FEDERAL COURT OF AUSTRALIA - FULL COURT

Cummins and Another v Trustees of the Property of J D Cummins, A Bankrupt

[2004] FCAFC 191

Carr, Tamberlin and Lander JJ

30 July 2004 - Sydney

Tamberlin J. 160 This appeal concerns 2 declarations made by Sackville J on 24 October 2003, and consequential orders which his Honour made on the same date.

161 His Honour set out his reasons for the declarations and orders in judgments given on 5 December 2002: Prentice v Cummins (No 5) (2002) 124 FCR 67 ; 51 ATR 400 and on 24 September 2003, Prentice v Cummins (No 6) (2003) 54 ATR 134 ; 203 ALR 449 .

162 When the respondent had closed its evidence the appellants made a no case submission in relation to 3 of the respondent ' s pleaded claims. Two of the claims involved the transfer in August 1987, by the bankrupt (Cummins) of the following property:

(a) an interest in the matrimonial home at Alexandra Street, Hunters Hill to his wife (Mrs Cummins) who is the first appellant; and

(b) 6000 shares in Counsel ' s Chambers Ltd to his family company, Aymcopic Pty Ltd, which is the second appellant.

163 His Honour only permitted the no case submission to be made on these transfers on the basis that the appellants elected to call no evidence: see Prentice v Cummins (No 4) [2002] FCA 1215 . The appellants pressed their no case applications on that basis.

164 His Honour upheld the appellants ' no case application in respect of the claim that the transfer of Alexandra Street was void against the Trustee in Bankruptcy pursuant to s 120 of the Bankruptcy Act 1966 (Cth). However, his Honour dismissed the no case application in respect of the claim by the respondent that the transfer of the Alexandra Street property and the shares in Counsel ' s Chambers Ltd were void by reason of s 121 of the Bankruptcy Act 1966 (Cth). His Honour ' s reasons are set out in Cummins (No 5).

165 In dismissing the appellants' no case submissions, his Honour held that the role of a judge sitting alone hearing a no case submission was to determine, not whether there was some evidence that could be the basis of proceeding to a jury, but whether the applicant had discharged its burden of proof. This approach is not challenged. The appellants challenge a number of findings by his Honour which are set out in the written submissions as follows:

(a) that Cummins was well aware in August 1987 that he had incurred very substantial liabilities to the Commissioner of Taxation (the Commissioner), contingent only on the Commissioner issuing assessments in respect of past income years;

(b) that Cummins was well aware in August 1987 that the Commissioner would issue assessments once Cummins ' longstanding tax delinquency became known, and that this was an event which could occur at any time. The reference to "tax delinquency" is to the failure by Cummins to file any income tax returns over a period of 45 years;

(d) that in any event, the assets retained by Cummins were not sufficient to meet his taxation liabilities if the Commissioner decided to issue assessments; and

(e) that Cummins, at the time of transfers, intended to protect his assets from any claims by the Commissioner.

166 Essentially the appellants make the following 2 submissions regarding Cummins ' main purpose in making the August 1987 transfers:

(a) the evidence did not permit a finding as to what Cummins ' main purpose was in implementing the transfers, or whether he was insolvent at that time; and alternatively

(b) that on the whole of the evidence, there were other inferences which were more likely, or at least as likely, as the inferences his Honour drew as to those matters.

Background

167 This background is substantially taken from the 2 judgments of the primary judge referred to at [161] above.

168 Cummins and Mrs Cummins were married in 1964 and at all material times up to their separation in February 2002, lived together as husband and wife. Cummins was admitted as a solicitor of the Supreme Court of New South Wales in 1957. In 1961 he was admitted as a barrister of that court and practised as a barrister thereafter. He was appointed Queen ' s Counsel in December 1980.

169 In 1962 Mrs Cummins inherited an amount of approximately £ 13,000 from her mother ' s estate. Before the relevant transactions in August 1987, Cummins and Mrs Cummins had bought or sold a number of properties as follows:

• In about May 1965, they purchased a property at Linley Point for £ 10,000 as joint tenants. The purchase was financed by a loan of £ 7000 secured on the property. It appears from subsequent references to the residential address of Cummins and Mrs Cummins that the Linley Point property was their residence. The property was sold on 15 December 1967 for £ 22,600.

• In January 1967, Cummins and Mrs Cummins, together with a third party, purchased a property at 12 Ferdinand Street, Hunters Hill as tenants in common. The purchase price was $68,000, of which the vendor lent $46,000 on the security of a mortgage.

• In October 1967, Cummins and Mrs Cummins became registered joint tenants of a property known as 12A Ferdinand Street, Hunters Hill. This property was the result of a subdivision of 12 Ferdinand Street, Hunters Hill. This property was sold in about December 1968 for $58,500 and of this amount the sum of $45,064.15 was paid into their joint bank account.

170 In April 1970, Mrs Cummins opened a loan account with the Commonwealth Trading Bank. An entry dated 30 April 1970 shows a debit to that account of $3000.

171 On 14 April 1970, Cummins and Mrs Cummins contracted to purchase Alexandra Street. The transaction was completed on 27 July 1970 and they became registered 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."

172 In July 1970, Cummins and Mrs Cummins opened a Commonwealth Trading Bank Loan Account. The purchase of Alexandra Street was financed in part by a loan of $15,000 from the Commonwealth Trading Bank, secured by a joint mortgage executed by both Cummins and Mrs Cummins as mortgagors. The mortgage was not registered until 1974. The solicitors acting for the purchasers issued a receipt to Mrs Cummins on 27 July 1970 for the sum of $13,053.27 in these terms:

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 and fifty three dollars 27 cents

being advance re purchase.

J P Grogan & Co

$13053:27
Stamp

Duty per: D Head.

RS0444 Trust Account

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

173 These payments, together with Mrs Cummins ' loan obligations and the debit of $3000 recorded in the loan account of Mrs Cummins on 30 April 1970, referred to above, were relied on by her counsel as evidence that she provided the deposit and the balance of the purchase price.

