Brien, R.C. v Kallifidas, A

[1992] FCA 48

IN THE FEDERAL COURT OF AUSTRALIA	)
NEW SOUTH WALES.DISTRICT REGISTRY	) No. NSW G43 of 1991
GENERAL DIVISION	)

BETWEEN:  RICHARD CAMPBELL BRIEN

Applicant

m:  ?&ITON10 KALLIFIDAS

First Respondent

ASPASIA KALLIFIDAS

Second Respondent

CORAM:	Jenkinson J.
PLACE :	Melbourne
W:	20 February, 1992

MINUTES OF ORDER

THE COURT DECLARES THAT:

The disposition of property effected by the execution, delivery and registration of the instrument of title numbered M620873V in the Office of Titles of the land comprised in certificate of title volume 8057 folio 839 was a settlement of property which by virtue of the provisions of section 120(l)(a) of the Bankru~tcv Act 1966 is void as against the applicant the trustee in the bankruptcy numbered in this Court NB1352/88 of the first-named respondent Antonio Kallifidas.

NOTE:	Settlement and entry of orders is dealt with in
Order 36 of the Federal Court Rules.

THE COURT ORDERS THAT:

Further consideration of the proceeding (including the costs of the proceeding to and including this day and of the entry of this order) be adjourned to a date to be fixed.

IN THE FEDERAL COURT OF AUSTRALIA	)
MEW SOUTHWUES DISTRICT REGISTRY	) NO. NSW G 43 of 1991
GENERAL DIVISION	)

BETWEEN:  RICHARD CAKPBELL BRIEN

Applicant

AND:  ANTONIO KALLIFIDAS

First Respondent

AND:  ASPASIA KAtLIFIDAS

Second Respondent

C O W :	Jenkinson J.
PLACE :	Melbourne
DATE :
-	20 February, 1992

REASONS FOR JUDGMENT

Proceeding for a declaration that a disposition of property is void as against the applicant, pursuant to s.120(1) of the Bankruptcv Act 1966, and for consequential relief.

The first-named respondent (to whom I shall refer as "the husband") is a bankrupt and the applicant is the trustee in that bankruptcy. A sequestration order was made against the husband's estate on 22 August 1988. Within 2 years before the commencement of the bankruptcy the husband had by execution and delivery of an instrument of transfer to hls wife, the second-named respondent, enabled her to become, by registration of that transfer the registered proprietor of his fee simple estate in the land comprised in certificate of

title volume 8057 folio 839 . That is the dlspositlon of
property impugned by the trustee.

The husband and the second-named respondent ("the wife") were married on 16 August 1958 and have always lived together. The land comprised in certificate of title volume 8057 folio 839 ("the land") was acquired in January 1964 by purchase and the husband became the registered proprietor. Husband and wlfe and their two children lived in the house on the land, the address of which is 5 Peel Street Newport, in the State-of Victoria until the daughter, Dina, married John Tslgaris ("the son-in-law") at some time before 1985. The other three still live there. In April 1985 the husband executed in favour of A.G.C. (Advances) Ltd. an instrument of mortgage of the land to secure a loan by that company to the son-in-law of more than $55,000, which was said to have been applied in the purchase by him of a milk bar business, and the mortgage was registered in June 1985. Neither the wife nor the couple's son George Kallifidas ("the son") was aware of the husband's grant of that mortgage until 1986. The son-in-

