Re Maurici, U.; Official Receivers Office v Maurici, A

[1991] FCA 926

Wl' FOR CIRCLII&TaN	1 lJG<2id L l U L ~ D , &	L	A	!	!
L-

LN THE	F E D E W COURT OF A U S T T U A	)
)
SpUTH AUSTRALIA D m I C T REGISTRY	)	\
1
1

TCY	D I S m C T OP THE STATE	)
1

- 1

A Bankrupt

I	Q P F I C I U RE-	for
and on behalf of

-	Trustee of the estate
of Umberto Uaurici
a bankrupt

Applicant

Respondent

ONS FOR m

-1 von Dou8sa J.

I 13 September 1991

(maur~c~ v Official Receiver's Office) wh~ch was handed down on 9 Mar 1992.

Please note that th~s judgment has been erroneously allocated Judg no. 126/1992.

Since the judgment was handed down on 13 September 1991, we have allocated it the Judg. no. 92611991. The Judg. no.126/1992 has now been allocated to the same matter

qzb 41

,l	B ? / - .	P-.'
,	T l ! . ..-.l-.-./-A".."

IN THE FEDERAL COURT OF AUS T RALI A )

1

S	RY	S	1
) No. 744 of 1989

-	E	)
)

P	K P	G	1
)

A D - )

Re

A Bankrupt

BETWEEN : Q P F I C W RECEIVER for

and on behalf of

THE OFFICIAL TRUSTEE
Trustee of the estate
of Umberto Maurici

a bankrupt

l q MAR 1992

FEDERAL COWlf c.	Applicant
Respondent

m: von Doussa J.

: 13 September 1991

By this application filed on 18 January 1991 the Official Receiver seeks declarations that transfers by the bankrupt of	his interests in two properties were settlements within the
meaning of s.120 of the m t 1966 ("the Act") and void as against the applicant or, alternatively, declarations that the settlements were fraudulent dispositions of property within the meaning of 8.121 of the Act and are void as against the applicant.

A sequestration order was made against the bankrupt on 17

July 1989. The act of bankruptcy alleged occurred on 19 April 1989, that act being the failure to comply with the requirements of a bankruptcy notice which was served on 5 April 1989. The background to the debt which gave rise to the judgment is briefly this (and the history, comes largely from the Westpac Banking Corporation files tendered through the evidence of Mr Mark Redmond. I accepted those files as business records and I proceed upon the evidence contained in

them) :

In April 1985 the bankrupt and another person borrowed $15,000 as temporary finance required in connection with a business from the Westpac Banking Corporation. By June 1985 the indebtedness to the bank, which was not secured, had increased to $22,680.01. On 20 August 1985 the bank served a notice of demand. The amount was not repaid. A special summons was issued on 26 November 1985 and later led to judgment. The date of the notice of demand assumes importance in the case which has been presented by the applicant.

The first of the properties is at 42 Barker Avenue, Pindon, being the whole of the land comprised in Certificate of Title Register Book volume 1515 folio 110. That property was acquired by the bankrupt jointly with the respondent on 10 August 1984. A transfer of the bankrupt's half-interest in that property was signed on 10 September 1985, that is, a few days after the date of the notice of demand from the bank. The consideration stated in the transfer document is $37,500.

The transfer was registered on 23 September 1985.

The respondent in the course of a section 81 examination
said that she sold the property in August 1986 for about
$70,000. The copy of the certificate of title which has been

admitted into evidence confirms that the transfer was registered on 29 August 1986. Mr Houlson, a valuer, has given evidence about the value of this and the other property at certain dates. I accept his evidence as to the values of the properties at the dates which he has nominated. As at 23 September 1985 the Findon property was valued at $69,000.

It is necessary, for the applicant to succeed under sub-
s.120(2) that he establish that the transfer was not one made

in favour of a purchaser in good faith and for valuable

consideration - that being the precise expression in

para.l20(l)(a). That is, he must establish that the
settlement is not a settlement referred to in para.l20(l)(a).

It is also necessary for the applicant to succeed under 9.121

valuable consideration in favour of a person who acted in good	that he establish that the transfer was not a disposition for	faith.
The respondent has not appeared at this hearing which, in some respects, has made the task of the applicant more difficult than it might otherwise have been. The evidence
tendered by the applicant includes the s.81 depositions of the respondent. In those depositions she asserts that the bankrupt was, at the time of the impugned transfers and

shortly before that, gambling and was not fulfilling in a responsible way his domestic obligations. She was concerned, as I interpret her evidence, about the welfare of her family. She was keen to secure their position. She says that she borrowed money from other members of the family to buy the half-interest of her husband in the property at Findon. She gave the money she borrowed to him along with her half- interest in a car, together amounting to the value of about $37,500, in satisfaction of the purchase price.

