Cooper v Fernihough, in the matter of the bankrupt estate of Phillip George Fernihough [2019] FCA 727

Cooper v Fernihough, in the matter of the bankrupt estate of Phillip George Fernihough [2019] FCA 727

Clause 3 and clause 11.2 of the financial agreement are void under s 90E of the Family Law Act 1975 (Cth) because they relate to spousal maintenance but do not specify the required information; as a result, there was no effective transfer of property to which s 120 or s 121 of the Bankruptcy Act 1966 (Cth) could apply, and the trustee's application for declarations under those sections must be dismissed. Even if there had been a valid transfer, the trustee failed to prove that the consideration was inadequate.

Parties
Applicant: Nicholas David Cooper; First Respondent: Christine Mary Fernihough; Second Respondent: Phillip George Fernihough
Jurisdiction
Australia
Judgment Date
23 May 2019
Procedural Posture
Bankruptcy Originating Application / Judgment After Contested Hearing
Outcome
Application for void transfer/disposition under Bankruptcy Act dismissed; declaration of vesting made; further orders for Family Law application opportunity and procedural steps.
Legal Topics
Financial Agreements Under Family Law Act, Voidable Transactions Under Bankruptcy Act, Spousal Maintenance, Division of Marital Property, Transfer of Property Under Bankruptcy
Bankruptcy Family Law Property Law Financial Agreements Under Family Law Act Voidable Transactions Under Bankruptcy Act Spousal Maintenance Division of Marital Property Transfer of Property Under Bankruptcy

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Parties

Nicholas David Cooper

Applicant

Christine Mary Fernihough

First Respondent

Phillip George Fernihough

Second Respondent

Procedural Posture

Bankruptcy Originating Application / Judgment After Contested Hearing

Legal Issues

  1. 1 Whether clause 3 of the financial agreement was void under s 90E of the Family Law Act 1975 (Cth)
  2. 2 Whether there was a 'transfer' of property under s 120 or s 121 of the Bankruptcy Act 1966 (Cth)
  3. 3 Whether consideration was given of less value than market value for the transfer

Ratio Decidendi

Clause 3 and clause 11.2 of the financial agreement are void under s 90E of the Family Law Act 1975 (Cth) because they relate to spousal maintenance but do not specify the required information; as a result, there was no effective transfer of property to which s 120 or s 121 of the Bankruptcy Act 1966 (Cth) could apply, and the trustee's application for declarations under those sections must be dismissed. Even if there had been a valid transfer, the trustee failed to prove that the consideration was inadequate.

Court Disposition

Application for void transfer/disposition under Bankruptcy Act dismissed; declaration of vesting made; further orders for Family Law application opportunity and procedural steps.

Orders

  • The second respondent's interest in the Pearsall property vested in the applicant trustee upon bankruptcy pursuant to s 58(1)(a) of the Bankruptcy Act 1966 (Cth).
  • Application for declarations under s 120/121 Bankruptcy Act dismissed.