10 There were corresponding, consequential entries made in the books of account of the trusts concerned (dealt with in more detail below).
11 The following facts are also admitted on the pleadings. On 5 November 2008, the Deeds of Gift, each by then having been signed and stamped, were sent to Mrs Spottiswood under cover of a letter of that date from the firm of solicitors, McCullough Robertson, which had prepared them. In that letter it is stated, inter alia, "we note that [the Deeds of Gift] have not been dated. The documents provide that the effective date of the gift is 1 July 2007. However, the date of signing should also be inserted at the top of the first page of each document." The Deeds of Gift each bear a stamp duty annotation dated 30 July 2008. Some time after 5 November 2008, a person has written 23 July 2007 adjacent to the word, "date" on each letter.
12 The conclusion of the period within which it is alleged and agreed that the Deeds of Gift were each signed, 5 November 2008, is based on the date upon which they were returned under cover of the solicitors' letter mentioned. The commencement of that period is alleged on the basis that on 9 July 2008 an email was sent by McCullough Robertson to Mrs Spottiswood in which it is stated that the deeds are being finalised and that the firm, "should be in a position to send them through by email later this afternoon". The Deeds of Gift must have been executed prior to their being stamped. Inferentially, they were executed by Mr and Mrs Spottiswood in their various capacities at some time between 9 and 30 July 2008. They were certainly not executed on 23 July 2007. Further, while, it is possible inter partes for any transfer to be deemed to have occurred at an earlier date, for the purposes of the operation of the Act any transfers occurred when the Deeds of Gift were executed, ie some time between 9 and 30 July 2008.
13 In order to establish their pleaded cause of action under s 120 of the Act, the trustees must prove that:
(a) the alleged transfers were "transfers of property";
(b) those transfers took place in the period beginning 5 years before the commencement of Mr Spottiswood's bankruptcy and ending on the date of his bankruptcy; and
(c) Mrs Spottiswood gave no consideration for the transfer or gave consideration of less value than the market value of the property.
14 Of these elements, if the Deeds of Gift did indeed effect transfers of property, those transfers occurred between 9 and 30 July 2008, ie within the requisite 5 year period. Moreover, even on the bankruptcy commencement date most favourable to Mr Spottiswood, any such transfer occurred within 2 years of that commencement date. As his spouse, Mrs Spottiswood was a "related entity" of Mr Spottiswood. It follows that neither s 120(3)(a) (related entity transfers made more than 4 years from bankruptcy commencement date) nor s 120(3)(b) (certain transfers made more than 2 years from bankruptcy commencement date) of the Act is applicable, because of the time when any transfer occurred. Further and in any event, there was no endeavour on the part of Mrs Spottiswood (on whom in this regard the onus lay) to prove that her husband was solvent at the time when any of the transfers alleged was made.
15 The only consideration recited in the Deeds of Gift is natural love and affection. The effect of s 120(5)(d) of the Act is that this is taken to be of no value as consideration. On one view of the effect of s 120(5), this means that, in this instance, it is not necessary, in relation to the claim under s 120 of the Act, for the trustees to prove the alternative mentioned in s 120(1)(b) of the Act, ie that Mrs Spottiswood gave consideration of less value than the market value of the property. That would be because, having regard to the only consideration recited in the Deeds of Gift, the operation of the Act is such that she is taken to have given no consideration for any transfer.
16 Was there a transfer of property? For the purposes of s 120 of the Act, a transfer of property includes a payment of money: s 120(7)(a).
17 For Mrs Spottiswood, it is submitted that the Deeds of Gift "do not provide for simply the payment of money, but rather that there is a gift as reflected in an adjustment of rights in respect of certain loan accounts and to a particular extent". This submission is made without prejudice to an alternative submission that the Deeds of Gift were affected by a common mistake on the part of Mr and Mrs Spottiswood.
