Majeed v Kerr as trustee of the Bankrupt Estate of Majeed

This matter concerned an application by the trustee of the bankrupt estate of Mr Majeed (the applicant) seeking to recover certain property from Ms Kerr, the trustee of the bankrupt estate of Mr Majeed (the respondent). The dispute centred on whether certain assets, specifically a property at 14 Waratah Avenue, Dural, and a sum of money held in a bank account, formed part of Mr Majeed's bankrupt estate. The application was heard in the Federal Court of Australia.

The primary legal issues before the Court were: (1) whether the property at 14 Waratah Avenue, Dural, was held by Mr Majeed on trust for his wife, and therefore not divisible amongst his creditors; and (2) whether a sum of $100,000 paid by Mr Majeed to the respondent was a voidable preference under section 122 of the *Bankruptcy Act 1966* (Cth).

In relation to the property, the Court found that the evidence did not establish a clear intention by Mr Majeed to create a trust over the property for the benefit of his wife. The Court applied the principles governing the creation of express trusts, requiring certainty of intention, subject matter, and object. The Court determined that the evidence fell short of demonstrating the requisite certainty of intention. Regarding the payment of $100,000, the Court considered the elements of section 122 of the *Bankruptcy Act 1966* (Cth), including whether the payment was made when Mr Majeed was unable to pay his debts as they became due from his own moneys, and whether the payment had the effect of preferring the respondent over other creditors. The Court found that the payment was made in circumstances where Mr Majeed was insolvent and that it did have the effect of preferring the respondent.

The Court ordered that the property at 14 Waratah Avenue, Dural, formed part of Mr Majeed's bankrupt estate. The Court also declared the payment of $100,000 to the respondent to be a voidable preference and ordered that this sum be repaid to the applicant for the benefit of the bankrupt estate.