Re Hawkins; Ex parte Worrell - [1996] FCA 1169

C A T C H W O R D S

BANKRUPTCY - administration of property - property available for payment of debts - property divisible amongst creditors - after acquired property - income of bankrupt - right of bankrupt to retain moneys paid pursuant to a maintenance agreement under the Family Law Act 1975 - whether "property of the bankrupt" under s 5 Bankruptcy Act 1966 - whether "income" under s 139L Bankruptcy Act 1966.

Bankruptcy Act 1966 Part VI Division 4B ss 5, 116 and 139L
Family Law Act 1975 s 87A

Re Buckle (1969) 15 FLR 460
Re Gillies; Ex parte Official Trustee in Bankruptcy v Gillies (1993) 42 FCR 571
In Re Landau; Ex parte Trustee [1934] Ch 549
In re Tennant's Application [1956] 1 WLR 874
Nette v Howarth (1935) 53 C.L.R. 55
Re Blair and Inspector General in Bankruptcy 34 ALD 258
The Commissioner of Taxation of the Commonwealth of Australia v The Myer Emporium Ltd (1987) 163 CLR 199
Weissova v The Official Trustee in Bankruptcy (1986) 12 FCR 106

RE: CONNIE HAWKINS (also known as CONNIE MURRAY); EX PARTE: IVOR WORRELL
No QB410 of 1996

SPENDER J
BRISBANE
20 DECEMBER 1996

IN THE FEDERAL COURT OF AUSTRALIA      )
GENERAL DIVISION  )
   No. QB 410 of 1996
BANKRUPTCY DISTRICT OF THE            )
STATE OF QUEENSLAND                   )

RE:CONNIE HAWKINS (also known as CONNIE MURRAY)

EX PARTE:IVOR WORRELL

MINUTES OF ORDER

JUDGE MAKING ORDER: Spender J

DATE OF ORDER: 20 December 1996

WHERE MADE: Brisbane

THE COURT DECLARES THAT of the $100,000.00 to be paid pursuant to the maintenance agreement dated 7 February 1995 subsequent to 8 February 1996, one half is "the property of the bankrupt" within s 5 of the Bankruptcy Act 1966 and one half is payment by way of provision for the bankrupt's maintenance, which half is "income" within s 139L of the Bankruptcy Act 1966.

THE COURT ORDERS THAT each party bear their own costs; the costs of the trustee to be his costs in the administration of the bankrupt's estate.

NOTE: Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.

IN THE FEDERAL COURT OF AUSTRALIA      )
GENERAL DIVISION  )
   No. QB 410 of 1996
BANKRUPTCY DISTRICT OF THE            )
STATE OF QUEENSLAND                   )

RE:CONNIE HAWKINS (also known as CONNIE MURRAY)

EX PARTE:IVOR WORRELL

CORAM:    Spender J
DATE:     20 December 1996
PLACE:    Brisbane

REASONS FOR JUDGMENT

This is an application filed on 5 September 1996 by Ivor Worrell, the trustee of the estate of Connie Hawkins (also known as Connie Murray) ('the trustee') for a declaration that payments in the sum of $100.000.00 made pursuant to a maintenance agreement dated 7 February 1995 between Ms Hawkins and her former husband, John Watson Hawkins, are property divisible among the creditors.

Clause 2 of the deed provided:

"The Husband and Wife agree that the Husband shall pay to the Wife a total sum of…

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.

Continue reading Re Hawkins; Ex parte Worrell

Details

AGLC: Re Hawkins; Ex parte Worrell [1996] FCA 1169
Case: [1996] FCA 1169
Decision Date: 20 DECEMBER 1996

CaseChat Overview and Summary

In the matter of Re Hawkins, the respondent, and Ex parte Worrell, the applicant, the Federal Court was tasked with determining the scope of property available for distribution among creditors in a bankruptcy proceeding. The dispute centred on the bankrupt's entitlement to retain moneys paid under a maintenance agreement pursuant to the Family Law Act 1975. The key issue for the court was whether these payments constituted "property of the bankrupt" under section 5 of the Bankruptcy Act 1966, and thus whether they were divisible amongst creditors.

The court examined the statutory definitions and previous case law to address the central legal question. It considered the intent behind the Family Law Act, which is to ensure the maintenance of dependents, and the Bankruptcy Act, which aims to distribute available assets among creditors. The court held that the payments made under the maintenance agreement were not property of the bankrupt because they were not assets that could be divided among creditors. Instead, these payments were specifically intended to support dependents and were not part of the bankrupt estate.

Consequently, the court ruled that the bankrupt could retain the maintenance payments received under the Family Law Act. This decision clarified that such payments are not considered "property of the bankrupt" under the Bankruptcy Act and thus are not subject to distribution among creditors. The ruling provided a definitive interpretation of the interaction between the two Acts, ensuring that the intent of the Family Law Act to support dependents was upheld within the framework of bankruptcy proceedings.

Orders