Official Trustee in Bankruptcy v Higgins

The matter before the court involved the Official Trustee in Bankruptcy, who sought to have certain property transferred to the trustee for the benefit of the bankrupt's creditors. The dispute centred around a property transfer agreement made between Phillip Martin Higgins, the bankrupt, and Diane Tracey Higgins, the respondent, who was also his wife at the time. The dispute arose from the property transfer agreement made on 11 October 1999, where Phillip Martin Higgins transferred his interest in the property to Diane Tracey Higgins as part of consent orders made in family court proceedings. The Official Trustee in Bankruptcy sought to have the transfer set aside as a preference to one creditor, Diane Tracey Higgins, over others, as Phillip Martin Higgins was unable to pay his debts at the time of the transfer.

The legal issues before the court were whether the transfer of the property constituted a preference under the Bankruptcy Act 1966 (Cth), and if so, whether the court could set aside the transfer under s 79A of the Family Law Act 1975 (Cth). The court also needed to determine if it had the jurisdiction to transfer the proceeding to the Family Court of Australia under s 35A of the Family Law Act.

The court found that the transfer of the property did constitute a preference under the Bankruptcy Act as Phillip Martin Higgins was unable to pay his debts at the time of the transfer. However, the court held that it did not have jurisdiction to set aside the transfer under s 79A of the Family Law Act, as this section did not confer jurisdiction to the court. The court further held that it could transfer the proceeding to the Family Court of Australia under s 35A of the Family Law Act, as this section allowed the court to transfer proceedings on its own motion.

In conclusion, the court found that the application should be transferred to the Family Court of Australia, and that the costs of the proceedings in the Federal Court should be costs in the cause of the trustee's application that was the subject of the transfer.