ne . ay MMAZ O, MA2 Oo ORDER APPEAL DISMISSED WITH COSTS. FE : u Pro nee in A PE DIXON J. I agrees (> ns a HAZO_v. _MAZO - REASONS FOR JUDGMENT (OHAL). LATHAM C.J. This ts an appeal from a decision of the Supreme Court of Western Australia, His Honour Mr. Justice Wolff, in a case 4n which the plaintiff Morris Mazo claimed as against his wife Zlata Mazo that he was entitled to two pieces of land of which she was the registered proprietor. The plaintiff husband claimea a declaration that the house and land, No. 96 Monash Avenue, Hollywood, and certain other land, No. 35 Fairway, — Nedlands, were the property of the plaintiff. The claim suc— ceeded and the learned judse gave judament for the plaintiff. There are two srounds of appeal. The first is that the finding of the learned jJudze that it was intended by the parties when the properties were purchased and placed in the that they should nevertheless belong to the vlaintifr name of the defendent/was against evidence and the weight of evidence. The proverty at Hollywood was bought 4n February 1939 and the property at Nedlands was bought in August 1940. The evidence of the plaintiff is not absolutely clear on all points of detail, but the substance of it was accepted by the learned juazs, supported as it was by other evidence of lir. Routemen ana Mr, Southwood, which His Honour accepted as true. The substance of that evidence was that in 1928 the platntir? husband purchased a property in Perth known as the Bon Marche' for £42,000. A considerable amount of the purchase money was left outstanding upon mortzage. At the time when the prop- erties at Hollywood and Nedlands were purchased there were arrears of interest outstanding upon that mortgage. The plaintiff, 1t was found, and there was evidence to support that finding, provided the money for the purchase of the two properties in question and procured them to be put in his wife's name. The property at Hollywood was a house which be-— 2. came the residence of the parties, and at Nedlands the prop~ erty which was bought consisted of a house and an adjoining vacant block of land. The evidence was that the house was to belons to the wife, but the husband's evidence was that the vacant block of land, upon which he subsequently erected flats known as the Oxford Flats, should be the property of the husband. Thus the wife became the registered proprietor both of the house at Hollywood and of the vacant land at Nea lands. The evidence of the husband was that he placed the properties in his wife's name because if the mortgazee of the Bon Marche property, Mrs. McAuliffe, had discovered that he owned other property, she might have required further secur-— ity for her mortgage, the interest on which, as I have already stated, was in arrear when the properties in question were bought. ~ The plaintiff save evidence which was accepted by the learned trial judse that the reason why he put these proper- ties in the name of his wife was the reason stated, namely that he did not desire to have other property in his name over which security might have been sought by the mortgagee of the Bon Marche property. He said, speaking to a wit- ness, Mr. Southwood, "Te I hed given all my assets as secur— ity, I could not build the Oxford Flats; it hampers a man." The learned trial judzse accepted the evidence of the plaintiff as to his intention, an@ also accepted the evidence of the pldntiff that he told his wife what he was doing ané@ why he Was doing it. This evidence was supported Py the evidence of Mr, Routeman, who save evidence tothe /effect. Mr. Route- man knew both parties, and he speaks of the property at Fair-— way, Nedlands, He says "They expldned [that 12 the Imeband and wite} that they had to buy the block as well as the house and Mrs. Mazo was buying the house for herself and Mr. Mazo 3. the block for himself". _Then he further says that Mrs. Mazo said the flats at Fairway were Mir. Mazo's. "She put the income from the flats in her income tax return, and by doing so she had to pay higher income [tax | and at a higher rate ....... There were always arguments about it and she asked me to try and get Mazo to take the flats in his owm name," Similarly, Mr. Southwood, who was an accountant en- ployed by the parties in relation to income tax, says that it would be in 1942 or 1943 that Mrs. Mazo "asked me to as— certain how much should be paid that 4s, in income tax! by Mr. Mazo in view of the fact that the Oxford Flats income belonged to him ..... She said the flats had been put in her .. On a number of occasions name and they were not hers .. Mrs, Mazo told me 96 Monash Avenue belonged to her husband." Accordingly there certainly was evidence which, 1f believed, justified the finding of the learned judge that it was the intention of the parties that, though the legal title to these two properties should be in the name of the wife, the husband should have the beneficial interest. The second zround of appeal is that the transaction consisting in the purchase of the properties and placing then * _ in the name of the wife was tainted by illezality, and the ground of appeal is stated in