The Official Trustee in Bankruptcy v Macalindong [2016] NSWSC 1735

Supreme Court New South Wales

Medium Neutral Citation: The Official Trustee in Bankruptcy v Macalindong [2016] NSWSC 1735 Hearing dates: 11 November 2016; 18 November 2016 Decision date: 12 December 2016 Jurisdiction: Equity Before: Emmett AJA Decision: Direct that no later than 16 December 2016 the plaintiff bring in short minutes of order giving effect to my conclusions and, if there is any dispute as to the distribution of sale proceeds of the North Ryde Property, providing a timetable for submissions on all outstanding questions. Catchwords: REAL PROPERTY – s 66G of the Conveyancing Act 1919 (NSW) – appointment of trustees of sale – former husband and wife jointly owned property – whether wife sold to her former husband her equitable share in the property when they separated and divorced – whether payment was made as consideration for wife's share in property Legislation Cited: Bankruptcy Act 1966 (Cth), s 267(2) Conveyancing Act 1919 (NSW), s 66G Category: Principal judgment Parties: The Official Trustee in Bankruptcy (Plaintiff / Cross-Defendant) Gerardo Macalindong (Defendant / Cross-Claimant) Representation: Counsel: Ms CT Ensor (Plaintiff / Cross-Defendant) Mr M Lawson (Defendant / Cross-Claimant) Solicitors: Harris Carlson Lawyers (Plaintiff / Cross-Defendant) CMI Legal Services (Defendant / Cross-Claimant) File Number(s): 2016/133891

Judgment 1. EMMETT AJA: The principal question in these proceedings is whether, as at 14 September 2010, when Ms Josefina Macalindong (the Bankrupt) became bankrupt following the filing of debtor's petition, she was the beneficial owner of an interest in a property situated in Lane Cove Road, North Ryde (the North Ryde Property). At that time, the Bankrupt and her former husband, the defendant, Gerardo Macalindong (the Husband), were the registered proprietors as joint tenants of an estate in fee simple in the North Ryde Property. 2. The plaintiff, the Official Trustee in Bankruptcy (the Official Trustee), seeks an order under s 66G of the Conveyancing Act 1919 (NSW) for the appointment of trustees for sale of the North Ryde Property. That application is resisted by the Husband, who seeks, by cross-claim, a declaration that, prior to the commencement of his former wife's bankruptcy, he had acquired beneficial ownership of her interest in the North Ryde Property, such that he became the owner, in equity, of the whole of the North Ryde Property. Since the Official Trustee's claim under s 66G of the Conveyancing Act would fail if the cross-claim succeeded and since there may be questions as to the distribution of the proceeds of any sale if an order were made under s 66G, the parties have agreed that it would be convenient for me to indicate my conclusions on the cross-claim before the determination of the application under s 66G. 3. The Bankrupt and the Husband were married in early 1992. In late 1992, the Bankrupt and the Husband purchased, as joint tenants, a property located at Ridgeview Place, Oakhurst (the Oakhurst Property). In 1997, they purchased, as joint tenants, two blocks of land situated in Carrington Road, North Arm Cove (the North Arm Cove Property). In 1997, the Bankrupt and the Husband purchased, as joint tenants, the North Ryde Property for a consideration of $197,000. On 23 May 2003, a mortgage in favour of Bank of Western Australia Limited (BankWest) was registered in respect of the North Ryde Property and the Oakhurst Property to secure joint borrowings by the Husband and the Bankrupt. The Bankrupt and the Husband were named as joint mortgagors. 4. In May 2007, the Bankrupt and the Husband separated. Shortly thereafter, the Bankrupt left Australia and travelled to the Philippines. The Husband asserts that, prior to the departure of the Bankrupt for the Philippines, he and the Bankrupt made an arrangement whereby, in consideration of the Husband paying the sum of $50,000 to the Bankrupt, the Bankrupt would allow the Husband to have the North Ryde Property as his own. Each of the Bankrupt and the Husband swore affidavits deposing to the arrangement. 5. In his affidavit, the Husband said as follows concerning the alleged arrangement: "She said: Jerry [sic], I am going to the Philippines and I need to finalise our financial affairs. I have thought about it and I want $50,000 so I can move back overseas and move on with my life. When you pay me you can have the properties." I said: "You know I don't have any money to pay you now" She said: "Just transfer to me when you can and when I get back I will sign a document to show and agree this [sic]." 