not lead in cross-examination evidence which relates solely to its own case. With this may be contrasted the practice in federal courts and many State courts in the United States of America where the view is taken that cross-examination must be limited to matters of credit and matters raised in evidence in chief: see Wigmore on Evidence, Chadbourn rev (1976), pars 1885 et seq. This view has never been taken in this country.

  27  The approach taken by Dawson J in relation to criminal trials is consistent with that adopted in relation to a civil trial by Young J in GPI Leisure Corp Ltd v Herdsman Investments Pty Ltd (No 3) (1990) 20 NSWLR 15. There his Honour said (at 22) that it is the duty of the trial judge to ensure that all parties have a fair trial and that in:

   

carrying out his duties the trial judge must so exercise his discretion in and about the examination and cross-examination of witnesses that a fair trial is assured.

 These observations suggest that there may be circumstances in which the interests of justice require some limit to be imposed on the extent to which a party can cross-examine a witness on issues not addressed by that witness in chief: cf Re Woodfine; Thompson v Woodfine (1878) 47 LJ Ch 832 (issues raised by a counter-claim were distinct from those raised in the claim and the defendant was permitted to cross-examine the plaintiff on issues relevant to the claim but not on the counter-claim).

  28  I should add that there is nothing in the Evidence Act 1995 (Cth) which appears to alter these principles. Section 27 provides that a party may question any witness except as provided by the Act. The court retains the general power to control the conduct of proceedings (s 11) and may make orders in relation to the ways in which witnesses are to be questioned (s 26(a)). In addition, the court may refuse to admit evidence if its probative value is substantially outweighed by the danger that the evidence might be unfairly prejudicial to a party or be misleading or confusing (s 135(a), (b)). None of these provisions cuts across the position established at common law and in equity concerning the scope of cross-examination of a witness.

  29  If Mr Brereton had been able to point to injustice flowing from the Trustees' entitlement to cross-examine Mrs Cummins on all issues relevant to the proceedings, there may have been a sound basis for curtailing her cross-examination on issues relevant to the causes of action in respect of which the respondents elected to call no evidence. However, I do not think that Mr Brereton identified any such injustice.

  30  Mr Brereton suggested that the respondents had made their election to call no evidence on the assumption that the Trustees, having closed their case, would not be permitted to call any further evidence relevant to the causes of action under s 121 of the Bankruptcy Act 1966 (Cth). But the respondents made no application to separate the trial of these causes of action before they made their election. Nor did Mr Brereton suggest that the respondents had been misled by the Trustees as to how they intended to conduct their case. Indeed, in the course of debate on whether the respondents could elect to call no evidence in relation to some causes of action while reserving the right to call evidence on others, Mr Coles made it clear that if that procedure were adopted he would be at liberty to cross-examine Mrs Cummins (assuming she gave evidence) on all issues in the proceedings. Furthermore, the Trustees' consent to the course suggested by the respondents can fairly be said to have been based on the expectation that they would be permitted to take the approach foreshadowed by Mr Coles.

  31  In these circumstances, I did not think it would be unjust to the respondents to permit the Trustees to cross-examine Mrs Cummins on the causes of action in respect of which the respondents elected to call no evidence. If the respondents did assume that no such cross-examination would be permitted, in my opinion there was no reasonable basis for the assumption.

Issue 2: the Hunters Hill property

  32  The Trustees adduced only documentary evidence in support of their claim to be entitled to the Bankrupt's interest as beneficial joint owner of the Hunters Hill Property. As I have noted, the respondents elected to call no evidence in relation to this claim. It follows that I am obliged to determine the extent of the Bankrupt's interest at the date of the 1987 transaction by reference to the documentary evidence, without the assistance of evidence from the Bankrupt or Mrs Cummins, the persons who acquired the Hunters Hill Property in 1970. Since the documentary evidence is incomplete, each party resorted to presumptions and inferences to support their respective positions. Before recounting the submissions, I shall first set out the facts that were not in contest.

Facts not in contest

  33  The Bankrupt and Mrs Cummins entered into a contract of sale on 14 April 1970 to purchase the Hunters Hill Property. The contract of sale itself was not in evidence, but a notice to complete issued by the vendor's solicitors on 10 July 1970 shows that a deposit was paid, although the amount of the deposit is not recorded.

  34  Settlement took place on 27 July 1970. The vendor executed a transfer in favour of the Bankrupt and Mrs Cummins as joint tenants. The transfer was expressed to be:

   

in consideration of $31,000 (the receipt whereof is hereby acknowledged) paid to [the vendor] by John Daniel Cummins and Mary Elizabeth Cummins.

 On 10 August 1970 the purchasers became registered as joint tenants of the Hunters Hill Property.

  35  The purchase of the Hunters Hill Property was financed in part by a loan of $15,000 from the Commonwealth Trading Bank, secured by a mortgage executed by both the Bankrupt and Mrs Cummins as mortgagors. For some reason, the mortgage appears not to have been registered until 1974, although nothing turns on this. It was common ground that the mortgage was to be treated as a joint contribution by the Bankrupt and Mrs Cummins of $15,000 to the purchase price: Calverley v Green (1984) 155 CLR 242 at 257-258, per Mason and Brennan JJ.

  36  On 27 July 1970, the date of settlement, the vendor's solicitors issued a receipt in the following form:

   

J P GROGAN & CO Solicitors 2a Florence Street, Hornsby
No 11134	Phone 47-3642
	27th July 1970

 

Received from M E Cummins

by cheque the sum of Thirteen thousand & fifty three dollars 27 cents

being advance re purchase.

