Holden in His Capacity as Trustee of the Bankrupt Estate of Pekar v Pekar

The Federal Court of Australia, constituted by Judge Burchardt, considered a dispute between the trustee of a bankrupt estate and the bankrupt's spouse. The trustee sought to recover funds transferred from the bankrupt to his spouse, alleging these transfers constituted voidable transactions under the *Bankruptcy Act 1966* (Cth). Specifically, the trustee contended that the transfers were either preferential payments or unreasonable payments made by the bankrupt prior to his bankruptcy.

The central legal issues before the Court were whether the transfers of funds from the bankrupt to his spouse were voidable preferences under section 122 of the *Bankruptcy Act 1966* (Cth), and alternatively, whether these transfers could be set aside as unreasonable payments under section 120 of the *Bankruptcy Act 1966* (Cth). The Court was required to determine if the conditions for voiding these transactions were met, including whether the spouse was a creditor or had received the property in good faith and for valuable consideration.

Judge Burchardt reasoned that for a transaction to be a voidable preference, the bankrupt must have been influenced by a desire to prefer the recipient over other creditors. The Court found that the evidence did not establish this desire. Regarding the claim of unreasonable payments, the Court considered whether the bankrupt received adequate consideration for the transfers. The Court concluded that the transfers were not voidable preferences as the requisite intention was not proven, nor were they unreasonable payments as the bankrupt had received consideration, albeit not necessarily equal in value, for the funds transferred.

Consequently, the Court dismissed the trustee's application.