Draper v Official Trustee in Bankruptcy [2006] FCAFC 157

FEDERAL COURT OF AUSTRALIA

Draper v Official Trustee in Bankruptcy [2006] FCAFC 157

BANKRUPTCY – joint mortgagors – where one mortgagor became bankrupt and other mortgagor continued to make mortgage repayments – where bankrupt mortgagor provided general financial support to other mortgagor whilst bankrupt – disclaimer – whether trustee in bankruptcy disclaimed interest in property – estoppel – where trustee in bankruptcy inactive with respect to real property for 16 years – whether trustee in bankruptcy estopped from asserting interest in property – after-acquired income – whether after-acquired income of bankrupt vests in trustee in bankruptcy – whether bankruptcy should be annulled pursuant to s 153B of the Bankruptcy Act 1966 (Cth).

EQUITY – express trusts – whether husband's interest in real property held on trust for wife – whether clear intention to create express trust – whether requirements of s 29 of the Law of Property Act 1936 (SA) that creation of interest be evidenced in writing satisfied – whether Magistrate overlooked material evidence in finding no express trust – constructive trusts – circumstances in which constructive trust imposed – equitable accounting – relevant principles – trustees – claim for damages against trustee in respect of administration of estate.

EVIDENCE – negative inference drawn by magistrate following applicant's failure to call witness – where witness co-operating with both parties.

PROCEDURE – appeal by jury – where party seeks appeal to be determined by jury – circumstances in which Court may order trial by jury.

Held: material evidence overlooked by Magistrate in finding that no express trust arose – Magistrate failed to review material which might satisfy s 29 of the Law of Property Act 1936 (SA) – Magistrate erred in drawing negative inference against applicant on the basis of failure to call witness where witness available to both parties – question of whether bankrupt contributed to mortgage repayments is question of fact – no conduct on the part of trustee in bankruptcy capable of creating an estoppel – no disclaimer of interest in property by trustee in bankruptcy – bankrupt potentially entitled to an account in equity for payments made improving property or repaying mortgage after discharge of bankruptcy – trustee in bankruptcy entitled to proper rent on equitable accounting – no power for Court to direct that matter in its appellate jurisdiction be heard by jury – no basis for annulment of bankruptcy under s 153B of Bankruptcy Act 1966 (Cth) – no basis for claim for damages against trustee in respect of administration of estate – appeal allowed in part – matter remitted for rehearing of claims in respect of proceeds of sale of property.