Oliver v Malanos

The appeal in Oliver v Malanos before the Full Court of the Federal Court of Australia concerned the interpretation of consent orders made by the Family Court of Australia regarding the division of assets following the separation of the appellant, Mr. Oliver, and Ms. Fung. The central issue was whether the consent orders, which included provisions for the creation of a fund for the children's education, resulted in Ms. Fung's share of the proceeds from the sale of their jointly owned property vesting in a trust for the children, thereby protecting it from creditors upon Ms. Fung's subsequent bankruptcy. The court was required to determine if the consent orders effectively established a trust, and if so, whether such a trust could preclude the vesting of Ms. Fung's interest in the fund to her trustee in bankruptcy.

The court examined the language and intent of the consent orders, particularly Orders 2, 5, and 6, and noted that Order 5, while not explicitly creating a trust, indicated an intention to establish a fund for the children's education using the proceeds from the sale of the matrimonial home. The court held that the consent orders, made under section 79(1) of the Family Law Act 1975 (Cth), altered the property interests of the parties, and section 59A of the Bankruptcy Act 1966 (Cth) applied to make the vesting provisions in the Bankruptcy Act subject to these orders. Consequently, the transfer of Ms. Fung's interest in the property, as outlined in Order 5, superseded the vesting provision of section 58 of the Bankruptcy Act. The court found that there was no requirement for Ms. Fung to be bankrupt at the time of making the consent orders for section 59A to apply, and the orders had immediate effect, irrespective of the timing of Ms. Fung's bankruptcy.

The Full Court allowed the appeal, set aside the demand made by the trustee in bankruptcy, restrained the trustee from withdrawing funds from the joint account, and declared that the funds in the joint account were not vested in the trustee and therefore not divisible amongst Ms. Fung's creditors. The costs of the appeal and the proceedings before the Federal Magistrate were reserved for further submissions.