CATCHWORDS Bankruptcy - Avoidance of transactions - application by trustee to have options to purchase granted by the bankrupt to his wife in respect of his interest in properties declared void pursuant to ss. 120 and 121 of the Act - whether the dispositions were made with an intent to defraud creditors - ° whether the wife was a purchaser for "valuable consideration" within the meaning of s. 120(1)(a). Bankruptcy Act 1966: ss. 5; 11g; 120; 121 Re: James Louis Florance Ex Parte: William Edward Andrew N.S.W. No 95 of 1980 _~ Sweeney J Melbourne 22 December 1983 IN THE FEDERAL COURT OF AUSTRALIA ) GENERAL DIVISION ) BANKRUPTCY DISTRICT OF THE STATE ) N.S.W. No. 95 of 1980. OF NEW SOUTH WALES AND THE ) AUSTRALIAN CAPITAL TERRITORY ) Re: JAMES LOUIS FLORANCE The Bankrupt Ex Parte: WILLIAM EDWARD ANDREW Applicant JAMES LOUIS FLORANCE First Respondent JEAN MARGARET FLORANCE Second Respondent ORDER JUDGE MAKING ORDER: Sweeney J WHERE MADE: Melbourne DATE OF ORDER: 22 December 1983 THE COURT: l. declares that the option to purchase purported to be given by the first respondent to the second respondent dated 28 March 1977 wherein the first respondent purported to grant to the second respondent or her nominee for the consideration of $10.00 an option to purchase from the first respondent the property therein described as "Lot 49, 50, 55, 73, 81, 114, 63, 66, 115, 154, 157, Pt Por 95 D.P. 342587, D.P. 242, Parish of Canobolas whole of the interest of James Louis Florance in 'Greenwood' and 'Boronia'" for the sum of $69,400.00 on certain terms and conditions, including a condition that the option may be exercised by the second respondent by notice in writing addressed to the first respondent at any time within 5 years from the date of the option to purchase constituted a settlement of property by the bankrupt on the second respondent within the meaning of s. 120 of the Act and as such was and remains void as against the applicant, as trustee of the property of the bankrupt. 2. declares that the option to purchase purported to be given by the first respondent to the second respondent dated 28 March 1977 wherein the first respondent purported to grant to the second respondent or her nominee in consideration of the sum of $10.00 an option to purchase from the first respondent the property therein described as "Lot 49, 50, 55, 73, 81, 114, 63, 66, 115, 154, 157, PT Por 35 D.P. 242587/D.P. 24758 Parish Canobolas whole of the interest of James Louis Florance in 'Greenwood' and 'Boronia' for the sum of $69,400.00 on certain terms and conditions, including a condition that the option may be exercised by the second respondent by notice in writing addressed to the first respondent at any time prior to 15 March 1981 constituted a settlement of property by the bankrupt on the second respondent within the meaning of s. 120 of the Act and as such was and remains void as against the applicant, as trustee of the property of the bankrupt. 3. declares that the option to purchase purported to be granted by the first respondent to the second respondent dated 28 March 1977 wherein in consideration of the sum of $1.00 paid to the first respondent by the second respondent -the first respondent purported to grant to the second respondent or her nominee an option to purchase from the first respondent the land therein described as "Portion 2581 Aroona Road, Oxford Falls, Shire of Warringah Volume 8453 Folio 9 Plan C 7528" for the sum of $32,500.00 upon certain terms and conditions, including a condition that the option may be exercised by the second respondent by notice in writing addressed to the first respondent at any time within five years from the date of the option to purchase constituted a settlement of property by the bankrupt on the second respondent within the meaning of s. 120 of the Act and as such was and remains void as against the applicant, as trustee of the property of the bankrupt. 4. declares that the option to purchase purported to be granted by the first respondent to the second respondent dated 28 March 1977 wherein in consideration of the sum of $10.00 paid to the first respondent by the second respondent the first respondent purported to grant to the second respondent or her nominee an option to purchase from the first respondent the land therein described as "District of Beacon Hill Shire of Warringah Volume 7023 Folio 29 Portion 1935" for the sum of $57,000.00 upon certain terms and conditions, including a condition that the option may be exercised by the second respondent by notice in writing addressed to the first respondent at any time within five years from the date of the option to purchase constituted a settlement of property by the bankrupt on the second respondent within the meaning of s. 120 of the Act and as such was and remains void as against the applicant, as trustee of the property of the bankrupt. 