1. In her affidavit, the Bankrupt said as follows concerning the alleged arrangement: I said: "I have thought about the financial situation and I know that it is tough at the moment. I will be taking [our daughter] with me to the Philippines. I was thinking it about it and I agree that you take the properties and you pay me $50,000. Can you do that?" He said: "I don't have the money right now to do this." I said: "Pay me when you can then I will sign for you when I come back." 1. As I have indicated, at the time of the alleged arrangement in May 2007, the Husband and the Bankrupt owned the North Ryde Property, the Oakhurst Property and the North Arm Cove Property as joint tenants. Accordingly, any reference to "the properties" in the discussion deposed to might be understood as a reference to all three of the properties. However, in cross-examination, the Husband said that, in the discussion to which he deposed, he understood that the Bankrupt was referring to the North Ryde Property and the North Arm Cove Property, and that the discussion did not refer to the Oakhurst Property. 2. Tagalog is the first language of the Husband and I would assume that it is also the first language of the Bankrupt. However, neither the Bankrupt nor the Husband made any suggestion in their respective affidavits that their discussion about the alleged arrangement was in any language other than English. Nevertheless, in cross-examination, the Husband said that the discussion was in English. On the other hand, the Bankrupt said in cross-examination that the conversation was partly in Tagalog and partly in English. Thus, there can be no certainty as to the precise words that were used in any discussion that might have occurred. 3. In June, August and November 2007, 6 transfers of funds totalling $32.431.85 were made by the Husband to the Bankrupt (including charges totalling $71.50), as follows: * 25 June 2007 - $13,415.60 * June 2007 - $4,682.80 * 8 June 2007 - $6,523.95 * 3 August 2007 - $6,500 * 9 November 2007 - $600 * 11 November 2007 - $709.50 Documentary evidence of those transfers was tendered on behalf of the Husband and admitted. 1. Both the Husband and the Bankrupt gave oral evidence that further sums were paid by the Husband to the Bankrupt, which were said to have been in furtherance of the alleged arrangement. Thus, each gave oral evidence that a sum of about $3,000 was given in cash by the husband to the Bankrupt's mother, Ms Modesta Francisco, to be delivered by her to the Bankrupt in the Philippines. Each of them also gave oral evidence that transfers of other sums were made at times and in amounts of which neither of them could give any particulars. No documentary evidence of any of the other payments was proffered on behalf of the Husband. However, each asserted that the total of all the payments made by the Husband to the Bankrupt was $50,000. 2. It is significant that, in their affidavit evidence, neither the Husband nor the Bankrupt referred to the payment of $3,000 in cash through Modesta Francisco. In cross-examination, the Husband, when first asked, could not remember exactly how much he gave to Modesta Francisco. He was vague as to the denomination of the notes that were said to have been given to her but, after some prompting, said "It's mixed up, $100 and $50". 3. Curiously, the Bankrupt, who was cross-examined after the luncheon adjournment following the Husband's cross-examination, appeared to have no doubt as to the amount alleged to have been given to Modesta Fransisco. She proffered the evidence "I think a mix of 100s and 50s" by interrupting the cross-examiner's question, rather suggesting that the Bankrupt was expecting the question. That gives rise to an inference that she discussed the matter with the Husband before giving her evidence, although the Bankrupt denied it. 4. The Husband claimed to have kept the receipts of the transfers of the balance but said he could not now find them. No explanation was proffered as to why further steps had not been taken by the Husband to get access to any other documentary evidence of the alleged transfers of funds to the Philippines, for example, by way of subpoena to relevant currency dealers. In the absence of such an explanation or any other corroborative evidence, it is difficult to accept that any such alleged payments were actually made. 5. The Bankrupt gave evidence that she knew when a total of $50,000 had been paid by the Husband. She asserted that she counted the amounts, but kept no record of the amounts. She said that she received receipts but threw them away as soon as she received the money. The documentary evidence of the recorded transfers referred to above indicates that, although, in some cases, the amount of foreign currency was a round figure, the foreign currency for other transfers was not a round figure, since a round figure of Australian currency was the subject of the transfers. The Bankrupt's response, when asked as to how she kept track of "how close to the $50,000 target your Husband had come" was as follows: "Well, because he had the receipt, and also when he's giving me money or sending in any way, I counted it. But the only problem, I don't keep receipt, but I know for myself that he gave me $50,000." That explanation is hardly credible. 