Carter (Trustee) in the matter of Vos (Bankrupt) v Vos

3 On 6 September 1999 the applicant was appointed trustee of the husband's bankrupt estate. By application made 22 September 1999 the applicant sought in the Federal Court a declaration that the amount held in the solicitors' trust account, representing the proceeds of sale of the two properties, vested in him by force of s 58 of the Bankruptcy Act 1966 ("the Act") and forms part of the divisible property of the bankrupt, and an order that the wife direct her solicitors to pay the money to the applicant. The bankrupt had not, prior to 6 September, complied with the Family Court's orders. The applicant also sought a declaration that unit 1, 4 Shepherd Street, Darwin vested in him by force of s 58 and forms part of the divisible property of the bankrupt. 4 On 25 October 1999 the wife applied to the Federal Court for an order that the proceeding in this Court be transferred to the Family Court in Darwin. From the affidavit of the wife's solicitor sworn in support of the transfer application, it appears that O'Ryan J has laid down a timetable to enable all outstanding issues, including those arising from the bankruptcy, to be finalised. His Honour made orders requiring the parties, including the applicant in this Court, to file applications, affidavits and submissions within specified times. I have not seen a copy of this order. The matters are to be heard on 10 December 1999. 5 The matter before me today is the application to transfer the proceeding in this Court to the Family Court. Section 35A(1) of the Bankruptcy Act 1966 provides that

"Where a proceeding is pending in the Federal Court, the Federal Court may, on the application of a party to the proceeding or of its own motion, transfer the proceeding to the Family Court."

Sub‑section (4) provides that where a proceeding is transferred to the Family Court, that Court has jurisdiction to hear and determine the proceeding.

6 The question is whether it is more appropriate for this dispute to be determined in this Court or in the Family Court. In support of a transfer counsel for the wife relied on a number of decisions on s 35A, the main one being Re Sabri; Ex parte Sabri v Brien (1995) 60 FCR 131. In that case, property was transferred from the husband to the wife pursuant to orders of the Family Court. An application was later made in the Federal Court by the husband's trustee in bankruptcy for orders that the wife retransfer the property to the trustee. Davies J held that the matter should be transferred to the Family Court for two reasons. The first was that if the Federal Court were to make orders in favour of the trustee, those orders would appear on their face to conflict with the order of the Family Court. Such appearance of conflict should be avoided where possible, and that would be achieved by a transfer to the Family Court. The second reason was that it was "not inconceivable" that the wife might have a claim to an equitable interest in the property which a bankruptcy court would recognise. That was an issue with which the Family Court could readily deal. 7 Both reasons in Sabri are in my view applicable to the present case. I accept that there will be no actual conflict between the Courts' orders, and that there was a greater appearance of conflict in Sabri than in this case. But the appearance is there, because the Family Court's order is that the husband assign to the wife the money in the trust account. The effect of the order sought by the applicant is that that money will vest in the applicant and will not pass to the wife. Secondly, in the Family Court proceedings the wife claims, as against the husband and the applicant, an equitable interest in the money. This is an issue which could more easily be dealt with by the Family Court. That Court has heard evidence in relation to the circumstances under which the properties were acquired, and has made findings on the contribution made by the wife to the accumulation of the assets of the marriage, including the properties in question. O'Ryan J's reasons for judgment were in the material before me. The Family Court is therefore better equipped to hear argument and make findings as to whether the wife has an equitable interest in the money. The case for a transfer based on the wife's claim to an equitable interest is stronger than the comparable ground in Sabri, because in that case the wife had not in fact made a claim. Davies J merely said it was "not inconceivable" that she might have a claim to an equitable interest. Counsel for the applicant contended that Sabri was distinguishable because in this case the family law proceedings were, for all practical purposes, complete. That may be so, but it appears also to have been the case in Sabri. 8 Accordingly, the matter should be transferred to the Family Court in Darwin. The applicant must pay the costs of the transfer motion. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sundberg.

Associate: Dated: 29 November 1999 Counsel for the Applicant: P McNamara