Ebner v Official Trustee in Bankruptcy, in the matter of Ebner [2003] FCA 73 (14 February 2003)

Last Updated: 14 February 2003

FEDERAL COURT OF AUSTRALIA

Ebner v Official Trustee in Bankruptcy, in the matter of Ebner

[2003] FCA 73

BANKRUPTCY - trustee in bankruptcy - supervision by the Court - s 178 Bankruptcy Act - whether available for personal injury

PERSONAL PROPERTY - proof of ownership - inferred from possession - inferred from ownership of land on which property is found

TORT - personal property - conversion - assertion of ownership - failure to return

TRUSTS AND TRUSTEES - property purchased by wife using husband's credit card - inference of resulting trusts - whether rebutted by the presumption of advancement - whether presumption available in case of jointly enjoyed chattels

Bankruptcy Act 1966 (Cth) ss 54(1), 58, 130(2), 149 and 178

Abesbaum, In re; Irving Trust Co. v Abesbaum 70 F2d 628 (2d Cir 1934) referred to

Abrahams v Trustee of the property of Abrahams [2000] WTLR 593 cited

Armory v Delamire [1722] EWHC J94 (KB); (1721) 93 ER 664 referred to

Bishop, Re; National Provincial Bank Ltd v Bishop [1965] 1 Ch 450 disapproved

Blair v Curran [1939] HCA 23; (1939) 62 CLR 464 applied

Claflin & Co v The Continental Jersey Works 11 SE 721 (1890) cited

Clark, Re (A Bankrupt), Ex parte The Trustee v Texaco Ltd [1975] 1 WLR 559 followed

Cohen In re, deceased; National Provincial Bank Ltd v Katz [1953] 1 Ch 88 cited

Dingle, Re; Westpac Banking Corporation v Worrell (1993) 47 FCR 478 referred to

Dyer v Dyer [1788] EWHC J8 (Exch); (1788) 30 ER 42 cited

Ebrand v Dancer (1630) 2 ChCas 26 cited

First National Bank of Rodgers v Tribble 244 FW33 (1922) cited

Fogarty, In the Marriage of (1976) 27 FLR 257 cited

Hall, Re (1957) 20 ABC 21 referred to

Houghton; Ex parte (1810) 17 VesJr 253 cited

Howard E Perry & Co Ltd v British Railway Board [1980] 1 WLR 1375 followed

James; Ex parte (1874) 9 Ch App 609 applied

Jeffries v Great Western Railway (1856) 119 ER 680 referred to

Johnson v Pickering [1907] 2 KB 437 cited

Jones v Maynard [1951] 1 Ch 572 distinguished

Kuwait Airways Corporation v Iraqi Airways Co (Mance J, 29 July 1998, Queens Bench Division, unreported) followed

Macchia v Nilant [2001] FCA 7; (2001) 110 FCR 101 applied

Oakley v Lyster [1931] 1 KB 148 followed

Peters, Re; ex parte Lloyd (1882) 47 LT 64 referred to

Pickard v Pickard (1981) 7 Family Law Reports 636 cited

Rathwell v Rathwell [1978] 2 SCR 436 cited

Reid, Re; Clarke v Reid (1998) 85 FCR 452 cited

Rider v Kidder (1805) 10 VesJr 630 cited

Sheppard v Cartwright [1954] UKHL 2; [1955] AC 431 cited

Short v The City Bank (1912) 12 SR (NSW) 186 followed

Silver v Silver [1958] 1 WLR 259 considered

Smith v Torr (1862) 3 F&F 505 doubted

South Staffordshire Water Company v Sharman [1896] 2 QB 44 followed

Tyndall, Re; (1977) 30 FLR 6 referred to

Winkfield, The [1902] P 42 referred to

Crossley Vaines on Personal Property 5th ed (1973)

Palmer & McKendrick (eds) Interests in Goods 2nd (1998)

IN THE MATTER OF MAXWELL WILLIAM EBNER

INGRID EBNER v THE OFFICIAL TRUSTEE IN BANKRUPTCY (AS TRUSTEE OF THE PROPERTY OF MAXWELL WILLIAM EBNER)

VG 7179 of 1999

JUDGE: FINKELSTEIN J

DATE: 14 FEBRUARY 2003

PLACE: MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 7179 of 1999

IN THE MATTER OF MAXWELL WILLIAM EBNER

BETWEEN:	INGRID EBNER Applicant
AND:	THE OFFICIAL TRUSTEE IN BANKRUPTCY (AS TRUSTEE OF THE PROPERTY OF MAXWELL WILLIAM EBNER, A BANKRUPT) Respondent

JUDGE:	FINKELSTEIN J
DATE:	14 FEBRUARY 2003
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

1 Maxwell Ebner became a bankrupt on 29 August 1994 when an order sequestrating his estate was made on the petition of the Australian & New Zealand Banking Group Limited, a judgment creditor. The Official Trustee in Bankruptcy was appointed trustee of the estate. Pursuant to s 58 of the Bankruptcy Act 1966 (Cth) the property of the bankrupt vested in the Official Trustee. In his statement of affairs to the Official Trustee (as to which see s 54(1)) the bankrupt claimed that he was unemployed, had no income and owned no assets. Some ten years earlier, in a statement of financial position submitted to the ANZ Bank for the purpose of obtaining credit, the bankrupt claimed that he owned, among other assets, furniture and household effects (including antiques and paintings) to the value of $250,000. The two statements are not necessarily inconsistent, as the bankrupt could have disposed of his personal property before bankruptcy. Indeed he had transferred to the applicant, his wife Ingrid Ebner, his interest in their matrimonial home at 6 Watts Parade, Mt Eliza, although the transfer was later set aside at the suit of the Official Trustee on the basis that it had been made with intent to defraud creditors. However, Mr Ebner does assert that when the sequestration order was made he owned no personal property, perhaps apart from a few items of clothing. The truthfulness of this assertion is at the heart of this case.

