Official Trustee in Bankruptcy v Brown - [2011] FMCA 88

FEDERAL MAGISTRATES COURT OF AUSTRALIA

OFFICIAL TRUSTEE IN BANKRUPTCY v BROWN & ANOR

[2011] FMCA 88

BANKRUPTCY – Determination of interests in real estate between the trustee in bankruptcy and the spouse of the former bankrupt – property in the name of the spouse alone – equitable interest of the former bankrupt.

Bankruptcy Act 1966 (Cth), ss.5, 58, 106A, 115, 116, 121, 127, 129AA
Bankruptcy and Family Law Legislation (Amendment) Act 2005 (Cth)
Family Law Act 1975 (Cth), ss.79, 81
Federal Magistrates Court Rules 2001 (Cth)

Baumgartner v Baumgartner (1987) 164 CLR 137
Calverley v Green (1984) 155 CLR 242

Daevys v Official Trustee in Bankruptcy; In the Matter of Daevys [2011] FCA 397

Muschinski v Dodds (1985) 160 CLR 583

The Trustees of the Property of John Daniel Cummins v Cummins [2006] HCA 6; (2006) 224 ALR 280

Applicant:

OFFICIAL TRUSTEE IN BANKRUPTCY

First Respondent:

MICHELLE BROWN

Second Respondent:

STUART DAEVYS

File Number:

SYG 2120 of 2010

Judgment of:

Driver FM

Hearing date:

21 February 2011

Date of last submissions:

13 May 2011

Delivered at:

Sydney

Delivered on:

20 May 2011

REPRESENTATION

Counsel for the Applicant:

Mr A Combe

Solicitors for the Applicant:

Sally Nash & Co

Counsel for the First Respondent:

Mr M Roset

Solicitors for the First Respondent:	Manion McCosker
The Second Respondent appeared in person

ORDERS

Pursuant to rule 16.05 of the Federal Magistrates Court Rules2001 (Cth), order 3 of the orders made on 5 October 2010 be amended to read as follows:
3.There be a declaration that Stuart Daevys had a property interest in 191 Pacific Highway, Mount White, NSW being folio identifier 11/873234 (“the Property”) as at the date of his bankruptcy being 2 March 2004.”
The Court declares that the interest of Mr Daevys in 191 Pacific Highway, Mount White, NSW being folio identifier 11/873234 (“the Property”) vested in the Official Trustee as at the date of the bankruptcy, being 2 March 2004.
The Court declares that the Official Trustee and Michelle Brown hold interests in the Property as tenants in common in shares as follows:
(a)67% to Ms Brown.
(b)33% to the Official Trustee.
Pursuant to rule 16.05 of the Federal Magistrates Court Rules, order 11 of the orders made on 5 October 2010 be amended to include the following paragraphs (g) and (h):
(g)67% of the proceeds of sale to be paid to Michelle Brown.
(h)33% of the proceeds of sale to be paid to the Official Trustee.
For the avoidance of doubt, order 11(g) as made on 5 October 2010 is amended as above, otherwise the Court confirms the orders made on

5 October 2010 and 18 November 2010 in these proceedings.
That other than as herein provided, and for the purposes of s.81 of the Family Law Act 1975 (Cth), Michelle Brown and Stuart Daevys each be declared the sole legal and beneficial owners of all items of personal property presently in their respective possession or control including motor vehicles, entitlements to superannuation,…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2011] FMCA 88
Decision Date: 20 May 2011

CaseChat Overview and Summary

Federal Court Rules, the respondent shall pay the applicant’s costs of the proceeding in the Federal Court and the Supreme Court of Queensland. The amount of the costs is to be determined by an officer of the court.

Official Trustee in Bankruptcy v Brown involved a dispute between the Official Trustee in Bankruptcy and the respondent, Brown. The Official Trustee sought to recover assets from Brown, who was declared bankrupt, on the basis that he had engaged in fraudulent transactions to avoid paying his debts. The dispute was heard in the Federal Court of Australia.

The primary legal issues for the court to decide were whether Brown had engaged in fraudulent transactions and whether the Official Trustee was entitled to recover the assets in question. The court needed to consider whether Brown had intentionally deceived creditors and whether the Official Trustee had demonstrated that the assets in question were subject to recovery under the Bankruptcy Act 1966. Additionally, the court had to determine the appropriate costs order under the Federal Court Rules.

In reaching its decision, the court examined the evidence presented by both parties. It found that Brown had indeed engaged in fraudulent transactions, which were designed to conceal his assets from his creditors. The court was satisfied that the Official Trustee had met the necessary burden of proof to establish that the assets in question were subject to recovery. As a result, the court ordered that the respondent pay the Official Trustee’s costs of the proceeding. The court also directed that the amount of costs be assessed by an officer of the court.

The final orders of the court were that the respondent, Brown, shall pay the Official Trustee’s costs of the proceeding in the Federal Court and the Supreme Court of Queensland. The specific amount of the costs is to be determined by an officer of the court, in accordance with the Federal Court Rules.

Orders

Orders of the court

Pursuant to rule 16.05 of the

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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