Conveyancing Act 1919 (NSW) s. 12

Norman v Federal Commissioner of Taxation [1963] HCA 21; (1963) 109 CLR 9

Strong v Bird (1874) LR 18 Eq. 315

For reasons given orally at the hearing of the application, the decision under review is affirmed.

At the conclusion of the hearing of this application for review, the Tribunal stated orally the terms of the decision intended to be made and the reasons therefor. Those reasons are set out below.

2. By virtue of section 6AC of the Social Security Act 1947 ("the Act"), if a person who is entitled to a social security pension disposes of assets after 1 June 1984 without receiving consideration or adequate consideration in respect of those assets, then those assets are taken into account for the purpose of calculating the pension, notwithstanding the fact that they have lost the assets, unless the hardship provisions of section 6AD of the Act can be applied.

3. In this case, no application has been made under the hardship provisions of the Act and the sole question that I have to decide is whether or not Mr Wolfgang deprived himself of assets after 1 June 1984.

4. Mr Wolfgang was a shareholder in a company called A.W. Wolfgang and Co. Pty Ltd which conducted a dairy farming, cattle and wheat growing property called "Randwick Park" and indeed he still holds a minority shareholding in that company. Mr Wolfgang also had an interest in another property called "Glen Erac", situated about 3 miles west of the Randwick Park property. "Randwick Park" is conducted by Mr Wolfgang's son, Edward Ian Wolfgang, who holds a power of attorney from his father.

5. A.W. Wolfgang & Co. had considerable overdraft problems with "Randwick Park" and Mr Wolfgang decided to sell "Glen Erac" to his nephew Robin Wolfgang and his nephew's wife Sandra. Mr Wolfgang gave instructions concerning the sale to his solicitors, L.H. Halliday, Hook & Co. of Scone, through his son, but never spoke to anybody at Halliday, Hook & Co. at any relevant period prior to the completion of the contract of sale on 12 June 1984.

6. A.W. Wolfgang and Co. Pty Ltd uses as its accountants the firm of Coopers & Lybrand. In March 1984 the applicant spoke on the telephone to Mr P.J. Slee of Coopers & Lybrand and told him that the proceeds of the sale were to be paid to his son, Edward. A contract in writing dated 30 March 1984 appears to have been executed in the form approved by the Law Society of New South Wales and the Real Estate Institute of New South Wales. The Tribunal does not have a complete copy of that contract but only the first page which shows the sale of the property "Glen Erac" for $85,000, a deposit of $9000 being paid to the vendor's solicitor and the balance of $76,000 to be paid on completion.

7. In the documents before the Tribunal there is the solicitor's memorandum to his client setting out the settlement figure, a document dated 20 June 1984. It shows the balance of the sale proceeds due to Mr Wolfgang, after payment of legal costs and other expenses, as $84,906.42 (T25/74). The solicitor's trust ledger regarding the sale shows that on 30 March 1984 the deposit of $9000 was paid into the solicitor's trust account and was not paid out of the solicitor's trust account until 12 June 1984, when apparently it was accounted for to the vendor as part of the full purchase price (T25/73-74)

8. Mr Wolfgang did not execute any declaration of trust, nor did he execute any written assignment of the chose in action, being the balance of the purchase money, not did he execute an assignment of the proceeds of sale in writing in accordance with section 12 of the Conveyancing Act 1919 (NSW) as amended. The Tribunal therefore is faced with a claim that there was a voluntary assignment without consideration made in March 1984, to Mr Wolfgang's son.

9. Some doubt was caused amongst equity practitioners by some readings of the decision of Mr Justice Windeyer in Norman v The Federal Commissioner of Taxation [1963] HCA 21; (1963) 109 CLR 9 However, those doubts were set at rest by the subsequent High Court case of Olsson and Anor v Dyson (1969) 120 CLR 365

10. Notwithstanding the comments in the textbook on equity of Messrs Meagher, Gummow and Lehane ("Equity, Doctrines and Remedies", 2nd ed., 1984), that the comments in Olsson v Dyson are strictly obiter dicta, I consider there is little doubt that the views expressed by the High Court in Olsson v Dyson are authoritative as to the functioning of equitable assignments in New South Wales. Firstly, Mr Justice Windeyer himself makes it clear at page 385 in Olsson's case that his remarks in the earlier case were not intended to suggest that a voluntary assignment could take place in equity without compliance with the statutory procedure. His Honour expresses the view at page 386 that any other interpretation of Norman v The Federal Commissioner of Taxation is mistaken and points out that there is no equity to complete an imperfect gift. In Olsson v Dyson, at page 375, Mr Justice Kitto said:

"There was no valid assignment in equity either, for

property which is assignable at law but is not assigned

in the manner which the law requires for a legal

assignment of it cannot be held in equity to be

assigned unless by reason of some fact or circumstance

which a court of equity regards as binding the legal

owner in conscience to hold the property upon trust for

the assignee."

11. I was troubled at one stage by a consideration of whether or not the principles in the case of Strong v Bird (1874) LR 18 Eq 315, might apply to this case. Those principles were considered by the High Court in the case of Cope v Keene (1968) 118 CLR 1, at page 8. That case concerned the making of an imperfect gift, which was completed by delivery of the property to the donee. But it seems that the doctrine of Strong v Bird is basically confined to the case of an imperfect gift of property to a person who is subsequently appointed as executor under a will and who thereby obtains the property in his capacity as executor, once probate is granted, and equity has treated that as a completion of the gift relating back to the date of the imperfect gift.

12. Even if I were mistaken in thinking that the doctrine of Strong v Bird is not confined to testamentary situations of the type that I have mentioned, the evidence in this case appears to support the fact that there was not an imperfect gift, because Mr Wolfgang says that it was not until after 31 May 1984 that he executed a written authority on the solicitor to account for the proceeds of sale to his son or to the company, whichever it may be. The evidence of the solicitor's trust account documents appears to support that position.

13. It therefore appears to me that I am bound in law to take the view that Mr Wolfgang did not execute a sale or at least did not assign the proceeds of sale to his son until on or about the date of settlement of the contract, namely, 12 June 1984.

14. While it is a matter of some regret that I am brought to this conclusion, it is fortunate that Mr Wolfgang's pension has now been restored to him to a considerable degree, so that the results of the decision are not as disastrous as might otherwise appear. The Tribunal has reached the conclusion that the decision under review should be affirmed.