CATCHWORDS Bankruptcy - settlement of property - whether gifts of gewellery, a fur and a cutlery set were settlements and, if so, whether the settlements were "1n consideration of marriage" - Bankruptcy Act 1966, s.120. RE IAN JOHN WALSH WILLIAM JAMES HAMILTON v. YVONNE LORRAINE WaLSH N,S,¥, W 382 of 1982 Coram: Sheppard J. 7 February, 1983 Sydney tinea IN THE FEDERAL COURT OF AUSTRALIA THE BANKRUPTCY DISTRICT OF THE STaTS OF NEW SOUTH WALES AND THE No. 382 of 1982 Ne eee AUSTRALIAN CAPITAL TERRITORY re JAN JOHN WALSE BETWEEN WILLIAM JAMES HAMILTON Apolicant YVONNE LORRAINE WALSH Respondent ORDER _AND DECLARATION JUDGE MAKING ORDER AND DECLARATION : SHEPPARD J. DATE OF ORDER AND DECLARATION: 7 FEBRUARY, 1983 WHERE MADE : Sydney THE COURT DECLARES THaT the items of property referrea to 1n the schedule avpended to the application form part of the estate of tne bankrupt. THE COURT ORDERS THAT ;: l. There be liberty to anvply. 2. The respondent, Yvonne Lorrazne Welisn pey tne applicant's costs of the application inclucing any "reservec costs, be ly IN THE FEDERAL COURT OF AUSTRALIA THe BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES AND THE AUSTRALIAN No. 382 of 1982 ed CAPITAL TERRITORY re IAN JOHN WALSH BETWEEN WILLIAM JAMES HAMILTON Applican AND ~~ YVONNE LORRAINE WALSH Responden CORAM: SHEPPARD J. 7 February, 1983 REASONS FOR JUDGMENT This 1s an application made pursuant to s.120 of tne Bankruptcy Act 1966 by "she trustee in bankruptcy of the bankrupt estate of Ian John Welsh. Tne application was originally against two respondents, the anzlicant's wife, Yvonne Lorraine Walsn and a firm, Cornelius Furs, For reasons which need not ce mentioned it was not ultimetely proceeded with in respect of the second respondent. During a relationship whicn Mr. and Mrs. Walsh nad before their marriage on 8 April, 1982, Mr. walsr mace a number of gifts to Mrs. wWalsn, mostly of jewellery. The gifts are specified in the affidavits of the parties and may be summariseca as be:ng gifts of a scla pendant, a gold Chinese cracelet, a diamonc engagement rzng, a zianond and fe) D gold watcn, some diamond earrings, e mink coat, two further rings, described in the eviderce as a wedding ring and an eternity ring, a gold cutlery set, a pearl necklace and pearl earrings. There 1s no dispute between the parties that the gifts were mede nor as to the dates when they were made. Prior to tne marriage of Mr.' and Mrs, Walsh tney lived for a time as man and wife. They first met, according to Mrs. walsn's eviaence, which is unchallenged, towards the end of 1980, They made various visits to places ouzside Sydney, inclucing Perth and certain places in the United States of america. The first of the items, tne subject of these pvro- ceedings, was acquired by Mr. Walsh for Mrs. walsh in February 1981. The engagement ring was purchased on or about 14 February, 1981, from a firm of jewellers, Bruce and walsh. Its purchase price wes $6,000. According to Mrs. Walsh's evidence, which 1s not challengea, not long before the acquisition of the engagement ring, there had been a conversation between tnem at Little Bay Beach, Sydney, in which amongst otner things she kad said to Mr. Walsh, "No matter how much I ioved a man I would never marry nim unless he could prov:ce for me", Mr. salsh said, "That's OK I wouldn't be offerin= to marry vou if I could not provide for you", i take it from that evidence that prior to the acouisition of tne engage- ment ring there had oeen an offer of marriage made by Mr, Walsh which Mrs. walsh had acceptea. The wedaing ring and the eternity ring were purchased at the same time. They were purchased, according to Mrs. Walsh, in August or Sestember 1981. Mr. walsh puts the date as being May 1981. There is no documentary evidence to indicate which of Mr. or Mrs. Walsh is correct in his or her recollection, but it is immaterial to come to a conclusion on the matter. At the tame Mr. and Mrs. Walsh met, Mr. Walsh was married. His marriage remainea on foot until Septerber or October 1981 when the marriage was Gissolved. From acout May or June 1981 the two commenced to live in the de facto relationship to wnich I have earlier referred. It 1s common ground that they continued to live together in this way until late in October 1981 wnen the relation- ship was discontinued due to disagreements oetween tnem. According to Mrs, walsh, she had a conversation with Mr. Walsn at Christmas time 1961 ana tne two agreed to resume their relaticnship. In his affidavit Mr. walsh agrees that tne two did go back to live together, but not until February 1982. Again, any airference in tneir evidence 1S immaterial. 