Re Bankrupt Estate of Paul Anthony Simpson; and Richard John Grellman v Marina Ferial Simpson [1990] FCA 2 (9 January 1990)

FEDERAL COURT OF AUSTRALIA

Re: THE BANKRUPT ESTATE OF PAUL ANTHONY SIMPSON; and RICHARD JOHN GRELLMAN
And: MARINA FERIAL SIMPSON
No. W970 of 1986
FED No. 1
Bankruptcy - Evidence

COURT

IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL TERRITORY
Burchett J.(1)

CATCHWORDS

Bankruptcy - application to set "settlement" aside under s.120 - whether presumption of advancement worked a settlement.

Evidence - Circumstances where principle of Jones v. Dunkel applied - circumstances where affidavit read though deponent not available for cross examination - breadth of discretion conferred by Rule 135.

Bankruptcy Act, ss. 120 & 121.

Bankruptcy Rules, rule 135.

HEARING

SYDNEY
9:1:1990

Counsel for the Applicant: Mr R.B.S. MacFarlan Q.C.
with Miss H. Coonan

Solicitors for the Applicant: Messrs Abbott Tout Russell Kennedy

Counsel for the Respondent: Mr M.D. Broun Q.C. with
Mr J.M.A. Atkin

Solicitors for the Respondent:Messrs Phillips Fox

ORDER

1. It be declared that the applicant is entitled as trustee
of the bankrupt estate of Paul Anthony Simpson to a one
half interest in the property situated at 36 Newcastle
Street, Rose Bay.
2. The respondent pay the applicant's costs.
3. Liberty be reserved to the applicant to apply on seven
days' notice.

NOTE: Settlement and entry of orders is dealt with in rule 124 of the Bankruptcy Rules.

DECISION

This application under ss.120 and 121 of the Bankruptcy Act 1966 involves unusual circumstances. The acquisition of a house in Newcastle Street, Rose Bay in the name of the bankrupt's wife, which is attacked, occurred at a time when the bankrupt had no reason to fear any difficulty in paying his creditors, and was certainly not insolvent. Admittedly, his bankruptcy was not very long delayed, but it came as the result of a bolt from the blue - the bankrupt's own inexplicable action in deliberately setting fire to the premises of a businessman he apparently suspected of having defrauded him. The consequential damages, amounting to about half a million dollars, constituted the sole cause of his insolvency.

2. But the facts are required to be set out in order. On 15 December 1979, the bankrupt, Paul Anthony Simpson, married the respondent, Marina Ferial Simpson, who was of Indonesian parentage but had been educated in Australia since the age of fourteen. Mr Simpson apparently met his wife through her brother, who had also been educated in Australia, and her father, Mr Victor Paath, with whom he had a relationship as friends and also of business. In 1975, Mr Simpson had obtained employment as an accountant with Garuda Indonesian Airways in Sydney, a position which he retained until 1 August 1983. At the very inception of his employment, he was granted an unsecured loan of $250,000.00, interest free for ten years. The moneys lent were actually received by Mr Victor Paath, a member of the Indonesian Parliament and the instigator of the transaction.

3. Mr Paath died on 14 November 1977, leaving an Indonesian will of which his widow, the respondent's mother, was appointed executrix. The respondent and her brother were equal beneficiaries, subject to rights of the mother which were not explained by any evidence of Indonesian law. Possibly the mother had something in the nature of a life estate, and possibly her rights were limited to a part of the estate, being her portion or to which she had some particular entitlement in Indonesian law. Another daughter, who lives in Sydney, received nothing under the will, having married against her parents' wishes.

4. On 15 December 1979, as I have said, the respondent was married to Mr Simpson. They have three children, of whom the third was born at a time of some importance to the story, about six weeks before 6 June 1985. At the time of the marriage, Mrs Simpson had just passed the second year of an arts course, which she afterwards completed at Sydney University. She is now a teacher. The parties went to live, upon their marriage, in a house already owned by Mr Simpson in Trafalgar Street, Brighton-le-Sands.

