Abeyratne v Latour
[2009] FMCA 688
•9 September 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| ABEYRATNE v LATOUR | [2009] FMCA 688 |
| BANKRUPTCY – Transfer of property by bankrupt within five years before commencement of bankruptcy – whether joint funds – whether consideration – whether consideration worth less than market value – whether transfer void under s.120 of the Bankruptcy Act 1966. |
| Bankruptcy Act 1966, ss.120(1), 120(5), 120(6) Federal Magistrates Act 1999, s.76(3) |
| Re Reid; Clark v Reid (1998) 85 FCR 452 Fodare Pty Ltd v Official Trustee in Bankruptcy [2000] FCA 1388 Mateo v Official Trustee in Bankruptcy (2002) 117 FCR 179 Re Bishop [1965] 1 All ER 249 |
| Applicant: | WILLIAM BERNARD ABEYRATNE (in his capacity as trustee of the bankrupt estate of Ghiliane Mary Latour) |
| Respondent: | CORINE MONICA LATOUR |
| File Number: | MLG 1416 of 2008 |
| Judgment of: | Riley FM |
| Hearing dates: | 22 June 2009 23 June 2009 |
| Date of Last Submission: | 23 June 2009 |
| Delivered at: | Melbourne |
| Delivered on: | 9 September 2009 |
REPRESENTATION
| Counsel for the Applicant: | Peter Booth |
| Solicitors for the Applicant: | Frenkel Partners |
| Counsel for the Respondent: | Timothy Sowden |
| Solicitors for the Respondent: | Law 554 |
THE COURT DECLARES THAT:
The payment from the bankrupt to the respondent of $5,150 on or about 22 November 2004 is void as against the applicant pursuant to s.120 of the Bankruptcy Act 1966.
THE COURT ORDERS THAT:
The respondent pay the applicant the sum of $5,150 together with interest on that sum from 21 December 2006 at the rates applicable from time to time to judgments of the Magistrates’ Court of Victoria.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 1416 of 2008
| WILLIAM BERNARD ABEYRATNE (in his capacity as trustee of the bankrupt estate of Ghiliane Mary Latour) |
Applicant
And
| CORINE MONICA LATOUR |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an application pursuant to s.120 of the Bankruptcy Act 1966 (“the Act”). The application is brought by the trustee of the bankrupt estate of Ghiliane Mary Latour (“the bankrupt”). She became bankrupt by her own petition on 31 October 2006. The respondent is the bankrupt’s daughter. The trustee seeks declarations that two payments from the bankrupt’s bank account to the respondent’s bank account are void as against the trustee. The two payments were:
a)$10,300 on or about 22 November 2004; and
b)$68,000 on or about 4 January 2005.
The bankrupt and her husband, Mr Latour, were the joint registered proprietors of their family home. They sold their house. On about
22 October 2004, the proceeds of sale, consisting of $238,995.68, were deposited into a bank account in the sole name of the bankrupt (“the Award Saver account”). The bankrupt was the only signatory of the Award Saver account.
The trustee did not rely on a presumption of advancement. Rather, the trustee accepted that the bankrupt and her husband had equal shares in the proceeds of the sale of their house, such that Mr Latour had a half interest in the money in the Award Saver account. The trustee accepted that the court could well find that the Award Saver account held a joint pool of money: transcript page 84.
After the settlement of the sale of their house, on about 22 October 2004, the bankrupt and her husband began living with their daughter, the respondent, in her three bedroom house. No one else lived there at the time.
On about 15 November 2004, $50,000 was transferred from the Award Saver account to an account in the names of the bankrupt and her husband (“the Streamline account”). On or about 22 November 2004, $10,300 was transferred from the Award Saver account to the respondent’s account. On or about 4 January 2005, $68,000 was transferred from the Award Saver account to the respondent’s account.
About eight months later, in September 2005, the bankrupt and her husband placed an order for the construction of a bungalow on the respondent’s property. The total price of the bungalow was $37,120. It was self-contained with a kitchen and a bathroom. However, there was some additional work done and paid for after the bungalow was constructed.
