REASONS FOR JUDGMENT
WILCOX J:
1 This is an appeal against a decision of a judge of the Court (Tamberlin J) in proceedings arising out of the administration of the bankrupt estate of Arturo Mateo ("the bankrupt"): see Mateo v Official Trustee in Bankruptcy [2002] FCA 344. The appeal raises some issues of general importance concerning the interaction of the Bankruptcy Act 1966 (Cth) ("the Act") and the Family Law Act 1975 (Cth).
2 Corazon Bes Mateo, the former wife of the bankrupt, applied to this Court for an order setting aside a notice under s 139ZQ of the Act issued by the Official Receiver for the Bankruptcy District of the State of New South Wales. The Official Trustee in Bankruptcy ("the Official Trustee") filed a cross-claim in which he named as cross-respondents, not only Mrs Mateo, but also the three children of her marriage to the bankrupt: Jeremy Mateo, Jennifer Joy Mateo and Justin James Mateo. The Official Trustee sought a declaration that the notice was valid and orders for the transfer of property, and payment of moneys, to him by the various cross-respondents.
3 Tamberlin J held the notice should be set aside. He granted Mrs Mateo's application and dismissed the cross-claim. The Official Trustee appeals against these orders.
The facts
4 Mr and Mrs Mateo were married in 1972. Their children were born, respectively, in 1974, 1979 and 1982.
5 The matrimonial home, immediately prior to 18 November 1997, was at 3 Coolibah Street, Merrylands West. I will refer to this property as "the home". The home was owned jointly by Mr and Mrs Mateo. On that day, they mortgaged the home to Citibank Limited in order to secure a debt of $178,000.
6 On 10 January 2000 Mr and Mrs Mateo separated. On 18 April 2000 they signed a document entitled "Consent Orders". On 22 June 2000 the Family Court of Australia, by consent, made a series of orders that carried the agreed terms into effect.
7 The substantive orders made by the Family Court may be summarised as follows:
(i) Within 28 days, the husband was to transfer to the wife his interest in the home.
(ii) Upon transfer of the husband's interest, the wife was to be responsible for all outgoings on the home, including mortgage repayments, council and water rates and insurance, and was to indemnify the husband in relation to them.
(iii) The wife was to pay the husband a total sum of $10,000; $3,000 upon signing the "Consent Orders" document and $7,000 upon the husband signing the transfer of the home.
(iv) If the home was sold by the end of the year 2000, the wife was to pay an additional $10,000 to the husband and $80,000 "to the three children of the marriage at the direction of the husband".
(v) If the home was not sold by the end of 2000 (as it was not), the wife was nevertheless to pay the husband an additional $10,000. However, in that eventuality, the wife's obligation to the children was a different one. She had to preserve their "entitlements", pursuant to the previous clause, and divide amongst them, equally, the greater of the sum of $80,000 or one-third of the net proceeds of sale of the home.
(vi) Within 28 days the husband was to transfer to the wife his interest in a Honda car.
(vii) The wife's name was to be removed from a credit card account.
(viii) The wife was to be the owner of all chattels and personal items located in the home.
8 In making the orders, the Family Court noted, pursuant to s 81 of the Family Law Act, that "the parties intend that these Orders as far as practicable finally determine the financial relationship between them and avoid further proceedings between them".
9 On 26 April 2000 Mrs Mateo paid her husband $3,000. She paid a further sum of $3,000 on 10 July 2000. There was evidence before Tamberlin J about other payments, but his Honour was not satisfied about them. The property transfer was registered on or about 10 August 2000.
10 Tamberlin J found the "net amount received by [Mrs Mateo] on the transfer of the husband's interest was approximately $107,000". His Honour did not explain how this sum was calculated.
11 On 19 March 2001 Mrs Mateo contracted to sell the home for $398,000. The sale was settled on 1 May 2001. Mrs Mateo applied some of the proceeds of sale to the purchase of a property at Toongabbie.
12 While the sale of the home was on foot, on 10 April 2001, Mr Mateo presented a debtor's petition. The petition was accepted, with the result that he became bankrupt that day: see s 55 of the Act.
The s 139ZQ notice
13 The s 139ZQ notice was issued by the Official Receiver on 19 June 2001. Section 139ZQ of the Act relevantly provides:
"(1) If a person has received any money or property as a result of a transaction that is void against the trustee of a bankrupt under Division 3, the Official Receiver:
(a) if the Official Trustee is the trustee - on the initiative of the Official Receiver; or
(b) if a registered trustee is the trustee - on application by the trustee;
may require the person, by written notice given to the person, to pay to the trustee an amount equal to the money or the value of the property received.
(2) The notice must set out the facts and circumstances because of which the Official Receiver considers that the transaction is void against the trustee.
(3) The notice may:
(a) require the amount to be paid at a time or within a period set out in the notice; or
(b) require the amount to be paid at such times, and in such instalments, as are set out in the notice.
(4) …
(5) …
(6) …
(7) If a person is required by a notice under this section to pay to the trustee the value of any property, the requirement is taken to be complied with if the property is transferred to the trustee.
(8) An amount payable by a person to the trustee under this section is recoverable by the trustee as a debt by action against the person in a court of competent jurisdiction."
14 The effect of a s 139ZQ notice is to create a charge over the affected property in favour of the trustee (s 139ZR). Failure to comply with a notice is an offence (S 139ZT).
15 Section 139ZS provides:
"(1) If the Court, on application by a person to whom a notice has been given under section 139ZQ or by any other interested person, is satisfied that this Subdivision does not apply to the person on the basis of the alleged facts and circumstances set out in the notice, the Court may make an order setting aside the notice.
(2) A notice that has been set aside is taken not to have been given."
16 The s 139ZQ notice in the present case was addressed to Mrs Mateo. After reciting that Mrs Mateo had received property from the bankrupt "as a result of a disposition of property under section 120 of the [Act] that is void against the [Official Trustee]", the notice required her to pay to the Official Trustee "an amount of $95,000 being the value of the bankrupt's interest in [the home] … or to transfer to the Official Trustee a half interest in the property". The notice went on to make a series of factual allegations. They included how the sum of $95,000 had been calculated. It was said that, at the date of the Family Court orders, the property was valued at $390,000; the debt to Citibank Limited was approximately $180,000, leaving an equity of $210,000; the bankrupt's interest was, therefore, worth $105,000. However, Mrs Mateo had paid the bankrupt $10,000, leaving an equity of $95,000 for which no consideration had been paid. It is not clear to me how the sum of $10,000 was calculated.
