PT Garuda Indonesia Limited v Grellman

On 16 April 1991 Madgwicks wrote to both Mr Ebner and Mrs Ebner and set out certain details of the proposed sale. They also enclosed a copy of s 121 of the Bankruptcy Act, explained its provisions and asked Mr Ebner and Mrs Ebner to sign an acknowledgment of the letter which Mr Ebner and Mrs Ebner duly did. Mr Ebner said he did not remember receiving advice about s 121 of the Bankruptcy Act and that no advice was given to him in relation to any of the provisions of the Bankruptcy Act in general or s 121 in particular. However Mr Ebner signed a copy of the letter and as the letter contained advice about documents to be signed, which were signed he must have read in the letter order to implement and complete the contract of sale. Mrs Ebner also said that she did not receive any advice from Madgwicks in relation to the Bankruptcy Act. That evidence is quite incorrect having regard to the terms of the letter of 16 April 1991 which she signed. She then said that she did not understand the significance of the reference on page two of the letter (to s 121 of the Bankruptcy Act) which suggests that she was aware at the time of advice having been given about the Bankruptcy Act. She does not say that she did not read the letter. I am satisfied that Mrs Ebner read the letter and was aware of the advice given in relation to s 121 of the Bankruptcy Act. On the same date Madgwicks obtained authorities from each of Mr Ebner and Mrs Ebner which enabled them to act for both parties on the transaction. On 16 April 1991 a contract of sale prepared by Madgwicks was executed by Mr Ebner and Mrs Ebner whereby Mr Ebner sold to Mrs Ebner his one‑half interest in the property for $150,000.00. The instrument of transfer was signed on the same day. The consideration of $150,000.00 provided for in the contract of sale was expressed to be paid in the following manner: "In consideration of the Vendor transferring his interest in the land hereby sold to the Purchaser pursuant to this Contract the Purchaser hereby agrees to accept same in partial settlement of various verbal Loan Agreements made during the period from around March 1990 until April 1991 (inclusive) whereby the Vendor owes to the Purchaser the total sum of $177,158.07. The purchase price payable hereunder shall be deemed to be paid in partial satisfaction (to the extent of the said sum of $150,000.00) of the said Verbal Loan Agreements."

On 27 April 1991 the Bank sold the Gisborne property for $350,000.00 and on 29 April 1991 made demand upon Mr Ebner for the balance outstanding. Subsequently on 6 September 1991 the Bank sent Logenstone a demand for the payment of $1,477,961.75. That amount was never paid and Logenstone was wound up on 17 February 1992. The bankruptcy notice served on Mr Ebner by the Bank did not relate to the amount due under the mortgage and the guarantee contained in it but was rather for the sum of $12,000.00 due in respect of a credit card account. In his statement of affairs dated 3 October 1994 Mr Ebner did not disclose any assets and specified a debt due to the Bank of $12,098.26 in respect of the credit card account but did not disclose any other debts due to the Bank, nor any debts due to Mrs Ebner. The Official Trustee conducted an examination of both Mr Ebner and Mrs Ebner pursuant to s 77C of the Bankruptcy Act on 14 December 1995. In the course of Mrs Ebner's examination the following questions were asked and answered: "Why did your husband transfer the property to you?‑‑‑Mainly to do with the support that I had given him over the years with the Gisborne property, the family and I, in supporting - brochures and finances towards getting this project off the ground. What sort of support, in detail?‑‑‑Monetary support. How much?‑‑‑I think it was about $175,000 in total. Support that you gave him?‑‑‑Yes. My family, not just myself, but also from my family, and Max's family. So $175,000 support was given to the bankrupt by you, your family and Max's family. How much did you give? How much support?‑‑‑I think in total we worked it out, with the bills that I paid, 150‑odd or 55 or 65. I can't remember. I mean, this is - - - What sort of bills did you pay?‑‑‑Stationery and brochures and reports and rent - rates, I mean, on the properties, both properties. Was this in favour of Loganstein (sic) Corporation or in favour of your husband?‑‑‑No, no, the property. Do you have any evidence of paying those moneys?‑‑‑Well, what evidence do you have, except maybe the receipts or something. Yes, I mean, I'm asking. I mean, you were asked to bring the receipts. They form part of the documents. Do you have any receipts?‑‑‑I don't have any books or anything. That's what I was asked to do - - - You don't have anything to support it?‑‑‑No. How about the money that you say the bankrupt's family provided, is there any evidence of that money being - - -?‑‑‑It's a family thing. We are a family and we're a European family. We stick together when it comes to someone getting into trouble. How about your parents providing money, is there any evidence of that?‑‑‑Well, apart from their having given it to me, from their bank to my bank. That's the only --- ... Why did you suddenly transfer the property at this point in time in April 1991 and not earlier when clearly, what you're saying to me is your husband still owed you money earlier?‑‑‑Only more to do with the fact that it was pretty obvious that the Gisborne property wasn't going to be developed and to right the situation, to sort out the situation that I - - - So you knew there were going to be problems with the Gisborne property at the time?‑‑‑No, just that the property wasn't going to be developed, it looked like. It wasn't going to be developed into a resort which was something that was hopefully going to happen but didn't. So you knew that the prospects on the Gisborne property weren't good. They weren't going to be developed?‑‑‑They weren't going to be developed then, at the time. So after that came to fruition, your husband and you decided to put this contract of sale into place?‑‑‑We just decided to sort the situation out in case I died."

In the course of Mr Ebner's examination the following questions were asked and answered: "In about April 1991 it appears that you transferred your half interest in the property to your wife?‑‑‑Yes. Can you tell us about that transfer?‑‑‑Well, as I say, my wife had put a lot of money into the Gisborne property, which I owe her. She also - - - Sorry, what sort of money did she put in?‑‑‑You know, I mean, architect's fees, accountant's fees, printing fees. There's a lot of money involved in doing these things. How much?‑‑‑Well, I don't know offhand but a substantial amount of money. Not only that, afterwards, after the bank withheld funds from Loganstein (sic) Corporation, my wife supported me and, you know, paid certain bills and we - you know, I mean, it reached a point where the bank had sold the development property. Obviously there was no prospect of me being able to repay her from the proceeds of that. The company had gone down the drain so it was reckoning time and I decided that the best way to partially repay my wife's debt is to transfer my interest in the property over to her. ... Why did you did you decide to transfer the property in April 1991 and not earlier or after?‑‑‑Because by that stage of the game, the bank was either in the process of selling up the Gisborne property or had sold the Gisborne property - I'm not quite sure now - and at that point, I realised, as I said earlier, that, you know, there was no other way that I could repay my wife, so at that stage it became pretty clear that I had to clear the slate and I, you know, transferred that - - - So you knew the bank was after you, so to speak?‑‑‑Well, I wouldn't put it in those terms. I mean, the bank made certain allegations that I gave them - that I guaranteed this loan. I vehemently denied it, as I still do today, and I was quite happy to see them in court about it. ... In April 1991 was your wife aware of the dispute you were having with the ANZ Bank?‑‑‑Of course."