March 1986. That company had a representative at or near the	law also borrowed $10,000 from Premier Credit Union Ltd. in
place where the husband had worked until he became disabled by injury. The husband took the son-in-law to that representative so that the loan by Premier Credit Union Ltd. might be made. At about the time the loan was made the husband signed one or more documents relating to the loan. The husband, who does not read English, swore that he at all times believed, and that he still believes, that his slgnlng was as a wltness, but he later suffered a judgment at the suit of Premier Credit Union Ltd. for some $16,000, and counsel for the parties have conducted this proceeding on the basis that the judgment was in respect of an obligation undertaken by the husband to pay the money lent to the son-in-law and interest accrued thereon. On the judgment was based the bankruptcy notice on which the company founded the petitlon which resulted in the husband's bankruptcy.
For reasons to be stated hereafter the impugned disposition has in my oplnion been shown to have been for "valuable consideration", in the sense which the law assigns that expression in s.120(1). The principal question is whether the wife, in whose favour the disposition was made, was "a purchaser in good faith", in the sense which the law assigns that expression in that section.
For a number of years after their marriage the husband and the wife, who both worked until about 1985, pooled
their incomes. Savlngs were kept in an account in the wife's name with the Commonwealth Bank of Australia. From that
account came the deposit on the purchase of the house in January 1964. Title was taken in the husband's name. The wife demanded that she and the husband be registered as joint proprietors. In 1966 a mortgage of the land to Bendigo Mutual Permanent Land and Bullding Society, to secure a loan of money applied in purchasing the land, was discharged and the

Commonwealth Savings Bank of Australia was substituted as the mortgagee. Each of the husband and the wife claimed in evidence to have believed at that time that the title was also being changed to joint proprietorship. She has little English. The husband clalmed ln evidence that he did not learn that the title remalned in his sole name until he arranged the mortgage to A.G.C. (Advances) Ltd. in 1985. A writ for possession of the land was issued out of the Supreme Court of Victoria at the suit of A.G.C. (Advances) Ltd. in April 1986, but I find that the wife and the son did not learn that the mortgage had been granted until early September 1986 when they returned from a journey to Greece. Discussions between husband and wife, in which the son participated, resulted in a decislon that money would be borrowed from the Commonwealth Bank to enable the mortgage to A.G.C. (Advances) Ltd. to be discharged. (The previous mortgage to the bank had been discharged in 1971.) The amount required to discharge the mortgage to A.G.C. (Advances) Ltd. was just under $60,000. The husband had recently recelved $25,000 as worker's compensation. The wife had about $7,000 which she and the son	had accumulated in a State Bank of Victoria bank account,	being savings from his wages and perhaps some of her own
money. It was agreed that these sums, totalling about $32,000 would be committed to paying out A.G.C. (Advances) Ltd., together with the money to be borrowed from the Commonwealth Bank. In the middle of October 1986 the Commonwealth Bank by the manager of the Newport branch agreed to lend the wife $26,000, which was later increased to $28,000, on the security of a mortgage by the husband of the land. Husband, wlte and son gave evidence that the bank manager had refused to lend the husband the money on the ground that he was not employed, but was a pensioner. The wife herself had not worked since 1985, but was receiving weekly payments of worker's compensation. According to the husband's evidence the wife represented to a bank officer that she was working.
The mortgage to A.G.C. (Advances) Ltd. was discharged on 31 October 1986. The mortgage to the Commonwealth Bank is dated 10 December 1986. It was not registered until June 1988. On 18 December 1986 the wlfe became the registered proprietor of the fee slmple estate in the land by registration of an instrument of transfer by the husband to her which is dated 27 October 1986. It may be confidently inferred that A.G.C. (Advances) Ltd. suffered the mortgage to be discharged only after the loan by it had been repaid and that the Commonwealth Bank contributed more than $25,000 to that repayment. The evidence does not disclose what security the Commonwealth Bank held for its advance, other than possession of the duplicate certificate of title, from October until December.
The consideration stated on the instrument of transfer from husband to wife is "Natural Love and Affection". In a statutory declaration by the husband concerning the
transfer he deposed that he was "donor of the . . . . property".
The solicitor by whom the transfer was prepared did not give evidence. Application was made by counsel for the applicant for leave to re-open the applicant's case and to call the solicitor as a witness after that counsel had cross-examined husband, wife and son at length. It had been polnted out to counsel the day before the application was made, whlle he was cross-examining the first of those three to give oral evidence, that there was no evidence by the solicitor. When the application was made, it was refused, having regard to those circumstances. Those three witnesses all gave evidence that the wife, with the son's support, had demanded that, if she were to be the borrower from the Commonwealth Bank, she become the registered proprietor of the land. She had always claimed a jolnt interest with her husband in the land and had understood from him that since 1966 she and he had been joint registered proprietors. In order to discharge an obligation which her husband had caused to be secured by the land without her knowledge she was now to contribute an amount equal to nearly half the value of the land : $28,000 for the repayment of which to the Commonwealth bank she would be responsible and $7,000 which her son was allowing her to contribute in cash.
paying in cash and what she was undertaking to repay to the They all gave evidence that in exchange for what she was Commonwealth Bank the husband should transfer to her the sole registered proprietorship. The husband gave evidence that, upon enquiry by the solicitor, he said that the transfer to the wife was by way of gift. But in reality he conce~ved the transaction as both a gift and a selling, as he swore.

