£23 CATCHWORDS BANKRUPTCY - mortgage given by bankrupt within five years of bankruptcy - whether settlement of property - whether made for valuable consideration - whether mortgage void against trustee. Bankruptcy Act 1966 5.120 Bankruptcy Act 1924-1960 5.94 Transfer of Land Act 1958 (Vic.) 5.74 Re Pahoff; Ex parte Ogilvie (1961) 20 A.B.C. 17 Re Hyams; Official Receiver v. Hyams (1970) 19 F.L.R. 232 Barton v. Official Receiver (1984) 58 A.L.R. 328 THE OFFICIAL TRUSTEE IN BANKRUPTCY (as trustee of the property of Troodia Arcadiou, a bankrupt) and PHILLIP ARCADIOU and SANDRA ARCADIOU V. No. G 140 of 1985 Fox, Woodward and Northrop dJ. 17 December 1985 Melbourne TH_THE FRDEPAL COMPT OF AUSTRALIA Un. VG 140 of 1985 BANKRUPTCY DISTRICT OF THE STATE a) GENERAL DIVTISIGN ) yUy OF VICTORIA OM APPEAL from a single iuiddge of the Federal Court of Australia BETWEEN : THE OFF ICTAL TRUSTEE IN BANKRUPTCY (as Trustee of the property of Troodia Arcadisu, a bankrupt) Appeltant Ts LNT) : ? PHTILLIF ARCADTOU and SANDRA ARCADTOM Respondents MINUTE OF ORDER JUDGES MAKING ORDER: . Fox, Wooodward and Northrop JJ. DATE OF ORDER: 17 December 1985 WHERE MADE: Melbourne THE COMRT ORDERS THAT: 1. The order made in the Court below be varied bv deleting the declaration therein. ae Subtect to that variation. the appeal be dismissed. 3, The appellant pay the respondent's costs of the appeal. Note: Settlement and entry of orders 1s dealt with in Order 36 of the Pederal Court Rules. TN_THE FEDETAL COMRT OF ANTSTRALTA GENERAL DIVISTON BANKRUPTCY DISTRICT OF THE STATE OF *7TCTORTA FOX T, Tourt ~ eee er ee No, VG 140 of 1985 ON APPEAL from a sinale judge of the Federal Court of Australia BETWEEN : THE OFFICIAL TRUSTEE IN BANKRUPTCY (as Trustee of the property of Troodia Arcadiou. a bankrupt) AND: Appellant EHILLIP ARCADIOU and SANDPA ARCADTOU FOX. WOODWARD AND NORTHROP JJ. 17 DECEMBER 1985 REASONS FOR JMDGMENT Respondents This is an appeal from the decision of a iudge of the (Smithers J.) in a case where a trustee in bankruptcy has sought to have declared void. under sub-secn.120(2) of the Bankruptcy Act 1966 ("the Act") a mortaage given within 5 vears before bankruptcy bv the bankrupt. Traodia Arcadiou, to the respondents. The claim of the trustee is that the mortaaqge was not wivyen for valuable consideration (vide para.120(l)(a) of the Act}. The learned iudq@e held that the mortqaqe was supported bv valuable consideration, and dismissed the claim. The mortaaqe is dated 28 September 1976. It is ina common form. The principal sum secured was $50,000, repayable at the expiration of 12 months from the first advance of the principal sum. Interest at 14% was payable monthly on so much of the principal sum as had been advanced. The property secured was situated at Mildura, where the bankrupt (mortgagor) later lived with her husband, Yianaos Arcadiou. The respondents (mortaagees) rel are their son and his wife. For some reason. the property was not registered in the name of the bankrupt until 2 February 1979, and the mortaade was reqistered on the same dav. No sum of monev was paid bv the respondents to the bankrupt under the mortaaqe, and this is doubtless the reason for the claim of lack of consideration. However. the mortaage was executed pursuant to an aqreement, between members of the familv. desiaqned to provide monetary assistance for the father. He was a builder. and was at the time havina financial difficulties. In od fact. he went bankrupt. on his own petition. about six months later. TE was not suaqested to the family members, at first instance, that they knew of the extent of the father's liabilities, or that his promise fo repay monevs lent to him was worthless. There has been no alleqation of a lack of qood faith. The aqreement between the members of the familv was complex, but 1t is not necessarv to deal with it in anv detail. It is sufficient to sav that the respondents were to raise $50,000 from Guardian Investments Proprietary Limited ("Guardian"), secured over a property at Werribee. and this sum, subiect to some adiustments affecting the respondents. was to be paid to the father. Another son, anda son-in-law. were also involved and the total to be received by the father. subject to adjustments, was $110.000. The learned dudde summarised the Cransaction as he saw 1t as follows: "T have no doubt that the mortaage entered into bv