When Mr Ebner and Mrs Ebner were summoned to attend the s 77C examinations in December 1995 they were asked to produce, inter alia, any documentation relating to the debts claimed to be due by Mr Ebner to Mrs Ebner. No such documents were produced at the examination although in the course of Mrs Ebner's examination she undertook to produce such documents subsequently. She never did, and the first time any documentation started to come to light was after the hearing of the current proceeding had commenced. The Official Trustee challenged the consideration expressed in the contract of sale and submitted that the transfer of the property was not made for valuable consideration or in good faith and was made with intent to defraud Mr Ebner's creditors. Mrs Ebner said that she paid over a period of time amounts for and on behalf of her husband thereby creating debts due by him to her in respect of the amounts unpaid. The debts are said to arise as a result of verbal loan agreements entered into between Mr Ebner and Mrs Ebner but there is no evidence of any such verbal agreements. Relevant legal principles The Official Trustee seeks relief under ss 120 and 121 of the Bankruptcy Act in the form in which those sections existed prior to the amendments to the Bankruptcy Act which came into operation in October 1996. In their unamended form ss 120 and 121 relevantly provided: "120 (1) A settlement of property, whether made before or after the commencement of this Act not being: (a) a settlement made before and in consideration of marriage, or made in favour of a purchaser or encumbrancer in good faith and for valuable consideration; or (b) ... is, if the settlor becomes a bankrupt and the settlement came into operation after, or within 2 years before, the commencement of the bankruptcy, void as against the trustee in the bankruptcy. ... 121 (1) Subject to this section, a disposition of property, whether made before or after the commencement of this Act, with intent to defraud creditors, not being a disposition for valuable consideration in favour of a person who acted in good faith, is, if the person making the disposition subsequently becomes a bankrupt, void as against the trustee in the bankruptcy. (2) Nothing in this section shall be taken to affect or prejudice the title or interest of a person who has, in good faith and for valuable consideration, purchased or acquired the property the subject of the disposition or any interest in that property.

In Barton v Official Receiver (1986) 161 CLR 75, 85 the High Court saw the purpose of the bankruptcy legislation as being: "... to prevent properties from being put into the hands of relatives to the disadvantage of creditors". The relevant legal principles can be summarised under the following headings. Burden of proof The burden of proof lies upon the applicant to establish the necessary factors required to be established by ss 120 and 121: Re Trautwein; Richardson v Trautwein (1944) 14 ABC 61, 75 ‑ 76 affirmed on appeal to High Court: Trautwein v Richardson (1946) ArgLR 129; Official Receiver v Marchiori (1983) 69 FLR 290, 297; Re Barton; Ex parte Official Receiver v Barton (1983) 52 ALR 95, 105 affirmed on appeal: Barton v Official Receiver (supra) 75; In Re Windle; Ex parte Trustee [1975] 1 WLR 1628, 1632; PT Garuda Indonesia Limited v Grellman (1992) 35 FCR 515, 526; Official Trustee in Bankruptcy v Mitchell (1992) 38 FCR 364, 369 ‑ 370. However it has been suggested that where all the facts concerning the transaction are within the knowledge of the parties to it and not within the knowledge of the creditors, although the burden lies upon the party seeking to impugn the transaction, "a very slight degree of proof should be sufficient to shift that burden": Michael v Thompson (1894) 20 VLR 548, 552; Official Receiver v Marchiori (supra) 297. I am prepared to adopt this suggestion, recognising that the ultimate burden nevertheless remains on the applicant. Good faith In the context of s 120(1)(a) and s 121 the "good faith" in issue is that of the transferee and such good faith will be negatived by the existence of knowledge or a suspicion of an inability by the transferor to pay his or her debts as they fall due : Re: Barton; Ex parte Official Receiver v Barton (supra) 115. In PT Garuda Indonesia Limited v Grellman (supra) at 528, the Full Court of the Federal Court (Wilcox, Gummow and von Doussa JJ) held that the correct question was whether the transferee "had been privy or a party to" the fraud of the transferor. In Wansley v Edwards (1996) 68 FCR 555, the Full Court of the Federal Court (Olney, Whitlam and Sundberg JJ) analysed a number of authorities which had considered the content of "good faith" in the context of s 120 and set out the following test, at 564: "A disponee will not act in good faith for the purposes of s 120 if he knows or suspects that the effect of the disposition will be to disadvantage creditors. It is not a requirement of lack of good faith in that section that the disponee be aware of any intention on the part of the disponer to disadvantage his creditors." (Cf Official Trustee in Bankruptcy v Mitchell (supra) 371 ‑ 372). Valuable consideration Fully adequate consideration is not required in order for valuable consideration to exist. The consideration need not be equal to the value of the property relevant. A purchaser gives valuable consideration when the consideration given has a real and substantial value and is not merely nominal, trivial or colourable: Barton v Official Receiver (supra) 86; Official Trustee in Bankruptcy v Mitchell (supra) 369 ‑ 370. Intent to Defraud It is Mr Ebner's intention which is relevant for the purposes of s 121 and the intention covers existing, future or anticipated creditors: Barton v The Deputy Commissioner of Taxation of the Commonwealth of Australia (1974) 131 CLR 370, 374. In Cannane (DM) v J Cannane Pty Ltd (In Liq) (1998) 153 ALR 163, Brennan CJ and McHugh J said at 168 ‑ 169: "Section 121 is not enlivened merely by showing that the disposition has reduced the assets available to the creditors when the disponor is adjudicated bankrupt. It is the disponor's intent to deprive creditors of assets against which (or against the proceeds of which) they would otherwise be entitled to prove their debts that enlivens the operation of s 121. As Dixon CJ said in Hardie v Hanson: The phrase 'intent to defraud creditors of the company' suggests that present or future creditors of the company will, if the intent is effectuated, be cheated of their rights." At 172 Gaudron J said: "It is to be remembered that the operation of s 121(1) depends on the intent of the bankrupt or, where it is applied in a company winding up, the intent of the company concerned. What is in issue in each case is, as Dixon J said in Williams v Lloyd; Re Williams, a 'real intent'. And as Starke J observed in the same case, '[f]raud ... is not to be presumed'. That is not to deny that it may take very little to justify a finding of fraud or intent to defraud for the purposes of s 121(1) of the Act if the person or company concerned disposes of assets when facing financial difficulties. Even so, the real intent must be ascertained."