2 It is convenient to begin with a description of the events which led to the institution of this action. Following an investigation, the Official Trustee formed the view that the personal property located at Watts Parade, which he believed to be worth around $500,000, was "the property of the bankrupt solely or the bankrupt and his wife and as such constituted divisible property of the bankrupt" which was being concealed from him. Accordingly, the Official Trustee applied for the issue of a warrant under s 130(2) of the Bankruptcy Act authorising a member of the Australian Federal Police to enter the Watts Parade property, search for and take possession of "relevant property" (which was defined in the warrant to include (paintings; antiques; other furniture and household effects; jewellery and watches; any of the property of the bankrupt; property that may be connected with, or related to, the Bankrupt's examinable affairs; or books (as defined in the Act) (including books of an associated entity of the Bankrupt) relevant to any of the Bankrupt's examinable affairs) and deliver that property to the Official Trustee. The warrant was issued on 16 October 1998 and executed five days later. In all 432 individually identified items (including some sets) were removed from the property and delivered to the Official Trustee in whose possession they still remain.

3 In this action Mrs Ebner seeks an order that the Official Trustee be directed to deliver this property to her. She also wants compensation in the event that any of the property has been damaged. Finally there is a claim for damages for personal injury (mental distress) alleged to have been caused by the issue and execution of the warrant and the detention of the property. The basis upon which these orders are sought is that Mrs Ebner is the owner of the property, having acquired it by purchase, gift or operation of law. Accordingly, she alleges that the Official Trustee "had no basis in fact or in law" to apply for the warrant, and in any event, in the first instance, he should have requested her to deliver up the property before proceeding to obtain the warrant. Mrs Ebner relies upon s 178 to found her relief. Section 178 provides that "if the bankrupt, a creditor or any other person is affected by an 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". It seems, although it is not altogether clear, that Mrs Ebner seeks damages under s 178 even if she is not the owner, or a co-owner, of the personal property.

4 The way Mrs Ebner puts her claim of ownership is as follows. Her family (father, mother and five children) migrated to Australia from Germany in 1960 when she was 13 years old. The family struggled to establish itself financially. Mrs Ebner was forced to leave school at age 14 and work in labouring jobs for three years. She then obtained an executive traineeship with Myer in Melbourne where she remained for one year, until 1969, when the family returned to Germany. The family came back to Australia in 1971 and Mrs Ebner resumed her position at Myer. After a time she was promoted "to a management position" (an overseas buyer), a position which she held until her retirement in 1987.

5 Mrs Ebner's work as a buyer and the influence of her father resulted in her developing a "hobby and passion" for the decorative arts and "collectibles". She collected, amongst other things, jade, silverware, artefacts, chinaware, pottery, jewellery, clocks, watches, scientific equipment, furniture and paintings. Mrs Ebner's uncle and cousin were collectors of military memorabilia. This inspired her collection of military objects, including antiques swords, pistols and medals. Her uncle was also a collector of watches and clocks. He inspired her collection of men's watches and clocks. Mrs Ebner says that the personal property in the possession of the Official Trustee forms part of her collection.

6 According to Mrs Ebner she paid for all of the items in the collection, apart from those she received by gift. She said that the sources of the funds were savings, her income from Myer, which she says she kept in a number of accounts and in cash at home, and the superannuation entitlements which she received upon her retirement in 1987. Mrs Ebner identified 219 items as having been purchased for cash "from [her] savings or cash resources". The aggregate purchase price for these items is approximately $200,000. She identified five items which she said were paid by bank cheque again using her own funds. In aggregate the bank cheques (which were not produced) were said to total $6,010. She said that she purchased some items using her mother's visa card but could not identify any particular item which fell into this category. She said that she purchased thirty-eight items (which she identified) using her Myer credit card. The cost of those items totalled $16,540.18. She said that she discharged the debt due on the Myer credit card from her own savings or cash reserves. The same was true, so it was said, of one item which was purchased by Mrs Ebner using her American Express card. This item cost $1,542.64. She identified sixty-six items, which she claimed to have purchased, "for [her] own use" but could not remember how they were purchased or from whom. The cost of these items is not known. A number of items (fifteen) were said to have been purchased "by unknown credit cards". This cost, save for one item for which the price is not known, is $9598. There were a number of items which she had claimed were gifts from members of her family. Finally there are a large number of items (sixty-three in all) which she said were purchased using one of two ANZ visa card accounts (no. 4564 6350 2890 6389 or no. 4564 6930 2885 8125) established in the name of her husband but in respect of which an additional card had been issued to her. She said that she had made all the purchases on those cards and paid the debts to the bank from her own savings or cash reserves. The cost of these items is approximately $27,000.

7 Without putting too fine a point on it, what follows is a fair description of Mrs Ebner's case. She and her husband were married for about fourteen years before his bankruptcy. During that period hundreds of "collectibles" were purchased for use or display in the matrimonial home. Some of the items are quite valuable. Mrs Ebner paid for all the items (apart from the few she received by gift) and her husband paid for none. Indeed, on Mrs Ebner's case, nothing in the house, apart from a few personal items, such as clothing and items of personal hygiene, belonged to her husband.

