Macks as trustee of the Bankrupt Estate of Townsend v Grima

The parties to this proceeding were Macks, as trustee of the bankrupt estate of Townsend, and Grima. The dispute concerned the validity of a transfer of property from Mr Townsend to Ms Grima, which the trustee sought to set aside as a fraudulent preference. The matter was heard in the Federal Court of Australia.

The primary legal issue before the court was whether the transfer of the property constituted a fraudulent preference under section 122 of the Bankruptcy Act 1966 (Cth). This required the court to determine if the transfer was made by Mr Townsend while he was insolvent, with the intention of giving Ms Grima a preference over other creditors, and if Ms Grima was aware, or ought to have been aware, of Mr Townsend's insolvency and the preferential nature of the transaction.

Judge Brown found that the evidence did not establish that Mr Townsend was insolvent at the time of the transfer. Furthermore, the court determined that there was insufficient evidence to conclude that Mr Townsend intended to give Ms Grima a preference over his other creditors. Consequently, the court held that the transfer did not meet the criteria for a fraudulent preference under section 122 of the Bankruptcy Act.

The application by the trustee to set aside the transfer was dismissed.