Re Brown, P. v Ex parte Taylor, A.R - [1987] FCA 270

Re: PAULINE ISABEL BROWN
Ex parte: ALLAN RICHARD TAYLOR
No. QLD E810 of 1984
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE SOUTHERN DISTRICT OF THE STATE OF QUEENSLAND
Spender J.

CATCHWORDS

Bankruptcy - voluntary settlement on children of settlor - whether void as against trustee - whether property accrued to settlor "in right of the spouse of the settlor".

Bankruptcy Act 1966, s.120(1)(b)

HEARING

BRISBANE

#DATE 27:5:1987

Counsel for the applicant: Mr. Morris instructed by Cooper Grace & Ward

Counsel for the respondent: Mr Galloway instructed by C.W. Hooper & Hooper.

ORDER

THE COURT DECLARES THAT: a property described as vacant land comprised in Certificate of Title Volume N1127 Folio 222 County of Carlisle Parish of Hector containing an area of 4080 square metres being Lot 125 on Registered Plan No.35290 of which the bankrupt is registered proprietor of an estate in fee simple as trustee belongs absolutely to the applicant as trustee of the property of the bankrupt.

THE COURT ORDERS THAT: the respondent pay half the taxed costs of the applicant, including reserved costs, to a limit of $1,500.00.

NOTE: Settlement and Entry of Orders is dealt with in Rule 124 of the Bankruptcy Rules.

JUDGE1

This application involves an archaic provision of the Bankruptcy Act 1966, s.120(1)(b) which provides:-

"A settlement of property, whether made before or after the commencement of this Act, not being -

...

(b) a settlement made on or for the spouse or children of the settlor of property that has accrued to the settlor after marriage in right of the spouse of the settlor,

is, if the settlor becomes a bankrupt and the settlement came into operation after, or within 2 years before, the commencement of the bankruptcy, void as against the trustee in the bankruptcy."

It is an application by the trustee of the estate of Pauline Isabel Brown, bankrupt, for a declaration that the payment by Mrs. Brown of $24,129.58 from a savings account held in her name at a branch of Westpac Banking Corporation Ltd., in Mackay, to a savings account in the name of Pauline Isabel Brown as trustee for Amanda Kay Brown, Angie Louise Brown and Melanie Fay Brown constituted a settlement of that property by her and was and remains void as against the trustee by force of s.120 of the Bankruptcy Act 1966. Alternatively, the trustee claims a declaration that it was a fraudulent disposition of property and void as against the trustee by virtue of s.121 of the Bankruptcy Act 1966.
The application seeks a declaration that a piece of vacant land in Mackay, being Lot 125 on Registered Plan No.35290, of which the bankrupt is registered proprietor of an estate in fee simple as trustee, belongs absolutely to the applicant as trustee of her estate on the ground that that property was purchased by the application of the proceeds of the payment from the savings account of Mrs. Brown to the savings account in her name…

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: [1987] FCA 270
Decision Date: 27 MAY 1987

CaseChat Overview and Summary

The case of Re Brown; Ex parte Taylor involved a dispute over the ownership of certain property following the bankruptcy of the settlor. The applicant, Taylor, sought a declaration that a parcel of vacant land, held by the bankrupt, Brown, as trustee, should be recognised as belonging to the applicant. The applicant argued that the property, which was settled on Brown's children prior to the bankruptcy, should not be considered void as against the trustee in bankruptcy and should instead be recognised as belonging to the applicant. The matter was heard in the Federal Court of Australia.

The primary legal issues before the court were whether the voluntary settlement on Brown's children was void as against the trustee in bankruptcy and whether the property accrued to the settlor "in right of the spouse of the settlor". The court needed to determine if the settlement was valid and whether it could be considered as property belonging to the bankrupt's spouse.

In delivering the judgment, the court found that the settlement did not confer any beneficial interest on Brown's children and, therefore, the property did not vest in them. Consequently, the property remained the property of Brown and, upon his bankruptcy, became the property of his trustee in bankruptcy. The court also found that the property did not accrue to Brown "in right of the spouse of the settlor" as there was no requirement for the property to vest in Brown's spouse. The court declared that the property in question belonged absolutely to the applicant as trustee of the bankrupt's property.

The court further ordered that the respondent, Brown, pay half of the applicant's taxed costs of the proceeding, including reserved costs, up to a limit of $1,500.00. This ruling clarified the ownership of the disputed property and established the rights of the trustee in bankruptcy concerning the property.

Orders

Orders of the court

THE COURT DECLARES THAT: a property described as vacant land comprised in Certificate of Title Volume N1127 Folio 222 County of Carlisle Parish of Hector containing an area of 4080 square metres being Lot 125 on Registered Plan No.35290 of which the bankrupt is registered proprietor of an estate in fee simple as trustee belongs absolutely to the applicant as trustee of the property of the bankrupt.

THE COURT ORDERS THAT: the respondent pay half the taxed costs of the applicant, including reserved costs, to a limit of $1,500.00.

NOTE: Settlement and Entry of Orders is dealt with in Rule 124 of the Bankruptcy 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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