Neat Holdings Pty Limited v Karajan Holdings Pty Ltd

Mr Fitz-Gibbon gave to the Court an account of the circumstances under which he said the original gold Rolex watch was stolen. The event according to Mr Fitz-Gibbon occurred around 1988 when Mr Fitz-Gibbon visited a place with a view to having a casual meeting with another man. Mr Fitz-Gibbon says that he was approached by a young man out of the blue who threatened him with a knife and stole the watch and some clothes. Mr Fitz-Gibbon says that he did not confide in Mr Hudson or his wife about the loss of the watch. His wife at that time was unaware that he was homosexual. Mr Hudson was of a similar sexual persuasion but, because the whole matter was embarrassing, Mr Fitz-Gibbon did not mention the loss of the watch to him. Mrs Fitz-Gibbon gave evidence. She was fairly distraught and gave the impression that her life had been shattered by two events; the first, the fact that her husband had been struck off as a solicitor and in consequence she suffered financial hardship and, the second, that her husband and father of her children turned out to be homosexual. She remembered Mr Fitz-Gibbon having purchased an original gold Rolex watch on their honeymoon and, as far as she was concerned, he had always had it. She was not aware of a fake Rolex being owned by her husband, nor had she been told that it had been stolen. Although I am prepared to accept that Mr Fitz-Gibbon would be embarrassed to relate the circumstances in which he lost a watch, I think it is more probable than not that Mr Fitz-Gibbon did not lose the watch as he said but rather continued to own it as he told Mr Hudson, at least two years ago. In summary, I am of the view that the following findings of fact should be made: 1. Mr Fitz-Gibbon purchased, when on honeymoon with his wife, a gold Rolex watch. 2. At some stage he purchased as well a fake Rolex watch. 3. Whatever the circumstances might be when he wore the fake watch as against the solid gold watch (and from his own evidence, these obviously included circumstances of travel) Mr Fitz-Gibbon continued to own the solid gold Rolex watch up until the date of the meeting on 17 June. 4. The watch Mr Fitz-Gibbon wore at the meeting on 17 June and removed in the toilet was a Rolex watch and not the dress watch which Mr Fitz-Gibbon alleged it was. 5. Both Mr Wily and Miss Halpin make it clear that the watch they observed on Mr Fitz-Gibbon's wrist was a Rolex watch. 6. Mr Fitz-Gibbon discussed the possible sale of the Rolex watch with Mr Hudson in 1996, a matter quite antithetical to the evidence of Mr Fitz-Gibbon. Before turning to deal with the question of the paintings and the Lladro figurine, I propose now to set out my findings on credit in relation both to Mr Fitz-Gibbon and Mr Hudson. THE CREDIT OF MR HUDSON I accept the submission of counsel for Mr Fitz-Gibbon that Mr Hudson was an intelligent witness. I do not, however, accept that Mr Hudson invented his oral evidence to bolster the case that he wished to put against Mr Fitz-Gibbon. Counsel for Mr Fitz-Gibbon relied upon the fact that Mr Hudson at the commencement of cross examination had been asked whether there was any material fact or matter not included in his affidavit and had responded that there was not, according to his knowledge. From this I was asked to conclude that when Mr Hudson gave oral evidence of the conversation about the potential sale of the watch two years previously, a conversation not included in the affidavit filed, that evidence should be rejected because not included in the affidavit. With respect, most witnesses asked that question, will respond that the affidavit is complete although their memory may well be jogged by questions later put to them. I think that is the case with Mr Hudson. In essence, I was asked to conclude that Mr Hudson deliberately set out to invent evidence to hurt Mr Fitz-Gibbon. That is not the impression Mr Hudson gave to me in the witness box. It is true that Mr Hudson's evidence suggests it was easier to tell the difference between a fake Rolex and an original than it seems to me to be the case. It is true also that he referred to having friends who, over the years, wore Rolex watches but refused to name those friends other than to say that most of them were persons he had seen at Mr Fitz-Gibbon's Australia Day party. In my view these were not matters of significance. In my view, Mr Hudson believed that Mr Fitz-Gibbon at all times wore a gold Rolex watch and that he had done so at a function at which photos were taken and which photos were in evidence. It may be, and it is unnecessary to make a finding to this effect, that Mr Hudson was sometimes mistaken and that, at least on some occasions, Mr Fitz-Gibbon did wear a fake Rolex watch instead of an original. However, having regard to my observations of Mr Hudson in the witness box and the manner in which he gave his evidence, I am of the view that he did so truthfully. I accept of course that Mr Hudson and Mr Fitz-Gibbon have fallen