What was the value of the property on the date of the contract of sale? The value of the property on 16 April 1991 was in issue. The Official Trustee said the value was substantially more than $300,000.00. Mr Williams who wrote the letter of 5 April 1991 passed away prior to the hearing. Mr David Cassidy a licensed estate agent (but not a registered valuer) from John Crowder & Sons Pty Ltd with twelve years experience was called by the Official Trustee. Mr Cassidy said that Mr Williams' valuation of $300,000.00 in April 1991 was very much on the low side and was not a realistic value of the property. In fact Mr Williams had not valued the property at $300,000.00 but had said that "the property should conservatively realise approximately $300,000.00". In September 1995 Mr Cassidy had, at the request of the Official Trustee, estimated the value of the property at that time to be between $340,000.00 to $380,000.00 and had estimated its value in April 1991 to be between $450,000.00 and $500,000.00. He believed the value of properties in the general location of the property had dropped approximately 30% since April 1991. Mr Cassidy had not inspected the property personally and was unable to conduct a kerbside valuation but relied on his knowledge of the area with which he was familiar. In the course of preparing his estimate value of the property for the Official Trustee Mr Cassidy was contacted by another valuer, Mr Garry Coates, who discussed the value of the property with him and they compared notes as to comparable sales. It was after this discussion that he formed his opinion as to the value of the property at the relevant dates. In the face of credible expert evidence to the contrary I would not be able to accept Mr Cassidy's evidence. However, the Official Trustee called Mr Coates. He has been a registered valuer since 1973 and had inspected the property in November 1994 at the request of Mr Ebner for the purpose of giving an opinion which Mr Ebner might wish to use for a rate appeal in respect of a 1990 valuation being heard before the Administrative Appeals Tribunal. In the events which occurred, Mr Coates was not retained for that purpose and did not give evidence at that appeal. He said that he had investigated market conditions in relation to the 1990 period which was the date relevant for the rate valuation. He had been shown Mr Williams' letter of 5 April 1991 and said that Mr Williams' figure seemed "very low" and he said that he had told Mr Ebner at the time that the value of the property in 1990 was a minimum site value of $325,000.00, a minimum total value of $375,000.00 which was at the low end of the range and that the property was worth at least $400,000.00 in June 1990. At that time he had not expressed an opinion as to the value of the property in April 1991. When he was asked to do so in evidence he said that in April 1991 values were weakening and that the value of the property would have been a little bit less but not much less than the value he placed on the property in 1990. In summary he was of the opinion that in April 1991 the property was worth at least $400,000.00 which was mainly land value. In the course of cross‑examination he was not seriously challenged on this evidence and said that for the purpose of looking at and estimating the 1990 value, which exercise he had undertaken in November 1994, he had looked at comparable sales (forty in all) between 1988 and 1993. He had done this because there was a lack of sales evidence at the relevant time. He made it clear that in the course of this exercise he had looked at comparable sales in and around April 1991. The Official Trustee also tendered in evidence the determination by the Land Valuation Board of Review of Mr Ebner's appeal in respect of the council's valuation of the property as at 30 June 1990. The conclusion of the Board was that as at 30 June 1990 the site value of the property was $340,000.00 and the improved value was $405,000.00. The respondent called valuation evidence from Mr Ronald Courtney an estate agent and qualified valuer of considerable experience. He put a value on the property at April 1991 of between $320,000.00 and $330,000.00. He regarded Mr Williams' valuation of 5 April 1991 as correct and said that whilst it was towards the end of the lower range of the valuation of the property it was supportable on the valuation evidence available. He considered Mr Cassidy's estimate of $450,000.00 to $500,000.00 insupportable from information available and comparable sales in the area in 1991. He considered the drop in value of property values from 1991 to 1995 to be of the order of 7% and not 30% which was insupportable by relevant statistics. In cross‑examination he said the drop was a maximum of 10% and then amended that figure to 10% to 13%. He had first been asked to value the property in early May 1997 shortly before the hearing commenced and had visited the property on 9 May 1997 but had not been inside the house. He produced a list of comparable sales which he had extracted from a larger list. It was apparent that a number of the comparable sales produced were hardly comparable in the sense that they varied in their relationship to the subject property either as to the size of the property or as to the nature of it. The list of comparable sales which Mr Courtney produced as being most comparable did not include certain properties which appeared to have a closer approximate relationship which had been referred to in his larger list and by the Land Valuation Board of Review. Mr Courtney did not agree with the finding of the Land Valuation Board of Review which had assessed the value of the property at $405,000.00 in June 1990. He contended that the market had been in free fall from June 1990 although the market had not fallen as dramatically in Mount Eliza as in other areas. I am not satisfied that the comparable sales upon which Mr Courtney relied to reach his valuation support the figure to which he referred which was in clear conflict with the view expressed by Mr Coates. He relied upon the property at 65 Glen Shian Road which was less than 25 per cent of the land size of the subject property. Mr Courtney said that above 3000 square metre size does not matter in terms of valuation but it does not appear that Mr Courtney took into account the substantial difference between the size of 65 Glen Shian Road (1325 square metres) and the size of the subject property (5900 square metres). He said that he did not take into account the properties which had been referred to as comparable sales by the Land Valuation Board of Review apart from 65 Glen Shian Road and when asked why he said that there was no reason. I am satisfied on the evidence before me that the valuation of Mr Coates is more reliable and to be preferred to the valuation of Mr Courtney and I am strengthened in that conclusion by the decision of the Land Valuation Board of Review which, although fixing a value of $405,000.00 in June 1990 gives more support to Mr Coates' valuation in April 1991. Accordingly I am satisfied that in April 1991 $300,000.00 did not represent the fair market value of the property, its fair market value at that time being of the order of no less than $400,000.00. Who was the developer of the Gisborne property? There is also an issue as to who was the developer of the Gisborne property. The land was owned by Mr Ebner and he and Mrs Ebner maintained that he was the developer of the Macedon River Country Club. Mr Ebner gave the Bank a brochure showing Logenstone rather than Mr Ebner as the developer of the Gisborne property. If Logenstone was the developer then the payments made by Mrs Ebner in respect of the Gisborne property were not made for or on behalf of Mr Ebner. Mrs Ebner's explanation for Logenstone's name on the brochure: "... it was never intended to be a developer ... something was put on the brochure", does not lie easily with her evidence that Logenstone was a shelf company procured by the Ebners' solicitors when they started doing a possible development of the Gisborne property but in the end it turned out to be a package to put together to sell. Mr Ebner said that it did not eventuate that Logenstone was the developer although the intention was that Logenstone could possibly be the manager or developer of the project in the future. No documentation was produced to show that the developer was Mr Ebner or anyone other than Logenstone and on the evidence I am satisfied that Logenstone was presented as the