That story has been attacked as unlikely by counsel for the applicant. However, it appears in the depositions as part of the case of the applicant. In the absence of other evidence as to the background of these transactions I am not persuaded solely by the demand from the bank about which the respondent in the depositions said she was not aware, that her evidence is not to be relied on or is simply a sham. In short, I am not satisfied that the transaction was not one in good faith and for valuable consideration. I am not prepared

to find on the present state of the evidence that there was a	settlement or a fraudulent disposition falling within ss.120
or 121 in relation to the Findon property.
The other property was situated at 64 Frogmore Road, Kidman Park and was the whole of the land comprised in Certificate of Title Register Book volume 4216 folio 28. That property was acquired jointly by the bankrupt and the respondent on 25 October 1984. The bankrupt signed a transfer

transferring his half-interest in that property to the respondent in November 1985 and the transfer was registered on

4 April 1986.

In that transfer the consideration is stated to be "no monetary consideration". Mr Hodby, a land broker, has given evidence. He prepared the transfers in question for both the properties. He was instructed by an accountant. No money passed through his trust account. That fact would not be decisive of the question whether any consideration was paid on this or, indeed, on the other transfer, because the accountant, it could be expected, would have handled those

sorts of matters. But, certainly, in this instance - that is the Kidman Park transaction - there is no evidence to suggest

that there was any consideration paid. On the contrary, the transfer asserts that there was no monetary consideration. On the strength of the statement in the transfer, which has now become a deed by registration, I find that there was no monetary consideration paid for that transaction. The

could not, therefore, be a settlement referred to in	transaction was not one for "valuable consideration", and
para.120(1) (a) so as to take it out of the reach of sub- S.120(2).
I am satisfied that in relation to the Kidman Park property there was a settlement within the meaning of s.120. It was a settlement that occurred within five years before the commencement of the bankruptcy. The respondent, the party

claiming under the settlement, has not sought to prove the matters set out in paras.l20(2)(a) and (b) so as to come within the protective provisions of sub-s.120(2). The settlement is therefore void as against the Trustee in Bankruptcy pursuant to sub-s.120(2).

The question then arises as to the action that should be taken in consequence of that finding. Proofs of debt have not been called for by the Official Receiver. However, his inquiries lead him to believe that there is at the moment only one creditor seeking to prove, and that is Westpac Banking Corporation which seeks to prove for the judgment debt on which the bankruptcy notice was founded.

The amounts required by the Official Trustee to pay 100 cents in the dollar to Westpac Banklng Corporation, whose entitlement, including interest, at the date of the sequestration order was $35,220, together with all fees and interest which becomes payable if there are assets sufficient to pay interest after discharging the debts in full, would be $58,192.43. That is considerably less than the value of the half-interest which was disposed of in the settlement of the Kidman Park property. The Kidman Park property was sold by the respondent after the sequestration order was made. The transfer, registered on 30 November 1989, shows the sale was for an amount of $225,000, that being consistent with Mr Houlson's valuation of $215,000 for the property at June 1989.

Subject to some allowance that is perhaps due to the respondent for costs and outgoings on the sale, the value of the share settled on the respondent in that property, was in the order of $112,500 - that figure being based on the sale price. Counsel for the Official Receiver sought not only a declaration avoiding the settlement, but also an order that the figure of $112,500 or thereabouts be paid to the Official Receiver.

It is important, however, to recognise that the provisions of 9.120 avoid the settlement only as between the Official Receiver and the party upon whom the property was settled. The purpose of the Act is to avoid the settlement to the extent necessary to enable the debts of the bankrupt to be discharged and to meet other expenses incidental to the bankruptcy. Once those expenses and outgoings are met, there is no need within the purpose of the Act, to avoid the transaction nor, it has been held, does the section purport to so avoid the transaction; see McDonald, Henry and Meek, 5th

ed. at para.651 and the cases cited. The title to the	surplus, if any, of the settled property is not affected. I
have looked at Re Parrv. Ex Darte Salamaq [l9041 1 KB 129, & McDonald: Ex uarte McCullum [l9201 1 KB 205 and Re Colet Trustee in Bankru~tcv v. Public Trustee [l9311 2 Ch. 174, which bear out that proposition.
It is not possible on the present state of the evidence to make any final order for the payment of money by the

respondent to the Official Receiver. It will not be possible to do so until proofs of debt are called for and the extent of the moneys necessary to satisfy the debts of the bankrupt is known. In those circumstances I think the proper course for me to follow is to make a declaration and to make an interlocutory order for the payment of the sum of $58,192.43, which is, on the evidence, the minimum sum which will be required.

The Official Trustee should then call for proofs of debt. Upon the appropriate time limits expiring and upon him accepting or rejecting, as the case may be, such of those proofs as he receives, he can then come back to the Court and make a further application to vary, if variation is necessary, the amount of the interlocutory order. In any event, he will have to come back to Court to have that order confirmed as a final order even if there is to be no variation.

Application has been made for an order in the nature of a Mareva injunction to restrain the respondent from dealing with

a house property presently owned by her until the amount which

she will be required to pay to the Official Receiver, is paid. It is not possible on the information available for the Official Receiver to show that the present house property owned by her is a product of the proceeds of sale of the property in Kidman Park. There is no evidence that would warrant a suspicion that the respondent, faced now with the orders that I am about to make, will seek to conceal or

dispose of her assets in a way which is designed to defeat the
entitlement of the Official Receiver.

In the absence of any evidence to raise such a suspicion it would not be proper for me to make an injunctive order of the kind sought. I propose therefore to make the following orders :

1.    Declaration that the settlement by the bankrupt of his interest in the property situated at 64 Frogmore Road, Kidman Park on or about 4 April 1986 was a settlement within the meaning of s.120 of the Bankru~tcv Act and is void as against the applicant to the extent necessary to satisfy the debts with interest of the bankrupt and to pay the costs of the administration of the bankruptcy.

2.    That the respondent pay to the Official Receiver the sum of $58,192.43.

3.    Adjourn further consideration of the application.

4.    Liberty to apply on 48 hours notice.

I certify that this and the

f preceding pages are a

true copy of the Reasons for Judgment of M.r Justice von Doussa

Associate: ,[&,~/lcik'

Dated :  /3/9/~jl

Counsel for the applicant	: M r G A Britton
Solicitor for the applicant	: Official Receiver
Date of hearing	: 13 September 1991