 

		J P Grogan & Co
$13053:27	Stamp
	Duty	per: D Head
	RS0444	Trust Account

  37  On 26 August 1987, the Bankrupt entered into a contract with Mrs Cummins to sell to her his interest as joint tenant of the Hunters Hill Property. The price was said to be $205,250, being half the value attributed to the Property by a registered valuer. The contract required the payment of the purchase price on completion. On the same date, the Bankrupt executed a transfer of the Hunters Hill Property in favour of Mrs Cummins as transferee. The transfer was signed by Mr Harris, the solicitor who prepared the documentation, as "solicitor for" the transferee. The transfer included an acknowledgement by the Bankrupt that he had received the consideration of $205,250. It is, however, common ground that Mrs Cummins did not pay the purchase price or any part of it. Nonetheless, she paid the stamp duty on the contract and transfer and the valuer's fees. The transfer was subsequently registered and Mrs Cummins became registered as proprietor of the fee simple estate in the Hunters Hill Property.

The contributions to the purchase price

  38  Mr Brereton invited me to find that Mrs Cummins had contributed the whole of the balance of the purchase price, after allowing for the mortgage of $15,000: that is, that she had contributed the deposit of $3100 and the balance of $12,900 (presumably together with some further adjustments or expenses totalling $153.27) as recorded in the receipt for $13,053.27 issued by the vendor's solicitors.

  39  Mr Brereton supported the contention that Mrs Cummins had paid the deposit by pointing to a debit of $3000 recorded in a fully drawn loan account with the Commonwealth Trading Bank in Mrs Cummins' name. Mr Brereton submitted that the debit was so close to the conventional 10% deposit ($3100) as to suggest that Mrs Cummins had paid the amount from her loan account. There was no evidence as to the payee of the sum of $3000.

  40  There is no direct evidence as to the quantum of the deposit. I am prepared to infer, however, that the deposit was 10% of the purchase price. That accords with usual conveyancing practice in New South Wales in 1970, a matter which I think can be regarded as not reasonably open to question and which is common knowledge: Evidence Act 1995 (Cth), s 144(1), (2); R M Stonham, The Law of Vendor and Purchaser (1964) at 347-348. It is also consistent, more or less, with the balance of the purchase price remaining after allowing for the mortgage and the payment of $13,053.27 recorded in the receipt of 27 July 1970.

  41  The difficulty facing the respondents' submission, however, is that the debit of $3000 to Mrs Cummins' loan account is recorded as having been made on 30 April 1970, 16 days after the date of the contract of sale. In the ordinary course one would expect the deposit to be paid no later than the date of exchange of contracts and for the cheque to be presented almost immediately. Mr Brereton suggested that the debit might not have been precisely $3100 because a preliminary deposit of $100 may have been paid by Mrs Cummins. He also suggested that the agent may have delayed presenting the cheque, thus explaining why the debit was not recorded until 30 April 1970. These explanations are, however, speculative and are not supported by evidence. It is, of course, possible that the debit was related in some way to the deposit paid in respect of the Hunters Hill Property, but in the absence of a receipt or other evidence linking the debit to the payment of the deposit, I cannot be satisfied on the balance of probabilities that Mrs Cummins paid the deposit from her own resources or that the debit of $3000 reflected moneys paid towards acquisition of the Hunters Hill Property.

  42  Mrs Cummins' position is stronger in relation to the sum of $13,053.27. The receipt from the vendor's solicitors records that the amount was received by cheque on the date of settlement, 27 July 1970, from Mrs Cummins (not from Mrs Cummins and the Bankrupt) as an "advance re purchase". This suggests, in the absence of any other evidence, that Mrs Cummins herself probably provided the funds. That inference receives some modest support from the fact that at some time between 23 June 1970 and 27 August 1970, a sum or sums amounting to $13,000 was debited to Mrs Cummins' fully drawn loan account (the relevant page of the bank statement was missing). While there is not a precise equivalence between the cheque provided by Mrs Cummins and the debit to her account, the bank statements at least show that there was a source of funds from which Mrs Cummins could have made the payment, or at any rate all but a very small proportion of it.

  43  Mr Coles submitted that since Mrs Cummins herself had elected not to give evidence in relation to the Hunters Hill Property claim, I should infer that her evidence would not have been helpful to her case. But the receipt provides affirmative evidence that Mrs Cummins provided the sum of $13,053.27 for the purchase of the Hunters Hill Property. The bank statements relating to the loan account show that there were funds available to Mrs Cummins to enable her to pay that sum to the solicitors and that an amount very close to the sum she paid by cheque could have been withdrawn from the account on or about the date of settlement. As Mr Coles accepted in argument, there was no evidence that the Bankrupt had provided any portion of the sum of $13,053.27. (I would not regard the acknowledgment in the transfer of receipt of the purchase price from the Bankrupt and Mrs Cummins as indicating the contrary, since the acknowledgement did not represent that the purchase price had been paid by the purchasers equally.) In these circumstances, I do not think that Mrs Cummins' failure to give evidence on the Hunters Hill Property claim justifies my declining to draw the inference available from the documentary evidence that Mrs Cummins provided the cheque for $13,053.27 from her own resources. I find, therefore, on the balance of probabilities, that Mrs Cummins provided $13,053.27 towards the purchase price of the Hunters Hill Property from her own resources.

  44  On the assumption (which both sides seemed to accept) that a deposit of $3100 was paid, I am satisfied on the balance of probabilities that Mrs Cummins provided $20,400 (that is $12,900 plus $7500) of the total purchase price of $31,000: that is, she contributed 65.8% of the price. This percentage would vary slightly if the additional sum of $153.27 ($13,053.27 less $12,900) was regarded as a contribution to the net cost of the purchase, but Mr Brereton did not suggest that I should take account of the additional sum.

  45  There is insufficient evidence to make an affirmative finding as to whether Mrs Cummins, the Bankrupt or both (or, for that matter, a third party) paid the deposit. I do not think that the fact that Mrs Cummins probably paid most of the sum of $13,053.27 from her loan account makes it probable that the debit of $3000 from the same account related to payment of the deposit. Nonetheless, if the only possibilities were that the deposit was paid by Mrs Cummins alone, the Bankrupt alone or both equally, I might have been able to conclude (assuming each possibility to be equally likely) that on the balance of probabilities Mrs Cummins contributed at least half the deposit. But these are not the only possibilities. In these circumstances, I cannot be satisfied on the balance of probabilities that Mrs Cummins paid any part of the deposit.

