Gosling v McCombie

The Federal Court of Bankruptcy declared that by virtue of s. 111 of the Bankruptcy Act 1966-1970 Cth (the Act) an undivided interest in four lots of land registered under the Real Property Act, 1900-1967 N.S.W. in the joint names of husband and wife was to be treated as an asset in the bankrupt estate of the husband. The appellant, the wife of the bankrupt, seeks to discharge that declaration and seeks an order that the whole beneficial interest in the four lots of land belongs to her exclusively.

The facts as found or accepted for the purposes of the proceedings are that the appellant purchased the fee simple in the four properties in question out of her own funds, paid the whole consideration for their transfer but caused them to be registered in the names of herself and her husband as joint tenants. She did not give him any beneficial interest in the properties, but the husband held the undivided moiety vested in him as trustee for her.

One of the properties was mortgaged in 1965 to secure the sum of $4,000. Another was mortgaged in 1966 to secure a like sum. At some time a third was mortgaged, presumably by deposit of the two relevant certificates of titles, to the bank at which the parties had a joint account, to secure an overdraft. The fourth property was not encumbered at any time.

The appellant and her husband at the time of the purchase of these properties had a bank account in their joint names, each having the right to operate upon it individually. The proceeds of the two mortgages were paid into the joint account and interest and other payments due in respect of the mortgages were paid by cheques drawn on that account. No finding has been made as to which of the two, the appellant or her husband, drew such cheques but the appellant claimed to have paid all amounts paid under the mortgages, though from some other bank account in her own name. No doubt, because of the view he took on the matter, the learned judge in Bankruptcy did not find how in fact the properties came to be mortgaged, either by the creation of the charges for specific amounts or to secure the overdraft, nor did he indicate whether or not he accepted the appellant's account of that matter. She said that when her husband said that he wanted some money, he arranged the mortgages and the overdraft. She "went along with him", not knowing what purpose he had in making the arrangements or for what purposes he used so much of the proceeds as he did use by withdrawal from the joint account.

No examination was made in the Bankruptcy Court as to what amounts were withdrawn by the appellant and by her husband from the account. It would appear, however, that in all probability each did draw upon that account. Thus the husband, no doubt with the appellant's concurrence, did have the use of part of the proceeds of the mortgages and of the benefit of the right to overdraw the bank account. We do not know upon what either the appellant or her husband spent so much of the joint account as each respectively drew therefrom. Neither mortgage had been repaid at the date of the sequestration of the husband's estate: further, the joint account was overdrawn at that time.

91. Any money or other property of the spouse of a bankrupt lent or made available by the spouse to the bankrupt shall be treated as assets of the bankrupt's estate, and the spouse is not entitled to any dividend as a creditor in respect of that money or other property until all claims of the other creditors for valuable consideration in money or money's worth (other than claims in respect of excess interest under the next succeeding section and claims for interest on interest-bearing debts in respect of a period after the date of the bankruptcy) have been satisfied.

It derives from s. 3 of the Married Women's Property Act, 1882 U.K.. The provisions there effected a postponement of a claim against a husband by his wife in respect of "money or other estate lent or intrusted" to the husband "for the purpose of any trade or business" carried on by the husband. When transplanted to the Bankruptcy Act 1924 Cth, the necessity for the money or the property to have been lent or entrusted for the purpose of the husband's trade or business was removed. In the Act, the word "intrusted" has been replaced by the words "made available".

The Federal Court of Bankruptcy decided that, by causing the title to the four lots of land to be transferred into their joint names, the appellant had made the undivided moiety in such lands, vested in her husband, available to him within the meaning of s. 111 of the Act. It accepted that the four properties otherwise were beneficially owned by the appellant.

In Davis v. Mackerras [1] , this Court had occasion to consider s. 85 (1) of the Bankruptcy Act 1924, the predecessor of s. 111, which employed the expression "lent or intrusted" rather than "lent or made available". The Court decided that the word "intrusted" as there used implied that "some legal power or some authority has been conferred upon the bankrupt enabling him to use or dispose of the property as if it were his own, whether he is under any obligation or not to account for it or its proceeds to his wife" [2] . The reason for the change from "intrusted" to "made available" is not apparent. It would not have been made, in my opinion, so as to ensure that the new section covered such facts as those in Davis v. Mackerras [1] or to validate the argument in that case that in relation to property "any permitted physical possession, however limited in time and purpose, as, for instance, as a mere messenger" [2] , is within the section. It may be that property may be "made available" by a wife without conferring on her husband some legal power or authority to use or dispose of the property but, even so, in my opinion, it must be made available for the husband's own sole purposes "to deal with it as he might think fit" to use the language of Rigby L.J. in In re Cronmire; Ex parte Cronmire [1] , as quoted in Davis v. Mackerras [2] . As a part of a bankruptcy act, the section is akin to a reputed ownership provision. Thus, the nearest synonym for the expression "made available" is, in my opinion, "placed at the disposal of"

1. (1930) 43 C.L.R. 488. 2. (1930) 43 C.L.R., at p. 491. 3. (1930) 43 C.L.R. 488. 4. (1930) 43 C.L.R., at p. 491. 5. [1901] 1 K.B. 480, at p. 484. 6. (1930) 43 C.L.R., at p. 491.

