Birdseye v Sheahan [2002] FCA 1319

FEDERAL COURT OF AUSTRALIA

Birdseye v Sheahan [2002] FCA 1319

BANKRUPTCY – order relating to property of an entity controlled by a bankrupt – appellant, an accountant (the bankrupt), was trustee of a family trust and, in that capacity, conducted an accountancy practice – paid himself a modest "salary" – the practice generated substantial fees – bankrupt's wife owned property subject to mortgage – trust moneys were paid in discharge of wife's obligations under that mortgage – bankrupt's wife had possession of cheque book in respect of the bank account of the Trust – wife drew numerous cheques in payment of various outgoings of private or domestic nature – expenditure initially recorded in accounts of Trust as "Teresa's Expenditure" – subsequently balances of those amounts were treated as loans made to the bankrupt husband – whether in truth that expenditure created a debt owing by the bankrupt's wife to the entity – Trustee in bankruptcy applied for orders under Part VI Division 4A of the Bankruptcy Act – whether appellant's remuneration was substantially less than a person might reasonably be expected to receive if the person had dealt with the Trust at arm's length – whether the Trust had acquired an estate in "particular property" (the chose in action against the bankrupt's wife) as a direct or indirect result of, or of matters including, the supply by the appellant of those services – whether the appellant used or derived a benefit from the property – what was the relevant "examinable period" – whether Magistrate erred in making an order vesting in the bankruptcy Trustee the entity's estate in the chose in action constituted by the debt owed by the bankrupt's wife to the Trust.

Bankruptcy Act 1966 (Cth), ss 5, 139D

NICHOLAS GUY BIRDSEYE v JOHN SHEAHAN

S 106 of 2002

CARR J

25 OCTOBER 2002