Stephen John Michell in His Capacity as trustee of the Bankrupt Estate of Monica Stonehouse v Monica Stonehouse

Stephen John Michell, in his capacity as trustee of the bankrupt estate of Monica Stonehouse, brought proceedings against Monica Stonehouse. The dispute concerned the validity of a transfer of property from Ms Stonehouse to her daughter, which the trustee sought to set aside as a fraudulent or voidable preference. The matter was heard in the Federal Court of Australia.

The primary legal issue before the court was whether the transfer of the property constituted a fraudulent preference under section 122 of the *Bankruptcy Act 1966* (Cth) or a voidable transaction under section 37A of the *Conveyancing Act 1919* (NSW). The trustee contended that the transfer was made at a time when Ms Stonehouse was insolvent and with the intention of defeating or delaying her creditors, or alternatively, that it was made for a consideration that was not a fair and reasonable price.

Judge Hartnett considered the evidence presented regarding Ms Stonehouse's financial position at the time of the transfer and the circumstances surrounding the transaction. The court applied the principles established in case law concerning fraudulent preferences, which require proof of insolvency and an intention to prefer one creditor over others. The court also examined the requirements for setting aside a transaction under section 37A of the *Conveyancing Act 1919* (NSW), which involves a lack of valuable consideration and an intent to defeat, delay, or defraud creditors.

The court found that the trustee had not discharged the onus of proving the necessary elements for either a fraudulent preference or a voidable transaction under the *Conveyancing Act 1919* (NSW). Consequently, the application to set aside the transfer was dismissed.