18 Putting aside for the moment any question of mistake, the intention of the parties to the Deeds of Gift falls for determination by reference to the language which they have employed in those documents. The expression "assigned by way of gift the amount of $[X]" (clause 2.1) is not perhaps felicitous drafting but the construction which I prefer is that it means neither more nor less than "gives the amount of $[X]". In turn, my preferred construction of the Deeds of Gift is that the intention of the parties is that this gift is not to be satisfied by the physical tender of money one to the other but rather by an adjustment of accounts. Such an arrangement may be held nonetheless to constitute a payment of money, providing it is one made with the agreement of the appropriate parties, who necessarily in this case include the recipient, Mrs Spottiswood: In Re Harmony and Montague Tin and Copper Mining Company (Spargo's Case) (1873) LR 8 Ch. App. 407; Shepherd v Federal Commissioner of Taxation (1965) 113 CLR 385 at 391; Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471 at 485-489 [43]-[56]; Re York Street Mezzanine Pty Ltd (in liq) (2007) 162 FCR 358 at 366 [26].
19 The Deeds of Gift evidence agreement on the part of Mrs Spottiswood to the payment to her being satisfied in this way and the concurrence of the respective trustees to this course of action. In her letter of 20 July 2011 to the Official Receiver in respect of the notice issued pursuant to s 139ZQ of the Act, Mrs Spottiswood asserted that she had "not been paid any of these amounts". In the sense of her being the recipient of a physical tender of money this was true but nonetheless mistaken as to the effect in law of the Deeds of Gift and the consequential entries in the books of account of the trusts concerned. Having regard to the authorities mentioned, these consequential entries constituted in each instance a payment of the money gifted to her by her husband.
20 Relevant extracts from the accounts of the various trusts are in evidence. These show the making of entries corresponding with the intention of the parties to those deeds, including the intention that, inter partes, the transactions have effect on 1 July 2007. Thus, for example:
(a) the accounts of the DJH Spottiswood Bloodline Trust, governed by the DJH Bloodline Trust, materially record the following:
• Balance Sheet as at 30 June 2007 - current liabilities include a loan from Mr Spottiswood (GCCC Spottiswood) in the amount of $500.00
• Balance Sheet as at 30 June 2008 - current liabilities include a loan from Mrs Spottiswood (SL Spottiswood) in the amount of $500.00.
(b) the accounts of the Spottiswood Family Trust (also known as the CFJ & GCC Spottiswood Discretionary Trust) governed by the Willaire Deed, materially record the following:
• The balance sheet for the trust (entitled at the time the CFJ & GCC Spottiswood Discretionary Trust) discloses a trust liability to Mr Spottiswood in the amount of $1,145,800.08. The relevant note to this entry in the accounts discloses that this trust liability represents Mr Spottiswood's share of the trust's profits for the year ended 30 June 2007.
• The balance sheet for the trust (entitled at the time the CFJ & GCC Spottiswood Discretionary Trust) for the year ended 30 June 2008 discloses that the trust has a liability to Mrs Spottiswood in the amount of $2,386,214.32. The composition of this liability is explained by Note 3 to those accounts. This discloses that the liability to Mrs Spottiswood's at the end of that year comprised:
• A balance at the beginning of the year of $2,356,214.32. This opening balance is $1,145,800.08 greater than the 2007 closing balance of the trust's liability to her.
• Mrs Spottiswood's share in the amount of $30,000.00 of the trust's profits for the year ended 30 June 2008.
