Boutros v Lombe
[2011] FMCA 295
•19 April 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BOUTROS & ORS v LOMBE & ANOR | [2011] FMCA 295 |
| BANKRUPTCY – Property – application to restrain sale of property by mortgagee – where property subject to a caveat by the trustees – whether an order may be made to prevent the lifting of the caveat. |
| Bankruptcy Act1966, s.58 Real Property Act 1900 (NSW), ss.74F, 74H |
| Applicants: | CHALITA BOUTROS ANTOINETTE BOUTROS |
| Respondents: | DAVID JOHN FRANK LOMBE AND ELIZABETH ANN FLEMING AS TRUSTEES OF THE BANKRUPT ESTATE OF CHALITA BOUTROS AND ANTOINETTE BOUTROS |
| File Number: | SYG 635 of 2011 |
| Judgment of: | Raphael FM |
| Hearing date: | 19 April 2011 |
| Date of Last Submission: | 19 April 2011 |
| Delivered at: | Sydney |
| Delivered on: | 19 April 2011 |
REPRESENTATION
| For the Applicant: | In person |
| Counsel for the Respondent: | Mr Eardley |
| Solicitors for the Respondent: | Tresscox Lawyers |
ORDERS
Application dismissed.
Applicant to pay the Respondent’s costs assessed in the sum of $1,000.00.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 635 of 2011
| CHALITA BOUTROS ANTOINETTE BOUTROS |
Applicants
And
| DAVID JOHN FRANK LOMBE AND ELIZABETH ANN FLEMING AS TRUSTEES OF |
Respondents
REASONS FOR JUDGMENT
There comes before me urgently an application by Mr Chalita Boutros on behalf of himself and his wife, Antoinette Boutros, who are bankrupts. Mr and Mrs Boutros owned some land at 70–80 Cosgrove Road, Strathfield, that consists of a number of lots in a deposited plan.
So far as I can understand from the papers which Mr Boutros provided to the Registrar before this matter came before me, he claims that his trustee has placed a caveat over the land, which is in the process of being sold by its mortgagee. He wishes to restrain the sale because he says the land is being sold at a serious undervalue. He produces by way of evidence of this a valuation dated February 2010, although he tells me he has a more up-to-date valuation which confirms the figures shown in that original document. He tells me that the land is worth, with planning approval that he says he has, about $2 million and that is confirmed by the valuation. He tells me that the land is being sold by the mortgagee, for a figure of approximately $1.3 million. It would appear from that statement that there may well be some argument that the land is being sold at undervalue, particularly, if it is established, as Mr Boutros says, that the land is being sold without going to auction and without any substantive advertising to a creditor (other than the petitioning creditor) of Mr Boutros’ who has filed a claim in the estate.
Mr Boutros understands that he cannot raise a complaint in this Court as to the actions of the mortgagee. That is for another place. But, he says, the Court should restrain the trustees from being party to the actions of the mortgagee, by requiring them not to permit the lifting of the caveat.
None of the allegations made by Mr Boutros have been tested, but if they were found to have substance, then Mr Boutros may well have a claim against the mortgagee, and if the trustees have been in some way, complicit with the actions of the mortgagee, then there will possibly be some relief available from them. Mr Boutros tells me that he has been trying for some time to obtain an annulment of his bankruptcy on the basis of an agreed payment and that each time he approaches the trustees the amount required goes up. There is a letter included in the papers that he has supplied to me from Deloitte’s, for whom the trustees work, indicating that over a short period of time the trustees have become aware of considerably more unsecured creditors than those originally anticipated. I should point out that Mr Boutros refers to the trustee as “her”. This is because one of the joint trustees is
Ms Fleming, the other being Mr David J.F. Lombe.
Before me today, Mr Maloney appeared on behalf of the trustees. He has had very little time to deal with this application. The urgency comes from the fact that completion of the sale is due tomorrow. He has, however, had enough time to point the Court in the direction of s.74H of the Real Property Act 1900 (NSW) which says, in relation to caveats lodged under s.74F, which this one is, at s.74H(5):
Except in so far as it otherwise specifies, a caveat lodged under section 74F to protect a particular legal or equitable estate or interest in land, or a particular right arising out of a restrictive covenant, does not prohibit the Registrar-General from recording in the Register with respect to the same land:
(g)in relation to a mortgage, charge, or covenant charge recorded or lodged in registrable form before the lodgment of the caveat-a dealing effected by the mortgagee, chargee or covenant chargee in the exercise of a power of sale or other power or a right conferred by the mortgage, charge or covenant charge or by or under law;
The situation in this particular case is that the caveat has been lodged by the trustees to protect their interests as persons who are entitled to a vesting of the property in them, pursuant to s.58 Bankruptcy Act 1966 (the “Act”). However, any vesting in them is a vesting subject to prior charges of which this mortgage would appear to be one. If the mortgagee has a right to exercise a power of sale against the original owners of the land, Mr and Mrs Boutros, then it has the same rights against the trustees. There is really nothing the trustee can do to prevent the sale by the mortgagee and there is nothing this Court can do to require the trustees to act in a way that would be ineffectual because of the provisions of Real Property Act.
In all these circumstances I am obliged to dismiss Mr Boutros’s application. He is well aware of his rights against the mortgagee and possibly against the trustees and, no doubt, will make every effort to exercise those rights in the event his bankruptcy is annulled or following his discharge.
The applicant having been unsuccessful, it is only appropriate that I should order that he pay the respondent’s costs of the application which I would be prepared to assess in the sum of $1,000.
I certify that the preceding eight (8) paragraphs are a true copy of the reasons for judgment of Raphael FM
Associate:
Date: 2 May 2011
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