Wily, Hugh Jenner v Fitz-Gibbon, Peter Gerald & Anor [1998] FCA 522

FEDERAL COURT OF AUSTRALIA

BANKRUPTCY – demand by Trustee for delivery up of paintings allegedly the property of the Bankrupt. Bankruptcy Act 1966 (Cth)

HUGH JENNER WILY v PETER GERALD FITZ-GIBBON

AND ANN MAREE FITZ-GIBBON

ng 7786 of 1997

HILL J

SYDNEY

15 MAY 1998

IN THE FEDERAL COURT OF AUSTRALIA judgment no. 2

NEW SOUTH WALES DISTRICT REGISTRY ng 7786 of 1997

BETWEEN: HUGH JENNER WILY

Applicant

AND: PETER GERALD FITZ-GIBBON

FIRST Respondent

ANN MAREE FITZ-GIBBON

SECOND Respondent

JUDGE: HILL J

DATE OF ORDER: 15 MAY 1998

WHERE MADE: SYDNEY

THE COURT DECLARES THAT:

None of the paintings referred to in the letter of 17 June 1997 from the Applicant to the First Respondent were property of the Bankrupt, the First Respondent, as those words are used in the Bankruptcy Act 1966.

THE COURT ORDERS THAT: 1. The application to the extent that it relates to the paintings referred to in the declaration above be dismissed. 2. The Applicant pay the Respondents' costs of the Special Issue.