Submissions

  46  Mr Coles submitted that even if Mrs Cummins had contributed more than 50% of the purchase price of the Hunters Hill Property, nonetheless the Bankrupt held a beneficial joint interest in the Property at the date of the 1987 transfer. Mr Coles relied on 2 arguments:

 •  First, the presumption of a resulting trust in favour of Mrs Cummins was rebutted by the fact that the Hunters Hill Property was intended to be the matrimonial home and that both parties had contributed to the purchase price. It was proper to infer from these matters that the parties intended that they should be joint beneficial owners of the Property, so that the survivor would take the whole. The inference was further supported by the undisputed evidence that the Bankrupt and Mrs Cummins, before purchasing the Hunters Hill Property, had acquired at least 2 other properties as joint tenants.

 •  Secondly, Mrs Cummins' action in entering into a contract in 1987 to purchase the Bankrupt's interest for half the value attributed at the time by a valuer to the Hunters Hill Property (that is, a contract price of $205,250, being half the valuation of $410,500) was a clear acknowledgement by her that she intended, from the outset, that the Bankrupt should have a joint beneficial interest in the Property. Had Mrs Cummins believed that she already held (roughly) a two-thirds beneficial interest, there would have been no occasion to enter such a contract, much less pay stamp duty on the full value of a half interest in the Property.

  47  Mr Brereton relied on the presumption of law that beneficial interests in a property are held proportionately by the purchaser according to the contribution made by each to the purchase price. While he acknowledged that the presumption of a resulting trust is rebuttable, he submitted that it could not be rebutted by the so-called presumption of advancement as there is no such presumption in favour of a husband in whose name property is acquired with funds provided by his wife. He further submitted that the 1987 transaction could not be used to rebut the presumption of a resulting trust because it was never contemplated that Mrs Cummins would pay the expressed consideration of $205,250. Mr Brereton pointed to a letter written by the Bankrupt's solicitor some 10 years after the 1987 transaction suggesting that the transaction may have been structured as a sale so as to avoid higher rates of duty applicable.

The principles

  48  One of the curious features of the law governing property relationships between married persons or de facto partners is that a dispute arising out of the same facts may produce different outcomes depending upon the procedural context in which the dispute is resolved. In a property dispute between husband and wife following the breakdown of their marriage, for example, the Family Court has a discretion to adjust the parties' property rights to reflect the parties' financial and non-financial contributions to the relationship: Family Law Act 1975 (Cth), s 79. So, too, legislation has conferred a discretionary power on courts to adjust the property rights of de facto partners in the event of a breakdown of their relationship: see, for example, Property (Relationships) Act 1984 (NSW), s 8 (formerly the De Facto Relationships Act 1984 (NSW)). Upon the termination of a relationship by death, the surviving partner can invoke the court's discretion to alleviate injustice flowing from the legal and equitable principles determining the beneficial ownership of property: see, for example, Family Provision Act 1982 (NSW). But where one partner to a marriage or other relationship becomes bankrupt, any dispute between the remaining partner and the trustee in bankruptcy falls to be decided according to conventional legal and equitable principles. The remaining partner and, for that matter, the trustee in bankruptcy, cannot avail themselves of the "large discretions" that are applicable by statute in other circumstances: cf Bryson v Bryant (1992) 29 NSWLR 188 at 195, per Kirby P.

  49  Australian law has resisted the idea that equitable relief is available whenever justice, fairness or good conscience requires it (Muschinski v Dodds (1985) 160 CLR 583 at 608, per Brennan J; at 615-616, per Deane J; Baumgartner v Baumgartner (1987) 164 CLR 137 at 148, per Mason CJ, Wilson and Deane JJ). It is therefore necessary to resort to doctrines such as the presumptions of resulting trust and advancement in order to determine the interests of the parties to the litigation.

  50  The use of the presumptions has not gone unchallenged. In his dissenting judgment in Calverley v Green (1984) 155 CLR 242 at 264, Murphy J observed that:

   

[p]resumptions arise from common experience. … If common experience is that when one fact exists, another fact also exists, the law sensibly operates on the basis that if the first is proved, the second is presumed. It is a process of standardized inference. As standards of behaviour alter, so should presumptions, otherwise the rationale for presumptions is lost, and instead of assisting the evaluation of evidence, they may detract from it.

 His Honour considered that the old presumptions were not sustainable by common experience and should be discarded. See, too, Brown v Brown (1993) 31 NSWLR 582 at 595, per Kirby P.

  51  There is in my view a great deal to be said for Murphy J's approach. It is hard to accept, for example, that the principle that the so-called presumption of advancement operates in favour of a wife, but not in favour of a husband, accords with current "common experience": cf Calverley v Green at 247, per Gibbs CJ. Similarly, it is hard to accept that the application of the presumption of advancement to a wife, but not to the female partner in a long term de facto relationship, matches contemporary community expectations: cf Calverley v Green at 257-261, per Mason and Brennan JJ. Nonetheless, it is authoritatively established that the presumptions are:

   

too well entrenched as "landmarks" in the law of property … to be simply discarded by judicial decision. Indeed, the law embodying them has been said … to be so clear that it "can … no longer be the subject of argument". …

 Calverley v Green at 266, per Deane J; Nelson v Nelson (1995) 184 CLR 538 at 548, per Deane and Gummow JJ; at 602, per McHugh J.

  52  The parties in the present case were agreed that the extent of the respective beneficial interests of Mrs Cummins and the Bankrupt had to be determined at the time the Hunters Hill Property was purchased: Calverley v Green at 252, per Gibbs CJ. No reliance was placed on conduct post-dating the acquisition of the Property in order, for example, to make out a case of unconscionable conduct by one of the parties to the relationship: cf Baumgartner v Baumgartner at 148-149, per Mason CJ, Wilson and Deane JJ. Nor was any reliance placed on the post-acquisition conduct of Mrs Cummins and the Bankrupt (except for the form of the 1987 transaction) in order to shed light on their common intention at the time the Hunters Hill Property was acquired.

