Brien v Grapsas

Case [2004] FMCA 212

FEDERAL MAGISTRATES COURT OF AUSTRALIA

BRIEN v GRAPSAS & ORS [2004] FMCA 212
BANKRUPTCY – Property of bankrupt – whether vests in trustee- whether after trustee declared bankrupt property vests in Official Trustee – fiduciary duty – whether separate trust – whether indemnity as property of bankrupt which vests in trustee – whether right to claim indemnity and proceeds of property divisible amongst creditors.

Bankruptcy Act 1966, ss.27, 27(1), 43(1), 73, 74(5), 109(10), 116(1)(a), 116(2)(a), 156A

Transfer of Land Act 1958 (Vic), s.51
Property Law Act 1958 (Vic), ss.3, 221

Turner v Official Trustee in Bankruptcy [1999] FCA 1817 (23 December 1999)

Hospital Products v United States Surgical Corporation & Ors (1984) 55 ALR 417

Re Densham (1975) 1 WLR 1519
Re Sharpe (1980) 1 WLR 219
Morgan v Swansea Urban Sanitary Authority (1878) 9 ChD 582
Cummings v Claremont Petroleum NL (1996) 185 CLR 124
Fuller v Beach Petroleum NL (1993) 117 ALR 235
Re Silverstein (1998) 322 FCA (13 March 1998)
Barclays Bank Ltd v Quist Close Investments Ltd (1970) AC 567
Re Hudson Ex parte Australia & New Zealand Banking Group Ltd & Anor v Bird (1994) 50 FCR 281

Carvalho v Byrne 4 Barnes & Adolphus 382 at 393

Jennings v Mather (1902) 1 KB 1
St Thomas’ Hospital v Richardson (1910) 1 KB 271
Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360
Re Matheson; Ex parte Worrell (1994) 49 FCR 454, 121 ALR 605
Tattersalls Hotel Penrith Pty Ltd v Permanent Trustee Co of NSW Ltd (1942) 42 SR (NSW) 104
Sands & McDougall Wholesale Pty Ltd (In liq) v Commissioner of Taxation (1999) 2 VR 489

Applicant: RICHARD BRIEN (A BANKRUPT) (FORMERLY TRUSTEE OF THE ESTATE OF PETER GRAPSAS)
Respondents: PETER GRAPSAS, CATHERINA JOHANNA GRAPSAS and THE OFFICIAL TRUSTEE IN BANKRUPTCY FOR THE BANKRUPTCY DISTRICT OF NEW SOUTH WALES
File No: MZ 293 of 2002
Delivered on: 8 April 2004
Delivered at: Melbourne
Hearing Date: 27 November 2003
Judgment of: McInnis FM

REPRESENTATION

Counsel for the Applicant: Mr S O’Meara
Solicitors for the Applicant: Deacons
Counsel for the First and Second Respondents: Mr G Nash
Solicitors for the First and Second Respondents: Irlicht & Broberg
Counsel for the Third Respondent: Mr P Fary
Solicitors for the Third Respondent: Gadens Lawyers

ORDERS

  1. That the property described in Certificate of Title Volume 8423 Folio 791 being the property situate at and known as 12 Montpellier Drive Highton (property) has been and is vested in the Applicant to secure his remuneration and legal costs with respect to the administration of the bankrupt estate of Peter Grapsas.

  2. That the Applicant’s interest in the property is held on trust by the Applicant for Victoria Legal Aid pursuant to the terms of a deed of indemnity dated 10 April 1995, and accordingly the property does not form part of the Applicant’s divisible property for the purposes of the Bankruptcy Act 1966.

  3. That at all material times, both pursuant to orders of the County Court of…

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Brien v Grapsas [2004] FMCA 212
Case
[2004] FMCA 212
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CaseChat Overview and Summary

Brien v Grapsas involved a dispute over the ownership and control of a property situated at 12 Montpellier Drive, Highton. The case was heard in the County Court of Victoria, where the primary issue was the vesting of the property in the applicant, as the administrator of the bankrupt estate of Peter Grapsas, to secure remuneration and legal costs. Further issues included the applicant's interest in the property being held on trust for Victoria Legal Aid, the entitlement to deal with and sell the property, and the respondents' obligation to account for and pay rents and profits to the applicant.

The court examined the legal framework governing the administration of bankrupt estates, including relevant sections of the Bankruptcy Act 1966, and orders made by the County Court of Victoria. The applicant, as the administrator of the bankrupt estate, argued that they were entitled to vest the property to secure remuneration and costs. The court considered the deed of indemnity dated 10 April 1995 and orders from the County Court of Victoria, which supported the applicant's entitlement. The court also noted the respondents' obligations under the composition made pursuant to s.73 of the Bankruptcy Act 1966. After reviewing the evidence and arguments, the court determined that the applicant was entitled to vest the property and to sell it.

The court issued orders vesting the property in the applicant to secure remuneration and legal costs, with the applicant holding the interest on trust for Victoria Legal Aid. The court also ordered that the applicant was entitled to deal with and sell the property and that the respondents must account for and pay rents and profits to the applicant. The matter was adjourned for further hearing, with mediation to be conducted by a registrar of the court. The court reserved the issue of costs and granted liberty to apply for any matters arising out of these orders. The applicant indicated that they would not oppose any extension of time for leave to appeal made after 21 May 2004 in respect of certain orders.

Orders

Orders of the court

1.

That the property described in Certificate of Title Volume 8423 Folio 791 being the property situate at and known as 12 Montpellier Drive Highton (property) has been and is vested in the Applicant to secure his remuneration and legal costs with respect to the administration of the bankrupt estate of Peter Grapsas.

2.

That the Applicant’s interest in the property is held on trust by the Applicant for Victoria Legal Aid pursuant to the terms of a deed of indemnity dated 10 April 1995, and accordingly the property does not form part of the Applicant’s divisible property for the purposes of the Bankruptcy Act 1966.

3.

That at all material times, both pursuant to orders of the County Court of Victoria and the terms of Peter Grapsas’ composition pursuant to s.73 of the Bankruptcy Act 1966, the Applicant has been entitled to deal with and to effect a sale of the property.

IT IS ORDERED THAT:

4.

The Applicant have possession of the property.

5.

The First and Second Respondents account to the Applicant for all rents and profits earned by them in relation to the property since

16 November 1999 and that such account be provided to the Applicant by 14 May 2004.

6.

The First and Second Respondents pay to the Applicant’s solicitors all rents and profits earned by them in relation to the property since 16 November 1999 and up to and including 21 May 2004, which sum of rents and profits is to be held on trust subject to further order of the Court.

7.

The sum of $1861.95 held in Westpac Banking Corporation Account no. 033 000 38 1806 be retained in that account until further order.

8.

The Applicant shall file and serve any further affidavit material upon which he seeks to rely by 30 April 2004.

9.

The Respondents shall file and serve any further affidavit material upon which they seek to rely by 14 May 2004.

10.

The matter be otherwise adjourned for hearing on 21 May 2004 at

10 a.m.

11.

The proceedings shall be the subject of mediation on or before 19 May 2004 with the mediation to be conducted by a registrar of the court appointed by the registrar of the court as mediator.

12.

That orders 4 and 6 hereof be stayed pending further order of the court.

13.

The issue of costs, including the costs of this day, is reserved.

14.

Liberty to apply is granted to the parties in relation to any matters arising out of these orders.

THE COURT NOTES:

The Applicant has indicated today by its Counsel that he will not oppose any extension of time for leave to appeal made after 21 May 2004 in respect of Orders 1, 2 and 3 made today.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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