MELLUISH AS TRUSTEE OF THE ESTATE OF ERIKSSON (A BANKRUPT)

The applicant, Melluish as trustee of the estate of Eriksson (a bankrupt), sought to recover from the respondent, Mr. Eriksson, certain assets that had been transferred to him by his former wife, Ms. Eriksson, prior to her bankruptcy. The dispute concerned whether these transfers constituted voidable transactions under the *Bankruptcy Act 1966* (Cth).

The primary legal issue before the court was whether the transfers of property from Ms. Eriksson to Mr. Eriksson were voidable preferences or uncommercial transactions within the meaning of the *Bankruptcy Act 1966* (Cth). Specifically, the court had to determine if Mr. Eriksson was a creditor of Ms. Eriksson at the time of the transfers, and if so, whether the transfers had the effect of placing him in a position that would not have been his if the transactions had not taken place, and whether the transfers were uncommercial.

Judge Cameron found that the transfers were not voidable preferences because Mr. Eriksson was not a creditor of Ms. Eriksson at the time of the transfers. The court reasoned that the purported debt owed to Mr. Eriksson by Ms. Eriksson was not a genuine debt, but rather a contrived arrangement designed to shield assets from Ms. Eriksson's creditors. Furthermore, the court determined that the transfers were uncommercial transactions, as they were not entered into in the ordinary course of business and were made for significantly less than their true value. The court applied the principles established in cases concerning voidable transactions, focusing on the intention of the parties and the commercial reality of the transactions.

The court ordered that the transfers of property be set aside as voidable uncommercial transactions.