Re Abrahams, S. v. Ex parte Thomas, E.C. & Anor [1988] FCA 7

Re Abrahams, S. v. Ex parte Thomas, E.C. & Anor [1988] FCA 7

Both the Fairfield and Rose Bay mortgages were void under ss121 and 122 of the Bankruptcy Act because they were entered into when the respondent was or ought to have been aware of the bankrupt's insolvency and other creditors; the respondent lacked good faith and the mortgages effected a preference to the respondent over other creditors.

Parties
Applicant: Hugh Charles Thomas; Respondent: AGC (Factors) Limited; Bankrupt: Stephen Abrahams
Jurisdiction
Australia
Judgment Date
22 January 1988
Procedural Posture
Application to Set Aside Mortgages in Bankruptcy / Final Judgment
Outcome
Mortgages set aside as void against the trustee; costs ordered against respondent.
Legal Topics
Setting Aside Mortgages, Voidable Transactions, Insolvency, Preference, Fraudulent Intent, Good Faith of Mortgagee
Bankruptcy Setting Aside Mortgages Voidable Transactions Insolvency Preference Fraudulent Intent Good Faith of Mortgagee

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Parties

Hugh Charles Thomas

Applicant

AGC (Factors) Limited

Respondent

Stephen Abrahams

Bankrupt

Procedural Posture

Application to Set Aside Mortgages in Bankruptcy / Final Judgment

Legal Issues

  1. 1 Whether the Fairfield and Rose Bay mortgages are void against the trustee under s121 and s122 of the Bankruptcy Act 1966
  2. 2 Whether the mortgages were made with intent to defraud creditors
  3. 3 Whether the respondent was a bona fide encumbrancer for purposes of s122(2)

Ratio Decidendi

Both the Fairfield and Rose Bay mortgages were void under ss121 and 122 of the Bankruptcy Act because they were entered into when the respondent was or ought to have been aware of the bankrupt's insolvency and other creditors; the respondent lacked good faith and the mortgages effected a preference to the respondent over other creditors.

Court Disposition

Mortgages set aside as void against the trustee; costs ordered against respondent.

Orders

  • The mortgage dated 19 June 1981 over Certificate of Title Volume 10769 Folio 242 is void as against the trustee.
  • The mortgage dated 2 December 1981 over Certificate of Title Volume 12520 Folio 47 is void as against the trustee in the bankruptcy.