developer, and was the developer, of the Gisborne property. Did the respondent lend her husband money, and if so, for what purpose? In order for Mrs Ebner to establish that she gave valuable consideration for the transfer of the property she must establish that the "various verbal loan agreements" made between March 1990 and April 1991 referred to in the contract of sale were made and that $177,158.07 (or at least no less than $150,000.00) was advanced or paid for or on behalf of Mr Ebner by Mrs Ebner pursuant to those verbal loan agreements. No evidence was led by either Mr Ebner or Mrs Ebner as to the making of any such verbal loan agreements. Nor was any evidence led by them as to the existence of any conversation or conversations from which I could infer the existence of any such loan agreements. The evidence they led only discloses that from time to time purchases were made by use of the Visa credit card, signed for by Mrs Ebner and that she paid amounts due on the Visa credit card statements. The only evidence which might conceivably have touched upon the proposition that Mr Ebner and Mrs Ebner entered into a verbal loan agreement in and between March 1990 and April 1991 was in the course of the following cross‑examination of Mrs Ebner: "Right, what led up to a decision to transfer the property?‑‑‑It's mainly resulted around the Gisborne property which was a development property which we were marketing and attempting to sell, was being sold by the bank. So therefore, the discussion came that I would be reimbursed by the sale of the property eventually. When that looked like not happening, the effect of a transfer was made. So, I would get a partial repayment. Who was that discussion with?‑‑‑With my husband. When did that take place?‑‑‑When did that take place? When?‑‑‑From - we started marketing - serious marketing ourselves personally, still leaving it in the hands of Colliers and Baillieu Frank Knight and Ellis and A.C. Goode from about March '90 on wards. We marketed for nearly a year ourselves, and then when the bank decided to sell the property that is when partial repayment of loans were effected." However, having regard to my finding (to which I refer later) that Mrs Ebner's evidence was generally unreliable and inconsistent I do not accept that any such discussion took place. Mr Ebner did not give evidence about any such discussion. Even if such discussion occurred, the passage to which I have referred suggests that the discussion related only to money paid for in respect of the Gisborne property and not to money paid for or on behalf of Mr Ebner generally. Having regard to my finding that Logenstone was the developer of the Gisborne property any such money paid would not have resulted in a debt due by Mr Ebner but rather a debt due by Logenstone. As Counsel for Mrs Ebner acknowledged, there was no direct evidence of any such verbal loan agreements but he submitted that the parties' conduct corroborated verbal loan agreements. There is nothing in the parties' conduct which corroborates, supports or leads to the inference that there was a loan agreement between Mrs Ebner and Mr Ebner, verbal or otherwise. No specific conduct was so identified. All that occurred was that Mrs Ebner used the Visa credit card to pay some expenses and make some purchases and she paid amounts due on the account. However, I am not prepared to infer that there was any such loan agreement or a number of loan agreements. There is nothing in relation to the nature of the purchases or the circumstances surrounding the use of the Visa credit card account which, in my opinion, gives rise to an inference that there was a verbal loan agreement. The parties were husband and wife and many of the purchases on the Visa credit card account were personal purchases. Although it was said that substantial and expensive gifts were given to overseas potential clients or purchasers of the Macedon River Country Club venture, the evidence suggests that those gifts come from Mr Ebner and Mrs Ebner rather than just Mr Ebner alone. At the time the debts were incurred on the Visa credit card account and the payments were made by Mrs Ebner to discharge the account liability Mr Ebner and Mrs Ebner were living together in a marital relationship. There was no suggestion that they were estranged in any way. In such circumstances, having regard to the nature of the purchases made by the use of the Visa credit card, I do not consider that I should infer that Mr Ebner and Mrs Ebner intended a relationship of debtor and creditor to be created or to arise as a result of the purchases and payments: Merritt v Merritt [1970] 1 WLR 1211, 1213, 1214; Riches v Hogben [1986] 1 Qd R 315, 316; Woodward v Johnston [1992] 2 Qd R 214, 225. Even if there was a basis for inferring that there was an agreement between Mr Ebner and Mrs Ebner that he would pay her the amounts she paid for him or on his behalf, it is still necessary to identify which payments were the subject of the claimed verbal loan agreements because Mrs Ebner's case is that she paid or discharged Mr Ebner's personal debts. The evidence of Mrs Ebner and Mr Ebner in this respect was inconsistent and quite unsatisfactory and, for the reasons to which I shall refer, I am unable to place any reliance on their evidence in relation to the nature or purpose of the purchases by use of the Visa credit card and the payments made by Mrs Ebner. I am not satisfied that Mrs Ebner paid personal debts of Mr Ebner on the credit card account or otherwise to the extent of $177,158.07 or $150,000.00. Mr Ebner and Mrs Ebner's versions of the purpose of the payments changed quite significantly. Their initial position was that all the payments were made in respect of the Gisborne property. This was the position they had taken in their s 77C examinations on 14 December 1995. Mr Ebner and Mrs Ebner said in evidence that at the time they attended their s 77C examinations they did not appreciate they were going to be asked the questions they were in fact asked, they were not prepared and the answers they gave were not correct. However, when one looks at the events leading up to the examinations it is apparent that they were well aware they were going to be questioned about Logenstone's transactions and Mr Ebner's debts and were given the opportunity to be fully prepared. This is seen, for example, from correspondence to and from the solicitors Slater & Gordon and from Mr Ebner and Mrs Ebner's failure to respond to, or do anything in respect of, the advice given to them that they could have legal representation at the examinations if they wished to do so. I am satisfied that the answers they gave at the s 77C examinations can be relied upon as representing Mr Ebner and Mrs Ebner's considered responses to the questions put to them. The position taken in the examinations that the payments made by Mrs Ebner were made in respect of the Gisborne property was maintained by Mr Ebner and Mrs Ebner in their affidavits filed before the hearing commenced. In his affidavit Mr Ebner said that after the Bank served a notice to pay on him: "At that time [May 1990] I was concerned that I had borrowed a considerable sum from my wife to pay for various expenses associated with the Gisborne property and venture. As I could not repay her, I decided that an appropriate partial repayment would be to transfer my half interest in the property. ... The transfer was conducted with a view to discharging my obligation to my wife for the moneys owed from time to time as a result of loans my wife made to me during the course of the Mt Macedon Country Club venture for costs associated with that venture". In cross‑examination Mr Ebner said that this statement was only partially correct as there were costs incurred in respect of which loans were made which related to other matters. In her first affidavit Mrs Ebner said that the transfer of her husband's half interest in the property was effected to discharge his obligation to her in respect of loans she had made to him "during the course of the Macedon River Country Club venture for costs associated with that venture" which totalled $177,158.07. On the second day of the hearing I granted leave to Mrs Ebner to file a further affidavit in which she claimed to produce evidence of payments made by her for and on behalf of Mr Ebner. She said that between March 1990 and April 1991 she had been paying all accounts associated with the Gisborne property as well as other expenses incurred by Mr Ebner. In this