out as friends. But I do not accept that Mr Hudson in consequence was prepared to lie under oath to hurt Mr Fitz-Gibbon. MR FITZ-GIBBON'S CREDIT There is no doubt that Mr Fitz-Gibbon had a real interest in the litigation. He made it clear that, whichever way I found, there was no way the watch could be returned. No doubt that is consistent with his evidence, if I accepted it, that he did not own a Rolex watch now and had not owned such a watch as at 17 June 1997. There are of course many matters which can be pointed to which affect adversely Mr Fitz-Gibbon's credit. Although not determinative of his lying under oath before me, counsel for the trustee pointed to the fact Mr Fitz-Gibbon had been struck off as a solicitor for offences involving dishonesty, particularly deceiving the Commissioner of Stamp Duties by altering amounts on contracts for sale of properties. It was common ground that Mr Fitz-Gibbon had not contested the proceedings taken by the Law Society against him and did not offer any evidence on his own behalf. He said the particulars in several matters were incorrect but it was pointless arguing them. However, it can be accepted that there is no suggestion that Mr Fitz-Gibbon had in the proceedings brought against him by the Law Society lied on oath. Next, it is quite clear that Mr Fitz-Gibbon lied to Mr Andrew Wily and Miss Halpin about having a watch on his wrist at the commencement of the 17 June meeting. I find it difficult to accept that this lie was prompted by a fear that Mr Wily would demand surrender of the watch which was a 21st birthday present, a watch quite obviously of little or no value. The more likely explanation would seem to be that Mr Fitz-Gibbon was aware that he was to be asked questions about a gold Rolex watch, was wearing it and took steps to conceal it from the trustee. It is also difficult to accept that, if Mr Fitz-Gibbon had had the original stolen, he would have failed to confide in his friend of long standing of similar sexual orientation even if it was quite understandable that he would not have confided in his wife. I have formed the view from these matters and from listening to Mr Fitz-Gibbon's evidence in the witness box that I would not lightly accept his evidence except where corroborated. THE PAINTINGS The question of the existence of artworks appears to have arisen between Mr Fitz-Gibbon and Mr Wily around April 1996. In a letter dated 23 April Mr Fitz-Gibbon referred to his tax returns which disclosed a number of paintings. He said in that letter: "None of the paintings were by 'known artists'. They were purchased because we liked them. A number of the paintings were purchased as gifts for my wife but, be that as it may, my wife and I divided the artworks between us at separation. The two paintings I received were stored on the floor in my mother's garage. I was unaware at the time that, after heavy rain, the garage floor was subject to flooding and both pictures were sufficiently damaged to be of no value and have been disposed of." To the best of my recollection the remaining paintings could be described as follows: (a) An artist's proof of birds in blue and orange (b) A billabong scene (c) A small girl in white disappearing into the distance." The trustee obtained at some stage a valuation of six paintings (as at 8 July 1997). That valuation described the paintings as follows: "I would like you to look at these photos and verify that the painting showing in the background is the painting presently on the wall in the lounge room of my wife's home and that you can identify various furniture in the photos that indicates that the wall is the wall in my wife's lounge room. She said, "Yes, I can recognise the painting in the photographs and I can see from the photos that it was hanging in that location." I accept that the two Canadian paintings were bought by Mrs Fitz-Gibbon and are not in any way assets of Mr Fitz-Gibbon. There seems to be little doubt that on at least four occasions, Mr Hudson accompanied Mr Fitz-Gibbon when paintings were purchased from the Rotary Club annual art exhibition at Lane Cove Town Hall. It seems clear enough that on each occasion Mr Fitz-Gibbon paid for the paintings from his own funds. In response to a question from the bench, Mr Fitz-Gibbon agreed that at no time did he have any conversation with his wife about the ownership of the paintings and at least his evidence would suggest that he did not make any gifts of the paintings to his wife. That would be consistent with the income tax returns which showed the paintings as his assets and not assets of his wife. It is inconsistent that his wife's evidence that the paintings were given to her wrapped up as presents. Mr Fitz-Gibbon carried on practice at home, that is to say, his office was in his home and paintings were from time to time obviously hung in that part of the home which was used as his office. Shortly after Mrs Fitz-Gibbon had learnt of the investigation by the Law Society into her husband's affairs, she