  53  The starting point is the equitable presumption which arises where unequal contributions are made to the acquisition of an asset by parties to a marriage (or other relationship). The principle was that stated by Mason and Brennan JJ in Calverley v Green at 258:

   

[w]hen two or more purchasers contribute to the purchase of property and the property is conveyed to them as joint tenants the equitable presumption is that they hold the legal estate on trust for themselves as tenants in common in shares proportionate to their contributions unless their contributions are equal.

 See, too, Calverley v Green at 246-247, per Gibbs CJ; at 266-267, per Deane J; Official Trustee in Bankruptcy v Lopatinsky [2003] FCAFC 109 at [112], per Whitlam and Jacobson JJ. Mason and Brennan JJ went on to observe in Calverley v Green (at 259) that this "basic presumption" could be displaced in appropriate cases by the presumption of advancement or "perhaps" it could be qualified by an inference of the kind espoused by Lord Upjohn in Pettitt v Pettitt [1970] AC 777 at 815.

  54  No issue arises in the present case about the presumption of advancement. However, the Trustees did rely on Lord Upjohn's remarks in Pettitt v Pettitt. There his Lordship said this (at 815-816):

   

in the absence of all evidence, if a husband puts property into his wife's name he intends it to be a gift to her, but if he puts it into joint names, then (in the absence of all other evidence) the presumption is the same as a joint beneficial tenancy. If a wife puts property into her husband's name it may be that in the absence of all other evidence he is a trustee for her, but in practice there will in almost every case be some explanation (however slight) of this (today) rather unusual course. If a wife puts property into their joint names I would myself think that a joint beneficial tenancy was intended, for I can see no other reason for it.

 

But where both spouses contribute to the acquisition of a property, then my own view (of course in the absence of evidence) is that they intended to be joint beneficial owners and this is so whether the purchase be in the joint names or in the name of one. This is the result of an application of the presumption of resulting trust. Even if the property be put in the sole name of the wife, I would not myself treat that as a circumstance of evidence enabling the wife to claim an advancement to her, for it is against all the probabilities of the case unless the husband's contribution is very small.

 

Whether the spouses contributing to the purchase should be considered to be equal owners or in some other proportions must depend on the circumstances of each case: see Rimmer v Rimmer [1953] 1 QB 63 and many other cases. But for [sic] very good reasons for treating the spouses on an equality when one puts up the deposit and the other assumes liability for the building society mortgage. …

  55  After quoting the second paragraph from this extract, Mason and Brennan JJ in Calverley v Green pointed out (at 259) that, in some instances, the drawing of such an inference might work to the disadvantage of a wife who holds a legal interest in property greater than a joint tenancy and who would otherwise be entitled to rely on the presumption of advancement to assert as large a beneficial interest as the legal interest which she holds. Their Honours added this observation (at 259-260):

   

It may be conceded that Lord Upjohn's inference reflects the notion that both spouses may contribute to the purchase of assets during the marriage (as they often do nowadays) and that they would wish those assets to be enjoyed together during their joint lives and to be enjoyed by the survivor when they are separated by death. Such an inference is appropriate only as between parties to a lifetime relationship (like the presumption of advancement of a wife: Carkeek v Tate-Jones [[1971] VR 691 at 695-696, per McInerney J]. The exclusive union for life which is undertaken by both spouses to a valid marriage, though defeasible and oftentimes defeated, remains the foundation of the legal institution of marriage…though it is no necessary element of the relationship of de facto husband and wife.

  56  Mason and Brennan JJ appear to have understood Lord Upjohn to contemplate that where both spouses contribute to the acquisition of a property and place it in joint names, they may become equal beneficial owners in equity notwithstanding that their contributions are unequal. In particular, by referring to the presumption of a resulting trust as perhaps being "qualified" by Lord Upjohn's inference, their Honours seem to accept as a plausible view (without committing themselves) that if the parties both contribute to the acquisition of an asset they may be equal joint beneficial owners even if the wife contributes a greater proportion of the purchase price than the husband.

  57  Deane J did not refer to the passage from Lord Upjohn's judgment quoted by Mason and Brennan JJ. In the course of his observations, he referred to the comment by Viscount Simonds LC in Shephard v Cartwright [1955] AC 431 at 445, adopted by the High Court in Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353 at 365, that:

   

the presumption [of resulting trust] may be rebutted but should not, as Lord Eldon said [in Finch v Finch (1808) 15 Ves Jun 43; 33 ER 671], give way to slight circumstances.

 Deane J said this in Calverley v Green (at 270):

   

The weight to be given to a presumption of a resulting trust in the resolution of what is essentially an issue of fact may vary in accordance with changing community attitudes and with the contemporary strength or weakness of the rationale of the rule embodying the presumption: see, eg, Snell's Principles of Equity, 28th ed, (1982), p 183 and the cases there cited, and per Mahoney J, Doohan v Nelson [[1973] 2 NSWLR 320 at 325-326]. The generalization that a presumption of resulting trust "should not give way to slight circumstances" [Shephard v Cartwright [1955] AC 431 at 445] can no longer properly be accepted as an unqualified rule. Indeed, in a case where a presumption of resulting trust or a "presumption" of advancement applies in circumstances where the relationship between the parties does not, as a matter of modern experience, provide any firm rational basis for presuming either an intention to retain the beneficial interest or an intention to confer it on the other party, the presumption may be found to be of practical importance only in those cases where the evidence, including evidence of the actual relationship between the parties, does not enable the Court to make a positive finding of intention.