8 If true Mrs Ebner is entitled to have returned to her all the property taken by the Official Trustee because none of it could form part of her husband's distributable property which, according to the Bankruptcy Act, is to be applied in payment of his debts. On the other hand, Mrs Ebner's claim might be yet another attempt to deprive her husband's creditors of their just entitlements. I must determine the true position.

9 Mrs Ebner's primary case depends upon my acceptance of her evidence to the civil standard; that is upon my finding that what she says is more probable than not. I am not prepared to make that finding. Mrs Ebner spent a good deal of time in the witness box, mostly under the cross-examination of Mr Clarke for the Official Trustee. His cross-examination was at times hostile, but not unfair. At the conclusion of her evidence I was of the opinion that very little of what Mrs Ebner said should be accepted as true, unless it was contrary to her interest. Even during the early part of her evidence I had begun to suspect that Mrs Ebner, supported by her husband, was prepared to say anything that would best suit her purpose, that purpose being to keep the items in suit away from her husband's creditors. In the end I think that Mrs Ebner was quite indifferent to the truthfulness of much of what she said.

10 My view was influenced not only by Mr Ebner's demeanour and the unsatisfactory way in which she gave her evidence (avoiding difficult questions by pretending to misunderstand what was asked; being purposefully vague and forgetful; making many inconsistent statements; giving false explanations for inconsistent statements; asserting the existence of facts which were plainly untenable) but also by the following factors (not in order of significance), some of which will require later elaboration. One is the inherent improbability of Mrs Ebner's story. It is not the norm for a typical couple (if there be such a thing) to arrange their affairs so that the wife owns everything in the house, whether it was acquired for her use, her husband's use or for their joint use, and the husband owns nothing. In particular it is not the norm in a case where the evidence establishes (as I will later show) that Mrs Ebner did not have the funds to purchase everything in the house. She earned a modest income while at Myer, much less than she initially suggested in evidence. Her retirement benefits were also much less than first claimed, and some of those benefits were applied to meet her husband's expenses when he got himself into financial difficulty. Another factor is that Mrs Ebner falsified many purchase dockets by substituting as purchaser her name for that of her husband. In all, she altered some twenty-six purchase dockets, leaving only one that names her husband as purchaser. Mrs Ebner claimed that the changes had been made by the shopkeepers from whom the items had been purchased. I do not accept this explanation. In my view the changes were made by Mrs Ebner solely for the purposes of misleading the court into thinking that she, and not her husband, had purchased the items to which the dockets relate. Next there is the evidence given in the proceeding instituted by the Official Trustee to recover her husband's interest in the Watts Parade property. Mrs Ebner defended this claim by contending that she had given consideration for the transfer. The consideration was said to be her payment of personal debts incurred by her husband, including debts totalling $130,690.07 on an ANZ visa credit card numbered 4564 4350 2890 6389. She said that, in all, she paid $177,158.07 in discharge of her husband's debts. In this case, however, she gave a different account. Here she said that all the debts that were incurred on that particular credit card were for her own benefit. When cross-examined about the inconsistency her answers were confusing and vague. The best she could do was to suggest that her evidence in the earlier proceeding was not meant to be taken literally. At the end of the cross-examination on this topic, Mrs Ebner said she would abandon her claim for ownership of the items purchased on the credit card. (In final address her counsel pressed the claim on legal grounds to which I will turn in due course). In the overall context, the items purchased with the visa card are not of great value. But the inconsistent evidence given by Mrs Ebner in the two proceedings says a good deal about her credibility.

11 In passing I observe that this case is of the type Augustus Hand J had in mind when he said In re Abesbaum; Irving Trust Co. v Abesbaum 70 F2d 628 (2d Cir 1934) at 628:

"The stories of bankrupts who conceal assets have assumed a form almost as conventional as the plots one finds in the plays of Plautus and Trence. Indeed, if they were told with art and possessed more fertility of imagination, a new anthology might be gathered from American literature from the bankruptcy field. As it is, they contain little more than standarized forms of falsehood so often reiterated as to be neither credible nor interesting."

12 Notwithstanding the view which I have formed about Mrs Ebner's evidence, I cannot entirely reject it. I do reject her claim that she paid from her own resources for all the items in the Official Trustee's possession. I simply do not believe her evidence on this score. On the other hand, for example, I accept that she paid for the items purchased on her Myer card account and with her American Express card. This finding, however, will be of limited assistance to Mrs Ebner because I am not satisfied that those particular items have been identified. In fact, I think the opposite is true. For the most part, Mrs Ebner's attempts to match a particular credit card purchase to a particular item were simply an exercise in guesswork. Let me demonstrate what I mean by reference to a few items which Mrs Ebner identified as having been purchased with the Myer card. Among the seized items are twenty or so Leica cameras. Mrs Ebner produced a Myer card account for the period ending 25 November 1980. One entry on that account is a purchase from the "Radio department". Mrs Ebner said that this entry related to the purchase of one Leica camera. Mr Clarke pointed out that according to the credit card account the purchase had been from the radio department and asked her how she could be satisfied that the entry was for a camera. She said: "Because they sold cameras in that department and I did buy some there". That does not convince me that the particular camera has been properly identified. In any event the true position in relation to this purchase is indicated by the handwritten notation "Herm" on the credit card account. The reference is to Hermit, Mrs Ebner's brother. The notation was made by Mrs Ebner in 1981. In my opinion, it indicates that this item was purchased by Mrs Ebner for her brother, who was then required to pay the amount due to Myer or repay that amount to Mrs Ebner. Another example relates to a group of items described as a quantity of gold jewellery and watches. Mrs Ebner could not identify any particular connection between those items, an entry on a Myer account and on a number of receipts she produced. She said: "These receipts refer to items which I had bought at Myer in the gift department which were just little things. I didn't sketch them, and I didn't know exactly specifically which one it was." Yet another example relates to an item described as a Japanese temple. At one point Mrs Ebner said she had purchased this item at a market. Then she said it came from Myer. She explained: "I can only say that I had bought Japanese items in markets as well as Myer and as well as other small antique shops". Unless there is clear evidence that an entry on a Myer card account is referable to a particular item held by the Official Trustee, Mrs Ebner cannot establish ownership of the item in question. The only items for which there is sufficient proof of identity are the following: the blue crystal lamp, a pair of Doulton vases, a silver salt cellar and a carriage clock. There is a sufficient connection between the description of these items and the supporting documents to enable me to conclude that they were purchased at Myer. I am satisfied these items belong to Mrs Ebner.