the bankrupt was entered into by her pursuant to an aqareement to which she and the respondents were parties, and that the oblications expressed in that mortaage were undertaken by her to secure the respondents against the liabilitv incurred by them by entering into the mortaage te Guardian for $50,000 over their Werribee property, to the extent that the mortaqave monevs were received by Yiangos Arcadiou for the purpose of his business." While some findings of fact of his Honour are challendaed. the appellant has had difficulty in formulating the qrounds of challenge, and in mv view his Honour's findings should not be disturbed. The respondents had stated that they were not prepared to ag ahead with the arrangement unless their mother aqreed to accept a liability to the extent of $550,000, secured by a mortgage. She thereupon gave the mortaage now in question. The moneys were lent, and paid to the Father. The intention was that the father would repay the loan he thus received and that the securitv provided by the bankrupt would be available to meet any shortfall. An amount of $5,065.68 was paid to the respondents, as their own monevs. The result was that the father. Yianaos Arcadiou, was under a lLiabilitv to re-pay an amount of 344,934.32. Althouagh the father had a aood relationship with Guardian, wut required securitv. The respondents provided the security upon which the sum of $50,000 was paid. T& would seem at least unlikely that Guardian would lend on the security of the Mildura property. un its then state. The mortaage aiven by the bankrupt was in substance by wav of an indemnity to the respondents, to the extent, in the events which happened, of $44,934.32. The réspondents met in full their Liability under the mortaage to Guardian. and now claim to be secured creditors of the bankrupt. The mortgage should perhaps have been prepared in a form which reflected more closely the aqreement under which it was given. As 1t is, it appears divorced from the terms of that agreement except that 1t takes the fundamental step of qiving a security to the respondents for the same amount as their mortaade to Guardian. Having in mind that the slocuments should if possible be understood ina wav which qives effect to the intention of the parties. rather than defeat it, it seems to me that the advance from Guardian should be reqarded as notionally paid bv the respondents to the bankrupt, and as therefore constituting the advance referred to in the mortaage given by her. The result, for present purposes, would not be different if the mortaaqge were simply reaarded as securitv for the tndemnity. The common intention was that. whoever actuallv handled the sum of money. it was to be a loan, as to most thereof. to the father, and the bankrupt was to be liable to the respondents to meet anv liability to Guardian, excepting the adiustment of $5,065.68. The payment to the father plainlv had the concurrence of the bankrupt. The appellant submits that it is necessary, for there to be valuable consideration. that the estate of the bankrupt receive some tanaible benefit: it is not enough that there be an tntanaible or indirect benefit to the promisor, or detriment to the promisee. To hold otherwise. it is submitted. would defeat the purpose of the bankruptcy legislation. Tt is true. however, that a person makina a settlement need not receive equivalent value for what was settled (see Barton wv. Official Receiver (1984) 4 F.C.R. 380). and if the arqument of the appellant applied in every case. security for anv indemnitv or quarantee entered into by a bankrupt would be liable to be set aside for Pon) want of valuable consideration. The facts must be looked at as a whole, andin this case there was valuable consideration to supporr the mortaadge bv the bankrupt. The appeal should be dismissed, with costs. The Learned lidqe dealf with the question to which I have earlier referred. namely whether the sum of $5,065 was the subtect of the security. He said: "However, as to the sum of $5,065 received bv the respondents being part of the monev the subiect of the mortaage to Guardian. the securitv availble to the cespondents under the mortaqaqe given to them bv the respondent Cscil. bankrupt] does not extend to that. It extends onlv to that part of the mortaage monev received by Yiangos Arcadiou and interest thereon. No point was made at the