This aspect of the appeal should be resolved on the basis that his Honour's conclusion was amply supported by the evidence. In any case, being largely based on credibility, it could only be disturbed if its acceptability had been destroyed by the clear revelation of some serious and demonstrable error. Far from that, it is the correct conclusion on the evidence. But the statement in the passage lastly quoted from the judgment, that Mr Baker "was simply misappropriating" the moneys he obtained from his companies, opened the door to a further submission on behalf of the appellants. They submitted this amounted to a finding that the pictures were in part acquired, not as Mr Baker's purchases, but as property purchased, in some cases, with the moneys of various of the companies, and in some cases with moneys belonging to Mrs Baker (as to whom there was evidence that Mr Baker wrongfully procured from her a sum of $250,000 payable to her by the family trust).
There are a number of things to be said about this final argument. In the first place, in context, the passage cited from his Honour's reasons does not appear to be using the word "misappropriating" in any strict sense. The logic of the passage is that the arrangements by which Mr Baker had divested himself of property were shams, and the legal transactions, by which moneys recorded as the moneys of the companies were made available to Mr Baker, were also shams. If taking moneys in the guise of payments pursuant to legal
transactions, when in fact no such transactions have really been entered into, is misappropriating the moneys, then Mr Baker's taking of the moneys was a misappropriation. This appears to have been the judge's view. But in the light of the whole of the reasons, it seems that the moneys, like the pictures purportedly bought in the names of the various art trusts, may well have been Mr Baker's own. It is not at all clear that the judge meant to find otherwise.
In the next place, the argument now advanced does not seem to have been put at the trial. If it had been, some attempt might have been made, in evidence, to trace the sources of the funds employed in particular purchases of works of art, or at least to isolate and identify the uses that were made of "misappropriated" moneys. At the trial, the appellants' case was that the art collection belonged to the Contemporary Art Trust, not that the pictures belonged beneficially to an assortment of companies, together with Mrs Baker, claiming ownership of the funds devoted to particular purchases. It is too late now for the appellants to be permitted to change their ground: Coulton v Holcombe (1986) 162 CLR 1.
Furthermore, when Mr Baker, in 1987, transferred the art collection from his own home to premises owned by the appellant Vestos Pty Ltd, and then in 1990 arranged for the appellant Goodglint Pty Ltd to have charge of it, those companies, on the trial judge's findings, assumed the obligations of bailees or agents of Mr Baker. For he it was who was in reality asserting ownership, as he had always intended, and the companies, of which he was the directing mind, accepted the collection from him necessarily upon the same basis. It has long been the law that a person who accepts a deposit of goods or money, acknowledging the title of one person, cannot be permitted to set up the title of another who makes no claim: Biddle v Bond (1865) 6 B & S 225; 122 ER 1,179; Betteley v Reed (1843) 4 QB 511 at 517; 114 ER 991 at 993. In Biddle v Bond, Blackburn J., delivering the judgment of the Court, said (at 231): "We do not question the general rule that one who has received property from another as his bailee or agent or servant must restore or account for that property to him from whom he received it". His Lordship added (at 232-233):
"The position of an ordinary bailee, where there has been no special contract or representation on his part, is very analogous to that of a tenant who, having accepted the possession of land from another, is estopped from denying his landlord's title, but whose estoppel ceases when he is evicted by title paramount. ... The position of the bailee is precisely the same, whether his bailor was honestly mistaken as to the rights of the third person or fraudulently acting in derogation of them. We think that the true ground on which a bailee may set up the jus tertii is that indicated in Shelbury v Scotsford (Yelv. 22, 3rd ed. translated), viz., that the estoppel ceases when the bailment on which it is founded is determined by what is equivalent to an eviction by title paramount. It is not enough that the bailee has become aware of the title of a third person."
Blackburn J. thought that to decide otherwise would be to enable the defendant to keep for himself that to which he did not pretend to have any title. That this rule remains the law is confirmed by Palmer on Bailment 2nd ed. (1991) at 265 et seq. Biddle v Bond has been followed on numerous occasions, and in particular in Minichiello v Devonshire Hotel (1967) Ltd (No. 2) (1977) 79 DLR (3d) 656; Canadian National Railway Co v Hammill (1973) 43 DLR (3d) 731; Shields v Jeffries [1953] NZLR 666; and Remnant v Savoy Estate Ltd [1949] 1 Ch 622. The principle applies in the present circumstances, since neither Mrs Baker nor any of the companies through which funds for the purchase of works of art were provided has made any claim to any part of the collection. One of these companies, Vestos Pty Ltd, is an appellant.