affidavit she purported to identify the source of funds which were used and the manner in which they had been used to pay debts for and on behalf of Mr Ebner. The passage of the funds is not easy to identify. Mrs Ebner said that in April 1991 she calculated her Visa account purchases "which were incurred on my account but on behalf of my husband" to total $130,690.07 and that she made payments in satisfaction of these accounts. However, not all of those purchases have been identified. Mrs Ebner said that the source of her funding of the $177,158.07 was substantial investment accounts which she held. However it is in respect of an amount of $284,598.95 said by Mrs Ebner to be her money that the evidence is obscure, uninformative and less than probative. Mrs Ebner said that in April 1987 she "cashed" her Myer's Superannuation Fund benefit of $130,000.00 which she then invested. Superannuation payments are not ordinarily available as cash unless the person entitled to the superannuation payments has reached the relevant retiring age or an event has occurred which entitles the person to receive the superannuation payment. It was not suggested that either event had occurred. The Bank has produced roll‑over payment notification of statement of termination payment forms which show that in April 1987 amounts of $4,119.00 and $20,892.69 received by Mrs Ebner from the Myer Staff & Executive Superannuation Funds were rolled over into ANZ approved deposit funds. The Bank has also produced a statement of termination payment by Myer Stores verifying these payments. One of those statements shows an eligible termination payment of $88,659.86 but it is not clear what happened to the balance of that account which was not rolled‑over. Mrs Ebner said she invested the $130,000.00 she received from the Myer Superannuation Fund but she does not say how or where she invested that sum. Nor is it clear how the $130,000.00 was made up. She said that in October 1987 she closed an ANZ V2 investment account and withdrew $46,638.90 which also went into one of her investment accounts. The destination of that amount is not shown. She said that on 5 January 1990 she closed two Pyramid Building Society accounts, one for $25,952.85 and the other for $55,507.20 which she cashed, putting the proceeds in cash into her safe at home. She said that on 16 January 1991 she closed her ANZ Bank approved deposit fund and withdrew $26,500.00. The Bank has produced a letter to Mrs Ebner dated 13 January 1991 which notes that in accordance with her request $27,216.89 had been redeemed. Mrs Ebner said that this amount was obtained in cash and put into her safe at home. Mrs Ebner said in her second affidavit that the total of the amounts withdrawn and placed into the investment accounts was $284,598.95 but the investment accounts were not identified. In cross‑examination she said she was not saying that she had $284,598 at one time. She said that as at April 1991 she maintained two National Australia Bank cash management accounts. One account was opened on 26 October 1990 and deposits totalling of the order of $148,000.00 were deposited into that account between 29 October 1990 and 26 February 1991. The source of those receipts is not identified. More importantly Mrs Ebner said that "[a]s at that time we also had a safe at home. From time to time we held large sums of money in the safe". The source of the money held in the safe is said by Mrs Ebner to come from a number of terminated accounts and she said there could have been sometimes $120,000.00 in cash in the safe, her explanation being "I just like cash". She said that it was a very shaky period, Pyramid Building Society had a run and there were serious concerns about other banks. Mrs Ebner then identifies the source of various payments in respect of the Visa credit card accounts totalling $109,729.82. She said approximately $50,000.00 of these amounts came from the safe, the balance coming from the National Australia Bank cash management accounts. I am not satisfied that the funds used to pay the Visa credit card accounts came solely from Mrs Ebner's funds. Mrs Ebner also said in her second affidavit that although she had said in an earlier affidavit that the payments of $177,158.07 made were in respect of the Gisborne property, the development of which I have found was carried on by Logenstone, she now said that many of the payments were not so made. To the extent to which payments were made in respect of the Gisborne property it follows from my finding that Logenstone was the developer of the Gisborne property that the payments were made for and on behalf of Logenstone and not Mr Ebner. Mrs Ebner said when she looked at the documents she produced in her second affidavit. it became apparent that many of the payments were not made in respect of the Gisborne property. That may be so, but it does not follow from those documents that the accounts paid were in respect of, or for on behalf of, Mr Ebner or in discharge of his debts. It is apparent from a number of the accounts in respect of which amounts were paid on the Visa credit card that the accounts related to purchases or expenses by or for Mrs Ebner rather than her husband. Some Visa accounts have been produced but a number of the purchases on their face do not appear to be incurred for or on behalf of Mr Ebner. For example, there is reference to a hair salon and a purchase of a number of antiques or items of furniture costing some thousands of dollars. None of these items of furniture appeared in Mr Ebner's statement of affairs. It was said that a number of these antiques were purchased as gifts for clients. A number of the accounts relate to dental services and documents produced disclose that the dental services were rendered to Mrs Ebner. A number of the accounts also relate to stores and shops from which items were purchased which would not appear to be items purchased for Mr Ebner. There are, for example, purchases of jewellery, artefacts and children's clothing. There was a reference to a number of purchases from Clementine shoes. Mr Ebner said that he purchased shoes for his mother for her birthday which Mrs Ebner said was in December but there were other purchases from Clementines at other points of time. Mr Ebner said that one of his purchases was for his sister but it still left unresolved other purchases. Mrs Ebner acknowledged that a number of the expenses on the Visa credit card statement related to jewellery and dental work for herself. I am not satisfied that the purchases on the Visa credit card account were purchases for or on behalf of Mr Ebner alone. Indeed Mrs Ebner and Mr Ebner said that some of the expenses related to Logenstone and it is apparent that a number of the overseas charges including gifts were incurred for the purposes of marketing the Macedon River Country Club. Support for this conclusion is gathered from the letter of 1 February 1990 which made it clear that the expenses paid for by it were expenses of Logenstone. Mrs Ebner said that the Visa credit card account was not a company account but rather a private account and had nothing to do with Logenstone but this is to the contrary of the terms of the letter of 1 February 1990 which I accept as recording and reflecting the true position and status of the Visa credit card account. When confronted with the letter Mrs Ebner could only say that she did not know what the letter referred to and that she was confused. In cross‑examination Mr Ebner retreated from the position he had put to the Bank in the letter that all the expenses incurred in respect of the use of the Visa credit card were company expenses. He said that some were incurred by him personally, some were incurred by Mrs Ebner and some were incurred in respect of the Gisborne property. Mr Ebner acknowledged that the letter came about because the Bank had restricted the accommodation given to Logenstone and he wanted to make it clear that the expenses incurred on the card were in respect of the company and should be met by the Bank. Mr Ebner went further on the second day of his cross‑examination and sought to explain the letter by saying the credit card was used for Logenstone company business up to February/March 1990 and thereafter it was a private account. I do not accept that evidence as a truthful account and reject it. It was given as an after‑thought and is quite inconsistent with the terms of the letter of 1 February 1990 and his earlier evidence. I am satisfied that the Visa credit card account