IN THE FEDERAL COURT OF AUSTRALIA judgment no. 2

NEW SOUTH WALES DISTRICT REGISTRY Ng 7786 of 1997

BETWEEN: HUGH JENNER WILY

Applicant

AND: PETER GERALD FITZ-GIBBON

FIRST Respondent

ANN MAREE FITZ-GIBBON

SECOND Respondent

JUDGE: HILL J

DATE: 15 MAY 1998

PLACE: SYDNEY

REASONS FOR JUDGMENT In this matter, proceedings were brought by Mr Hugh Jenner Wily ("the Trustee") seeking the delivery up to him of certain paintings and other items. On 2 March 1998 I gave judgment reserving as a separate issue for consideration the question whether the paintings referred to in a letter dated 17 June 1997 from Mr Wily to Mr Peter Fitz-Gibbon (the respondent to the proceedings) ("the Bankrupt") were the property of the Bankrupt within the meaning of those words in the Bankruptcy Act 1966 and, if so, whether an order should be made pursuant to that Act that there be delivered up to the Trustee those paintings. I ordered that Mrs Fitz-Gibbon who claimed ownership of the paintings be joined as a party so that the matter could properly be determined in such a way as bound all parties. In due course an amended application was served upon Mrs Fitz-Gibbon. Although she filed no appearance on the return date she was represented by counsel who undertook to file on her behalf a notice of appearance. Counsel submitted that because the previous matter had been determined (although the question of ownership of the paintings had not) it was too late that she be joined as a party. He relied upon Associated Grocers Co-op v Hubbard Properties Pty Ltd (1985) 42 SASR 321 (SCSA, Full Court) at 341. With respect, nothing in that case suggests that it is impossible to join a party where an issue has not been determined and remains open. That is the present situation. At issue is the ownership of four paintings described in the valuation that was made on 8 July 1997 as follows: "Yvonne Langshaw, oil/board, Tread Softly in the Kimberley, signed lower right, dated 1990, approx. 3x4ft $400 D. Killop, oil/board, Riverscape, signed lower right 40 L. Denovan, oil/board, Top End Billabong, Signed lower left, 24x20" 70 Knudsen, Signed Print, Pelicans, titled lower centre, Signed lower right 50" Two other paintings, namely, "Starkey, watercolour, Point Claire, Quebec, signed lower right, 15x10" and "S. Quarles, Quebec Lakeshore Road, signed lower right, dated 1993, 5x8" are not in my view property of the Bankrupt for the reasons I gave in the earlier judgment. One must ask, on the assumption that the values shown in that valuation are correct, why it is that the parties are prepared to spend so much time litigating the ownership of the paintings. That, however, is not relevant to the present application. For the purposes of the separate issue reserved for decision, relevant parts of affidavits were read on behalf of the Trustee as well as an affidavit of Mr Fitz-Gibbon and one of Mrs Fitz-Gibbon. Neither side sought to cross examine on these affidavits. What emerges from them is that some six original paintings had existed "most" of which both Mr and Mrs Fitz-Gibbon claim were given to Mrs Fitz-Gibbon as a present. Mr Fitz-Gibbon had told Miss Halpin, working for the Trustee, that he had taken half of the paintings but lost them when his mother's garage was flooded. Mr Hudson, who at one stage had been a close friend of Mr Fitz-Gibbon but who was at the present stage estranged from him, deposed that on at least four occasions up to March 1996 he had accompanied Mr Fitz-Gibbon to an art exhibition at Lane Cove on each of which occasions Mr Fitz-Gibbon had purchased a painting. Mr Hudson's evidence is that Mr Fitz-Gibbon never mentioned anything about the potential ownership of the paintings. Some of the paintings were subsequently stored at Mr Hudson's home. One of the paintings, that entitled "Tread Softly in the Kimberley" had hung at Mr Fitz-Gibbon's home and, formerly, in the room he used as an office in the family home before he and his wife separated. Mr Wily, the Trustee, gave evidence of a conversation with Mr Fitz-Gibbon in which Mr Fitz-Gibbon said that he bought the paintings "with my wife". Mr Fitz-Gibbon conceded that the paintings had been bought from income from his legal practice, although apparently asserted that income was nevertheless jointly derived with his wife. In that interview, Mr Fitz-Gibbon referred to having purchased eight paintings, half of which were his and half were his wife's, indicating that his own had been destroyed by flooding and that those that had ultimately been stored with Mr Hudson had belonged to his wife. In a letter which Mr Fitz-Gibbon had written to the Trustee, he accepted that a number of prints had been on the wall of his rented premises as well as one original painting which his wife had owned. He said that these had now been returned to his wife. Mr Fitz-Gibbon in the letter referred to an event which took place at the time that he and his wife split up in which the paintings had been stored in Mr Hudson's home. The paintings, and there is no dispute about this, had subsequently been delivered by Mr Hudson to Mrs Fitz-Gibbon and remained in her possession until she delivered them up to the Trustee for safekeeping without admission. Finally, Mrs Fitz-Gibbon's affidavit dealt, somewhat briefly, with the relevant paintings. She said that, at the time she swore the affidavit, the painting "Tread Softly in the Kimberley" had been bought be her husband at a Lane Cove municipal art exhibition five or six years earlier, that is, it had originally hung in the loungeroom of their former home but subsequently hung in Mr Fitz-Gibbon's office. There was tendered also, on behalf of one side or the other, passages from the transcript of evidence taken on 16, 17 and 18 February 1998 so far as that evidence related to the paintings. The material tendered, although not always consistent with the affidavit material, is far from conclusive as to the ownership. There is no doubt that the four paintings now in question were all purchased by Mr Fitz-Gibbon from an art exhibition conducted on a yearly