Popescu, A. & Anor v Official Trustee in Bankruptcy [1995] FCA 132

IN THE FEDERAL COURT OF AUSTRALIA ) BANKRUPTCY DISTRICT OF THE STATE) No. WB 327 of 1993 OF WESTERN AUSTRALIA ) Re:ALEX POPESCU Bankrupt Ex Parte:ERNA OTILIA POPESCU Applicant And:OFFICIAL TRUSTEE IN BANKRUPTCY Respondent REASONS FOR JUDGMENT EINFELD J SYDNEY 8 FEBRUARY 1995 (heard in Perth) By notice dated 22 February 1994 issued pursuant to section 139ZQ of the Bankruptcy Act 1966 (the Act) the Official Receiver on behalf of the Official Trustee in Bankruptcy (the trustee) required the applicant to pay to the trustee the sum of $34,978.80 being "the property received by you from Alex Popescu of 307 Fulham Street, Cloverdale ("the Bankrupt"), pursuant to a transaction that is void against the Official Trustee under Section 120(2) of [the Act]". By this application the applicant seeks to have that notice set aside under section 139ZS of the Act. The applicant is the wife of the bankrupt. Background The applicant was born in Yugoslavia on 22 December 1923 and was 70 years old at the time of the hearing. Since 1949 she has lived in Australia where she married her first husband in 1951. She worked during this period in a shoe factory, until the birth of their daughter in late 1951. She resumed work some time later. Her husband died in 1955, leaving her a house in Brisbane and the proceeds of a worker's compensation payment, as well as a coin collection of unknown value. Half the estate went to their daughter in accordance with intestacy provisions. After the applicant married the bankrupt in 1957, she continued to work until the birth of her second child (their first) in 1958, with all her wages going to the upkeep of the family. After the applicant stopped working, the bankrupt was left to provide for the family alone, but he had poor business acumen and a gambling habit which depleted the available funds. As a consequence the applicant's savings were expended including the coin collection which was sold by the bankrupt, who retained the proceeds. In 1959 the applicant's house in Brisbane was sold, the proceeds being used partly to pay gambling debts of the bankrupt, and partly to pay the deposit on a house in Kensington, Sydney bought in the names of both the applicant and the bankrupt. The remainder of the Kensington purchase was financed by mortgage. The family rented out rooms in the Kensington house to boarders. As well as looking after her own family, the applicant cooked meals for the boarders, washed their linen, and cleaned the premises. The family lived from the money collected from the boarders. The bankrupt conducted a shoemaking business, but was never able to clear enough from the business, after his gambling expenses, to contribute to the mortgage repayments. Difficulties in servicing the mortgage led the couple to sell the Kensington house in 1960 and buy a house in North Bondi, again in both their names. After less than a year this house also had to be sold for inability to finance the mortgage. In November 1960 the bankrupt obtained a job in Mt Isa and the family moved into rental accommodation there. Whilst at Mt Isa the applicant had another child. In 1962 the family moved to Brisbane where the Popescus rented a boarding house. Again the applicant did all the work to run the house and the family. In 1963 another child was born and the family rented a normal residential house, relying for income on the bankrupt's latest shoe repair business. In 1965 their fourth child was born. The applicant now had five young children. In 1965 the family moved to Adelaide where they rented accommodation for about four years. In early 1969 they jointly purchased another house in Black Forrest in Adelaide. The only income came from the bankrupt's job, while the applicant looked after the family. After yet another inability to finance a mortgage, they were forced to sell that house and the applicant and children moved to a rented property in Perth, while the bankrupt remained in his job in Adelaide. The applicant worked as a cleaner, putting her earnings towards furniture, the children and household expenses. The bankrupt occasionally sent the family some money for housekeeping. In 1975 a property was purchased by the bankrupt and his son John Popescu in North Perth as the family home. The bankrupt was only able to afford to pay the deposit on this house because his wife was working to pay the family expenses. The mortgage on this house was paid off in about two years, and improvements were made. In 1982 the bankrupt had an accident at work and received a lump sum compensation payout. This was spent on gambling and on a trip to Romania for himself. When he returned from Romania he went on the invalid pension. The applicant's only source of income became the aged pension, which she spent on the upkeep of the North Perth house and household expenses. Meanwhile the bankrupt continued to incur debts, which he financed by mortgaging the North Perth house. The applicant was at this time unaware of the extent of her husband's indebtedness, although she had some suspicion that he was incurring large debts, and securing loans on the house. She stated on affidavit (affidavit 9 June 1994 p.8): As I was getting older I became more and more concerned about Alex's ways especially his gambling and not informing me of the details of the mortgage on the North Perth property. I telephoned the Bank Manager on 2 occasions about 1 to 2 years before the North Perth house was sold inquiring about the mortgage, but he refused to tell me the details and told me to ask Alex. Alex when questioned always replied "just a little bit".