There was good reason for the failure of any of the companies or Mrs Baker to make a claim to any picture in the collection. That reason is that, on the evidence adduced, it was impossible to identify the ownership of the funds with which any particular picture was purchased. Certainly, funds for various purchases were advanced through identified companies. But, having regard to the way in which the companies operated, this fact did not establish that the company effecting a particular payment was beneficially entitled to the funds employed. The trial judge has held that "Baker operated all the companies he controlled as a group, freely transferring funds between them according to the particular needs of the time, even though each company was the trustee of a separate trust". Also, the moneys were passed through bank accounts, and at different times one or other particular company acted as banker for the rest of the group, maintaining a special account with each other company. All this would make tracing particularly difficult. "[I]t is a fundamental feature of the doctrine of tracing that the property to be traced can be identified at every stage of its journey through life ...": Bishopsgate Investment Management Ltd (in Liquidation) v Homan [1995] Ch 211 at 221, per Leggatt L.J., citing Buckley L.J. in Borden (U.K.) Ltd v Scottish Timber Products Ltd [1981] Ch 25 at 46.
Furthermore, there are specific rules, which were also referred to in Bishopsgate Investment Management Ltd v Homan, limiting tracing to an amount not exceeding the lowest balance of an account, into which a sum to be traced has been paid, during the period following the payment into that account, and denying tracing through an overdrawn bank account - whether that account was already overdrawn at the time the relevant moneys were paid into it or is an account that, although then in credit, subsequently became overdrawn. The fact is that these difficulties were not confronted at the hearing because the present point was not taken. Even on the appeal, counsel for the appellants said:
"[W]e wish to emphasize that in the present case, none of our clients has said that a particular work of art is the property of someone other than the applicant, except, of course, the property of one of the relevant art trusts. Rather, our case has been that if the property was not the property of the relevant art trust, then it does not follow that the trustee has discharged his onus of showing that it was the bankrupt's property, and in turn, his. It is not a case where any of the present appellants
[was] seeking to set up any jus tertii, and indeed, having regard to the difficulty in identifying the source of funds used to purchase any particular item of property, it would not be a case where such a claim could be set up."
This submission involves the clearest admission that tracing is not possible. So far as it seeks to reverse the onus on what is really a tracing issue, the submission cannot be accepted. Of course there was an onus to be discharged by the respondent, but there was ample evidence to show, as the trial judge found, that the purchases were in reality made by Mr Baker on his own behalf, utilizing, at least in the main, the proceeds of his tax evasion activities. If, nevertheless, the title of the Official Trustee in Bankruptcy was to be denied, the burden of showing that the funds of someone else were traceable into a particular purchase did not rest on the Official Trustee.
For all these reasons, the appeal, so far as it relates to the ownership of the art collection, must be dismissed.
There is, however, a question in respect of the relief which was granted to the applicant in relation to the art collection. The amended statement of claim included a prayer for a declaration that the art collection "is and has been at all material times the property of [Mr Baker] vesting in his estate on the date of bankruptcy". Further declarations were sought that various portions of the collection, particularly identified in the statement of claim, were "at the date of bankruptcy held upon trust for [Mr Baker]", and that these portions (including a portion, called the "E collection", constituted by works of art acquired after the date of the bankruptcy with the proceeds earned by the sale or rental, after the date of bankruptcy, of works forming part of the collection) "and the proceeds of the sale or rental of [the portions of the collection previously referred to] vested in the [Official Trustee] and at all material times after the bankruptcy were held on trust for the [Official Trustee]." Orders were sought "requiring the [appellants] to transfer to the [Official Trustee] the [whole collection] together with the proceeds of any sales or rental thereof since the date of bankruptcy". There was also a prayer for "Further or other relief, including all necessary accounts and consequential orders to give effect to the orders and declarations sought herein ... ." In support of the claims for relief, so far as they related to the proceeds of sale of works of art, the amended statement of claim included, in para. 38, an allegation that "[a]fter the date of bankruptcy [the appellants] derived proceeds" from the sale and rental of works of art, which were applied to their own use. There was no allegation pleaded which concerned the derivation and appropriation of proceeds of sales of works of art prior to the bankruptcy, except an allegation that "the source of income for additions to the collection was [Mr Baker's] personal exertion and the proceeds of sale of works held in the collection".