After its construction, the bankrupt and her husband lived in the bungalow together. About one year later, on 31 October 2006, the bankrupt became bankrupt on her own petition. At that time, there was about $500 left in the bankrupt’s account.
The respondent defended the proceedings on two bases, namely:
a)the two sums transferred to the respondent were transferred from Mr Latour’s share of the funds in the Award Saver account rather than from the bankrupt’s share; and
b)valuable consideration was given by the respondent for the amounts transferred in the form of free accommodation in her house and then in the bungalow for an indefinite period for the bankrupt and her husband.
The legislation
Section 120(1) of the Act provides that:
A transfer of property by a person who later becomes a bankrupt (the transferor) to another person (the transferee) is void against the trustee in the transferor’s bankruptcy if:
a.the transfer took place in the period beginning five years before the commencement of the bankruptcy and ending on the date of the bankruptcy; and
b.the transferee gave no consideration for the transfer or gave consideration of less value than the market value of the property.
Section 120(5) of the Act provides that:
a)the fact that the transferee is related to the transferor; and
b)the transferee’s love or affection for the transferor,
have no value as consideration for the purposes of s.120(1) of the Act.
The respondent’s affidavit evidence
The respondent said in her affidavit that, at the time her parents sold the family home, she discussed with them the possibility of building the bungalow in her backyard. The respondent said that Mr Latour told her that he would arrange for moneys to be transferred to her account to fund the project. The respondent said that she and Mr Latour agreed that, in exchange, the bankrupt and Mr Latour could live in the bungalow rent free. The respondent said that Mr Latour assumed responsibility for organising and paying the builder. The respondent said that she gave Mr Latour funds from her accounts for that purpose.
The respondent’s oral evidence
The respondent said in additional oral evidence in chief that the sums of $10,300 and $68,000 were deposited into her account by her father. She said they discussed the money going into her account “sort of as a keepsake” until they finalised their plans about the bungalow. The respondent said that Mr Latour agreed to put the $10,300 in her account to help her clear up some credit card debt and utility debt.
The respondent said that the $68,000 was for the bungalow. She said that when her parents moved in with her she realised that it was difficult to live in such a small area with three people so they went ahead with the bungalow. The respondent also said that her mother had some gambling problems so the money was “almost given to [the respondent] as a keepsake”. By that, the respondent said she meant the money was given to her on trust, in an account her mother could not access.
The respondent tendered her bank statement (Exhibit 1) which shows a withdrawal of $18,565.40 on 12 January 2006. The respondent said $18,560 of that was a bungalow payment and the balance was the fee for a bank cheque.
In cross-examination, the respondent agreed that the $10,300 was not used for the purpose of building a bungalow in her backyard but was used for the payment of her debts.
The respondent said that in addition to the $37,120 paid for the bungalow there were additional costs for paving, which cost several thousand dollars, plumbing, stairs with a handrail, a veranda, a telephone line and curtains.
The respondent agreed that in her affidavit she did not say that the $10,300 was used to pay her debts and she did not say that there were additional expenses associated with the bungalow.
The respondent said that her electricity bills had increased since the bungalow was built. She denied that the money paid into her account from her parents’ Award Saver account was a gift. The respondent agreed that her parents could have been accommodated in her house with a tight fit. The respondent said that she did have her partner living with her in the house at one stage. She said, in effect, that if she were to get married, it would make more sense for her parents to be in the bungalow.
Mr Latour’s affidavit evidence
$50,000 was transferred from the Award Saver account to the Streamline account on 15 November 2004. Mr Latour said that the $50,000 was paid to him by the bankrupt as a partial payment of his half of the proceeds of sale of the family home. Mr Latour said that the Streamline account was in joint names for the sole purpose of the bankrupt being able to access the account if he was unable to do so. Mr Latour said that the Streamline account had always been used exclusively by him and had never been used by the bankrupt.