3. whe , ee Accordingly, the engagement ring, the wedding ring and the eternity ring, like tne otner items of property which are in dispute, were acquired and civen to Mrs. Walsh well before the marriage, which, as I have said, took place on 8 April, 1982. Mr. Walsh's estate was sequestrated by order of this Court on 15 June, 1982. The act of bankruptcy upon which the petition which led to Mr. Walsh's bankrup- tcy was basec, was committed on 8 March, 1982, Thus all the items in dispute were tne subject of gifts to the respondent within the period of two years from the commencement of the bankruptcy. Mr, Walsh's statement of affairs disclosed debts in total of almost $1,000,000, and assets of only a little over $30,000, Section 120 of the Bankruptcy Act upon which this application is dasedad provides in sub-section (1): "A settlement of property, whether made before or after tne commencement cf this Act, not ceing - (a) a settlement made before and in consideration of marriage, or made in favour of a purchaser or encumbrancer in good faith and for valuatle consideration; or {b) a settlement made on or for the spouse or chiléren of tne settlor of property that nas accrued to tne settlor after marriage in rignt £ tne spouse cf tne settlor, is, 1f the settlor oeccmes a carkrupt ana tre settle- ment came into overation after, or "ithin 2 years oefore, the commencement of tne bankruptcy, void ss ega:inst the trustee in the bankruotcy." . As I have said tne eviderce estaolishes that eacn or - the acquisitions of vcroperty end <eifts was made within two we years of 8 March, 1982. It 1s conceded by the respondent, Mrs. Walsh, through her counsel, that the gifts are settlements of property within the section. In the light of the decision in In re Vansittart (1893) 1 G.B. 181, the concession was clearly one whicn was properly made. The only issue which has been raised relates to the question of whether in each case the settlement or gift was made, not only before, but also in consider- ation of marriage. These words have not deen the subgect of a great deal of judicial attention, at least so far as the researches of counsel disclosed, It seems to me that I snould adopt what was saia of the words by R.W. Goff J., as he tnen was, in In re Densham (1975) W.L.R. 1519. The English section with which his Lordsnip was concerned 1S in similer terms to the Australian section. After referring to the decision of the House of Lords in Rennell v. Inland Revenue Commissioners (1564) A.C. 173, his Lordship said (pp.1526-1527): "Lord Cohen and Lord Guest, in considering whether a settlement was made in consideration of marriage within section 59(2) of the Finance (1S9CS-10) Act 1910 (not the legislation 1n guestion in the Densham case), adopted tnree tests (1) 1t must be made on the occasion of the marriage; (2) it must ce con- ditroned only to take effect on tne marrizge taxing place; (3) 1t "ust be made cy a person for tne purpose of or with 2 view to encouraging or facili- tating the marriage. OF these three conaltions, the sestiement -ith waren I am cesling plainly satisfies tie first, for it wes nade on the occasion of the nerrizge, but, in my gudement 1t 5. a 'tfails to satisfy either tne second or the third. It is true that some conveyancing difficulty seems to have been felt about the wife executing the contract or the transfer before marriage, but I do not think the settlement of a share of tne beneficial interest on her was in any way conditional on the marriage taking place, but ever if I am wrong about that, on the facts of tnis case it was not made for the purpose of or with