Verge v Devere Holdings Pty Ltd (No 4) [2010] FCA 653

Verge v Devere Holdings Pty Ltd (No 4) [2010] FCA 653

The transfers by the Andonys of one-third interest in the Dongara Land to Devere and subsequent transfer to Castleworld were at undervalue, with no or insufficient consideration actually given at the time, and thus voidable against the applicants under s 120 of the Bankruptcy Act. Neither Castleworld nor Packham gave market value for the interest acquired, nor did Castleworld acquire in good faith within the meaning of the legislation. Accordingly, equitable compensation and restitutionary orders, including correction of share registers, are available; indefeasibility provisions under state land law do not defeat the statutory rights of trustees in bankruptcy.

Parties
Applicant: Evan Robert Verge; Applicant: George Aubrey Lopez; First Respondent: Devere Holdings Pty Ltd; Second Respondent: Packham Pty Ltd; Third Respondent: Castleworld Pty Ltd
Jurisdiction
Australia
Judgment Date
24 June 2010
Procedural Posture
Civil / Interim Judgment; Reasons for Judgment; Directions for Final Orders
Outcome
Interim decision; land and share transfers voidable; directions for final orders invited.
Legal Topics
Undervalued Transactions, Trustee in Bankruptcy, Set Aside Land and Share Transactions, Good Faith Acquisition, Indefeasibility of Title, Equitable Compensation, Share Transfers, Jurisdictional Conflict
Bankruptcy Equity Constitutional Law Property Law Undervalued Transactions Trustee in Bankruptcy Set Aside Land and Share Transactions Good Faith Acquisition +4 more

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 7 Authorities cited 26 Party arguments 2 Amounts and remedies 6
Sign in to unlock

Parties

Evan Robert Verge

Applicant

George Aubrey Lopez

Applicant

Devere Holdings Pty Ltd

First Respondent

Packham Pty Ltd

Second Respondent

Castleworld Pty Ltd

Third Respondent

Procedural Posture

Civil / Interim Judgment; Reasons for Judgment; Directions for Final Orders

Legal Issues

  1. 1 Whether transfers of property and shares by the bankrupts to Devere, and by Devere to Castleworld, were at undervalue and voidable against trustees in bankruptcy under s 120 of the Bankruptcy Act 1966 (Cth)
  2. 2 Whether Castleworld was a good faith purchaser for market value for the purposes of protection under s 120(6) of the Bankruptcy Act
  3. 3 Whether statutory indefeasibility under the Transfer of Land Act 1893 (WA) is inconsistent with s 120 of the Bankruptcy Act and, if so, which prevails

Ratio Decidendi

The transfers by the Andonys of one-third interest in the Dongara Land to Devere and subsequent transfer to Castleworld were at undervalue, with no or insufficient consideration actually given at the time, and thus voidable against the applicants under s 120 of the Bankruptcy Act. Neither Castleworld nor Packham gave market value for the interest acquired, nor did Castleworld acquire in good faith within the meaning of the legislation. Accordingly, equitable compensation and restitutionary orders, including correction of share registers, are available; indefeasibility provisions under state land law do not defeat the statutory rights of trustees in bankruptcy.

Court Disposition

Interim decision; land and share transfers voidable; directions for final orders invited.

Orders

  • The applicants are to file and serve within 21 days a minute of orders and submissions to reflect the reasons and conclusions.
  • The respondents are to file and serve within 21 days a minute and submissions in response.