Re Florance, J.L. v. Ex parte Andrew, W.E. [1983] FCA 390

Re Florance, J.L. v. Ex parte Andrew, W.E. [1983] FCA 390

The options to purchase were not made with intent to defraud creditors within s. 121 of the Act, as the bankrupt acted for domestic reasons and not with such intent. However, the consideration given for the options ($10.00 or $1.00) was merely nominal and not valuable in a commercial sense. Therefore, Mrs Florance was not a purchaser for valuable consideration under s. 120(1)(a) and the options constituted settlements of property void as against the trustee.

Parties
Applicant: William Edward Andrew; First Respondent: James Louis Florance; Second Respondent: Jean Margaret Florance
Jurisdiction
Australia
Judgment Date
22 December 1983
Procedural Posture
Bankruptcy / Application by Trustee in Bankruptcy for Declarations and Consequential Orders
Outcome
Applicant succeeds under s. 120. Options void as against trustee, orders made restraining second respondent and compelling delivery of documents, and an order as to costs against respondents for one-third of applicant's taxed costs.
Legal Topics
Avoidance of Transactions, Settlements of Property, Intent to Defraud Creditors, Valuable Consideration
Bankruptcy Avoidance of Transactions Settlements of Property Intent to Defraud Creditors Valuable Consideration

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Parties

William Edward Andrew

Applicant

James Louis Florance

First Respondent

Jean Margaret Florance

Second Respondent

Procedural Posture

Bankruptcy / Application by Trustee in Bankruptcy for Declarations and Consequential Orders

Legal Issues

  1. 1 Whether the options to purchase granted by the bankrupt to his wife constitute dispositions made with intent to defraud creditors under s. 121 of the Bankruptcy Act 1966.
  2. 2 Whether the options constituted settlements of property by the bankrupt on his wife and as such are void under s. 120 of the Bankruptcy Act 1966.
  3. 3 Whether the wife was a purchaser for valuable consideration within the meaning of s. 120(1)(a) and s. 121.

Ratio Decidendi

The options to purchase were not made with intent to defraud creditors within s. 121 of the Act, as the bankrupt acted for domestic reasons and not with such intent. However, the consideration given for the options ($10.00 or $1.00) was merely nominal and not valuable in a commercial sense. Therefore, Mrs Florance was not a purchaser for valuable consideration under s. 120(1)(a) and the options constituted settlements of property void as against the trustee.

Court Disposition

Applicant succeeds under s. 120. Options void as against trustee, orders made restraining second respondent and compelling delivery of documents, and an order as to costs against respondents for one-third of applicant's taxed costs.

Orders

  • Declared that each of the five options to purchase (dated 28 March 1977) were settlements within the meaning of s. 120 of the Bankruptcy Act 1966 and as such void as against the trustee.
  • Second respondent restrained from dealing with the properties under the options.