Frost v Sheahan [2012] FCAFC 46

A mortgagor, who later became bankrupt, allegedly granted a mortgage over his property to his solicitor, the consideration being the provision of legal work to the bankrupt.

The alleged mortgage was rejected by the trial judge on the basis of the evidence before him and the fact that the bankrupt and his solicitor were found to be unreliable witnesses.

The trial judge found that the mortgages made in favour of the mortgagor’s solicitor were a “sham” and void as they were done to make it difficult for other creditors of the bankrupt to recover from him. The trial judge found an intent to defraud creditors and an absence of good faith. The trial judge also found the mortgage to be a “transfer of property” for the purposes of section 121 of the Bankruptcy Act.

The bankrupt and the solicitor both appealed these findings of fact.

The Court of appeal rejected the appeal noting that a party cannot re-canvass the evidence with a view to persuading an appeal court that different factual findings should have been reached.

The appeal court found no appealable error of law in the trial judge’s findings as they were open on the evidence before him and reinforced by the primary judge’s negative credit assessments of the bankrupt and the solicitor.

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