(c) The balance sheet for the Alimace Trust for the year ended 30 June 2008 discloses that the trust has a liability to Mrs Spottiswood in the amount of $969,963.52. Curiously, the balance sheet includes a 2007 year comparative column in which this same liability is recorded. Unfortunately, the balance sheet for the year ended 30 June 2007 is not in evidence. That for the year ended 30 June 2006 is. In that year, no liability to Mrs Spottiswood is recorded but two trust liabilities to Mr Spottiswood are recorded: one an indebtedness in respect of a loan ($491,238.68); the other an indebtedness in respect of his share ($278,724.84 - see note 10) of the profit of the trust for that year. Significantly, no trust indebtedness to Mrs Spottiswood is recorded in respect of the 2006 year. Further, the 2007 year comparative note on the 2008 year trust balance sheet contains no entry at all in respect of any indebtedness to Mr Spottiswood. For that 2007 year comparative note to be correct, in some way, the trust's total liability to Mr Spottiswood, (which must on the face of the 2006 year balance sheet have represented the opening balance of that liability on 1 July 2006, the start of the 2007 financial year), must have been extinguished in the 2007 year. As against that, the position in respect of the 2008 financial year disclosed in the trust's 2008 balance sheet exactly accords with the effect, inter partes, of the transaction described in the Alimace Deed, which, on the findings I have made, was executed within a month of the close of the 2008 financial year. Those who might be expected to know the true then position were parties to that deed. The 2007 year comparative note looks to be in error. I propose to act on the position for 2008 as disclosed in the balance sheet for that year.
(d) The balance sheet for the G.S. Investment Services Trust No. 4 for the year ended 30 June 2008 discloses that the trust has a liability to Mrs Spottiswood in the amount of $1,045,608.34. The relevant note (Note 5) to this entry discloses that this liability is comprised of:
• An opening balance at the start of the 2008 financial year of $1,017,643.60.
• Her share namely, $27,964.74, of the trust's 2008 year profit.
In contrast, the trust's 2007 year balance sheet discloses that the trust had, materially, the following liabilities:
• A liability to Mr Spottiswood in the amount of $991,821.73. A survey of the trust's balance sheets of earlier financial years, which are in evidence, discloses that this liability principally comprises a trust indebtedness to him derived from capital in the amount of $970,000.00 introduced by him in the 2005 financial year with the difference between that figure and the 2007 year figure referable to his share of trust profits in the 2005 and 2006 financial years, less a drawing made by him in the 2006 financial year.
• A liability to Mrs Spottiswood in the amount of $25,821.87, which was referable to her share of the profit of the trust in the year ended 30 June 2006 (see Note 6 to the trust balance sheet for that financial year). The amount of that end of 2007 financial year liability to Mrs Spottiswood as shown in the balance sheet for that year is misstated in the 2007 year comparative note to the trust balance sheet for the 2008 year (it is there recorded as $1,017,643.60, a like kind of error to the error in the comparative note in the 2008 year balance sheet for the Alimace Trust, and therefore supplies another reason to be cautious about comparative notes for 2008 year balance sheets, as opposed to what is recorded on the balance sheet for the year in question.).
By a process of mathematics, it can be seen that the trust's liability to Mrs Spottiswood of $1,045,608.34 at the end of the 2008 financial year comprises:
• $991,821.73 - The indebtedness to Mr Spottiswood assigned to her with effect inter partes on 1 July 2007, pursuant to the GSIS Deed executed in July 2008.
• $25,821.87 - Her share of the profit of the trust in the year ended 30 June 2006.
• $27,964.74 - Her share of the profit of the trust in the year ended 30 June 2007.
Total - $1,045,608.34.
(e) The balance sheet for the Lakepoint Discretionary Trust for the year ended 30 June 2008 discloses that the trust has a liability to Mrs Spottiswood in the amount of $493,194.39. In contrast, a liability in this same amount is shown as a debt owed by the trust to Mr Spottiswood in the trust's 2007 year balance sheet. The position in respect of the 2008 financial year disclosed in the trust's 2008 balance sheet exactly accords with the effect inter partes of the transaction described in the Lakepoint Deed. The 2007 year comparative note in the 2008 balance sheet makes no reference to any prior year trust debt to Mr Spottiswood in this amount but does, inconsistently with the 2007 year balance sheet, record that trust as having a debt to Mrs Spottiswood in the amount of $493,194.39. This is yet another reason I place no weight on the accuracy of the comparative notes to the balance sheets.