The proceeding at first instance
17 On 31 July 2001 Mrs Mateo filed an application in this Court seeking an order under s 139ZS(1) of the Act setting aside the notice given by the Official Receiver. As mentioned, the Official Trustee responded with a cross-claim against Mrs Mateo and her three children. He sought a series of declarations, an order against Mrs Mateo for the payment by her of the value of Mr Mateo's interest in the home and an order against each of the three children for payment of any amount of money found to have been paid to them in respect of the Honda motor car or consequentially on the sale of the home.
18 There was evidence before Tamberlin J concerning the breakdown of the marriage between Mr and Mrs Mateo, and also Mr Mateo's financial position at the date of the Family Court orders. His Honour made findings about each of these matters which were not challenged on appeal. They were:
(i) "there was a genuine breakdown of marriage prior to April 2000", the parties having mainly lived apart during the previous two or three years; and
(ii) Mr Mateo was insolvent at the dates of both the consent orders and the transfer of his interests to Mrs Mateo.
The decision of Tamberlin J
19 In the argument before Tamberlin J, the Official Trustee relied, in the alternative, on both s 120 and s 121 of the Act. His Honour dealt with each section separately.
20 Section 120 relevantly provides:
"(1) A transfer of property by a person who later becomes a bankrupt (the transferor) to another person (the transferee) is void against the trustee in the transferor's bankruptcy if:
(a) the transfer took place in the period beginning 5 years before the commencement of the bankruptcy and ending on the date of the bankruptcy; and
(b) the transferee gave no consideration for the transfer or gave consideration of less value than the market value of the property.
(2) …
(3) …
(4) The trustee must pay to the transferee an amount equal to the value of any consideration that the transferee gave for a transfer that is void against the trustee.
(5) For the purposes of subsections (1) and (4), the following have no value as consideration:
(a) the fact that the transferee is related to the transferor;
(b) if the transferee is the spouse or de facto spouse of the transferor - the transferee making a deed in favour of the transferor;
(c) the transferee's promise to marry, or to become the de facto spouse of, the transferor;
(d) the transferee's love or affection for the transferor.
(6) This section does not affect the rights of a person who acquired property from the transferee in good faith and by giving consideration that was at least as valuable as the market value of the property.
(6) For the purposes of this section:
(a) transfer of property includes a payment of money; and
(b) a person who does something that results in another person becoming the owner of property that did not previously exist is taken to have transferred the property to the other person; and
(c) the market value of property transferred is its market value at the time of the transfer." (Original highlighting)
21 In relation to the s 120 claim, Tamberlin J said:
"19 The primary submission for Ms Mateo is that notwithstanding that the transfer took place in the period commencing five years before the commencement of the bankruptcy, the transferee gave consideration for the transfer which was at least equal to the market value of the property at the time of transfer.
20 This submission is based firstly on the premise that as a consequence of the signing of the Consent Orders on 18 April 2000, the making of the application to the Family Court and the making by the Family Court of the Consent Orders in the form originally agreed, the beneficial interest in the property was transferred at the latest by 22 June 2000, to Ms Mateo.
21 It is submitted that since the equitable interest passed on 22 June 2000, there only remained in the husband a legal interest of nominal value and that by the time the 'transfer' took place, namely on or about 10 August 2000, the property had only a nominal market value and therefore there was no transfer for a consideration which was less than market value.
22 This submission depends on the selection of the Memorandum of Transfer as the only operative transfer within the meaning of s 120 in isolation from the other elements in the transaction, namely the signing of the Consent Orders and the making of the Consent Orders.
23 In my view, this is an artificial and unsupported approach to the interpretation of the meaning of the expression 'transfer' in s 120. The authorities indicate that one must look at the overall transaction which has been implemented rather than to simply isolate one individual component of the transaction as in itself comprising the transfer: see Silvera v Savic (1999) 46 NSWLR 124 at 140.
24 In my view, the 'transfer' in this matter consisted of the whole transaction ranging from the signing of the Consent Orders on 18 April 2000 through to the completion of the transfer of the interest on or about 10 August 2000. There is no basis on which to isolate the making of the Consent Orders from the 'transfer' which took place and rely only on the formal instrument of transfer. Effectively, the transfer of the equitable interest to the applicant occurred when the orders were made on 22 June 2000.
25 I therefore reject the primary submission made for the applicant.
26 However, I am not satisfied in the present case that the transfer which was effected by the above transaction was for a consideration which was less than the market value of the interest received by the applicant at the time of the transfer.
27 The language used in s 120(1)(b) is that the transferee gave no consideration for the transfer or gave consideration of less value than the market value of the property at the time of the transfer. In this case I am satisfied that consideration was given for the transfer. Further, I am not persuaded that consideration for the transfer was for less than the market value of the property. The burden of proof is on the party seeking to set aside the transaction and this has not been made out: P T Garuda Indonesia Ltd v Grellman (1992) 35 FCR 515 at 527-528.
28 The transfer in this case was carried out pursuant to orders of a superior Australian Federal Court, namely the Family Court and full faith and credit must be given to those orders unless they are set aside. No basis has been established before me to warrant the setting aside of any of these orders and indeed, if any ground had been raised, it might have been more appropriate to transfer the matter to the Family Court for determination of all the questions. No such application was made.
29 The orders made in this case under s 79 of the Family Law Act 1975 (Cth)were made in the exercise of statutory judicial discretion taking into account a broad range of matters, including financial contributions made by the parties to the marriage, together with other pertinent factors prescribed by the Act. The Court is enjoined not to make an order under s 79 unless it is satisfied that in all the circumstances it is just and equitable to make the order.
30 Evidence has been given by Ms Mateo in relation to extensive unremunerated work carried out by her in the home for the material benefit of herself and her husband during the approximate twenty-seven years that she and her husband lived together and the raising of the children. She has also given evidence as to mortgage payments having been met by her and rates having been paid by her over a period of nineteen months, which together amount to $11,037. I accept that these payments were made by her.
31 The Consent Orders of 22 June 2000 require her to make payments of $20,000 to her husband, together with $80,000 to the three children of the marriage at the direction of the husband. Although the $80,000 has not been paid to date by the applicant, there is obligation under the Consent Orders to make the payment. As to the payment of the $20,000 I am not satisfied, on the evidence, that it has been paid, despite the obligation to do so in the Consent Orders. There are other steps required to be taken by the wife in the agreed Family Court orders. This is not a case where Ms Mateo seeks to rely on any of the matters excluded as consideration by s 120(5) of the Act.