was used, and was intended to be used, for the purpose of incurring debts, and making purchases, for or on behalf of Logenstone and in respect of which Logenstone would be liable for payment. The fact that personal expenses and personal purchases were discharged and made by use of the Visa credit card account only meant that the beneficiaries of those payments may have become indebted to Logenstone in respect of the amounts paid. Mr Ebner and Mrs Ebner's change of evidence as to the purpose of the payments made by the use of the Visa credit card is such as to render their evidence unreliable and not such as I can accept. Although Mrs Ebner said that she realised that many payments were not made in respect of the Gisborne property when she looked at the documents she produced in her second affidavit, in her first affidavit she said she had conducted an analysis of the loan account between her husband and herself when she prepared the initial list for Madgwicks on 15 April 1991 in respect of the amount of $177,158.07. Mrs Ebner acknowledged that she had instructed her solicitors that most of the costs totalling $130,690.07, and the purchases for which they were incurred, were associated with the Gisborne property. Her explanation for her change of evidence is not credible. The only documents which she could have had available to her around April 1991 were the Visa credit card statements and the solicitors' accounts from which it must have been apparent that numerous expenses incurred by the use of the Visa credit card were not expenses in respect of the Gisborne property. Yet Mr Ebner and Mrs Ebner were prepared to swear to that effect on 14 December 1995 at their s 77C examinations and in their affidavits, namely that all the expenses incurred in respect of the Visa credit card account were incurred for or in respect of the Gisborne property. Although Mrs Ebner denied making a number of the purchases shown on the credit card statements which were shown to her, for example in relation to the purchase of dresses and Chinese arts and crafts, the credit card imprints showed that the purchases were made by the use of the Visa card bearing her name. Mrs Ebner said that the fact that the credit card bearing her name was used did not mean that she made the purchases but I reject that explanation. I am satisfied that numerous purchases made by the use of the credit card bearing Mrs Ebner's name were made for her and on her behalf. I include in this category purchases for clothes, Chinese arts and crafts, dental services, jewellery and antiques. (In this respect I note that in his statement of affairs Mr Ebner did not disclose any items of antiques, furniture or arts and crafts). Mrs Ebner also offered the alternative explanation that from time to time she would be signing for something Mr Ebner was buying and for which he was liable to pay. However I am satisfied this was an explanation of convenience when a purchase was put to her which, by its description, was not overtly a purchase for a male. I reject it as a truthful explanation. The credit card statements showed purchases of antiques but Mrs Ebner denied that they were purchases for herself and she said that Mr Ebner did not own them. The explanation for these purchases offered by Mrs Ebner was that gifts were purchased for overseas clients or for persons who made introductions to overseas clients whose interest was sought in relation to the Gisborne property. I reject this explanation as another explanation of convenience. In any event if such purchases were made they were made on behalf of both Mrs Ebner and Mr Ebner and I am satisfied that on that basis they did not give rise to a debt due from Mr Ebner to Mrs Ebner to the extent of the purchase price. For example Mrs Ebner said the purchase of a sterling silver tea set was made for a person who "is a good friend of mine". Mrs Ebner said she purchased this article as a gift. She did not say Mr Ebner purchased it. Although Mr Ebner produced in re‑examination a list of items on the credit card statements which he said were expenses or costs incurred by him, I am not satisfied that the items of jewellery and furniture were purchases on his account alone but rather were purchases for and on behalf of Mrs Ebner and himself. To the extent to which items said to be gifts were purchased by use of the Visa credit card account I am satisfied that the gifts were either purchased by Mr Ebner and Mrs Ebner together or were purchased for their joint use or were purchased in circumstances where there was no intention to create a debt from Mr Ebner in favour of Mrs Ebner or to create any obligation in Mr Ebner to repay the purchase price to Mrs Ebner. There are obvious inconsistencies in Mrs Ebner's various versions of what she said she paid for Mr Ebner. At her s 77C examination on 14 December 1995 she ventured a figure of $175,000.00 and said she had no supporting documentation. That was an incorrect statement because she was able to produce documents, albeit very belatedly at the hearing. Further the $175,000.00 was said to have been contributed not only by her but also by her family and Mr Ebner's family. In cross‑examination she repeated that the $175,000.00 had been contributed to by a few people but said the $177,000.00 she had supplied to Madgwicks in April 1991 was supplied by her alone and was only part of the contribution to Mr Ebner. Mrs Ebner was unable in cross‑examination to identify how much was contributed by the families. Mrs Ebner was specifically asked whether the answers she gave about the families' contributions at the s 77C examination were correct and she could only say: "I don't quite recall why I said what I said there. But the total amount that was reconciled in order to make the transfer was 177,500. Why I said what I said then, I can't quite remember. It was a very, very confusing period. That meeting was very, very nerve-wracking." If Mrs Ebner was telling the truth at that examination her later reconciliations in her affidavits do not accurately record the correct amounts paid by her alone. In any event her various versions are inconsistent and her evidence is unreliable. Legal fees and other costs and expenses The claimed expenditure for legal fees given to Madgwicks on 15 April 1991 was $32,850.00. In her second affidavit Mrs Ebner could only produce accounts totalling $25,000.00. These included $23,000.00 claimed to be incurred for legal fees to Holding Redlich. It was put to Mr Ebner that the amount of legal fees of $23,000.00 said to have been incurred by him and paid by Mrs Ebner to Holding Redlich were not in fact legal fees but rather an amount paid in respect of the settlement of legal proceedings. Mr Ebner was unable to say and did not know what legal costs were paid to Holding Redlich. On the evidence before me it appears that most, if not all of that sum, was paid, not for legal fees but rather in satisfaction of a settlement amount in respect of various actions brought by solicitors Hardham Dalton & Sundberg against Mr Ebner and Mrs Ebner and Logenstone. A total of $44,687.85 was claimed by that firm in respect of which only $5,367.00 represented a debt claimed to be due from Mr Ebner. My conclusion is that the $23,000.00 was not paid in respect of any debt of Mr Ebner save perhaps for the amount of some $5,000.00. The figure for other costs and expenses of Mr Ebner said to have been paid by Mrs Ebner given to Madgwicks on 15 April 1991 was $13,618.00. In her second affidavit Mrs Ebner recalculated that amount as $11,743.00 "from an inspection of my husband's miscellaneous accounts". No such accounts addressed to Mr Ebner were produced other than a letter from the Shire of Gisborne referring to a cheque for $210.00 which was not paid on presentment. Although Mrs Ebner produced bank statements which she said proved payments included in the $11,743.00 I am not prepared to accept that payments were made for Mr Ebner in the absence of accounts directed to him for the relevant amounts. Mrs Ebner said that in April 1991 she prepared a reconciliation of payments made as at April 1991 but no such reconciliation was produced. I am not satisfied that Mrs Ebner paid $11,743.00 for Mr Ebner in discharge of his debts of that amount. Credibility of witnesses I found both Mrs Ebner and Mr Ebner to be unsatisfactory and unreliable witnesses. Mrs Ebner on many occasions was unable to recall matters in respect of which I would have expected her to have some recall. Both witnesses changed