Leroy as trustee of the Bankrupt Estate of Mogilevsky v Mogilevsky (No.2)

Paul Leroy, as trustee of the bankrupt estate of Alla Mogilevsky, sought summary judgment against Edward Leon Mogilevsky in the Federal Circuit Court of Australia. The dispute concerned the validity of a transfer of the bankrupt's interest in a property located at Brighton, Victoria, from Mrs Mogilevsky to the respondent, Mr Mogilevsky. The applicant sought to have this transfer declared void against him pursuant to section 120 of the *Bankruptcy Act 1966* (Cth).

The primary legal issue before the Court was whether the transfer of Mrs Mogilevsky's interest in the Brighton property to Mr Mogilevsky, made for "love and affection" on 3 November 2011 and registered on 23 November 2011, was void against the trustee in bankruptcy. This required the Court to determine if the consideration provided for the transfer was sufficient under section 120 of the *Bankruptcy Act 1966* and whether the transfer occurred within the relevant statutory period preceding Mrs Mogilevsky's bankruptcy.

Judge Jarrett found that the transfer was void against the applicant. The Court applied section 120(1) of the *Bankruptcy Act 1966*, which renders a transfer of property void against a trustee if it occurred within five years before the commencement of bankruptcy and the transferee gave no consideration or consideration of less value than the market value. The Court held that "love and affection" did not constitute consideration for the purposes of section 120(1), as expressly provided by section 120(5)(d) of the Act. While Mr Mogilevsky argued that section 46(2) of the *Transfer of Land Act 1958* (Vic) implied a covenant to indemnify the transferor against liability under the mortgage, the Court determined this did not constitute valuable consideration for the transfer itself under the *Bankruptcy Act*.

The Court ordered judgment for the applicant, declaring the transfer void against the applicant. It further declared that the applicant was entitled to be registered as proprietor of a one-half interest in the land as tenant in common with the respondent, and that the land should vest in them as tenants in common in equal shares. The respondent was also ordered to pay the applicant's costs.