Arcadiou, P. v Arcadiou, S - [1985] FCA 623

Re: THE OFFICIAL TRUSTEE IN BANKRUPTCY (as Trustee of the property of Troodia
Arcadiou, a bankrupt)
And: PHILLIP ARCADIOU and SANDRA ARCADIOU
No. VG 140 of 1985
Bankruptcy
8 FCR 4

COURT

IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKTUPYCY DISTRICT OF THE STATE OF VICTORIA
Fox(1), Woodward(2) and Northrop(2) JJ.

CATCHWORDS

Bankruptcy - mortgage given by bankrupt within five years of bankruptcy - whether settlement of property - whether made for valuable consideration - whether mortgage void against trustee.

Bankruptcy Act 1966 s.120

Bankruptcy Act 1924-1960 s.94

Transfer of Land Act 1958 (Vic.) s.74

Re Pahoff; Ex parte Ogilvie (1961) 20 A.B.C. 17

Re Hyams; Official Receiver v. Hyams (1970) 19 F.L.R. 232

Barton v. Official Receiver (1984) 58 A.L.R. 328

Bankruptcy - Avoidance of settlements - "Disposition of property" - Disposition "for valuable consideration" - Mortgage within five years of bankruptcy - No consideration received by bankrupt - Consideration moving from mortgagee to third party - Whether mortgage void - Bankruptcy Act 1966 (Cth), s 120.

HEADNOTE

Held: (1) A mortgage of land under the Transfer of Land Act 1958 (Vic), is a "disposition of property" and is therefore a settlement for the purposes of s 120(1) of the Bankruptcy Act 1966.

Re Pahoff; Ex parte Ogilvie (1961) 20 ABC 17; Re Hyams; Official Receiver v. Hyams (1970) 19 FLR 232, referred to with approval.

(2) A settlement in favour of a purchaser or encumbrancer will have been made "for valuable consideration", within the meaning of s 120(1) of the Bankruptcy Act 1966, where the consideration has moved from the purchaser or encumbrancer to a third party, and it is not necessary that any part of the consideration should have moved to the bankrupt.

Barton v. Official Receiver (1984) 4 FCR 380 at 395-396 per Lockhart J., applied.

HEARING

Melbourne, 1985, November 14-15; December 17. #DATE 17:12:1985
APPEAL

Appeal from a decision of Smithers J.

A Moshinsky, for the appellant.

F G Davey, for the respondents.

Cur adv vult

Solicitor for the appellant: G T Bigmore.

Solicitors for the respondents: Millard Kidd & Byrne.

FPC

ORDER

The order made in the Court below be varied by deleting the declaration therein.

Subject to that variation, the appeal be dismissed.

The appellant pay the respondent's costs of the appeal.

Note: Settlement and entry of orders is dealt with in

Order 36 of the Federal Court Rules.

Appeal dismissed

JUDGE1

This is an appeal from the decision of a judge of the Court (Smithers J.) in a case where a trustee in bankruptcy has sought to have declared void, under sub-secn.120(2) of the Bankruptcy Act 1966 ("the Act") a mortgage given within 5 years before bankruptcy by the bankrupt, Troodia Arcadiou, to the respondents.

The claim of the trustee is that the mortgage was not given for valuable consideration (vide para.120(1)(a) of the Act). The learned judge held that the mortgage was supported by valuable consideration, and dismissed the claim.
The mortgage is dated 28 September 1976. It is…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [1985] FCA 623
Decision Date: 17 DECEMBER 1985

CaseChat Overview and Summary

The case of Arcadiou, P. v Arcadiou, S involved a dispute concerning a mortgage given by a bankrupt within five years prior to their bankruptcy. The issue before the court was whether the mortgage constituted a settlement of the property and if it was made for valuable consideration, thereby determining its validity against the trustee in bankruptcy. The case was heard in the Federal Court of Australia.

The central legal issue was whether the mortgage was a voidable transaction under the Bankruptcy Act 1966, specifically sections 120(1)(c) and 120(2). The court had to determine if the mortgage was a settlement of property made within the five-year period before the bankruptcy and if it was made for valuable consideration. If the mortgage did not constitute a settlement of property or was not made for valuable consideration, it could potentially be upheld against the trustee.

The court found that the mortgage did not constitute a settlement of property and was not made for valuable consideration. Therefore, the mortgage was not void against the trustee in bankruptcy. The court concluded that the settlement of property did not occur as the mortgage did not transfer ownership or possession, and the valuable consideration was not adequately demonstrated. Consequently, the appeal was dismissed, and the appellant was ordered to pay the respondent's costs of the appeal. The order made in the Court below was varied by deleting the declaration therein, and the appeal was dismissed with the appellant paying the respondent's costs.

Orders

Orders of the court

The order made in the Court below be varied by deleting the declaration therein.

Subject to that variation, the appeal be dismissed.

The appellant pay the respondent's costs of the appeal.

Note: Settlement and entry of orders is dealt with in

Order 36 of the Federal Court Rules.

Appeal dismissed

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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