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Property – bankrupt appellant lacked sufficient interest to prosecute appeal

In Glover & Webster [2021] FedCFamC1A 69 (19 November 2021), the Full Court (Strickland, Ainslie-Wallace and Aldridge JJ) heard an appeal from a decision of Baumann J relating to a binding financial agreement (BFA).

The court declared the BFA as binding and that it covered all assets of the parties. The de facto wife appealed, but was then made bankrupt.

The trustee in bankruptcy advised that pursuant to s60(2) of the Bankruptcy Act 1966 (the Act), he would not prosecute the appeal but that he did not oppose or consent to the appellant continuing the action.

The court said (from [30]):

“Fundamental to the bankrupt being relieved of both his property for the benefit of his creditors is that the bankrupt has no financial interest in an appeal such that he may continue it in his own name after being made bankrupt.

(…)

[33] This concept has been applied in the family law context. Whilst a bankrupt party can commence property settlement proceedings, in Guirguis & Guirguis [1997] FamCA 6 … the Full Court accepted that a bankrupt party cannot appeal property orders where the subject of the orders vests or will vest in the trustee in bankruptcy, because the bankrupt lacks sufficient interest.

(…)

[38] If the appeal from the declaration in this matter was successful, and the declaration set aside, then there would either be the re-exercise of the discretion, or a rehearing of the question of whether there was property not covered by the BFA, and if there was, then the … appellant could pursue an application pursuant to s90SM of the (Family Law) Act seeking an entitlement to some or all of that property. However, as an undischarged bankrupt, any property that she thereby became entitled to would then vest in her trustee in bankruptcy as after-acquired property pursuant to s58(1)(b) of the (Act).

[39] It follows … that the appellant does not have sufficient interest in the order the subject of the appeal to give her standing to prosecute the appeal. As the trustee does not wish to pursue it, the appeal must be dismissed.”

Craig Nicol and Keleigh Robinson are co-editors of The Family Law Book. Both are accredited specialists in family law (Queensland and Victoria, respectively). The Family Law Book is a one-volume loose-leaf and online family law service (thefamilylawbook.com.au).

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