5. It is necessary to recount a series of transactions of sale and purchase of homes of the parties which followed. The Trafalgar Street house was sold in 1981 for a net figure of about $129,000. On 5 March 1981, a house at 21 The Kings Road, Brighton-le-Sands was purchased, in the joint names of the parties, for $90,000. That house was sold under a contract completed on 17 September 1982, yielding a figure of $100,000 net. On 23 September 1982, settlement was effected of the purchase of a house at 29 Beresford Road, Rose Bay, in the joint names of the parties, for the sum of $400,000. It is a matter of great dispute how and by whom this sum was provided. Mr and Mrs Simpson lived in Beresford Road, Rose Bay until 20 March 1985, when a sale for $450,000 was completed, yielding a net figure of $440,000 odd. Of that sum, the amount of $402,072.51 was deposited, on the day after the settlement of the sale, in the joint account of the parties at the Pitt and Hunter Streets branch of the National Australia Bank. The sum of $35,469.71, subsequently received in respect of the deposit from the real estate agent through whom the property had been sold, was paid into the same account. (There was an additional amount of $27.00 received later from the agent, after Mrs Simpson had telephoned him to point out that he had not accounted accurately for the deposit.)

6. Prior to the sale of 29 Beresford Road, Mr Simpson had already purchased, in his own name, a property in Livingstone Road, Marrickville, that purchase having been settled for the sum of $134,425 on 5 February 1985. The parties moved, following the sale of 29 Beresford Road, into the house in Livingstone Road, Marrickville.

7. There was an auction held on 6 June 1985 in respect of a house at 36 Newcastle Street, Rose Bay. Mr Simpson attended the auction. He made the successful bid of $260,000. The contract, which of course had to be signed immediately, showed him as the purchaser, with the addition straight after his name of the words "or Nominee". It is his evidence that he had attended the auction solely on behalf of his wife, not for himself, but that the vendor's solicitor insisted, as she was not present, the contract would have to be in his name. The impasse was overcome by the addition of the reference to a nominee. The insertion of those words tends to confirm that there was a difficulty, but the explanation of it given by Mr Simpson cannot be uncritically accepted. The same difficulty would have arisen had it been intended to continue the previous practice of buying the matrimonial home in joint names. The fact is Mrs Simpson was not there. She says she was nursing the six weeks old child, and she also had the older children to care for. That can readily be understood, if her husband was the prime mover in the purchase; but if it was really her purchase, it is less easy to think she would not have made arrangements to be at the auction herself.

8. What happened afterwards scarcely clarifies the situation. Although the trust account ledger of the solicitor who acted on the purchase, a Mr Clapin (Mr and Mrs Simpson's usual solicitor - but for some reason not the solicitor who had acted on the purchase of the Beresford Road property), shows Mrs Simpson as the client, the requisitions on title were sent out referring to Mr and Mrs Simpson as the purchasers, and the transfer (the title was Torrens system) was originally typed to show the transferees as Mr and Mrs Simpson. It was only on the very day of settlement, 2 August 1985, that Mr Clapin arranged with the solicitors for the vendors to alter the transfer to name "Marina Ferial Simpson" the transferee. Yet the settlement sheet, which had been prepared a few days in advance, showed Mr Simpson as the purchaser. The moneys required to effect payment, both of the deposit and of the balance due on settlement, were withdrawn from the joint account of Mr and Mrs Simpson at National Australia Bank, Pitt and Hunter Streets, Sydney, and the receipt issued by Mr Clapin for the bank cheque to cover the balance due on settlement was made out to "Mr and Mrs P.A. Simpson". The immediate source of those moneys was an account in the name of Mr Simpson with a merchant bank, Hambros Australia Limited, into which there had been paid the net proceeds (other than the sum of $27.00) of the sale of the property in Beresford Road, Rose Bay. It is not in dispute that Mrs Simpson, whether tacitly or expressly, consented to that investment of moneys originally paid into the joint account and later returned to it, pending the purchase of 36 Newcastle Street.

9. On the day on which the auction was held, a company Coroba Pty Limited, of which Mr and Mrs Simpson were the directors and shareholders, entered into an agreement to purchase a travel agency business for the sum of $140,000, payable by a deposit on contract of $14,000 and the balance on 1 July 1985. Mr Simpson was permitted to work in that business, and came, after a time, to harbour some doubts about it. Payment of the balance of the purchase money was deferred. Mr Simpson sought legal advice, which was to the effect that he could not cancel the contract. On 13 October 1985, he set fire to the premises of the travel agency. As a result, on 29 April 1986, he incurred a judgment for damages in the sum of $496,529.18. A sequestration order followed on 19 August 1986. The bankrupt's statement of affairs revealed virtually no assets left in his estate.