The section, in any case, has a number of difficulties in its application in bankruptcy. It enables an owner of property to be deprived of it or of some interest in it and at the same time defers the right to a dividend in respect of that property. Presumably the wife is to be treated as a creditor in the bankrupt estate of her husband for money lent or the value of the property of which she is deprived under the section. It is difficult to conceive of money lent becoming an asset of the husband's estate - which can only be effected, it seems to me, by denying the wife a right to its repayment; yet, at the same time, the section treats her as a creditor for the money lent and defers her right to a dividend in respect of her debt. Further, whether it be money or property lent or made available, the section seems to contemplate that, at the date of sequestration of the husband's estate, the money or property is still in the possession of or otherwise available to the husband, that is to say, that he remains able at the date of the sequestration order whether or not he has any title to or interest thereto or therein to employ or use or otherwise take advantage of it for his own benefit. The section then contemplates that by its own operation the money or property so lent or so available will be "treated" as assets of the bankrupt's estate and the money or the property will be shorn of any right of the wife in that money or property. No transfer or conveyance by the wife is contemplated; nor is any power granted by the section to order transfer or conveyance. The Court's declaration merely ascertains the fact that the section has operated so that the money or property is an asset in the bankrupt estate. The operation of the section will give title to the Inspector-General in Bankruptcy to sell or dispose of what money or property remains lent or available to the bankrupt at the date of the sequestration of his estate. So regarded the section will operate in the same manner as an order or disposition clause would have done.

The section is privative of property and, consequently, is to be strictly construed and applied. The difficulties of applying it to real estate are obvious. Where no beneficial interest in land is vested in the husband (if it were there would be no scope for the section as to that interest), land could be made available to the husband by it being placed in his use either by actual possession or some form of occupancy or permission to use or enjoy. Whether the deposit of deeds to support financial accommodation to the husband would relevantly make the estate in the land available to the husband is a serious and difficult question to which I will later return.

The Court of Bankruptcy has held that the transfer of the four properties into the joint names of the appellant and her husband relevantly made available to the husband an undivided moiety in those properties. If that conclusion is right, the section could treat those moieties as assets of the bankrupt estate and effectively terminate the beneficial interest of the appellant in those moieties, as the legal estate was already vested in her husband. But, in my opinion, the mere transfer of the properties into the joint names did not in any relevant sense make them or any interest in them "available" to the husband. The beneficial interest in the whole estate in all the properties remained throughout in the appellant. The husband became no more than a trustee for his wife of the interests in the lands vested in him by the transfer of the legal title into the joint names. Without breach of trust he could do nothing with that interest for his own benefit. Therefore, in my opinion, the declaration made by the Court of Bankruptcy cannot be sustained on the ground taken by that Court.

However, it was submitted in the argument of this appeal that the declaration could be supported on the ground that, by "allowing" the husband to join in the memoranda of mortgage securing the loans of fixed amount, and to join in the deposit of the certificates of title - which it is assumed was done - to support the overdraft of the joint account, the appellant made available to the husband the beneficial estate in the undivided moieties legally vested in him.

After a good deal of consideration, I have reached the clear conclusion that this submission should be rejected. It is proper to remark at the outset that we have no findings of fact relevant to this submission. There is some evidence, but its credibility has not been determined. These circumstances alone would make me reluctant in this case to decide a matter not passed upon by the Court of Bankruptcy. The privative nature of the section is not without significance in this connexion. Probably the appellant was readily influenced by her husband and perhaps vague as to the nature of legal transactions into which he advised or persuaded her to enter. But the properties were hers, purchased with money that was hers. We should be convinced by evidence which has been tested to that end that the appellant made her property available in the relevant sense to her husband.

However, if we are to treat ourselves as free to decide the matter on the assumption that what was said in evidence is credible both generally and in its precise detail, that view of it which is most favourable to the appellant should be taken, both because of the nature of the section we are applying and because the onus rests on the respondent to make out a case for a declaration under the section.

