Commonwealth Banking Corporation v Percival

Re: OFFICIAL TRUSTEE IN BANKRUPTCY
And: DAVID CHARLES ROSS and CORINA MULHOLLAND
No. G162 of 1988
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL TERRITORY
Morling(1), Wilcox(1) and Burchett(1) J.

CATCHWORDS

Bankruptcy - avoidance of settlement under s.120(1)(a) - $5000 conditionally given by bankrupt to his daughter to enable her then to purchase works of art, motor car and other goods from him - whether she was a "purchaser ... for valuable consideration" - whether the transaction should be dissected into a gift and a purchase, or be seen as a whole - whether the motor vehicle was "necessary household property".

Bankruptcy Act 1966, ss.116(2)(b), 120(1)(a)

HEARING

SYDNEY

#DATE 2:6:1988

Counsel for the Appellants: B.J. Skinner

Solicitors for the Appellants: Messrs Lobban McNally and Harney

Counsel for the Respondent: M.R. Aldridge

Solicitors for the Respondent: Messrs Duffield and Duffield

ORDER

The appeal be allowed.

It be declared that the goods itemised in the amended schedule to the application as numbers one to twelve inclusive (other than numbers nine, ten and eleven) are property to which the Official Trustee in Bankruptcy is entitled as trustee of the estate of the bankrupt.

The respondents deliver up within 7 days to the Official Trustee in Bankruptcy the said property to which he is so entitled.

The respondents pay the costs of the Official Trustee in bankruptcy of the application at first instance and of the appeal.

NOTE: Settlement and entry of orders is dealt with in Order 36

of the Federal Court Rules.

JUDGE1

This is an appeal from a decision of a Judge of the Court in respect of an application by the Official Trustee in Bankruptcy, who had sought, in reliance on s.120(1)(a) of the Bankruptcy Act 1966, orders for the delivery up to him of certain articles as property devolving upon him in the bankruptcy of the first respondent. The learned Judge held that the property had been sold by the bankrupt, for valuable consideration and in good faith, to his daughter, the second respondent. The Official Trustee appeals on the ground (inter alia) that his Honour erred in finding that the relevant transaction was for valuable consideration.

1. In April 1986, the bankrupt, who had been recently diagnosed as terminally ill, had discussions with his daughter, in which he expressed a desire to ensure that she received his personal property on his death. His evidence is that he was concerned his brother might challenge a will he had made in her favour. Apparently, he had previously neglected her and was anxious to make amends. He said in evidence, supported by his daughter and a friend, that he gave her $5,000 in cash, telling her:
   
   

"I will now sell you all my household belongings, personal effects, art works and antiques for $5,000... I'll give you a receipt and that will stop Dennis from challenging my will, as this receipt will be your evidence of ownership. You…