This being the state of the pleading which the appellants came to court to answer at the hearing at first instance, they now complain that the orders made against them include orders in respect of property "which was acquired by [the appellants] or any of them with moneys being the proceeds of sale, hire or use of any work of art belonging to [Mr Baker]". The appellants point out that the language quoted is not, at least expressly, limited to sales, hirings and use which occurred after the date of bankruptcy. It is perhaps not entirely clear that the orders have the scope which is suggested. In the absence of a prayer for relief directed to dealings with works of art prior to the bankruptcy, and also in the absence of any pleaded allegation going directly to such dealings, orders with respect to them do seem unlikely, as well as inappropriate. Furthermore, there are provisions in the Bankruptcy Act 1966 identifying the particular requirements for the recovery by a trustee in bankruptcy of the proceeds of a dealing with the property of a person who afterwards became bankrupt. Circumstances falling within these requirements have to be shown before such a claim can be sustained, particularly against third parties. In the present case, not only were the appellants not on notice of a claim, unlimited as to the retrospective period covered, in the terms suggested; circumstances giving rise to such a claim were not specifically pleaded. The appellants did not come to court to answer such a case. In any event, the decision in Bishopsgate Investment Management Ltd v Homan (supra) would seem to throw a considerable obstacle in the way of an attempt to trace the proceeds of sales of art in the particular circumstances of the affairs of Mr Baker and his companies. The problem has already been outlined in relation to another aspect of the case.
In these circumstances, the dismissal of the appeal, so far as it relates to the art collection, should be qualified by a variation of the orders so as to make it clear that they do not extend to the proceeds of dealings in pictures consummated prior to the bankruptcy.
The final issue raised by the appeal relates to a quite separate matter. The Official Trustee claimed, at the hearing at first instance, that an assignment of certain debts said to total $286,000 to the appellant Vestos Pty Ltd was a fraudulent disposition within s. 121 of the Bankruptcy Act. This is the section, as the Full Court noted in Official Trustee in Bankruptcy v Mitchell (1992) 38 FCR 364 at 368, that "was intended to reflect generally the principles which have been worked out over the centuries, in relation to fraudulent dispositions, since the enactment in 1570 of 13 Eliz I c 5 (the Statute of Elizabeth)". See also PT Garuda Indonesia Ltd v Grellman (1992) 35 FCR 515. The claim in respect of the $286,000 was not pleaded in the way in which, as actually pursued, it has been set out; but there was no dispute at the hearing of the appeal that the claim, as pleaded, was abandoned in favour of a claim so formulated. The trial judge upheld it, making orders accordingly.
It is necessary to refer in a little detail to the facts from which this issue arises. In 1984, Mr Baker was still carrying on practice as an accountant, with two partners, Mr Schmidt and Mr Doyle. Mr Baker's share in the partnership was the dominant one, being 60%. He was becoming increasingly engrossed in the art collection, and at the same time had by then every reason to be concerned about his own financial future. On 1 July 1984, he entered into transactions by which he disposed of half of his interest in the partnership, in part to a Mr Haworth and in part to Mr Doyle. The disposition created a debt owed by Mr Haworth to Mr Baker in the sum of $80,000. By a quite complex series of transactions, involving circular dealings with a bill of exchange and an issue of worthless shares at a high premium, Mr Baker arranged for the debt of $80,000 to be extinguished on the same day and replaced by a debt owed by Mr Haworth to one of his companies, Venmere Pty Ltd. There can be no doubt that the substitution of Venmere Pty Ltd as Mr Haworth's creditor, though achieved by extremely artificial arrangements, was not a sham. For Mr Haworth certainly intended that what was done should have its actual legal effect. But the trial judge held that Mr Baker's intention was "to put this asset [i.e. the debt of $80,000] of his beyond the reach of his major potential creditor, the Taxation Department, while retaining control of it through his control of Venmere", which, through him, had "knowledge of [his] fraudulent intention". Although there was no direct assignment by Mr Baker to Venmere Pty Ltd, the judge considered the effect of the steps taken was a disposition of the chose in action by Mr Baker to Venmere Pty Ltd, which was avoided by s. 121. His view may be supported, so far as concerns the beneficial interest in the debt, as being analogous to that taken by Dixon J. in Williams v Lloyd (1934) 50 CLR 341 at 373-374.