(f) The balance sheet for the Lodgecroft Discretionary Trust for the year ended 30 June 2008 discloses that the trust has a liability to Mrs Spottiswood in the amount of $52,103.00. In contrast, a liability in this same amount is shown as a debt owed by the trust to Mr Spottiswood in the trust's 2007 year balance sheet. The position in respect of the 2008 financial year disclosed in the trust's 2008 balance sheet exactly accords with the effect inter partes of the transaction described in the Lakepoint Deed. The 2007 year comparative note in the 2008 balance sheet makes no reference to any prior year trust debt to Mr Spottiswood in this amount but does, inconsistently with the 2007 year balance sheet, record that trust as having a debt to Mrs Spottiswood in the amount of $52,103.00. This is yet another reason again why I place no weight on the accuracy of the comparative notes to the balance sheets.
21 In her affidavit evidence, Mrs Spottiswood regarded the balance sheets for the various trusts as accurate. So do I. The 2008 year balance sheets for the various trusts accurately evidence the making of entries carrying into effect the terms of the Deeds of Gift. In contrast, the prior year comparative notes in the various 2008 year trust balance sheets are not accurate, having regard to such 2007 balance sheets for the trusts as are available.
22 I reject Mrs Spottiswood's contention that the Deeds of Gift were each effected by a mistake namely, that she and her husband mistakenly considered that it was Mr Spottiswood who had made the loans to the various trusts as recited in the respective Deeds of Gift, whereas the lender was in fact Willaire Pty Ltd. She gave evidence to this effect, as did, in his public examination, Mr Spottiswood. To accept this evidence, and I do not, would involve a substantial re-writing of history and of the contemporaneous, yearly balance sheets of the various trusts.
23 The relevant history is as follows.
24 On 22 November 2004, GAMP Developments Pty Ltd (GAMP Developments), a company of which Mr Spottiswood was a director, entered into a credit facility deed (the GAMP facility) with Equititrust Ltd (Equititrust) pursuant to which GAMP Developments borrowed the sum of $13,210,000.00 from Equititrust. Mr Spottiswood was one of the guarantors of this facility.
25 The GAMP facility loan was initially repayable 12 months after the initial advance (cl 1.1, definition of "Date for Repayment" and item 5). On 28 March 2005, in her capacity as a justice of the peace, Mrs Spottiswood witnessed her husband's signature to a document relating to the GAMP facility. Only the signature portion of this document is in evidence but, inferentially, it is the Finance Acceptance Form of 28 March 2005, referred to in item 2 on the first page of a letter dated 18 September 2008 from Equititrust to the directors of GAMP Developments (Mr Spottiswood and a Mr Alan Ikin). By 29 May 2007 the amount owed under the GAMP facility by GAMP Developments had become $15,600,000.00 with the facility term extended to 30 November 2007 (Equititrust letter of 29 May 2007 to the directors of GAMP Developments). By 19 September 2008 the amount owed by GAMP Developments under the Gamp Facility had risen yet further to $19,424,983.16 (letter dated 18 September 2008 from Equititrust to the directors of GAMP Developments as signed in acknowledgement, materially, by Mr Spottiswood).
26 Separate to the GAMP Facility but also originating in 2004 was a credit facility entered into with the Commonwealth Bank by Mr Spottiswood as borrower on or about 17 December 2004 (letter from Commonwealth Bank to Mr Spottiswood of that date). That facility had a borrowing limit of $2,000,000.00 and was termed by the bank a "Viridian Line of Credit". The guarantors of that loan facility were Willaire Pty Ltd (Willaire) and Mrs Spottiswood (separate letters of 17 December 2004 from the Commonwealth Bank to Willaire and to her). There is no reference in any of the Commonwealth Bank's letters in December 2004 in respect of the establishment of the Viridian Line of Credit to that borrowing having been undertaken by Mr Spottiswood on behalf of Willaire. Copies of this correspondence as signed by Mr and Mrs Spottiswood each in their own right and as directors of Willaire are not in evidence. There is no doubt though that the line of credit was established and drawn down. Inferentially, any drawing down would not have been permitted by the Commonwealth Bank unless its correspondence containing the offer of the Viridian Line of Credit to Mr Spottiswood and the guarantees by Willaire and Mrs Spottiswood had been signed.