10. After the examinations of Mr and Mrs Simpson, these proceedings were instituted by the trustee in bankruptcy, seeking relief under s.120 or s.121 in respect of the house and land at 36 Newcastle Street, Rose Bay.

11. The claim under s.121 may be disposed of at once. There is no reason to believe that Mr Simpson had any thought of defrauding his creditors. It is not suggested that the evil intention, which led to his financial downfall, had been formed at the time the contract was signed to purchase the Newcastle Street property, or at the time of its completion. After the property had been purchased in Mrs Simpson's name, Mr Simpson remained solvent. Although he had become dissatisfied with the purchase of the travel agency business, that purchase had been made by his and Mrs Simpson's company, not by him personally. In any case, the evidence provides no basis for concluding that the contract, even if it was in fact unwise as being at too high a price, or for any other reason, threatened to cause any serious loss. The true value of the business was not the subject of evidence.

12. Section 120 is another matter. Under that section, the trustee claims that there is here "a settlement of property ... not being ... made ... in favour of a purchaser ... in good faith and for valuable consideration", and that the settlor became bankrupt within two years after the date of the settlement. As was made clear (if clarification was needed) in Barton v. Official Receiver [1986] HCA 44; (1986) 161 CLR 75, it is not sufficient that a settlement within s.120 was made in good faith; it must also have been made "for valuable consideration".

13. In the present case, the respondent says that the settlement, assuming there was a settlement, was made for valuable consideration. But the essence of the case put forward on her behalf was the contention that there was no settlement at all, since, as it was asserted, the purchase of the Newcastle Street property merely reflected her rights in respect of the proceeds of the sale of the Beresford Road property. To understand that contention, it is necessary to discuss some aspects of the evidence which have not as yet been adverted to.

14. Well before the institution of proceedings, the Official Receiver (who was then acting as trustee) wrote to Mrs Simpson asserting that the Newcastle Street property had been bought with the proceeds of the sale of the joint property at Beresford Road, and also that the original intention, at the time of purchase of the Newcastle Street property, was that it would be held jointly. Accordingly, he claimed an equitable interest in the property. The letter concluded:

"I should be pleased if you would advise me of
the reasons for the change in the name of the
registered proprietor for the said property,
together with a schedule calculating the
bankrupt's interest in the said property at 36
Newcastle Street, Rose Bay."

Mrs Simpson sent a hand written reply to this letter, a month later, stating:

"(I)t was never the intention of myself or my
husband to purchase this property in joint
names ... The certificate of transfer was
never altered as the original contract of sale
was signed by my husband on my behalf (as
agent or proxy) as I was unable to be present
at the auction. My husband has no interest
in the property, and never has."

(The statement about the transfer was of course incorrect, since the alteration appears on its face. However, it should be remembered that the transfer was accepted by the solicitor, and Mrs Simpson may never have seen it.) There followed a further letter from the Official Receiver, referring to the fact the bankrupt had stated at his public examination that his wife had made a contribution to the purchase of the Beresford Road property from an inheritance paid out of the estate of her late father. Details of the receipt of these funds were sought, together with a copy of the will. Mrs Simpson's solicitors entered into correspondence with the Official Receiver about this letter; five months later, on 16 July 1987, that correspondence culminated in a curt rejection of the Official Receiver's request for information. The applicant says this casts some doubt on the details now belatedly put forward by Mrs Simpson. Certainly, I think it is curious she should not have supplied, especially after obtaining legal advice, clear particulars of the receipt of the very large sums she now claims to have received from Indonesia in and about the year 1982. It may be that in 1987 some records might have been obtained, or some memories might have been stirred, the benefit of which could not in the event be made available at the hearing two years later.

15. What is now asserted (and was claimed in very general terms, but with some difference of detail, by the bankrupt at his public examination and, I assume in her favour, was claimed by Mrs Simpson at her later examination) is that a substantial source of the moneys used in the purchase of the property at Beresford Road, Rose Bay was moneys paid to her out of the estate of her late father. She says that in 1981 she asked her mother to release to her her "share of the inheritance". That request was contrary to an express declaration in the will of the wish of the deceased that the estate should remain undivided during his widow's life. To grant it would also involve cementing the exclusion of Mrs Paath's other daughter. Nevertheless, by agreement with Mrs Simpson's mother and brother in Indonesia, the estate was apportioned, as it is alleged, between Mrs Simpson and her brother, her brother undertaking the care of their mother, who was also in receipt of a parliamentary pension as Mr Victor Paath's widow. The assets of the estate, which included land and a customs agency or similar business, realised the equivalent of US$500,000.00, of which Mrs Simpson's share was about US$250,000.00. The evidence is that, at the time, there was little difference between the exchange values of the Australian and United States dollars.

