Roufeil as Trustee of the Bankrupt Estate of Tarrant v Tarrant Enterprises Pty Ltd as Trustee for the MRT Family Trust

In the case of Roufeil as Trustee of the Bankrupt Estate of Tarrant v Tarrant Enterprises Pty Ltd as Trustee for the MRT Family Trust, the appellant sought to overturn a decision of the Federal Circuit and Family Court of Australia (Division 2), which had ruled against the avoidance of transfers made by the bankrupt from his current account to a loan account held by a company. The central issue before the court was whether these transfers constituted a "payment of money" under sections 120 and 121 of the Bankruptcy Act 1966 (Cth). The court held that the term "payment of money" should be interpreted according to its ordinary meaning and that the receipt of value, irrespective of intermediary steps, was sufficient to constitute a payment of money. The court also dismissed the argument that regulation 31 of the Bankruptcy Regulations 2021 (Cth) provided a defence, as well as the claims related to double recovery and set-off.

Further, the court considered whether the proceedings should have been stayed as an abuse of process, and whether there was a failure to comply with the rule in Browne v Dunn in relation to the issue of whether there was an agreement to forbear suing the bankrupt in negligence. The court found that ample notice had been given of the intention to challenge the existence of the agreement and that there was a direct challenge to the witnesses in cross-examination. Additionally, the court addressed the issue of whether pre-judgment interest should be awarded on the judgment in circumstances where it was not pleaded. The court held that an application to claim interest pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth) would ordinarily be granted, unless special circumstances existed. The court also noted that the award of interest is compensatory in character and should not be used to penalise either party for delay or failure to observe court procedures.

The court concluded that the appellant was entitled to judgment in his favour in the amount of $194,290 by reason of the avoidance of the 27 payments pursuant to s 120 of the Bankruptcy Act. The court granted the application to amend the Amended Application in order to claim interest pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth). The court set aside the orders made by the Federal Circuit and Family Court of Australia (Division 2) on 23 December 2022, and granted judgment for the appellant in the amount of $194,290 together with interest pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth) from 4 April 2020 at the rates referred to in the Interest on Judgments Practice Note at para 2.2. The respondent was ordered to pay the appellant’s costs of the appeal and of the proceedings at first instance.