The settlement of a February 2014 sale of a spacious home in tropical St Christians Avenue Port Douglas has presented the unique result of a buyer recouping his forfeited deposit by standing in the place of the seller to defeat the demands of the buyer’s own trustee in bankruptcy.

Herbert Brett-Hall’s $1.39 million purchase allowed a 150 day settlement but not long after signing, he was declared bankrupt.

His trustees disclaimed the contract as “onerous property” in accordance with their entitlement and the Bankruptcy Act.

In response, sellers Joel & Christine Majet promptly notified the receivers that they treated the disclaimer as a repudiation entitling them to terminate the contract and forfeit the $139k deposit.

The trustees contended the deposit should refunded to them as the sale did not proceed. They sued to compel the seller’s solicitor to disgorge the deposit held in his trust account to them as being the party justly entitled to it in place of the buyer himself.

In the meantime the buyer’s family trust signed a new contract to buy the property at the same price on condition the seller subrogate the right to contest the receiver’s deposit claim on terms that it be entitled to the proceeds of the litigation.

Thus the buyer had negotiated a position with the seller to retrieve (via the family trust) is otherwise “lost” deposit.

Such “circuitous arrangement” was not in issue and the trustees did not allegedly transferred to defeat creditors.

Judge James Henry in the Supreme Court at Cairns simply had to decide whether the seller was entitled to exercise its rights pertaining to the deposit in normal fashion regardless of the trustees’ position.

He ruled that having disclaimed the contract, any right to the deposit by reason of non-completion of the contract had been surrendered.

The seller’s termination was valid and it was entitled to retain the deposit – which Mr Brett-Halls family trust could retain regardless of the fact that it had originally been paid by him personally in his capacity as buyer.

An appeal by the bankruptcy trustee was rejected by the Court of Appeal in November 2015.

Majet & Anor v Goggin & Miller as Trustees of the Bankrupt Estate of Brett-Hall & Anor [2015] QSC 038 Henry J 27/02/2015


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