Section 139ZQ notice evidence for a section 121 claim

The Official Receiver (OR) Notices Team has seen an increase in trustee’s using s 139ZQ notices as an effective tool in the recovery of antecedent transactions. These notices are an effective compliance tool for trustees and often lead to a recovery without costly court applications and legal fees.

For the OR to issue such a notice, the trustee must satisfy the OR that a transfer of property is prima facie void. This includes obtaining evidence based on the facts and circumstances of the transfer. Recently, the OR has seen an increase in the number of applications returned to trustees asking for further evidence. This is particularly so for s 121 claims or transfers made with the intention to defeat creditors. For the OR to issue the notice, the trustee must provide evidence of a void transfer sufficient to allow the exercise of the discretion to issue a notice, and for s 121 in particular, having regard to these elements:

  • the property would probably have become part of the transferor’s bankrupt estate if it had not been transferred.
  • the transferor’s main purpose in making the transfer was to prevent, hinder or delay the transferred property becoming divisible among the transferor’s creditors; and
  • the transfer is not caught by an exemption stated in s 121 including whether the transferor was insolvent at the time of the transfer.

The OR is unlikely to issue a notice in relation to a transfer claimed to be void under s 121 if the trustee cannot provide evidence that the person who was bankrupt was insolvent at the time of the transfer but claims that the transfer was made with the intention to defeat creditors.

Accordingly, the OR will require a detailed analysis and evidence of these points to issue a s 139ZQ notice with a s 121 claim.

For more information about what trustees must establish to issue Official Receiver Notices, please refer to Official Receiver Practice Statement 7 or contact the Official Receiver Notices Team at or.notices [at] afsa.gov.au.