174 There was no documentary evidence as to Cummins ' income from professional or other activities in respect of any period prior to the 1992 taxation year. Nor was there any detailed evidence as to the extent of Cummins ' professional activities between 1961 and the date of the transfers in August 1987, which are the subject of the present proceedings. Some earlier transfers or mortgages to which Cummins was a party described him as a "barrister" . These documents were executed in 1965, 1967, 1970, 1971, 1982 and 1987. Cummins ' tax returns, constructed by his accountant in 1999 from some records then available, show that he derived substantial professional income from his practice as a barrister in years for which taxation returns were compiled retrospectively, that is to say, for the period 1992 to 1999, although the precise amounts vary considerably. They disclose taxable incomes ranging between $181,026 to $397,050 over that 8 - year period.

175 In 1986 Cummins acquired units in Barristers Chambers Parramatta Unit Trust for the sum of $30,000. These units, which related to a second set of barristers ' chambers in Parramatta, formed part of his bankrupt estate and were ultimately sold by the trustee for $100,000. By 1987 Cummins had acquired shares in Counsel ' s Chambers Ltd, which entitled him to occupy a double room on a floor of barristers ' chambers. The primary judge could not, on the evidence, determine when the shares were acquired or whether they were acquired in one transaction. The shares in Counsel ' s Chambers Ltd related to barristers ' accommodation at 174 - 176 Phillip Street, Sydney.

176 On 17 August 1987, Cummins and Mrs Cummins each acquired one share in Aymcopic, a "shelf" company. On 24 August 1987, a deed was executed whereby Aymcopic became the trustee of the Cummins Family Trust. The beneficiaries of the discretionary trust so created were Mrs Cummins and the 4 children of the marriage. On 26 August 1987, Cummins executed a transfer of the shares in Counsel ' s Chambers Ltd to Aymcopic, in consideration of the sum of $360,000, said to have been paid by Aymcopic. It is common ground that Aymcopic did not pay any part of the purchase price. Mrs Cummins provided the funds to meet the stamp duty on the transfer. The shares were registered in Aymcopic ' s name in December 1987.

177 On the same day, 26 August 1987, Cummins agreed with Mrs Cummins to sell to her his interest as joint tenant of Alexandra Street, and executed a transfer in favour of Mrs Cummins as transferee. The price was expressed to be $205,250, being half the value attributed to that property by a registered valuer. The contract required the payment of the purchase price on completion. The transfer was signed by Mr Harris, the solicitor who signed the transfer as "solicitor for" the transferee. The transfer included an acknowledgement by Cummins that he had received the consideration of $205,250. It is common ground that Mrs Cummins did not pay the purchase price or any part of it. Nonetheless, she paid the ad valorem stamp duty on the contract and transfer and the valuer ' s fees. The transfer was subsequently registered and Mrs Cummins became registered as the proprietor of the fee simple estate in Alexandra Street, which later became the matrimonial home.

178 On 7 October 1987, Mr Harris, the solicitor who prepared the documentation to give effect to the transactions of 26 August 1987, confirmed by letter to Cummins that his instructions were "to transfer by way of gift" , to Aymcopic, Cummins ' units in the Parramatta Unit Trust. These instructions were never implemented and the units in the Parramatta Unit Trust ultimately formed the most valuable single asset in Cummins ' bankrupt estate following his bankruptcy. In a letter written a decade later, the solicitor reported to Cummins, in response to an inquiry from the latter, that the failure to prepare a transfer of the units was an oversight on the solicitor ' s part. His Honour concluded that Cummins intended to transfer the units in the Parramatta Unit Trust to Aymcopic in 1987, but his instructions were not implemented.

179 Handwritten file notes made by Mr Harris around the time of the transfers were in evidence. These notes, although cryptic and incomplete, show that the solicitor paid attention to the possible application of s 121 of the Bankruptcy Act 1966 (Cth) (which at that time was concerned with dispositions of property "with intent to defraud creditors" ) and its State counterpart, namely s 37A of the Conveyancing Act 1919 (NSW).

180 After referring to the terms of the relevant legislation, these notes record the observation that "Mary [Mrs Cummins] Must be a Purchaser " . The notes relating to the Alexandra Street property record questions - "what is valuable consideration [?]" and "is forgiveness of a debt a settlement [?]" . They refer, without elaboration, to the decision of the High Court in Williams v Lloyd (1934) 50 CLR 341 , which was concerned with dispositions of property for the benefit of a wife with intent to defeat or delay creditors by a person who became bankrupt. They also record the observation that "promise to pay is valuable consideration" and an apparent suggestion that a deed of release of debt should be executed after say 4 months.

181 The notes relating to the transfer of the shares in Counsel ' s Chambers Ltd record that, as Cummins was a director of the transferee, the company "could not escape notice of any intent on John ' s [Cummins] part" . The solicitor records that "semble could be attacked under s 37A [of the Conveyancing Act 1919 (NSW)" ] but asks, "where is evidence of intent[?]" .

182 Because none of the participants in the 1987 transactions gave evidence, there was no direct express evidence of Cummins ' purpose in transferring assets to Mrs Cummins and Aymcopic. However, business records were in evidence which were considered by his Honour to be relevant to the question of Cummins ' purpose. In a letter dated 2 March 1998, the managing director of a company described as a "strong" source of referrals to the National Australia Bank, applied to that bank on Mrs Cummins ' behalf, seeking a loan of $1.3 million for residential investment purposes. The letter stated that:

In addition to substantial real estate holdings which are held in her name for legal reasons in view of her husband ' s occupation, Mrs Cummins currently has [certain other assets]. (Emphasis added.)

Contemporaneous records of the National Australia Bank, apparently recording information supplied on behalf of Mrs Cummins, refer to "all assets" or "all real estate property" being in her name. In particular, one document, dated 3 April 1998, records that: "Mary ' s [Mrs Cummins ' ] husband is a Queens Council (sic) thus why all assets are in her name and only minimal income."