32 On the evidence, I am not persuaded that, taking into account the wife's contribution and work in the joint enterprise, comprised by the marriage and bringing up of a family, that the consideration for the transfer of the husband's interest in the property, was of less value than the market value of the interest transferred to her: cf Re Sabri; Ex parte Brien v Sabri (1996) 137 FLR 165 at 181-182. If account is taken of the duration of the marriage and the number of hours which she said she worked in caring for the children and in and around the home over the twenty-seven years of marriage for approximately thirty-five hours per week, I am not satisfied that the consideration given by her was of less value than the market value of the property. Indeed, even allowing a minimal amount per hour for the amount of work carried out by her, the value of the work would far exceed the fair net market value of the interest she received after taking into account the outstanding debts and charges.
33 Accordingly, for the above reasons, I am not satisfied that the transaction resulting from the signing and making of the Consent Orders was a transfer for less than the market value of the property.
34 In relation to the transfer of the Honda Prelude motor vehicle, I am further satisfied on the evidence of Ms Mateo that the vehicle belonged to her. Although it was registered in joint names, I am satisfied that the husband had access to another motor vehicle in connection with his work and that the vehicle in question was treated as solely the property of Ms Mateo."
22 Section 121 of the Act relevantly states:
"(1) A transfer of property by a person who later becomes a bankrupt (the transferor) to another person (the transferee) is void against the trustee in the transferor's bankruptcy if:
(a) the property would probably have become part of the transferor's estate or would probably have been available to creditors if the property had not been transferred; and
(b) the transferor's main purpose in making the transfer was:
(i) to prevent the transferred property from becoming divisible among the transferor's creditors; or
(ii) to hinder or delay the process of making property available for division among the transferor's creditors.
(2) The transferor's main purpose in making the transfer is taken to be the purpose described in paragraph (1)(b) if it can reasonably be inferred from all the circumstances that, at the time of the transfer, the transferor was, or was about to become, insolvent.
(3) Subsection (2) does not limit the ways of establishing the transferor's main purpose in making a transfer.
(4) Despite subsection (1), a transfer of property is not void against the trustee if:
(a) the consideration that the transferee gave for the transfer was at least as valuable as the market value of the property; and
(b) the transferee did not know that the transferor's main purpose in making the transfer was the purpose described in paragraph (1)(b); and
(c) the transferee could not reasonably have inferred that, at the time of the transfer, the transferor was, or was about to become, insolvent.
(5) The trustee must pay to the transferee an amount equal to the value of any consideration that the transferee gave for a transfer that is void against the trustee.
(6) For the purposes of subsections (4) and (5), the following have no value as consideration:
(a) the fact that the transferee is related to the transferor;
(b) if the transferee is the spouse or de facto spouse of the transferor - the transferee making a deed in favour of the transferor;
(c) the transferee's promise to marry, or to become the de facto spouse of, the transferor;
(d) the transferee's love or affection for the transferor.
(7) …
(8) This section does not affect the rights of a person who acquired property from the transferee in good faith and for at least the market value of the property.
(9) For the purposes of this section:
(a) transfer or property includes a payment of money; and
(b) a person who does something that results in another person becoming the owner of property that did not previously exist is taken to have transferred the property to the other person; and
(c) the market value of property transferred is its market value at the time of the transfer." (Original highlighting)
23 Tamberlin J dealt with the s 121 argument in this way:
"35 I accept that the bankrupt was insolvent at the time when the Consent Orders were signed on 18 April 2000 and this continued to be the position during the period up to and including the transfer, but I am not satisfied that the husband's main purpose in making the transfer was to hinder or delay the process of making property available for division among creditors, or to prevent the transfer of property from becoming divisible among creditors. The evidence supports the conclusion that the main purpose of the orders was to resolve outstanding matrimonial issues as to property and I so find.
36 I am not satisfied that at the time during which the transfer was effected, that is to say, between 18 April and 10 August 2000, the consideration for the transfer was less than the market value of the property, nor that the transferee knew that the transferor's main purpose was to defeat or delay creditors (if such a purpose had existed), nor that Ms Mateo could reasonably have inferred that her husband was or was about to become insolvent.
37 I note that in the Statement of Affairs, the primary cause of the insolvency is stated by the bankrupt to have been gambling speculation and extravagance in living, together with the domestic discord and relationship breakdown. There is no evidence to the contrary of these assertions.
38 In circumstances where there was, in my view, a genuine breakdown of marriage pursuant to which obligations were entered into and a property arrangement was made by a final order by the Family Court including the resolution of mutual rights and obligations, I am not persuaded that a case has been made out under s 121. In particular, I am not persuaded that the consideration, being the final resolution of all claims between the parties in the Family Court proceedings, did not amount to valuable consideration at least equal to the market value of the interests transferred.
39 This is not a case where any attempt has been made to set aside the orders of the Family Court and they, as indicated earlier, were made pursuant to s 79 which requires the Family Court to take account a broad range of considerations."
24 Tamberlin J made orders allowing the application to set aside the notice and dismissing the Official Trustee's cross-claim. The Official Trustee was ordered to pay the costs of both the application and cross-claim.
The appeal
25 The Official Trustee's notice of appeal challenged his Honour's findings in respect of both the bankrupt's interest in the home and the Honda car. However, the grounds of appeal concerning the car were abandoned at the hearing of the appeal.
26 The respondents to the appeal (Mrs Mateo and the three children) filed a notice of contention concerning Tamberlin J's rejection of their argument "that the market value of the relevant items of property at the time of the transfers was nil".
Appellant's contentions
27 Although the notice of appeal was not so limited, counsel for the appellant, Mr P Taylor SC and Mr P B Walsh, indicated at the hearing of the appeal that the Official Trustee wished to confine himself to s 121 of the Act; reliance was not now placed on s 120.