27 In her affidavit evidence, Mrs Spottiswood acknowledged that the Viridian Line of Credit of $2 million was drawn down in Mr Spottiswood's name but stated that, she "understood the money belonged to Willaire Pty Ltd (as trustee) in that it was lent to those entities within the Spottiswood Group if and when repaid when funds became available". She further stated:
28. A review of the 2007 accounts by solicitors McCullough Robertson in conjunction with accountant Tony Ponti brought to our attention the fact that the Viridian Line of Credit was recorded as being borrowed by Graham Spottiswood instead of Willaire Pty Ltd and that should be rectified by the Commonwealth Bank.
29. The financial records of the Spottiswood entities showed the loans from [Mr Spottiswood] and solicitors McCullough Robertson documented Deeds of Gift to reflect the actions of the parties with regards to the assignment of debt to me at the effect date of the gifts ie 1 July 2007. I understood that the debt was assigned to me personally rather than Willaire (as trustee) because stamp duty would be paid to transfer the debt to Willaire but would not be paid to assign the debt by Deed of Gift to me.
28 Mrs Spottiswood also stated that the Commonwealth Bank "switched" the Viridian Line of Credit to Willaire (as trustee) at the end of June 2008 with her and Mr Spottiswood as guarantors.
29 Mrs Spottiswood's explanations stand to be measured against other, known, contemporary facts, in particular, GAMP Developments' deteriorating financial situation, her husband's related exposure as a guarantor, her contemporary state of knowledge and the manner in which the accounts of the trusts had been cast for years.
30 The review of accounts mentioned by Mrs Spottiswood was undertaken for Mr and Mrs Spottiswood by McCullough Robertson and Mr Ponti at a time when the GAMP facility was in terminal default and in circumstances more particularly described below. Mr Ponti had, by then, provided accounting services to Mr and Mrs Spottiswood and the various trusts for some years. A sequel to this review was the sending of the Deeds of Gift in draft to the Spottiswoods by McCullough Robertson on 9 July 2008 for execution. Another sequel was, I find, an offer by the Commonwealth Bank by correspondence dated 23 June 2008 in relation to the borrowing of $2 million by Willaire as trustee for the Willaire Discretionary Trust.
31 Mrs Spottiswood's evidence was that this borrowing was used to extinguish Mr Spottiswood's Viridian Line of Credit with the Commonwealth Bank and that Willaire became "immediately liable" to the Commonwealth Bank. In this sense, a "switch" did indeed occur. The Commonwealth Bank's offer of 23 June 2008 was accepted. I do not accept that this regularised a position which had been ever thus. That was neither the form which the Viridian Line of Credit with the Commonwealth Bank took in 2004 nor the way in which the accounts of the various trusts were cast year after year up until 2008. It was Mr Spottiswood, not Willaire as "internal banker", who introduced capital sourced from his borrowing under the Viridian Line of Credit. The accounts of the various trusts consistently reflect this.
32 On 17 April 2008, Tucker & Cowan Solicitors, then acting for Equititrust, sent a letter to Mr Spottiswood's then solicitors, Davis Lawyers. By then, the GAMP facility's term had expired. The loan had neither been repaid nor had alternative accommodation been offered by Equititrust. The GAMP facility was in default. By then, demand had been made of, materially, Mr Spottiswood for repayment of the outstanding balance of the GAMP facility.