  58  In Doohan v Nelson, to which Deane J referred, Mahoney JA (at 325-326) considered that it was not open to him to hold that there was no longer a presumption of advancement. He noted, however, following the observations of three of their Lordships in Pettitt v Pettitt at 793, per Lord Reid; at 811, per Lord Hodson; at 824, per Lord Diplock, that:

   

the strength of the presumption and of the evidence required to rebut it will be less where the case concerns the ordinary matrimonial home.

  59  I was not referred to any Australian case that has expressly applied the analysis of Lord Upjohn in Pettitt v Pettitt. But in Vedejs v Public Trustee [1985] VR 569, which was decided 6 days after Calverley v Green (but which did not refer to that case), Nicholson J held that the presumption of resulting trust did not apply in circumstances where the parties to a de facto relationship contributed unequally to the purchase price. His Honour identified (at 575) the principle underlying the presumption in favour of a tenancy in common as:

   

that the parties, by contributing unequally, have evinced a desire that they be treated as having a share in proportion to the amount so contributed.

 However, his Honour did not regard the fact that there were unequal payments to be decisive. He observed (at 575) that:

   

If it is accepted, as I have found, that the relationship between the parties was a warm and loving one which bore all the facets of a happy marriage except the formalities associated therewith, it would, in the circumstances of this case, seem unthinkable that either party would have contemplated that their share would have gone other than to the other on their death.

  60  On the present state of the authorities, it is clear that where the parties to a marriage contribute in unequal proportions to the purchase of real property, the presumption is that they hold the property beneficially in proportion to their respective contributions. As the judgment of Mason and Brennan JJ in Calverley v Green shows, this presumption of a resulting trust applies where the title to the property is placed in joint names. The presumption may be rebutted by circumstances attracting the counter-presumption of advancement, or by evidence showing that the parties' common intention was that the beneficial interest in the property should be held otherwise than in proportion to their respective contributions.

  61  The dicta to which I have referred suggest that, although the presumption of a resulting trust is not in general lightly displaced, there are circumstances in which the presumption may be more readily rebutted than others. In particular, the dicta suggest that the presumption of a resulting trust may be rebutted by relatively slight evidence where:

 •  the parties to a marriage have made substantial, albeit unequal contributions to the acquisition of a property;

 •  the property acquired is intended to be used as the matrimonial home; and

 •  the property is placed in the joint names of the parties.

  62  The rationale for the presumption of a resulting trust having limited force in this situation is that there is some reason to think, given the committed nature of the parties' relationship and the fact that they have chosen to place the property in joint names, that they intend that the matrimonial home should be enjoyed together during their lives and that, on the death of one of them, the beneficial interest should go to the survivor. The circumstances I have identified indicate that the parties do not necessarily intend that beneficial ownership of the property should depend on mathematical calculations referable to the precise financial contributions made by each of them to the purchase price. In other words, in the circumstances posited, there is not a particularly strong basis in practical modern experience for attributing to the parties an intention that the beneficial interests in the matrimonial home be allocated solely by reference to their respective financial contributions.

  63  There may be other circumstances in which the presumption of resulting trust has less force than usual. Calverley v Green drew a clear distinction between marriage and what are generally known as "de facto" relationships (whatever the position in 1984, the term "de facto" is now in common usage, as recognised by the Macquarie Dictionary). But the legal position of de facto partners and, for that matter same sex couples, has changed since 1984, as indeed have social attitudes. If the presumptions are to reflect current laws and social attitudes, it may be that the presumption of resulting trust should have less force where, for example, de facto partners or a same sex couple in a long term relationship each contribute to the acquisition of a property intended to be used as a home, and place the property in their joint names. It may be, too, that the strength of the presumption needs to take account of the fact that, as Lord Reid pointed out in Pettitt v Pettitt as long ago as 1970 (the year, as it happens, that the Hunters Hill Property was acquired), it cannot now be assumed that women are financially dependent on their male partners.

  64  In a somewhat different context, Kirby J has recently warned against the danger of judges attempting to "objectify the foundation for their judgments" by appealing to what ordinary citizens might regard as right or proper: Cattanach v Melchior (2003) 77 ALJR 1312 at 1339 [135]. The danger, as his Honour points out, is that unreliable personal opinions might be disguised as statements relating to community attitudes. Doubtless it would be better, as Kirby J suggests, for courts to act on empirical evidence rather than judicial assertion (at 1343 [152]). But where the courts themselves have formulated presumptions in order to reflect perceived social realities, they should be prepared, within the limits permitted by authority, to adapt the presumptions so as better to reflect obvious changes in legal and social conditions. It is perhaps of some comfort to note that in Cattanach v Melchior itself, Kirby J expressed the view (at 1341 [145]), without reference to empirical evidence, that the:

   

experience of post-birth parental love [for a child born after a failed sterilisation operation] would usually allay the hypothetical hurts attributed to hypersensitive children later learning that their births were originally unexpected.

  65  In the present case, there is no occasion to consider all the circumstances in which the presumption of a resulting trust might be less difficult to rebut than is ordinarily the case. It is enough to say that although the circumstances of this case attract the presumption, it can be rebutted by slighter evidence than might ordinarily be required of a common intention that the parties should be joint beneficial owners of the property.

Application of the principles

  66  Mrs Cummins is entitled to the benefit of the presumption of a resulting trust in consequence of her disproportionate contribution to the purchase price of the Hunters Hill Property. For the reasons I have given, however, I think that slighter evidence than usual might suffice to establish that the parties had a common intention in 1970 that they should hold the Hunters Hill Property as beneficial joint owners. Does the limited evidence adduced in this case support such a conclusion? There are a number of factors to take into account.

  67  First, the Bankrupt and Mrs Cummins were married in 1964 and, by 1970, had lived together as husband and wife for 6 years. I would infer that at the time the Hunters Hill Property was acquired, both were committed to the matrimonial relationship.

  68  Secondly, the evidence indicates that the Hunters Hill Property became the parties' matrimonial home. It is not clear whether this happened immediately after the Property was acquired or, as seems more likely, after a short period of time. In any event, I infer that the parties intended, at the time they acquired the Hunters Hill Property, that it should become the matrimonial home.

