Sutherland v Brien [1999] NSWSC 155

Sutherland v Brien [1999] NSWSC 155

The deed of guarantee, mortgage and consents were transfers of property within s 120 of the Bankruptcy Act. The only consideration actually given by Mr Sutherland was limited forbearance from taking steps to cause AIG to cease trading for short periods, not any promise to refrain from insolvent trading or breach of duty proceedings. Objectively, that consideration was nominal or of no value and was less than the market value of the rights obtained, initially about $180,000 and later about $250,000. The transfers were therefore void against the defendants under s 120(1), no payment was due under s 120(4), the plaintiffs' summons failed, and the defendants succeeded on the cross-claim.

Jurisdiction
Australia
Judgment Date
01 March 1999
Procedural Posture
Equity Proceedings Concerning Claims to Money Held in a Trust Account and Validity of Transfers Under Bankruptcy Legislation / Hearing of Summons and Cross Claim
Outcome
Summons dismissed; judgment for cross-claimants.
Legal Topics
['void Transfers Against Trustee in Bankruptcy' 'consideration for Transfer of Property' 'market Value of Property Transferred' 'deed of Guarantee and Mortgage' 'jurisdiction of the Supreme Court of New South Wales']
['bankruptcy' 'equity' 'corporations'] ['void Transfers Against Trustee in Bankruptcy' 'consideration for Transfer of Property' 'market Value of Property Transferred' 'deed of Guarantee and Mortgage' 'jurisdiction of the Supreme Court of New South Wales']

Case Brief

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Procedural Posture

Equity Proceedings Concerning Claims to Money Held in a Trust Account and Validity of Transfers Under Bankruptcy Legislation / Hearing of Summons and Cross Claim

Legal Issues

  1. 1 ['Whether s 27(1) of the Bankruptcy Act deprived the Supreme Court of New South Wales of jurisdiction to determine the proceedings.' 'Whether the deed of guarantee, mortgage and subsequent consents executed by Mr and Mrs Roberts were transfers of property for the purposes of s 120(1) of the Bankruptcy Act.' 'Whether the consideration given by Mr Sutherland for those transfers was of less value than the market value of the property transferred.' 'Whether the fund held in the Jirsch Sutherland Trust Account was payable to the post deed creditors of AIG or to the defendants as trustees of the estates of Mr and Mrs Roberts.']

Ratio Decidendi

The deed of guarantee, mortgage and consents were transfers of property within s 120 of the Bankruptcy Act. The only consideration actually given by Mr Sutherland was limited forbearance from taking steps to cause AIG to cease trading for short periods, not any promise to refrain from insolvent trading or breach of duty proceedings. Objectively, that consideration was nominal or of no value and was less than the market value of the rights obtained, initially about $180,000 and later about $250,000. The transfers were therefore void against the defendants under s 120(1), no payment was due under s 120(4), the plaintiffs' summons failed, and the defendants succeeded on the cross-claim.

Court Disposition

Summons dismissed; judgment for cross-claimants.

Orders

  • ["Declare that the transfers of property by Harley Warren Roberts and Deirdre Ruth Roberts to the first plaintiff as administrator of Australian Imaging Group Pty Ltd ('AIG') on behalf of certain creditors of AIG by deed of guarantee and mortgage each dated 16 January 1997, and by their respective consents given in...