28 The outline of submissions provided by counsel for the appellant contained a detailed analysis of s 121, with extensive reference to decided cases. Counsel emphasised that Mrs Mateo bore the onus of establishing the elements of the defence provided by subs (4). They said Mrs Mateo had failed to identify the consideration she gave for the transfer of the home or establish its value. As a result of this, Tamberlin J had made no specific finding about these matters. Mrs Mateo had not proved the consideration she gave for the transfer to her of the bankrupt's interest in the home "was at least as valuable as the market value of the property". Counsel criticised the lack of specificity in Tamberlin J's findings about these matters. They noted his Honour's statements that he was "not persuaded … that the consideration for the transfer … was of less value than the market value of the interest transferred to her" (para 32 of Tamberlin J's reasons) and was not satisfied that the consideration for the transfer was less than the market value of the property (para 36). They said these statements reversed the onus of proof imposed by s 121(4).
29 Counsel made particular criticism of Tamberlin J's having taken account of Mrs Mateo's "obligation" to pay the children of the marriage $80,000 (or one-third of the net proceeds of sale of the home). They said s 121(4)(a) refers to the value of the consideration, not its cost; value must be determined objectively; it connotes an amount hypothetically realisable by the person receiving the value; but Mrs Mateo's promise provided no value (in that sense) to Mr Mateo.
30 Counsel also criticised the statement of Tamberlin J (para 38) that he was "not persuaded that the consideration, being the final resolution of all claims between the parties in the Family Court proceedings, did not amount to valuable consideration at least equal to the market value of the interests transferred". Counsel said this statement incorrectly characterised the legal effect of the consent orders; orders made under s 79 of the Family Law Act may be set aside in the circumstances contemplated by s 79A. They added the finding also made the "unjustifiable assumption that Mrs Mateo's implied acceptance of the 'final resolution' was either (i) unilateral or (ii) should be acknowledged as consideration for the property transfer, rather than as consideration for Mr Mateo's reciprocal acceptance of 'final resolution'." They also said there was no evidentiary basis for arriving at any material "value" for the "final resolution". Insofar as the consideration was said to be Mrs Mateo's unremunerated work during the course of the marriage, this was "fundamentally wrong because all the 'work' pre-dated the transfer and could not constitute consideration".
Respondents' contentions
31 Counsel for the respondents, Mr P L Brereton SC and Mr D P Ash, repeated the primary argument put to Tamberlin J (rejected by him) that the market value of Mr Mateo's interest in the home at the date of the transfer was nil. They said this flowed from the fact that Mr Mateo was then bound by the order of the Family Court, under which he was required to make the transfer. Counsel submitted that Tamberlin J erred in treating the whole transaction from 18 April to 10 August 2000 as the "transfer" for the purposes of s 121(1). They said an order under s 79 of the Family Law Act is not itself a transfer; rather, it contemplates a subsequent transfer to give effect to the order.
32 Counsel argued the effect of an order for transfer under s 79 is to vest in the specified transferee an equitable estate in the interest ordered to be transferred. They cited Harris v Walker (1969) 14 FLR 167, a decision of McLelland CJ in Eq. of the New South Wales Supreme Court, regarding an order under s 86 of the Matrimonial Causes Act 1959 (Cth). Counsel suggested that a construction of the word "transfer" in the Bankruptcy Act which accords with the meaning of the same word in the Family Law Act, if available, is to be desired. They said it "avoids the anomalous and arbitrary result that spouses who choose the last method [orders under the Family Law Act] may be exposed to an application by a Trustee, notwithstanding that there is no attack on the integrity of the orders made in the Court better suited to determine the integrity".
33 Counsel for the respondents said that, if the word "transfer" is treated as embracing more than the formal transfer of 10 August 2000, the appellant's case "can only be a direct attack on the orders of 22 June 2000". They said:
"His Honour considered that attack and considered that the orders survived the attack. The alternative view is that such attack ought not be permitted."
34 The respondents' counsel dealt with both these alternatives. They said there was "a valuable consideration moving from each of Mr Mateo and Mrs Mateo in that the order settled the disputes between them". Counsel cited an unreported judgment of Needham AJ, of the Supreme Court of New South Wales, Craven v The Official Trustee in Bankruptcy (26 July 1991). The issue in that case was whether the plaintiff was entitled to receive the whole of the proceeds of sale of her former matrimonial home, as contemplated by orders made in the Family Court, notwithstanding her husband's supervening bankruptcy. Needham AJ referred to comments by Beaumont J, in Sonenco v Silvia (1989) 89 ALR 437 at 444, that a trustee in bankruptcy "takes the property of the bankrupt subject to 'equities'" and "the trustee's title to that property is no better than the bankrupt's". Needham AJ went on:
"The orders in the present case did not merely declare that, upon sale, the Plaintiff was to have the proceeds less the encumbrance; they ordered that a sale take place forthwith and that the proceeds of sale, after payment of the mortgage and other liabilities, should go to the Plaintiff. In my opinion, such an order creates an equitable interest in the land which could be enforced just as a contract for sale could be enforced.
The submissions of the Defendant would result, if accepted, in a conclusion that the subsequent bankruptcy of the husband in effect would re-vest in him his full interest in the property. I do not think that there is any justification for such a submission. It is not without significance that the High Court, in Mullane v Mullane (1983) 158 CLR 436, at p 445, said:
'In our opinion, therefore, s. 79 on its proper construction refers only to orders which work on alteration of the legal or equitable interests in the property of the parties or either of them. An interest in property is a right of a proprietary nature, not a mere personal right.'
As I have said, my opinion is that the orders made by the Family Court created in the Plaintiff rights of a proprietary nature."
Needham AJ held the plaintiff was entitled to the whole net proceeds of sale of the property.
35 Counsel put the submission that, in any event, the reasonable inference is that the consideration moving from Mrs Mateo was equal to the market value of the property acquired. They contended this inference arose from the nature of the role of the Family Court in sanctioning a property agreement between spouses. Counsel said:
"(a) First, the legislature demands of the Family Court that it exercise a duty to end financial relations; it shall as far as practicable make such orders as will finally determine the financial relationships between the parties to the marriage and avoid further proceedings between them: s 81.
(b) Secondly, the legislature demands that the Court not make an order unless it is satisfied that in all the circumstances it is just and equitable to make an order: s 79(2).
(c) Thirdly, the legislature demands that the Court take into certain matters (including each of the matters referred to by his Honour): s 79(4). The process is substantive.