5. declares that the option to purchase purported to be granted by the first respondent to the second respondent dated 28 March 1977 wherein in consideration of the sum of $10.00 paid to the first respondent by the second respondent the first respondent purported to grant to the second respondent or her nominee an option to purchase from the first respondent the land therein described as "Lot 324, 8th Av, Lladillo - near Penrith, Municipality of Penrith, D.P. 214" for the sum of $18,000.00 _upon certain terms and conditions, including a condition that the option may be exercised by the second respondent by notice in writing addressed to the first respondent at any time within five years from the date of the option to purchase constituted a settlement of property by the bankrupt on the second respondent within the Meaning of s. 120 of the Act and as such was and remains void as against the applicant, as trustee of the property of the bankrupt. 6. orders that the second respondent be wr ee me ee ee restrained from dealing in any way with the properties referred to in paragraphs (1), (2), (3), (4) and (5) above. 7. orders that the second respondent be restrained from doing any act or thing or executing any deed, documents, instrument or writing wherein she "purports to rely on the options referred to in paragraphs (1), (2), (3), (4) and (5) above. 8. orders that the first respondent and second respondent deliver to the applicant all certificates of title, title deeds, option agreements and any other document whatsoever relating to the said properties. 9. orders that the first respondent and second respondent pay one third of the applicant's taxed costs of the application, including reserved costs. IN THE FEDERAL COURT OF AUSTRALIA ) GENERAL DIVISION ) BANKRUPTCY DISTRICT OF THE STATE ) N.S.W. No. 95 of 1980. OF NEW SOUTH WALES AND THE ) AUSTRALIAN CAPITAL TERRITORY ) Re: JAMES LOUIS FLORANCE The Bankrupt Ex Parte: WILLIAM EDWARD ANDREW Applicant JAMES LOUIS FLORANCE First Respondent JEAN MARGARET FLORANCE Second Respondent Coram: Sweeney J Place: Melbourne Date: 22 December 1983. . - Reasons for Judgment Sweeney J: On 28 March 1977 James Louis Florance, the bankrupt, executed in favour of his wife, Jean Margaret Florance ("Mrs Florance"), options to purchase his interest in the following properties: (a) his interest as joint registered proprietor with Mrs Florance as tenants in common in equal shares in two properties near Orange, known as "Greenwood" and , Boronia". (bo) his half interest as joint registered proprietor with Mrs Florance in a property known as "Aroona Road, Oxford Falls." (c) his interest as sole registered proprietor of their matrimonial home in Beacon Hill. (da) his interest as sole registered proprietor in a property known as "8th Avenue, Llandillo" near Penrith. The bankrupt executed five options in total, two in respect of his interest in the same Orange properties, and one in respect of his interest in each of the other properties. One of the options in respect of the Orange properties contained a term that it might be exercised by Mrs Florance at any time prior to 15 March 1981. Each of the other options contained a term that it might be exercised by Mrs Florance at any time within five years from its date. The consideration for the grant of the options was as follows: Greenwood and Boronia $10 (for each of the options) Aroona Road, Oxford Falls $1 The matrimonial home $10 8th Avenue, Llandillo $10 The purchase price specified in the option over: the matrimonial home in Beacon Hill was $57,000.00. Notice of the exercise of the option was served on 14 March 1982. The purchase price specified in the option over the Llandillo property was $18,000.00, and notice of its exercise was served also on 14 March 1982. In late 1977 Mr Florance had entered a contract of sale to sell the Llandillo property to a company named Dalliam Pty Ltd for $21,000.00. The Supreme Court of New South Wales on 14 December 1978 ordered specific performance of the contract by Dalliam Pty Ltd. Dalliam Pty Ltd went into liquidation on 11 December 1979 but prior to that date it entered into a contract to sell the Llandillo property for the sum of $25,000.00. Mr Florance is still presently the sole registered proprietor of the property. The purchase price specified in the option over the Oxford Falls property was $32,500.00, and notice of its exercise was served on 14 March 1982. The purchase price specified in each of the options over the Orange properties was $69,400.00. The option exerciseable prior to 15 March 1981 was not exercised, and notice of the exercise of the other option in respect of the Orange properties was served on 12 March 1982. The purchase prices specified in the options broadly accorded with the valuations put into evidence on behalf of the respondents. No evidence to the contrary was led, and the effect of the valuations can be summarized conveniently in tabular