Barton v Official Receiver [1986] HCA 44

High Court of Australia Gibbs C.J. Mason, Wilson and Dawson JJ. Barton v Official Receiver [1986] HCA 44

ORDER Appeal dismissed with costs.

Cur. adv. vult.

The Court delivered the following written judgment:—

Aug 6 Gibbs C.J., Mason, Wilson and Dawson JJ.

The respondent is the trustee in the bankruptcy of Thomas Barton, whose estate was sequestrated on 23 August 1974. He instituted proceedings in the Federal Court seeking, inter alia, a declaration that a payment of $170,000 made on 14 April 1973 by the bankrupt to the bankrupt's uncle Terence Barton ("the appellant") was void as against him by reason of the provisions of s. 120(1) of the Bankruptcy Act 1966 Cth, as amended ("the Act"). That sub-section has been amended since the events in question. Its form at the relevant time and so far as material was as follows:

A settlement of property, whether made before or after the commencement of this Act, not being—

(a) a settlement made in favour of a purchaser in good faith and for valuable consideration; or

(b)

is, if the settlor becomes a bankrupt within two years after the date of the settlement, void as against the trustee in the bankruptcy. It is not now disputed that the payment in question was a "settlement" within the meaning of s. 120. Clearly it was, bearing in mind the broad definition of settlement of property in s. 120(8) as including "any disposition of property" and the circumstances in which the payment was made. Although made in the form of a loan, no part of the principal was repayable for twenty years and the purpose of the loan was to enable the appellant to buy property in the form of a house and company shares. There being no contemplation of the immediate dissipation or consumption of the money, the established principles governing the making of a settlement were satisfied: see Williams v. Lloyd; In re Williams [1] ; Re Hyams; Official Receiver v. Hyams [2] . 1. (1934) 50 C.L.R. 341, at pp. 364, 375. 2. (1970) 19 F.L.R. 232, at pp. 247-253.