1. No attempt was made on behalf of the Husband to formulate the precise terms of the alleged agreement relied upon to support the declaration sought in the cross-claim. One possible characterisation of the alleged arrangement is that the Husband and the Bankrupt agreed that the Bankrupt would assign her right, title and interest in the properties to the Husband, in consideration of the Husband paying her $50,000 and indemnifying her in respect of her liability to BankWest. That latter aspect must be an essential part of the alleged arrangement. However, it does not appear to have been the subject of any consideration by the Husband or the Bankrupt, and the Bankrupt gave evidence that she did not take any steps to "remove her name from the mortgage". 2. In particular, if an arrangement such as that alleged was in fact made, it might be expected that the Bankrupt would have taken steps to ensure that her liability to BankWest in respect of the borrowings to buy the properties would have been given some attention. However, her response when questioned about why she did not arrange "to remove her name from the mortgage" was as follows: "It's just that I think to myself that's not my responsibility anymore because I gave him the statutory declaration so he can do it by himself." That response rather suggests a lack of comprehension on the part of the Bankrupt. It may be that she simply relied upon the Husband to discharge the debt owing to BankWest as part of the consideration for the assignment of the "equity" in the properties to him. However, that raises a question as to the precise legal characterisation that should be placed on the alleged arrangement. 1. Thus, in November 2007, the Oakhurst Property was sold for $340,000. The sum of $268,884, being part of the proceeds of sale, was paid to the credit of a joint account with BankWest in the name of the Husband and the Bankrupt. The balance was paid to the credit of another account with BankWest, details of which were not in evidence. No evidence was given as to the circumstances of the sale. However, the proceeds of sale appear to have been applied in satisfaction of joint liabilities. 2. If the payments that were in fact made by the Husband to the Bankrupt are not properly to be attributed to the payment of a consideration agreed for the assignment by the Bankrupt of her "equity" in the jointly owned properties, it may be a matter of speculation as to the true characterisation of the payments. If it is accepted that the alleged arrangement was in fact made, the fact that the whole of the consideration has not been paid would not necessarily detract from the conclusion that there was a contract. On the other hand, the Husband and the Bankrupt each assert that the full sum of $50,000 was paid in circumstances where the evidence of payment beyond the sum of $32,431.85 is not credible, great doubt is thrown on the credibility of the Husband's evidence as well as that of the Bankrupt. 3. The marriage of the Husband and the Bankrupt was dissolved with effect from 29 September 2008, by an order of the Federal Circuit Court. No property orders were made by the Federal Circuit Court at that time and no subsequent application has been made in that regard. Thus, any change in the beneficial ownership of the North Ryde Property would depend entirely upon the effect of the alleged arrangement. Further, the absence of any application to the Federal Circuit Court in relation to property or maintenance might give rise to an inference that the payments actually made by the Husband to the Bankrupt had something to do with the finalisation of the relations between them. It is consistent with an arrangement such as the arrangement alleged to have been made in May 2007. 4. Even so, where valuable property is concerned, albeit property mortgaged to secure borrowings, one might expect some degree of formality even between individuals such as the Bankrupt and the Husband, neither of whom could be thought to be especially sophisticated in financial matters. Nevertheless, one would expect some formalisation of their arrangement, either contemporaneously with the making of the arrangement or when the dissolution of their marriage was formalised. 