Husband, wife and son gave evidence that, although

one of the motives the wlfe and the son had for seeking sole

proprietorship of the land for the wife was a deslre to

protect her from any further dealing by the husband with the land of whlch she would not approve, neither the wife nor the son had any suspicion, at the time when the instrument of transfer was executed, that the husband had already incurred any debt or other financial obligation, in addition to that to A.G.C. (Advances) Ltd. All three swore that it was not until November 1986 that any knowledge or suspiclon of the husband's

involvement in a transaction of loan, whether by Premier

Credit Unlon Ltd. or any other person, to the son-in-law came to the wife or the son. Having given evidence that he and his mother had been shocked to learn, on their return from Greece, that the husband had mortgaged the land to secure the loan by A.G.C. (Advances) Ltd., the son gave this evidence:

"Here he was; he had put the family into the

possibility of being responsible for $60,000

that was owed by your brother-in-law ? . . .

Correct.

Did nelther of you say to him, 'What else have

you done?'?...Yes. I had asked my father after the AGC incident if he had signed anything else

or if there was any - - -

No, no. Never mind about slgning things. Did you ask him, 'What else have you done to help Tsigaris?'?---And he had told me nothing. I did not put it in that way. I just asked him if there were any other loans or anything else at the time that we received the summons and he had told me no.

But did you believe him?---I asked him several

tunes - - -

Did you go and ask your sister?---Well, we were not virtually on good talklng terms then. They would not reply to anything. Every time we sort of trled to ring them up, they would hang up on us, or, 'Just hang on a second, we are busy', and they would leave us on the line and they just would not talk to us."

At the time when a loan of $28,000 was being sought from the Commonwealth Bank the wife's account with that bank had a credit balance of about $16,000. The wife agreed in evidence that that was the jolnt property of the husband and herself, the credit balance of their pooled savings. She was not asked why none of that amount of $16,000 was applied in discharge of the debt owed to A.G.C. (Advances) Ltd. She agreed that she had paid the whole of the amount to her son "round about the time" when her husband transferred to her sole proprietorship of the house. The son gave evidence that the $16,000 formed part of about $18,500 given to him by his mother to purchase a panel-beating business. The husband was not questioned, and gave no evidence, about this gift to the son. I find that the wife knew and intended, certainly before registration of the instrument of transfer to her, and on the

probabilities before execution of that instrument, that her	husband's share, as well as her own share, of the $16,000 at
bank was to be committed to the purchase by their son of a panel-beating business.

Sub-section 120(1) of the Bankruutcv Act 1966

provides :

"A settlement of property, whether made before or after the commencement of this Act, no being

-

(a)	a settlement made before and in consideration of marriage, or made in favour of a purchaser or encumbrancer in good faith and for valuable consideration; or
(b)	a settlement made on or for the spouse or children of the settlor of property that has accrued to the settlor after marriage in right of the spouse of the settlor,

is, if the settlor becomes a bankrupt and the settlement came lnto operation after, or within

2 years before, the commencement of the

bankruptcy, void as agalnst the trustee in the
bankruptcy."

