Brown v Mikulski [2016] FCA 1037

Brown v Mikulski [2016] FCA 1037

Although it was open to infer that the bankrupt was insolvent at the time of the transfer, Mr Brown did not know of the Fors judgment debt or of any other creditors apart from himself and the bank, and therefore did not have sufficient information from which he could reasonably have inferred either that the bankrupt was or was about to become insolvent or that her main purpose was to prevent, hinder or delay property becoming available to creditors. Because the consideration was accepted to be at least market value and s 121(4)(b) and s 121(4)(c) were satisfied, the transfer was not void against the trustee.

Jurisdiction
Australia
Judgment Date
01 September 2016
Procedural Posture
Bankruptcy and Insolvency Appeal / Appeal From a Judgment of the Federal Circuit Court of Australia
Outcome
Appeal allowed.
Legal Topics
['transfer of Property Prior to Bankruptcy' 'void Transfers to Defeat Creditors' 'bankruptcy Act 1966 (cth) S 121' 'insolvency' 'good Faith Transferee Defence']
['bankruptcy and Insolvency'] ['transfer of Property Prior to Bankruptcy' 'void Transfers to Defeat Creditors' 'bankruptcy Act 1966 (cth) S 121' 'insolvency' 'good Faith Transferee Defence']

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Procedural Posture

Bankruptcy and Insolvency Appeal / Appeal From a Judgment of the Federal Circuit Court of Australia

Legal Issues

  1. 1 ['Whether the FCCA judge erred in finding that the bankrupt was insolvent at the time of the transfer of the property.' 'Whether Mr Brown could reasonably have inferred that the bankrupt was, or was about to become, insolvent at the time of the transfer.' "Whether Mr Brown did not know, and could not reasonably have inferred, that the bankrupt's main purpose in making the transfer was a purpose described in s 121(1)(b) of the Bankruptcy Act 1966 (Cth)." "Whether the transfer of the bankrupt's interest in the property to Mr Brown was void against the trustee in bankruptcy under s 121 of the Bankruptcy Act 1966 (Cth)."]

Ratio Decidendi

Although it was open to infer that the bankrupt was insolvent at the time of the transfer, Mr Brown did not know of the Fors judgment debt or of any other creditors apart from himself and the bank, and therefore did not have sufficient information from which he could reasonably have inferred either that the bankrupt was or was about to become insolvent or that her main purpose was to prevent, hinder or delay property becoming available to creditors. Because the consideration was accepted to be at least market value and s 121(4)(b) and s 121(4)(c) were satisfied, the transfer was not void against the trustee.

Court Disposition

Appeal allowed.

Orders

  • ['The appeal be allowed.' 'The orders of the Federal Circuit Court made on 13 May 2016 are set aside.' "The respondent pay the appellant's costs of the appeal." 'The respondent is entitled to be indemnified out of the bankrupt estate of Angela Flora Moutinho-Brown for his costs of the appeal on a solicitor client...