Cummins ' 1992 - 1999 tax returns

183 The tax returns constructed and filed retrospectively on behalf of Cummins by his accountant, Mr Morelli, for the 8 financial years 1992 - 1999, show the following gross receipts and nett income from his business or professional activities:

Year ended 30 June	Gross Receipts $	Net Business Income $
1992	335,425	181,026
1993	337,294	208,277
1994	299,664	188,859
1995	377,300	239,426
1996	191,909	89,679
1997	261,379	151,756
1998	350,625	264,051
1999	520,525	397,050

184 Not all the gross receipts were derived from Cummins ' practice as a barrister, but Sackville J concluded that the great bulk were derived from that source. For example, the deposits for the 1992 tax year show that of the $335,425 recorded as gross receipts, the sum of $325,032 constituted fees received by Cummins.

185 None of the returns disclose the sale or disposal of any substantial assets during the period 1992 to 1999. The details of income and expenditure suggest that throughout the 8 - year period Cummins owned a motor vehicle and had a small share portfolio. The returns do not indicate that Cummins derived any substantial income from a source other than his practice as a barrister. This picture is not changed by the 2000 return, which covered an earning period after Cummins had finally recognised the need to lodge at least some income tax returns. Cummins presented a petition for his bankruptcy on 13 December 2000. On 16 March 2001, Mr Maxwell Prentice was appointed as trustee of his estate.

186 Cummins ' statement of affairs as at 30 January 2001 disclosed that his assets totalled $259,614 and his liabilities to unsecured creditors totalled $1,040,400. His principal assets were the units in the Parramatta Unit Trust ($100,000), a motor vehicle (sold for $51,750) and shares (sold for approximately $42,000).

187 Mrs Cummins gave evidence on the hearing that she and Cummins separated in February 2002, largely in consequence of the events leading up to her husband ' s bankruptcy. Mrs Cummins ' evidence was to the effect that her marriage to Cummins had broken down before the first hearing of the matter.

188 The evidence is that Mrs Cummins filed a number of tax returns over the period 1965 and 1987 showing amounts of taxable income ranging between $950 through to $17,140.

Appellants ' submissions

189 The alleged errors relied on by the appellants can be summarised as follows:

(a) His Honour could not and should not have reached the conclusions and drawn the inferences that he made as to:

(i) the non - payment of the deposit by Mrs Cummins;

(ii) the respective entitlements of the interests in the transferred property as at the date of the transfers by Cummins in August 1987;

(iii) the existence of an intention to hinder or delay creditors in relation to the August 1987 transfers;

(iv) the effect of the failure of the appellants to adduce evidence as to the August 1987 transfers in order to reach the conclusion that there was the necessary intent within s 121(1) of the Bankruptcy Act 1966 (Cth);

(v) the earnings of Cummins between 1965 and the time of the transfers in August 1987;

(vi) the inferences drawn as to the likely source of the purchase price in respect of the purchase of Counsel ' s Chambers Ltd by Cummins;

(vii) the importance of the tax returns prepared retrospectively by Mr Morelli for the income years 1992 - 1999.

(b) His Honour erred in making the inferences when other more probable or possible inferences were available on the evidence. This includes the source of funds used to purchase Counsel ' s Chambers Ltd. In particular, it is said that the inference drawn by his Honour that the source of the funds to purchase 6000 shares in Counsel ' s Chambers Ltd was from Cummins ' income as a barrister was not open, because there was no evidence as to Cummins ' income or financial position in the period before the purchase.

Purchase price contribution

190 The primary judge accepted that Mrs Cummins paid an amount of $13,053.27 towards the purchase price of Alexandra Street from her own funds, and that she was jointly liable for one - half of the $15,000 borrowed for the purchase price from the Commonwealth Trading Bank. His Honour was not satisfied that she paid the deposit, and therefore concluded that she had contributed only 65.8 % of the purchase price for the Alexandra Street property, and not 76.3 % . as she contended.

191 In reaching this conclusion, his Honour accepted that the required deposit was probably $3100, being 10 % of the purchase price in accordance with usual conveyancing practice. His Honour saw the difficulty in Mrs Cummins ' contention that she had paid the deposit as being the fact that the debit in her bank loan account for $3000 was made on 30 April 1970, which was 16 days after the date of the contract for sale. His Honour had regard to the practice that deposits in contracts for the sale of land are ordinarily paid on the date of contract. His Honour considered that possible explanations for the 16 - day period could be delayed presentation of the deposit cheque or a preliminary deposit of $100. But his Honour considered that these explanations on behalf of Mrs Cummins were speculative.

192 His Honour considered that he could not make an affirmative finding as to whether or not Mrs Cummins or a third party paid most or all of the deposit. I note that there is no evidence whatsoever that any third party had any reason to pay the deposit. In view of the fact that $3000 was debited to the account of Mrs Cummins shortly after the date of the contract, and because his Honour found that the balance purchase price was paid from Mrs Cummins ' funds and out of the same bank account, I consider the correct inference to be drawn on this question is that Mrs Cummins paid the deposit. It is well - settled in circumstances such as the present that an appeal court can substitute what it considers to be the correct inference for that drawn by the primary judge: see Warren v Coombes (1979) 142 CLR 531 at 551; 53 ALJR 293 at 300-301; 23 ALR 405 at 423.

193 The evidence is that in April 1970, Mrs Cummins opened a loan account with Commonwealth Trading Bank at Liverpool. On 14 April, Cummins and Mrs Cummins signed a contract to purchase Alexandra Street. On 30 April, there was a miscellaneous debit of $3000 recorded in Mrs Cummins' account. The receipt is not in evidence, but on 24 July 1970 Mrs Cummins paid $13,053.27 towards the purchase from the same bank account, which amount his Honour found to have been paid out of her funds.