form which appears as annexure 1 td these reasons. Each of the properties the subject of the options was encumbered by mortgages in favour of the Bank of New South Wales ("the bank") at the time of the grant of the options. In 1982 the bank brought proceedings pursuant to these mortgages in the Supreme Court of New South Wales against Mr & Mrs Florance for possession of the properties. These proceedings were settled and minutes of orders and terms of settlement were signed on 28 September 1982. On 18 February 1980 a sequestration order was made against the estate of the bankrupt on the petition of Turimetta Properties Pty Ltd ("the petitioning creditor") which had on 15 February 1978 obtained judgment against the bankrupt and George John Knight ("Mr Knight") in the Supreme Court of New South Wales in respect of their liability under a guarantee of the obligations of Louis John Holdings Pty Ltd under a mortgage between it and the petitioning creditor. The amount of the judgment was $432,545.50. The act of bankruptcy upon which the sequestration order was based was the failure of Mr Florance on or before 21 February 1979 to comply with the requirements of a bankruptcy notice founded upon that judgment. Accordingly, the commencement of his bankruptcy was on 21 February 1979. (see ss. 5 and 115 of the Bankruptcy Act, 1966 ("the Act")) By application dated 25 March 1983 William Edward Andrew ("the trustee"), the trustee of the bankrupt estate of Mr Florance sought declarations that each of the options was a disposition of property with--intent to defraud creditors which is void as against the trustee pursuant to s. 121 of the Act. Alternatively, he sought declarations that each of the options was a settlement of property which is void as against the trustee pursuant to s. 120 of the Act. Mr & Mrs Florance filed an amended notice of intention to oppose the application. In relation to the s. 121 claims they denied that the dispositions were made with intent to defraud creditors and they raised the defence that the dispositions were for valuable consideration in favour of a person who acted in good faith. In relation to the s. 120 claims they raised the defence that the settlements were made in favour of a purchaser in good faith and for valuable consideration. Mrs Florance has commenced proceedings in the Supreme Court of New South Wales against the trustee seeking to have the options specifically performed. These proceedings have been adjourned, on the application of the trustee,' pending the outcome of the present proceedings. Counsel for the trustee submitted that at the time of the grant of the options the bankrupt had very considerable liabilities which were either due or about to become due. In a letter dated 17 September 1976 to Mr Knight, Mr Florance had outlined the "seriousness" of the situation which existed in relation to several projects with which they were associated, including the project out of which the liability to the petitioning creditor arose, and had said: "You have indicated to me George, that you have no funds whatsoever with which to meet interest payments in connection with any of the above mentioned matters and quite frankly the position so far as I am concerned is much the same". The court was asked to infer that in such circumstances the grant, for a small consideration, of.the options, exerciseable at any time within 5 years without any provision for the specified purchase price to be increased were dispositions of property with intent to defraud creditors. Brennan J in delivering the judgment of a Full Court of this court in Noakes v Harvy Holmes & Son (1979) 26 ALR 297 said at p303: "The case falls squarely within the line of authorities of which Freeman v Pope (1870) 5 Ch App 538 is the leading example, where Lord Hatherley LC said (at 541): "But it is established by the authorities in the absence of any such direct proof of intention, if a person owing debts makes a settlement which subtracts from the property which is the proper fund for the payment of those debts, an amount without which the debts cannot be paid, then, since it is the necessary consequence of the settlement (supposing it effectual) that some creditors must remain unpaid, it would be the duty of the judge to direct the jury that they must infer the intent of the settlor to have been to defeat or delay his creditors, and that the case is within the statute'. _ That proposition does not trespass upon the rule as to onus of proof; it is a particular illustration of the discharge of the onus by inference from the known facts (cf Re Holland; Gregg v Holland [1902] 2 Ch 360 at 381).7 See also Re: Marchiori Ex parte The Official Trustee Fisher J unreported 1l March 1983. It was submitted that the grant of the options was capable of explanation only on the basis that Mr Florance wished to retain the benefits of ownership of the properties whilst at