DECISION
69 I will deal first with the question of motivation, the third of the matters relied on by Mr. Robb. I will then consider the second of those matters, concerning examination of the basis of the transaction. I will then consider the question of an agreement or understanding, referred to in the first matter raised by Mr. Robb. I will then consider the question of Mr. Rogers' intention, the fourth matter raised by Mr. Robb. I will conclude by considering Mrs. Rogers' position, as raised in the fifth matter.
70 I start with motivation, because this was essentially the only basis on which there was a direct attack on the primary judge's generally favourable credit findings in relation to Mrs. Rogers.
71 I accept that the letters written by the solicitors for the parties around the time of the transaction provide strong evidence that, by October 1993, Mr. Rogers was motivated by the revival of the proceedings in carrying through the transaction; but I do not understand that the primary judge made any findings to the contrary of that. The correspondence also supports the view that Mrs. Rogers was also motivated by the revival of the proceedings, although it does so less strongly and less directly. In my opinion it does not do so strongly enough to justify rejection by an appeal court of the primary judge's acceptance of Mrs. Rogers as an honest witness, and his acceptance in substance of her account of the genesis of the transaction, to the effect that she was unaware of the television program until about one and a half weeks after it was broadcast; that at least until this time she did not know of the revival of the proceedings; that prior to this the marriage was going through a difficult patch and she asked Mr. Rogers to prepare a list of the payments of legal costs made by her; that when she received it she sought to secure her past and future payments; and that the impetus for the transaction came from her and not Mr. Rogers. Acceptance of this account from Mrs. Rogers is not inconsistent with the view that Mr. Rogers, while carrying out his wife's request, was also motivated by the revival of the proceedings; and in my opinion this is in substance what the primary judge found.
72 Turning to Mr. Robb's second broad contention, there is force in the submission to the effect that, where there is a transaction between a husband and wife that prima facie depletes the husband's assets available for creditors, the circumstance that informal arrangements or understandings may exist between a husband and a wife does not absolve the Court from consideration of what was the true effect of the legal relationships between them, when that is relevant to the question whether the transaction was entered into with intent to defraud creditors.
73 In my opinion, the primary judge did give consideration to this, and concluded that Mr. Rogers was in debt to his wife albeit that the primary judge was unsure of the actual extent; but if and to the extent that the list was inaccurate, the primary judge was not satisfied that any error was more than negligent. In my opinion, where the judge had previously given detailed consideration to how the list was arrived at and the status of various items in it, this did not amount to a deficiency of reasons.
74 However, Mr. Robb has submitted to the effect that a detailed consideration of the transactions would show that the primary judge's conclusion was wrong; and in deference to those submissions, I will undertake such a consideration. I will do so first on the assumption that the only relevant agreement is the written agreement of 8 July 1981; and then I will consider what difference it would make if there was an agreement in terms of what has been called "the understanding".
75 In undertaking this exercise, it is appropriate to take into account that the onus generally of proving matters which would support an inference of intent to defraud creditors lies on Ms. Wentworth; but also to have regard to the circumstance that the matters under consideration are solely within the knowledge of Mr. and Mrs. Rogers. It is also relevant to have regard to the primary judge's generally favourable view of Mrs. Rogers' credibility. It is also appropriate to have regard to the presumption of advancement, which would mean that the interest of Mrs. Rogers in any joint account is at least 50%, unless the contrary is shown; and her interest in any account in her own name is a full beneficial interest, again unless the contrary is shown. It would not be sufficient to show the contrary that in some respects an account in Mrs. Rogers' name alone is treated as a joint account. I would add that, even in the absence of this presumption, it seems to me consistent with the intention of the parties, in so far as it is disclosed in the evidence and found in the judgment, that Mrs. Rogers should have a 50% interest in any joint account and a full beneficial interest in accounts in her own name.