194 In July 1970, Cummins and Mrs Cummins opened a Commonwealth Trading Bank loan account, and on 27 July 1970 that bank lent $15,000 for the purchase of Alexandra Street by way of the fully drawn joint loan account.

195 On this evidence I consider the proper and more probable inference is that Mrs Cummins paid the deposit from her own moneys, notwithstanding the delay of 16 days and the difference of $100, which was probably part deposit. I consider that it would be most unusual if she were prepared to pay $13,053 from the same account and not to have paid the $3000 which was an almost identical amount to the deposit customarily paid on entry into a binding contract. Accordingly, in my view, his Honour erred in relation to this matter and the proper finding should be that she paid the deposit from her own moneys.

Resulting trust

196 The primary judge concluded that given the unequal contributions of the parties there was a presumption of a resulting trust with the consequence that Cummins and Mrs Cummins each had an unequal interest in the Alexandra Street property in accordance with their contributions. In reaching this conclusion, his Honour adopted the formulation of the principle as to a resulting trust expressed by Mason and Brennan JJ in Calverley v Green (1984) 155 CLR 242 at 258; 59 ALJR 111 at 117; 56 ALR 483 at 494, which was in the following terms:

… When 2 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 in trust for themselves as tenants in common in shares proportionate to their contribution unless their contributions are equal. …

197 The primary judge considered that the presumption of resulting trust based on the contributions had been rebutted, because as at the date of transfer the interests of the parties were to be adjusted on the basis that each had one equal half share beneficial in the property. In reaching this conclusion, his Honour referred to the remarks of Lord Upjohn in Pettitt v Pettitt [1970] AC 777 at 815, which addresses property held in the names of husband and wife:

… 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.

198 These observations of Lord Upjohn were referred to by Mason and Brennan JJ in Calverley (at CLR 259; ALJR 117; ALR 494) in these terms:

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 upon the presumption of advancement to assert as large a beneficial interest as the legal interest which she holds. It is not necessary now to consider whether the founding of a joint beneficial tenancy in husband and wife upon their inferred intention "is the result of an application of the presumption of resulting trust" .

199 Statements are made to similar effect, with respect to the decision in Pettitt, by the editors of Lewin on Trusts (2000) 17th ed at 9 - 57 and 9 - 61. See also the judgment of Kerr LJ in Bernard v Josephs (1982) 1 Ch 391 at 408 .

200 The primary judge concluded from these remarks in Calverley that their Honours understood Lord Upjohn to contemplate that where both spouses contribute to the acquisition of a property, and place it in joint names, they may be equal beneficial owners in equity, notwithstanding the effect that their contributions are unequal. His Honour the primary judge said at [56] of Cummins (No 6) (at ATR 147; ALR 463):

Mason and Brennan JJ appear to have understood Lord Upjohn to contemplate that where both spouses contribute to the acquisition of 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 both parties 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.

201 His Honour also cited at [57] (at ATR 147; ALR 463), the remarks of Deane J in Calverley:

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, for example, Snell ' s Principles of Equity (1982) 28th ed, p 183 and the case there cited, and per Mahoney J, Doohan v Nelson [1973] 2 NSWLR 320 at 325 - 326. …

202 In Doohan v Nelson (at NSWLR 325 - 326), Mahoney J accepted that the strength of the presumption of a resulting trust and of the evidence required to rebut it will be less where the interests are in the matrimonial home of the parties.

203 In Vedejs v Public Trustee [1985] VR 569 , Nicholson J held that there was at the time of the acquisition of a property by a deceased and his common law wife an implied common intention that the property should be acquired on the joint behalf of the plaintiff and the deceased. His Honour said (at 573):

… I am satisfied on the evidence that there was at the time of the acquisition of the property a common intention that the property should be acquired on their joint behalf. There was no evidence of an expressed statement to this effect but I find that it can readily be implied from what occurred … the house was obviously acquired for the purpose of their relationship so that they might live together and for no other purpose, and the fact that they both contributed their savings to the purchase are to my mind strongly indicative of a common intention expressed at the time of acquisition of the property that the house should become a jointly acquired asset held equally by them.

204 The primary judge considered that the above dicta indicated that the presumption of a resulting trust might be rebutted by relatively slight evidence in circumstances where the parties to a marriage have made substantial even if unequal contributions to the acquisition of a property; where the property is intended to be used as the matrimonial home; and where the property is placed in the joint names of the parties.

205 His Honour said at [65] (at ATR 149; ALR 466) of Cummins (No 6):

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.

206 His Honour in reaching his conclusion referred to a number of factors. The first was that Cummins and Mrs Cummins had been married for 6 years at the time of the purchase of Alexandra Street, and that at the time of purchase both were committed to the matrimonial relationship. Secondly, that Alexandra Street was the matrimonial home. Thirdly, that Alexandra Street was not the first property acquired by the parties jointly or as a matrimonial home. The parties had acquired a property at Linley Point in 1965, and one in Ferdinand Street, Hunters Hill in 1967, and the parties were registered as joint proprietors on both properties. Fourthly, the Linley Point property was acquired and financed by a mortgage loan of £ 7000 secured on that property, and both Cummins and Mrs Cummins were mortgagors. That property was sold in December 1967 for $22,600 and the sum was paid to them. Fifthly, in October 1967, Cummins and Mrs Cummins were registered as joint proprietors of 12A Ferdinand Street, Hunters Hill as a result of a subdivision of a property originally acquired by them as tenants in common with a third person in January 1967, and the original purchase of this property was arranged by a mortgage loan of $46,000, which was executed by all 3 tenants in common as mortgagors. The property at 12A Ferdinand Street was later sold by Cummins and Mrs Cummins in December 1971 for $58,500, and an amount of $45,064.15 was paid into a joint account of Cummins and Mrs Cummins, which was a fully drawn loan account. His Honour inferred that it was likely that the nett proceeds of sale were paid to the parties jointly. His Honour noted, having regard to these transactions, that Alexandra Street was not a one - off occurrence. This was the third occasion on which Mrs Cummins was registered as co - owner with her husband. His Honour inferred that solicitors in the various transactions had, in the ordinary course, explained to her the significance of joint ownership. His Honour concluded that in 1970 it was more likely than not that Mrs Cummins understood the concept of a joint tenancy and the notion of survivorship attaching to it.