The parties file documents setting out the orders they seek and supporting affidavit material. Even though the order sought is by consent, the Court is obliged to consider whether it is appropriate to make it, having regard to the circumstances and the statutory criteria for making property orders." (Original emphasis)
36 The alternative argument is that, to the extent Tamberlin J identified the relevant date of transfer as 22 June 2000 (the date of the Family Court order) and then considered the market value, "his Honour was effectively re-adjudicating an issue previously determined between the same parties or their predecessors". Counsel acknowledged that, in one sense, the Family Court orders were not final. But they said s 79A of the Family Law Act, not s 120 or s 121 of the Bankruptcy Act, provides the avenue to challenge them.
37 Counsel for the respondents put submissions asserting the existence of a constructive trust. They also said the case was governed by the rule in Ex parte James; Re Condon (1874) 9 Ch App609, as to which see the decision of Chisholm J, in the Family Court of Australia, in Re Sabri; Ex parte Brien v Sabri (1996) 137 FLR 165. Counsel said:
"Mrs Mateo by her contributions to the marriage and by her direct contributions to the property enriched the assets of Mr Mateo. She would not have been in a position to lodge a proof of debt to the extent of that enrichment. It would be unfair of the Trustee to rely upon its strict legal rights, particularly as Mrs Mateo was in no way a party to the activities which led to Mr Mateo's bankruptcy, and the rule ought be applied to prevent her contributions being stripped from her."
Importance of the issues
38 The present appeal poses issues of general importance. Those issues, or variants of them, have emerged in many cases and been resolved in various ways. It seems not uncommon for a person to become bankrupt shortly after consenting to orders under s 79 of the Family Law Act. There is an obvious possibility that a person who is already insolvent, or fears future insolvency, will seek such orders, possibly collusively with his or her spouse, primarily in an endeavour to put assets beyond the reach of creditors. Examples of such conduct in relation to the analogous situation of an "alienation of property … with intent to defraud creditors" are provided by the facts of three cases in the Supreme Court of New South Wales: Silvera v Savic (1999) 46 NSWLR 124, Langdon v Gruber [2001] NSWSC 276 and Green v Schneller [2002] NSWSC 671. On the other hand, if the purposes underlying the Family Law Act are to be achieved, it is necessary to ensure that the genuine property interests of a party to a marriage are safeguarded from the creditors of the other party.
The Family Law Act
39 Part VIII of the Family Law Act is entitled "Property, Spousal Maintenance and Maintenance Agreements". Sections 72 to 77A deal with spousal maintenance. They may be passed over.
40 Section 78 authorises a court exercising jurisdiction under the Family Law Act, in proceedings between the parties to a marriage with respect to existing title or rights in respect of property, to declare the title or rights, if any, that a party has in respect of the property.
41 Section 79(1) empowers such a court to alter the parties' property interests. An order altering property interests is enforceable notwithstanding the death of a party (subs (1A)). It is not to be made unless the court "is satisfied that, in all the circumstances, it is just and equitable to make the order" (subs (2)). Subsection (4) states criteria to be considered by the Court in considering what order (if any) should be made under s 79. The criteria include a party's contributions (both financial and non-financial) to the acquisition, conservation or improvement of any property, a party's contribution to the welfare of the family constituted by the parties and their children (including any contribution made in the capacity of homemaker or parent), the effect of any proposed order on the earning capacity of either party to the marriage, any child support that a party to the marriage has provided, is to provide or might be liable to provide in the future, and the list of personal factors set out in s 75(2) of the Family Law Act as being relevant to the making of a spousal maintenance order.
42 Section 79A(1) sets out the circumstances under which a s 79 order may be varied or set aside. Of these, para (a) is relevant to this case. It reads:
"(a) there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information), the giving of false evidence or any other circumstance;"
The decided cases
(i) Whether the Court should exercise jurisdiction
43 In Baxter; Ex parte the Official Receiver v Baxter (1986) 10 FCR 398, Northrop J held this Court ought not to give directions to a trustee, pursuant to s 134(4) of the Act, in relation to the taking of proceedings to assert an interest in a bankrupt's former matrimonial home. A husband and wife had entered into a terms contract with the Victorian Housing Commission to purchase the property as joint tenants. The husband became bankrupt, with the result that his equity in the property vested in his trustee. However, no action was taken by the trustee to assert any right to the interest; not even after he received notice of an application by the wife for a declaration under s 78 of the Family Law Act that she was the sole proprietor of the property. The Family Court made that declaration.
44 Counsel for the trustee submitted to Northrop J that the trustee was not bound by the declaration and that, as the husband had no interest in the property when the declaration was made (that interest having passed to the trustee), the Family Court had no jurisdiction or power to make the declaration. Northrop J rejected that submission. He said (at 401-402):
"In my opinion, those contentions should not be accepted. If the Federal Court proceeded to hear and determine the application, of necessity, conflicting orders would be made. The Family Court order may not be binding upon the trustee, but until it is set aside, it is binding upon the wife. Any order of the Federal Court made in the application by the trustee would be binding upon the wife. That illustrates the practical results arising from conflicting judgments. The Federal Court has no jurisdiction or power to set aside the order of the Family Court.
Even though the order made by the Family Court on 22 October 1984 may have been beyond the power of that Court to make, and I express no view on that question, nevertheless the order remains in existence. That order could have been set aside on appeal… . Until the order of the Family Court is set aside, it must be given full faith and credit. Otherwise, inconsistent orders of the Family Court and the Federal Court could place the wife as well as the Housing Commission in an impossible position. What court order should the Housing Commission observe when it transferred the land on the completion of the terms contract?
In all the circumstances, the Federal Court should refrain from hearing
and determining the application of the trustee while the order of the Family
Court remains in existence."
45 This decision was applied, in Official Trustee in Bankruptcy v Turner [1999] FCA 129; 94 FCR 512, to a case in which the Family Court order preceded the bankruptcy. O'Loughlin J commented (at para 33) that, unlike the position in Baxter, "there is nothing to suggest, prima facie, that the order was beyond the power of the Family Court. In those circumstances, it seems to me to be inevitable that this Court must give recognition to the Family Court order".
(ii) Transfer to the Family Court
46 Re Sabri, referred to at para 37 above, was a proceeding based on various provisions of the Bankruptcy Act, including ss 120 and 121. It was instituted in this Court. However, Davies J acceded to an application, under s 35A of the Act, for its transfer to the Family Court: see Re Sabri; Ex parte Sabri v Brien (1995) 60 FCR 131. Davies J did not express any doubt about this Court's jurisdiction to determine the proceeding. But he was concerned about the possibility of conflict (or, at least, the appearance of conflict) between an existing Family Court order and any order that might be made in the proceeding then before him.
