Halse v Norton

This appeal concerns the interpretation of s139ZS of the Bankruptcy Act 1966 (Cth) ("the Act") and the admissibility of certain evidence. The appellant, the trustee of the bankrupt estate of N.R. Payne ("Mr Payne"), appeals against a decision of a judge of the Federal Court (Carr J) that a notice issued under s139ZQ of the Act be set aside. The notice required the respondent, Mr Norton, to pay to the trustee an amount equal to the value of property received by Mr Norton from Mr Payne under a transaction for the sale and purchase of the property entered into by those parties prior to Mr Payne's bankruptcy. The notice was issued at the request of the trustee. The trustee's case was that the transaction was void against the trustee because it was not made for valuable consideration and in good faith.The appeal by the trustee does not challenge his Honour's identification of the relevant issues. The questions raised on the appeal relate to his Honour's construction of s139ZS of the Act and a ruling on evidence made by his Honour in the course of the hearing.The trustee contends that the provisions of Subdivision J impose an onus on a person who has made application under s139ZS of the Act to set aside a notice issued by the Official Receiver, to prove, on the balance of probabilities, that relevant facts relied upon by the Official Receiver in the facts and circumstances set out in the notice did not exist, or that the facts and circumstances did not disclose that the transaction was void against the trustee under Division 3 of the Act. The court found that the purpose of Subdivision J, namely, to facilitate the recovery of the worth of property, or alternatively the property, in respect of which the trustee has a right under Division 3 that may be made enforceable by litigation, is met by the construction that the onus of proving that the provisions of Subdivision J apply to the applicant and, therefore, that the provisions of Division 3 apply to the transaction, will be on the trustee, subject to express contrary provisions such as those set out in ss120(2) and (5), 122(3), 123(2) and 124(2) of the Act which place the onus of proof of certain matters on the person seeking to uphold the transaction.The court also found that the primary judge did not err in admitting into evidence the set of financial statements which were the subject of the other ground of appeal. The court found that the document remained admissible notwithstanding the concession as to good faith made by counsel for the trustee. The court found that the financial statements of Elgin provided to Mr Norton in April/May 1991 were relevant to the issue whether valuable consideration was provided by the transfer of the interest in the shares in Elgin in August 1991 and, therefore, admissible.The appeal must be dismissed.