On this footing, the view of the facts which, in my opinion, should be adopted is that the appellant did not at any stage release to her husband any part of her beneficial ownership of the properties. His obligations to her as her trustee remained unimpaired throughout. In order to place herself in a position to provide her husband with money, the appellant agreed to mortgage the three parcels of land, two to secure fixed amounts and one to secure overdraft accommodation. Because of the state of the title to the lands, her husband had of necessity to be a party to the mortgage arrangements. But, in my opinion, he should be taken as doing so at the appellant's request and as her trustee. That he joined in the mortgages did not in any sense terminate or lessen his trusteeship. Apart from any other relationship or arrangement which might have existed between them, the appellant would have been bound to indemnify her husband in respect of any demand made upon him personally by the mortgagees who lent the fixed amounts. There is no evidence on which to form a conclusion as to whether the amounts of money withdrawn by her husband from the joint account were gifts by the appellant or were loans, and, if so, upon what terms as to repayment. Dependent on what was the proper conclusion in these respects, the appellant's obligation as cestui que trust to indemnify her trustee in respect of the consequences of the financial covenants in the memoranda of mortgage may or may not have been precluded or discharged, either entirely or partly. However, as I have said, we are not in a position to form any opinion on that matter. Of course, in the case of the overdraft of the joint account, the financial liability of the husband to repay the bank might well prove on examination to be entirely personal.

The proceeds of the mortgages were placed in the joint account on which the husband drew to some unknown extent. Clearly the appellant intended that he should do so: and do so for his own sole purpose.

In my opinion, the proper conclusion from this state of facts is not that the appellant made any interest in the mortgaged properties available to her husband but that she used her beneficial interest in these properties, which remained exclusively in her throughout, to provide funds which could be placed at her husband's disposal. So far as appears, the appellant was free to withdraw the whole of the amounts paid into the joint account from the proceeds of the mortgages. The fact that the husband joined in the memoranda of mortgage - which presumably contain personal covenants - itself gave the husband no command of the proceeds: he remained her trustee, as much of the proceeds as of the undivided interest in the land. Whatever the husband received from the mortgagees he received as trustee for the appellant. Nothing in the case establishes to my mind that the husband had sole beneficial control of the proceeds of the mortgages at any time. His capacity to gain access to them depended upon his right to withdraw money from the joint account. Any act of the appellant making anything "available" to her husband was subsequent, in my opinion, to the receipt of the mortgage moneys. Undoubtedly, if her statements are accepted as the fact, by paying or allowing the proceeds of the mortgage to be paid into the joint account the appellant made it possible for so much as her husband withdrew from that account to be relevantly available to him. Whilst the appellant's husband could have withdrawn the whole of the moneys capable of withdrawal from the joint account, in my opinion, the better view is that she did not make the whole of the mortgage moneys available to her husband by placing them in the account; she retained the right to withdraw them wholly or in part for her own purposes. The intention which should be inferred was that he should be free to withdraw so much as he needed for his purposes. Consequently, in practical terms, only so much as the husband drew from the joint account and had not repaid by the time of the sequestration order should be regarded as relevantly made available to him or placed at his disposal. In so far as such moneys constituted loans by the appellant to her husband, the section will operate to postpone her right to dividend in respect of such moneys. Of course, if the right view is that such moneys were given by the appellant to her husband, no question under the section will arise.

So far I have dealt with the lands mortgaged to secure fixed loans. There remains for consideration two lots, one the subject of security for the overdraft of the joint account and the other not encumbered at all.

Clearly, if the view of the Court of Bankruptcy is not sustained, there was no possible ground on which a declaration could be made under the section with respect to any interest in the unencumbered land. No more need be said about it.

The submission in relation to the lot used as security for the overdraft is that the deposit by or with the authority of the appellant of the certificates of title to enable overdrawing of the joint account made available to her husband the beneficial interest in the undivided moiety vested in him. There could be no doubt that the support of the overdraft by the deposit of the certificates of title was advantageous to the husband and that because of that support he was able to withdraw money from the joint account. But that, in my opinion, does not mean that the beneficial fee simple in the land was made available to him in any relevant sense. I say the beneficial fee simple because it was the fee simple and not an undivided moiety which supported the overdraft. The undivided moiety vested in the husband was still held by him as trustee. Neither the legal nor equitable interest was ever his to deal with for his own purposes: neither was it in any sense placed at his disposal. I do not understand how an order could be made as to that undivided moiety unless the appellant's beneficial interest in that moiety had become available to the husband. But it was not dealt with separately either by the appellant or by her husband. If by depositing or authorising the deposit of the certificates of title to the fee simple, the appellant made anything available to her husband, it was her beneficial interest in that fee simple.

