Morton, R.W. v Feteiha, S. [1995] FCA 280

Morton, R.W. v Feteiha, S. [1995] FCA 280

The applicant was not entitled to relief. The constructive trust ground was not pressed. The payments of $22,265.25, $1,500 and $70,000 were not settlements of property within s 120 because they were payments made to complete the respondent's purchase, discharge mortgage costs or repay the mortgage debt, not dispositions intended to be retained by the recipient. Although the Court proceeded on the basis that s 122(1) applied, there was no evidence supporting the inferences in s 122(4)(c), and the respondent proved that the payments were made in good faith, for valuable consideration and in the ordinary course of business, so s 122(2)(a) protected the payments.

Jurisdiction
Australia
Judgment Date
03 May 1995
Procedural Posture
Bankruptcy Application by Trustee in Bankruptcy Seeking Declarations and Orders Concerning Property and Payments / Application Heard and Dismissed
Outcome
Application dismissed with costs.
Legal Topics
['bankruptcy Act 1966 S 120 Settlements of Property' 'bankruptcy Act 1966 S 122 Preferences' 'constructive Trust' 'trustee in Bankruptcy' 'good Faith, Valuable Consideration and Ordinary Course of Business']
['bankruptcy' 'property' 'trusts'] ['bankruptcy Act 1966 S 120 Settlements of Property' 'bankruptcy Act 1966 S 122 Preferences' 'constructive Trust' 'trustee in Bankruptcy' 'good Faith, Valuable Consideration and Ordinary Course of Business']

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Procedural Posture

Bankruptcy Application by Trustee in Bankruptcy Seeking Declarations and Orders Concerning Property and Payments / Application Heard and Dismissed

Legal Issues

  1. 1 ['Whether the respondent held 27 Sorrento Street, Broadmeadows on constructive trust for the bankrupt so that the applicant trustee was entitled to registration and possession.' "Whether payments made by the bankrupt in relation to settlement of the respondent's property were settlements of property void against the trustee under s 120 of the Bankruptcy Act 1966." 'Whether payments made by the bankrupt to or on behalf of the respondent were void preferences under s 122 of the Bankruptcy Act 1966.' 'Whether the respondent was protected by s 122(2)(a) as a payee in good faith, for valuable consideration and in the ordinary course of business.']

Ratio Decidendi

The applicant was not entitled to relief. The constructive trust ground was not pressed. The payments of $22,265.25, $1,500 and $70,000 were not settlements of property within s 120 because they were payments made to complete the respondent's purchase, discharge mortgage costs or repay the mortgage debt, not dispositions intended to be retained by the recipient. Although the Court proceeded on the basis that s 122(1) applied, there was no evidence supporting the inferences in s 122(4)(c), and the respondent proved that the payments were made in good faith, for valuable consideration and in the ordinary course of business, so s 122(2)(a) protected the payments.

Court Disposition

Application dismissed with costs.

Orders

  • ['The application herein filed on 30 August 1994 be dismissed.' "The applicant pay the respondent's costs of the application including any reserved costs."]