5. In that regard, the Husband placed great reliance on two statutory declarations by the Bankrupt as evidence of the alleged arrangement. Each of the Husband and the Bankrupt gave evidence that, on 22 December 2008, the Bankrupt made two declarations before Mr Crisologo Anoneuvo, a Justice of the Peace. However, for reasons that I shall explain, I have grave doubts as to the circumstances in which the declarations were brought into existence. Accordingly, I do not consider that the declarations corroborate the alleged arrangement. 6. The originals of both declarations were in evidence. Both referred only to the North Ryde Property and not to the other two properties. The Bankrupt said that both forms of declaration were prepared by Mr Anoneuvo and that they were made at the North Ryde Property. 7. The hearing of the proceedings was adjourned part-heard after the evidence closed and counsel for the Husband had virtually completed his address. No evidence had been called from Mr Anoneuvo when the matter was adjourned. No indication was made that further evidence might be adduced. However, when the hearing was resumed, seven days later, the Husband sought leave to reopen in order to adduce evidence from Mr Anoneuvo. Over the objection of the Official Trustee, leave was granted to the Husband to reopen to adduce evidence from him. 8. Mr Anoneuvo regarded himself as a family friend of the Bankrupt and the Husband, having been a close friend with the Bankrupt's father before 1987 to the extent that he was called "uncle" by both of them, despite not being a blood relation. Mr Anoneuvo had lived in the North Ryde Property with the Bankrupt and the Husband at various times, although the evidence as to the times when he did so was not entirely clear, because none of the parties had a clear recollection. Mr Anoneuvo's evidence was initially that the Bankrupt spoke to him by telephone and asked him to come to the North Ryde Property to prepare a statutory declaration. At another time, he said that, at the relevant time, he was living at the North Ryde Property and was asked by the Husband to prepare a statutory declaration. He claimed to remember making an alternation to one of the forms of statutory declaration but was exceedingly vague as to how he could remember such a matter. One of the statutory declarations was altered by the application of liquid paper. Mr Anoneuvo could not independently remember putting liquid paper on the statutory declaration, without relying on the document itself. Mr Anoneuvo clearly had only very limited recollection of what he had done in 2008. 9. Mr Anoneuvo was not an impressive witness and I would not have any confidence that the evidence that he gave was reliable. It was inconsistent and I formed the impression that he had no real understanding of certain of the questions that were put to him. 10. The substantive part of the first statutory declaration is in the following terms: "THAT, I am a naturalized Australian Citizen; THAT, I am now lawfully and legally divorced with my Husband Mr. Gerardo Macalindong; THAT, I am executing this STATUTORY DECLARATION on my own FREE WILL and VOLITION and to attest to the truth and NOTHING BUT THE WHOLE TRUTH, that I AM WAIVING PERSONALLY my LAWFUL AND LEGAL RIGHTS to 189 PROPERTY, NORTH RYDE N.S.W. 2113; THAT, I am personally giving my former husband the lawful and legal rights whatever he wants to do with the property I will never interpose NO OBJECTION WHATSOEVER with his personal decision;" 1. The substantive part of the second declaration is in the following terms: "THAT, I am a naturalized Australian Citizen; THAT, I am executing this Statutory Declaration as the lawful and legal document for the RECEIPT OF FIFTY THOUSANDS ($50,000.00) DOLLARS (AUSTRALIAN) from my Ex-Husband – GERARDO MACALINDONG in FULL-PAYMENT of my SHARE of 189 LANE COVER PROPERTY, NORTH RYDE NSW 2113 THAT, aside from the above-mentioned payment, this Statutory Declaration is also being executed as a lawful and legal document that I received from my Ex-Husband – GERARDO MACALINDONG SEVERAL THOUSNADS [sic] AUSTRALIAN DOLLARS sent to me in the Philippines when I opened my HARDWARE BUSINESS in MONTALBAN, RIZAL;" 1. A significant difference between the substance of the two declarations is that, while the second declaration refers to the sum of $50,000, characterised as "full-payment of my share" of the North Ryde Property, the first declaration makes no reference to any consideration payable for "waiving personally" the Bankrupt's "lawful and legal rights" to the North Ryde Property and "giving" the Husband "the property". The language of the two documents is different, in referring to "lawful and legal rights", in one case, and "my share", in the other case. The reference to money sent to the Bankrupt in the Philippines in connection with a hardware business suggests that part of the sums totalling $32.431.85 may have been for that purpose and not as consideration for the alleged arrangement in relation to the North Ryde Property. 