hearing that the sums referred to in paragraph two of the disbursement order was monev not received bv Yiangos Arcadiou but if thev were the security does not extend to them." There 15 no challenae before us to this conclusion. His Honour's orders included a declaration in the following terms: "So far as monev borrowed from Guardian investments Csic] Pty.Ltd. was received bv Yianaos Arcadiou, the amount so received is the principal sum secured pursuant to the mortqaqe entered into by the bankrupt on 28th September, 1976 and that securitv has subsisted at all times thereafter." His Honour was perhaps not taking into account monevs IN THE FEDERAL COURT OF AUSTRALIA ) ) VICTORIA DISTRICT REGISTRY ) V. No. G 140 of 1985 ) ) GENERAL DIVISTON ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA BETWEEN THE OFFICIAL TRUSTEE IN BANKRUPTCY (as trustee of the property of Troodia Arcadiou, a bankrupt) Appellant (Applicant) and PHILLIP ARCADTOU and SANDRA ARCADIOU Respondents (Respondents) COURT: FOX, WOODWARD AND NORTHROP Jd. DATE: 17 DECEMBER 1985 PLACE: MELBOURNE REASONS FOR JUDGMENT WOODWARD & NORTHROP Jd. The question raised in this appeal is whether a Mortgage given by Troodia Arcadiou ("the mother") in favour of Phillip Arcadiou and Sandra Arcadiou ("the son and daughter-in-law") is void as against the Official Receiver in Bankruptcy as trustee of the property of the mother, a bankrupt. The mortgage was given within five years before the commencement of her bankruptcy. The mortgage was given on 28 September 1976 and the sequestration order against the property of the mother was made on 8 September 1981. There is no suggestion that when she gave the mortgage, she was able to pay all her debts without the aid of the property the subject of the mortgage; see paragraph 120(2)(a) of the Bankruptcy Act 1966. Thus, unless the mortgage is a settlement referred to in paragraph 120(1)(a) of the Bankruptcy Act, the mortgage is void as against the appeliant. The relevant parts of paragraph 120(2)(a) of the Bankruptcy Act are:- "120(Z2) A settlement of property, ... not being a settlement referred to in paragraph (1)(a) ... is, if the settlor becomes a bankrupt and the settlement came into operation after, or within 5 years before, the commencement of the bankruptcy, void as against the trustee in the bankruptcy, unless the parties claiming under the settlement prove - (a) that the settlor was, at the time of making the settlement, able to pay all his debts without the aid of the property comprised in the settlement; ... . Paragraph 120(1)(a) of the Bankruptcy Act is set out in full:- "120(1) A settlement of property, whether made before or after the commencement of this Act, not being - (a) a settlement made before and in consideration of marriage, or made in favour of a purchaser or encumbrancer in good faith and for valuable consideration; ... is, if the settlor becomes a bankrupt and the settlement came into operation after, or within 2 years before, the commencement of the bankruptcy, void as against the trustee in the bankruptcy." Under sub~section 120(8) of the Bankruptcy Act, the phrase "settlement of property" "includes any disposition of property". On 23 May 1985, the Court, constituted by a single Judge, dismissed an application by the appellant for an order that the mortgage was void as against him as being a settlement within the meaning of s.120 of the Bankruptcy Act. The appellant appealed against that judgment. The grounds of appeal appearing in the notice of appeal included matters directed to whether it was open to the trial Judge to make the findings which he did, but at the hearing of the appeal, counsel for the appellant was unable to refer to any matter to support those grounds. As a result, the only issue raised on the appeal is whether the mortgage was made in favour of the son and daughter-in-law in good faith and for valuable consideration within the meaning of those words in paragraph 120(1)(a) of the Bankruptcy Act. The appellant did not dispute that the mortgage was made in favour of the son and daughter-in-law in good faith. The facts giving rise to the issue before the Court are complex and confused, but for the purposes of this appeal, the relevant facts can be stated shortly. The husband of the mother, Yiangos Arcadiou, ("the father") carried on the business of building and selling houses. In