207 His Honour considered that the conduct of Mrs Cummins in 1987, in the absence of any explanation, was an acknowledgement that she regarded Alexandra Street as beneficially jointly owned by Cummins. He attached importance to the fact that Mrs Cummins agreed to pay one - half the appraised value of Alexandra Street for Cummins' interest, and that this suggested she regarded him as having a joint equal beneficial interest in the property. His Honour had regard to the fact that stamp duty was paid by her on the contract price on the basis of the transfer of a half interest. The fact that the purchase price was not ultimately paid, and perhaps was never intended to be paid, was not, in his Honour ' s view, to the point. The transaction was not a "sham" . The transfer of the interest was effective and was registered. His Honour considered that the transfer was structured on the basis, and in such a way that acknowledged, that Cummins had a joint beneficial interest. He inferred, in the absence of evidence from her on this aspect, that Mrs Cummins understood that the transaction was structured in this way and was content for it to be so structured. A solicitor acted on the transfer of the assets. His Honour considered that he was entitled to take account of what occurred in 1987 when determining the common intention of the parties as to beneficial ownership of Alexandra Street in 1970.

208 In evaluating these matters his Honour considered that when all of them were taken into account, they justified the conclusion that the common intention in April 1970 was to acquire Alexandra Street as joint beneficial owners in equal shares, and that therefore, the presumption of resulting trust in unequal shares was rebutted. His Honour was supported in this conclusion by the fact that no evidence was given by Cummins or Mrs Cummins in relation to Alexandra Street, and he therefore more confidently drew the inference from the material and had to regard to the principles set out by Handley JA in Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418, which concerned a failure to lead evidence from a witness on a central issue. In this case, although some evidence was elicited from Mrs Cummins, no evidence was led from her as to the intention of the parties on the acquisition of Alexandra Street.

209 Counsel for the appellants submits that no authority cited by the primary judge has expressly followed the statements of Lord Upjohn in Pettitt, with the exception of Vedejs referred to by his Honour and that these statements had no bearing on this case.

210 Counsel for the appellants referred to a decision of the full Federal Court in Official Trustee in Bankruptcy v Lopatinsky (2003) 129 FCR 234 . In that case, the court concluded that there was nothing in the evidence which was capable of giving rise to a suggestion that Mrs Lopatinsky intended to make a gift to her husband of a payment by her and pointed out that there was no presumption of advancement in favour of her husband. The court said (at FCR 252):

We do not accept the trustee ' s submission that the equitable presumption was rebutted by certain concessions made by Mrs Lopatinsky in cross - examination as to her understanding of the nature of the joint tenancy and her intention that the Peakhurst property was to pass by survivorship. In our view, this evidence established, at most, that Mrs Lopatinsky intended the legal interest in the property be held by the parties as joint tenants. (Emphasis added.)

211 The decision in that case accepted that the presumption could be rebutted. However, the case turned on its own facts. The court did not decide the quantum of the interest of the parties and remitted the matter to the primary judge for reconsideration. The question whether an equitable presumption has been rebutted is a question of degree. In my view, Lopatinsky does not provide support for the proposition that the principles adopted by his Honour were erroneous or misapplied.

212 In relation to the property transactions referred to by his Honour, counsel for the appellants has pointed out that the property in Ferdinand Street was acquired as tenants in common with a third person, namely, Mr Howarth, and submits that there is no evidence that either Linley Point or Ferdinand Street, were intended to be the matrimonial home. This is simply not correct. The tax returns of Mrs Cummins for 1965 and 1966 show Linley Point as her residential address and refer to Cummins as her husband. Her occupation is stated to be "Home Duties" . Her tax returns for 1968 and 1970 show her residential address as 12 or 12A Ferdinand Street and again refer to her husband. It should also be recalled that when purchased, the property at Alexandra Street was vacant land. It did not immediately become the matrimonial home.

213 In my view, the cumulative weight of the factors referred to by his Honour provide adequate support for his Honour ' s inference of equality of interests. I can see no error in his Honour ' s reasoning or statement of principle in relation the rebuttal of the resulting trust in favour of the intention at the time of acquisition being that the parties should have equal beneficial interests.

Main purpose

214 The issue is whether his Honour erred in finding that Cummins ' main purpose in transferring Alexandra Street was to prevent that property becoming divisible among his creditors, or to hinder or delay the process of making that property available for division among his creditors.

215 The submissions for the appellants analyse in detail each of the circumstances relied on by his Honour to determine the intention of Cummins in an attempt to demonstrate that, on the whole of the evidence, there were other equally or more likely inferences to be drawn than those made by his Honour.

216 In support of the submission concerning the purpose of the August 1987 transfers, counsel for the appellants submits that the litigation concerning barristers in - court immunity that was ultimately decided by the litigant on 13 October 1988 in Giannarelli v Wraith (1988) 165 CLR 543 ; 35 A Crim R 1 ; 62 ALJR 611 ; 81 ALR 417 (the Giannarelli litigation) explained the reasons for the transfers, and that his Honour erred in not accepting that submission. This is said to be at least an equally plausible hypothesis for the transfer of the assets which was equally open, or indeed more likely, because Cummins wanted to protect his assets from risk of suit by a client.

217 This argument was rejected by his Honour after careful analysis of the time scale of the litigation at first instance in the full court of the Supreme Court of Victoria and in the High Court: see Cummins (No 5) (at FCR 80-81 [56] - [61]; ATR 411-412 [56] - [61]).