Mr Latour said in his affidavit that the $50,000 was made up as follows:
a)$7,500, being the bankrupt’s half share of an overseas holiday taken by the bankrupt and Mr Latour;
b)$11,450, being the bankrupt’s half share of a car purchased in December 2004 for the benefit of both the bankrupt and Mr Latour;
c)$31,050, being a partial transfer from the bankrupt to Mr Latour of his half of the proceeds of sale of the family home.
Mr Latour said that much of the $31,050 was expended by him on household expenses for both the bankrupt and himself. Mr Latour also said that the bankrupt spent money from her half of the Award Saver account on day to day household expenses for the two of them. However, Mr Latour claimed the bankrupt’s expenditure on such matters was insignificant.
The Mr Latour said that the bankrupt had a gambling problem. He said that she spent much of her half share of the proceeds of the sale of the family home on gambling.
Mr Latour said that he directed the bankrupt to pay their daughter, the respondent, from the balance of his half share of the proceeds of sale of the family home that were in the Award Saver account:
a)$10,300 on 22 November 2004; and
b)$68,000 on or about 4 January 2005.
Mr Latour acknowledged that about $10,147.84 of his half share of the proceeds of sale of the matrimonial home has never been paid to him.
Mr Latour said that after he and the bankrupt moved into their daughter’s house, it became apparent that there was insufficient room to accommodate them all. He said it was only at that stage that he decided to pay the money to his daughter to allow her to build the bungalow on her property.
Mr Latour’s oral evidence
In additional oral evidence in chief, Mr Latour was asked what he meant by the words “directed the bankrupt” to make the payments in question. He said that he went to the bank with his wife and “ordered her” to make the payment from her account into his daughter’s account. Mr Latour said that he had discussed the matter with the bankrupt and “we agreed” that he would like the money owing to him from the proceeds of sale of the family home to go to his daughter. Mr Latour identified a receipt from Aaron's Outdoor Creations for the deposit for the bungalow: Exhibit R2. It is made out to Mary and Michael Latour. It is dated 7 September 2005. It is for $3,712. Mary is the bankrupt’s middle name.
In cross-examination, Mr Latour said that the respondent asked him for some money for her credit card debts and he gave her the $10,300. Mr Latour agreed that he did not say in his affidavit that the $10,300 was to be used for the respondent to pay her debts. He agreed that the $10,300 was a gift. He agreed that when he paid the $10,300, he did not intend that it would be used for the bungalow. He agreed that the $10,300 went directly from his wife's account into his daughter's account.
Mr Latour said that his daughter's boyfriend lived in the house for about a year.
Mr Latour said that, when the $68,000 was transferred from the bankrupt’s account to the respondent’s account, he had not paid the deposit on the bungalow. He agreed that the bungalow cost a lot less than $68,000. He agreed that the amount transferred had no relationship to the price of the bungalow. He said that “we provided that money because we didn't know how much the granny flat was going to cost.” (emphasis added) Mr Latour said there were in fact other expenses that brought the total cost of the bungalow close to $68,000. He agreed that he had not mentioned the other expenses in his affidavit.
Mr Latour said that he was very concerned about his wife's gambling at the time the family home was sold. He said that was part of the reason he put the $68,000 into his daughter's account. However, he agreed that at the time of the sale of the family home, he did not open an account in his sole name to keep the proceeds of sale safe, and nor did he put the proceeds of sale into his existing joint account with the bankrupt.
Mr Latour said that, at the time the family home was sold, he just did not think. He said he had control of the Award Saver account, because he knew his money was involved in that account so he kept an eye on it. However, Mr Latour agreed that he was not a signatory to the account and then agreed that he had no control over it at all.
In relation to Mr Latour’s affidavit evidence that the bankrupt gambled away much of her 50% share of the proceeds of sale of the family home, he said that he did not allow his wife to gamble the money. He said he was not aware that she was gambling.