47 In Official Trustee in Bankruptcy v Higgins [2000] FCA 1850, 109 FCR 1, Tamberlin J followed Sabri. Pursuant to consent orders, made under s 79 of the Family Law Act by the Manly Local Court, Mr Higgins transferred to his wife his interest in their matrimonial home. He then became bankrupt. The Official Trustee sought orders against the wife, pursuant to ss 120 and 121 of the Act. The motion before Tamberlin J raised the question whether the Federal Court had power to order a transfer of the interest taken by the wife, under the consent orders, without those orders having been set aside by the Local Court. No party made application for transfer of the proceeding pursuant to s 35A of the Act.
48 Nonetheless, Tamberlin J ordered transfer to the Family Court. In para 22 of his reasons, his Honour said:
"In my view, the position in the present case is that the Federal Court has both the power and jurisdiction to make an order under s 121 in a case such as this. In this respect I do not agree with the remarks of Northrop J in Baxter's case. However, as a matter of discretion, for the reasons given by Davies J in Re Sabri; Ex parte Sabri v Brien it is desirable in this case not to do so where there the Family Court has power to both set aside or vary the order under s 79A and to exercise jurisdiction under the Act. Such a course will avoid the appearance of conflicting orders between the two courts."
(iii) The position in the Family Court
49 The proceeding transferred by Tamberlin J was heard in the Family Court by Moore J: see Official Trustee in Bankruptcy v Higgins (2 September 2002). Her Honour noted there was no application before the Family Court under s 79A of the Family Law Act; the only application was the transferred application under ss 120 and 121 of the Bankruptcy Act. Therefore, she said (at para 42):
"… the Trustee's recovery of the property transferred depends entirely on whether he can bring his claim within the provisions of the Bankruptcy Act and the Family Law Act has no place in that save for the prospect of a transfer being pursuant to a maintenance order or a maintenance agreement as defined by it according to s 5 of the Bankruptcy Act." (Original highlighting)
50 However, Moore J saw no problem about that. At paras 55-56 she said:
"The transfer of property pursuant to s 79 orders is not exempt from the provisions of the Bankruptcy Act. If the circumstances mean that a transfer under such an order is later caught by the voidable transactions provisions of the Bankruptcy Act, then it follows that the transfer is void against the Trustee in bankruptcy. A declaration to that effect is available from the Court exercising bankruptcy jurisdiction and that Court has the power given in s 30 to make such consequential orders as it considers necessary to give effect to the Act, including an order for a further transfer. This does not give rise of itself to any inconsistency of orders. The order made under s 79 of the Family Law Act is subject to the ordinary operation of bankruptcy law and the property dealt with in the order must be that of the parties and not that vested by law in another. I can find no obligation on the Trustee to seek to set the s 79 orders aside by bringing an application under s 79A of the Family Law Act - either to eliminate any perceived inconsistency or to relieve the non-bankrupt spouse from obligations undertaken there. If relief is needed, the non-bankrupt spouse has the remedy available. Not only is there nothing specifically requiring the earlier order to be set aside in either Act, but there is nothing in a reading of either from which it should be inferred that would be a necessary step in the recovery of property for distribution to the bankrupt's creditors.
In this case, the concession was made that the transfer was caught by ss 120 and 121. Finding as I do no obligation on the Trustee to have the consent order set aside before the Trustee is entitled to the relief provided there, the declaration and consequential order to give effect to it should be made."
51 Moore J made a declaration that the husband's transfer of his interest in the property to his wife was void against the Official Trustee and ordered the wife to transfer that interest to the Official Trustee.
52 Even in relation to an application made to it under the Family Law Act, the Family Court has an obligation to take into account interests of strangers to the marriage. In Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337 at 354, Gibbs J (with whom Stephen, Aickin and Wilson JJ agreed) said:
"The authorities to which I have referred establish that in some circumstances the Family Court has power to make an order or injunction which is directed to a third party or which will indirectly affect the position of a third party. They do not establish that any such order may be made if its effect will be to deprive a third party of an existing right or to impose on a third party a duty which the party would not otherwise be liable to perform. The general words of ss. 80 and 114 must be understood in the context of the Act, which confers jurisdiction on the Family Court in matrimonial causes and associated matters, and in that context it would be unreasonable to impute to the Parliament an intention to give power to the Family Court to extinguish the rights, and enlarge the obligations, of third parties, in the absence of clear and unambiguous words. It can safely be assumed that the Parliament intended that the powers of the Family Court should be wide enough to prevent either of the parties to a marriage from evading his or her obligations to the other party, but it does not follow that the Parliament intended that the legitimate interests of third parties should be subordinated to the interests of a party to a marriage, or that the Family Court should be able to make orders that would operate to the detriment of third parties. There is nothing in the words of the sections that suggests that the Family Court is intended to have power to defeat or prejudice the rights, or nullify the powers, of third parties, or to require them to perform duties which they were not previously liable to perform."
53 The Family Court takes seriously the statements of principle made in Ascot Investments. In Biltoft v Biltoft (1995) FLC 92-614 at 82,128 the Full Court of the Family Court said:
"There is no requirement that the rights of an unsecured creditor or a claim by a third party must be considered and dealt with prior to the Court making an order under s.79, nor is there a rule of priority as between a creditor claimant and a spouse. Those rights, however, cannot be ignored. They must be recognised, taking into account and balanced against the rights of the spouse.
…
There is an obligation on both parties to disclose any significant creditors or any significant claim against either of them by a third party. If, as a result of the order of the Court in the property proceedings, the ability of a creditor or claimant to recover his or her debt or claim is likely to be affected, notice of the Family Court proceedings must be given to that creditor or claimant. He/she may then intervene in the Family Court proceedings and either seek a stay of those proceedings or some appropriate order which recognises his/her rights."
54 It appears from the judgment of Moore J in Higgins that the form prescribed for applications under s 79 of the Family Law Act requires details of an applicant's property, liabilities and financial resources, verified by affidavit. Her Honour said (at para 19) that it is "usual, as part of the first step of determining the value of assets to be distributed, to deduct the amount owing under unsecured liabilities". This apparently extends to contingent liabilities, although her Honour noted authorities to the effect that "it might be proper not to take into account unsecured debts … where the alleged liability is vague or uncertain or it is unlikely to be enforced or has been unreasonably incurred".