the same time placing them beyond the reach of his creditors, or having them realised at an undervalue to the detriment of his creditors. Mr & Mrs Florance gave evidence and were cross-examined at length. I accept them as witnesses of truth whose account of the circumstances surrounding the giving of the options may be safely accepted. Mr Florance said that he wished to retire from the practice of law, sell the properties and move to the country to take up farming, but that Mrs Florance opposed this strenuously. It was Mrs Florance who had suggested and insisted upon the options, and he eventually granted them to her in the interests of domestic harmony. In paragraph 12 of her affidavit sworn 12 August 1983 Mrs Plorance said: "My reasons for insisting upon an arrangement in general, and options in particular, were as follows:- (a) my husband's state of health; (b) the pressure of work on my husband; (c) I was uneasy about my husband's partners; (a) I did not want the properties sold (one was the matrimonial home and the other three properties I wanted to use when we retired); (e) I did not want our children taken away from their schools and their friends; (£) I did not want to get out of touch with my friends; (g) options would enable me to select the time best suited to me to enter into contract (sic) for the purchase of my husband's shares of the various properties and I would need time in order to arrange finance, and until such time as I exercised my right under the options, the present situation would be unaltered." Mrs Florance gave evidence that she was anxious for her husband to stay on in his legal practice, and that she had always hoped that her son and daughter, who are both presently »studying law, would eventually also go into the practice. Mr Florance under cross-examination conceded that at the time of the grant of the options he had considerable actual or contingent liabilities, but I accept his evidence that he pelieved that he was financially sound and solvent. Mr Florance said that he and Louis John Holdings Pty Ltd had chosen not to meet their liability for interest under the mortgage to the petitioning creditor because of the "long standing ill feeling" which existed with Mr Frost, the representative of the petitioning creditor. He believed, however, that the problem with the petitioning creditor would be solved. Under re-examination Mr Florance said: "My partner in the venture was in constant if not daily touch with Mr Frost representing Turimetta Properties and I had every reason to believe whatever problems there were would be solved." Mr Florance's letter to Mr Knight of 17 September 1976, which contained the statement relating to his ability to meet interest payments to the petitioning creditor which I have referred to earlier in these reasons, may fairly be regarded as a piece of special pleading by Mr Florance to encourage Mr Knight to concentrate his mind upon reaching some arrangement with Mr Frost. Mr Florance and his partners in legal practice had used a company named Wegrow Products Pty Ltd to conduct various business activities which were financed by money raised from clients of the practice. The company owned commercial land in Bungan Street and Parklands Road, Mona Vale which it intended to develop. In September 1977 Mr Florance, at a meeting of the partners, proposed that the properties be realised and the lenders repaid. Mr Florance gave evidence that had this been done there would have been no shortfall but rather a very substantial profit. To support his proposal Mrs Florance, at his request, transferred her interest in property in Darley Road worth approximately $200,000.00 to Civic Ice Rinks Pty Ltd on trust for Wegrow Products Pty Ltd to cover Mr Florance's proportion of any shortfall which might occur if his proposal were carried out. Mr Florance would have been unlikely to request or accept such a contribution from his wife if, at that time, he was seriously concerned about the state of his financial affairs. For her part, Mrs Florance, a woman versed in business affairs, would have been most unlikely to provide such a substantial sum had she regarded her husband as being in serious financial difficulties. 