called Mr Hudson to the home. At that stage Mr Fitz-Gibbon was away skiing with his sons. Mrs Fitz-Gibbon asked Mr Hudson to take delivery of the paintings and store them at his house. Mr Hudson had a trailer which was available for use in this exercise. Mrs Fitz-Gibbon did so because she was of the view that it was likely that her house would be sold and she would lose everything. Apparently, at that stage, she realised also that the marriage was at an end. She was apparently, and understandably, visibly upset. It is not quite clear from Mr Hudson's evidence how many paintings he took with him. Ultimately, he returned all the paintings to Mrs Fitz-Gibbon. Mr Fitz-Gibbon was questioned about the paintings at the meeting of 17 June. According to both Miss Halpin and Mr Andrew Wily, Mr Fitz-Gibbon admitted having purchased the painting from his own money but said, somewhat inconsistently: "but the paintings were purchased using joint income and were jointly owned by me and my wife under the Family Law Act." Apparently Mr Wily asked how many paintings were purchased; to which Mr Fitz-Gibbon replied: "about eight paintings were purchased. Three or four of them were mine and three or four of them were my wife's. The paintings which were mine were damaged by flooding as the result of heavy rain and have been the subject of previous correspondence. I stored the paintings from my wife at Mr Hudson's about 18 months ago, however I returned them to her before I became a bankrupt." In his affidavit filed in the proceedings Mr Fitz-Gibbon gave an alternative view of the conversation. His version was that he said: "the three or four paintings in my wife's possession are paintings I purchased as birthday and other occasions presents for my wife (sic) and they represent approximately half the original paintings which were in the house and home office and, even if they had not been presents, my wife would have been entitled to half the artworks anyway as a joint owner of the home and its contents" According to Mr Fitz-Gibbon it was Mr Andrew Wily who raised the question of the Family Law Act. Mr Fitz-Gibbon affirmed a version about the paintings in a letter dated 18 June 1997, the day after the 17 June meeting which letter was in the following terms: "Various paintings: I had a number of prints on the wall of the rented premises and one original painting belonging to my wife. She had provided it to me to help 'cheer up a rather dowdy rented premise'. That has now been returned to her and hangs on her lounge room wall. I understand that Mr Hudson has alleged that certain paintings were stored by myself in his property and under his custody in the last few months. This is a total lie; the incident involving storage of paintings is as follows: In September-October of 1995 while I was absent with my son skiing, my wife took it on herself to go through my personal papers and in consultation with Mr Hudson removed from the matrimonial home paintings and other items of value that she claimed exclusive ownership of. The paintings were stored in Mr Hudson's home. When I returned from my skiing trip I was extremely annoyed and demanded their return. My wife refused and, as our marriage was at that point breaking down, I chose not to pursue the issue. The paintings were subsequently delivered by Mr Hudson to my wife and remained in her possession. ... It was arguable that, even though I had given a number of the paintings to my wife as presents that I may have had some interest in them as part of a joint estate, however, as the division of the paintings that my wife claimed were hers and those that could be reasonably regarded as being owned by the 'practice' was approximately equal, I did not pursue the matter." It is clear from Mr Fitz-Gibbon's oral testimony that he neither made present to his wife of the paintings nor in any way agreed to some division of them. As far as his evidence is concerned, it seems fairly clear he regarded the paintings as his but no doubt was content to leave them in the possession of his wife rather than lose them to the trustees. But for the fact that Mrs Fitz-Gibbon, who is not a party to the proceedings, claims to be entitled to the paintings by way of gift, I would have had little difficulty in finding as against Mr Fitz-Gibbon that the paintings were his. There is, however, a real question as to whether it is appropriate where Mrs Fitz-Gibbon claims an interest in the paintings as owner and is not a party that I should make a declaration dealing with ownership or, for that matter, orders that Mr Fitz-Gibbon transfer the assets in question to his trustee. In News Limited v Australian Rugby Football League Limited (1996) 64 FCR 410 at 523ff a Full Court of this Court considered the problem arising where all parties necessary to determine a point in issue were not before the Court. While in Pegang Mining Co Limited v Choong Sam [1969] 2 MLJ 52 at 55-6 in a passage approved by the Full Court, Lord Diplock in delivering the opinion of the Judicial