Davis v Mackerras

This case involved an appeal from the Court of Bankruptcy for the District of Victoria concerning a sum of £900 held by the Official Receiver. The appellant, John G. Davis, as trustee in the bankruptcy of John William Mackerras, sought to claim the majority of this sum (£788 18s. 2d.) as assets of the bankrupt's estate. The respondent, Ermonce Irene Mackerras, the bankrupt's wife, claimed the money as her own property, arguing it had not been "lent or intrusted" to her husband within the meaning of section 85(1) of the *Bankruptcy Act 1924-1929*. The Court of Bankruptcy had found that the money originated from the respondent's property and ordered that a significant portion be paid to her.

The central legal issue before the Full High Court was whether the respondent had "lent or intrusted" the sum of £788 18s. 2d. to her husband, John William Mackerras, within the contemplation of section 85(1) of the *Bankruptcy Act 1924-1929*. This section dictates that money or estate of a wife lent or intrusted to her husband shall be treated as assets of his estate, postponing the wife's claim as a creditor until other creditors for valuable consideration have been satisfied. The court was required to determine if the circumstances surrounding the handling and arrangement of the funds constituted such a lending or entrusting, or if the wife retained sufficient control and rights over the money.

The High Court, in dismissing the appeal, reasoned that the mere physical possession of the wife's money by the husband, even for the purpose of safekeeping or transmission, did not amount to "lending" or "intrusting" under section 85(1). The court emphasised that the word "intrusted" in this context implied the conferral of some legal power or authority upon the husband to use or dispose of the property as if it were his own, rather than simply holding it for physical custody or as a messenger. In this instance, the wife retained the right and power to draw the money, with her right being primary and her husband's conditional. Therefore, the facts did not fall within the scope of the section, as the wife had not divested herself of her legal control in a manner that would prejudice other creditors.