the latter part of the year 1976, the father was in financial difficulties, particularly with respect to the availability of cash, He had had numerous dealings with a finance company, Guardian Investments Pty. Ltd., but that company was not prepared to advance further money to him without security. The son and daughter-in-law had owned land at Sunshine but in July 1976 that land had been sold although the sale was not completed until October 1976. The father owned a vacant lot of land at Werribee. By a contract of sale dated 24 August 1976, the father agreed to sell the Werribee land to the son and daughter-in-law for the sum of $11,000 to be paid by a deposit of 10% on the signing of the contract and the balance on the following day, namely 25 August 1976. By a building contract dated 24 August 1976 and entered into between the son and daughter-in-law as owners and the father as builder, the father agreed to erect a dwelling house on the Werribee land for the price of $32,000. The dwelling was to be completed by 25 December 1976 and the purchase price was to be paid by an amount of $3,200 on the Signing of the contract and the balance on or before 25 December 1976. The Arcadiou family was close-knit, but dominated by the father. In September 1976, Guardian Investments Pty. Ltd. was prepared to lend $110,000 to the father on condition that security for that loan be given by way of mortgages over the land owned by the s50n and daughter-in-law and certain lands owned by another son and a son-in-law respectively. An arrangement was reached between members of the Arcadiou family by which the son and daughter-in-law would give a mortgage of their land at Werribee to Guardian Investments Pty. Ltd. as security for the repayment of the sum of $50,000 and that the other son and the son-in-law would give mortgages over the land owned by each of them respectively to Guardian Investments Pty. Ltd. as security for the repayment of the balance of the loan to be paid to the father. The three mortgages were prepared by the solicitor for the father on the instructions of the father, The son and daughter-in-law refused to sign the mortgage on their Werribee land because they wanted security of their own to protect them against the possibility that, if something went wrong, they might lose the Werribee land to Guardian Investments Pty. Ltd. The mother suggested that she give a mortgage to the son and daughter-in-law over land owned by her at Mildura as security for them with respect to what was being proposed by the father. The solicitor, Mr. Sotos, gave evidence, which was accepted by the trial Judge, that the mother :- "instructed me to prepare security over the Mildura property to secure her son's agreement to sign the documents that were put before him in respect to the Guardian Investment mortgage." After setting out that passage from the evidence of Mr. Sotos, the learned trial Judge, in his reasons for judgment said:- . "The evidence of the father is to the effect that when the loan for $110,000 was arranged on the basis of the three family mortgages, the son and daughter-in-law refused to sign the mortgage over their Werribee property unless they had security. The father then told the son and daughter-in-law to speak to Mr. Sotos about security and after they had spoken he asked his wife, the mother, if she would give the necessary security over her Mildura property and she agreed and in due course the two mortgages were signed. The mother herself said: 'That in or about September 1976 my husband requested me to mortgage my property situated at Walnut Avenue Mildura South to my son Phillip Arcadiou. My husband told me that if I did this my son and his wife would Mortgage their property at Glenmoyne Square Werribee to Guardian Investments Pty. Ltd. and Guardian Investments Pty. Ltd. would then advance moneys to my husband. I agreed to mortgage my property at Walnut Avenue Mildura South as part of this arrangement.' The respondent, Phillip Arcadiou said that at the meeting in September between himself, his father and mother, and probably other members of the family, he refused to give the mortgage to Guardian for $50,000 over their Werribee property unless they were given some security and that the mother agreed to give the security over her Mildura property until the father could 'obtain the money'. He said that instructions