55 Section 92 of the Family Law Act empowers a court to allow "any person" to intervene in any proceeding, other than a proceeding for principal relief. Having regard to that provision, it may safely be assumed that, in an appropriate case, the Family Court will allow intervention by a trustee of a party to the marriage.
56 Section 79A(1) of the Family Law Act enables a court exercising jurisdiction under the Family Law Act to vary or set aside a s 79 order "on application by a person affected by" that order. These words have been held to be wide enough to include the trustee of the bankrupt estate of a party affected by the s 79 order: see Official Trustee in Bankruptcy v Donovan (1995) 20 Fam LR 802 at 816.
Conclusions
57 Craven provides support for the view, advanced by counsel for the respondents, that the effect of a transfer order under s 79 of the Family Law Act is to vest in the beneficiary of the order an equitable estate in the property interest that is the subject of the order. If that is so, what remains, after the order, in the hands of the person who is bound to effect the transfer is a bare legal interest, the market value of which must be nil. It would follow that a transfer giving effect to such an order could never be void against the trustee of the transferor's bankrupt estate; the market value of the property (nil) would never be greater than the consideration given for the transfer (also nil).
58 This way of looking at the matter is consistent with the view of McLelland CJ in Eq., in Harris v Walker, admittedly in relation to an earlier statutory provision. It may be regarded as inconsistent with the decision of Moore J in Higgins. It will be recalled she saw no problem about granting relief under s 120 or s 121 of the Act, notwithstanding the s 79 order of the Local Court remained in place. However, it was conceded in that case that the transfer was caught by ss 120 and 121; so there was no need for her Honour to consider whether the wife had a defence to the application under s 121(4)(a).
59 A more significant matter is that the view mentioned in para 57 is also inconsistent with the approach of Tamberlin J in this case, in which the application of s 120 or s 121 was in issue. It will be recalled his Honour rejected the argument, advanced by counsel for the present respondents, that the interest taken by his clients had a merely nominal value. He thought it was artificial to "isolate one individual component of the transaction as in itself comprising the transfer", rather than to "look at the overall transaction which has been implemented". He found support for this approach in Silvera v Savic. That case concerned s 37A of the Conveyancing Act 1919 (NSW) which made voidable "every alienation of property … with intent to defraud creditors". At para 78, Hodgson CJ in Eq said:
"In my opinion, the 'alienation' in this case was the whole process of obtaining the Local Court order and the consequent transfer; and it is that whole alienation which is made voidable by s 37A."
60 Hodgson CJ in Eq went on to say: "if one step in that alienation is the fraudulent obtaining of a Local Court order, then s 37A itself purports to give power to set that step aside". However, he held it was not necessary to take that course. He apparently thought it would be open to the Court simply to order a re-transfer, but the report of the case does not indicate whether this was done.
61 I do not wish to cast doubt upon the correctness of the view expressed in Silvera v Savic and subsequent New South Wales cases, but I see difficulty in applying that view to s 121 of the Bankruptcy Act. Section 37A of the Conveyancing Act uses the broad term "alienation", whereas s 121 is concerned with a "transfer of property". This term is not defined by the Act, other than by the statement in s 121(9)(a) (and s 120(7)(a)) that it includes a payment of money. It seems to direct attention to the particular transaction, commonly a document, that changes title to the relevant property. However, it is important to note that the transaction will not necessarily affect the legal title to the property. That is clear from the passage in Mullane, quoted by Needham AJ in Craven, in which Mason ACJ, Wilson, Brennan, Deane and Dawson JJ said s 79 referred to "orders which work an alteration of the legal or equitable interests in the property of the parties". If the effect of a s 79 order requiring a party to a marriage to transfer an interest in real estate to the other party is to cause the designated transferor to become a bare trustee of the relevant legal interest, that is because the order has vested an equitable interest in the proposed transferee.
62 On this analysis, in the present case there were two vesting events; but only the second of them was a "transfer of property by a person who later becomes a bankrupt". The first event took place on 22 June 2000, when the Family Court made orders requiring, amongst other things, Mr Mateo to transfer to his wife all his right, title and interest in the home. The effect of that order was to vest in Mrs Mateo an equitable interest in the one-half legal estate that continued to be held by Mr Mateo, but which, thereafter, had only a nominal market value. The second event was the transfer of the legal estate that was effected by the registration of a transfer document on or about 10 August 2000.
63 In analysing the matter in this way, I do not overlook the fact that, before 22 June 2000, Mr Mateo had signed a document, called "Consent Orders", which provided for the transfer of his interest in the home to his wife. However, whatever contractual force it may immediately have had, the form of the document indicates the parties intended it would affect their interests in the various items of property only when its terms were embodied in orders made by the Family Court.
64 It may be thought that, in a practical sense, my analysis yields a result that does not differ greatly from the result reached by Tamberlin J, in treating the "transfer" as "the whole transaction ranging from the signing of the Consent Orders on 18 April 2000 through to the completion of the transfer of the interest on or about 10 August 2000". Although that may be so, the analysis has the advantage of pointing up the critical importance of the Family Court order. It was that order which transferred the value of Mr Mateo's interest in the home to his wife. It follows that any useful application under s 121 would need to assert that the Family Court order is void against the trustee in the transferor's bankruptcy. However, I do not see how it is possible to conclude that a court order constitutes a "transfer of property by a person who later becomes a bankrupt". Also, any such assertion would raise potential issues under s 121(4), including whether "the consideration that the transferee gave for the transfer was at least as valuable as the market value of the property". How is that matter to be assessed, having regard to the criteria for the making of a s 79 order? Those criteria include non-financial contributions, both to the acquisition, conservation or improvement of property and to the welfare of the parties' family.
65 The problems inherent in such an assessment are illustrated by Tamberlin J's reasons in this case. First, it is not really possible to relate the value of non-financial contributions to the market value of a property interest. Recognising this, Tamberlin J did not attempt to assign a money value to Mrs Mateo's contributions. He simply made a value judgment that the benefits taken by Mrs Mateo under the consent orders were not disproportionate to the contribution she had made to the parties' fortune and family welfare. That may well have been so; but the question under s 121(4)(a) was whether the "consideration" given by Mrs Mateo "for the transfer" (that is, in exchange for the transfer) was as "valuable" (worth as much money) as the property.
