tim mcgrath, partner melanie husband, senior associate 24 july 2014 miller harris in business
TRANSCRIPT
Tim McGrath, Partner Melanie Husband, Senior Associate
24 July 2014
Miller Harris in Business
Looking below the surface: home ownership
Miller Harris in Business
Constructive trusts Resulting trusts Exoneration Equitable accounting Occupation rent Bankruptcy Act
The bankrupt co-owner
Miller Harris in Business
Case study
Miller Harris in Business
Bankrupt
$50,000
Spouse $50,00
0
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Resulting trusts
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Constructive trusts
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Remedial in nature; what is required to do justice between the parties?
Muschinski v Dodds Calverley v Green
1. Joint property except his interest greater because:
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2. Joint property except trust over his undeserved equity
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Here is how the trust worked:
Her $ contribution
His $ contribution His ½ share
property
Her ½ share property
He must account to her for this
He retains this equity
She retains this equity
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Exoneration?
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Farrugia: trustee’s claim
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Item Sum
Sale price $41,000
Less “acquisition” finance ($12,500)
Sub‑total $28,500
Less “business” finance ($10,500)
Net proceeds $18,000
BANKRUPT’S ESTATE $9,000
WIFE’S SHARE $9,000
Mrs Farrugia’s figures
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Item Sum
Sale price $41,000
Less “acquisition” finance ($12,500)
Sub‑total $28,500
Bankrupt’s share $14,250
Less “business” finance ($10,500)
BANKRUPT’S ESTATE $3,750
WIFE’S SHARE $14,250
Shortfall scenario
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Item Sum
Sale price $30,000
Less “acquisition” finance ($12,500)
Sub‑total $17,500
Bankrupt’s share $8,750
Less “business” finance ($8,750)
BANKRUPT’S ESTATE NIL
Wife’s interest $8,750
Less “business” finance ($1,750)
WIFE’S SHARE $7,000
What could possibly go wrong?
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Equitable accounting Occupation rent
Div 4A Bankruptcy Act Elements for a claw back
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Claw back provisions
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Birdseye v Sheahan
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Div 4B Bankruptcy Act
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The Edelsten factor; income diverted from the bankrupt to a third party
What about the PPSA?
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No application to land No application to equitable interests No application to Bankruptcy Act recovery
What does it all mean?
Tim McGrath Partner
Melanie Husband Senior Associate
Miller Harris in Business