On 1 July 1985, Mr Baker sold his remaining interest in the partnership, save for a 1% interest which he kept for the next two years, in three parcels distributed between Messrs Schmidt, Doyle and Haworth. The total price was $200,000, which was left outstanding. Again, somewhat complicated steps were taken to extinguish the debts and to substitute for them debts owed to Venmere Pty Ltd, all the transactions taking place on the one day, 1 July 1985. Again, the trial judge concluded that Mr Baker was "motivated to do this by his ongoing concern to put his assets beyond the reach of the Taxation Department whose investigations he knew were continuing". And again, the trial judge held that what was done amounted to a disposition in fraud of creditors which was caught by s. 121.
A few days after his receipt on 26 May 1986 of notices of amended assessments in respect of income tax totalling $2.2 million, Mr Baker took steps to have his partners' indebtedness transferred from Venmere Pty Ltd to Mrs Baker. This was achieved by circular dealings with a bill of exchange in the sum of $280,000, so as to eliminate the existing debt, and entry by the partners into loan agreements with Mrs Baker, the term of each loan being five years, at interest. Interest payments of about $3,500 per month were in fact made to Mrs Baker for a period of five months. Although Mr Baker claimed his purpose in arranging for the debt to be in substance transferred to Mrs Baker was related to her needs at the time, the judge held that in this matter also Mr Baker was motivated by his concern to erect a barrier between a substantial asset and the Taxation Department. But there was no finding that Mrs Baker was similarly motivated. Indeed, his Honour appears to have accepted that Mrs Baker had no real understanding of the nature of the arrangement.
It might be thought, in this situation, to be an inevitable conclusion that Mrs Baker obtained beneficial ownership of debts totalling $280,000. As she was a volunteer, that ownership would have been subject to the right of a trustee in bankruptcy, should her husband become bankrupt, to avoid the transaction. However, the trial judge appeared to take the view that the original arrangement by which the debt was vested in Venmere Pty Ltd was void as against the Official Trustee, and that therefore the later arrangement by which the debt was further transferred to Mrs Baker must be ineffective, because "as between the Official Trustee, Baker and Venmere, it was Baker who must be regarded as having title to [the debts]." With respect, this does not necessarily follow. When property is conveyed by a fraudulent conveyance, the title of the recipient is not for all purposes void. He may have a title which can be passed on, or which enables him to turn the property to some account, or to consume it. That title subsists unless and until steps are taken to avoid the transaction. Thus, in Higgins v The York Buildings Company [1740] 2 Atk. 107; 26 ER 467 Lord Hardwicke L.C. refused to order an account of profits against a defendant who had taken property under a fraudulent conveyance, saying: "I do not know in the case of fraudulent conveyances, that this court have ever done any thing more than remove such fraudulent conveyances out of the way ... ." In In re Maddever. Three Towns Banking Company v Maddever [1884] 27 Ch D 523 at 528 North J. said of creditors who had delayed taking action against a person to whom property had been conveyed by a fraudulent conveyance:
"They left him in possession, but it does not appear that they had any notice or knowledge that he did deal with the property; still, if they left him in possession they must take the consequences, and any dealing he had the power of effecting by which they could be prejudiced they must submit to. It does appear that he has effected a mortgage which may very likely embarrass the Plaintiffs very considerably, and which in fact may be good against them. But as regards him he loses nothing by the mortgage. No doubt he created a charge on the property with an obligation to pay, but he actually got the money which is the subject of the mortgage, and he was content."
In Harrods, Limited v Stanton [1923] 1 KB 516, a deed of gift of furniture was held to be caught by the Statute of Elizabeth. However, Bailhache J. said (at 520-521):
"But in my opinion until a deed of gift is set aside the donee under the deed of gift is the true owner of the goods comprised therein. It is true that the
donee has a defeasible title, but unless and until the deed of gift is set aside the title is a good title, and if the donee conveys to a purchaser for value without notice before the deed of gift is set aside he makes a good title."
McCardie J. agreed, saying:
"It was an actual gift from [the fraudulent donor] to his wife, and she therefore became the owner of the goods, though it is clear that her title was subject to defeasance upon an application by the creditors of her husband under 13 Eliz. c. 5 as being in fraud of creditors."
This decision was cited with approval in the joint judgment of Dixon C.J. and Fullagar J. in Brady v Stapleton (1952) 88 CLR 322 at 333-334. The position seems to be analogous to that with which the Court of Appeal dealt in the recent decision Law Debenture Trust Corporation v Ural Caspian Oil Corporation Ltd [1995] Ch 152, where Sir Thomas Bingham M.R. said (at 166) of a transfer which was defeasible (though not on the present ground - it had taken place under a tortious dealing):
"It was open to Law Debenture to seek an interlocutory injunction restraining Hilldon from making onward transfer and a final injunction ordering retransfer, but application had not been made and injunctions had not been granted. Until some injunction was granted, Hilldon was in my judgment entitled to do what it would with its own."