But, in my opinion, the correct interpretation is that by that deposit no interest in the land was made available by the appellant to, or placed at the disposal of, her husband. The appellant charged her beneficial fee simple so that the joint account could be overdrawn, intending that her husband should at best participate in that overdrawing. But that is very different from making her beneficial fee simple available to her husband to use for his own purposes. Further, in my opinion, in any case, no beneficial interest in the land was available to the husband at the date of the sequestration order. He then held the legal estate in an undivided moiety as trustee for the appellant. He was not then, and, in my opinion, never had been in a position to use that legal estate for his own purposes. The certificates of title to the fee simple remained at the date of sequestration in the possession of the bank as security for the overdraft and, subject thereto, the beneficial ownership of the fee simple remained with the appellant. If a person guarantees a loan, it can be said, I suppose, in a layman's imprecise language that the guarantor makes his name and credit "available" to the borrower. By the same token, if the guarantor backs his guarantee by a registered bill of sale over chattels which remain in his possession, it could be said with equal imprecision that he made his chattels "available" to the borrower. If the guarantor happened to be the wife of the borrower, it must then be said that the ownership in the chattels automatically passed to the assignee in bankruptcy on the making of the sequestration order, subject of course to the rights of the holder of the bill of sale. But I am quite unable to give such a vague and imprecise meaning and operation to this statutory expression having legal significance and effect. In my opinion, in the case I have supposed, the guarantor does not make anything available to the borrower, according to what I conceive to be the legal meaning of the expression "made available" in a section such as the present. Nothing more can relevantly be said, as a proposition of law, in the hypothetical case than the guarantor used her property to assist the borrower. It could make no difference in law if the arrangements for the guarantee and the effecting of the bill of sale were entrusted to the borrower, even if he was allowed to execute the bill of sale under a power of attorney from his guarantor. The legal analysis, in my opinion, would be the same: nothing was relevantly available to the borrower except, of course, the money he received. That, in my opinion, is all that can be said, in the instant case, in relation to the security given for the overdraft of the joint account. There was, in my opinion, no warrant under the section for treating any beneficial estate in the husband as security for the overdraft as an asset in his bankruptcy. The husband remained throughout a trustee of the legal estate. The equitable estate had always been in and remained in the appellant. Neither estate, nor any ability to deal with or dispose of either estate, was in the possession of the husband at the date of the sequestration order. The section does no more than itself treat something which is still available to the bankrupt as an asset in his estate.

I therefore think that the same conclusion should be drawn in the case of the lot charged to secure the overdraft as should be drawn in the case of the lots mortgaged to secure fixed loans.

For these reasons, in my opinion, it was not established before the Court of Bankruptcy that the appellant, within the meaning of s. 111, made available to her husband any interest in any of the four properties standing in their joint names.

The appeal should be allowed, the declaration made by the Court of Bankruptcy set aside and a declaration made that the appellant is entitled to the beneficial interest in all four properties.

I have had the advantage of reading the judgment of Walsh J. It is my opinion that the order which he proposes should be made and I agree with his reasons for making that order. There is but one matter upon which I wish to say a few words of my own.

It is obviously a real problem whether, in doing what the appellant did, in allowing her properties to be used to secure bank credits which her husband, the bankrupt, could draw against to obtain money for himself, she made available to the bankrupt the properties or merely the moneys as they reached the account. It is not necessary, I think, to distinguish too nicely between property which was actually mortgaged and property which was merely used as security for the spouse's joint overdraft. In principle there seems to be no difference for the present purposes between the two. The provision by a person of a title, to be used by another as security for an overdraft, could, however, be regarded as the simplest way whereby one person might make real property available to another. It is not difficult to conceive of a letter to a bank manager, somewhat as follows:

I understand that you are prepared to grant my husband A.B. an overdraft limit of $10,000 if security worth not less than $15,000 is lodged with the bank. I am making available to A.B. the unencumbered title to my property Blackacre, worth not less than $20,000 to lodge with you as security for his overdraft up to but not exceeding $10,000.

Were A.B. then to lodge the title with the bank and later to become bankrupt, it appears to me that the circumstances would fall exactly within the words of the section. Furthermore, the scope of the section having been extended by amendment, there appears to be no reason why the effect of its words should be limited by construction in the absence of some compelling reason. I have found no such reason. I therefore construe the section to give full effect to its language.