  69  Thirdly, the Hunters Hill Property was not the first acquired by the parties as joint tenants. As recounted in Prentice v Cummins (No 5) at FCR 409 [45], the Bankrupt and Mrs Cummins acquired a property at Linley Point in 1965 and a property at Ferdinand Street, Hunters Hill in 1967. Both became the matrimonial home for a time and in each case the parties were registered as joint proprietors.

  70  The Linley Point property was acquired for £10,000 and was financed by a mortgage loan of £7,000 secured on the property. Both the Bankrupt and Mrs Cummins executed the mortgage as mortgagors. This property was sold in December 1967 for $22,600. The transfer states that the sum was paid to the transferors, although there is no evidence as to how it was divided between them.

  71  In October 1967, the Bankrupt and Mrs Cummins became registered as joint proprietors of a property at 12A Ferdinand Street, Hunters Hill, apparently in consequence of a subdivision of a property originally acquired by them as tenants in common with a third person in January that year. The original purchase was financed by a mortgage loan of $46,000, which was executed by all three tenants in common as mortgagors.

  72  The property at 12A Ferdinand Street Hunters Hill appears to have been sold by the Bankrupt and Mrs Cummins in December 1971 (not December 1968 as I stated in Prentice v Cummins (No 5)) for $58,500. As Mr Coles pointed out, the sum of $45,064.15 was paid into the "John Daniel Cummins and Mrs Mary Elizabeth Cummins Fully Drawn Loan Account" on 22 December 1971, the date of completion of the sale of the Ferdinand Street property. It appears likely, therefore, that the net proceeds of sale were paid to the parties jointly.

  73  It follows from this account that the registration of the Bankrupt and Mrs Cummins as joint proprietors of the Hunters Hill Property was not a one-off occurrence. The acquisition of that Property marked the third occasion on which Mrs Cummins had become registered as the joint tenant of a property intended to be the matrimonial home. In each transaction, so the documentation suggests, Mrs Cummins and the Bankrupt were represented by solicitors. The obvious inference is that the solicitors explained to her, if she did not know already, the significance of a joint tenancy. In the absence of any evidence to the contrary, I infer that in 1970 Mrs Cummins understood the concept of a joint tenancy and, in particular, the notion of survivorship attaching to a joint tenancy.

  74  Fourthly, in my opinion the conduct of Mrs Cummins in 1987, in the absence of explanation, amounts to an acknowledgment that she regarded the Hunters Hill Property as beneficially jointly owned by the Bankrupt. It is true that the reference in the contract of sale to "the interest of the Vendor as joint tenant" is equivocal, since it could refer to the Bankrupt's legal interest, as distinct from his beneficial interest. But the fact that Mrs Cummins was prepared to agree to pay half the assessed value of the Hunters Hill Property for the Bankrupt's interest suggests that she regarded him as having a joint beneficial interest in the Property. She was also prepared to pay stamp duty on the contract price arrived at on that basis. I do not think it is to the point that the price was not ultimately paid and perhaps was never intended to be paid. The transaction was structured in a way that implicitly acknowledged that the Bankrupt held a joint beneficial interest in the Hunters Hill Property. In the absence of evidence to the contrary, I conclude that Mrs Cummins understood that the transaction was structured in this way and was content for it to be so structured.

  75  In my view, I am entitled to take into account Mrs Cummins' actions in 1987 in determining the common intention of the parties in 1970. Indeed I did not understand Mr Brereton to contend otherwise. In effect Mrs Cummins' actions in 1987 amount to a declaration against her interest: Calverley v Green at 262, per Mason and Brennan JJ; Bryson v Bryant per Sheller JA, at 215.

  76  I do not think that the first 2 factors I have identified would be sufficient, of themselves, to rebut the presumption of a resulting trust, although they have a bearing on the strength of the presumption. But when all 4 factors are taken into account, they justify concluding that the parties' common intention in 1970 was to acquire the Hunters Hill Property as joint beneficial owners. Mrs Cummins, so I infer, was aware of the significance of the Hunters Hill Property being registered in joint names and understood that the 1987 transaction was structured on the basis that the Bankrupt had a joint beneficial interest in the Hunters Hill Property.

  77  I am strengthened in the conclusion I have reached by the fact that Mrs Cummins has elected not to give evidence in relation to the Hunters Hill Property cause of action. Given her failure to give evidence on this issue, I can be more confident about drawing the inference from the material to which I have referred that the common intention of the parties in 1970 was that the Bankrupt would have a joint beneficial interest in the Hunters Hill Property.

  78  Mr Brereton submitted that it is not appropriate to regard Mrs Cummins as a party who had declined to give evidence in his or her own cause. As he pointed out, she ultimately went into the witness box and, in accordance with the ruling recorded earlier in this judgment, could have been cross-examined by Mr Coles had he chosen to do so, on any issue relevant to the quantification of the Bankrupt's interest in the Hunters Hill Property.

  79  While it is true that Mrs Cummins ultimately went into the witness box, the fact remains that she elected to give no evidence in the Trustees' cause of action relating to the Hunters Hill Property. In my opinion, the position is analogous to that obtaining where counsel for a party fails to ask questions of a witness in chief relevant to an issue in dispute. In Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418, Handley JA (with whom Kirby P substantially agreed on this point) explained the position as follows:

   

There appears to be no Australian authority which extends the principles of Jones v Dunkel to a case where a party fails to ask questions of a witness in chief. However, I can see no reason why those principles should not apply when a party by failing to examine a witness in chief on some topic, indicates "as the most natural inference that the party fears to do so". This fear is then "some evidence" that such examination in chief "would have exposed facts unfavourable to the party": see Jones v Dunkel (at 320-321) per Windeyer J. Moreover in Ex parte Harper; Re Rosenfield [1964-5] NSWR 58 at 62, Asprey J, citing Marks v Thompson 1 NYS 2d 215 (1937) at 218, held that inferences could not be drawn in favour of a party that called a witness who could have given direct evidence when that party refrained from asking the crucial questions.