The belief of each of the husband and the wife was, as I find, that the value of the land in 1986 was about $80,000. At all material times at and before that time their contributions to the acquisition of the land were, and were regarded by each of them as, substantially equal. The husband represented to the wife from 1966 until October 1986, as I find, that their formally legal entitlement to the land was as equal owners. It is, as I think, unnecessary to make a finding as to whether he believed that representation to be

true until 1985. Any clam by the husband in or after 1966

that he was owner of the land to the exclusion of any interest in the wife would in my opinion have been rejected by a court, and she would have been recognised by a court as joint owner

of the land in equity : B a u m a a r t n e r v. B a u m a a r t n e r (1987) 164

C.L.R. 137. I did not understand counsel for the applicant to submit to the contrary. On that basis the interest of each of the husband and the wife in the land, if it were unencumbered,

was worth about $40,000. But upon partition or sale in lleu thereof before October 1986 the husband's interest was burdened with his obligation to d~scharge the debt to A.G.C. (Advances) Ltd. by payment of about $60,000. The agreement

between the two parties included provision for a contribution by the husband of $25,000 (the worker's compensation award), which he in fact made. That left $35,000 which the husband had to allow the wife on taking an account between them. In lieu of receiving payment of that sum the wife acquired his interest in the land, the value of which was about $40,000. In my opinion the wife was a purchaser for value of the husband's interest in the land : the consideration she gave in releasing him from his obligation to account to her was a consideration of real and substantial value, not a consideration which was nominal, trlvial or colourable. (See Barton v. Official Receiver (1986 161 C.L.R. 75.)

If it were objected that the wife's equitable joint
interest in the land had not been recognised elther by the

husband or by any court, yet the arrangement the parties made

compromise of their conflicting claims, if conflict there	is in my opinion to be regarded as including a bona fide
were, on the question whether she did have that interest. So regarded, the disposition the husband made was for valuable consideration provided by the wife, in my opinion.
The questlon remains as to whether the wife was "a purchaser . . . . in good faith" within the meaning of that expression in s.l2O(l)(a). The meanlng of the expression in that sectlon is not free from doubt, as Flsher J. explained in Barton v. Official Receiver (1984) 4 F.C.R. 380 at 388-389:

"The respondent challenged the trial judge's finding that the settlement was made in good faith and his finding that, in relation to s.121, it was not made with intent to defraud creditors. I would agree with the latter flnding as there was no evidence that at the date of the settlement the bankrupt, and indeed the appellant, could have reasonably been aware that the bankrupt had any creditors. The trial judge also was of opinion that the requirement that the purchaser should be 'a purchaser in good faith' was established, or more correctly that the respondent had failed to prove to the contrary. I agree wlth thls finding if the sole test of bona fides was that relied upon by the trlal judge, namely that 'existence of knowledge or suspicion of an inability to pay debts as they fall due negatives good faith'. The test was taken from the judgment of Lathan C3 in Downs Distributing Company Ltd. v. Associated Blue Star Stores Pty. Ltd. (In Liq.) (1948) 76 CLR 463 at 472. In that case however the High Court was considering 'good faith' in the context of the preferential payments provisions in s.95 of the then Bankruptcy Act 1966 (Cth). It has been said that these words do not necessarily have the same meaning in other sections of the Act (see Williams, Bankruptcy ( 18th ed) , p. 375 ; McDonald, Henry and Meek Australian Bankruptcy Law (5th ed), p.320) and that under the sectlons dealing with

dishonesty or of any conscious attempt to	avoidance of settlements they mean 'absence of
defraud ny other person'. If this be the case, there is much to be said for a wider review of the present transactions beyond merely considering their impact upon the interests of the bankrupt's creditors. In this regard I note that Buckley LJ in Re Pope [l9081 2 KB 169 at 174 sald that the 'words 'in good faith' exclude colourable transactions' and also that the expression normally means that deallngs are made with honesty and propriety.
In this present matter the inference can fairly be drawn that the purpose of the transactions was to remove from two of the Barton family companies the only valuable or potentially valuable assets of the group, namely the Castelcrag Dwellinghouse and the shares in Hawkesbury Developments Pty. Ltd. Such withdrawals took place very shortly after investigators had been appointed to these companies under the Companies Act 1961 (NSW). By arranging the transactions the bankrupt and his father as directors not only ensured that these assets were vested in friendly hands, but also that the bankrupt's loan accounts wlth the two companies became virtually worthless. The trial judge found that the appellant's participation in the transactions 'was that of an acquiescent at the behest of the bankrupt and Alexander Barton' and that he would not readily accept the appellant's evidence. In my opinion this inference as to the real purpose of the transactions can fairly be drawn and the evidence of the appellant would not persuade one to the contrary. However in the circumstances of this matter it is neither necessary nor desirable to form any concluded view, particularly as this as the purpose or the transactions does not appear to have been put to the participants. It is also proper to observe that to approach 'good faith' in this manner may well not accord with the view of Gibbs J., as he then was, in Re Hyams (1970) 19
FLR 232 at 256 where he said that 'in good
faith', in the context of the predecessor to s.120, means 'without notice that any fraud or preference contrary to the statute is intended'. However it was not necessary on the facts of that case to decide whether a wider meaning can in appropriate circumstances be given to the words."