76 I will deal first with the payments made in the year ended 30 June 1983. Three payments to Henry Davis York, namely that of 27 December 1982, 28 January 1983, and 21 February 1983, respectively of $400.00, $400.00 and $1,400.00, were made from an account in the name of Mr. Rogers; but Mrs. Rogers gave evidence that she provided the money for these payments to be made; and that evidence was not rejected. The other payments to Henry Davis York, namely further payments of $500.00, $400.00, $500.00 and $222.18, came from a joint account, and can be considered as contributed by Mrs. Rogers as to at least one half. The other two payments were made to Mr. Twigg of $1,000.00 and $7,350.00 and came from a joint account, so can be considered as having been made as to at least one half by Mrs. Rogers. The contribution of Mrs. Rogers to these payments adds up to $7,186.00. The agreement provides for interest at State Bank overdraft rate current as at 8 July 1981; and I was not referred to any evidence as to this. I note that the Supreme Court rate at that time was 14.5%, and my understanding is that this is generally set at something like 1% or 2% above overdraft rates. Conservatively, I will adopt 12% as the interest rate. Interest for about 11 years at 12% on $7,186.00 would amount to something like $9,400.00, giving a total in respect of this period of about $16,500.00.
77 In the year ended 30 June 1986, $30,000.00 was paid to Mr. Shand from a joint overdraft, so that $15,000.00 of this can be considered as contributed by Mrs. Rogers. A further $3,233.42 was paid to Henry Davis York, with no clear evidence as to where it was paid from. It seems reasonable to treat at least half of that as contributed by Mrs. Rogers. In addition, in that year Mr. Burbidge was paid $15,000.00, but that was financed by an interest-free loan from Mr. Findlay, and it is reasonable to treat the relevant contributions as the amounts expended to repay that loan. Accordingly, for that year one can put Mrs. Rogers' contribution at $16,116.71. Eight years' interest at 12% would give interest of $15,952.00, giving a total in round figures of around $32,000.00.
78 In the year ended 30 June 1987, $3,540.65 was paid to Ms. Wentworth on 18 July 1986, and $5,000.00 to Mr. Findlay on 17 November 1986. It appears that these payments came from a joint account, so it is reasonable to treat at least half as being paid by Mrs. Rogers. That amounts to $4,270.32. Seven years' interest at 12% amounts to $3,587.00, and one can round this off to $7,500.00.
79 In the year ended 30 June 1990, Mr. Findlay was paid $5,000.00 from an account in the name of Mrs. Rogers, and adding five years' interest at 12% this gives a total of $8,000.00.
80 Payments from an account in the name of Mrs. Rogers were made to Mr. Findlay of $1,000.00 on 22 October 1989, and $4,000.00 on 3 November 1989; and a payment of $2,000.00 was made from that account to Henry Davis York on 7 February 1990. Allowing four years' interest on $7,000.00 at 12% gives interest of $3,360.00, giving a total that can be rounded off to $10,500.00.
81 Further payments were made from an account in the name of Mrs. Rogers to Henry Davis York of $2,000.00 each on 7 February 1990, 4 February 1991 and 4 February 1992. Adding three years' interest to this at 12% gives a further $2,000.00 and a total of $8,000.00.
82 The total of these sums is $82,500.00. In addition, there was an outstanding debt to Henry Davis York of $14,000.00 and an outstanding debt to the State Bank of $18,000.00, of which half was attributable to Mr. Rogers. There could in those circumstances plainly be no objection, having regard to Mr. Rogers' 1981 undertaking that his share in any jointly owned property be reduced by the amount of any such debt, for Mr. Rogers to give security over his interest in Te Mata to the extent of $82,500.00 plus whatever Mrs. Rogers should pay in respect of the $14,000.00 owing by Mr. Rogers to Henry Davis York and his $9,000.00 share of the debt to the State Bank.
83 On that analysis, there were errors by Mr. Rogers in preparation of his list. First, a number of payments from joint accounts were treated as wholly made by Mrs. Rogers. Second, the $6,000.00 repayment to Mr. Wentworth should not have been included, because it did not represent money used for his legal fees. Third, it was an error to treat the $14,000.00 owing to Henry Davis York and $18,000.00 owing to the State Bank as if they were debts that had already been paid, and in the case of the State Bank, treating it as if it was wholly owed by him. Of course, it may in equity have been wholly owed by him, but that was not established. However, on this analysis, Mr. Rogers need not have given credit for the $9,952.89 which he contributed to paying off the bank loan. The circumstance that he did not give credit for $6,100.00 paid into the joint account after $7,350.00 had been paid to Mr. Twigg would not be an error having regard to the presumption of advancement.