were given to Mr. Sotos to prepare the mortgage over the mother's Mildura property and that mortgage was signed by the mother and thereupon the son and daughter-in-law signed the mortgage to Guardian over the Werribee property. Having regard to the foregoing I have no doubt that the mortgage entered into by the mother was entered into by her pursuant to an agreement ta which she and the son and daughter-in-law were parties, and that the obligations expressed in that mortgage were undertaken by her to secure the' son and daughter-in-law against the liability incurred by them by entering into the mortgage to Guardian for $50,000 over their Werribee property, to the extent that the mortgage moneys were received by the father for the purpose of his business. The son and daughter-in-law entered into the mortgage." (It is to be noted that in that passage, the description of the parties involved has. been altered to accord with the terminology used in these reasons for judgment. ) Thereafter, the mortgage the subject of this appeal was entered into. It is dated 28 September 1976, although it was not registered in the Titles Office until much later. In the mortgage, the mother is described as the Mortgagor and the consideration is stated as "in consideration of the sum in the Schedule and hereinafter called 'the principal sum' lent and/or to be lent to the Mortgagor" by the son and the daughter-in-law, described in the mortgage as "the Mortgagee". In the Schedule the principal sum is stated to be $50,000. Provision is made for interest at the rate of 14% to be paid on money advanced and the principal sum is said to be repayable "at the expiration of twelve (12) months from the date of the first advance of principal sum". In fact, mo money was paid by the son and daughter-in-law direct to the mother. The mortgage in favour of Guardian Investments Pty. Ltd. given by the son and daughter-in-law with respect to their Werribee land is dated 17 November 1976. In that mortgage, the son and daughter-in-law are described as the Mortgagor and the consideration is stated as "in consideration of the sum in the Schedule and hereinafter called 'the principal sum' lent and/or to be lent to the Mortgagor" by Guardian Investments Pty. Ltd., described in the mortgage as "the Mortgagee". In the Schedule, the principal sum is said to be §50,000. Provision is made for interest at the rate of 14% to be paid on money advanced and the principal sum is said to be repayable "at the expiration of twelve (12) months from the date of the first advance of principal sum". Special conditions are contained in the mortgage making reference, inter alia, to the building which was to be constructed upon the Werribee land. Apart from the sum of $5065.68 paid by Guardian Investments Pty. Ltd. direct to the son and daughter-in-law and other small amounts representing costs and disbursements retained by Guardian Investments Pty. Ltd., the balance of the $50,000 was paid by Guardian Investments Pty. Ltd. direct to the father. The first payment was made on or about 28 September 1976. Thereafter, further sums were paid by Guardian Investments Pty. Ltd. direct to the father. The total amount of the sums so paid to the father was of the order of $44,000. The father did not repay any of the moneys paid to him by Guardian Investments Pty. Ltd. with respect to the mortgage of the Werribee land, nor did he make any payments of interest on moneys 50 paid to him. On 1i5 March 1977, the father became a bankrupt by virtue of the presentation of his own petition; see s.55 of the Bankruptcy Act. In due course, Guardian Investments Pty. Ltd. acted to enforce its security on the Werribee land and on 7 July 1978, the sum of $56,738.46 representing principal and interest owing to Guardian Investments Pty. Ltd. as at 7 July 1978 was paid to Guardian Investments Pty. Ltd. from the proceeds of the sale of the land at Werrihee, the subject of the mortgage to Guardian Investments Pty. Ltd. The appellant looked at the mortgage of the Mildura land. He saw that no money had been paid directly to the mother by the son and daughter-in-law. He claimed that the mortgage was a settlement of property under 5.120 of the Bankruptcy Act. He claimed that the mortgage had not been given for valuable consideration. The son and daughter-in-law disputed that clain. There is no doubt that the