13 Moving away from credit card purchases to the items identified as gifts, Mrs Ebner said that a number of items, which she identified, had been given to her by members of her family. I accept that Mrs Ebner received gifts from her family. I suspect that the identification of the gifts may have involved some guesswork on her part. On the other hand, the number of items in this category is not great, and for that reason (which may not be a very good reason in law), I am prepared to give her the benefit of the doubt, apart from her claim for watches and cameras. In respect of those items I do not believe that Mrs Ebner was able to identify any particular watch or camera, out of the many watches and cameras in the possession of the Official Trustee, which she received as a gift.

14 The next group of purchases to be considered is that said to have been acquired by cash, by unknown credit card, by bank cheque or in respect of which it is not known from whom and how they were purchased. As I have said, I reject Mrs Ebner's evidence that she paid for all these items. Yet, I believe that she paid for some of them, although there is no basis upon which I can identify those which she did purchase. In large measure this is due to the "grab-all" basis upon which Mrs Ebner put her case.

15 There is another category in respect of which Mrs Ebner claims relief, but her claim is not dependent upon her having purchased the items. Mr Ebner was discharged from bankruptcy on 4 October 1997, presumably pursuant to s 149 of the Bankruptcy Act. Mrs Ebner says that certain items were purchased after the date of discharge. If true, these items would not form part of the bankrupt's distributable property and should be returned to Mrs Ebner. (It is possible that they should go to Mr Ebner as he may have purchased the items but no point is made of this). The only issue that arises, therefore, is whether the items are in fact after acquired property. As regards the sterling silver teapot, the silver ladle, the Royal Doulton vase and the bark painting, the documents which Mrs Ebner has produced do establish, to my satisfaction, that they were purchased after discharge. These items should be returned. As to the remaining items, Mrs Ebner's claim is not made good by any contemporaneous document and therefore depends upon her evidence. Conformably to my earlier approach, I think her evidence is too unreliable for me to accept it. The same is true of the other categories which I earlier discussed.

16 Although I have rejected Mrs Ebner's claim to be the sole owner of the items in suit (apart from some credit card purchases, a number of gifts and a few post bankruptcy acquisitions) on the basis that she paid for them, I still have to decide to whom those items belong, because they must belong to someone.

17 On the assumption that I would find that she had not paid for the property, Mrs Ebner looked to the principles of equity to establish ownership. Her main argument was based on the law with respect to resulting trusts. On this argument Mrs Ebner acknowledged that if the property was purchased with her husband's money then prima facie he should be regarded as the owner. However she says that what occurred is that when the property was purchased she took legal title to it as the purchase was made in her name (in the sense that she purchased the items from the various vendors) and that the resulting trust which would ordinarily arise in favour of her husband as the person who paid the purchase price is rebutted by the presumption of advancement.

18 The best known statement of the relevant principle, cited and quoted in many cases, is by Eyre CB in Dyer v Dyer [1788] EWHC J8 (Exch); (1788) 30 ER 42, 43:

"The clear result of all the cases, without a single exception, is, that the trust of a legal estate, whether freehold, copyhold or leasehold; whether taken in the names of the purchasers and other jointly, or in the names of others without that of the purchaser; whether in one name or several; whether jointly or successive, results to the man who advances the purchase-money."

The case concerned real property but the rule also applies to personal property: Ebrand v Dancer (1630) 2 ChCas 26 (a bond); Rider v Kidder (1805) 10 VesJr 630 (stock); Sheppard v Cartwright [1954] UKHL 2; [1955] AC 431 (shares); Ex parte Houghton (1810) 17 VesJr 253 (chattels); Abrahams v Trustee of the property of Abrahams [2000] WTLR 593 (a lottery ticket).

19 The typical case in which a resulting trust arises is where the person claiming to be the beneficiary (A) pays the purchase price to the vendor and directs the vendor to convey the title to a stranger (B). I will assume, without deciding, that a resulting trust will also arise where B pays the purchase price with A's money and takes legal title with A's consent. I have not been able to find any Anglo-Australian authority on the point, but this is the view taken in the United States: 5 Scott on Trusts 4^th ed para 440.1 (1989). I will also assume, without deciding, that B relevantly takes legal title to personal property in respect of which there is no document of title or a named "owner", such as occurs in the case of shares, bank accounts, motor vehicles and the like, when the purchase is made. On the basis of these assumptions, we have at least reached the stage where there is property in respect of which there will be a presumption of a resulting trust unless it is to be rebutted by the presumption of advancement.