a view to encouraging or facilitating the marriage." Counsel for the respondent did not submit that I should not apply the test wnich Goff J. adopted for the purposes of nis judgment in In re Densham, and I am satis- fied that I snould apvly it. I think one needs, when considering this provision, to nave it clearly in mind that the words used by the legislature are "in consider- ation of marriage", These words are very different from words which are sometimes seen in other legislation - I unstance s.l11A of the Marriage Act 1961 - "in contemplation of marriage". More will be required where the words, as here, are "in consideration of marriage", than in cases wnere they are "1n contemplation of marriage", In my opinion the evicence here does not disclose eny of the gifts - that i1s,.any of the settlements - was made in consideration of marriage. It couia not te suggested that any was made on the occasion of tne marriage; a fortiori it could not be said tnat ary was conditioned only to take effect on the marrizge taking piace. zach of the gifts had taken effect a substantial time prior to the marriage. It seems to me to pe likely, although the evidence does not spell it out, that the engagement ring, and subsequently the wedding ring and the eternity ring, were acquired so that Mrs. Walsh would have conventional rings to wear in her role as the de facto wife of Mr. Walsh. In his affidavit he said: When I gave the atove gifts to Mrs. Walsh (I interpolate to say he refers to each of the gifts 1n question) I did not state in any form to Mrs. walsh or anyone else that I would take back any of the above gifts from Mrs. Walsh if we did not get married, nor did I make a statement to that or similar effect." Mr. Walsh was not cross-examined on that statement and, accordingly, I accept his evidence. In any event, there 1s no evidence given by Mrs. Walsh to a contrary effect. Some reliance was pleced by ner counsel on a letter annexed to ner affidavit. The letter was sent by solicitors acting for Mr. Walsh to solicitors acting for Mrs. Walsh; it 1s dated 6 November, 1981, and was written during the time that tne parties were separated pcetween October 1981 and the end of that year or early 1982. The letter demanced the return of éli of tn2 jewellery and otner items which haa been giver. Mrs. waish down to trat . time, exeept for the cutlery set. It was suggested that this indicated that Mr. Walsh regarded the items as returnable to him in the light of the break up between the parties whicn had occurred on the basis that they were given only in consideration of marriage, ana taking the position as it was-.at that time, the marriage having not taken place, the articles properly belonged to him. All I say about that submission 1s that it 1s contrary to what Mr. Walsh himself has sald. No cross-examination of nim took place and no contrary evidence was given by Mrs. Walsh herself. The submission therefore fails. It was also submitted by counsel for Mrs. Walsh that the onus of proof throughout was upon the trustee. I agree that that 1s right; but this, so it seems to me, 1s not a case to be decided upon the onus of proof, The evidence, as I remarked during the course of the argument, is sketchy and one might in other circumstances have had some of the gaps filled in. But the essential things are there. The parties are in agreement really as to when and under whet circumstences these varzcus accu1sitions of property were made. Thus there 1s no roor for ny decision of the case basec upor tne avplicant's failure to discharge tne orus of croof, The essential facts are known, These, as I have incicatec, militate against any mM - ween finding that the facts fit any of tne recuirements laid down by Goff J. 1n Densham's case. For the reasons I have given, I have reached the conclusion that the applicant is entitled to succeed. I make the declaration sought in paragraph 1 of the application, with liberty to apply. I order the respondent, Yvonne Lorraine Walsh, to pay the applicant's costs of the application, including any reserved costs, ri. oo for 7 lppai S} tte A 3s0ciate raat 7 Febrwooy \AsS