218 It would be most unusual to take the significant decision to commit to a divesting of major assets before the decision of the High Court on a special leave application, when that decision may have brought an end to the question of barristers in - court immunity by refusal of leave. At the time when the steps were taken to effect the transfer of assets by Cummins, the decision of the Victorian full court, following a well settled line of authority, was in effect a unanimous decision rejecting the proposition that barristers did not have in - court immunity. In my view, the likelihood is that the existence of the Giannarelli litigation focussed the attention of Cummins on the need to protect his assets from pursuit by the Commissioner in the light of his decisions over the preceding 45 years not to lodge any tax returns.

219 I am not persuaded that there was any error in his Honour ' s analysis and treatment of submissions based on the Giannarelli litigation, particularly as no evidence was adduced from Cummins or Mrs Cummins as to the purpose of the August 1987 transfers. I now turn to the principles relating to the failure to call evidence from an important available witness.

220 Judges do not leave commonsense and experience outside the door when they enter the courtroom. Nor do they prefer speculative hypotheses as opposed to making available inferences arising from the circumstances where a key witness who could testify to those matters is not called by the party who advances the hypothetical alternative. As Rich J notes in Insurance Commissioner v Joyce (1948) 77 CLR 39 at 49:

… when circumstances are proved indicating a conclusion and the only party who can give direct evidence of the matters prefers the well of the court to the witness box a court is entitled to be bold …

All sorts of hypotheses may be suggested. … But this is not a criminal case in which we are called upon to allow our imagination to play upon the facts and find reasonable hypotheses consistent with innocence. A balance of probability is enough. And when the greater probability is that both had enough consciousness to be aware of what they had been doing, although not enough judgment and discretion to drive, why should a judge hesitate to find accordingly against a plaintiff who gives no evidence. (Emphasis added.)

221 A similar approach was adopted by Lord Diplock in British Railways Board v Herrington [1972] AC 877 at 930 - 931 as follows:

The appellants, who are a public corporation, elected to call no witnesses, thus depriving the court of any positive evidence as to whether the condition of the fence and the adjacent terrain had been noticed by any particular servant of theirs. … This is a legitimate tactical move under our adversarial system of litigation. But a defendant who adopts it cannot complain if the court draws from the facts which have been disclosed all reasonable inferences as to what are the facts which the defendant has chosen to withhold.

…

Anyone of commonsense would realise the danger that the state of the fence so close to the live rail created for little children coming to the meadow to play. … A court is accordingly entitled to infer from the inaction of the appellants that one or more of their employees decided to allow the risk to continue of some child crossing the boundary and being injured or killed. …

222 These words concerning litigious strategy and commonsense are apposite to the present case.

223 In Holloway v McFeeters (1956) 94 CLR 470 at 480 - 481, Williams, Webb and Taylor JJ, in referring to the drawing of inferences in the absence of an explanation, said:

Inferences from actual facts that are proved are just as much part of the evidence as those facts themselves. In a civil cause, ' you need only circumstances raising a more probable inference in favour of what is alleged … where direct proof is not available it is enough if the circumstances appearing in evidence give rise to a reasonable and definite inference; they must do more than give rise to conflicting inferences of equal degree of probability so that the choice between them is a mere matter of conjecture: see per Lord Robson, Richard Evans & Co Ltd v Astley [1911] AC 674 at 687 … All that is necessary is that according to the course of common experience the more probable inference from the circumstances that sufficiently appear by evidence or admission, left unexplained, should be that the injury arose from the defendant ' s negligence. By more probable is meant no more than that upon a balance of probabilities such an inference might reasonably be considered to have some greater degree of likelihood ' . (Emphasis added.)

224 In the House of Lords decision in Murray v Director of Public Prosecutions [1994] 1 WLR 1 at 11 - 12, Lord Slynn, in his speech giving reasons that were concurred in by other members observed:

There must be thus some basis derived from circumstances which justify the inference.

If there is no prima facie case shown by the prosecution there is no case to answer. Equally, if parts of the prosecution case had so little evidential value that they called for no answer, a failure to deal with those specific matters cannot justify an inference of guilt.

On the other hand, if aspects of the evidence taken alone or in combination with other facts clearly call for an explanation which the accused ought to be in a position to give, if an explanation exists, then a failure to give any explanation may as a matter of commonsense allow the drawing of an inference that there is no explanation and that the accused is guilty.

In the present case, if the only evidence relied on was that relating to fibres in the hair, on the clothing and in the car, it might well not be enough to justify an inference that the defendant was guilty beyond a reasonable doubt. The cartridge residue on the jeans, the thumb print on the mirror and the mud on the trousers, the evidence that he was not at home during the night, clearly taken in combination call for an explanation if there was one. The judge was, moreover, entitled to have regard to the cumulative effect of all the circumstantial evidence in deciding whether a failure to give evidence justified an inference of guilt.

In my opinion the evidence adduced by the prosecution established a clear prima facie case and the trial judge was entitled in all the circumstances of the case, and as a matter of commonsense, to infer that there was no innocent explanation to the prima facie case and that the defendant was guilty. That inference was a "proper" one open to the judge on all the material before him. (Emphasis added.)

225 These comments were of course made in the context of proof beyond reasonable doubt.

226 The relevant principles and authorities are collected and considered in detail in J D Heydon, Cross on Evidence (2000) 6th Australian ed at [1190] - [1220].

227 Rather than provide evidence from Cummins and Mrs Cummins, the appellants proffered a series of possible hypotheses as to what their intention could have been when acquiring Alexandra Street in 1970, and transferring the interest of Cummins in August 1987 in the Alexandra Street property and Counsel ' s Chambers Ltd.

228 In Jones v Dunkel (1959) 101 CLR 298 at 308, Kitto J expressed the evidentiary principle which applies where there is a failure to call a witness in these terms:

… any inference favourable to the plaintiff for which there was ground in the evidence might be more confidently drawn when a person presumably able to put the true complexion on the facts relied on as the ground for the inference has not been called as a witness by the defendant and the evidence provides no sufficient explanation of his absence.