2. The two statutory declarations are on printed forms. The date of the second declaration was altered at some stage by the application of liquid paper. Thus, the date 22 December 2013 appears to have been obliterated by the liquid paper and an indecipherable date inserted over it. Someone has initialled over the liquid paper, and Mr Anoneuvo said that it was his initial after he "corrected it". Mr Anoneuvo could not remember what had originally been typed before the liquid paper was applied. The Bankrupt also had no recollection of what had originally been typed. 3. In addition to being internally inconsistent, Mr Anoneuvo's evidence contradicted evidence given by the Bankrupt. In particular, their evidence was inconsistent as to who chose the vocabulary for the body of the statutory declarations. The Bankrupt gave evidence that she instructed which words Mr Anoneuvo was to type and that she was the one to come up with the words, whereas Mr Anoneuvo said that they were his "own words", and that he was the one who chose the words because he knew "proper words to use in this sort of document". 4. While the two statutory declarations were alleged to have been prepared, signed and stamped at the same time, they are on different printed forms. Mr Anoneuvo could offer no explanation as to why they were on different forms. Having given evidence that earlier that day he had made 10 photocopies of the form, he was unable to explain why he used different forms instead of 2 of the copies. Further, as well as being on different forms, both the Bankrupt and the Justice of the Peace signed the first one with a black ink pen and the second one with a blue ink pen. In addition, the typeface of the typing on the documents appears quite different, suggesting that they were typed on different typewriters. 5. Another point of difference between the two forms is that the address of Mr Anoneuvo is stated in both declarations as being the North Ryde Property. However, the way in which the address is typed is quite different in format on each statutory declaration. In addition, on one form, the Justice of the Peace typed his mobile telephone number. On the other, he typed two mobile telephone numbers. He agreed that, at one time he had two mobile numbers. Those anomalies indicate that the two declarations were not prepared on the same day and were not signed on the same day. When confronted with these anomalies, Mr Anoneuvo appeared to accept that he may have prepared them on different days, but immediately restated that they were prepared on the same day. That exchange in cross-examination went as follows: "Q. No, I'm asking for your memory. Did you type different things on these documents because you typed them on a different day? A. Yes ma'am. Q. The document that has a 2 on the back of it [the second declaration]? A. Yes ma'am. Q. Did you type that on a later day than 22 December 2008? A. I believe I type it on the same day because 22nd—" 1. Additionally, there is significant material, which came into existence after the presentation of the debtor's petition by the Bankrupt, that is inconsistent with the arrangement alleged to have been made in May 2007. Most significantly, the Bankrupt completed a statement of affairs, which was filed with the Insolvency and Trustee Service Australia on 9 September 2010 (the Statement of Affairs). Following the filing of the Statement of Affairs, the Official Trustee was appointed as trustee in bankruptcy of the Bankrupt on 14 September 2010 and the bankruptcy of the Bankrupt commenced on that day. 2. The Statement of Affairs was signed by the Bankrupt. Immediately above her signature is a printed statement that, pursuant to s 267(2) of the Bankruptcy Act 1966 (Cth), a person must not sign a declaration that the person knows to be false and that the penalty is imprisonment for 12 months. The Bankrupt said that the Statement of Affairs was prepared by the Bankrupt with the assistance of Mr Hugh Seccombe, a financial counsellor. She said that the Statement of Affairs was completed by Mr Seccombe in her presence and that he read the questions to her and completed them in accordance with her answers. She accepted that she had read the document before she signed it. An inference should be drawn, in the circumstances, that, when the Statement of Affairs was completed, the Bankrupt knew its contents and believed that it was true and accurate. 