Re Barton, Thomas v Ex Parte The Official Receiver [1983] FCA 366

Re Barton, Thomas v Ex Parte The Official Receiver [1983] FCA 366

The payment of $170,000 by Thomas Barton to Terence Barton was a settlement of property within two years prior to the date of sequestration, but not for valuable consideration as required by sections 120 and 121 of the Bankruptcy Act 1966. The promise to repay after twenty years at less than commercial interest rates was not real and substantial value and was thus not valuable consideration. The respondent acted in good faith, but the disposition is void as against the trustee because the element of valuable consideration was not satisfied.

Jurisdiction
Australia
Judgment Date
09 December 1983
Procedural Posture
Bankruptcy Proceedings / Judgment Following Application for Declaratory Orders
Outcome
Payment of $170,000 by Thomas Barton to Terence Barton is void as against the trustee in bankruptcy and is property divisible among creditors. Respondent to pay applicant's costs.
Legal Topics
['dispositions to Defraud Creditors' 'settlement of Property' 'valuable Consideration' 'good Faith' 'onus of Proof']
['bankruptcy'] ['dispositions to Defraud Creditors' 'settlement of Property' 'valuable Consideration' 'good Faith' 'onus of Proof']

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Procedural Posture

Bankruptcy Proceedings / Judgment Following Application for Declaratory Orders

Legal Issues

  1. 1 ['Whether payment of $170,000 by Thomas Barton to Terence Barton is void against the trustee as a disposition of property with intent to defraud creditors or as a settlement not for valuable consideration and not in good faith under sections 120 and 121 of the Bankruptcy Act 1966']

Ratio Decidendi

The payment of $170,000 by Thomas Barton to Terence Barton was a settlement of property within two years prior to the date of sequestration, but not for valuable consideration as required by sections 120 and 121 of the Bankruptcy Act 1966. The promise to repay after twenty years at less than commercial interest rates was not real and substantial value and was thus not valuable consideration. The respondent acted in good faith, but the disposition is void as against the trustee because the element of valuable consideration was not satisfied.

Court Disposition

Payment of $170,000 by Thomas Barton to Terence Barton is void as against the trustee in bankruptcy and is property divisible among creditors. Respondent to pay applicant's costs.

Orders

  • ["Payment of $170,000 by Terence Barton to the Official Receiver as trustee of the bankrupt's estate" 'Respondent to pay taxed costs to applicant']