Mr Latour agreed that, when he wanted the $50,000, the bankrupt transferred it to him. He agreed that he could have asked for the entirety of his half to be transferred to him but he did not do so. He said he trusted his wife and that is why he let her handle the money. Mr Latour agreed that he and the bankrupt put all of the proceeds of sale of the family home into the bankrupt’s account and they treated it as a joint fund.
The bankrupt’s affidavit evidence
The bankrupt said in her affidavit that there was no particular reason why the proceeds of sale of the family home were placed in an account in her sole name. However, she said half of the proceeds belonged to her husband because they owned the home together. The bankrupt said that she and her husband had separate bank accounts but they both contributed to their day-to-day living expenses without having to account to each other.
The bankrupt confirmed that Mr Latour told her to withdraw the sums of $10,300 and $68,000 in favour of their daughter, the respondent. The bankrupt said that the respondent offered to build a bungalow in the backyard of her house and Mr Latour offered to pay for it. The bankrupt said that at all times she believed the $10,300 and the $68,000 belonged to Mr Latour.
The bankrupt’s oral evidence
The bankrupt said that her daughter's house was a bit crowded. She said she had problems with her knees going upstairs so they decided to build the bungalow to make it easier.
The bankrupt was shown her statement of affairs which is contained in exhibit WBA-1 to be trustee’s affidavit sworn on 19 November 2008. At page 13 of that document, the bankrupt said that she had contributed to the purchase or improvement of an asset valued at over $1,000 which is held by someone else. The asset is described in the statement of affairs as a house and granny flat owned by her daughter worth $260,000.
The bankrupt was assisted in the completion of her statement of affairs by a Mr Nyhuis, from Credit Repairs Australia. He advised her to become bankrupt. The bankrupt agreed that she had told Mr Nyhuis that she had assisted her daughter with the improvements to her property. However, she said there was some missed wording. She said she did not have the money to give her daughter.
The bankrupt admitted that she had signed the withdrawal slips for the payments of $10,300 and $68,000. She agreed that she was the only signatory for the account.
The bankrupt agreed that she had written to the trustee’s daughter, Erica, the third letter contained in the exhibit marked WBA-15 to the trustee’s affidavit. In the letter, the bankrupt said:
I am sending the expenses that I paid with the money…:
For the car we bought $26,028.10
The loan at ANZ bank pd $10,000
The holiday… $15,000
The money to daughter for granny home $60,000
$39,435 plus expenses
The money Hume city council application $210
The home loan service centre $70,000
ML Harrington Electrics Pty Ltd $649
St Jude Investment Pty Ltd –
Loan on Buyers edge paid $5,000
Loan on Gateway credit union $20,000
paid Commonwealth Visa card credit card $5,000
Surgery on abdominoplasty $6,800
The bankrupt said that the $60,000 mentioned in the letter was a mistake. The amounts set out in the letter add up to $218,687. When the additional $18,300 paid to the respondent is added on, the total is $236,987. That is about $2,000 less than the proceeds of sale of the family home. The bankrupt did not expressly resile from the statements made in this letter, and nor were they challenged, except in relation to the $60,000 paid to the respondent.
The bankrupt said that she did not ask her husband what the $10,300 and $68,000 were for. She said that she knew that her husband wanted to clear the money away from her account because she had a gambling problem. The bankrupt said that the husband had not told her that was his reason but she just knew. The bankrupt said that the $68,000 was from her and her husband so that the two of them could live in the bungalow together.
Findings
I do not accept that the bankrupt had a significant gambling problem. The evidence about this issue was brief, vague and unparticularised. It was not explained what form the bankrupt’s gambling took, where the bankrupt gambled, when she began gambling, how much she gambled, where she obtained the funds that she gambled, whether the amounts she gambled changed over time, when and how Mr Latour discovered his wife was gambling or how he reacted when he discovered his wife was gambling. The failure to give these details reduces the credibility of the claim about gambling.