In one sense the husband was plainly unable to pay his debts as they fell due at the time he made the settlement, and his wife well knew it : he was under a liability then due to pay A.G.C. (Advances) Ltd. about $60,000. Hls assets consisted, as the wife believed and as was probably the true position, of his equitable jolnt interest in the land, worth, free of the encumbrance of the mortgage, about $40,000, his $25,000 compensation money, and his joint interest in the $16,000 at bank in the w~fe's name. Without the acquiescence
of his wife he could not by hls own acts promptly realise the value of his interest In the land, and he had therefore less than $35,000 with which promptly to discharge a liability of about $60,000. But that situation, as I have described it, is not that which is contemplated by the courts when reference is made to an inability to pay debts as they fall due. That situation, as described, involves only one secured creditor (or, it might in another case be, several secured creditors each with recourse to a securlty readily realisable for more than the amount of his debt) whose readily realisable security is worth more than the amount of the debt, and no unsecured creditor. The wife might by legal proceedings have restrained the husband from selling the land, but she could not have delayed the sale of the land by the mortgagee by raising in a legal proceeding against the mortgagee her equitable interest, of which A.G.C. (Advances) Ltd. had no notice. But there was another creditor, who was an unsecured creditor : Premier Credit Union Ltd. If the wife knew or suspected that there was another creditor or other creditors, was she a purchaser in good faith? On the taklng of an account between herself	and her husband on sale of the land the balance of the
proceeds of sale after discharge of the secured debt would
obviously have been a sum insufficient to provide her with an amount equal to the value of her unencumbered interest as joint proprietor. While not a credltor in the conventional sense, she was a person to whom the husband would inevitably come under a pecuniary liability upon the taking of an account between him, as trustee holding the legal estate in the land
I n t r u s t f o r them a s jo in t equitable owners, and her as one of
those equi table owners. H i s mortgaging of t he l e g a l e s t a t e
was a breach of h i s duty as t r u s t e e . She should i n my opinion
be regarded a s a c r e d i t o r wi th in t h e meaning of t h a t word i n
s . 1 2 2 : see R e Donovan: Ex p a r t e A.N.Z. Bankinq Group Ltd.
( 1 9 7 2 ) 2 0 F.L.R. 50 a t 68-69. To s a t i s f y t h a t l i a b i l i t y t h e
husband would have had t h e $25,000 compensation money, h i s i n t e r e s t i n t he money a t bank i n he r name (about $8,000) and
h i s half share of t h e balance of t h e proceeds of s a l e of t h e
land a f t e r discharge of t h e secured debt , which balance might
be about $20,000. From the aggregate of those t h r ee amounts,
$43,000, he could have paid t h e wife t h e amount which on a
t ak ing of accounts might be expected t o be found due t o he r ,
about $30,000, which together wi th her half share of t h e
balance of t he proceeds of s a l e would equal her half share of
t h e p r i c e f o r which it is assumed t h a t t h e land was sold . The
balance of $13,000 might o r might not s u f f i c e t o pay t h e o the r
c r e d i t o r o r c r e d i t o r s . A s purchaser under t h e se t t lement
which was i n f a c t made she assured herse l f of ownership of t h e
land, f r e e of encumbrance, by paying $7,000 and incurr ing an
ob l iga t ion t o pay $28,000 over t h e following t e n years ,
leaving t h e husband t o pay $25,000 and t o d i v e s t himself of
h i s benef ic ia l i n t e r e s t i n t h e land. I f t h e wife knew o r
suspected t h a t t h e r e was an unsecured c r e d i t o r , then she must
have known t h a t i f t h e debt owed t o t h a t c r e d i t o r proved t o be
s u b s t a n t i a l l y more than $13,000, o r i f t h e land so ld f o r
s u b s t a n t i a l l y less than $80,000, her husband would be unable
t o pay t h a t c r e d i t o r what was owed him a s w e l l a s allowing her
on a taking of an account between them what would be due to her. And she must have known that, if her husband's share of the money at bank in her name ($8,000) was shortly to be paid to the son, it was likely that elther she or the creditor would not be paid what was due to each of them. (In the result the judgment on which the bankruptcy notice was founded was for more than $16,000.)
Mr. McInnes of counsel for the applicant relied upon reasoning of Cairns L.C. in T o m k i n s v. Saffery (1877) 3 App. Cas. 213, which he said aptly comprehended the mental state of the wife in this case and showed her to have lacked "good faith" when the impugned disposition was made. T o m k i n s v.
Safferv concerned the application of s.92 of the E n u l i s h
B a n k r u p t c v A c t 1869, which provided:

