Palmer as trustee of the Bankrupt Estates of Capocchiano and Capocchiano v Capocchiano

The proceeding concerned an application by the trustee in bankruptcy of the bankrupt estates of Mr and Mrs Capocchiano for an order that certain property, namely a residential property at 123 Main Street, Sydney, be vested in the trustee. The bankrupts, Mr and Mrs Capocchiano, were the registered proprietors of this property. The trustee sought to have the property vested in him pursuant to section 116(1)(a) of the *Bankruptcy Act 1966* (Cth) (the Act), which provides that the property of a bankrupt divisible amongst his creditors includes all property that belonged to or was vested in the bankrupt at the commencement of the bankruptcy. The bankrupts contended that the property was held by them on trust for their adult children, and therefore was not divisible amongst their creditors.

The primary legal issue before the court was whether the bankrupts held the residential property at 123 Main Street, Sydney, on a resulting or constructive trust for their adult children, or whether they were the beneficial owners of the property. This determination was crucial to ascertain whether the property formed part of the bankrupts' estates and was therefore divisible amongst their creditors under the *Bankruptcy Act 1966* (Cth).

Judge Manousaridis found that the evidence did not establish a common intention between the bankrupts and their children that the property would be held on trust for the children. The court noted that while the children had contributed to the purchase price of the property, this contribution was not sufficient, in the absence of a clear common intention, to give rise to a resulting trust. Furthermore, the court found no basis for imposing a constructive trust, as there was no unconscionable conduct on the part of the bankrupts. Consequently, the court concluded that the bankrupts were the beneficial owners of the property.

The court ordered that the residential property at 123 Main Street, Sydney, be vested in the trustee of the bankrupt estates of Capocchiano and Capocchiano.