Re Cross, Wayne Edward & Anor Ex Parte Offical Trustee in Bankruptcy v Ritchie, Michael John & Anor [1983] FCA 41

Re Cross, Wayne Edward & Anor Ex Parte Offical Trustee in Bankruptcy v Ritchie, Michael John & Anor [1983] FCA 41

The respondents' claim to an equitable charge failed as it was never part of the agreement between the parties. The payment of $3073.39 in January 1981 was void as a preference under s.122 of the Bankruptcy Act 1966 because it was made when the bankrupts were unable to pay their debts and the respondents knew this; earlier payments were protected as they were received in good faith and for valuable consideration in the ordinary course of business.

Parties
Applicant: Official Trustee in Bankruptcy; Bankrupt: Wayne Edward Cross; Bankrupt: Debra Ellen Cross; Respondent: Michael John Ritchie; Respondent: Janise May Ritchie
Jurisdiction
Australia
Judgment Date
11 March 1983
Procedural Posture
Bankruptcy Proceedings / Final Judgment
Outcome
Applicant partially succeeds
Legal Topics
Void Payments, Preferences, Equitable Charge, Property Divisible Among Creditors
Bankruptcy Property Law Void Payments Preferences Equitable Charge Property Divisible Among Creditors

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Parties

Official Trustee in Bankruptcy

Applicant

Wayne Edward Cross

Bankrupt

Debra Ellen Cross

Bankrupt

Michael John Ritchie

Respondent

Janise May Ritchie

Respondent

Procedural Posture

Bankruptcy Proceedings / Final Judgment

Legal Issues

  1. 1 Whether the Bill of Encumbrance executed by the bankrupts and certain payments to the respondents are void against the Official Trustee in Bankruptcy under s.122 of the Bankruptcy Act 1966
  2. 2 Whether an equitable charge existed over land to secure monies owed to respondents
  3. 3 Whether payments made fell within s.122(2)(a) of the Bankruptcy Act 1966

Ratio Decidendi

The respondents' claim to an equitable charge failed as it was never part of the agreement between the parties. The payment of $3073.39 in January 1981 was void as a preference under s.122 of the Bankruptcy Act 1966 because it was made when the bankrupts were unable to pay their debts and the respondents knew this; earlier payments were protected as they were received in good faith and for valuable consideration in the ordinary course of business.

Court Disposition

Applicant partially succeeds

Orders

  • Declared the amount in the joint names in National Bank of Australasia Limited, Elizabeth Street, Brisbane, is property divisible among creditors and vested in the Official Trustee in Bankruptcy under s.58(1)(a) Bankruptcy Act 1966
  • Declared payment of $3073.39 by Wayne Edward Cross and Debra Ellen Cross to Michael John Ritchie and Janise May Ritchie in January 1981 is void against the Official Trustee in Bankruptcy by virtue of s.122 Bankruptcy Act 1966