16. According to the respondent, Mrs Paath remitted to her in May 1982, by bank draft made out to bearer, the sum of US$200,000.00. The bank draft was in an envelope together with a letter from her mother, and she sent her mother a receipt. Mrs Simpson did not keep the letter, nor did Mrs Paath keep the receipt. The envelope was delivered by a family friend, a Mrs Wachjo, who gave evidence. I note here that Mrs Wachjo was an impressive witness, but of course her evidence cannot confirm that the envelope contained a draft for anything like the sum asserted, nor can it confirm that a distribution of the estate of the late Mr Paath was involved. One of the complications of the case is the acknowledged receipt from Indonesia of $250,000.00 at some time (it is asserted 1981), representing the amount of the loan required to be repaid to Garuda Indonesian Airways. The close correspondence between the amount of the loan moneys remitted from the estate of the late Mr Paath and the amount of the distribution, claimed to have been received from the same estate, is either a very curious coincidence, or else it suggests the possibility that a genuine sum remitted on the one account has found a distorted way into the version given of remittances on a different account altogether.

17. The balance (being US$50,000.00) of the US$250,000.00 alleged distribution from the estate of the late Mr Paath was, according to Mr Simpson's evidence, brought to Australia by Mrs Simpson herself on her return from a visit to Indonesia in about December 1982. (Mr Simpson's affidavit referred to an amount of $150,000.00, but this of course, when added to the $200,000.00 said to have been brought to Australia by Mrs Wachjo, would have totalled an amount of $350,000.00, and in his oral evidence he gave the version I have stated.) The respondent and her husband allege that the amounts of US$200,000.00 and US$50,000.00 received in May and December 1982 were deposited by Mr Simpson, on behalf of his wife, with the merchant bank Hambros Australia Limited, after he had obtained cash for the bank drafts from what was then the Commercial Banking Company of Sydney Limited. No receipt from Hambros Australia Limited, nor any record of the exchange transaction with Commercial Banking Company of Sydney Limited, was produced. Although the alleged cash dealings were of some magnitude, and Mr Simpson is said to have conducted personally a number of transactions with the merchant bank, and to have exchanged bearer drafts on a number of occasions at the particular branch of Commercial Banking Company of Sydney Limited, there was no evidence of any attempt to obtain corroboration, even in the most general terms, from any employee of either bank.

18. Records of Hambros Australia Limited were subpoenaed, and tendered in evidence. It may well be that other records once existed, especially as the series of documents produced leaves at least one gap. However, it is noteworthy that what was produced included an almost continuous record of a deposit account maintained by Mr Simpson between 31 December 1981 and 29 September 1982. From that record, it appears Mr Simpson deposited the sum of $50,000.00 on 31 December 1981, adding to it $7,000.00 on 12 February 1982, $5,000.00 on 30 March, $59,000.00 by two deposits in April, no new deposit in May, apparently $10,000.00 some time in June (the June document is missing), $32,000.00 in two deposits on 3 and 4 August, and $135,000.00 in two deposits on 2 and 17 September. He withdrew the total amount of $298,000.00 plus outstanding interest on 22 September 1982. As settlement of the purchase of 29 Beresford Road, Rose Bay was effected on 23 September 1982, the purchase price being $400,000.00, it seems an obvious inference that the withdrawal of almost $300,000.00 on 22 September was related to that settlement.

19. The only other records produced on subpoena by Hambros Australia Limited are records of an account in the name of Mrs Simpson maintained between 4 March 1983 and 7 November 1983. This account was opened with a deposit of $45,000.00, to which was added a deposit of $20,000.00 on 15 April, a deposit of $29,500.00 on 23 June, a deposit of $5,500.00 on 14 July, a deposit of $25,000.00 on 12 August and a deposit of $19,000.00 on 3 November. The total amount of $144,000.00 deposited plus outstanding interest was repaid by the bank on 7 November 1983. The evidence of Mr and Mrs Simpson is that these transactions would have been attended to by Mr Simpson on behalf of his wife.