basis in Lane Cove. There is little reason to doubt that Mr Fitz-Gibbon himself paid the purchase money. Prima facie, therefore, there would be little doubt that the paintings belonged to him and not his wife. Although Mr Hudson could hardly be said to be very sympathetic to Mrs Fitz-Gibbon he had at her request stored the paintings and returned them to her because she had given him a receipt for the paintings when he took delivery of them. For a short time the paintings were stored in the attic of Mr Hudson's house. He returned them to her possession. Although I accept Mr Hudson as a truthful witness, I do not think his evidence ultimately is of assistance to either party. At the most, it makes clear that he acted at the direction of Mrs Fitz-Gibbon as the person in possession of the paintings. The transcript of the evidence of Mr Hudson indicates that his recollection was only of three occasions on which paintings were bought not more. One of the paintings he recalls was "Tread Softly in the Kimberley". In cross examination, Mr Fitz-Gibbon conceded that he had paid for the paintings himself and that the paintings had been invoiced to him. He said that he had had the Kimberley painting both in his previous flat and paid out of his account at work. He said that it was now in his wife's home on her wall. At some stage Mr Fitz-Gibbon said in oral testimony that being angry he had asked his wife to return the paintings and she had declined to do so. At that stage the relationship between them was, to use Mr Fitz-Gibbon's words, "acrimonious". On his oral evidence, Mr Fitz-Gibbon said that none of the paintings was insured (because the cost was too high) and, in any event, the items were not of sufficient value to make the insurance worthwhile. In cross examination, Mr Fitz-Gibbon affirmed the view taken in his affidavit that he bought the four paintings in question with his wife. He conceded however that the reference to a joint account was incorrect. He reiterated however that the balance of the paintings, some of which he had otherwise retained, were his wife's. In oral evidence, Mrs Fitz-Gibbon accepted that her husband had written the cheque which paid for the paintings, although she said she presumed it was from a joint account. She accepted that, although she never used the joint account, her husband had numerous other accounts but said that he had given the paintings to her. She said that it was "a gift with the usual pleasant greetings that people give to each other". When asked about the facts she relied upon in concluding that a gift had been made to her, she said: "My memory given that he – Peter had given them to me as gifts, mostly birthday gifts. My birthday was in September. This particular art show came up about August nearly every year and I ended up with --- Did you have conversations with him about making gifts to you? --- No. If so, what did he say to you and what did you say to him? --- No, he just gave me a birthday gift like most people give each other birthday gifts. I gave him --- Well, normally one would say something like, "This is a gift" and some words? --- Well, it was done up in pretty paper and it had a birthday card that said, "Happy Birthday, darling". I can find those, I just don't have any receipts." She said that her husband had demanded them back when they had split up, but that she had refused. She accepted that at some stage she had lent "Tread Softly in the Kimberley" back to her husband, perhaps to brighten up his flat and also it was too large for her house but that she had picked it back up again. She could recall no specific discussions with her husband as to the ownership of the paintings. It is not in dispute that the onus lies upon the Trustee to show that the paintings in question were at the time of his bankruptcy the property of Mr Fitz-Gibbon. The Trustee's case was in essence that I had not accepted Mr Fitz-Gibbon's evidence in the earlier aspects of the case and should not do so now. It was pointed out that the evidence established that Mr Fitz-Gibbon had paid for the paintings with his own money and such evidence as there was thereafter did not discount the prima facie position that the paintings belonged to Mr Fitz-Gibbon. Reliance was placed on the fact that the paintings at some stage had been in Mr Fitz-Gibbon's home and, at least until he had moved out, they had been in his possession including the "Tread Softly in the Kimberley" painting which had been in Mr Fitz-Gibbon's office. Counsel for Mrs Fitz-Gibbon, who appeared also for Mr Fitz-Gibbon, relied upon the evidence of Mrs Fitz-Gibbon that the paintings were gifts to her. He pointed to the fact that they had been returned to her by Mr Hudson after they had been taken by him at the time Mr and Mrs Fitz-Gibbon had broken up. He submitted that at all times on the evidence the paintings had been treated as belonging to Mrs Fitz-Gibbon. I have no reason to reject the evidence of Mrs Fitz-Gibbon. She was somewhat distraught, and understandably so, but there is no real reason to disbelieve her evidence. I find her to be a witness of truth. I must say that, on the evidence, I am not really convinced that all of the four paintings were purchased by Mr Fitz-Gibbon as presents for his wife. I have set out in the previous judgment other evidence which points in the opposite direction. However, it is for the Trustee ultimately to show which of the paintings in question were the property of Mr Fitz-Gibbon and which were not. On the balance of probability the Trustee has not succeeded in this. No attempt was made to suggest that any gifts made should be set aside under any provisions of the Bankruptcy Act and, in these circumstances, I would answer the separate issue reserved by declaring in effect that the Trustee has not established that any of the paintings referred to in the letter dated 17 June 1997 from the Trustee to the Bankrupt were "property of the Bankrupt" within the meaning of those words in the Bankruptcy Act 1966 and, accordingly to that extent, I would dismiss the application.