Indeed, not only is the conveyance good until set aside. As in the case of a settlement avoided under s. 120 of the Bankruptcy Act, it has been held to be good, even upon an application to set it aside, except to the extent that it proves necessary to set it aside: Ideal Bedding Company, Limited v Holland [1907] 2 Ch 157 at 173-174. If the whole value of the property involved is not required to meet the bankrupt's debts, the balance should not be taken away from the person to whom he chose (though fraudulently) to convey it. As regards s. 120 of the Bankruptcy Act, the point was settled in Barton v Official Receiver (1984) 4 FCR 380 at 386, 389 and 397, where the order was limited to what was required to meet the bankrupt's debts.
On 1 December 1986, six months after the vesting of the debts in Mrs Baker, yet another circular dealing with a bill of exchange was carried out in order to eliminate the debt to Mrs Baker, and Mr Baker's partners accepted an obligation to Vestos Pty Ltd, under loan agreements entered into with it, to pay sums totalling $280,000 lent at interest for five years. Mr Baker claimed that the purpose of vesting the debt in Vestos Pty Ltd was to enable it to service interest payments due to Westpac Bank in relation to the building in which he intended the art collection to be housed. But the judge rejected this explanation, and concluded that the reason for the transaction was related to the imminence of the proceeding by the Commissioner of Taxation which ultimately led to Mr Baker's bankruptcy.
In the case of this transfer also, the judge appears to have taken the view that documents predicated on the assumption that the earlier transactions had been effective (and thus that Mrs Baker was the legal owner of the choses in action constituted by the obligations to pay the sums totalling $280,000) must be ineffective because Mrs Baker was not entitled to these debts, which Mr Baker had attempted to vest in her pursuant to arrangements amounting to fraudulent conveyances. For the reasons already given, this solution of the problems in the present case cannot be accepted as soundly based in law. Until action was taken to set aside Mrs Baker's title, she was entitled to the benefit of the agreements Mr Baker's partners had made with her.
In the event, Vestos Pty Ltd was not challenged by any one, in relation to the loan agreements made with it on 1 December 1986, at any time prior to the repayment of the loans. That occurred early, in September 1988, by a payment made to it by Messrs Schmidt, Doyle and Haworth of $286,000 in full and final settlement of their obligations to the company. It was not until after Mr Baker's bankruptcy on 16 January 1990 that the Official Trustee made the claim now in question in respect of this amount. The judge upheld that claim on the basis that Vestos Pty Ltd was simply not entitled to receive the payment, since in his Honour's view the right to the debts had never been effectively transferred to it.
The appeal was argued on the assumption that, despite the path of almost Byzantine tortuousness by which the original debts owed by the partners to Mr Baker became transmuted into debts owed by them to Vestos Pty Ltd, what was in question was indeed a fraudulent conveyance of the debts (or rather a series of fraudulent conveyances) by Mr Baker to Vestos Pty Ltd. As has been said, there is authority to support an argument in favour of this conclusion, so far as the beneficial interests in the debts owed to Vestos Pty Ltd are concerned. The problem then is whether the law permits the Official Trustee to recover from Vestos Pty Ltd, not the actual debts, which no longer exist, but the proceeds of the payment received long before any step was taken to set aside the fraudulent conveyances. No attempt was made in this case to trace the sum of $286,000 paid to Vestos Pty Ltd, so as to show that any part of the moneys, or any assets representing the moneys or any part of them, could now be identified. It is consistent with the evidence that the whole sum may have been consumed in the payment of debts or just by payment into an overdraft account. The decision under appeal does not rest upon principles of tracing, but upon the proposition that Vestos Pty Ltd was not entitled to receive the money, and must account for it simply on that basis. (An inconsistency in the claim, as so put, is that it includes $6,000 representing a final payment of interest on the $280,000, but does not include any of the earlier payments of interest totalling a much larger amount, and indeed Mrs Baker, the recipient of about $17,500, was not made a respondent to the claim.)