66 The second problem is that, the marriage having come to an end, any contributions must lie in the past. Generally speaking, past consideration is no consideration: see The Law of Contract, Cheshire and Fifoot, 4th Australian edition, at para 211; The Law of Contract, Greig and Davis at 81-88. The only significant exception to that rule arises where there is an earlier promise to pay (express or implied). It is difficult to apply that exception to matrimonial contributions, unless, perhaps, there is a valid prenuptial agreement to that effect. There was no evidence of an earlier promise in the present case.
67 It is no answer to these difficulties to argue, as do counsel for the respondents, that the consideration for Mr Mateo's consent to the Family Court orders was Mrs Mateo's consent. In terms of contract law, that may be true. But the issue under s 121(4)(a) is not whether any consideration was given by the transferee for the transfer of property by the (now) bankrupt, but whether that consideration "was at least as valuable as the market value of the property". That brings the Court back to the problems I have mentioned.
68 Tamberlin J's reasoning in relation to the s 121(4)(a) issue (although stated in reference to s 120) was set out in para 32 of his reasons. The paragraph reads like reasons for judgment in a disputed application for an order under s 79 of the Family Law Act; except, importantly, that it did not commence with a determination as to the value of the net assets of Mr Mateo, after deducting his liabilities. As I have said, his Honour made a value judgment that the benefits taken by Mrs Mateo under the consent orders were not disproportionate to the contribution she had made to the parties' fortune and family welfare. That exercise involved his Honour second-guessing the Family Court's judgment about the same matter. Although the orders were made with the consent of both Mr and Mrs Mateo, the Family Court, itself, had to address the issue of their fairness. As already noted, s 79(2) of the Family Law Act instructs the Family Court "not to make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make an order". For the reasons explained by Davies J in Sabri, and adopted by Tamberlin J in Higgins, it was inappropriate for this Court to put itself in the position of second-guessing the Family Court's assessment of what was just and equitable, as between Mr and Mrs Mateo; or even of seeming to do this. It was particularly unfortunate for the Court to do this on a basis (disregard of a party's debts) that would not have found favour in the Family Court.
69 It seems to me the Official Trustee's resort to s 121 of the Act was misconceived. Transfer by this Court to the Family Court of an application under s 120 or s 121 of the Act will have the advantage of avoiding one court being in the position, or apparent position, of second-guessing another. However, there remains the fundamental problem that the critical divesting event is the Family Court's order under s 79 of the Family Law Act, and that event lies outside the reach of s 120 or s 121.
70 Where the Official Receiver desires, effectively, to recover benefits taken by the non-bankrupt spouse under s 79 orders, the appropriate course will ordinarily be for him to make an application under s 79A of the Family Law Act to vary or set aside those orders. For such an application to be successful, it will be necessary for the Official Trustee to satisfy the Family Court that "there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information), the giving of false evidence or other circumstance". However, it would not ordinarily be difficult for the Official Trustee to do this. Having regard to the practice described by Moore J, it seems likely it will be found, on investigation, that there has been a miscarriage of justice by reason (at least) of failure to disclose relevant information, in relation to any s 79 order that provides for the transfer of significant assets by a person who was then insolvent, or facing a serious and well-defined claim.
Disposition
71 It will be apparent that I respectfully disagree with the course taken by Tamberlin J. I do not think it was appropriate to deal with the s 121 application by seeking to put a value on Mrs Mateo's past contributions to the parties' property interests and the welfare of their family. And I see force in the Official Trustee's criticisms of his Honour's treatment of the "obligation" incurred by Mrs Mateo towards the three children of the marriage. The consent orders made in the Family Court required her to pay to them a total sum of $80,000, if the home was sold by the end of 2000, or the greater of that sum and one-third of the net value (in the result probably something like $130,000) if it was sold at a later date. Although s 79(1) permits an order, under that section, to be for the benefit of a child of the marriage, it is not easy to fit the obligation incurred by Mrs Mateo into the notion that the purpose of the consent orders was to make an adjustment of the parties' property interests that fairly reflects Mrs Mateo's contribution to the parties' property interests and the welfare of the family. Mr Mateo was then insolvent and the amount of the obligation undertaken was roughly the same as the assumed value of his interest in the home. Although I accept the finding of Tamberlin J that there was a genuine breakdown of marriage prior to April 2000, there is room for the suspicion that the parties preferred the husband's equity in the home to find its way to the children rather than his creditors. This suspicion may be unfounded, but it warrants investigation. There was no such investigation when the consent orders were made; apparently, the Family Court was not informed of Mr Mateo's insolvency. There was no such investigation before Tamberlin J; because of the approach taken by his Honour, it was not thought relevant to his task. It seems the only way in which such an investigation might take place would be pursuant to an application to the Family Court under s 79A of the Family Law Act.
72 During discussion at the hearing of the appeal, Mr Taylor contended that, if we held Tamberlin J had erred, we ought to set aside his Honour's order dismissing the s 121 application and transfer the matter to the Family Court for determination.
73 For the reasons I have indicated, I am of the opinion that his Honour erred in relation to the application of s 121(4)(a). However, I do not think he ought to have transferred the matter to the Family Court. Nobody asked him to do this. The Official Trustee was prepared to litigate the matter on the basis that the only relevant "transfer of property" was the memorandum of transfer of 10 August 2000, for which Mrs Mateo gave no consideration. It was only after members of this Court pointed out the problems surrounding that approach that counsel raised the matter of transfer to the Family Court.
74 More fundamentally, there seems to be no utility in transferring to the Family Court the claim under s 121 constituted by the Official Trustee's cross-claim. This claim is structured by reference to the benefits taken by Mrs Mateo, and her children, under the consent order made by the Family Court on 22 June 2000. However, as I have suggested, such a claim is misconceived. If the Family Court is to deal, on their merits, with the issues mentioned to us, it will be necessary for it to have, before it, an application by the Official Trustee pursuant to s 79A of the Family Law Act. If that application is successful, it is likely that the Family Court will make new and different orders under s 79 of the Family Law Act, presumably leaving greater assets in Mr Mateo's hands, as between himself and his wife and children, than under the earlier order. Those assets would be property divisible among creditors, by virtue of s 116 of the Bankruptcy Act.
75 In the result, the appropriate order of the Court is that the appeal be dismissed. However, having regard to the fact that my reasons are very different from those of Tamberlin J, and reflect a view of the case more favourable to the Official Trustee than that of his Honour, I would reserve the question of costs.