Moreover, the figures in the bankrupt’s letter to Erica, adjusted to include the correct amount paid to the respondent, account for virtually all of the proceeds of sale of the family home. The letter does not mention any losses on gambling. The statement of affairs includes some unsecured debts for credit cards and borrowings from financial institutions. It is conceivable that the bankrupt used those funds for gambling. However, no one said so. There is no basis on which I conclude that those funds were used for gambling, as opposed to goods and services.
Additionally, if the bankrupt did have a significant gambling problem, it is implausible that Mr Latour would have allowed the proceeds of the sale of his family home to be put into a bank account over which the bankrupt had complete control.
All in all, I conclude that, if the bankrupt gambled at all, it was to a very minor extent. Accordingly, I do not accept that the bankrupt and Mr Latour or either of them gave the respondent any money “as a keepsake” or on trust. Indeed, if the bankrupt had given money to the respondent on trust, she would now have to give it to the bankrupt’s trustee in bankruptcy as money properly belonging to the bankrupt.
I consider that the proceeds of sale in the Award Saver account were jointly owned by the bankrupt and Mr Latour. The bankrupt and Mr Latour had jointly owned the family home. Mr Latour would certainly have had an equitable claim to half of the proceeds of sale of the family home. Mr Latour in fact said that he and the bankrupt treated the money in the Award Saver account as a joint fund. Moreover, the money in the Award Saver account was to a large extent used for things enjoyed by both the bankrupt and Mr Latour, including a holiday, a car, day to day living expenses, and, on the respondent’s evidence, the bungalow.
I do not accept that the transfer from the Award Saver account to the Streamline account of $50,000, and the transfers from the Award Saver account to the respondent’s account totalling $78,300 were understood by the bankrupt and Mr Latour to represent part of his half of the proceeds of sale of the family home. The amounts transferred did not add up to half of the proceeds of sale. They were about $10,000 short. This is not consistent with an intention to transfer half of the proceeds of sale.
Moreover, if the bankrupt and Mr Latour had intended to put half of the proceeds of sale into a bank account under his control, the simple and natural way to do it would have been to the transfer the money in one transaction at or about the time that the sale of their family home was settled. The piecemeal and delayed manner of transferring the funds indicates that the transfers were not intended to represent a transfer to Mr Latour of his half of the proceeds of sale.
I do not accept that Mr Latour “ordered” the bankrupt to transfer the two sums to the respondent, as he claimed in his affidavit. In oral evidence, Mr Latour said “we agreed” that he would like money from his share of the proceeds of the family home transferred to his daughter. This indicates that the transfers were joint decisions, rather than on the order of Mr Latour. In relation to the $68,000 in particular, Mr Latour admitted that “we provided that money because we didn't know how much the granny flat was going to cost.” (emphasis added) That is, the bankrupt and Mr Latour provided the $68,000 jointly. I give greater weight to Mr Latour’s oral evidence than to his affidavit evidence because his oral evidence was clearly his own words and was more likely to reflect his real thoughts than his statements in an affidavit.
I do not accept that the bankrupt and Mr Latour regarded any of their money as separately owned by one or the other of them. I consider that the bankrupt and Mr Latour at all material times dealt with their money jointly and made decisions about all their significant expenditures jointly. More particularly, I consider that the $78,300 transferred to the respondent was transferred jointly by the bankrupt and Mr Latour from their joint funds.
Where one of the joint owners of a joint account has used some or all of the money in the account to buy an item for themselves, the item generally would belong to that joint owner, and not to the joint owners jointly: Re Bishop [1965] 1 All ER 249 at 456; Re Reid; Clark v Reid (1998) 85 FCR 452. However, that is not this case. As explained, I do not accept that the money transferred to the respondent was transferred by either the bankrupt or Mr Latour separately, or for the separate purposes of either of them.
In Fodare Pty Ltd v Official Trustee in Bankruptcy [2000] FCA 1388 at [20], the Full Federal Court referred to:
the prima facie position that the [joint account holders] are each taken to have a beneficial ownership of half of the funds in the account by virtue of their position as joint account holders.