In Brady v Stapleton (supra), as appears from the joint judgment of Dixon C.J. and Fullagar J. (at 331), the question before the High Court was whether, in the case of a fraudulent conveyance, "the transferee is liable at law to pay to the defrauded creditors the amount of the proceeds of a sale made by him to a bona fide purchaser for value before any steps have been taken to set the transfer aside". It had been held (as appears at 332) that the actual moneys received could not be identified, so the question, as in the present case, related to "a money sum equivalent to the amount received". Clyne J., the trial judge, had held that any right to set aside the alienation had been lost when the property the subject of it had passed to a bona fide purchaser for value without notice. Dixon C.J. and Fullagar J. (at 332) considered this view "to be in accord with principle and authority". They said:
"[I]f the proceeds of a sale of any of that property by the company [i.e. the recipient under the fraudulent conveyance] to a bona fide purchaser for value could be identified in the company's hands, the case of In re Mouat; Kingston Cotton Mills Co. v Mouat [1899] 1 Ch. 831 would be authority for saying that the trustee would be entitled to have handed over to him any asset in the company's hands which represented the proceeds of sale".
But they added (at 333), on the basis that the proceeds of sale could not be identified, that "it would seem contrary to principle to hold that there is any personal remedy against the company". They said too (also at 333):
"The truth seems to be that, although the statute uses, and most emphatically uses, the word `void', the courts have always treated a fraudulent assignment as effective unless and until a creditor or creditors intervene by levying execution or taking legal proceedings."
On the basis of the cases, to which they referred in some detail, their Honours said (at 334):
"And, if the position created by the statute is that which is indicated in those cases, one can find no basis for a personal liability on the part of the company in the present case. It is only on the footing that the company sold something to which it had no title or that the sale was otherwise wrongful when made, that a personal liability on the part of the company could be based. But the company, when it sold the assets in question, sold something to which it had a title, albeit a defeasible title. The sale was not wrongful when made. If the company were selling something to which it had no title, it might well be that the trustee in bankruptcy could claim to stand in the shoes of the true owner, the bankrupt, and maintain money had and received. But this is not the position. The company had a title, though a defeasible title. The defeasance has, in the event, taken place, but it cannot relate back so as to make a sale by the company wrongful and impose a personal liability on the company."
It should be borne in mind, when reading the last passage, that their Honours had already said (at 332) that "[t]he company in this case must be taken to have received the property with notice of the fraudulent character of the assignment to it". The situation was thus quite similar to that to which Sir Thomas Bingham M.R. referred in the dictum cited earlier in these reasons from his judgment in Law Debenture Trust Corporation v Ural Caspian Oil Corporation Ltd, where also the party alleged to be liable had acted knowingly. In both cases, the right of title to property which, though defeasible, had not yet been subject to defeasance, prevailed to entitle the proprietor to enter into the challenged dealing.
It is impossible to distinguish what was involved in Brady v Stapleton from the situation in the present case, in point of principle. In Brady v Stapleton, properties received under fraudulent conveyances were sold to innocent purchasers and the proceeds of the sales could not be identified. The vendor, though privy to the fraud, was not liable in those circumstances because at the time of the sales it was entitled to the properties, no action having been taken at that stage to set aside the fraudulent conveyances. In the present case, choses in action were held, as a result of what were assumed to be fraudulent conveyances, and they were held by a company which was privy to the fraud. However, in this case also, at the relevant time no action had been taken to set aside the company's title to the choses in action. They were then discharged by innocent third parties who made full payment to the company. There is no reason why that payment, in point of principle, should be seen as qualitatively different from the payments in question in Brady v Stapleton. One of the ways in which property may be turned to account is by sale; another, if the property consists of a chose in action, is by receiving payment of the amount due under it. If the receipt of the proceeds of a sale cannot be attacked, there is no reason why the receipt, in the case of property being a chose in action, of a payment in discharge of the debt should be liable to attack. In each case, the effect of what happens is to put the item of property that was the subject of the fraudulent conveyance out of the reach of the creditors, substituting a sum of money in the hands of the person to whom the fraudulent conveyance was made. In each case, of course, if the proceeds can be traced, the creditors retain a remedy: Brady v Stapleton at 332.
As no attempt has been made to justify the judge's order by the identification of the proceeds, or any part of the proceeds, in the hands of Vestos Pty Ltd, the appeal in this respect should be allowed.
Most of the time at the hearing was taken up by those aspects of the case which were concerned with the art collection, which also, on the evidence, involves a very much greater sum of money. In all the circumstances, the only order as to the costs of the appeal which should be made is that the appellants pay two thirds of the respondent's costs. As for the costs of the hearing at first instance, the order made below should be varied so as to require the appellants to pay five sixths of the respondent's costs.