Theo v Official Trustee in Bankruptcy

The case of *Theo v Official Trustee in Bankruptcy* concerned a dispute between Mr. Theo and the Official Trustee in Bankruptcy. The matter came before the High Court of Australia.

The central legal issue before the High Court was whether certain payments made by Mr. Theo to his wife constituted a fraudulent preference under section 122 of the *Bankruptcy Act 1966* (Cth). This involved determining whether these payments were made when Mr. Theo was insolvent and whether they had the effect of giving his wife a preference over other creditors.

The High Court considered the principles of fraudulent preference, focusing on the intention of the debtor and the effect of the transactions. The Court analysed the evidence to ascertain whether Mr. Theo's intention was to prefer his wife over other creditors, and whether the payments were made in circumstances where he was unable to pay his debts as they fell due. The Court applied established legal principles regarding insolvency and the onus of proof in fraudulent preference claims.

The High Court found that the payments made by Mr. Theo to his wife did not constitute a fraudulent preference. Consequently, the appeal was dismissed.