33 According to her evidence, Mrs Spottiswood "most probably" knew of the default. Based on her admission, which accords with a history of involvement over the years as director, guarantor or shareholder (or some combination thereof) in the financial affairs of her husband and various trusts (and their corporate trustees), I find it is more probable than not that Mrs Spottiswood knew that the GAMP facility was in default as at 17 April 2008. It is an inescapable inference that her knowledge influenced her later action in signing the various Deeds of Gift after the review conducted by Mr Ponti and McCullough Robertson. Indeed, I regard her evidence that on, 17 April 2008, she "most probably" contacted McCullough Robertson (Mr Matthew Burgess) for advice in relation to asset protection as an admission that she did just that. The trigger for that was the letter from Tucker & Cowan.
34 Having regard to the events which were by then unfolding in relation to the GAMP facility, in respect of which Mr Spottiswood was a guarantor, the existence of assets in his name, materially debts owed to him by various trusts and the prospect that these might fall into his bankrupt estate in the event of his being made bankrupt, provided every reason to undertake a review of insolvency exposures. Mrs Spottiswood acknowledged in cross-examination that by April 2008 she was aware that Mr Spottiswood was "under pressure".
35 Tucker & Cowan's letter of 17 April 2008 signalled a disposition on the part of Equititrust, on particular terms, temporarily to forebear in enforcing its rights under the GAMP facility, including as against Mr Spottiswood. That forbearance was limited to close of business on 19 May 2008. The forbearance offer was accepted.
36 As at April 2008, Mrs Spottiswood's knowledge did not merely extend to knowledge that the GAMP facility was in default or that demand had been made on her husband as guarantor. By her own admission, she was aware that:
(a) Mr Spottiswood was a guarantor;
(b) the facility debt was for a sum substantially in excess of $10 million;
(c) Equititrust had sought further security in respect of the GAMP facility in the form of a mortgage over a property at Cotton Street and a reduction in the total amount owed under that facility (as a result of what Mr Spottiswood had told her); and
(d) Mr Spottiswood had, consequentially, signed a second mortgage over the Cotton Street property in favour of Equititrust and caused various entities within the Spottiswood Group (which group I infer included the trustees of the trusts in question) to pay Equititrust the total sum of $1 million.
37 At this time and also by her own admission, Mrs Spottiswood regarded Mr Alan Ikin, her husband's fellow director in GAMP Developments, the borrower under the GAMP facility, to be "the partner from hell" and "heavily geared".
38 The 19th of May 2008 passed without either the repayment of the facility or the granting of any further accommodation or forbearance by Equititrust. By this stage and by her own admission Mrs Spottiswood was:
(a) "extremely concerned" about the need to protect her and her husband's asset position as much as possible;
(b) "concerned about different actions" (not the subject of further elaboration in evidence) taken by Mr Spottiswood and needed to speak with a solicitor about these matters;
(c) was greatly concerned about Mr Spottiswood's personal guarantee of the GAMP facility, because she remained of the belief that Mr Ikin (also a facility guarantor) was heavily geared and that Equititrust would therefore focus debt recovery action on her and her husband because, "I think you always go for the plum closest to the - that you can reach".
39 Mrs Spottiswood's concerns were hardly irrational either in April, May or June 2008 or at any time prior to the execution of the Deeds of Gift. On 27 June 2008, Equititrust commenced proceedings in the Supreme Court of Queensland against, inter alios, Mr Spottiswood claiming the sum of $15,485,000.00. He was served with the initiating process by 30 June 2008. At or about that time, Mrs Spottiswood by her own admission knew that Equititrust had commenced proceedings against her husband. Eventually, on 7 August 2009, summary judgment was entered against Mr Spottiswood in those proceedings in the amount of $5,428,226.61.