84 Next, I will consider what difference would be made to the figures if there was an agreement that any money paid for legal fees was as between them to be treated as money provided by Mrs. Rogers. There would be nothing improper with such an agreement, nor could such an agreement be considered unreasonable, particularly in circumstances where, at least after about mid-1983, most of the income providing for the support of Mr. and Mrs. Rogers was provided by Mrs. Rogers. Such an understanding would add to the amounts expended by Mrs. Rogers to 30 June 1983 the sum of $4,486.00, plus interest of $5,921.00, making in round figures about $10,000.00. It would double the amounts for the years ended 30 June 1986 and 30 June 1987, adding a further $40,250.00. In total therefore it would add $50,250.00 to the $82,500.00, making a total of $132,750.00. However, since the whole of the payment to Mr. Shand of $30,000.00 would be treated as having been made by Mrs. Rogers, the amount still owing to the State Bank ultimately consequent upon that payment would be left out of account altogether.
85 It follows from this analysis that, if Mr. and Mrs. Rogers believed that there was an agreement in place between them to the effect of "the understanding", such agreement would support a debt of over $130,000.00 owing by Mr. Rogers to Mrs. Rogers. In those circumstances, it might be considered difficult to infer that such errors as Mr. Rogers made in preparing his list supported an inference that he intended to defeat or delay creditors. This in my opinion raises the question of whether Ms. Wentworth established that Mr. and/or Mrs. Rogers had no belief that there was an agreement between them in terms of what has been called "the understanding".
86 It is true that there was no evidence from them of any particular document or conversation that could give rise to such an agreement. However, there was evidence from Mrs. Rogers that this was what she understood to be in place between them. The evidence from Mr. Rogers was less direct: he accepted that the only agreements as to payment of legal costs by Mrs. Rogers were the documents of 1981 and 1983, but he said that Mrs. Rogers said she would help him in every way possible, implicitly including payment of legal costs; and that their agreement was that he pay for all living expenses with his income. It was open to infer that his belief was that, since his income was to be used to pay living expenses and Mrs. Rogers would help by paying legal costs, money used to pay legal costs was to be treated as her money. In considering whether these were beliefs they could reasonably have held, it is pertinent to have regard to the respective contributions that had been made to family finances and were being made to the family finances as at late 1993 and early 1994.
87 Over the thirteen years from the year ended 30 June 1982 to 30 June 1994, the total net income before tax earned by Mrs. Rogers was about $322,000.00, compared with about $103,000.00 for Mr. Rogers. That averages out at about $25,000.00 per annum for Mrs. Rogers and about $8,000.00 for Mr. Rogers. Over the five years from the year ended 30 June 1990 to 30 June 1994, the total net income before tax of Mrs. Rogers was about $217,000.00, and for Mr. Rogers was about $41,000.00. This averages out at about $43,000.00 per annum for Mrs. Rogers and about $8,000.00 per annum for Mr. Rogers. It is true that in the early years significant capital contributions were made by Mr. Rogers: about $180,000.00 in 1981, about $5,000.00 in 1982, about $6,100.00 in 1983, and about $10,000.00 in 1986. However, there were substantial capital contributions by Mrs. Rogers, in particular $69,000.00 in 1983 and apparently about $510,000.00 in 1991. The evidence did not reveal very much about that contribution and what happened to it.
88 In all those circumstances, even in the absence of evidence as to a document or conversation that could give rise to an agreement in terms of the understanding, I do not think the judge's finding that there was an agreement that Mr. Rogers' income would generally be expended in maintaining the family and Mrs. Rogers would fund the payment of legal costs and associated expenses is shown to be an error. Certainly I do not think it was proved that there was no such agreement; much less was it proved that Mr. and Mrs. Rogers did not believe that there was such an agreement.
