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".