20 Mrs Ebner's argument breaks down when we consider the presumption of advancement or, more accurately, whether that presumption is rebutted on the facts of this case. In the first place I do not accept that the presumption of advancement can easily be applied in relation to household goods (in which category I would, for present purposes, include furniture and "collectibles") which are acquired for use or display in the family home. Put another way, when personal property is acquired for the purpose of being used or enjoyed by both parties to a marriage, or by parties in a similar relationship, that is a sufficient basis for rebutting the presumption. This is the view that commended itself to Parker LJ in Silver v Silver [1958] 1 WLR 259. The issue in the case was whether property purchased in the name of the wife was held on trust for the husband or for the two of them jointly. Both husband and wife had made contributions (instalments under a mortgage) to the purchase of the property. The trial judge found that the husband intended to make an advancement to his wife. With some misgivings the Court of Appeal did not disturb this finding. In the course of his reasons Parker LJ said (at 265):

"When, however, the house is bought in the wife's name, as here, there is no doubt that the presumption of advancement applies: it is presumed to be a gift, in the absence of evidence of a contrary intention ... The question posed [by the trial judge] was whether the husband had satisfied him that the parties had a contrary intention. He answered that question in the negative and I do not see how on this question of fact this court can interfere. For Myself, I think that in the case of a family asset, such as the home or the furniture, acquired for their joint use, the presumption of advancement can easily be rebutted. It is different from a case where what is acquired is, for instance, for the wife's personal use."

21 In the second place, I do not believe that a presumption of advancement to a wife can be made in relation to property when the only basis for the presumption is that the purchase price was paid out of a credit card account established by the husband which his wife was authorised to use. The existence of such an account may be a factor, along with others, that tends to suggest that purchases effected by the wife belong to her. But here there are no other relevant factors. The fact that Mrs Ebner may have chosen the items in question is not enough to make her the owner.

22 Next it was suggested that the decisions in Jones v Maynard [1951] 1 Ch 572 and Re Bishop; National Provincial Bank Ltd v Bishop [1965] 1 Ch 450 could be applied. In Jones v Maynard the husband and wife each had a bank account, but, as he was about to go overseas on war service with the Royal Air Force they decided that their joint income should be paid into his account with the wife given power to draw thereon. From time to time money was withdrawn from that account by both parties for their own purposes and in particular for investments which were made in the name of the husband. After their divorce the wife brought an action against her husband claiming half the balance remaining in the account and half the value of the investments acquired with monies drawn from the account. Vaisey J said (at 575):

"In my judgment, when there is a joint account between husband and wife, and a common pool into which they put all their resources, it is not consistent with that conception that the account should thereafter (in this case in the event of a divorce) be picked apart, and divided up proportionately to the respective contributions of husband and wife, the husband being credited with the whole of his earnings and the wife with the whole of her dividends. I do not believe that, when once the joint pool has been formed, it ought to be, and can be, dissected in any such manner. In my view a husband's earnings or salary, when the spouses have a common purse, and pool their resources, are earnings made on behalf of both; and the idea that years afterwards the contents of the pool can be dissected by taking an elaborate account as to how much was paid in by the husband or the wife, is quite inconsistent with the original fundamental idea of a joint purse or a common pool.

In my view the money which goes into the pool becomes joint property. The husband, if he wants a suit of clothes, draws a cheque to pay for it. The wife, if she wants any housekeeping money, draws a cheque, and there is no disagreement about it.

That being my view, it follows that investments paid for out of the joint account, although made in the name of the husband, were in fact made by him in his own name as a trustee as to a moiety for his wife. If the investments out of the joint account had been made in the name of the wife alone, there is no doubt that the ordinary presumption of law would have applied and she would have been entitled to the investments; but as they were made in the name of the husband, it seems to me that the assumption of half and half is the one which I ought to apply."

23 In Re Bishop, Mr and Mrs Bishop opened, in 1946, a joint bank account to which they transferred the amounts to the credit of their separate accounts, which were then closed. The joint account was fed by dividends and shares owned by both Mr and Mrs Bishop and sales of investments owned by them separately. It was drawn on by the husband and wife for the purposes of themselves, or either of them, and from it regular payments were made to another joint account opened by them at another bank and used for the purpose of paying housekeeping and local expenses. Monies were drawn also from the first-mentioned joint account for investment purposes; in some instances investments of similar amounts were made in respective names of the spouses, and in other instances investments were made in the name of one only without a corresponding investment being made in the name of the other. The court was asked to determine the beneficial ownership of the investments acquired by monies taken from time to time from this account. Stamp J stated the law which in his opinion applied in the following passage from his judgment (at 456):

" Where a husband and wife open a joint account at a bank on terms that cheques may be drawn on the account by either of them, then, in my judgment, in the absence of facts or circumstances which indicate that the account was intended, or was kept, for some specific or limited purpose, each spouse can draw on it not only for the benefit of both spouses but for his or her own benefit. Each spouse, in drawing money out of the account, is to be treated as doing so with the authority of the other and, in my judgment, if one of the spouses purchases a chattel for his own benefit or an investment in his or her own name, that chattel or investment belongs to the person in whose name it is purchased or invested: for in such a case there is, in my judgment, no equity in the other spouse to displace the legal ownership of the one in whose name the investment is purchased. What is purchased is not to be regarded as purchased out of a fund belonging to the spouses in the proportions in which they contribute to the account or in equal proportions, but out of a pool or fund of which they were, at law and in equity, joint tenants. It also follows that if one of the spouses draws on the account to make a purchase in the joint names of the spouses, the property purchased, since it is purchased in joint names, is, prima facie, joint property and there is no equity to displace the joint legal ownership."