It seems to me that it would be an altogether too restricted view of what happened here to conclude that it was not until there became available to the bankrupt the credits in the joint account of the appellant and himself that property of the appellant was "made available" to him. The appellant seems to me to have made the land of which she was the owner available to the bankrupt to mortgage or to use as security in order that there would be credits in the joint account against which the bankrupt could draw. In this way she made her land available to him.

Furthermore, it is my opinion that so long as property of the appellant continued to be security for money owing by the bankrupt - as well as by herself - that property continued to be available to him. This was the position at the date of the sequestration of the bankrupt.

To my mind it is no objection to the view of s. 111 of the Bankruptcy Act, which commends itself to me, that no provision is made enabling the Court of Bankruptcy to make vesting orders and the like to give effect to any declaration it may make under s. 111. Should it be duly determined that particular property of a spouse is by virtue of s. 111 to "be treated as assets of the bankrupt's estate" then appropriate ancillary orders, including, if need be, vesting orders to enable the trustee of the bankrupt's estate to deal with it, can be made by a court of competent jurisdiction upon the application of the trustee.

The appellant was formerly the registered proprietor of land which she had bought in 1949. She had paid part of the purchase price from her own money and had raised the balance by a mortgage of the land. All payments made to the mortgagee had been made by her from her own money. On 27th May 1964 the appellant entered into a contract to sell that land for £25,000 and that contract was afterwards completed. The net proceeds of that sale were in part paid into a bank account which had been opened by her in the name of herself and her husband, and in part retained in accordance with her instructions by her solicitors for the purpose of being applied towards the purchase of some other properties. Four properties were purchased between July 1964 and October 1964. These properties were transferred to the appellant and her husband and they became registered proprietors thereof for an estate in fee simple as joint tenants.

Findings have been made and are not now in dispute that all payments made in respect of the purchase of those properties were made by the appellant from her own money and that she alone was beneficially interested in them. It was found that her husband held his estate as registered proprietor as joint tenant in trust for her.

On 20th August 1970 a sequestration order was made against the husband and the respondent is the trustee of the husband's bankrupt estate.

One of the properties was mortgaged in 1965 to secure a loan of $4,000. Another property was mortgaged in 1966 to secure another loan of $4,000. A third property was stated in evidence to have been "given as security for an overdraft" from the bank at Merrylands in which the appellant and her husband had an account in their joint names upon which each of them was entitled to operate. Although there does not appear to be any direct evidence as to the form of this transaction, it has been treated by the parties to this appeal as having consisted of the lodging of the relevant certificates of title (there being two such certificates relating to this land) as security for an overdraft. I shall refer later to the circumstances in which the two fixed loans and the overdraft were obtained. The fourth property was not encumbered in any way.

The appellant made an application to the Federal Court of Bankruptcy for a declaration that the said properties are her exclusive property and do not form part of the bankrupt estate of her husband. Before that application was finally determined the respondent made an application to that Court for a declaration that a one-half interest in the said properties may be treated as assets of the estate of the bankrupt, in accordance with the provisions of s. 111 of the Bankruptcy Act 1966-1970 Cth (the Act) and for an order that a one-half interest in the properties may be vested in him as trustee of the estate of the bankrupt. Both these applications referred also to an item of personal property as to which there is not now any dispute.

The Court refused the appellant's application so far as it related to the four properties. On the respondent's application the Court ordered and declared in respect of each of these properties "that an undivided moiety thereof shall be treated as an asset of the bankrupt estate of the (husband)". From those orders and declarations this appeal has been brought.

In some respects the evidence as to the arrangements between the appellant and her husband is not very clear. It was admitted that there was a bank account at the Bank of New South Wales at Merrylands which was a joint account in the names of the appellant and her husband and which was opened in August 1963. The learned judge found that the two sums of $4,000 borrowed on mortgage were paid into that account, that cheques were drawn on the account by each spouse from time to time, and that interest on the mortgages was paid by cheques drawn on that account. Those findings are not contested. They are supported by the oral evidence given by the appellant, although in an affidavit she had stated that payments on each of the mortgages amounting to $90 per quarter had been made by her from her own money and had stated that they were made from a Savings Bank Account, supplemented at times by cash in her possession. His Honour made no specific findings as to the manner in which the borrowings or the arrangements for the overdraft came to be made. But the appellant's evidence was that the two loans on mortgage were made after her husband told her that he wanted some money. She said "I went along with him". She said that she did not really know what happened to the money. As to the overdraft she said her husband arranged it; she did not know what his purpose was in arranging it, or for what purpose he used it.

