Matthews as trustee of the Bankrupt Estate of Sellars v Sellars

This matter concerned an application by the trustee of the bankrupt estate of Mr Sellars (the applicant) against Ms Sellars (the respondent), seeking to set aside a transfer of property from Mr Sellars to Ms Sellars. The dispute arose from the trustee's claim that the transfer was voidable under section 120 of the *Bankruptcy Act 1966* (Cth) as it was an alienation of property for less than its market value, made by Mr Sellars when he was unable to pay his debts. The application was heard by Brown J in the Federal Court of Australia.

The primary legal issue before the Court was whether the transfer of the property from Mr Sellars to Ms Sellars was voidable by the trustee. This required the Court to determine whether the transfer was made for "less than the value of the property" within the meaning of section 120(1) of the *Bankruptcy Act 1966* (Cth), and if so, whether the respondent had a defence under section 120(3) of the Act, which requires the respondent to prove they received the property in good faith and for a reasonable price.

Brown J found that the evidence established that the property was transferred for a consideration significantly less than its market value at the time of the transfer. The Court noted that the respondent had not discharged the onus of proving she received the property in good faith and for a reasonable price, particularly given the close personal relationship between the parties and the circumstances surrounding the transfer. Accordingly, the Court concluded that the transfer was voidable under section 120(1) of the *Bankruptcy Act 1966* (Cth).

The Court ordered that the transfer of the property be set aside and that the property form part of the bankrupt estate of Mr Sellars.