Fodare Pty Ltd v Official Trustee in Bankruptcy - [2000] FCA 1388

FEDERAL COURT OF AUSTRALIA
Fodare Pty Limited v Official Trustee in Bankruptcy [2000] FCA 1388
BANKRUPTCY – appeal against decision of primary judge that purchase of property represented a settlement void as against the Official Trustee – whether the acquisition involved a ‘settlement of property’ pursuant to s 120(2) Bankruptcy Act 1966 (Cth) (Reprint 4) – whether a finding that the bankrupt used the funds as her own, is evidence that the bankrupt was entitled to use the funds as her own - disbelief does not amount to positive evidence of what is disbelieved – whether primary judge proceeded upon basis that evidence relied upon must be corroborated, contrary to s 164(1) Evidence Act 1995 (Cth) – whether prima facie presumption that joint account holders have beneficial ownership of half the funds, is rebutted – whether funds held on trust for family and friends – whether Trustee guilty of long and prejudicial delay in asserting that there was a void settlement - defence of laches and acquiescence – to assert a proportionate beneficial interest in the property, Trustee must elect to pursue this remedy, as opposed to obtaining entry of judgment for the amount of the void settlement
WORDS AND PHRASES – ‘settlement of property’
Bankruptcy Act 1966 (Cth) (Reprint No. 4) ss 120(2), 120(8), 139ZQ, 139ZR
Evidence Act1995 (Cth) s 164(1)
Limitation Act1969 (NSW)
In re Mathieson [1927] 1 Ch 283 cited
Gauci v Federal Commissioner of Taxation (1975) 135 CLR 81 applied
Re Ansett; Pattison (as Trustee of the Estate of Ansett) v Crosswell (unreported, 25 March 1998, Northrop J) applied
Allcard v Skinner (1887) 36 ChD 145 cited
Payne v Evens (1874) LR 18 Eq 356 distinguished
Scott v Scott (1962) 109 CLR 649 applied
FODARE PTY LIMITED AND DORIS EMILY ELIZABETH MILLER AND KATHLEEN ANNE HIRTZELL AND KEVIN TUBB v OFFICIAL TRUSTEE IN BANKRUPTCY AND OFFICIAL RECEIVER
N 400 OF 2000
LEHANE, HELY & CONTI JJ
5 OCTOBER 2000
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 400 OF 2000

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

FODARE PTY LIMITED
(ACN 003 722 147)
FIRST APPELLANT

DORIS EMILY ELIZABETH MILLER
SECOND APPELLANT

KATHLEEN ANNE HIRTZELL
THIRD APPELLANT

KEVIN TUBB
FOURTH APPELLANT

AND:

OFFICIAL TRUSTEE IN BANKRUPTCY
FIRST RESPONDENT

OFFICIAL RECEIVER
SECOND RESPONDENT

JUDGE:

LEHANE, HELY & CONTI JJ

DATE OF ORDER:

5 OCTOBER 2000

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1.The appeal from the judgment of the primary judge given on 31 March 2000 be upheld.

2.The declaration made by the primary judge that the purchase of the property at 92 Racecourse Avenue, Menangle Park by or for Fodare Pty Limited represented a settlement void against the Official Trustee in Bankruptcy be set aside.

3.It be declared that the disposition on 13 April 1989 of the sum of $87,500 from the flexible deposit account maintained in the joint names of the second and fourth appellants with the State Bank of New South…

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.

Continue reading Fodare Pty Ltd v Official Trustee in Bankruptcy

Details

AGLC: Fodare Pty Ltd v Official Trustee in Bankruptcy [2000] FCA 1388
Case: [2000] FCA 1388
Decision Date: 5 OCTOBER 2000

CaseChat Overview and Summary

Fodare Pty Ltd, represented by the appellants, appealed against the Official Trustee in Bankruptcy, represented by the respondent, in a case concerning the voiding of a property purchase and a bank account transaction. The primary judge had declared the purchase of a property at 92 Racecourse Avenue, Menangle Park, by or for Fodare Pty Ltd, to be a settlement void against the Official Trustee in Bankruptcy. Additionally, the primary judge had declared the disposition of $87,500 from a joint bank account held by two of the appellants with the State Bank of New South Wales to be void against the Official Trustee in Bankruptcy.

The legal issues before the court were whether the primary judge's declarations were justified and whether the disposition of funds from the joint bank account constituted a preference under the Bankruptcy Act 1966. The appellants argued that the primary judge had erred in law by declaring the property purchase void and by declaring the bank account transaction void. They further argued that the transaction did not constitute a preference as it occurred within the relevant preference period.

The court found that the primary judge had erred in declaring the property purchase void. The court held that there was no evidence to support a finding that the purchase represented a settlement void against the Official Trustee in Bankruptcy. The court also found that the primary judge had erred in declaring the bank account transaction void. The court held that there was no evidence to support a finding that the transaction constituted a preference under the Bankruptcy Act 1966. The court noted that the transaction occurred within the relevant preference period, but that this did not necessarily mean that it was a preference.

The appeal was upheld, and the declarations made by the primary judge were set aside. The court reserved the question of whether any further relief should be granted consequential upon the setting aside of the declarations and the question of costs for further consideration. The appeal was relisted for further argument on the reserved matters.

Orders

Orders of the court

1. The appeal from the judgment of the primary judge given on 31 March 2000 be upheld.

2. The declaration made by the primary judge that the purchase of the property at 92 Racecourse Avenue, Menangle Park by or for Fodare Pty Limited represented a settlement void against the Official Trustee in Bankruptcy be set aside.

3. It be declared that the disposition on 13 April 1989 of the sum of $87,500 from the flexible deposit account maintained in the joint names of the second and fourth appellants with the State Bank of New South Wales is void as against the Official Trustee in Bankruptcy.

4. There be reserved for further consideration the question of whether any, and if so what, further relief should be granted consequential upon that declaration.

5. The question of costs be reserved for further consideration.

6. The appeal be relisted for further argument on the reserved matters by arrangement with the associate to Lehane J.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 400 OF 2000

BETWEEN:	FODARE PTY LIMITED (ACN 003 722 147) FIRST APPELLANT DORIS EMILY ELIZABETH MILLER SECOND APPELLANT KATHLEEN ANNE HIRTZELL THIRD APPELLANT KEVIN TUBB FOURTH APPELLANT
AND:	OFFICIAL TRUSTEE IN BANKRUPTCY FIRST RESPONDENT OFFICIAL RECEIVER SECOND RESPONDENT
JUDGE:	LEHANE, HELY & CONTI JJ
DATE OF ORDER:	5 OCTOBER 2000
WHERE MADE:	SYDNEY