89 On this analysis, on the best accounting that can be done without "the understanding" there was a debt of around $82,500.00 and an agreement from Mrs. Rogers to meet a further $23,000.00; while if "the understanding" did amount to an agreement with legal effect, there was a debt of $132,750.00 plus an agreement by Mrs. Rogers to meet a further $14,000.00.
90 Mr. Robb submitted that the primary judge erred in not deciding whether the $40,000.00 paid by Mr. Rogers to Mrs. Rogers in about 1983 was a gift or a loan, and working out the consequences of this. However, if it was a gift, as Mr. Rogers asserted, this could not affect the analysis; and it could not have any material effect on Mrs. Rogers' credit, having regard to the ambiguity that may attend such transactions between spouses. If it was a loan, it could be said that some of the payments of legal expenses were repayments of a loan and not such as to be caught by the 1981 agreement. But it was not shown that Mr. Rogers did not believe it was a gift, or that he had reason to believe that some payments of legal costs were repayment of a debt to him; and it was not shown that in 1993 and 1994, Mrs. Rogers should have adverted to the possibility that some of the items on the list prepared by Mr. Rogers should be considered as repayments of this loan. In those circumstances, no error by the judge in this respect is shown.
91 The question then is, in all these circumstances, were errors in the list, and the making of the acknowledgement of debt of $130,000.00, and the giving of security for it so as to reduce Mr. Rogers' share of joint property, as promised in July 1981, such as to support an inference of intent to defeat or delay creditors?
92 Although the primary judge did say that Ms. Wentworth alleged that the mortgage was a sham, that there was a conspiracy, that various documents were forgeries, and so on, he did also directly address the question whether it was proved that Mr. Rogers had an intent to defraud creditors. He concluded that this was not proved. Having regard to his own reasons, and to the analysis I have undertaken, in my opinion he has not been shown to have been in error in so concluding. A conclusion that Mr. Rogers was not shown to have been doing anything other than attempting to work out what he owed his wife, and to carry through what had been agreed in 1981, was well open; and the judge's finding to this effect is not vitiated by error or inadequacy in the reasons.
93 Having regard to that conclusion, the question whether Mrs. Rogers was protected by s.37A(3) does not arise. However, again having regard to the analysis I have undertaken, I do not think that her acceptance of the list provides any basis for concluding that she entered into the transaction otherwise than bona fide believing that she was owed this money and that she was entitled to the transaction having regard to the agreement of July 1981. The primary judge's findings amount in substance to a finding that she was acting bona fide and had no notice of any intention to defraud creditors. In my opinion also, she was a purchaser in the sense that she had given consideration pursuant to the 1981 agreement entitling her to a reduction in Mr. Rogers' share of the joint property and a consequent increase in her share, and this transaction was a convenient way of giving effect to that entitlement. She may also have been a purchaser in the sense that she forebore from demanding payment in cash, and also impliedly undertook to give further support; but it is not necessary to decide this. In those circumstances, in my opinion, and even if the onus of proof lay on her (as I believe it does), Mrs. Rogers would have the protection of s.37A(3).
94 I would add one further comment. Even if the 1994 transactions were set aside, the 1981 document would itself, in my opinion, give rise to an equitable charge in favour of Mrs. Rogers over Mr. Rogers' interest in joint property, to the extent of at least about $82,500.00 in 1994. To this would be added post-1994 contributions by Mrs. Rogers to Mr. Rogers' legal costs, and interest at about 12% per annum, giving a total today much in excess of $130,000.00.
95 For those reasons, in my opinion the appeal should be dismissed with costs.
96 On behalf of Mrs. Rogers, an application was made for indemnity costs, of the hearing below and the appeal. There was no cross-appeal, and so no basis for altering the order for costs below. I do not think the appeal, as argued by Mr. Robb, was such as to attract indemnity costs. The result may have been different if all the points initially raised in the Notice of Appeal and written submissions had been pursued. In my opinion, no order for indemnity costs should be made.
97 SANTOW JA: I agree with Hodgson JA.
98 HISLOP J: I agree with Hodgson JA.
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