Re Malan, J.H. Exparte Boothe, S.A. as Trustee of the Bankrupt Estate of Malan, J.H. v Malan, A

[1993] FCA 535

JUDGjJEkT No. 53s ........ .., J ..,,.,,..,, 93

NOT SUITABLE FOR DISTRIBUTION

IN THE FEDERAL COURT OF AUSTRALIA )

1

NEW SOUTH WALES DISTRICT REGISTRY ) NB 237 of 1993

)

GENERAL DIVISION 1

RE :  JOHN H. MALAN

EX PARTE:  STEPHEN ALAN BOOTHE AS TRUSTEE OF THE
BANKRUPT ESTATE OF JOHN H. MALAN

Applicant

AURORA MALAN

Respondent

CORAM: Burchett J. I

PLACE:  Sydney i

DATE : 22 July 1993 ,'

/

EX TEMPORE REASONS FOR JUDGMENT

BURCHETT J.:

Section 120 of the Bankruptcv Act 1966 provides, as is well known, that a settlement of property - not being a settlement made in certain circumstances specified, or in favour of a purchaser or encumbrancer, in good faith and for valuable consideration - if the settlor becomes a bankrupt and the settlement came into operation after or within two years before the commencement of the bankruptcy, is void as against the Trustee in the bankruptcy.

application is Aurora Malan, the wife of the bankrupt, and the
The Trustee in the bankruptcy of Mr Malan brings this application under that section.	The respondent to the

amended application, which was filed on 30 June, seeks a declaration that a transfer by the bankrupt of his interest in the property contained in folio identifier 39/3/757, known as

9 Livingstone Road, Lidcombe, to Aurora Malan on 14 August 1991 is void as against the applicant as trustee of the bankrupt estate of John H. Malan; and further, a declaration that the applicant is the beneficial owner as tenant in common of a one-half interest in the said property. There are consequential orders sought, but at the commencement of the hearing of this case it was suggested that I deal in the first place with those substantial matters, so that there would be an opportunity for consequential matters, if my decision should be in favour of the Trustee, to be sorted out at the least expense and with the greatest possible consideration for the position of the parties. I have acceded to that suggestion, and therefore these reasons will be concerned only with the question whether the declarations which have been sought should be made.

The evidence makes it clear that the starting point, for present purposes, is the registration on the title to the land in question, which is held under the Real Propertv Act 1900 (NSW), of John Malan and Aurora Malan as joint tenants by virtue of a transfer which was registered on 6 June 1985. Subsequently, and after a substantial verdict for some $60,000 odd had been given against Mr Malan for defamation in the District Court, and while that verdict was subject to appeal, a transfer under the Real Propertv Act was executed by John Malan as transferor to Aurora Malan as transferee on 14 August

1991; and that transfer was executed by both parties in the

respective capacities of transferor and transferee and witnessed by a Mr Bolster, solicitor of the firm of Messrs Patrick Bolster and Sons, solicitors. The transfer was registered, and in consequence a Certificate of Title issued in favour of Aurora Malan. The date of that transfer was well within the two years period specified in s . 120.

The question of good faith has not been the subject of any detailed submission, but there is no doubt on the evidence that Mrs Malan was aware of the judgment. She says that she believed the appeal would be successful. Counsel for the trustee concentrated, in his submissions, upon the question whether, within the meaning of S. 120(1) of the Bankruptcy

, there was valuable consideration for the settlement

constituted by the transfer. The transfer itself, which plainly was prepared by the firm of solicitors, a member of which witnessed the signatures of both parties, specifies

explicitly that its consideration was the sum of one dollar.

Mrs Malan, who is of Romanian origin, did not comply with the requirements of a direction as to the filing of an affidavit in answer to the application, and I offered her the opportunity of an adjournment to obtain legal advice. She declined that opportunity, and decided to proceed with the hearing. She suggested that she had a difficulty with the English language, but in fact she communicated in clear and

intelligible English. Undoubtedly, she had a difficulty in understanding the legal issues, as I would expect the great majority of persons to have, having regard to the technicality

of the provisions of S. 120 of the Bankru~tcv Act.

Mrs Malan gave evidence orally and tendered some documents. The only suggestion of any ground of defence in respect of the trustee's claim, so far as it depends on the absence of valuable consideration, which emerged from her evidence, was the suggestion of some consideration dehors the document. Mrs Malan gave evidence that her husband was seriously ill, at the time, and it does appear that he had been diagnosed as having some form of carcinoma which required operative treatment. She indicated that this threw upon her the burden of caring for him, and raised the possibility that she would be left with the care of the children.

So far as being left with the care of the children is

concerned, it should of course be pointed out that the title

to the property was previously held upon a joint tenancy, and	in the event of her husband's death, she would have received
the whole of the property in the normal course by virtue of the joint tenancy. It was not suggested that there was any contractual agreement or any legal undertaking that would constitute a valuable consideration, additional to the consideration actually specified by the parties in the only legal document into which they entered. The possibility of a consideration dehors such a document was raised in the leading Australian case, Barton v. The Official Receiver (1986) 161 CLR 75, and has been referred to in a number of decisions since. However, I do not know of any decision which would enable me to find, on the basis of such evidence as Mrs Malan has given, that there was an additional consideration. The High Court did not so find in Barton itself, where there had been a much more precisely stated obligation to care for some extremely elderly relatives in the house the subject of the settlement there in question.
In the circumstances, I think that this is a perfectly clear case. It is appropriate to make the declarations which are sought in the amended application. As I have already indicated, I propose to allow some time to enable the consequences of those declarations to be explored, and the possibilities of solving the further problems of this matter, without recourse to litigation, to be thoroughly examined, before I make further orders. It is appropriate that I reserve the making of the final costs order until then also.
There is no doubt what that will have to be. the question of costs at this stage. I will reserve I certify that this and the preceding four (4)

pages are a true copy of the Reasons for Judgment

herein of his Honour Mr Justice Burchett.

Associate:

Date: 4 August 1993

Mr J.H. Malan and Mrs A. Malan appeared in person.

Counsel for the Trustee:	Mr M.R. Aldridge
Solicitors for the Trustee:	Messrs Ternes & Salier
Date of hearing:	22 July 1993