Baker v Official Trustee in Bankruptcy

The appeal in this case involved the ownership of an art collection and certain sums of money claimed to have been the proceeds of fraudulent dispositions by the bankrupt, James Andrew Baker. The Official Trustee in Bankruptcy sought to recover these assets on the basis that they belonged to Mr. Baker and should therefore vest in the trustee upon his bankruptcy. The appeal was dismissed in respect of the art collection, with certain qualifications. The court found that Mr. Baker had never intended to create a trust over the collection, and that any purported transfers were ineffective. The art collection, therefore, belonged to Mr. Baker and now belongs to the Official Trustee. The appeal was allowed in respect of the sum of $286,000 paid to Vestos Pty Ltd, as the court found that the Official Trustee could not claim that sum on the basis that the payment was made under a fraudulent conveyance. The court held that until a fraudulent conveyance is set aside, the recipient holds a valid title, and in this case, the payment was made to Vestos Pty Ltd before any action was taken to set aside the conveyance. Consequently, the declaration and order for payment of the sum to the trustee were set aside. The appellants were ordered to pay two thirds of the respondent's costs of the appeal, and the order for costs at first instance was varied to require the appellants to pay five sixths of the respondent's costs below.