  80  I accept that in the present case Mr Coles had the opportunity, if he wished, to ask Mrs Cummins about her intentions when the Hunters Hill Property was acquired in 1970. Mrs Cummins was therefore exposed to the possibility of cross-examination on that issue and cannot necessarily be said to have demonstrated a fear of cross-examination. (I note in passing, however, that Mrs Cummins, through the respondents' motion to sever the various causes of action, resisted being exposed to cross-examination in relation to the Hunters Hill Property. While she ultimately entered the witness box, she had little choice if she was to resist the Trustees' claims to the share in Hospitality Hire and to repayment of the loan of $138,546.80.) But it must be true that in every case where counsel refrains from asking a question in chief on a matter relevant to an important issue in dispute, the witness can be cross-examined on that issue. The fact that the cross examiner can choose to enter the perilous waters of cross-examination without the benefit of the witness's account in chief of the relevant events does not seem to me to detract from the force of the proposition advanced by Handley JA. Accordingly, the respondents' failure to adduce evidence from Mrs Cummins on matters within her own knowledge justifies applying the principle of Jones v Dunkel to determine what inferences should be drawn on the issue of the quantum of the Bankrupt's interest in the Hunters Hill Property.

  81  For these reasons, I conclude that at the date of the transfer of the Bankrupt's joint interest in the Hunters Hill Property to Mrs Cummins, he held that interest beneficially. Given that the transfer is void as against the Trustees by virtue of s 121 of the Bankruptcy Act 1966 (Cth), the Trustees are entitled to 50% of the net proceeds of sale of the Hunters Hill Property.

THE SHARE IN HOSPITALITY HIRE

  82  In about May 1980, Mrs Cummins instructed her then accountant, Mr Moore, to establish a trust to be known as the M Cummins Family Trust (the Trust). She intended to use the corporate trustee of the Trust as the vehicle for investing in listed shares and to distribute income to herself and her children (who were then minors).

  83  Lomova Pty Ltd (Lomova), a shelf company which had been incorporated on 5 May 1980, was acquired by Mrs Cummins on the advice of Mr Moore, to act as the trustee of the Trust. Mrs Cummins herself acquired one share and became a director. Because she was told that the company required at least 2 members and 2 directors she asked the Bankrupt to become a shareholder and director and he agreed. Mrs Cummins and the Bankrupt acquired their respective shares in Lomova by means of transfers executed on 19 May 1980 by the previous shareholders of Lomova (that is, the promoters of the shelf company or their nominees). Each transfer was expressed to be for a consideration of one dollar.

  84  The Trust was established as a discretionary trust by a deed of trust dated 19 May 1980. Lomova became the trustee of the Trust. The "Primary Beneficiaries" identified in the deed of trust included Mrs Cummins, the Bankrupt and the children of Mrs Cummins. Mrs Cummins gave evidence, which I accept, that she never intended her husband to receive any benefits from Lomova or from the Trust, notwithstanding his inclusion in the list of beneficiaries who might have benefited from a favourable exercise of the trustee's discretion. In any event, the Bankrupt received no benefits from the Trust.

  85  Lomova engaged in the purchase and sale of some listed shares on behalf of the Trust, although Mrs Cummins said in oral evidence that she did not use the Trust very much at all. Mrs Cummins attended to the affairs of Lomova through Mr Moore and, later, another accountant, Ms Johnson.

  86  In 1992, Mrs Cummins commenced in her own right a business hiring out hospitality and other social function plant and equipment, which she conducted under the name "Hospitality Hire". By that time, or shortly thereafter, it appears that Mrs Cummins was no longer using the Trust. In September 1995, Ms Johnson suggested to Mrs Cummins that, as the Trust had become redundant, she should use Lomova as the corporate vehicle for conducting the business. Mrs Cummins accepted that advice and on 22 September 1995 caused Lomova's name to be changed to Hospitality Hire Pty Ltd.

  87  Mrs Cummins ran the business herself. The Bankrupt had no input into the operations of the business, nor into any decision affecting it. It appears that Hospitality Hire has never paid any dividends to its shareholders.

  88  Mrs Cummins signed the annual returns for Hospitality Hire (and, I would infer, for Lomova). Hospitality Hire's annual returns for 1996 and 1997 were in evidence. Each of the annual returns recorded that Mrs Cummins and the Bankrupt held one share in the company. The form provided for a "Y/N" answer to the question "Is the member the beneficial owner of the shares?" The typed answer was "Y" for each shareholding.

  89  Mrs Cummins gave evidence that when she signed the returns she was not aware of the meaning or significance of the letter "Y" on the forms and that she had not told her accountants or anyone else that the Bankrupt was the beneficial owner of the share held by him. She said that she doubted that she had read the forms before signing, which contained a number of other errors and omissions. Mrs Cummins also said that she did not understand the concept of beneficial ownership.

  90  I am dubious about the last claim, but I accept that when Mrs Cummins signed the forms she did not appreciate that they had been completed so as to indicate that the Bankrupt held his share in Hospitality Hire beneficially. I also accept that Mrs Cummins never told her accountants or anyone else that the share was held by the Bankrupt beneficially. In making these findings I have taken into account her evidence that she was the only one who gave instructions to the accountants relating to the affairs of Lomova or Hospitality Hire. Despite that evidence, I do not think that Mrs Cummins appreciated, when she signed the annual returns, that they recorded that the Bankrupt beneficially held his share in Hospitality Hire. Nor do I think that Mrs Cummins ever intended that the Bankrupt would have any beneficial interest in the shares in Hospitality Hire or in the business that she conducted through the company.