mortgage of the Mildura land is a settlement of property under paragraph 120(1)(a) of the Bankruptcy Act. The Mildura land is registered under the Transfer of Land Act 1958 (Vic.). The instrument of mortgage is in the form of the Thirteenth Schedule to the Transfer of Land Act. It is registered under the Transfer of Land Act. For present purposes, the relevant words of the instrument of mortgage are "the Mortgagor hereby mortgages to the Mortgagee ALL the Mortgagor's estate and interest in ALL THAT piece of land being Lot 2 on Plan of Subdivision No. 85688 and being the land comprised in Certificate of Title Volume 8913 Folio 967". In Re Pahoff; Ex parte Ogilvie (1961) 20 A.B.C. 17, Clyne J. had to consider whether a mortgage of land given by a bankrupt and registered under the Transfer of Land Act was void as against the Trustee in Bankruptcy by reason of 5.94 of the Bankruptcy Act 1924-1960. The relevant provisions of sub-section 94(1) of that Act were identical with the provisions of s.120(1)(a) of the present Bankruptcy Act, but in the earlier Act, under sub-section 94(5), for the purposes of s.94, a settlement included "any conveyance or transfer of property". In the present Act the relevant words are "any disposition of property". These latter words have a wider connotation than the former. In Re Pahoff, Clyne J. said at pp.19-20:- "The word 'settlement' in s.94(1) is not used in a narrow or technical sense, but according to a long line of authority means a disposition of property by the settlor for the benefit of the person on whose behalf the settlement is made anda disposition of such a nature that the retention of the property in some form is contemplated; not its immediate disposal or consumption." It is interesting to note the word "disposition" appearing in that passage. At p.20, Clyne Jd. said:- "The words in sub-s.(5) of s.94 'any conveyance or transfer' must, I think, be qualified so as to mean a conveyance or transfer which constitutes a settlement within the meaning of sub-s.(1). Section 94(1) specifically refers to a settlement in favour of an encumbrancer. The mortgage given by the bankrupt to the respondents is and must be regarded as an interest in land and can be the subject of a settlement. Under s.74 of the Transfer of Land Act 1958 (Vic.), a registered proprietor may mortgage land and any such mortgage when registered shall have effect as a security and be an interest in land, though it does not operate as a transfer of the land mortgaged. The mortgage given to the respondents by the bankrupt is, in my opinion, a settlement within the meaning of s.94." In Re Hyams; Official Receiver v. Hyams (1970) 19 F.L.R. 232 at p.252, Gibbs J., as a Judge of the Federal Court of Bankruptcy, expressly agreed with the conclusion reached by Clyne J. in Re Pahoff. At pp.247-253 Gibbs J. discusses at some length the relevant legal principles. - lil - It remains to determine whether the son and daughter-in-law, as the encumbrancers, gave valuable consideration for the mortgage of the Mildura land or rather, for the disposition of property contained in the instrument of mortgage. In considering this question, it must he remembered that the Court is not required to enforce the mortgage. The Court is not required to construe the mortgage. The Court is not required to determine what amount of money, if any, is owed by the estate of the mother to the sen and daughter-in-law. The Court is not required to determine whether the son and daughter-in-law are able to enforce the security. The mortgage constitutes the settlement of property within sub-section 120(1)(a) of the Bankruptcy Act. The Court has to determine the question stated at the beginning of the previous paragraph. For that purpose, the Court is required to look at all relevant evidence directed to that question. This is not a case where the general rule of evidence, that oral evidence is not admissible to add to, vary or contradict the terms of a written contract, has any application. The Court is applying the statutory provision contained in sub-section 120(1)(a) of the Bankruptcy Act to the facts found by the trial Judge. Thus, in cases under Paragraph 120(1)(a) of the Bankruptcy Act and in equivalent provisions both in England and in Australia, oral evidence has always been admissible on the issue of good faith and on the issue of valuable