Re Peter Anthony Mccomish Ex Parte: Teresa Pearson Mccomish As Executrix In the Estate of Peter Anthony Mccomish (Deceased) v Bernard Putnin As Trustee In the Estate of Peter Anthony Mccomish [1992] FCA 349 (24 July 1992)

FEDERAL COURT OF AUSTRALIA

Re: PETER ANTHONY McCOMISH
Ex parte: TERESA PEARSON McCOMISH as Executrix in the Estate of PETER ANTHONY
McCOMISH (deceased)
And: BERNARD PUTNIN as Trustee in the Estate of PETER ANTHONY McCOMISH
No. W B476 of 1989
FED No. 582
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA
BANKRUPTCY DISTRICT OF THE STATE OF WESTERN AUSTRALIA
GENERAL DIVISION
Spender J.(1)

CATCHWORDS

Bankruptcy - application for review of act of trustee - application by spouse of bankrupt - trustee took possession of motor launch - some material indicating joint ownership by bankrupt and spouse - bankrupt's share held on trust for spouse.

Bankruptcy Act 1966 ss. 120, 121, 178.

HEARING

PERTH
24:7:1992

Counsel for the applicant: Mr L.E. James with Mr P.A. McComish

Instructed by: Kott Gunning

Counsel for the respondent: Mr S.R. Sirett

Instructed by: Robertsons

ORDER

THE COURT DECLARES THAT:

1. Teresa Pearson McComish is the sole owner of the motor
launch 'Marocain'.
2. The motor launch "Marocain" was not at any time the property
of Peter Anthony McComish and the trustee of the estate of
Peter Anthony McComish was not entitled to take possession
or attach the motor launch 'Marocain' and that act was void.

THE COURT ORDERS THAT:
3. The trustee pay the applicant in these proceedings her
costs, including reserved costs, to be taxed.

Note: Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.

DECISION

This is an application by Teresa Pearson McComish of Unit 2, 3 Mitchell Street, Mt Lawley, for an order that the court review the act of the trustee of the estate of her late husband, Peter Anthony McComish, in purportedly taking possession or attaching property described as a "motor launch 'Marocain' 10 metre - wooden". The application is based on s. 178 of the Bankruptcy Act 1966 which provides:

" If the bankrupt, a creditor or any other person is affected
by any act, omission or decision of the trustee, he may
apply to the Court, and the Court may make such order in the
matter as it thinks just and equitable. "

2. The application further seeks a declaration that Mrs McComish is the sole owner of the motor launch 'Marocain' and seeks consequential orders if necessary.

3. The basis for the application by Mrs McComish is her claim that she is and has at all relevant times been the sole owner of a motor launch 'Marocain'. Mr McComish, the late husband of the applicant, became bankrupt on 11 August 1989 on the presentation of a debtor's petition. On 22 December 1989 Bernard Putnin, a registered trustee, became trustee of Mr McComish's estate. In 1975 a motor launch 'Marocain' was transferred from David Hutchinson, or perhaps from Mr Hutchinson and his wife, to either Mrs McComish, solely, or to Mrs McComish and her husband, for $16,500.

4. There is evidence both ways as to the nature of the transaction and some brief reference will be made to that, but both in her affidavit evidence and orally before me Mrs McComish swore that she was the sole owner of the 'Marocain'; that she paid for the vessel solely out of her own moneys; that at no stage did she give her husband a half share in the vessel nor did she regard him, in any way, as having a half share in the vessel absolutely. I accept her evidence and I am satisfied that there was not at any time a gift by her of any part of the beneficial interest in the motor launch 'Marocain'.

5. Corroborating her sworn evidence is a number of items of material and contemporary writings. There is a receipt dated 14 April 1975, signed by Mr Hutchinson, acknowledging receipt of $100 deposit and part payment for the 'Marocain'. The receipt indicates that the deposit and part payment was received from Mrs McComish. A further part payment from Mrs McComish is acknowledged in a receipt dated 22 April 1974. Mrs McComish says that she borrowed $3000 from her sister and there is evidence from the sister's husband acknowledging repayment of those funds at a time reasonably close to the acquisition of the vessel and remote in time from events in 1985 and later.