their evidence in material respects. I have covered a number of these matters in these reasons and I refer to some of them by way of example. In their primary affidavits both Mrs Ebner and Mr Ebner said that what were said to be loans by Mrs Ebner were made to Mr Ebner in respect of costs associated with the Gisborne property venture and the transfer of the property was conducted to discharge the obligation to pay back this money. Mrs Ebner said those costs totalled $177,158.07 but her initial breakdown of this amount, when analysed, was obviously incorrect. In her second affidavit filed after the hearing had commenced, Mrs Ebner said that many of the payments made were not in respect of the Gisborne property. Mr Ebner when called for cross‑examination sought leave, which was given, to give further evidence that the loans said to be made by Mrs Ebner related to other matters apart from the Gisborne property venture. This was a significant change in evidence and was said to have occurred as a result of reviewing documents yet in her first affidavit Mrs Ebner had said that in April 1991 she had conducted an analysis of what she called "the loan account between me and my husband". It also conflicted with the evidence which they had both given at their s 77C examinations on 14 December 1995 that Mrs Ebner had given Mr Ebner money for the Gisborne property. Mrs Ebner was not at all forthcoming about her knowledge prior to April 1991 of Mr Ebner's problems with the Bank and the demand for payment which the Bank had made on him. Mr Ebner's evidence in relation to his ownership of furniture was quite unsatisfactory. In his statement of affairs he had not listed any furniture as an asset. He said he did not have and had never had any furniture. He was then shown a statement of his financial position as at 3 September 1986 which he had signed as being true and correct and given to the Bank. It disclosed furniture and household effects "including antiques and paintings" with a present value of $250,000.00. When confronted with this entry he said it did not mean they were his belongings and said that they belonged to the household. When Counsel persisted in his questioning on this item Mr Ebner said that Counsel was trying to trick him and persisted in his assertion that they were household items and not items belonging to him. When Counsel said he did not understand the difference his response was: "Well, I didn't own them, my wife owned them." I do not accept this explanation; the statement of financial position is clear - Mr Ebner was verifying that he owned furniture including antiques and paintings with a present value (in September 1986) of $250,000.00. The statement was provided at a time when there was no pressure or incentive to conceal or deny the existence of assets. This evidence is also relevant to a number of purchases on the Visa credit card account in relation to antiques, gold and jewellery items. Both Mr Ebner and Mrs Ebner said that these purchases were gifts for overseas clients or persons whom they were trying to interest in the Gisborne property venture. I do not accept this evidence and I regard it as an attempt to justify a purchase of assets which were for personal use but not intended to be disclosed as such. I do not accept that Mr Ebner and Mrs Ebner were truthful witnesses in relation to these purchases. Mr Ebner in re‑examination identified a number of the recipients of the purchases shown on the visa account statements but I am not satisfied that the evidence given was reliable. It is significant, in this respect that no such evidence had been proffered at the s 77C examinations, nor had it been referred to in the initial affidavits filed nor had it been raised before the hearing was adjourned for some three weeks, after leave was given to file Mrs Ebner's second affidavit. I am satisfied that they were purchases for Mr Ebner and Mrs Ebner jointly, or if not jointly, for one or other of them in circumstances where no obligation arose between them in respect of the cost of the purchase. Mrs Ebner's knowledge on 16 April 1991 I am satisfied that at the time of the contract of sale and transfer of Mr Ebner's interest in the land on 16 April 1991 Mrs Ebner was well aware that the Bank was asserting that Mr Ebner had guaranteed the obligations of Logenstone to the Bank and was asserting that he owed the Bank of the order of $1,300,000.00 to $1,400,000.00. Mrs Ebner said that she knew that the Bank was attempting to claim that it had a guarantee and that her husband was challenging that obligation but the point is rather that the Bank had made the demand. Mrs Ebner vacillated in evidence as to the nature and extent of her knowledge. At one stage she said she could not remember when the Bank made the demand on Mr Ebner for $1,400,000.00 but she remembered discussions in March 1990 between her husband and Madgwicks about fighting the Bank on its demands. Mrs Ebner accepted that at the time Mr Ebner consulted Madgwicks and Madgwicks wrote the letters of 31 May 1990 and 14 June 1990 to the solicitors for the Bank contesting Mr Ebner's obligations at the Bank as a guarantor, she was aware of the Bank's demand and her husband's challenge to that demand. She also said that prior to April 1991 she was "probably a little aware" that the Bank was asserting that the mortgage contained a guarantee by Mr Ebner for the sum owed by Logenstone. The matter was put beyond doubt by Mr Ebner who said that by April 1991 his wife was aware of the dispute with the Bank. He said he had told her of the dispute and his denial of liability. The decision to transfer Mr Ebner's interest in the property Mrs Ebner and Mr Ebner said that Mrs Ebner was to be reimbursed what she had paid from the eventual sale of the Gisborne property which they were marketing and attempting to sell. When it became apparent that that would not happen, and that the Bank was going to sell the Gisborne property a decision was made to transfer Mr Ebner's interest in the property to Mrs Ebner. Mrs Ebner said that when she was told that she would not be getting any money reimbursing her from that sale she and her husband decided on the contract of sale and the transfer of his interest in the property to her. I am satisfied that the decision to transfer Mr Ebner's interest in the property was made when Mr Ebner and Mrs Ebner realised that the result of the sale of the Gisborne property by the Bank was going to be that Mr Ebner would still be liable to the Bank for an amount of some hundreds of thousands of dollars which he could not pay. Mr Ebner realised that his interest in the property was vulnerable and took steps to put it out of the reach of the Bank. It is not clear whether Mr Ebner and Mrs Ebner sought advice about s 121 of the Bankruptcy Act or whether it was volunteered by their solicitors. Whichever event occurred, the result was that they were given advice about s 121 of the Bankruptcy Act. I reject the denials that they were given such advice. Such denials demonstrate, in my opinion that both Mr Ebner and Mrs Ebner were alive to the fact that the transfer of Mr Ebner's interest in the property to Mrs Ebner would put that interest beyond the reach of Mr Ebner's creditors but nevertheless intended that circumstance to occur. At the time the transfer occurred Mr Ebner was unable to pay his creditor, the Bank what he owed it. Was there valuable consideration for the transfer? I am satisfied that although the value of the property in April 1991 was significantly higher than $300,000.00 and probably of the order of $400,000.00 it does not follow from that discrepancy that, assuming that $150,000.00 was paid or an amount allowed in that sum, there was not valuable consideration. Assuming the value of the property was $400,000.00 then $150,000.00 was paid for an interest in the property worth $200,000.00. Although such consideration may be inadequate it is not nominal or trivial. As the Full Court said in Wansley v Edwards (supra) at 559‑560: "The first two adjectives in the phrase 'nominal, trivial or colourable' are directed to the quantum of the consideration: the first to consideration which is of only token value; the second to that which is not a mere token but is very small in relation to the value of the property for which it is exchanged. 'Colourable' on the other hand goes to the genuineness of the consideration. Colourable consideration is that which is 'pretended, feigned, counterfeit, collusory': The Oxford English Dictionary".