Although it is probable that the appellant received some direct benefits from the loans and from the overdraft, by drawing cheques for her own purposes on the account and although the moneys raised by the loans were available to be drawn upon by her as well as by her husband, so long as they remained in the joint account, it seems plain that the transactions occurred at the request of the husband and that his purpose was that money would thus become available to him for his use. It is clear that he did use for his own purpose a substantial part of the bank credit thus made available.

The question for decision is whether upon the facts which I have stated it is proper to conclude that the said four properties or any of them or any estate or interest in them constituted "property" of the appellant "made available" by her to her husband, within the meaning of s. 111 of the Act.

In its application to money or other property of a wife whose husband has been made bankrupt, s. 111 replaces s. 85 (1) of the Bankruptcy Act 1924. In that provision the words "lent or intrusted" were used. They were replaced by the words "lent or made available". These provisions had their origin in the Married Women's Property Act enacted in England in 1882 and copied afterwards in many other places, including the Australian States. But in the Bankruptcy Act 1924 and in the Act now in force, the provision has not been confined, as it was in the married women's property legislation and in the English Bankruptcy Act, 1914, to money lent or property intrusted by a wife to her husband for the purpose of his trade or business. It has been said that when a married woman became entitled to own separate property which previously would have gone to her husband, it was considered proper that if she claimed that new right in respect of money which she lent to her husband for the purpose of his trade or business she "should be identified with him to such an extent that she should not be able to claim a dividend" in his bankrupt estate until other creditors had been paid in full: see In re Tuff; Ex parte Nottingham [1] . In Haw v. Official Assignee of Haw [2] , Herdman J. regarded the purpose of the provision as being to protect persons trading with the husband in ignorance of his being assisted by his wife who might be prejudiced by a large claim subsequently made by her. Such explanations are not applicable directly to a provision which makes no reference to the trade or business of the husband. But it may well be that that provision is intended to perform a similar function, in protecting persons who when giving credit are misled by an appearance of affluence which a man is enabled to present because of his wife's resources. But attempts to discover the purpose of the original legislation or the purpose of the changes subsequently made are not, in my opinion, of much assistance in interpreting and applying the provision in its present form. It postpones a wife's claim in debt for money lent to her husband to the claims of other creditors. But in an attempt to combine in one provision the carrying out of that purpose and the effecting also of the purpose of bringing into the estate of the bankrupt assets in addition to those which, being property belonging to him or over which he has a disposing power, constitute in accordance with s. 116 the "property divisible amongst his creditors", the provision has been enacted in a rather curious form. It requires money lent to the bankrupt to be treated as assets, although it is probable that at the date of the bankruptcy there will be no asset or fund which can be identified with the money lent. In respect of property other than money it is provided that the spouse is not entitled to any dividend as a creditor until all claims of other creditors have been satisfied. But the provision does not define the basis upon which a dividend as a creditor in respect of the property is to be claimed or is to be allowed. We are not concerned, however, in the present appeal with any problem of that kind.

1. (1887) 19 Q.B.D. 88, at p. 90. 2. [1927] N.Z.L.R. 366, at p. 372.

The learned judge in the Bankruptcy Court appears to have held that the taking of title to the four properties in the joint names of the appellant and her husband was enough to constitute the making available of property to the husband. His Honour referred to the mortgage transactions as illustrating the use that the husband was able to make with the concurrence of his wife of the state of the registered title. But he did not regard the subsequent mortgage transactions as an essential element in the making available of the properties. The declaration which he made included the property which was not made a security for any loan.

With respect I am unable to agree that the taking of title in the joint names was an act which of itself brought s. 111 into operation. I agree with his Honour's view that the provision in s. 116 (2) (a), by which property held by a bankrupt in trust for another person is excluded from property divisible amongst the creditors of the bankrupt, does not necessarily prevent the operation of s. 111 upon property held by a bankrupt upon trust for his or her spouse. I think that it is possible for a spouse who is the beneficiary under such a trust to make the trust property "available" to the trustee spouse within the meaning of s. 111. But, in my opinion, that section does not apply in every case in which a spouse of the beneficiary is the trustee or one of the trustees by whom property is held in trust. The legal estate vested in a husband as trustee for his wife does not enable him lawfully to make any use of the property for his own benefit. It is true that a dealing by him in breach of trust could confer rights upon a third person not having notice of the trust, which would affect the rights of the wife. But that does not mean that the property is "available" to him. In the provision in its earlier form the use of the word "entrusted" or "intrusted" did suggest perhaps that it would apply if a wife made her husband trustee of her property. In Davis v. Mackerras [1] , Rich J. said that the word "intrusted" was used of "property impressed with a kind of trust". Nevertheless the view that because of the word "intrusted" the earlier provision would have applied whenever a husband was made trustee of a wife's property does not accord, in my opinion, with the statements in the principal judgment in that case, in which [2] their Honours said that the word "implies that some legal power or some authority has been conferred upon the bankrupt enabling him to use or dispose of the property as if it were his own, whether he is under any obligation or not to account for it or its proceeds to his wife". They added, "Rigby L.J. in In re Cronmire; Ex parte Cronmire [1] , expressed that view, as we understand him, when he said intrusting property to a husband meant "handing it over to him to deal with it as he might think fit"." In my opinion, the difference in the language of the present provision is important and I shall refer again to that difference. But, in my opinion, the provision either in its earlier or in its present form would not be satisfied unless a spouse who subsequently became bankrupt had been enabled to make use of the property in some way for his own benefit or advantage. This would not be effected, in my opinion, merely by allowing a spouse to have an estate in land held upon the terms of a trust, under which no personal benefit accrued to him.

