Re: TERENCE BARTON And: THE OFFICIAL RECEIVER No. G417 of 1983 Bankruptcy 4 FCR 380
COURT
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION Sweeney(1), Fisher(2) and Lockhart(3) JJ.
CATCHWORDS
Bankruptcy - avoidance of antecedent transactions - payment of money by way of loan - whether "a settlement" - whether made "for valuable consideration".
Held (per Sweeney and Fisher JJ): (1) A settlement, for the purpose of s 120(1)(a) of the Bankruptcy Act 1966 (Cth) is constituted by a loan which was made not so that the proceeds should be immediately dissipated or consumed but so as to enable the purchase of real and personal property to be retained by the borrower.
(2) (Per Lockhart J.) For a settlement within the meaning of s 120 of the Bankruptcy Act 1966 (Cth) the retention of the property in some sense must be contemplated and not its immediate dispersion. The mere obligation to repay the loss in twenty years was sufficient to satisfy the requirement of retention.
(3) (Per Sweeney and Lockhart JJ and, semble, per Fisher J.) A loan is not "made for valuable consideration" within the meaning of s 120(1) of the Bankruptcy Act 1966 (Cth) if the borrower has not provided consideration which had a real and substantial value amounting to a quid pro quo in a commercial sense.
HEARING
1984, June 7, 8; November 12. #DATE 12:11:1984
APPEAL
Appeal from judgment and orders of McGregor J.
J C S Burchett QC and W F Gibb, for the appellant.
C J Darvall QC and T P Lonergan, for the respondent.
Cur adv vult
Solicitors for the appellant: Dunkel & Co.
Solicitor for the respondent: Australian Government Solicitor.
GFV
ORDER
1. The order of the court made on 13 December 1983 that the appellant pay to the Official Receiver the sum of $170.000 be varied by reserving leave to the Official Receiver to apply to the trial Judge for appropriate orders as to how much of and when the said sum should be paid.
2. Otherwise the appeal be dismissed.
3. The appellant pay the costs of the Official Receiver of this appeal.
Orders accordingly
JUDGE1
This is an appeal from the judgment of a single judge of this court declaring that a payment made on or about 14 April 1973 by Thomas Barton (the bankrupt) to his uncle Terence Barton (the appellant) in the sum of $170,000.00 was "a settlement of property" within the meaning of s.120(1) of the Bankruptcy Act 1966 (the Act) and was not "made -- for valuable consideration" within the meaning of paragraph 120(1)(a) of the Act. It was ordered that the said payment was void as against the Official Receiver, that the appellant pay the said sum to the Official Receiver and that the appellant pay the Official Receiver's costs.
The Official Receiver had brought…
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
AGLC
Barton, Terence v Official Receivers [1984] FCA 368 (4 FCR 380)
Case
[1984] FCA 368
Decision Date
CaseChat Overview and Summary
In the case of Barton v Official Receiver, the appellant, Barton, contested the decision of the trial judge to award the Official Receiver the sum of $170,000 on the basis that the payment made to Barton by the bankrupt was not a settlement for valuable consideration, and therefore could be recovered under the Bankruptcy Act 1966 (Cth). The dispute arose from a payment made by the bankrupt to Barton prior to the bankruptcy, which the Official Receiver sought to recover as an antecedent transaction.
The central legal issue the court needed to address was whether the payment made to Barton constituted a settlement for valuable consideration within the meaning of section 120 of the Bankruptcy Act 1966 (Cth). This required a determination of the nature of the payment, whether it was made for a legitimate purpose, and if it could be classified as a settlement for valuable consideration. Additionally, the court had to consider whether the payment was made in the ordinary course of business or if it was intended to place Barton in a better position than other creditors.
The court examined the evidence and concluded that the payment made to Barton did not constitute a settlement for valuable consideration. The court found that the payment was not made for a legitimate business purpose, and there was no evidence to suggest that the transaction was in the ordinary course of business. The court held that the payment was made with the intent to place Barton in a better position than other creditors. As a result, the court varied the order of the trial judge by reserving leave to the Official Receiver to apply to the trial judge for appropriate orders regarding the payment. The appeal was otherwise dismissed, and Barton was ordered to pay the costs of the Official Receiver.
Orders
Orders of the court
1. The order of the court made on 13 December 1983 that the appellant pay to the Official Receiver the sum of $170.000 be varied by reserving leave to the Official Receiver to apply to the trial Judge for appropriate orders as to how much of and when the said sum should be paid.
2. Otherwise the appeal be dismissed.
3. The appellant pay the costs of the Official Receiver of this appeal.