Trimbole, Re R. Donnelly, Ex Parte M.C. & Ors [1986] FCA 277

Trimbole, Re R. Donnelly, Ex Parte M.C. & Ors [1986] FCA 277

The transfer was void as against the trustee because neither the contract for sale nor the first respondent's undertaking constituted valuable consideration; the contract was a sham intended to cloak what was in substance a gift, and the promise to manage the property and discharge future outgoings did not amount to real or substantial consideration for purposes of s.120(1)(a) of the Bankruptcy Act 1966.

Parties
Applicant: Max Christopher Donnelly; Bankrupt: Robert Trimble (Bankrupt); First Respondent: Craig Grainger Trimble; Second Respondent: Water Resources Commission
Jurisdiction
Australia
Judgment Date
11 July 1986
Procedural Posture
Bankruptcy / Application for Declaration and Orders
Outcome
Declaration that the transfer is void against the trustee; order for transfer of property back to trustee; costs awarded to applicant; liberty to apply reserved.
Legal Topics
Void Disposition, Valuable Consideration, Sham Transaction
Bankruptcy Law Void Disposition Valuable Consideration Sham Transaction

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Parties

Max Christopher Donnelly

Applicant

Robert Trimble (Bankrupt)

Bankrupt

Craig Grainger Trimble

First Respondent

Water Resources Commission

Second Respondent

Procedural Posture

Bankruptcy / Application for Declaration and Orders

Legal Issues

  1. 1 Whether transfer of property to son of bankrupt is void under s.120(1) Bankruptcy Act 1966
  2. 2 Whether promise to discharge future outgoings and to manage property constitutes 'valuable consideration'
  3. 3 Whether the contract for sale was a sham transaction

Ratio Decidendi

The transfer was void as against the trustee because neither the contract for sale nor the first respondent's undertaking constituted valuable consideration; the contract was a sham intended to cloak what was in substance a gift, and the promise to manage the property and discharge future outgoings did not amount to real or substantial consideration for purposes of s.120(1)(a) of the Bankruptcy Act 1966.

Court Disposition

Declaration that the transfer is void against the trustee; order for transfer of property back to trustee; costs awarded to applicant; liberty to apply reserved.

Orders

  • Declare that the disposition by the bankrupt to the first respondent of the property is void as against the applicant.
  • Order that the first respondent transfer the property to the applicant as trustee of the estate of the bankrupt.