3. By letter of 7 September 2010 addressed to the Official Trustee, Mr Seccombe said as follows: "Josie Macalindong has been a client of mine for the last 12 months. During this time we have worked together in an attempt to resolve her financial matters with her creditors. Her circumstances have been very difficult starting with a marriage breakdown followed by a divorce. Josie has worked full time for Australia Post for approximately 16 years, except when having children and when she was off work for nearly 12 months on stress leave. Her ex husband has not been supportive in providing child support for the three children … . The marriage separation occurred in 2006 and the divorce was finalised in 2008. The relationship has been further complicated by Josie having to take out an AVO on her ex husband. During the period Josie was off work for stress reasons her financial situation became a lot worse and she has now been forced into petitioning for voluntary bankruptcy. She has disposed of a motor vehicle within the last 12 months and this vehicle has now been registered in her daughter's name. Even though this vehicle was originally registered in Josie's name she was not using it and was paying no costs associated with that vehicle. The reason that she has recently purchased a Honda Civic is because she needed a vehicle to transport herself and her youngest daughter. There are properties in both Josie's name and her ex husband [sic]. The property at West Ryde should provide all the funds necessary for all Josie's creditors to be paid in full and hopefully with some money over that will assist Josie financially. There are also two blocks of land that are in both names. As mentioned before the relationship with Josie's husband is very poor and therefore we have not been able to obtain all the details on the two blocks of land. We ask that this petition for bankruptcy is accepted. If we can provide any further information we will be pleased to do so." 1. The Bankrupt said in cross-examination that she had not seen the letter of 7 September 2010 written to the Official Receiver by Mr Seccombe. However, the contents of the letter are entirely consistent with the answers given to the questions in the Statement of Affairs. Neither party called Mr Seccombe to give evidence. 2. Specifically, in the Statement of Affairs, the following questions were answered as indicated: "28 Real Estate Q: Do you own, or are you buying, any land or buildings in Australia or overseas? A: Yes Q: What is the property address? A: 189 Lane Cove Rd, North Ryde NSW 2113 Q: Date the property was acquired or purchased. A: 1997 Q: Amount paid to acquire or purchase the property. A: $197,000 Q: What is the estimated resale value of the property? A: $550,000 Q: How much do you own to creditors who hold security over this property? A: $400,000 Q: Are there any other owners? A: Yes Mr D Gerardo, 189 Lancove Rd [sic], North Ryde NSW 2113 Q: Does your ex partner live at the property? A: Yes 33. Sale, Transfer or Gift of Assets in the last 5 years Q: Have you sold, transferred or given away any assets worth more than $1000 in the last 5 years? A: Yes Sedan Car Josica Macalindong Sept 2010 38 List your secured creditor Secured Creditor No. 1 BankWest Total amount owing to this creditor $400,000 Q: Is it a joint loan? A: Yes" 1. The reference to the Husband as "Mr D Gerardo" in the answer to question 28 is curious. It was not suggested that the Husband is known by his first name. That may simply be a misunderstanding on the part of Mr Seccombe, but it tends to suggest that there could have been miscommunication between the Bankrupt and Mr Seccombe in the preparation of the Statement of Affairs. 2. Nevertheless, it is significant that Mr Seccombe, acting on the instructions of the Bankrupt, said that there were properties in the name of the Bankrupt and the Husband and that the North Ryde Property should provide all the funds necessary for the Bankrupt's creditors to be paid in full with some money over. That comment was consistent with the way in which the Statement of Affairs was completed, showing the Bankrupt as continuing to have an interest in the North Ryde Property. It is of course quite inconsistent with the existence of any arrangement concerning the "properties" such as is alleged to have been made in May 2007. 3. The Husband sought to downplay the significance of the fact that the Statement of Affairs contradicted the evidence of the Bankrupt and the Husband. He claimed that, whilst the Statement of Affairs reveals "a lack of due care and appreciation for what needed to be recorded on that document", it is inconsistent with other representations made by the Bankrupt and the Husband as to their financial affairs, and therefore does not "seriously undermine" the Bankrupt's and the Husband's version of events. 