40 Mrs Spottiswood did not elaborate on her assertion in evidence that the reason why she, rather than Willaire, was named as recipient of a gift was for stamp duty reasons. Mr Ponti was not called to give evidence by her. Nor was this proposition, insofar as it may have been explicable as a pure point of law, developed in submissions. On any view of their meaning, the Deeds of Gift are not, inter partes, apt to make Willaire rather than Mr Spottiswood a source of funds advanced to the various trusts on and from December 2004.
41 Mrs Spottiswood was not in any way obliged to waive client lawyer privilege in respect of whatever legal advice she may have received from McCullough Robertson between April and July 2008 either as to stamp duty or more generally. No adverse inference can be drawn on the basis of the absence of a witness from this firm giving evidence. So to do would be subversive of the privilege. As it happens, something of the advice received by Mrs Spottiswood is in evidence. That is that, on 13 June 2008, two months after initial consultation, McCullough Robertson advised Mrs Spottiswood that the Viridian Line of Credit should be a "cleanskin" trust "moving forward". The "switch" later that month in response to the Commonwealth Bank's offer is consistent with that. It is not consistent with any mistake on the part of either Mrs Spottiswood or her husband in entering into the Deeds of Gift.
42 The "switch" had the advantage, for the Commonwealth Bank, of making it a creditor of Willaire as trustee, not Mr Spottiswood. Unless made void as against a bankruptcy trustee, the Deeds of Gift had the advantage, for Mrs Spottiswood of her becoming Mr Spottiswood's successor as a creditor of the various trusts as a result of her choosing to accept payment of the gift in this way. What the Deeds of Gift do not do is to make Willaire that creditor. Further, if it were always intended that Willaire be the "banker" in respect of funds sourced from the Viridian Line of Credit in 2004, 1 July 2007 is an inconsistent date to choose for an inter partes rectification measure.
43 For all of these reasons, I do not accept Mrs Spottiswood's evidence or that of her husband in his public examination that, when they entered into the Deeds of Gift, they were under a mistake that Mr Spottiswood was not a creditor of the various trusts. Recital A in the Deeds of Gift is erroneous only in the sense that the source of the indebtedness of some of the trusts to him was originally not a loan of capital by him to that trust but rather, inferentially, his agreement that a distribution of profit payable to him could be retained by that trust. That was not the mistake asserted by Mr and Mrs Spottiswood. Further, whether the source of the liability was an unpaid distribution of profit or a loan of capital, Mr Spottiswood would nonetheless be a creditor of the trust.
44 The result is that there have been under the Deeds of Gift what are to be taken as transfers of property namely, payments of money to Mrs Spottiswood by Mr Spottiswood for consideration of no value less than 5 years prior to the commencement of his bankruptcy. By operation of s 120 of the Act, these transfers are void as against the trustees. The operation of the Act in these circumstances is then as carefully summarised by Lindgren J in Anscor Pty Ltd & Others v Clout & Another (2004) 135 FCR 469 at 481-483, 43 to (k) (Anscor). The transfers occurred prior to the commencement of the bankruptcy and before any vesting of the property of the bankrupt in the trustees as a result of the making of the sequestration order. In the circumstances of this case, Mrs Spottiswood is liable to account to the trustees for the total of those transfers of money namely, $3,693,412.85 as money had and received.
45 Even if one were to approach the gifts made under the Deeds of Gift on the basis that the effect of s 120(5) was not that no consideration was to be taken as having been given but rather that there was consideration (natural love and affection) but that consideration is to be taken as having no value the result would be no different. The transaction would remain one in which a payment of money was to be taken to have occurred with the money necessarily having a market value of $3,693,412.85 as at the date of the Deeds of Gift. Having bound herself by deed to that position, she cannot now resile from it: Dabbs v Seaman (1925) 36 CLR 538 at 549 per Isaacs J and at 573 per Starke J. Consideration of no value was given by Mrs Spottiswood in return for that payment. In Anscor at 478-479, in a passage cited with apparent approval by the High Court in Vale v Sutherland (2009) 237 CLR 638 at [6] (Vale v Sutherland), Lindgren J stated that, "the policy underlying s 120 is to enable the trustee in bankruptcy to recapture the amount of the 'shortfall in consideration'; not to go further by, in effect, requiring the transferee to pay more for the property than its market value at the time of the transfer." Here, the position to which Mrs Spottiswood has bound herself by deed is that the shortfall is $3,693,412.85.
