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A trustee’s interest in a bankrupt’s interest in trust property – Boensch v Pascoe

A seven member bench of the High Court was convened for the hearing in Boensch v Pascoe on 11 October 2019.

It is an appeal from a Full Federal Court decision to the effect that a trustee in bankruptcy had a right to lodge a caveat over real property of the bankrupt held by him under a family trust. The property had vested under s 58(2) of the Bankruptcy Act subject to the family trust. The Court dismissed the former bankrupt’s claim for damages.  See my earlier comments.

Before the High Court, the central issue was the nature of the bankruptcy trustee’s interest, confirmed, for some, by the High Court’s recent decision in Carter Holt Harvey, shown in this brief extract:

“NETTLE J: Mr Bevan, do you take issue with what the Court held in Carter Holt that a property, even if held by the bankrupt on trust for another, will vest in his trustee and bankruptcy unless there be not the merest possibility of a beneficial interest in the trust – in the bankrupt?

MR BEVAN: We do, that is coming from paragraph [94] of Carter, your Honour?

NETTLE J: Wherever it was, that was the thrust of the message.

MR BEVAN: We do, … “

See Franz Boensch as trustee of the Boench Trust v Pascoe [2019] HCATrans 198.

The High Court’s decision is reserved.

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