I see nothing in the facts of this case to displace that prima facie position. Accordingly, I consider that half of the $78,300 (or $39,150) was, in effect, transferred by the bankrupt to the respondent.
The clear admission by the respondent and Mr Latour was that $10,300 was transferred for the payment of the respondent’s debts. It was a gift. There was no consideration for it. Accordingly, half of that sum, or $5,150, was paid by the bankrupt to the respondent within five years of the commencement of the bankruptcy without any consideration being given in exchange. That transfer is void as against the trustee.
As to the $68,000, the clear facts are that:
a)the bankrupt and Mr Latour moved into the respondent’s home on or about 22 October 2004 with the intention that they would live there indefinitely;
b)the bankrupt and Mr Latour transferred $68,000 to the respondent on or about 4 January 2005;
c)the bankrupt and Mr Latour ordered the construction of a bungalow on or about 7 September 2005 for $37,120;
d)the cost of the purchase of the bungalow, and some associated amounts, were paid by the respondent via Mr Latour.
The trustee said in his affidavit that some or all of the $78,300 was applied to the purchase of the bungalow. However, that does not mean that the original transfer of the funds was pursuant to an agreement to that effect. The money may simply have been available for that purpose.
There is good reason to doubt that the bankrupt and Mr Latour paid the respondent $68,000 specifically for the bungalow. The payment was made long before the bungalow was ordered. The $68,000 was considerably more than the purchase price of the bungalow. The evidence as to the additional costs relating to the bungalow was scant and unsubstantiated by documentary records. Records such as invoices from tradesmen could have been expected to have been available. The respondent did not attempt to put a figure on the additional costs, except to say that the paving cost several thousand dollars.
It could have been expected that there would have been evidence of enquiries about how much the bungalow would cost, and how much the additional costs would be. There was no evidence of any such enquiries. Moreover, if the bankrupt and Mr Latour had intended to pay for the bungalow, the simple and natural way of doing that would have been to pay for it directly at the time it was built, rather than putting more than the cost of the bungalow into the respondent’s account eight months ahead of time.
I also note that there was no evidence of any formal agreement regarding the transfer of the $68,000. There was certainly no written agreement. Nor was it suggested that the bankrupt, Mr Latour and the respondent expressly agreed on a particular date, or approximate date, that the $68,000 would be given in exchange for accommodation.
Nevertheless, the fact is that the respondent has accommodated her parents for nearly four years and has accommodated them in the bungalow for nearly three years. I accept that she intends to do so indefinitely. I accept the evidence that, after the bankrupt and Mr Latour moved into the respondent’s house, everyone realised that the house was a little small for three people. That evidence strikes me as inherently plausible. I also accept that, after the bankrupt moved into the respondent’s house, she realised that the stairs would cause problems for her knees. That evidence was not challenged and I consider it to be inherently plausible.
I consider that, in these circumstances, the bankrupt, Mr Latour and the respondent decided that they would go ahead with the idea they had previously floated, namely, building the bungalow, at the expense of the bankrupt and Mr Latour. I accept that that decision was made before the $68,000 was transferred from the Award Saver Account to the respondent’s account on 4 February 2005.
I was troubled by the delay between the transfer of the $68,000 on 4 February 2005 and the placing of the order for the bungalow on 7 September 2005. However, on reflection, I consider the delay is explicable by the fact that the bankrupt and Mr Latour are not young and are perhaps not especially well organised. I infer that the $68,000 was transferred to the respondent not as a keepsake, but to confirm the arrangement that had been entered into, albeit informally. That arrangement was that the bankrupt and Mr Latour would continue to live with the respondent rent free, in her house, and, after its construction, in a bungalow in her backyard. As such, the $68,000 was consideration for ongoing accommodation.
The respondent’s counsel argued that the consideration for the transfer of the $68,000 did not have to be pursuant to an agreement contemporaneous with the transfer. He did not cite any case as authority for that proposition. I have been unable to find any. Counsel referred to s.120(6) of the Act which provides that:
This section does not affect the rights of a person who acquired property from the transferee in good faith and by giving consideration that was at least as valuable as the market value of the property.
