Verge v Devere Holdings Pty Ltd (No 4)

Evan Verge, as Trustee in Bankruptcy of the Andonys, sought to set aside various transactions involving land and shares, claiming they were undervalued and thus could be challenged under section 120 of the Bankruptcy Act 1966 (Cth). Devere Holdings Pty Ltd, along with other respondents, contested these claims. The court needed to determine whether the transactions were indeed undervalued and if the recipients of the property had acted in good faith, providing consideration at least as valuable as the market value of the property. Additionally, the court had to consider the principles of good faith, the burden of proof, and the indefeasibility of title in relation to the Bankruptcy Act.

The court found that the evidence provided by the Andonys was not entirely reliable, particularly regarding the transactions and the receipt of consideration. Despite challenges to their credibility, no evidence contradicted the Andonys' claims that they did not receive the consideration they were supposed to under the agreements. Mr Verge, as the Trustee in Bankruptcy, provided evidence of his attempts to obtain documentation from Mr Fazio, culminating in a caveat against the Dongara Land and a warning to Mr Fazio against further dealings. The court concluded that the transactions in question were undervalued and that the recipients did not provide consideration at least as valuable as the market value of the property, thus allowing the claims to be set aside.

The court's reasoning led to the conclusion that the transactions were indeed undervalued and that the recipients were not acting in good faith by failing to provide adequate consideration. The Andonys did not receive consideration as valuable as the market value of the property, and the court found that the Trustees in Bankruptcy were entitled to set aside the transactions. The principles of good faith and the burden of proof were upheld, with the court finding that the Andonys had not discharged the burden of proving that they had received adequate consideration. The indefeasibility of title was not inconsistent with the Bankruptcy Act in this context, as the court found that the transactions were fraudulent.

The court ordered that the applicants file and serve a minute of orders and submissions reflecting these reasons and conclusions within 21 days, and that the respondents do the same. General liberty to apply was also granted.