Marchesi v Apostoulou

In the case of Marchesi v Apostoulou, the central issue was whether the bankrupt had successfully transferred ownership of certain properties to a family trust in 1987. The dispute arose following the bankrupt's estate being sequestrated in 2004, and the subsequent inquiry by the trustee in bankruptcy as to the legitimacy of the transfer of the properties to the family trust prior to the sequestration. The question of whether the transfer was effectively executed in accordance with equity principles, particularly whether the gift was perfected, was brought before the court for determination. The court was tasked with examining whether the bankrupt had taken all necessary steps to ensure that the properties were transferred to the trust and whether the transfer was completed in a manner that could not be undone by the bankrupt.

The legal issue at the heart of this case was whether the gift of the properties to the family trust was perfected in equity, as required by the principles established by the High Court in Corin v Patton. The court had to consider whether the bankrupt had done all that was necessary to place the vesting of the legal title within the control of the trust, particularly by obtaining the consent of the mortgagees of the properties. Additionally, the court examined whether there was evidence that the bankrupt had represented to third parties that he owned the properties, which could suggest that the gift was not truly intended. The court also considered the significance of the failure to register the transfers and the implications of this for the validity of the gift.

The court found that the gift to the family trust was not perfected in equity. The critical factor was the lack of evidence that the mortgagees had consented to the transfers, which was a necessary step to register the transfers and thus perfect the gift. Without such consent, the bankrupt could still have intervened to recall the gift. Furthermore, the court noted that the bankrupt had made representations to third parties that he owned the properties, which undermined the assertion that the properties had been genuinely gifted to the trust. These representations, made in various contexts including loan applications and dealings with government bodies, suggested that the bankrupt had not intended to transfer the properties to the trust. The court concluded that the bankrupt had not done all that was necessary to perfect the gift to the family trust.

The court ordered that the bankrupt's second respondent must execute and deliver all necessary documents to transfer the title of the properties to the applicant, the trustee in bankruptcy. This order ensures that the properties are transferred to the trustee, reflecting the court's finding that the gift to the family trust was not perfected and thus the properties remained the bankrupt's assets at the time of sequestration.