24 Stamp J distinguished Jones v Maynard. As to the facts he pointed out, (at 461), that unlike Re Bishop "[b]oth husband and wife agreed that investments were to be `our savings'". As to the law he observed that the only question to be decided was whether investments which the husband had purchased in his own name, by drawing on the joint account, were held by him in trust for the wife and himself in equal shares or whether they were held by him for his wife and himself and the shares in which they had contributed to the joint account. Stamp J did not think that "Vaisey J was there laying down any general principle that wherever one finds money standing to a joint account and there are investments in the name of the husband" acquired with monies derived from that account, "those investments are held by the husband on trust for the husband and the wife in equal shares": [1965] 1 Ch 450 at 463.

25 Re Bishop has been applied on numerous occasions in Australia. See for example, In the Marriage of Fogarty (1976) 27 FLR 257, Pickard v Pickard (1981) 7 Family Law Reports 636 and Re Reid; Clark v Reid (1998) 85 FCR 452.

26 Mrs Ebner says that the principles established by these cases ought to be applied to purchases by a wife using her husband's credit card account with his authority. In my view, however, the joint bank account cases are different. They are concerned with the situation where husband and wife use a joint bank account to pool their resources. In Jones v Maynard the court found that the money in the account was joint property and it was as a result of this finding that investments purchased from the money in the account were jointly owned investments. Re Bishop also proceeded from the same premise, although there was a different result as regards the purchase of property from the account because it had been agreed by the parties that each spouse could draw on the account for his or her own benefit. Here we are not dealing with the purchase of property out of money which belonged to both the husband and wife. It would be making new law to hold that, in the absence of some agreement or understanding between the parties, purchases effected by a wife using her husband's credit card account, confers on her ownership of the property that has been purchased.

27 In any event, to the extent that Mrs Ebner relies upon Re Bishop I think the case is of doubtful authority. In Rathwell v Rathwell [1978] 2 SCR 436 Dickson J, who delivered the leading judgment of the Supreme Court of Canada said of the case (at 459):

"I have difficulty in understanding the basis upon which it can be said that the joint owner who reaches the bank first can divert jointly-owned funds to the purchase of investments upon which the other joint owner will have no claim. In a decision of this court Re Daly; Daly v Brown, at p.148, a joint bank account case, McLellan J said: `In a case of joint tenancy neither party is exclusive owner of the whole. Neither can appropriate the whole to himself'." (Footnotes omitted).

28 Mrs Ebner tried a different route to establish ownership of some items paid by visa credit card numbered 4564 4350 2890 6389. The route was to rely on the doctrine of issue estoppel. She said that one of the reasons she lost the fraudulent disposition claim was that the trial judge, Goldberg J, made findings to the effect that the credit card had not been used for her husband's benefit as she had alleged, but had been used to purchase items (which the judge identified) for Mrs Ebner. She says that this finding is conclusive against the Official Trustee in respect of those items and cannot be re-litigated here.

29 The so called doctrine of issue estoppel was defined by Dixon J in Blair v Curran [1939] HCA 23; (1939) 62 CLR 464, 531-2 in the following terms:

"A judicial determination directly involving an issue of fact or of law disposes once for all of the issue, so that it cannot afterwards be raised between the same parties or their privies. The estoppel covers only those matters which the prior judgment, decree or order necessarily established as the legal foundation or justification of its conclusion, whether that conclusion is that the money sum be recovered or that the doing of an act be commanded or be restrained or that rights be declared. The distinction between res judicata and issue estoppel is that in the first the very right or cause of action claimed or put in suit has in the former proceeding passed into judgment, so that it is merged and has no longer an independent existence, while in the second, for the purpose of some other claim or cause of action, the state of the fact or law is alleged to be denied the existence of which is a matter necessarily decided by the prior judgment, decree or order."

30 But the doctrine does not operate in respect of every finding made in a proceeding. As Dixon J pointed out in Blair v Curran (at 532):

"Nothing but what is legally indispensable to the conclusion is thus finally closed or precluded. In matters of fact the issue estoppel is confined to those ultimate facts which form the ingredients in the cause of action, that is, the title to the right established. Where the conclusion is against the existence of a right or claim which in point of law depends upon a number of ingredients or ultimate facts the absence of any one of which would be enough to defeat the claim, the estoppel covers only the actual ground upon which the existence of the right was negatived."

31 Given that issue estoppel in relation to factual findings is confined to ultimate facts, it is clear that Mrs Ebner's argument must fail. The facts found by Goldberg J concerning the person for whom goods were purchased were not necessary facts which the Official Trustee was required to establish for him to succeed in his claim that there had been a fraudulent disposition of the Watts Parade property. The judge's findings were made in part to negate a defence raised by Mrs Ebner. But the findings were not "legally indispensable". The result of the case could have been the same if those findings had not been made.

32 Another way out of Mrs Ebner's difficulty has been suggested, and that is to deem the person in possession of the property to be the owner. Mrs Ebner says that she was in possession at the time of seizure and so should be regarded as the owner (that is as having a possessory title) in her claim to regain possession from the Official Trustee. It is true that there is such a presumption, at least in cases between a possessor and a wrongdoer. The authorities go back to the year books (YB 48 Ed 111 20; 11Henry IV 77; 21Henry VII 14) but for present purposes I need only refer to Armory v Delamire [1722] EWHC J94 (KB); (1721) 93 ER 664 (where a chimney sweep boy who found a jewel succeeded in conversion against the jeweller who refused to return the jewel after taking it for valuation); Jeffries v Great Western Railway (1856) 119 ER 680 (where the defendant, who had without permission taken certain chattels from the plaintiff's possession was not entitled to avoid liability by showing title in a third party); and The Winkfield [1902] P 42 (a claim by the Post Master General as bailee for the loss in a collision between ships of letters and parcels in transit by post).