46 Assuming, contrary to my view, that it was possible for Mrs Spottiswood to lead evidence which contradicts the position as to value she acknowledged by deed, she led no such evidence. Forensic accounting and asset valuation evidence would be required, rather than an assertion in submissions that an examination of all of the balance sheets of the trusts would, on consolidation, show a cross-indebtedness position such that the trust debts to Mr Spottiswood must have been worth less than $3,693,412.85 as at July 2008. A position based on a consolidation of the various trust balance sheets does not necessarily disclose what the market value, on orderly realisation or otherwise, of the debts may have been in 2008. Further, subject to allowing for off-sets after the 2008 year, the balance sheets of the various trusts for the year ended 30 June 2010, also said by Mrs Spottiswood to be correct, continue to acknowledge liability to her in the amounts specified in the various Deeds of Gift. This is evidence that the value of the choses in action transferred to her in 2008 were at least regarded by the respective trustees (each controlled by Mr and Mrs Spottiswood) to be as specified in the Deeds of Gift. Further, again there could be no substance in any proposition that at least some of the debts must have been barred from recovery by expiry of a limitation period and therefore be of no value. The existence of each of the liabilities was acknowledged by the Deeds of Gift, in the 2008 year trust balance sheets and, even more recently, in the 2010 balance sheets of the various trusts. In these circumstances, no limitation period could have expired.
47 If this is not a case where, having regard to Spargo's Case and the other authorities mentioned, the Deeds of Gift can be construed as having effected a payment of money, it does not follow that s 120 of the Act has no application in the circumstances of this case.
48 The liability (of the trustees) of the various trusts to repay the debts owed to Mr Spottiswood as recorded in the balance sheets of the various trusts would constitute a chose in action and thus, as personal property, fall within the definition of property in s 5 of the Act. If, on their true construction, the Deeds of Gift are not to be regarded as effecting a payment of money they either effected or at least authorised a transfer of the property represented by these choses in action. Insofar as they authorised a transfer, that transfer was carried into effect, as the 2008 year trust balance sheets evidence. In succession to her husband, Mrs Spottiswood became the creditor, the possessor of the chose in action represented by the liability to repay the debt.
49 Mrs Spottiswood's evidence that she received nothing under the Deeds of Gift was, in the face of her subscription to those deeds and the 2008 and later year accounts of the trusts, nonsense, understandable only in the sense that she did not receive a physical tender of money. At the very least, even if the acknowledgement as to receipt in the Deeds of Gift is set at nought, then, after the carrying into effect of the transfers of the debt choses in action to her pursuant to those deeds, she received in the 2010 financial year the following, having regard to the accounts of the various trusts:
(a) $557.225.79 by way of drawings from the Spottiswood Family Discretionary Trust, which were offset against her loan account, the balance of which incorporated in her favour the amount of the debt hitherto owed to Mr Spottiswood and assigned to her (see Note 3 to those accounts).
(b) $1,000.00 by way of a partial repayment of the transferred debt (balance sheet shows a reduction in the amount of the debt from $52,103.00 in the 2009 year to a 2010 year balance of $51,103.00).
50 On this alternative basis, and if my conclusion as to her liability to pay to the trustees the sum of $3,693,412.85 is incorrect, Mrs Spottiswood would nonetheless be liable to account to the trustees for a total sum of $558,225.79 as money had and received by her: see, again, the summary of the operation of s 120 offered by Lindgren J in Anscor at [43].