20. No record has been produced to substantiate any deposit with Hambros Australia Limited of the equivalent of US$200,000.00 in May 1982 or of US$50,000.00 in December 1982. Since some records are available from as far back as the end of 1981, there is no reason to think that the explanation is any systematic destruction of old records. The production of records covering the month of May 1982 and ensuing months, showing deposits of quite different amounts, casts a shadow on the respondent's case. The difficulty cannot be explained by a possible error of date on the part of Mrs Simpson, for she fixes the date by the return of Mrs Wachjo from her visit to Indonesia, and the date of that return was ascertained from Mrs Wachjo's passport. So far as the alleged receipt of US$50,000.00 in December is concerned, there is no record that either Mr or Mrs Simpson had any account at Hambros Australia Limited at that time.

21. If it is accepted, on the basis of Mrs Wachjo's evidence, that some money was sent from Indonesia to Mrs Simpson in May 1982, the deposit of $10,000.00 in June 1982 may represent that money and reveal the extent of it.

22. At the time of the purchase of the Beresford Road property, and to facilitate its completion, an application was submitted to a finance company to borrow the amount of $100,000.00. The application does not suggest that a large sum of money, the equivalent of US$200,000.00, had recently been received from a source which could readily be acknowledged. It does make reference to Mrs Simpson's entitlement under a "family trust", but describes the value of that as "undetermined".

23. An affidavit of Mrs Paath confirming her daughter's allegations was tendered. In the exercise of my discretion under Rule 135 of the Bankruptcy Rules, I permitted it to be read notwithstanding that Mrs Paath was unavailable for cross-examination. Rule 135 refers to "special leave", but nevertheless I think it confers a broad discretion: cf Jess v. Scott (1986) 12 FCR 187; Avery v. No 2 Public Service Appeal Board (1973) 2 NZLR 86 at 92. However, although the reasons urged for Mrs Paath's inability to attend at the hearing were age and ill health, she had been in Australia as recently as 1987, and there was no medical evidence to support the proposition that she was absolutely too ill to travel from Jakarta to Sydney to give evidence in her daughter's case. I took the view that the affidavit should not be excluded, but its weight is clearly affected considerably by the absence of any cross-examination upon it. No affidavit of Mrs Simpson's brother was tendered, notwithstanding that he was said to have been a friend of Mr Simpson and to have been involved in the division of the estate with his sister. He is manager of a publishing firm in Jakarta. According to the evidence, he accepted the care of his mother under the alleged arrangement. If what Mr and Mrs Simpson say is true, he would be unlikely not to know a great deal about the detail of it. In my opinion, the principle of Jones v. Dunkel [1959] HCA 8; (1959) 101 CLR 298 is applicable in respect of the respondent's failure to adduce evidence from her brother.

24. A great obstacle in the way of acceptance of the respondent's case, that a large contribution to the purchase of the Beresford Road property was made by her through moneys received (and particularly the US$200,000.00) from a distribution of her father's estate, is raised by certain admissions made by Mr Simpson in cross-examination. He, as the alleged agent of his wife to exchange and bank the money, is a twin pillar of the case. But he acknowledged he had said in evidence in his public examination that the $250,000.00 forwarded from Indonesia, not as a distribution of the estate but for the purpose of repayment of the Garuda Indonesian Airways loan, was used in making the Beresford Road purchase. He acknowledged, too, that he had said the sum of $50,000.00 accumulated in the cheque account (that is, the joint account) had also been put in to effect the purchase. That left $100,000.00 (the full purchase price being $400,000.00), which was provided by a loan on mortgage from a finance company. On these figures, there was no room for any contribution from moneys made available by a distribution of Mr Paath's estate.

25. Another difficulty is the lack of clarity of the evidence proffered by Mr and Mrs Simpson. In her affidavit sworn 29 May 1989, Mrs Simpson said: "(B)etween July 1981 and approximately 1983 I received funds from my family in Indonesia, totalling approximately US$250,000.00." In her affidavit of 23 October 1989, she referred to the amount delivered by Mrs Wachjo, and said: "As far as I recollect it was for $200,000.00 in US currency." She said she asked her husband to deposit it with Hambros Australia Limited, and that he told her he had done so. She then said:

"I collected some other money myself when I was
in Indonesia on visits to my family. I went
on a few occasions in about 1981 and 1982. I
received amounts between $2,000.00 and
$5,000.00 US currency each time in notes which
I brought back to Australia. On the trip in
late 1982 I think some part or perhaps the
whole of what I brought back was in a Bank
draft."

A notable aspect of this statement is that it does not suggest there was also a bank draft in the sum of $50,000.00 brought back by her, and given to her husband for deposit at Hambros Australia Limited, in December 1982. Yet her husband says that is what happened. Mr Simpson in his affidavit, sworn 23 October 1989, stated:

"Monies were transferred to Marina Simpson in
Australia by about 4 international bank drafts
made payable to 'Bearer'. These bank drafts
were delivered to Marina Simpson in Australia
by various people travelling backwards and
forwards between Australia and Indonesia. I
arranged to cash these bank drafts at the CBA
(sic) Bank in George Street, Sydney. Cash
sums were paid over and these monies were then
generally placed with Hambros by me. ...
Marina Simpson travelled to Indonesia on a
number of occasions returning with small
amounts of between $2-5,000. In addition,
other persons from time to time delivered cash
in similar amounts. Although I have not kept
any records I estimate that the total amount
transferred in cash was about US$20,000."

Yet in his oral evidence Mr Simpson referred, apart from relatively small amounts of cash, only to the two bank drafts, not four, the one for US$200,000.00 and the one for US$50,000.00. He was extremely vague about the circumstances of the receipt of the US$200,000.00 in May 1982. This would have been a signal event; it would probably have been the largest single amount of their own money the parties had ever received from any source. If it was received, as alleged, it is strange that the occasion should be so obscure in Mr Simpson's recollection.

26. Counsel for the respondent put forward in argument an analysis of the known assets of the parties designed to show that some money must have been received from an outside source. But if so, it does not follow that the additional money was a distribution of Mr Paath's estate. There were dealings of which, according to her, the respondent was only dimly aware. She said she was never told the details of the loan from Garuda Indonesian Airways, nor the details of the arrangements for its repayment. In the light of the importance of that loan for her case in so serious an application as the present, it is strange indeed that her husband has not told her all about his handling of these moneys, and that she has not been impelled by more than curiosity to enquire. The secretiveness of the whole transaction with Garuda Indonesian Airways, and of Mr Simpson's dealings with the proceeds of it, draws a curtain across his financial affairs. In substance, all that the evidence discloses is that US$250,000.00 was obtained late in 1975, to be dealt with in Indonesia, and was remitted to Mr Simpson in Australia in about February 1981, but not repaid to Garuda Indonesian Airways until the end of 1985. Repayment was effected in cash to the extent of $100,000.00, and by the transfer to Garuda Indonesian Airways of the property in Livingstone Road, Marrickville in lieu of the balance of cash due. Given the circumstances, I do not think I can place much weight on an arithmetical analysis which depends on the premise that all the elements of the calculation are known quantities.

27. The solicitor who acted for Mr and Mrs Simpson at the time of the purchase of the Beresford Road property, Mr Kremnizer, was not called to give evidence. But Mr Clapin had been their solicitor previously, and was their solicitor again on the sale of the Beresford Road property and on the purchase of the Newcastle Street property. Mrs Simpson says she attended Mr Clapin's office in connection with the purchase to execute some documents. It may be that this is incorrect, but if so, it is likely she did attend upon Mr Clapin in relation to the sale. At that time, she says, there were marital problems between her and her husband, and they had arranged to divide the proceeds so as to return to her the contribution she had made (as she asserts) from her father's estate. Assuming this is true, another curious feature of the case, though not of great importance in itself, is that Mr Clapin was told nothing about it.

28. I have come to the conclusion that I should reject the evidence of a very large distribution to Mrs Simpson from her father's estate. I think it is probable that she did receive some moneys, either from the estate or from her mother, but I think the amounts were relatively small.

29. Counsel for the respondent had a further argument. Basing himself on Mrs Simpson's evidence of matrimonial discord and of an agreement to divide the proceeds of the sale of the jointly owned house at Beresford Road, he said that 36 Newcastle Street should be regarded as purchased with Mrs Simpson's half share of the proceeds of sale, so far as her half share extended. On that footing, he calculated that her beneficial interest in the Newcastle Street property was 80%. He argued that Mr Simpson's half share went into the purchase of the Livingstone Road property, and claimed corroboration for his submission from the fact that that property was purchased in Mr Simpson's name alone. However, the Livingstone Road property was bought, and paid for, seven weeks before the sale of the Beresford Road property, and thus it is not possible that it actually represented a distribution of the proceeds of sale of the latter property. It seems more likely it was bought in Mr Simpson's name because it was never intended to be the matrimonial home, though they lived in it briefly pending the purchase of 36 Newcastle Street. That it was an investment property seems to be confirmed by its transfer to Garuda Indonesian Airways only a few months later. That it was beneficially owned by Mr Simpson is not to be assumed, since there is no presumption of advancement in favour of a husband.

30. But the real answer to counsel's argument is of a more fundamental nature. Mrs Simpson's evidence of an arrangement to divide the proceeds of sale of the Beresford Road property was predicated upon the proposition that she at that time asserted, and her husband acknowledged, her entitlement as provider of more than half the funds used in the purchase. Since I have found this entitlement did not exist, I do not accept there was any such discussion. Whatever the basis on which the purchase was made in Mrs Simpson's name, it was not based on the agreement alleged by her. It is unnecessary, therefore, to consider the further difficulty that the alleged agreement was said to have arisen out of a contemplated separation of the parties, a contemplation which seems to have evaporated by the time of the Newcastle Street purchase.

31. On all the evidence, and having regard to my findings, there is a very real question whether the presumption of advancement has not been rebutted in respect of the placing of the Newcastle Street property in the name of Mrs Simpson. The property was purchased, as I find, with moneys which belonged to the parties jointly, being the proceeds of the sale of their joint property in Beresford Road. Prima facie, it follows that Mrs Simpson was beneficially entitled in right of her pre-existing interest in the purchase moneys, as to an undivided one half share, and that, if the presumption of advancement applied, she had become entitled as to the other one half share beneficially by virtue of the presumption. But in Calverley v. Green [1984] HCA 81; (1984) 155 CLR 242 at 259-260, Mason and Brennan JJ., in their joint judgment, referred to the view of Lord Upjohn expressed in Pettitt v. Pettitt [1969] UKHL 5; (1970) AC 777 at 815:

"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."

The difficulty of reconciling this view with the presumption of advancement is plain, but as Mason and Brennan JJ. point out "(t)he doctrines of equity are not ossified in history". In the present case, it is unnecessary to pursue the question since, if the presumption of advancement applies, it works a settlement within the meaning of s.120 not made in favour of a "purchaser ... for valuable consideration".

32. Counsel for the applicant, however, sought an order for more than a half interest in the Newcastle Street property. He relied on some evidence given by Mrs Simpson in cross-examination. He said the effect of that evidence was that the property was to be held upon the basis that the beneficial interests in it should reflect the contributions made by the parties respectively towards its acquisition. He urged that if I rejected the evidence of a distribution from the estate of Mrs Simpson's father, the contribution of Mr Simpson to the acquisition of the property would far outweigh any contribution by Mrs Simpson. I think there are two answers to this argument. In the first place, the purchase price of the Newcastle Street property came from the proceeds of sale of the jointly owned property in Beresford Road; I do not think it is appropriate to go further back than that in tracing the contributions made by the parties respectively. But in any case, I do not think the evidence of Mrs Simpson should be understood in the sense for which counsel contends. In cross-examination, she asserted that her "inheritance money went into Beresford Road". There then followed these questions and answers:

"And what was your intention at the time that
Beresford Road was purchased? Was it that you
and Mr Simpson would have interest (sic) which
reflected the contributions you had made to
the purchase of the property? ANSWER Yes, we
both have an interest in Beresford Road, yes.
Which reflected the contributions that you had
made to the purchase price of the property?
ANSWER That is right, yes."

I have underlined the word "you" because I think the true sense of the answer is that the beneficial title to the property was asserted by Mrs Simpson to reflect her own contribution, that is, the alleged contribution by putting in moneys from her father's estate. I do not think she intended to assent to any suggestion of an intention rebutting the presumption of advancement (if it applied), or rebutting the ordinary inference that the use of joint moneys to purchase a property would produce a joint asset.

33. For these reasons, there should be a declaration that the applicant is entitled to a one half interest in the property situated at 36 Newcastle Street, Rose Bay, and the applicant should also have an order for his costs against the respondent.