Sanwick v Bankrupt Estate of Peter Robert Finn [2009] NSWSC 86

Section 120(1) of the Bankruptcy Act provides:

 A transfer of property by a person who later becomes a bankrupt to another person is void against the trustee in bankruptcy if:

  • the transfer took place in the period beginning 5 years before the commencement of the bankruptcy; and 
  • the transferee gave consideration of less value than the market value of the property

In this case Bryson AJ determined that for the purposes of this section the giving of a mortgage constituted a transfer. Thus creditors cannot be defeated by mortgaging property.

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