4. On 11 April 2011, Messrs Collins & Thompson, solicitors, wrote to the Official Trustee on behalf of the Husband. A copy of a market appraisal in relation to the North Ryde Property was enclosed, together with a mortgage statement from BankWest dated 6 June 2007 showing the amount owing under the mortgage at the time that the Husband and the Bankrupt separated. The letter enclosed a copy of the first Statutory Declaration signed by the Bankrupt "in which she relinquishes her rights to the matrimonial property following separation". No mention was made of the second Statutory Declaration. The letter goes on to say that it was "unfortunate that the parties did not finalise their property settlement by way of … [a] Binding Financial Agreement as it appeared that neither of them obtained legal advice at the [time of the dissolution of their marriage]." 5. The letter said that the Bankrupt would "still rely upon the Family Law Act" in terms of finalising settlement by offering to purchase the Official Trustee's interest in the Property. The letter went on to say as follows: "We respectfully submit that given the overwhelming financial contribution made by our client following the separation of the parties, as well as his non-financial contribution, including that two of the children from the marriage permanently reside with our client – that [the Bankrupt's] current share in the matrimonial asset pool would not be in the vicinity of 50 per cent. You will note that at the time of separation the mortgage of the property was a lot more than the value of the property and it appears that was the reason for [the Bankrupt] relinquished [sic] her rights in the property. Furthermore, our client's contribution which has led to the dramatic reduction over the property has all occurred following separation and as such needs to be credited to him alone." The letter must be taken to be written on instructions from the Husband. It is extraordinary that no mention was made of an arrangement whereby a payment of $50,000 would be made by the Husband to acquire the Bankrupt's "equity" in the properties. 1. On 22 July 2011, Collins & Thomson wrote again to the Official Trustee. The letter began with a formal offer of $30,000 "to purchase the Trustee's share" in the North Ryde Property. The letter relevantly said as follows: "Further, as we pointed out in our correspondence dated 11 April 2011, [the Husband] made a number of cash payments totally $32,431.85 to [the Bankrupt] following separation. Given these circumstances and the ongoing contribution [the Husband] is making to pay off the property he believes that the offer of $30,000 is fair. We also note that his former spouse relinquished all rights to and interest in the property in a statutory declaration made in 2008." There was no suggestion that the payments of $32,431.85 were consideration for the assignment of the Bankrupt's "equity". It is inconceivable that, if the Husband believed that he had had an arrangement with the Bankrupt to purchase her "equity" in the properties, he would have offered to pay $30,000 again to the Official Trustee. Again, highly significantly, no mention was made in the letter of 22 July 2011 of a second statutory declaration evidencing payment of $50,000 as consideration for the North Ryde Property. 1. Collins & Thompson wrote again to the Official Trustee on 6 October 2011, putting a proposal whereby the Husband would pay to the Official Trustee $50,000 within four months. The letter said that the Husband was not positive he could raise the amount and may have to resort to private borrowing from friends and relations: hence the extended time to get the money together. The letter went on to say that the Husband could prove direct payments to the Bankrupt of not less than $32,418.85 by means of receipts for international transfers and could prove payment of joint debts post-separation and payments of the mortgage instalments post-separation. The letter said that the Husband could not offer proof at that time of additional payments. Once again, there is no mention of an arrangement whereby the Husband had already paid $50,000 to acquire the Bankrupt's "equity". 2. On 14 October 2011, the Bankrupt had a conversation with Ms Rita Ghali, an officer of the Official Trustee. On 17 October 2011, Ms Ghali made a note of the conversation in the following terms: I spoke with the bankrupt on 14/10/11. She advised she did not receive payments of $32,431.85 while she was on holiday in the philippines [sic] in 2007. She advised when she left separated [sic] from her husband in 2006 the children went to live with her. She advised she received $29 a month in child support. She advised that at the time separation there was no formal agreement made in relation to the property. In cross-examination Ms Ghali confirmed that the Bankrupt had told her that she had received the sum of $32,431.85. It is highly significant that no assertion was made by the Bankrupt that the payments totalling $32,431.85 represented payment of consideration for an assignment of the Bankrupt's "equity" in the North Ryde Property. 