1l In my opinion, the allegation of intent to defraud creditors cannot be sustained. I am satisfied that Mr Florance in granting the options to his wife was motivated solely by domestic considerations and in the circumstances any intention to defraud creditors cannot be properly inferred. * I am also satisfied that Mrs Florance acted in good faith. The application fails in so far as it is based upon s. 121 of the Act. Counsel for the trustee submitted that there was no "valuable consideration" provided for the grant of the options within the meaning of s. 120(1)(a) and s. 121 of the Act. In the light of my earlier findings it is now necessary to consider the question of valuable consideration only in respect of s. 120(1)(a) of the Act. The grant of each of the options amounted to a settlement of property, which came into operation within two years before the commencement of the bankruptcy, within the meaning of that section. There are several recent English authorities which deal with the meaning of "valuable consideration" in s. 42 of the Bankruptcy Act 1914 (Eng), a provision which is in terms almost identical with s. 120 of the Act. These authorities construe the section in a commercial sense and attach a meaning to "valuable consideration" that, in the context of that section, requires something more than the merely nominal consideration which would suffice to support a simple contract at common law. In Re Windle [1975] 3 All E.R. 987 at 995 Goff J cited the following passage from the judgment of Stamp J in Rea debtor, ex parte the Official Receiver v Morrison [1965] 3 All E.R. 453 at 457; "In construing the section, I must have regard to the fact that it is clearly a section framed to prevent properties from being put into the hands of relatives to the disadvantage of creditors, and as was said, in effect, by Sir George Jessel, M.R., in Re Pumfrey, Ex parte Hillman (1879) 10 Ch D 622, the section falls to be construed in a commercial sense." : In Re Windle a bankrupt had transferred to his wife the matrimonial home, subject to a mortgage but having a valuable equity of redemption. Goff J held that the wife's covenant to indemnify the bankrupt against his liability under the mortgage could not be regarded as valuable consideration. He said at p. 994: - "= - - for this purpose the expression 'purchaser for valuable consideration' does not import a purchase in the strict sense of a contract of purchase and sale, but it does postulate a person who in a commercial sense provides a quid pro quo:" In the earlier decision of Re Densham [1975] 3 All E.R. 726 Goff J had held that a wife's contribution to the original purchase of the matrimonial home was not valuable consideration in a commercial sense and accordingly the interest conferred on her by her bankrupt husband constituted a settlement voidable under the section. At p. 735-736 Goff J said: "I cannot say, therefore, that there was not a valuable consideration, because it did not equal the share given up by the bankrupt or cannot be evaluated so as to show that it did. However bearing in mind the approach to the section of Stamp J in Morrison [1965] 3 All E.R. 453] and the views expressed in the cases to which I have referred, that one must look at it in a commercial sense, I cannot think that the contribution by the wife in respect of which she is in any event entitled to an appropriate aliquot share in equity, and which ex hypothesi affords nothing in relation to any larger share can, on these principles, be held to be valuable consideration within the section." Re Windle was applied by Brightman J in Trustee of C.R. Spinks (in bankruptcy) v Dicker which is noted at 122 Sol Jo 791. Part of the note of the decision reads: "However, the creditors had to be 'purchasers for valuable consideration' within the section and there had to be a quid pro quo in a commercial sense for the surrendered asset: see Re Windle (a bankrupt), ex parte Trustee of the Property of the Bankrupt v Bankrupt {1975] 1 WLR 1628. The only consideration moving from the creditors was the undertaking to give notice of proceedings. Any or all of the creditors could have given seven days' notice the moment the deed was signed and therefore the advantage to the debtor was a triviality. The quid pro quo was of no commercial value at all. There was no advantage in it to the debtor;" The most recent reported English decision on the section is Re Abbott [1982] 3 All E.R. 181. In that case a wife compromised her bona fide claim to. a property adjustment order under s. 24(1) of the Matrimonial Causes Act 1973 (Eng) in return for the right to part of her bankrupt husband's share in the net proceeds of sale of the matrimonial home. The court held the wife to be a purchaser for valuable consideration. Peter Gibson J at p. 184 summarised the effect of the earlier English cases as establishing three propositions: firstly, "The word 'purchaser' in s. 42(1) means a buyer in the ordinary commercial sense, that is to say a person providing a quid pro quo:"; secondly, "The consideration moving from the purchaser need not replace in the hands of the debtor the consideration moving from the debtor:"; thirdly, "The consideration given by the purchaser need not be equal in value to the consideration given by the debtor, though it must be valuable consideration in the commercial sense:" Sir Robert Megarry V-C at p.187 when considering the meaning of "valuable consideration" in s. 42(1) of the English Act said: "The question, then, is what that meaning is. Plainly 'good consideration', in the sense of the natural love and