1. (1930) 43 C.L.R. 488, at p. 492. 2. (1930) 43 C.L.R., at p. 491. 3. [1901] 1 K.B. 480, at p. 484.

What must next be considered is whether upon the evidence relating to the mortgage transactions and the overdraft, it should have been found that the properties over which security was taken were "made available" to the appellant's husband. I have found this a difficult question to answer. Unless the contrary intention appears the word "property" in the Act means, as s. 5 provides, "real or personal property of every description". I do not think that a contrary intention appears and I am of opinion that real property is not to be treated as excluded from the operation of s. 111. But there are difficulties in applying the section to real property. A disposition of property owned by a wife, by which the property or some interest in it passes from her to her husband, cannot fall within the section, which can operate only in relation to property or an interest in property which continues to belong to her. But I think that transactions are less likely to occur in relation to real property than in relation to goods, by which an owner of property makes it "available" to another without transferring any beneficial interest in it. In the present case the appellant did not put an end to the trust in her favour upon which the properties were held. Nor did she diminish her beneficial interest by conferring part of it upon her husband. But she allowed her husband to join with her in dealing with the properties in a manner which did affect her beneficial interest, in that rights in the property were obtained by the mortgagee, to which her own rights as beneficial owner were made subject. I have come to the conclusion that in allowing her husband to obtain money for his use by means of these transactions the appellant did make the properties available to him. Upon a strict view it may be said perhaps that it was the whole legal and equitable ownership of the properties that was made available to him to be used, with her concurrence, to provide security for the loans and the overdraft. But since no greater claim is made by the respondent than a claim that an undivided moiety in each property should be treated as assets in the bankrupt's estate, it is not necessary to consider whether upon the facts of the case, including the fact that she as well as her husband joined in the mortgages and that the money obtained went to a joint account, a larger claim would be justified.

As between herself and her husband the trust of the properties continued and he was not authorized to deal with them in any way he might choose. He was authorized only to carry out the particular transactions which did take place. But, in my opinion, these were of such a character that it is proper to describe each property as having been made available to him, whether one thinks of the land itself or of her beneficial interest in it, as being for relevant purposes the "property" which has to be considered. It is not easy to envisage transactions which, whilst falling short of surrendering her interest or any part of it to her husband, would be more effective than the transactions now under consideration to make it available to him, in the sense of making it possible for him to obtain, by means of dealing with the proprietary rights represented by the title to the property, an advantage of the same kind as he could obtain from dealing with property which was his own.

If it be right to conclude that the appellant made the properties available, I am of opinion that they continued to be made available up to the date of the sequestration order, because they continued to provide the security for the loans which were still outstanding and for the overdraft from which he had obtained benefits. If the loans and the amount due on the overdraft account had been paid off before the bankruptcy so that the securties were discharged, then the properties would have ceased to be within the scope of s. 111. But so long as the properties remained subject to the rights of the mortgagee, in my opinion they continued to be properties upon which upon bankruptcy the section would operate.

An argument that may be advanced against the view that I have expressed is that it was not the properties, but the money or credit obtained from the mortgagee, that was made available to the husband. It may be said that it was in the mortgagee and not in the husband that rights became vested by which the appellant's interest in the properties was affected. But, in my opinion, upon the facts of the transactions as disclosed by the evidence, it would not be correct to hold that she obtained money from the bank and then made that money available to her husband. It is true, of course, that she did not transfer any proprietary interest in the properties of her husband. If she had done that the interest would have been part of his estate without recourse to s. 111. But, in my opinion, she made the proprietary interest "available" in the sense that I have already endeavoured to explain. She enabled him, by dealing with the properties with her concurrence, to arrange the transactions in the same way as he could have arranged them if he had been the beneficial owner of the interests which he held as trustee.