I am therefore not satisfied that if consideration was given by Mrs Ebner, to the extent to which it was measured by reference to the value of the property, it was nominal or trivial. However I am not satisfied that valuable consideration was in fact given by Mrs Ebner. Whether the consideration was colourable gives rise to different considerations which depend upon whether Mr Ebner was genuinely indebted to Mrs Ebner for sums totalling in excess of $150,000.00. The consideration relied upon in the contract was the partial settlement of "various verbal loan agreements made during the period from around March 1990 until April 1991 (inclusive)". Mrs Ebner's case is that there was an antecedent debt or antecedent debts. In PT Garuda Indonesia Limited v Grellman (supra) the Full Court at 531 ‑ 532 drew a distinction between payments or transfers made in discharge of an antecedent debt and transactions where a debtor conveys property by way of assignment or mortgage as security for an existing indebtedness. The Court said: "The ground for distinction between the two types of transaction is that in the former the payment or transfer of property is made in performance of an obligation incurred by the payer or transferor at the time of, and as part of, the original transaction which created the debt. The payment or transfer is made in discharge of an obligation which has been subsisting since that time. In the latter case there is a new and additional transaction which must be accompanied by new valuable consideration in exchange for the new obligation incurred by the person giving security." For the reasons to which I have referred I am not satisfied that there were any such antecedent debts prior to April 1991. I am satisfied that as at 16 April 1991 there was no obligation which had been subsisting since, or subsequent to, March 1990 whereby Mr Ebner was under an obligation to pay to Mrs Ebner any of the amounts said to comprise the total sum of $177,158.07. There was no obligation incurred by Mr Ebner, at the time any of the amounts comprised in the sum of $177,158.07 were incurred or paid, to pay to Mrs Ebner any of those amounts. Counsel for Mrs Ebner relied on Re Brunner; Ex parte Official Trustee in Bankruptcy (1984) 2 FCR 6 in support of the proposition that monies lent by a husband to a wife to enable her to pay for improvements to the matrimonial home constituted valuable consideration within s 120 of the Bankruptcy Act. However the facts in that case were quite different from those presently before the Court as the husband and wife had signed a formal loan agreement evidencing the actual loan and the obligation of the wife to repay the loan on demand with interest. Morling J held that there was a genuine loan. There is no such genuine loan here and no valuable consideration was given by Mrs Ebner for the transfer. It was also submitted that the case may properly be treated as one of forbearance to sue but there is no evidence of any forbearance by Mrs Ebner nor is there any evidence that it was Mrs Ebner who requested the transfer. In any event the consideration expressed in the contract was not couched in terms of a forbearance to sue. Mrs Ebner's good faith It was submitted that I should accept Mrs Ebner's evidence that she had no knowledge of any financial difficulties from which her husband may have been suffering. I reject that evidence and I am satisfied that by 16 April 1991 she was well aware that the Bank was claiming that Mr Ebner owed the Bank an amount of the order of $1.3 million from Mr Ebner. I do not accept her evidence that she believed that Mr Ebner had a defence to the claim but, in any event, she was well aware that the Bank had made the demand. Further, I am satisfied that she was aware that Mr Ebner could not pay the amount claimed and she was aware of this, if for no other reason, than that for a considerable period she said she was paying the amounts due on the Visa credit card account and also other accounts for him. It was submitted that Mr Ebner had a defence of non est factum to a claim under the personal covenant in the mortgage given to the Bank to secure Logenstone's indebtedness to the Bank but there was no evidence which would support such a claim. His solicitors Madgwicks threatened rectification proceedings in June 1990 but no such proceedings were instituted. The circumstances which existed at, and shortly prior to, 16 April 1991 were such that I am satisfied that Mrs Ebner knew or at least had a suspicion that Mr Ebner was unable to pay his debts as they fell due. By this time the Bank had taken possession of the Gisborne property and was in the process of selling it. It was apparent that the Bank would not be able to realise from the sale of the Gisborne Property the amount secured by the mortgage. Further, to the extent to which Mrs Ebner claimed to be owed money by Mr Ebner, she was aware prior to 16 April 1991 that he would not be able to repay those amounts to her which represented the costs of the development of the Gisborne property venture. I do not accept Mrs Ebner's protestations that she had no knowledge of any financial difficulties her husband may have been suffering or that he had a good defence to the Bank's claim under the personal covenant in the mortgage. Mr Ebner's intention I am satisfied that Mr Ebner intended to deprive his creditors of an asset which would otherwise be available to them. In April 1991 he was in financial difficulties. He knew the Bank was claiming he owed the Bank in excess of $1.3 million and he knew he could not meet that demand. He knew the Gisborne property was being sold on a broadacres basis and would not realise anything near the amount required to discharge Logenstone's indebtedness to the Bank. He was upset with the Bank. He was also given by his solicitors a copy, and an explanation, of s 121 of the Bankruptcy Act. Whether or not he and Mrs Ebner specifically sought advice on that provision the fact is that it must have come up in discussions with their solicitors. I do not accept that Mr Ebner just wanted to repay his wife what she had put into the Gisborne property when it became apparent that she could not be repaid out of the Gisborne property. I am satisfied that he wanted to put his interest in the property out of reach of his creditors. He did so in respect of the furniture he had identified on 3 September 1986. He also sought to do so with his interest in the property. I gain support for this conclusion from the fact that although he and Mrs Ebner relied in the contract on the consideration for the transfer being the various verbal loan agreements, they never existed and neither Mr Ebner nor Mrs Ebner led any evidence as to their existence. Conclusion I am satisfied, and I find, that: (a) Mrs Ebner did not, in and between March 1990 and April 1991, pay any money for or on behalf of Mr Ebner in circumstances which gave rise to a debt owed by Mr Ebner to Mrs Ebner in respect of any money so paid. (b) To the extent to which Mrs Ebner paid money in respect of purchases made or expenses incurred by the use of the Visa credit card account, such money was paid in circumstances which did not give rise to a debt owed by Mr Ebner to Mrs Ebner in respect of the money so paid and no obligation by Mr Ebner arose to pay or repay such money to Mrs Ebner. (c) To the extent to which Mrs Ebner paid money in respect of purchases or in discharge of liabilities made by the use of the Visa credit card account a number of such purchases and liabilities were purchases made or liabilities incurred by Mrs Ebner and Mr Ebner and were not purchases or liabilities of Mr Ebner alone. (d) During the period at least commencing on 1 March 1990 and running through to 16 April 1991 Logenstone was the developer of the Macedon River Country Club development on the Gisborne property. (e) To the extent to which Mrs Ebner paid money in respect of costs associated with, or incurred in respect of, the Gisborne property or the Macedon River Country Club development such money was paid not for or on behalf of Mr Ebner but rather for or on behalf of Logenstone. (f) To the extent to which Mrs Ebner paid money to Holding Redlich solicitors, such money was not paid for or on behalf of Mr Ebner. (g) On 16 April 1991 Mr Ebner was not indebted to Mrs Ebner in the sum of $177,158.07 or $150,000.00, or any part thereof. (h) Mr Ebner and Mrs Ebner did not enter into any loan agreements, either verbal or to be implied, in or between March 1990 and April 1991 for the payment or repayment of any money paid by Mrs Ebner in respect of the Visa credit card account, money paid to Holding Redlich, solicitors or in respect of any money owed or to be paid by Mr Ebner to third parties. (i) There was no consideration valuable or otherwise given by, or moving from, Mrs Ebner for the transfer of Mr Ebner's interest in the property to her on 16 April 1991. (j) On 16 April 1991 Mrs Ebner knew, or at least suspected that, Mr Ebner was not able to pay his debts as they fell due and did not act in good faith in executing the contract for the sale and purchase of Mr Ebner's interest in the property and executing the transfer of Mr Ebner's interest in the property. (k) The transfer of Mr Ebner's interest in the property on 16 April 1991 was a transfer by Mr Ebner with intent to defraud his creditors. It follows from these findings that the transfer of Mr Ebner's interest in the property on 16 April 1991 is void as against the Official Trustee and must be set aside. I certify that this and the preceding thirty-two (32) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg

Associate: Dated: 30 June 1998 Counsel for the Applicant: Mr M Clarke

Solicitor for the Applicant: Dunhill Madden Butler

Date of Hearing: 21, 22 May 1997 17, 18 & 30 June 1997