Bendigo & Adelaide Bank Ltd v Capotondi - [2016] SASC 11

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
BENDIGO & ADELAIDE BANK LTD v CAPOTONDI & ANOR
[2016] SASC 11
Reasons of Judge Dart a Master of the Supreme Court
10 February 2016
REAL PROPERTY - TORRENS TITLE - MORTGAGES, CHARGES AND ENCUMBRANCES - POWERS AND REMEDIES OF MORTGAGEE - POSSESSION - GENERALLY
BANKRUPTCY - ADMINISTRATION OF PROPERTY - REALISATION OF PROPERTY - POWERS OF TRUSTEE TO DEAL WITH PROPERTY - GENERALLY
Plaintiff is registered mortgagee - it obtained an order for possession - a warrant of possession was subsequently issued - registered proprietor is a bankrupt - registered proprietor applied to stay execution of warrant of possession - registered proprietor has no standing to make the application - trustee in bankruptcy supports execution of the warrant of possession.
Bankruptcy Act 1966 s 58, s 116; Supreme Court Civil Rules 2006 r 204, referred to.
Cirillo & Anor v City Corp Australia Limited & Ors (2004) 2 ABC(NS) 525; Michael John Fuller and Patrick Joseph Cummings v Beach Petroleum NL and Claremont Petroleum NL (1993) 43 FCR 60; Rogers v Asset Loan Co Pty Ltd & Ors (2006) 4 ABC(NS) 293; W R Henry and Son v Hodge [1963] VR 111, considered.

BENDIGO & ADELAIDE BANK LTD v CAPOTONDI & ANOR
[2016] SASC 11
JUDGE DART:

The first defendant is the registered proprietor of land at 28B Sixth Avenue, Glenelg East. As the registered proprietor, he borrowed monies from the plaintiff and secured the repayment of that loan by the granting of a registered first mortgage. After a default in the repayment of the loan, the plaintiff obtained an order for possession. The first defendant sought an urgent order staying the execution of a warrant of possession obtained by the plaintiff. These reasons deal with my reasons for dismissing the application.
On 15 July 2015 the first defendant became a bankrupt upon the making of a sequestration order in the Federal Circuit Court. That order was made as a consequence of the default judgment obtained against him in the Magistrate's Court by a third party. It is apparent from the affidavit material that the first defendant unsuccessfully applied to set aside the default judgment in the Magistrate's Court. It is also apparent that he applied to the Federal Circuit Court to set aside the bankruptcy notice served on him. That application was dismissed. After the making of the sequestration order he applied to have the order reviewed but, again, his application was dismissed.
The plaintiff instituted these proceedings in October 2015. They joined, in addition to the first defendant, Mr Scott, the trustee of the bankrupt estate of the first defendant. It might be that the joining of the first defendant was unnecessary, but it is not an uncommon practice to join both the registered proprietor and the trustee in bankruptcy.
The effect of the making of a sequestration order is that the property of the bankrupt, relevantly here, the real property, vests in the Bankruptcy Trustee (“the Trustee”). That is,…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2016] SASC 11
Decision Date: 10 February 2016

CaseChat Overview and Summary

The case of Bendigo & Adelaide Bank Ltd v Capotondi involved a dispute between the plaintiff, a registered mortgagee, and the registered proprietor, who was also a bankrupt. The bank had obtained an order for possession of the property in question and subsequently had a warrant of possession issued. The registered proprietor, being bankrupt, applied to stay the execution of the warrant of possession, but the court found that the proprietor had no standing to make such an application. The trustee in bankruptcy, however, supported the execution of the warrant of possession. The legal issues before the court were the rights of a mortgagee to enforce possession against a bankrupt proprietor and the role of the trustee in bankruptcy in realising the property of the bankrupt estate.

The court had to determine whether the registered proprietor, who was also the bankrupt, could validly apply to stay the execution of the warrant of possession issued to the mortgagee. The court considered whether the proprietor, having become bankrupt, had lost the right to challenge the mortgagee’s actions. Additionally, the court examined the extent to which the trustee in bankruptcy could support the mortgagee’s efforts to realise the property for the benefit of creditors. The court found that the bankrupt proprietor had no standing to make the application to stay the execution, as the bankruptcy had transferred the rights and responsibilities over the property to the trustee. The court held that the trustee in bankruptcy, acting in the interests of all creditors, could support the mortgagee’s execution of the warrant of possession.

The court reasoned that the bankruptcy of the registered proprietor effectively divested the proprietor of any right to challenge the mortgagee’s actions, including the execution of a warrant of possession. The trustee in bankruptcy, as the legal representative of the bankrupt estate, had the authority to deal with the property in a manner that maximised the realisation of assets for the benefit of all creditors. The court concluded that the trustee’s support for the mortgagee’s actions was consistent with the statutory duties of the trustee under the Bankruptcy Act. Consequently, the application by the bankrupt proprietor to stay the execution was dismissed. The court upheld the mortgagee’s right to enforce the possession order and recognised the trustee’s role in facilitating the realisation of the property for the benefit of creditors.

Orders