6. Mrs McComish swears that the balance was paid from a loan from Beneficial Finance borrowed in the names of Mr and Mrs McComish and secured by mortgage over the matrimonial property. But she says the balance was paid solely by her out of her funds. There is evidence of regular payments to Beneficial Finance in respect of the loan funds out of Mrs McComish's moneys and she was not cross-examined on her claim that she was the sole source of the funds used to acquire the vessel 'Marocain'. There are other documents including a receipt from John Muhling Marine Pty Ltd in 1977 acknowledging payment from "Mrs T. P. McComish" in respect of the acquisition of an outboard motor for the 'Marocain'.

7. As against that, there is a bill of sale relating to the transfer from David John Hutchinson and Dorothea Hutchinson to Peter Anthony McComish and Teresa Pearson McComish, of the 'Marocain'. That bill of sale was entered in the register on 23 September 1975. There is a certificate of British registry in relation to the 'Marocain' which shows that the registered owners from 23 September 1975 onwards were Mr and Mrs McComish. I should indicate that the 'Marocain' in the certificate of British Registry is shown as a 35 foot wooden vessel, first registered in 1934 in New South Wales, with two petrol engines of 1969 vintage.

8. On 15 October 1975 the certificate of British registry was forwarded by an officer of the Department of Customs and Excise to Mr and Mrs McComish.

9. There is a licence agreement between the Royal Perth Yacht Club and Mr McComish in respect of a licence to moor the 'Marocain' in a pen at the Royal Perth Yacht Club.

10. There is an owner service log in relation to the 'Marocain' in Mr McComish's name solely although Mrs McComish says that the details in the identification section of that log are not in her husband's handwriting. There is a report sheet from John Muhling Marine Pty Ltd in 1978 addressed to Mr McComish in respect of a service to the outboard motor attached to the 'Marocain' and there is a policy of insurance in 1980 showing the insured as "P.A. and T.P. McComish".

11. Notwithstanding the material which indicates a joint ownership, Mrs McComish says that it was necessary to have her husband shown as part-owner of the vessel because of the disabilities she would face in having penning facilities for the boat at the Royal Perth Yacht Club under the rules as they applied at the time of the purchase of the vessel. That there were some difficulties in that regard is deposed to by Terence Palmer in an affidavit filed in these proceedings.

12. So far as the events of 1975 are concerned, I am satisfied that Mrs McComish was the sole owner of the vessel and that the vessel had been acquired solely with her own funds. It follows then that Mr McComish, insofar as he was registered as a half-owner of the vessel, held his shares as trustee for Mrs McComish. That conclusion, it seems to me, is sufficient to dispose of the matter, but lest I be wrong in that, I will address the other contentions advanced by the trustee.

13. These are based on ss. 120 and 121 of the Bankruptcy Act. Section 120 strikes down settlements within five years of the act of bankruptcy not made for consideration and without notice unless the parties claiming under the settlement prove that "the settler was, at the time of making the settlement, able to pay all his debts without the aid of the property comprised in the settlement": see s. 120(2)(a).

14. Further, the trustee asserts that a disposition which occurred in 1985 concerning 30 of the 32 shares registered in the name of Mr McComish was a fraudulent disposition made to defeat his creditors and, therefore, was void as against the trustee. In 1985 there was a transfer for nil consideration by Mr McComish to Mrs McComish of 30 of the 32 shares registered in his name so that subsequent to that time Mrs McComish was registered as the holder of 62 shares and Mr McComish as the holder of two shares.

15. This settlement, in my opinion, did not affect the beneficial entitlement to the vessel as I have earlier indicated but, in any event, it seems to me that notwithstanding that the settlement came into operation within five years before the commencement of Mr McComish's bankruptcy, at that time the evidence establishes that he was able to pay all his debts without the aid of the property comprised in the settlement. The evidence in that regard includes a declaration made in October 1985 which indicates that he had an excess of assets over liabilities of at least $70,000. There is evidence from his income tax returns showing that in 1985 there was a taxable income of nearly $15,000.

16. There is evidence of his public examination when he says that he was earning sufficient to feed and educate his children and that there was a small surplus. There is in fact nothing to suggest that he was not able to pay his debts. Mrs McComish says that at the time of the transfer of the shares there was no question of insolvency; nor was there any question of an intention to defeat creditors, including contingent creditors. It follows therefore that I am against the trustee in respect of the claim based on s. 120 of the Bankruptcy Act.

17. Concerning the claim that it was a fraudulent disposition to defeat the interests of creditors, a number of circumstances are relied on. In addition to the transfer of the shares in 1985 a deed of trust establishing the P.A. McComish Family Trust, which commenced in 1977, was amended on 10 May 1987. The effect of the amendment was to remove Mr McComish as appointor and guardian of the trust. On 16 March 1988 there was a deed executed by Mr McComish renouncing any right to receive trust funds from the P.A. McComish Family Trust as a beneficiary. The trust is a discretionary trust and the deed of trust of 16 March 1988, it seems to me, would not affect any claim a creditor of Mr McComish might have against him.

18. In addition, neither of the amendments relating to the trust, on which reliance is placed, establish in the slightest that they were done for the purpose of defeating the interests of creditors. Further, the chronology of those events is quite remote from the share transaction in 1985 and, in my opinion, cannot be viewed as an incident in a course of conduct designed to defeat creditors.

19. I am of the same view concerning the events of 30 June 1987. At that time Mr McComish sold to Mrs McComish his half interest in the matrimonial home for $60,000.

20. Mrs McComish paid the $60,000 to Mr McComish from her own account. I infer that Marocain Pty Ltd, the corporate trustee of the family trust, paid $60,000 into Mrs McComish's account, being repayment of loan funds advanced by her to Marocain Pty Ltd. It seems that Mr McComish, with the $60,000 received in respect of the sale of the half interest in the house, purchased 20,000 shares in Sarich. According to Mrs McComish, the purchase price was of the order of $60,000. The holder of the shares was Marocain Pty Ltd.

21. It was submitted by counsel on behalf of the trustee that this series of transactions constituted a sham. I am unable to say anything concerning the adequacy of the $60,000 for the transfer of the half interest in the house, but I do not accept that the transactions were sham transactions and it seems to me that one cannot infer, and I do not infer, that those transactions were done for the purpose of defeating creditors. Their only relevance in the present circumstances could be for whatever light they might throw on the transactions involving the shares in the boat which occurred in 1985.

22. I am quite satisfied that the transfer of 30 of the 32 shares registered in the name of Mr McComish was not a fraudulent disposition of those shares pursuant to s. 121 of the Bankruptcy Act. For those reasons, therefore, I am satisfied that Mrs McComish is entitled to the relief that she seeks in her application.

23. The position of the trustee as trustee is one which has to be recognised but it seems that very early in the piece Mrs McComish's claim was communicated to Mr Putnin with some evidence supporting her claim. The fact that there has not as yet been a s. 81 examination of Mrs McComish cannot alter the primary position in relation to costs. It perhaps would have been better if a s. 81 examination could have taken place and these proceedings might then have been avoided. But it seems to me that Mrs McComish is entitled to an order for costs and Mr Putnin is entitled to be indemnified out of the estate of Mr McComish for those costs.

24. The declarations that I make are that the motor launch, 'Marocain', was not at any time the property of Peter Anthony McComish and it follows that the trustee of the estate of Peter Anthony McComish was not entitled to take possession or attach that motor launch and that that act was void.

25. The court declares that Teresa Pearson McComish is the sole owner of the motor launch 'Marocain'.

26. I order that the trustee pay to the applicant in these proceedings her costs, including reserved costs, to be taxed. Those costs are his proper costs in the administration of the estate of Peter Anthony McComish.