affection that a man has for his wife and children, is not enough. Nor is a merely nominal consideration, even though it would suffice to support a simple contract at common law. In the context of the avoidance of settlements by a trustee in bankruptcy, a 'purchaser . . . for valuable consideration' must be someone who can not only be described as being a 'purchaser' but can also be said to have given a consideration for his purchase which has a real and substantial value, and not one which is merely nominal or trivial or colourable. It is in this sense that I understand the use of the phrase about providing a quid pro quo that is to be found in the authorities. In that phrase, I do not 'think that the word 'quid' is confined to some material asset which can or will replace in the hands of the debtor the asset of which he has disposed to the purchaser." The meaning of valuable consideration in s. 121 of the Act was considered recently by a single judge of this Court in Re Marchiori Ex parte The Official Trustee,supra. In that case the Official Trustee sought to set aside the transfer by the bankrupt to his daughter of a motor vehicle valued in excess of $5,000.00. An agreement between the bankrupt and his daughter provided that the vehicle was to be sold to her for the sum of $5,600.00 on terms that she pay a deposit of $325.00 and the balance by regular instalments of at least $20.00 per week as soon as she became fully employed after the termination of her education. Fisher J said on p. 10 of his reasons: "The question whether the disposition was for valuable consideration is difficult, in that although I must accept that the relatively small deposit was paid, the prospects of enforcing payment of the balance were precarious if not illusory. If I accept that the agreement was not a sham and that it did affect the legal rights of the parties, then I consider I am bound by the authorities to hold that the payment of $325 and the obligation to pay the balance when in employment was valuable consideration although it falls far short of full consideration. I refer to the recent consideration of this question in Re Abbott (a bankrupt), ex parte the trustee of the bankrupt v Abbott (T982] S ALI E.R. 181." In my opinion, in the light of the authorities to which reference has been made s. 120(1)(a) of the Act should be construed as requiring a purchaser to provide a quid pro quo in the commercial sense. In the present case the settlements which the trustee seeks to avoid are options to purchase the bankrupt's interest in properties to which I have referred earlier. The consideration provided by Mrs Florance was $10.00 in respect of each of four of the options and $1.00 in respect of the option over the Oxford Falls property. To determine whether she provided valuable consideration in a commercial sense regard must be had to the nature and value of the subject matter of the settlements. An option to purchase an interest in property within a specified time period at a specified price is an irrevocable offer on behalf of the grantor of the option to sell that interest in property at the specified price, and creates in the grantee a power of acceptance which may be exercised at any time within the specified time period so as to form a binding contract for the sale of the interest in property at the specified price. The effect of the grant of such an option is also to prevent the grantor from otherwise disposing of his interest in the property within the specified time period. . Thus, there are two aspects to the obligations accepted by a grantor by the grant of such an option. Firstly, at the will of the grantee at any time within the specified time period he may be compelled to sell his interest in the property at the specified price. Secondly, for the duration of the specified time period he is prevented from otherwise disposing of his interest in the property. It is the value of or price to be attached to these two aspects of a grantor's obligations which provides the stick against which the consideration provided by the grantee of the option is to be measured. The specified time period and the specified price bear significantly upon the severity of the obligations accepted by the grantor and consequently upon the value or price to be attached to those obligations. The specified price affects only the first of the obligations to which I have referred. If the market value of the grantor's interest in the property the subject of the option exceeds the specified price or increases above the specified price at any time within the specified time period, the grantor can be called upon to sell his interest at an undervalue. The grantor however does not enjoy any corresponding benefit should the specified price exceed the market value at any time within the specified time period since the grantee cannot be compelled to exercise the option. The bearing of