However, subsection 120(6) deals with a different situation, namely, where the transferee (in this case, the respondent) gives rights in the property to a third party. Subsection 120(6) has no bearing on the present case.
Certainly, consideration does not have to be fully performed at the time of the transfer. Consideration can be a promise to do something in the future. However, basic principles of contract law require that, at the time the agreement is entered into, consideration is provided. Otherwise, one side of the bargain will be past consideration, and thus no consideration at all.
Counsel for the respondent also relied on Mateo v Official Trustee in Bankruptcy (2002) 117 FCR 179. In that case, a husband transferred a property to his wife pursuant to Family Court orders. The husband’s trustee in bankruptcy sought to set aside the transfer, on the grounds that no consideration was given by the wife. However, the Federal Court held that the court must look at the whole transaction which has been implemented, not just an isolated aspect of it.
That is obviously correct, with respect. However, the question is what consideration was given in this case, and whether its market value was less than $68,000. If the market value of the consideration was less than $68,000, the transfer is void as against the trustee.
The bankrupt and Mr Latour gave the respondent $68,000. The respondent gave the bankrupt and Mr Latour a promise to accommodate them indefinitely firstly, in her house, and then in a bungalow in her backyard. Neither party gave evidence about the market value of the promise of indefinite accommodation.
The trustee brought the application. It was for the trustee to prove that the market value of indefinite accommodation for the bankrupt and Mr Latour was less than $68,000. The trustee did not do so.
It does not strike me as being self-evident that indefinite accommodation for the bankrupt and Mr Latour would be worth less than $68,000. According to her statement of affairs, the bankrupt was born on 1 June 1952. She is therefore 57 years old. If she lives to 84, which is about average these days, she will need accommodation for 27 years. As a rough indication, at $100 per week, that equals $5,200 for one year, $52,000 for 10 years and $140,400 for 27 years. This could, of course, be worked out with more precision, especially with the benefit of medical evidence and real estate evidence. However, suffice to say that the trustee has not proved his case in relation to the $68,000.
I accept that the bungalow itself did not cost $68,000, and that the respondent’s evidence of the additional costs associated with the construction of the bungalow was scant. However, it was not for the respondent to prove the market value of the consideration she gave. Moreover, the bankrupt and Mr Latour were not given title to a bungalow for their $68,000. They were given the promise of indefinite accommodation. Therefore, the actual cost of the bungalow is irrelevant.
Similarly, it is irrelevant that the value of the respondent’s real estate may have increased with the construction of the bungalow. The arrangement was that she received $68,000, which she agreed to spend in whole or part on the construction of a bungalow, and the bankrupt and Mr Latour received the promise of indefinite accommodation in the respondent’s house and then in a bungalow. Any increase in the value of the respondent’s land was simply a side benefit for her.
All in all, I am not persuaded that the respondent gave no consideration for the $68,000, or that she gave consideration of less than the market value of the property.
The trustee has sought interest pursuant to statute from 21 December 2006. That was the date when the respondent indicated that she would not comply with the trustee’s letter of demand for $60,000. However, s.76(3) of the Federal Magistrates Act 1999 provides for interest to be awarded on the whole or any part of the money for which judgment is granted for the whole or any part of the period since the cause of action arose. The rate of interest has not been prescribed. No reason has been advanced why interest should not be awarded on the sum outstanding.
I consider that it would be appropriate to follow the Federal Court practice and order interest at the rate applicable in the State courts. The amount recovered in this proceeding is within the jurisdiction of the Magistrates’ Court of Victoria. Accordingly, interest will be allowed on the sum outstanding from 21 December 2006 at the rates from time to time applicable to judgments of that court. I will leave it to the parties to calculate the amount.
There will be orders accordingly.
I certify that the preceding seventy-four (74) paragraphs are a true copy of the reasons for judgment of Riley FM
Associate: Rhonda Soans
Date: 9 September 2009
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