JONES (TRUSTEE), IN THE MATTER OF MCGINLEY

The proceeding concerned an application by the trustee in bankruptcy of the estate of Mr. McGinley for directions regarding the distribution of certain funds. The trustee sought to determine whether a sum of $100,000 paid by Mr. McGinley to his wife, Mrs. McGinley, prior to his bankruptcy, constituted a voidable transaction under section 120 of the *Bankruptcy Act 1966* (Cth). The dispute therefore lay between the trustee, seeking to recover the funds for the benefit of Mr. McGinley's creditors, and Mrs. McGinley, who claimed the funds were a valid gift. The matter came before Emmett J of the Federal Court of Australia.

The central legal issue before the Court was whether the transfer of $100,000 from Mr. McGinley to Mrs. McGinley was a disposition of property for less than the "availeble consideration" within the meaning of section 120(1) of the *Bankruptcy Act 1966* (Cth). This required the Court to consider the nature of the consideration, if any, provided by Mrs. McGinley for the transfer and whether it was adequate in the circumstances at the time of the transaction.

Emmett J reasoned that for the transaction to be voidable under section 120(1), the trustee bore the onus of proving that Mr. McGinley received less than the available consideration for the disposition. The Court examined the evidence presented, which indicated that Mrs. McGinley had provided no consideration for the $100,000. Consequently, the disposition was for less than the available consideration. The Court applied the principle that a gift, by its very nature, involves no consideration being given in return.

The Court ordered that the sum of $100,000 paid by Mr. McGinley to Mrs. McGinley be set aside as a voidable transaction under section 120(1) of the *Bankruptcy Act 1966* (Cth), and that Mrs. McGinley pay this sum to the trustee in bankruptcy.