the specified price upon the severity of this obligation of the grantor may be lessened or even nullified by the existence, as a term of the option, of a provision, which is lacking in the present case, for the specified price to be adjusted on some appropriate base so as to reflect the fluctuations in market value. The specified time period affects both of the obligations to which I have referred. In respect of the first obligation, the length of the specified time period is relevant to the potential or opportunity that exists for the market value to fluctuate and rise above the specified price. The operation of the specified time period in relation to the second obligation is obvious. The grantor is prevented from otherwise disposing of nis interest in the property the subject of the option for the duration of that period. The grantor may thereby lose an opportunity to sell his interest in the property at a higher price to an anxious purchaser. In the present case the specified price in respect of each option broadly accorded with the valuations in evidence before me, and there was no provision in any of the options for the price to be increased. The specified time period in respect of four of the options was 5 years and in respect of. the remaining option was a period of slightly more than 4 years. Counsel for the respondents sought to rely upon the decision of the High Court in Barba v Gas & Fuel Corporation of Victoria (1976) 136 CLR 120. That case involved an option for an easement over certain land in consideration of the sum of $10.00. Gibbs J, as he then was, said at p. 132; "The promise to pay the sum of $10.00 was sufficient consideration for the grant of an option." However, the case is of little assistance as it did not arise in the context of the avoidance of settlements by a trustee in bankruptcy. The High Court in that decision was concerned with the consideration necessary to support a simple contract at common law and not with any concept of valuable consideration in the commercial sense which is the relevant enquiry in the present case. The same can be said of authorities such as Goldsbrough, Mort & Co. Ltd v Quinn (1910) 10 CLR 674 in which the High Court regarded the sum of 5 shillings as valuable consideration for an option to purchase land comprising about 2,590 acres at 30 shillings per acre at any time within one week. In my opinion the consideration provided by Mrs Florance in each case in return for the options granted by the bankrupt was trivial and cannot be regarded as a quid pro quv in the commercial sense. Mrs Florance was not a purchaser for "valuable consideration" within the meaning of s. 120(1) (a) of the Act. The application in so far as it relies upon s. 120 of the Act should succeed. In the result the applicant has failed on the first ground and succeeded on the second. The first ground, which was strongly pressed, was based on an allegation of fraud. It gave rise to a lengthy cross-examination of Mr & Mrs Florance and accounted for a substantial part of the hearing and of the submissions of counsel. In the circumstances I consider that the appropriate order for costs is that the respondents should pay one third of the applicants taxed costs of the application, including reserved costs. The court: (a) declares that the option to purchase purported to be given by the first respondent to the second respondent dated 28 March 1977 wherein the first respondent purported to grant to the second respondent or her nominee for the consideration of $10.00 an option to purchase from the first respondent the property therein described as "Lot 49, 50, 55, 73, 81, 114, 63, 66, 115, 154, 157, Pt Por 95 D.P. 342587, D.P. 242, Parish of Canobolas whole of thee interest of James Louis Florance in 'Greenwood' and ''Boronia'" for the sum of $69,400.00 on certain terms and conditions, including a condition that the option may be exercised by the second respondent by notice in writing addressed to the first respondent at any time within 5 years from the date of the option to purchase constituted a settlement of property by the bankrupt on the second respondent within the meaning of s. 120 of the Act and as such was and remains void as against the applicant, as trustee of the property of the bankrupt. (b) declares that the option to purchase purported to be given by the first respondent to the second respondent dated 28 March 1977 wherein the first respondent purported to grant to the second respondent or her nominee in consideration of the sum of $10.00 an option to purchase from the first respondent the property therein described as "Lot 49, 50, 55, 73, 81, 114, 63, 66, 115, 154, 157, PT Por 95 D.P. 242587/D.P. 24758 Parish Canobolas whole of the interest of James Louis Florance in 'Greenwood' and ''Boronia'" for the sum of $69,400.00 on certain terms and conditions, including a condition that the option may be exercised