these words i- "That admissions of the Respondent (Plaintiff) die— Closed that he had registered the lends in question in the Appellant (Defendants) name for the purpose of defeating delaying or hindering his creditors and in consequence the Learned Trial Judge was wrong in law in holding that the Respondent (Plaintiff) was entitled to the relief claimed." One must begin the consideration of this part of the case by reference to the law which applies when a husband purchases property or makes an investment in his wife's name. The rule is that a gift to her is presumed in the absence of evi- 4. dence of an intention to the.contrary. I take the law so stated from the Laws of England, 2nd Han., Vol 16., p. 663. In this case the husband purchased property and procured 1t to be placed in his wife's name. There was therefore a pre- sumption of a gift. Therefore in these proceedings the wife begins with that presumption in her favour. The plaintiff husband seeks to rebut that presumption by stating the cir~ cumstances 1n which the properties were placed in her name in order to show that it was the intention of both parties that she should hold the property for hin. According to the defendant wife these circumstances show that the object of the transaction was to defeat or delay a creditor, namely, the mortgagee of the Bon Marché proverty and/or to make a false return of income tax, and posa bly to evade the payment of income tax. The question of the relation of this trans- action to the law with reapect to income tax has been very fully and carefully argued. There 1s no evidence that any tax in total was evaded. I say "tn total", adding the amounts payable by the husband and wife together, - there 1s no evidence that there was any object of evading payment of income tax so that the parties together would pay a less sum than was justly exisible. There was also in my opinion no evidence that either party had any idea of evading income tax or of deceiving the texation authorities. One must judze this matter, not merely by looking at the result, but by seeking to ascertain the intention. Here no result benefic~ fal to the parties in relation to income tax was in fact ac- hieved by the transaction, and it 1s, I think, not shom that either had any intention of deceiving the taxation authorities. By arrangement between the parties the rents from Oxford Flats were returned as the wife's income, but the husband was to repay to her the tax which she paid on i) 5. that income, The only concern of the parties with reference to income tax was in my view related to the question of how much the husband should repay to the wife. There was no evid- ence showinz thet the act of placings the properties in the name of the wife was animated by any intention to defeat the application of any of the provisions of the income tax leg- islation. Mr. Southwood's evidence supports that opinion. He went to the income tax authorities and explained on behalf of the parties that though the title to Oxford Flats was in the name of the wife the husband received the income. He was told that tn the absence of a document evidencing a trust the income should be returned as the income of the wife. That interview, it is true, took place at a later stage, but there 1s no reason which can be suggested why it should not be regarded as a true statement of the facts which he was . authorised to communicate to the Taxation Department. In my opinion the arrangement between the husband and wife as to income tax was a separable and divisible part of the trans- action. The distribution or apportionment of income tax was not one of the objects which the transaction was designed or intended to achieve. — As to the other matter relied upon, namely elleged intention to defeat and delay a creditor, namely the mortgagee of the Bon Marche buildings, the evidence accepted by the learned judge shows that the plaintaff was afraid that if the mortgagee became aware that he had other property the mortgagee would seek to obtain security over that property. It was for this reason, and not for the purpose of evading or delaying payment of either interest or principal, that he put the properties in his wife's name, All the evidence which was given on the subject showed that he expected to be able to pay off the mortgage end in fact he did so. There (4) 6. Wag no evidence that the intention of the plaintiff was to avoid or delay payins either the arrears of interest or future interest or the principal. Accordingly, in my opinion the learned judge rightly held that the illegal intention alleged or suggested was not shown to exist. In this view it 1s unnecessary to discuss the principle stated in PAYNE v. McDONALD, 6 C.L.x. 208 and PERPETUAL EXMOUTORS & TRUSTEES ASSOCIATION OF AUSTRALIA LID v._ WRIGHT 23 COL 185; and see DONALDSON v, FREESON, 51 C.L.R. 598; DREVER v. DREVER, 1942 A.L.R. 446 in thts Court. It would be necessary to consider the principle laid down in those cases only if it were held that the ellezed illegal intention actually existed. In my opinion the appeal should be dismissed with the natural consequence as to costs.