229 These remarks apply with considerable force here because the persons best able to testify as to their intent and purpose were not called. His Honour applied that principle in this case to strengthen and prefer the available inference that Cummins had the necessary intent under s 121 of the Bankruptcy Act 1966 (Cth). Counsel for the appellants submits that his Honour ' s reliance on the failure of the appellant to call Cummins was wrong in the present case where there had been a requirement to elect to call no evidence because such an approach was inconsistent with the decision of the full court of Victoria in Protean (Holdings) Ltd v American Home Assurance Co [1985] VR 187 at 215; which decision was cited with approval by the full Federal Court in Rasomen Pty Ltd v Shell Co of Australia Ltd (1997) 75 FCR 216 at 226; 144 ALR 497 at 507. The passage from Protean referred to by counsel is in the judgment of Young CJ (at VR 215), where his Honour referred to 3 results which may ensue in a situation where there is a no case submission without an election being required. His Honour said:

The third possible result of a submission that there is no case to answer is that the judge is persuaded by it and decides to uphold it. In reaching such a conclusion a trial judge is entitled to draw all proper inferences from the evidence, but he cannot draw inferences against the party making the submission based upon the absence of evidence from that party. (Emphasis added.)

230 It is important to note that the above remarks were made in the context of a situation where there was no requirement of an election not to call evidence as a condition of entertaining the no case submission. That situation was specifically left open by Young CJ.

231 The binding election not to call evidence was a conscious voluntary choice by the appellants that neither Cummins nor Mrs Cummins would be called as witnesses on the relevant issues. Therefore, in principle, it was open to the trial judge to rely on the commitment made by the appellants that Cummins would not be called in the appellants ' case and to use it to reinforce the inference which was open to his Honour as to the intent of the parties. This is quite a different situation to that in Protean where there had been no election. Counsel for the appellants referred to but conceded that the case of O ' Donnell v Reichard [1975] VR 916 was not a case in which there had been an election.

232 I can see no sound reason why the principles in the above cases cannot apply in this case when determining Cummins' main purpose in executing the August 1987 transfers. It is a consideration of central significance that evidence was not led on this question from Cummins or Mrs Cummins. In my view, it is not a "sufficient explanation" of the absence of evidence from Cummins to say that the appellants had made a deliberate choice made by way of their election not to call Cummins, or lead any evidence as to the intent of Cummins. It is also suggested that the appellants were precluded from doing so by being put to their election in making their no case submission, but the fact is that the appellants had the choice as to whether or not they were going to call evidence, and decided not to do so.

233 It is next submitted that it was for the respondent to call Cummins, because the respondent had examined Cummins and was in a position to call him to support the respondent ' s hypothesis. However, in the circumstances of this case the party with particular, if not unique, knowledge of Cummins ' purpose in making the transfer was Cummins, and he could reasonably have been expected to be called by the appellants in support of their case if the main purpose was not to hinder or delay any claims by the Commissioner.

234 I am not persuaded that his Honour ' s reasoning discloses any error of law in relation to the importance he attached to the appellants ' failure to call Cummins to give evidence of his intent in making the transfers. No explanation whatsoever has been proffered for Cummins ' absence from the witness box, or from giving any evidence whatsoever in this proceeding, where a central issue turns on his purpose.

235 The primary judge was satisfied on the evidence that Cummins was well aware in August 1987 that he had incurred very substantial liabilities to the Commissioner, contingent only on the Commissioner issuing assessments in respect of past income years; that Cummins was well aware at that time that the Commissioner would issue assessments once his long standing tax delinquency became known; that Cummins divested himself voluntarily of virtually all of his substantial assets in August 1987; that any assets retained by Cummins were not sufficient to meet his taxation liabilities if the Commissioner decided to issue assessments; and that Cummins saw the transfers as increasing the chances that his assets would be protected from any claims made by the Commissioner. On the basis of these findings, his Honour concluded that the main purpose of Cummins was to prevent the transferred property becoming divisible among his creditors, and in particular, the Commissioner.

236 The first matter challenged by counsel for the appellants relates to the conclusion of his Honour that Cummins had bought the chambers at Parramatta in 1986 out of his professional earnings. It is submitted that there is no evidence as to how this purchase for $30,000 was financed. It is said there was an infinite array of other possible sources of funds. For example, some form of borrowing, proceeds of sale from the other assets, or assistance from his wife or a third person. Because there was no evidence as to the source of funds for this acquisition, it is said that his Honour ' s finding that the source was from Cummins ' professional earnings was not open, or was not probable, as a matter of inference. Accordingly, it could not be said as a matter of inference that for many years prior to 1987 Cummins derived substantial assessable income from his practice as a barrister.

237 His Honour (at FCR 98 [126]; ATR 427 [126] of Cummins (No 5)) sets out a range of considerations, and notes that there is nothing in the evidence to indicate that the assets connected with Cummins ' practice as a barrister were paid for otherwise than out of Cummins ' professional earnings. This observation, together with the other factors set out in that paragraph, then form the basis for his Honour ' s inference that for many years, Cummins had derived substantial assessable income from his practice as a barrister, which is inherently probable, and that he would have been liable to pay tax on that income. In my view, it beggars belief to suggest that by August 1987, after spending over 22 years in practice at the New South Wales Bar, 6 of which as Queen ' s Counsel, without paying any tax, Cummins had not built up a substantial liability for unpaid tax and the attendant penalties and interest consequent upon such defaults, or that he was not fully conscious of his exposure to the Commissioner when the August 1987 transfers were implemented.