by the second respondent by notice in writing addressed to the first respondent at any time prior to 15 March 1981 constituted a settlement of property by the bankrupt on the second respondent within the meaning of s. 120 of the Act and as such was and remains void as against the applicant, as trustee of the property of the bankrupt. (c) declares that the option to purchase purported to be granted by the first respondent to the second respondent dated 28 March) 1977 wherein in consideration of the sum of $1.00 paid to the first respondent by the second respondent the first respondent purported to grant to the second respondent or her nominee an option to purchase from the first respondent the land therein described as "Portion 2581 Aroona Road, Oxford Falls, Shire of Warringah Volume 8453 Folio 9 Plan Cc 7528" for the sum of $32,500.00 upon certain terms and conditions, including a condition that the option may be exercised by the second respondent by notice in writing addressed to the first respondent at any time within five years from the date of the option to purchase constituted a settlement of property by the bankrupt on the second respondent within the meaning of s. 120 of the Act and as such was and-remains void as against 'the applicant, as trustee of the property of the bankrupt. (d) declares that the option to purchase purported to be granted by the first respondent to the second respondent dated 28 March 1977 wherein in consideration of the sum of $10.00 paid to the first respondent by the second respondent the first respondent purported to grant to the second respondent or her nominee an. option to purchase from the first respondent the land therein described as "District of Beacon Hill Shire of Warringah Volume 7023 Folio 29 Portion 1935" for the sum of $57,000.00 upon certain terms and conditions, including a condition that the option may be exercised by the second respondent by notice in writing addressed to the first respondent at any time within five years from the date of the option to purchase constituted a settlement of property by the bankrupt on the second respondent within the Meaning of s. 120 of the Act and as such was and remains void as against the applicant, as trustee of the property of the bankrupt. (e) declares that the option to purchase purported to be granted by the first respondent to the second respondent dated 28 March 1977 wherein in consideration of the sum of $10.00 paid to the first respondent by the second respondent the first respondent purported to grant to the second respondent or her nominee an option to purchase from the first respondent the land therein described as "Lot 324, 8th Av, Lladillo - near Penrith, Municipality of Penrith, D.P. 214" for the sum of $18,000.00 upon certain terms and conditions, including a condition that the option may be exercised by the second respondent by notice in writing addressed to the first respondent at any time within five years from the date of the option to purchase constituted a settlement of property by the bankrupt on the second respondent within the meaning of s. 120 of the Act and as such was and remains void as against the applicant, as trustee of the property of the bankrupt. (f) orders that the second respondent be restrained from dealing in any way with the properties referred to in paragraphs (a), (b), (ce), (ad) and (e) above. (g) orders that the second respondent be restrained from doing any act or thing or executing any deed, documents, instrument or writing wherein she purports to rely on the options referred to in paragraphs (a), (b), (c), (d) and (e) above. (h) orders that the first respondent and second respondent deliver to the applicant all certificates of title, title deeds, option agreements and any other document whatsoever relating to the said properties. (i) orders that the first respondent and second respondent pay one third of the applicant's taxed costs of the application, including reserved costs. I certify that this and the 24 preceding pages are a true copy of the reasons for judgment herein of The Honourable Mr Justice Sweeney. , eke Cobar _ Associate Dated: 22 December 1983 Property Beacon Hill Beacon Hill Oxford Falls (1/2 interest) Oxford Falls Oxford Falls (1/2 interest) Llandillo Orange (1/2 interest) Orange cae YATE TENET IT TEE Valuer Valuer General N.J. Bridger & Ass- ociates Pty Ltd Valuer General N.J. Bridger & Ass- ociates Pty Ltd Valuer General Valuer General Valuer General N.J. Bridger & Ass- ociates Pty Ltd Date at which Date at which Property Valued Valuation Prepared Value 28 March 1977 1 January 1977 28 March 1977 4 January 1977 6 December 1979 28 March 1977 28 March 1977 early 1977 7 July 1983 25 January 1977 7 July 1983 25 January 1977 11 December 1979 19 July 1983 12 July 1983 early 1977 $54,000.00 $59 ,500.00 $24,500.00 $60,000.00 $ 26,000.00 $20,000.00 $67,500.00 $125,000.00 -$130, 000.00 eR SST SETS