"Every conveyance or transfer of property, or charge thereon made, every payment made, every obligation incurred, and every judicial proceeding taken or suffered by any person unable to pay his debts as they become due from his own monies in favour of any creditor or any person in trust for any creditor, with a view

other creditors, shall, if the person making,	of giving such creditor a preference over the
taking, paying, or suffering the same become bankrupt within three months after the date of maklng, taking, paylng, or suffering the same, be deemed fraudulent and void as against the trustee of the bankrupt appointed under this Act; but this section shall not affect the rights of a purchaser, payee, or encumbrancer in good faith and for valuable consideration."

This is one of those "preferential payments sections" to which Fisher J. refers in the passage I have quoted from his reasons for judgment in Barton's Case. The payees in Yon~kins v .

S a f f r e v were creditors of a member of the Stock Exchange who

became bankrupt within three months after making a payment to them under the Stock Exchange rules. Their debts had been incurred on the Stock Exchange. Lord Cairns said (3 App. Cas.

at 2 2 6 - 2 2 7 ) :

"My Lords, I am willing to take it that we have here a 'payee' or payees 'for valuable consideration,' namely, pre-existing debts. But are they to be taken as payees ' in good faith,' within the meaning of this section? Of course I do not speak of good faith in a moral point of view. They may have belleved the statement, and I am willing to take it that they did believe the statement of the Bankrupt a$ to his having no other creditors. But are they payees in good faith according to the test whlch is laid down in this section, a test derived from the operation of the Bankruptcy Law? I take it that in order to give any meaning to the words 'in good faith' at the end of this section, your Lordships must hold those words to apply to the matters which are mentioned in the earlier part of the section. If you find a person receiving a payment in complete ignorance of, or without any means of getting information with regard to, the matters mentioned in the earller part of the section, he may be a payee in good faith. That was the case in the appeal that came before your Lordships ' House of B u t c h e r v. S t e a d Law Rep. 7

made to a person who was admitted not to have

1I.L. 839. In that case there was a payment

any knowledge of the circumstances of the person making the payment, and there was no suggestion that the person receiving the payment was aware that that payment would have interfered with, or could have interfered with, the rights of other creditors. But your Lordships have, in the present case, in the first place, this, that the persons who received the payment, the payees, were clearly aware that he who made the payment was a person unable to pay his debts, as they became due, from his own moneys, for he had told them so in the frankest and clearest way. Upon the application of that test, therefore, these payees must fail.

Well then, what as to thelr good faith, quoad the giving to themselves, the Stock Exchange creditors, a preference over other creditors? Now, my Lords, they are in this position as to that - they knew the amount of the bankrupt's assets, they knew the amount of their own debts, they knew therefore that if there was another creditor undoubtedly they must be receiving a preference over that other creditor. And upon the all-important fact whether there was another creditor or not, they had this farther information, that there was a person with whom the bankrupt had had pecuniary dealings to a considerable amount, which dealings might take the form either of debt or of bounty not amounting to debt. That they knew, for upon that they had asked quest~ons.