238 The next error alleged is said to arise from his Honour ' s reliance on the assessable and taxable income disclosed in the taxation returns prepared by Mr Morelli, which are said to have been compiled from inadequate data and information for these income years between 1992 and 1999. The submission is that his Honour was not entitled to rely on these records to reach a conclusion that in the years leading up to 1987 it was probable that Cummins had earned substantial taxable income. In support of this submission, counsel for the appellants speculates as to aspects of Cummins ' financial position in 1987 which may have caused him to transfer assets for the purpose set out in s 121(1) of the Bankruptcy Act 1966 (Cth). Counsel says that it was not open to infer from the gross receipts shown for the 1992 - 1999 tax years what Cummins ' financial position was in 1987, and that his Honour failed to take into account that there was no evidence at all of Cummins ' nett income in any of the years before 1992, or of his assets and liabilities during that time. Counsel submits that in any event, tax returns give a relatively incomplete picture of a person ' s financial position, in that they do not record assets and liabilities. It is suggested, for example, that an inference of equal probability may be made to the effect that, in the income tax years prior to 1992, Cummins ' nett taxable income was such that he was not required to lodge any income tax returns possibly because of offsetting losses in other varieties apart from his profession. It is said there was no evidence as to Cummins ' other business interests or investments during this period and that critical unanswered questions arise as to first, the quantum of Cummins ' income tax and liabilities in August 1987; secondly, whether Cummins was able to pay all of his debts as and when they fell due; and thirdly, whether by the August 1987 transfers he rendered himself unable to pay such liabilities.

239 Counsel submits that other equally consistent inferences with those drawn by his Honour are that Cummins sold assets between 1987 and 1992, and that assets may have been sold after 1992 but the sale did not attract capital gain, or were personal use assets, or did not yield a taxable profit. He raises the possibility that Cummins had cash or other assets sufficient to enable him to discharge his liabilities and that these were not required to be recorded in the tax returns from 1992, and that Cummins had cash sufficient to enable him to discharge the liabilities, but spent the money after 1987. It is suggested that there are other available inferences, such as Cummins having had significant cash balances in the bank account. It is pointed out that when he became bankrupt in 1999 he had cash and other assets amounting to over $200,000.

240 It is further said that another available inference was that Cummins in fact did not have a considerable tax liability in 1987 and the fact that he said nothing to his solicitor about it did not in any way indicate any intention to defraud creditors. Counsel attempts to meet the lack of any evidence that Cummins told the solicitor in 1987 about his failure to pay tax over a considerable period by asserting that this was not significant because Cummins ' solicitor was presumably engaged only in relation to conveyancing transactions, and it could not reasonably be expected that Cummins would disclose his taxation position to the solicitor. There is no basis in the evidence for this supposition.

241 A most important consideration in determining the purpose of Cummins is the advice and notes of the solicitor at the time of the August 1987 transactions, which specifically draw attention to ss 120 and 121 of the Bankruptcy Act 1966 (Cth) and to s 37A of the Conveyancing Act 1919 (NSW), which is concerned with transfers made with intent to defraud creditors. There is also reference in the notes to the High Court decision in Williams v Lloyd, which considered the principles relating to transfers of property to a wife with intent to defraud creditors under the Bankruptcy Act 1924 (Cth). His Honour concluded that Cummins must have been well aware of his own tax delinquency over the period leading up to 1987, and that he chose not to tell his solicitor of that fact despite his proposal to divest himself of his major assets. The solicitor ' s notes record advice that the transfers state that the expressed consideration had actually been received. There is a note by the solicitor that "Mary [Mrs Cummins] must be a purchaser" .

242 It is evident that Cummins did not tell his solicitor in 1987 of his liabilities to the Commissioner. The solicitor ' s notes can be taken to have resulted from, and summarised legal issues arising from, discussions between Cummins and his solicitor in 1987 prior to the transfers. There is a reference in those notes which reads as follows:

Do

We need to lease back of shares for TAX purposes.

243 This reference to tax purposes would have been of academic interest if Cummins had in fact disclosed to his solicitor his failure to pay tax over 22 years, and his omission to ever file any tax return. His intention in 1987 was probably never to file tax returns because he had successfully avoided the attention of the Commissioner for over 20 years and did not wish to be detected. The fact is he did not file any return until 12 years later. There can be no suggestion that Cummins ever intended to pay income tax or lodge a return for 1987 or any of the years following. Cummins did not need a tax deduction in 1987 and subsequent years. He never paid tax or disclosed his tax position.

244 There is reference in a letter written 10 years after the transfers by the solicitor that the solicitor considered in 1987 that if the transfers were for an expressed consideration and Cummins subsequently forgave the indebtedness, the transfers would not constitute "settlements" for the purposes of s 120 of the Bankruptcy Act 1966 (Cth). These records support the inference that Cummins wished to place his major assets beyond the reach of his creditors.

245 His Honour formed the view that given Cummins ' circumstances, it should be inferred that he had at the forefront of his mind, at the time of the August 1987 transfers, the impact of the transfers on the Commissioner ' s chance of recovering the income tax that Cummins should have paid over the preceding 22 years. The fact that Cummins did not inform his solicitor served, in his Honour ' s view, to reinforce the inference that the main purpose of the transfers was to protect Cummins' major assets from any claims made by the Commissioner.

246 In summary, in this case there has been an unexplained failure by the appellants to call evidence or witnesses or tender documents or other evidence as to the intention of Cummins and Mrs Cummins. No sufficient explanation has been given for this failure. It is clear that Cummins and Mrs Cummins could both give relevant evidence. They appear to be in the same camp notwithstanding the fact that they have separated. Facts are in evidence, which, in my view, raise an inference which requires an answer: see Jones v Dunkel (at CLR 322; ALJR 404). There is no question of privilege. I do not accept that the respondent should have been expected to call Cummins. There has been a failure to ask Cummins and Mrs Cummins questions in chief in relation to the issues of intent. It is clear that inferences are not to be drawn in favour of her case by reason of not leading the evidences and the comments in the Ferrcom case establish that the omission to ask questions of a friendly witness may be more significant than the failure to call the witness.

247 Having regard to the cumulative weight of the considerations referred to by his Honour on this issue, I do not consider that any appellable error has been shown in the reasoning or conclusions reached by his Honour as to the purpose of Cummins in making the August 1987 transfers such as would warrant interference with the orders and determinations made by his Honour, which were the subject of this appeal.

248 My conclusion is that this appeal should be dismissed with costs.