33 To identify the person who is in possession can sometimes cause difficulties. As I have mentioned Mrs Ebner says that at the time of seizure she was in sole possession of the property, presumably because they were part of "her collection". I think that this is just another example of Mrs Ebner exaggerating her case. If she were able to rely on the doctrine at all I would prefer to find that as between husband and wife, property which is in their matrimonial home for their mutual enjoyment (which, in my view, is the position here) is in their joint possession. In this case such an approach is assisted by the rule that personal property is presumed to be owned by the owner of the land on which the personal property is found. In South Staffordshire Water Company v Sharman [1896] 2 QB 44, 47 Lord Russell said: "[t]he general principle seems to me to be that where a person has possession of house or land, with a manifest intention to exercise control over it and the things which may be upon or in it, then, if something is found on that land, whether by an employee or the owner or by a stranger, the presumption is that the possession of that thing is in the owner of the locus in quo". See also Johnson v Pickering [1907] 2 KB 437; In Re Cohen, deceased; National Provincial Bank Ltd v Katz [1953] 1 Ch 88.

34 But, the principles to which I have referred are merely presumptions of law which must give way to the true "facts", if they are known. As will by now be apparent the facts in this case are murky. Nevertheless, it is possible to conclude, with some certainty, that the collection was brought into existence with purchases made by both Mrs Ebner out of her money and Mr Ebner from his resources. The legal position then is that each of them is the sole owner of the item he or she purchased. The only problem is that it is not possible to identify which item was purchased by Mrs Ebner or her husband. There is one possible qualification to this position. The qualification is that Mrs Ebner did say that over the years she and her husband had pooled some of their cash savings and kept those savings, which were sometimes in quite large amounts, in the house. According to Mrs Ebner this money was spent on the purchase of items in the collection. If this is true then these items could be jointly owned. However, there is scant detail about the amount of money involved and precisely which items were purchased from cash savings. While I accept the possibility that there may have been some cash savings kept at home, I suspect the amount is nowhere near as much as Mrs Ebner claims. In any event, even if there are some jointly owned items amongst the collection, that is not a sufficient justification to adopt a presumption which would produce the result that all of the items are jointly owned. And that is precisely what would occur if the presumption that possession is ownership were to be applied. Put differently, such a presumption is displaced here because the true fact is that most of the items are not jointly owned.

35 To this point I have effectively disposed of Mrs Ebner's arguments in support of her claim for ownership. She has established her claim in respect of a handful of items purchased with the Myer credit card, received by gift and acquired after discharge. But she has failed to establish ownership of most of the items in dispute. One reason for this failure is that although I have found that Mrs Ebner spent some of her own money in the purchase of part of the collection, the items which she did purchase have not been identified. Does this mean that she is without remedy? It would be a most unsatisfactory state of affairs if this were the position. It would produce a windfall for the creditors. Let me see if I can overcome this situation.

36 The first step is to see whether it is possible to determine what amount Mrs Ebner spent on the collection. At the time of her retirement from Myer in 1987 Mrs Ebner's net annual salary was in the order of $28,000. I will assume that during the sixteen years that she was employed by Myer her salary progressively increased to reach that figure. No doubt Mrs Ebner spent some of her income on normal living expenses. She also purchased personal property which did not form part of the collection. For example, she purchased a number of motor vehicles, including a Mercedes Benz and a Rolls Royce. I assume she also purchased other chattels. In addition it is likely that her expenditure on living expenses increased as her husband's financial difficulties worsened. The evidence is that in 1986 his net annual income was around $38,400. However, by the early 1990's, Mr Ebner's income probably decreased to next to nothing. There would have been surplus income which Mrs Ebner could have utilised to purchase part of the collection. Mrs Ebner also had some capital funds. She said she received an inheritance, but did not provide any details. She was paid $92,778.86 upon her retirement from Myer. Some of that money was spent on lawyers (approximately $26,000), some was paid to discharge her husband's debts (approximately $11,000), and there was a purchase of a motor vehicle ($45,000). I suspect that further capital was used to pay for living expenses following the collapse of her husband's business. But there was some surplus capital.

37 Turning to the cost of the collection, an approximation of the cost of those items where the cost is known is around $354,000. There are a number of items, somewhere between sixty-six and ninety as I understand the evidence, in respect of which no purchase price is given. A very rough and ready means of estimating their cost is to apply to them something approximating the average cost of the items where the cost is known, thus producing a total figure of about $435,000. In addition to the cost of the collection which is in the possession of the Official Trustee there must be added the cost of that part of the collection (mostly watches and jewellery) which was stolen from the Ebners in 1998. All I know about the stolen items is that Mr Ebner valued them at around $658,000 in the report he filed with the Victorian Police. I accept that the valuation is likely to be higher than the actual cost of the items. It is also possible that some of the stolen items were received by gift.

38 The second step is to form an assessment as to the proportion of the total expenditure with regards to the items in question borne by Mrs Ebner out of her own funds. In the absence of hard evidence, a judicial estimate will have to suffice. By judicial estimate I mean a figure which is not capable of precise calculation, but is something more than just a figure plucked out of the air. It may be doubtful whether what I propose to do is permissible; however, I intend to take this rather unusual course in order to avoid injustice. I am encouraged to do so because this is a bankruptcy case where the rule in Ex parte James (1874) 9 Ch App 609 can be applied. The rule is that a trustee in bankruptcy need not insist on the strict application of rules of law or equity in the determination of the estate where insistence would produce an unjust or dishonest result. In Re Clark (A Bankrupt), Ex parte The Trustee v Texaco Ltd [1975] 1 WLR 559, 564 Walton J said of Ex parte James: "If, in all the circumstances of the case, an honest man who would be personally affected by the result would nevertheless be bound to admit: `It's not fair that I should keep the money; my claim has no merits', then the rule applies". So, doing the best I can, I estimate that Mrs Ebner contributed 20 per cent of the aggregate purchase price of the items held by the Official Trustee.