And my Lords, upon all this they were satisfied to take the word of the bankrupt himself alone, the person who of all others upon a matter of this klnd would be their most untrustworthy informant. If they had been disposed, in good faith, really to ascertain what was the truth upon this matter, all they had to do was to ask the person who could have given them the information, namely, Mr. McKenzie himself. They asked no question of him, or of any other person representing him; they took the word of the bankrupt, and upon that they trusted; and in that view how can they be in any hlgher position than the bankrupt himself? Whatever notice or knowledge he has, they must be held to have. They did not provide themselves as they might have done with independent information; they rested their title upon the truth, or the untruth, of the assertion made to them by the bankrupt, and upon that truth or untruth they must stand or fall. If the statement had been a true one, the transaction

might have been maintained, but not being a	true one, it cannot, in my opinion, be
maintained."

So, here, according to Mr. >IcInnes s submission, if the wife had been disposed in good faith to ascertain what was the truth of the matter she would have pressed her son-in-law and her daughter to say what was the total indebtedness for which the husband had committed himself as surety, and to say who the creditors were.

I am persuaded that, knowing that the husband's $8,000 at bank in her name was shortly to be pald to the son, the wlfe elther knew (from one or several of her daughter, the son-in-law and the husband) or strongly suspected that the husband had engaged himself as surety for a substantial sum borrowed by the son-in-law (in addition to the indebtedness to A.G.C. (Advances) Ltd.), which sum the husband was likely to be called upon to pay in the immediate future, and which he would probably not be able, as she believed, to pay without leaving her unpaid to some extent what would be due by him to her on sale of the land to a third party. That being her state of mind, was she "a purchaser in good faith", within the meaning of that phrase in S . 120(l) (a)? It must be borne in mind that the wife - (a) believed herself to be as to one half owner of the land; (b) believed herself not to be in any way responsible for payment of the debt owed to A.G.C. (Advances) Ltd.; (c) believed herself not to be in any way responsible for payment of the further debt she knew or believed that the husband had incurred to an unsecured creditor. In none of those bellefs was she mistaken. The

creditor recourse to the husband's beneficial interest in the	effects of the impugned transaction were to deny the unsecured
land by disposing of it and to deny the unsecured creditor recourse to the $25,000 compensation payment. Such a creditor would have no recourse to the wife's own beneficial interest, whether or not the husband became bankrupt. For what she bought she gave good and commercially real consideration. The husband's beneficial interest in the land could be available to satisfy the unsecured creditor's debt only iL, and after, the husband's debt to B.G.C. (Advances) Ltd. was wholly discharged. To achieve that discharge the husband applied the value of his beneficial interest in the land, supposed to be $40,000, and $20,000 of the $25,000 compensation money, to discharge the debt of $60,000. That can in my opinion be said to have had the effect of giving the wife a preference over the unsecured creditor to the extent of $20,000. And of that the wife had notice if she had, as I find she had, knowledge or a strong suspicion that there was such an unsecured creditor. The application of the $25,000 also contributed to the removal of her beneficial interest as joint proprietor from the reach of the secured creditor, A.G.C. (Advances) Ltd. In my opinion she was not a purchaser in good faith.
There will be a declaration that the disposition of property effected by the execution, delivery and registration of the instrument of title numbered M620873V in the Of £ice of Titles of the land comprised in certificate of tltle volume 8057 folio 839 was a settlement of property which by virtue of
the provisions of section 120(l)(a) of the Bankruptcy Act 1966
is void as against the applicant the trustee in the bankruptcy numbered in this Court NB1352/88 of the first-named respondent Antonio Kallifidas. I will hear counsel as to what further
orders should be made.

I certify that this and the 19
preceding pages are a true copy of
the Reasons for Judgment of the

Honourable Mr. Justice Jenkinson.

Dated: 20 February, 1992

Counsel for the Applicant	Mr. R. S . McInnes instructed by M e s S r s . Coltmans
Counsel for the Respondent	Mr. B. Scheid instructed by Messrs. Dawson Kennedy
& McDonald
Dates of Hearing	9, 10 and 11 October, 199 1