1. On 21 October 2011, Ms Ghali received an email from the Bankrupt in the following terms: "Regarding about our conversation last week about the money I recieved [sic] from my ex husband last time 2006 after my seperation [sic].while I was in the philippine with my 3 children its true that I recieved all this money and use it to support our needs while we are staying in the Philippines.this money that he sent will be consider as my loan…" 1. Those communications are quite inconsistent with the Bankrupt's believing that she had made a binding agreement with the Husband in May 2007 in the terms of the alleged arrangement. On the other hand, they are consistent with the disclosures made in the Statement of Affairs. 2. Evidence was given by the Husband that, although the two statutory declarations were alleged to have been made at the same time, on 22 December 2008, the second statutory declaration had been retained by the Bankrupt. The reason given by the Bankrupt for its retention was that she did not want family members to know how much she had been paid for her interest in the properties. Nevertheless, the Husband asserted that he was present when the two statutory declarations were signed. He must therefore have been aware of the existence of both statutory declarations and of their contents. It is therefore inexplicable as to why he would not have mentioned the existence of the second statutory declaration, which refers to a payment of the sum of $50,000 as consideration for the assignment of the Bankrupt's interest in the North Ryde Property. 3. The Official Receiver accepts that the first statutory declaration was made on the day that it bears. The Husband contended that it is therefore common ground that $32,431.85 was paid by the Husband to the Bankrupt between June and November 2007 and that the first statutory declaration evidenced the Bankrupt giving up her share in the North Ryde Property to the Husband in December 2008. He said that, given those facts, the most probable explanation for both the payments and the first statutory declaration is that the transferred money was paid as a "quid pro quo" for the Bankrupt's interest in the North Ryde Property. I do not accept that that version of events is a credible explanation for the events, especially as the two events occurred more than a year apart. That explanation is expressly contradicted by the Statement of Affairs as signed by the Bankrupt, and the explanation is largely inconsistent with the subsequent correspondence set out above. 4. Moreover, in light of the matters described above, I am not persuaded that the second statutory declaration, containing the reference to the $50,000 being received by the Bankrupt as payment for the North Ryde Property, was made until a time considerably later than the first statutory declaration. Once that conclusion is reached, it must follow that the evidence of both the Husband and the Bankrupt is quite unreliable. 5. I do not consider that it is more likely than not that a conversation along the lines deposed to by the Bankrupt and the Husband took place in May 2007 as alleged. I am not persuaded that an arrangement was made whereby the Bankrupt agreed to assign her interest in the properties, or in the North Ryde Property, in consideration of a payment by the Husband of the sum of $50,000, representing the price for her "equity". 6. I conclude that, at the time of the commencement of her bankruptcy, the Bankrupt continued to be the beneficial owner of a moiety in the North Ryde Property and the North Arm Cove Property. That interest therefore vested in the Official Trustee upon acceptance of her debtor's petition. Accordingly, the cross-claim should be dismissed with costs. 7. It also follows that orders should be made under s 66G of the Conveyancing Act. It was accepted on behalf of the Husband that that relief should follow if I did not accept that the Bankrupt's interest in the North Ryde Property had been assigned to him. However, questions remain as to the distribution of the proceeds of sale of the North Ryde Property, following sale by trustees appointed under s 66G. Accordingly, I propose to defer making formal orders until the parties have had the opportunity of considering their respective positions, following the conclusions that I have reached.