Committee of the Privy Council indicated that it was undesirable to lay down general propositions applicable to all cases, his Lordship expressed as a relevant test the question whether the rights of a person against all liabilities to any party to the action in respect of the subject matter of the action were directly affected by any order which might be made in the action. As the Full Court in the News case said: "An order which directly affects a third person's rights against or liabilities to a party, should not be made unless the person is also joined as a party. If made, the order will be set aside." It is clear as the Full Court in that case indicated that there will be cases where the question of whether a party ought to have been joined because a necessary party can sometimes be difficult. However, their Honours accepted that one such case would be where the orders sought establish or recognise propriety interests, inter alia, in chattels. The present in my view is such a case. In my view, for the ownership of the paintings to be established (and questions of setting aside any gift alleged to have been made under the Bankruptcy Act may also arise) as a matter of practical reality, it is necessary that Mrs Fitz-Gibbon be a party so that all matters in issue can be determined. In my view, for me now to make an order in these proceedings, without Mrs Fitz-Gibbon being joined, would involve the Court directly affecting her rights without her being a party. Accordingly, I do not propose to proceed further in determining the question regarding the paintings but rather to adjourn. I will make directions that Mrs Fitz-Gibbon be joined to the balance of the proceedings involving the paintings to permit that question properly to be decided, on the assumption that the parties still wish to proceed with it.

THE LLADRO FIGURINE According to the letter dated 18 June which Mr Fitz-Gibbon wrote to Armstrong Wily & Co following upon the meeting held the day before, there was only one figurine and it belonged to his wife as a present for her birthday. It was, Mr Fitz-Gibbon said, purchased in Vanuatu in September 1982. In evidence Mr Fitz-Gibbon produced a passport showing that he was indeed in Vanuatu in September 1982 and at the time it was his wife's birthday and their wedding anniversary. Mrs Fitz-Gibbon confirmed that evidence. Although if I were to find otherwise the question whether Mrs Fitz-Gibbon should have been joined would have arisen, since I am of the view that the evidence clearly makes it evident that the figurine belonged to Mrs Fitz-Gibbon there is no reason to do other than dismiss the application to the extent of the figurine. There is however a minor discrepancy. There appear to have been two Lladro figurines not one. In a letter dated 23 April 1996 when the topic of a Lladro figurine was initially raised, Mr Fitz-Gibbon said that he had some six years earlier transferred a Lladro figurine to his mother but way of security for a debt of $1,000. He says that the Lladro figurine was later apparently returned to him but had been broken by a cat some three or four years earlier. The discrepancy appears therefore not to be relevant. In the circumstances, it is my view that the trustee has not established to the requisite standard that Mr Fitz-Gibbon owned a Lladro figurine which, pursuant to the trustee's direction, should be delivered up to the trustee. In the circumstances, I would make the following orders: 1. That the bankrupt, Peter Gerald Fitz-Gibbon comply with the requirement of the applicant that he deliver to the applicant a gold Rolex watch within seven days of the service upon him of a sealed copy of the order in the present proceedings. 2. That there be reserved as a separate question for consideration of the Court the question whether the paintings referred to in the letter dated 17 June 1997 from the applicant to the bankrupt are property of the bankrupt within the meaning of those words in the Bankruptcy Act 1966 and, if so, whether an order should be made pursuant to that Act that there be delivered up to the applicant those paintings. 3. For the purposes of the determination of the separate issue, Mrs Maree Fitz-Gibbon be joined as a party, that the applicant file an amended application accordingly and that the matter then be returnable before the Court for further directions on 1 April 1998 at 9.30 am. 4. That, save and except as herein dealt with, the application of the trustee dated 25 June 1997 be dismissed. 5. That, when the matter is listed before the Court for directions following the service of Mrs Fitz-Gibbon, the parties have leave to file submissions as to the appropriate orders as to costs which should be made. I certify that this and the preceding twenty-eight (28) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Hill

Associate: Dated: 2 March 1998 Counsel for the Applicant: J.K. Chippindall Counsel for the Respondent: M.J. Watts

Solicitor for the Applicant: Michell Sillar Solicitor for the Respondent: in person