In forming the opinions which I have expressed, I have not obtained much assistance from the decisions given upon similar legislation in this country or elsewhere. But it is desirable to refer to some of those decisions. Provisions of this kind have been held not to be confined to property eiusdem generis with money and have been applied to furniture lent by a wife to her husband for use by him for business purposes: see In re Donaldson [1] and In re Hacking [2] . The only case dealing directly with the applicability of such a provision to land which I have discovered is In re Islip [1] , in which it was held that land owned by a wife upon which her husband carried on business as a hotel-keeper was not "intrusted" to him. It is not necessary here to consider whether that was a correct decision, since both the facts and the legisaltion are different in the present case. I should be disposed to think, however, that to the transactions now in question the description of transactions by which property was made "available" to the husband could more readily be applied than to transactions consisting of the granting to a husband of a licence, not conferring any interest in the land and revocable at any time, to use land as a site for business operations or to put it to some other physical use, such as the grazing of stock.

1. [1902] 2 I.R. 310. 2. (1912) 12 S.R. (N.S.W.) 770. 3. (1907) 26 N.Z.L.R. 1293.

In the case of In re Cronmire [1] , the transactions in which the husband and wife took part were in their inception somewhat similar to what took place in this case. At the husband's request his wife deposited with his bankers the title deeds of her property as security for advances to be made to him. Before he became bankrupt the debt was paid off by her. In the arguments of counsel [2] the question whether the wife had "intrusted" property to her husband was debated and [1] Rigby L.J. said that "there was no question of a loan by the wife to the husband, or of intrusting her property to him - that is, handing it over to him to deal with it as he might think fit". It is that part of the judgment of Rigby L.J. from which the citation quoted above was made in Davis v. Mackerras [2] . But that dictum of Rigby L.J. is not applicable, in my opinion, to the language of s. 111. It seems to me that property may be "made available" for some particular purpose or purposes and it is not essential, in order that s. 111 may operate, that the property should be handed over to the other spouse to be dealt with in any way in which she or he may decide to deal with it without any further reference to its owner. It should be noticed that In re Cronmire [1] the basis of the decision was that the wife was to be treated as having been in the position of a surety for the debt and as being entitled, as a surety who has paid off a secured debt, to the rights which the creditor would have had if the debt had not been paid.

1. [1901] 1 K.B. 480. 2. [1901] 1 K.B., at p. 483. 3. [1901] 1 K.B., at p. 484. 4. (1930) 43 C.L.R., at p. 491. 5. [1901] 1 K.B. 480.

In Haw v. Official Assignee of Haw [3] it was decided that a security taken by a wife for a loan of money to her husband was not affected by a provision in the Married Women's Property Act, 1908 of New Zealand, that money lent by a wife to her husband for the purposes of his trade or business should be treated as assets in his bankrupt estate and it was held that such a security could be enforced by the wife. That case and the later New Zealand case of Re Taylor (A Bankrupt), Ex parte Dalgety and Co. Ltd. [4] , in which the statement of Rigby L.J. in In re Cronmire [1] , cited above, as to the meaning of the word "intrusted" was adopted, do not provide, in my opinion, any real assistance in deciding the present appeal, although the judgments in those cases contain useful discussions of the earlier authorities dealing with provisions of this kind.

1. [1927] N.Z.L.R. 366. 2. [1934] N.Z.L.R. 117. 3. [1901] 1 K.B., at p. 484.

I have said there are difficulties in applying the provision to real property but, in my opinion, it should be held that property was made available by the appellant to her husband when she joined with him in mortgaging two of her properties to secure loans and in making a third property a security for an overdraft, from which it was anticipated that he would obtain substantial benefit. I think that a contrary conclusion would mean that the provision could have little, if any, operation upon real property. The expression "made available" is one which has not any established technical meaning. In my opinion, the question whether or not property is caught by the section may be determined by considering whether or not the real effect of what has taken place is that the husband was enabled to carry out or to take part in a dealing with his wife's property, in a way which but for her concurrence would not have been possible, which is similar to that in which he could have dealt with property which he himself owned, and which gives to him a benefit or advanatage.

I am of the opinion that the order made by the Bankruptcy Court should be varied (1) by adding to the declaration made in the appellant's favour upon her application to that Court, a declaration that the land contained in certificate of title vol. 10358 fol. 249 is the exclusive property of the appellant and is not to be treated as an asset of the estate of Victor Gosling; and (2) by deleting from the declarations and orders made upon the application of the respondent to the Bankruptcy Court the reference to the land contained in that certificate of title.