  91  Mr Moore rendered a bill for his services relating to the acquisition of Lomova and the establishment of the Trust, which Mrs Cummins paid. Mrs Cummins also said that she paid for the acquisition of the shelf company, Lomova. I understood her answer to mean that she paid all expenses including the nominal sum of one dollar expressed to be the consideration for the transfer of the share in Hospitality Hire to the Bankrupt. I accept that evidence. It follows that the Bankrupt did not contribute anything towards the cost of the share he acquired in Hospitality Hire. Nor, on the evidence, did he make any contribution to the business conducted by Hospitality Hire.

  92  As in the case of the Hunters Hill Property, the parties accepted that the relevant time for determining whether the Bankrupt beneficially held his share in Hospitality Hire was the date of acquisition, 19 May 1980. Of course, at that time, the question of beneficial ownership of the share was not of great moment, since the company was originally intended simply to be the trustee of a discretionary trust. Presumably, it was thought unlikely that Lomova (as it was then known) would trade in its own right or hold assets beneficially. The question of beneficial ownership of the Bankrupt's share only became significant or potentially significant once the company, under the name of Hospitality Hire, became the vehicle for the conduct of Mrs Cummins' business.

  93  While the consideration for the transfer of the share in Lomova acquired by the Bankrupt was a nominal one dollar, I think it appropriate to apply the presumption of resulting trust. Mrs Cummins provided not only the consideration for that share, but met all expenses associated with the acquisition of the shelf company and the establishment of the Trust. She intended that she should operate and control the Trust and the Bankrupt became a shareholder in Lomova only because the law then required a proprietary company to have at least 2 shareholders. It is true, as Mr Coles pointed out, that Mrs Cummins did not give evidence of conversations with the Bankrupt as to the terms on which he was to acquire his share in Lomova. On the other hand, there is no evidence that the Bankrupt had a belief or understanding that differed in any way from that of Mrs Cummins. In particular, there is no evidence that he believed he had become a shareholder for any reason other than that the company required a minimum of 2 shareholders. Having regard to the evidence as to the current relationship between Mrs Cummins and the Bankrupt and the difficulty the respondents have had in obtaining information from him, I do not draw any Jones v Dunkel inference against the respondents by reason of the Bankrupt's failure to give evidence on this issue.

  94  Given my findings as to the circumstances in which Mrs Cummins signed Hospitality Hire's annual returns, the apparent admission in those returns is not sufficient to rebut the presumption that the Bankrupt held his share in Hospitality Hire on trust for Mrs Cummins and did not hold it as beneficial owner. On the contrary, such evidence as there is suggests that at the time the share was acquired, the common intention of the parties was that the Bankrupt held the share in Hospitality Hire on trust for Mrs Cummins.

  95  Accordingly, the Trustees' claim to the Bankrupt's share in Hospitality Hire fails.

Issue 4: Aymcopic

  96  The Cummins Family Trust accounts were in evidence. They show that a distribution was made to a beneficiary of the Trust during the years ended 30 June 1998 of $61,930.87. This amount included a sum of $57,144 attributable to the capital profit realised when 2000 of the Shares were sold during the financial year.

  97  As I understand Mr Coles' position, he accepted that this sum was distributed to the beneficiary before any demand was made on Aymcopic by the Trustees and that, accordingly, Aymcopic was not liable to reimburse or account for that sum. If this is correct, the Trustees are entitled to require Aymcopic to account for $120,010, being the balance of the proceeds of sale of the 2000 Shares ($177,154, less $57,144). They are also entitled to recover the proceeds of sale of the remaining 4000 Shares, which were disposed of by agreement between the parties and the proceeds held in trust pending the outcome of the proceedings.

  98  If I have misunderstood the Trustees' position, I shall give them an opportunity to make further submissions in writing, limited to this issue.

Issue 5: the loan

  99  Mrs Cummins acknowledged that she had borrowed the sum of $138,546.80 from the Bankrupt in about August 1991, in order to finance the balance of the purchase price of an investment property. She gave uncontradicted evidence, however, that she repaid the money in 1993 and 1994. Mr Coles conceded that if I accepted Mrs Cummins' evidence on that question, the Trustees' claim to recover the loan could not succeed. Since I accept Mrs Cummins' evidence, it follows that the Trustees' claim to recover the loss of $138,546.80 must fail.

CONCLUSION

  100  I have reached the following conclusions:

 (i)  The Trustees are entitled to relief under s 121 of the Bankruptcy Act 1966 (Cth) in respect of the Bankrupt's beneficial joint interest in the Hunters Hill Property.

 (ii)  The Trustees' claim to the Bankrupt's share in Hospitality Hire fails, since the Bankrupt did not hold that share beneficially.

 (iii)  The Trustees are entitled to recover, pursuant to s 121 of the Bankruptcy Act 1966 (Cth), the proceeds of sale of the Shares, other than the sum of $57,144 distributed to a beneficiary of the Cummins Family Trust. (This is subject to the Trustees' right to make further submissions if I have misunderstood their position in relation to the sum of $57,144.)

 (iv)  The Trustees' claim to recover the sum of $138,546.80 advanced by the Bankrupt to Mrs Cummins fails, as she has repaid that debt.

  101  In the course of argument, I understood Mr Coles to accept that the relief now sought by the Trustees may require some amendment to the pleadings. I further understood Mr Brereton to indicate that the respondents did not object to the amendments foreshadowed (but which were not the subject of an application). In these circumstances I propose to direct the Trustees within 7 days to bring in short minutes of order to give effect to these reasons for judgment, and to serve and file within the same period any application to amend the pleadings to seek additional or alternative relief. If the Trustees claim any interest, they should provide at the same time brief written submissions in support of that claim. If I have misunderstood the Trustees' position in relation to the sum of $57,144, their written submissions should address that issue. The submissions should also address the question of costs.

  102  I direct the respondents to file and serve within a further 7 days any submissions in relation to the short minutes of order proposed or any submissions made by the Trustees. Depending on the respondents' response, I shall determine whether the Trustees should be given an opportunity to reply.