39 This unidentified property has been converted by the Official Trustee either because he has asserted ownership over it (see Oakley v Lyster [1931] 1 KB 148; Short v The City Bank (1912) 12 SR (NSW) 186; and, for an interesting case involving aircraft stolen from Kuwait, Kuwait Airways Corporation v Iraqi Airways Co (Mance J, 29 July 1998, Queens Bench Division, unreported)) or has refused to hand it over (Howard E Perry & Co Ltd v British Railway Board [1980] 1 WLR 1375). Accordingly, Mrs Ebner is entitled to recover by way of damages 20 per cent of the present value of the property held by the Official Trustee. The calculation of the actual amount, if it cannot be agreed, is a matter which will be undertaken at a later hearing.

40 I note out of interest that I may have been able to reach the same result by application of the doctrine of confusio, as distinct from commixtio, (both taken from Roman law) if the doctrine can be applied to goods whose individual character is not lost as a result of mixture. There is, of course, an authority which says this cannot be done. The case is Smith v Torr (1862) 3 F&F 505. Accordingly, some authors assert that the doctrine of intermixture only applies where there is a commingling of substances and the parts are no longer distinguishable, as opposed to a mere confusion of goods which leaves separation possible: see eg Crossley Vaines on Personal Property 5^th ed 1973 at p 432. This view has been roundly criticised by Professor Birks in his chapter entitled "Mixtures" in Palmer & McKendrick (eds) Interests in Goods, 2^nd ed 1998. Professor Birks refers to English cases which he asserts are inconsistent with Smith v Torr. Smith v Torr is certainly inconsistent with a number of United States decisions including First National Bank of Rodgers v Tribble 244 FW33 (1922) (a mixture of mercantile goods) and Claflin & Co v The Continental Jersey Works 11 SE 721 (1890) (a mixture of stock held by a merchant). However, whether or not Professor Birks and the US cases are correct is a matter that can be left for another day.

41 This brings me to Mrs Ebner's personal injuries claim. This is based solely on s 178 of the Bankruptcy Act. In earlier times the predecessors of this section only allowed the court to control trustees in bankruptcy who were acting unreasonably or in bad faith: Re Peters; ex parte Lloyd (1882) 47 LT 64; Re Hall (1957) 20 ABC 21. By virtue of changes in the wording of the section which were introduced when the Bankruptcy Act 1986 came into force, the power of the court under this section was greatly expanded. According to Deane J in Re Tyndall (1977) 30 FLR 6, 9 the section "confer[red] upon the court the widest possible discretion as to the appropriate order which should be made in the particular case." This dictum was approved by the Full Court in Re Dingle; Westpac Banking Corporation v Worrell (1993) 47 FCR 478.

42 However there are limits to what a court can do. Some of the limitations were discussed by French J in Macchia v Nilant [2001] FCA 7; (2001) 110 FCR 101. In a passage which is directly relevant to the present claim, French J said:

"In my opinion, however, ss 178 and 179 do not extend to provide statutory mechanisms for pursuing claims for damages for torts said to have been committed against a bankrupt in the administration of the estate or otherwise under the general law. That is not to say that conduct which attracts remedial intervention under these control provisions may not also give rise to causes of action in tort or otherwise. Nor does it preclude the possibility that orders may be made under these sections based upon common law or equitable rights. But the sections are not mechanisms by which bankrupts or others can pursue claims for damages for malfeasance in public office or for negligence or for the tortious breach of statutory duties. Broad as it is, the essentially supervisory function of ss 178 and 179 does not extend to such wide ranging application. In Re Gault; Gault v Law (1981) 57 FLR 165, Ellicott J found a breach of trust to have been committed by the trustee of a deed of arrangement under Part X of the Act, to which s 179 was applicable, but declined to order an inquiry under that section. His Honour observed that the applicant debtor was "free to pursue such rights (if any) as he may have against the respondent for breach of trust whether under the Bankruptcy Act or the general law" (at 196). I do not doubt that there is some overlap between the orders that may be made under these sections and general law remedies and that the orders may involve the grant of what amounts to relief for a general law cause of action. But whatever the extent of that overlap, it does not, in my opinion, extend to claims for damages for losses unrelated to the bankrupt estate itself."

43 What Mrs Ebner seeks to do through the medium of s 178 is precisely what French J said could not be done, namely to use the section to pursue a claim for damages in tort for losses unrelated to the bankrupt estate. This part of her claim, then, must also fail.

44 I will hear submissions as to the orders that should be made to give effect to these reasons, and for the further conduct of the case.

I certify that the preceding forty four (44) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein.

Associate:

Dated: 14 February 2003

Counsel for the Applicant:	Mr G T Bigmore QC Mr M N C Harvey
Solicitor for the Applicant:	Clayton Utz
Counsel for the Respondent:	Mr M Clarke
Solicitor for the Respondent:	Deacons
Date of Hearing:	3, 5, 6, 10, 11 & 12 December 2001 8, 9 & 10 April 2002
Date of Judgment:	14 February 2003