Case: Combis, Trustee of the Property of Peter Jensen (Bankrupt) v Jensen [2009] FCA 778
Outcome: cited
background to these proceedings is described in detail in Combis, Trustee of the Property of Peter Jensen (Bankrupt) v Jensen [2009] FCA 778. In summary, pursuant to a financial agreement executed on 22 January 2002 by Mr Jensen and the respondent in accordance with s 90C of the Family Law Act 1975 (Cth) (Family Law Act), Mr Jensen agreed to transfer the interest he held as a joint tenant in the parties' matrimonial home at 640-646 Nerang-Broadbeach Road, Carrara ("the Carrara property") to the respondent. Mr Jensen became bankrupt on 14 February 2006. The applicant is his trustee in bankruptcy ("trustee"). In substantive proceedings in this Court the trustee has sought orders pursuant to s 120 and s 121 of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act) to set aside the transfer by Mr Jensen of his interest in the Carrara property to the respondent, and consequential orders in respect of the matrimonial home. In Combis, Trustee of the Property of Peter Jensen (Bankrupt) v Jensen [2009] FCA 778 I dismissed the respondent's notice of motion seeking an order that the substantive proceedings be stayed as an abuse of process. At the same time I dealt in part with the trustee's amended notice of motion filed 31 March 2009, and ordered that the trustee have leave to amend his statement of claim. However that part of the trustee's amended notice of motion seeking an order that paras 10a to 10i of the Defence filed by the respondent be struck out has remained unresolved. This is because: The respondent now seeks leave to file an Amended Defence and Cross-Claim. In her Amended Defence and Cross-Claim the respondent has also sought to further amend para 10, the subject of the trustee's notice of motion. It was not in contention during the hearing before me that the trustee's application to strike out para 10 of the respondent's Amended Defence and Cross-Claim extended to the amended version of para 10. 4. Fourth, I do not accept the submission of the respondent that the decision in Lopatinsky [2003] FCAFC 109 ; (2003) 129 FCR 234 is distinguishable because in Lopatinsky [2003] FCAFC 109 ; (2003) 129 FCR 234 there was only an informal agreement whereby the wife had relinquished her entitlement to sue, whereas in this case the respondent and Mr Jensen had executed a financial agreement pursuant to the Family Law Act in which the respondent had expressly relinquished and forfeited any claims and entitlements to property in Mr Jensen's name as well as an entitlement to spousal maintenance. I take this view because: (a) Although one of the reasons for the decision of the Full Court in Lopatinsky [2003] FCAFC 109 ; (2003) 129 FCR 234 was that there was no evidence to support a finding that Mrs Lopatinsky had promised to give up a claim under s 79 of the Family Law Act , in fact the primary reason described by Whitlam and Jacobson JJ as "the short answer to this appeal" (at [101]-[102]) was the incorrect view the primary judge had taken of the alleged consideration provided in the circumstances of the case. (b) It is not in dispute that a binding financial agreement which is valid under the relevant provisions of Pt VIIIA of the Family Law Act has the effect of ousting the jurisdiction of the court in respect of certain matters covered by the agreement, including financial matters or financial resources to which a binding financial agreement applies: Black &amp; Black [2008] FamCAFC 7 at [29] . However the simple fact of acknowledgment by one spouse in a financial agreement of the provision of consideration for the transfer of property does not mean that the alleged consideration is adequate for the purposes of s 120 and s 121 of the Bankruptcy Act if a transaction is subsequently challenged by a trustee in bankruptcy. As I noted earlier in this judgment, "consideration" in the context of the bankruptcy legislation has its ordinary legal and commercial meaning ( Lopatinsky [2003] FCAFC 109 ; (2003) 129 FCR 234 at 249). The fact that the movement of consideration is acknowledged in a financial agreement does not give the consideration validity it would not otherwise have. (c) Further, and in any event, as I have already found in Combis, Trustee of the Property of Peter Jensen (Bankrupt) v Jensen [2009] FCA 778 , the transfer of property pursuant to a financial agreement does not equate to a transfer of property pursuant to Court order, as was the case in Mateo [2003] FCAFC 26 ; (2003) 127 FCR 217. The current legislative framework applicable to financial agreements contemplates that a trustee in bankruptcy may make application pursuant to both s 120 and s 121 of the Bankruptcy Act to set aside a transfer pursuant to a financial agreement executed by the parties. Similarly, it is open to the Court to review the nature of the consideration stated in a financial agreement. The Court is not in any way prevented from doing so by the fact that the financial agreement is enforceable as between the parties under the Family Law Act. (b) Alleged payment by the respondent and her mother for the Carrara property, resulting in the transfer of that property to the respondent by Mr Jensen was merely a transfer of the bare legal title In Combis, Trustee of the Property of Peter Jensen (Bankrupt) v Jensen [2009] FCA 778 the Court declined of its own motion to transfer these proceedings to the Family Court. In that decision I observed that no formal application for transfer had been made by the respondent and no opportunity provided to the trustee to answer such an application. The respondent has now specifically sought an order that these proceedings be transferred to the Family Court, and filed detailed submissions in support of her application. The trustee opposes such an order, in summary, on the following grounds: The question whether bankruptcy-related proceedings should be transferred from the Federal Court to the Family Court has been considered in a number of cases by this Court. So, for example, the respondent has drawn my attention to the following cases: 1. First, Mr Griffin QC for the respondent submitted that if the trustee is successful in the substantive proceedings the respondent will make an application in the Family Court under s 79(1) of the Family Law Act seeking an order altering the interests of the trustee in the relevant property of Mr Jensen. As Besanko J observed in Macks v Edge [2006] FCA 1077 ; (2006) 156 FCR 302 at [42] , the Federal Court can hear and determine the trustee's claim, but it cannot hear and determine a spouse's claim under the Family Law Act should it become necessary to do so. Since judgment was delivered in Combis, Trustee of the Property of Peter Jensen (Bankrupt) v Jensen [2009] FCA 778 it has become clear that: