Re: OFFICIAL TRUSTEE IN BANKRUPTCY (as trustee of the bankrupt estate of David
Mitchell)
And: DAVID MITCHELL and PATRICIA ELIZABETH RUSSELL
No. N G155 of 1992
FED No. 792
Bankruptcy - Family Law
(1992) 110 ALR 484
(1992) 38 FCR 364
COURT
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Burchett(1), French(1) and Einfeld(1) JJ.
CATCHWORDS
Bankruptcy - application by trustee under ss. 120 and 121 - origin of s. 121 in Statute of Elizabeth - whether marriage is a valuable consideration for the purposes of the section - marriage settlement - effect in equity - relationship of ss. 120 and 121 - "purchaser for valuable consideration" - onus - Court should consider the broad effect of the arrangement, not being confined to the technical language of the document - whether payment of mortgage was valuable consideration within sections - good faith - whether good faith is a requirement in relation to a marriage settlement under s. 120 as well as under s. 121 - meaning of good faith under the sections - lack of good faith distinguished from negligence or blindness - discussion of tests for good faith; in general the test is that stated in Re Hyams - good faith as a question of fact.
Family Law - whether deed void under s. 87 of Family Law Act 1975
Evidence - cross-examination - Court entitled to understand answers other then literally, having regard to the evidence as a whole and its impression of the witness.
Appeal - weight of trial judge's assessment of a witness's character.
Bankruptcy Act 1966, ss. 120 and 121
Family Law Act 1975, ss. 86 and 87.
PT Garuda Indonesia Ltd v. Grellman (1992) 107 ALR 199, applied
Re Hyams (1970) 19 FLR 232, applied
National Australia Bank Ltd v. Cunningham (1990) 12 ATPR 51,619, considered
Re Pacific Projects Pty Ltd (in Liq.) (1990) 2 Qd R 541, referred to
The Official Trustee v. Marchiori (1983) 69 FLR 290, referred to
In re Reis. Ex parte Clough (1904) 2 KB 769, referred to
HEARING
SYDNEY
#DATE 30:10:1992
Counsel for the Appellant: Mr D.F. Jackson QC with Mr M.R.
Aldridge
Solicitor for the Appellant: Australian Government Solicitor
Counsel for the Respondents: Mr C.P. Comans
Solicitors for the Respondents: Messrs Blake Dawson Waldron
ORDER
Appeal be dismissed with costs.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
JUDGE1
BURCHETT, FRENCH AND EINFELD JJ. This is an appeal from the refusal by a judge of the Court of an application made by the Official Trustee in Bankruptcy, in which orders were sought under ss. 120 and 121 of the Bankruptcy Act 1966. Section 120(1) provides:
"A settlement of property, whether made before or after the commencement of this Act, not being -
(a) a settlement made before and in consideration of marriage, or made in favour of a…
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- Case
- [1992] FCA 792
- Decision Date
CaseChat Overview and Summary
The primary legal issues were whether the marriage settlement constituted a valuable consideration under section 121 and if good faith was required under both sections 120 and 121. The court examined the origins of section 121 in the Statute of Elizabeth and the relationship between sections 120 and 121. It also deliberated on the meaning of "purchaser for valuable consideration" and the onus of proof in such cases. The court was tasked with determining the broader effect of the arrangement rather than being confined to the technical language of the documents involved. The court also needed to assess whether the payment of a mortgage could be considered valuable consideration under the sections and whether the concept of good faith was applicable and what it entailed.
The Federal Court, in dismissing the appeal, held that a marriage settlement could indeed be considered a valuable consideration under section 121. The court emphasised that the effect of the arrangement in equity should be considered rather than just the technical language of the document. Regarding good faith, the court found that it was not a requirement under section 120 but was under section 121. Good faith was determined to be a question of fact, and the test generally followed that in Re Hyams, which required a genuine belief in the facts asserted. The court distinguished a lack of good faith from mere negligence or blindness, underscoring that good faith required more than an absence of negligence. The Official Trustee in Bankruptcy's appeal was dismissed, and costs were awarded to the respondent.
The court made no further orders beyond dismissing the appeal and awarding costs. The settlement and entry of orders were addressed in Order 36 of the Federal Court Rules.
Orders
Orders of the court
Appeal be dismissed with costs.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
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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