consideration even though that evidence had the effect of adding to, varying or contradicting the - 12 - written terms contained in the instrument constituting the settlement of property. Hyams' Case, above, is a good illustration of the principle. In the present case, the essential terms of the agreement between the mother and the son and daughter-in-law have been found by the trial Judge. For the purposes of this appeal, that finding is accepted. It has been set out earlier in these reasons. Reduced to its simplest form, the agreement was that the mother promised to give a mortgage of the Mildura land to the son and daughter-in-law if the son and daughter-in-law would give a mortgage of the Werribee land to Guardian Investments Pty. Ltd. to secure the sum of $50,000 to be lent by Guardian Investments Pty. Ltd. to the father. It is not to the point that there may have been a failure by the parties to that agreement to consider all matters in detail arising with respect to that agreement. The agreement was made. It was executed. The mother gave the mortgage of the Mildura land to the son and daughter-in-law. The 'son and daughter-in-law gave the mortgage of the Werribee land to Guardian Investments Pty. Ltd. Guardian Investments Pty. Ltd. advanced money by way of loan to the father. The total amount so advanced was of the order of §44,000. The issue is whether what the son and daughter-in-law did constituted valuable consideration for the mortgage to them of the Mildura land. - 13 - In Barton v. Official Receiver (1984) 58 A.L.R. 328, a Full Court of this Court had to consider the meaning of the words "valuable consideration" appearing 1n paragraph 120(1)(a) of the Bankruptcy Act. At p.344, Lockhart J. clearly and succinctly stated the general principle with respect to a purchaser, but the same principle applies with respect to an encumbrancer:- "To constitute a purchaser for valuable consideration it is not necessary that either money or physical property should be given (Re _ Charters; Ex parte Trustee £19233 3 B & CR 94), but a nominal, trivial, colourable or fictitious consideration will not suffice: Re Abbott (1982) 3 W.L.R. 86. Nor is it necessary that the consideration moving from the purchaser must he equal to that which has been taken out of the debtor's estate and in that sense replaces it: Re Densham; Ex parte Trustee of Property of Bankrupt v. Bankrupt £19751 1 W.L.R. 1519, Re Windle £19753 1W.L.R. 1628 and Re Abbott. The expression does not connote a purchaser in the strict sense of a contract for purchase and sale. It is not a conveyancing term. The phrase connotes a purchaser in the ordinary commercial sense who gives consideration which is real and substantial: Re Abbott." The whole of the passage at p.344 elaborates upon that principle and should be read. There is no doubt that in the ordinary commercial sense, the son and daughter-in-law gave consideration for the mortgage of the Mildura land. That consideration was real and substantial. It is not to the point that the mother received no financial benefit from the agreement. What is important is that the consideration moved from the encumbrancer. It was valuable consideration within the Meaning of paragraph 120(1)(a) of the Bankruptcy Act. - 14 - In concluding these reasons, attention is drawn to the fact that this judgment does not affect any rights and obligations that may exist between the estate of the mother and the estate of the father, nor the details of the moneys, if any, owed by the mother to the son and daughter-in-law. The judgment appealed from included a declaration that:- "So far as money borrowed from Guardian Investments Pty. Ltd. was received by VYiangos Arcadiou, the amount so received is the principal sum secured pursuant to the mortgage entered into by the bankrupt on 28th September, 1976 and that security has subsisted at all times thereafter." At the hearing of the appeal, no submissions were directed to that declaration. It is not clear what power the Court had to make that declaration. In all the circumstances, the order appealed from should be varied by deleting that declaration. Otherwise the appeal should be dismissed with costs. Y cerusy thet this and the Hhirkeen (tz) preceding pages are a thue copy of the Reasons for Judgment herem of the Honourable Mr. Tustico Ward andl, Asscciate Penne Wordle | Dated: 1?| (2f 3s