Re Lucas, Phillip William Ex parte Peake, Russell Graeme [1996] FCA 623

Re Lucas, Phillip William Ex parte Peake, Russell Graeme [1996] FCA 623

The payment was not void against the trustee because, although s 122(1) was accepted to apply and the payment gave the respondents valuable consideration, the respondents established that they accepted the payment in good faith and in the ordinary course of business. The sale of the house came to the solicitor's attention fortuitously, there was no pressure by the creditor, the refinancing and continued trading of the business justified the absence of further creditor enquiries, the client was notified of the proposed deduction and did not object, and a solicitor's deduction of outstanding costs from client money held in hand was an ordinary business transaction notwithstanding the age of...

Jurisdiction
Australia
Judgment Date
17 July 1996
Procedural Posture
Bankruptcy Application Under S 122 of the Bankruptcy Act 1966 (cth) to Set Aside a Payment as a Preference / Reasons for Judgment and Orders After Hearing
Outcome
Application dismissed.
Legal Topics
['preference Payment' 'good Faith' 'ordinary Course of Business' "solicitor's Deduction of Costs From Client Funds"]
['bankruptcy' 'insolvency'] ['preference Payment' 'good Faith' 'ordinary Course of Business' "solicitor's Deduction of Costs From Client Funds"]

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Procedural Posture

Bankruptcy Application Under S 122 of the Bankruptcy Act 1966 (cth) to Set Aside a Payment as a Preference / Reasons for Judgment and Orders After Hearing

Legal Issues

  1. 1 ['Whether the respondents received the payment in good faith for the purposes of s 122(2)(a) of the Bankruptcy Act 1966 (Cth).' 'Whether the respondents received the payment in the ordinary course of business for the purposes of s 122(2)(a) of the Bankruptcy Act 1966 (Cth).']

Ratio Decidendi

The payment was not void against the trustee because, although s 122(1) was accepted to apply and the payment gave the respondents valuable consideration, the respondents established that they accepted the payment in good faith and in the ordinary course of business. The sale of the house came to the solicitor's attention fortuitously, there was no pressure by the creditor, the refinancing and continued trading of the business justified the absence of further creditor enquiries, the client was notified of the proposed deduction and did not object, and a solicitor's deduction of outstanding costs from client money held in hand was an ordinary business transaction notwithstanding the age of...

Court Disposition

Application dismissed.

Orders

  • ['Application dismissed.' "Applicant pay the respondent's costs, including reserved costs."]