Camm v Linke Nominees Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Camm v Linke Nominees Pty Ltd [2010] FCA 1148

Citation: Camm v Linke Nominees Pty Ltd [2010] FCA 1148
Parties: THE TRUSTEES OF THE PROPERTY OF GARY STIRLING CAMM v LINKE NOMINEES PTY LTD (ACN 005 860 944)
File number(s): VID 828 of 2009
Judge: TRACEY J
Date of judgment: 25 October 2010
Corrigendum: 2 December 2010
Catchwords: BANKRUPTCY – transfer of property – warehousing arrangements between transferor and transferee – transferee twice bankrupted - whether transfer of property void against the trustee in second bankruptcy - whether trustees may make application to obtain orders with respect to property – rights and liabilities of trustees
Legislation: Bankruptcy Act 1966 (Cth) ss 5, 30, 58, 59, 81, 116, 120, 121, 160
Bankruptcy Legislation Amendment Act 1996 (Cth) Schedule 1, items 208, 457
Land Titles Act 1994 (Qld) ss 60, 62, 158, 159, 166, 167  
Cases cited:

Barry v Heider (1914) 19 CLR 197 referred to
Black v Garnock (2007) 230 CLR 438 cited
Breskvar v Wall (1971) 126 CLR 376 cited
McIntosh v Linke Nominees Pty Ltd [2008] QCA 275 referred to
McIntosh v Linke Nominees Pty Ltd [2008] QSC 79 referred to
Orison Pty Ltd v Strategic Minerals Corporation NL (1987) 77 ALR 141 cited
Peldan v Anderson (2006) 227 CLR 471 applied
Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 cited

Peter Butt, Land Law (6th ed, 2010)

Date of hearing: 11 March 2010
Place: Melbourne
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 49
Counsel for the Applicant: Mr G Bigmore QC & Mr J Ribbanos
Solicitor for the Applicant: Maitland Lawyers
Counsel for the Respondent: Mr W Sofronoff QC & Mr M Amerena
Solicitor for the Respondent: Broadley Rees Hogan Lawyers

FEDERAL COURT OF AUSTRALIA

Camm v Linke Nominees Pty Ltd [2010] FCA 1148

CORRIGENDUM

1.In paragraph [28] in the first line “Linke” should be substituted for “the trustees” where first appearing.

2.Paragraph [39] in the last line after “sale” insert “and”

I certify that the preceding two (2) numbered paragraphs are a true copy of the Corrigendum to the Reasons for Judgment herein of the Honourable Justice Tracey.

Associate:

Dated:  2 December 2010


IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

GENERAL DIVISION

VID 828 of 2009
BETWEEN:

THE TRUSTEES OF THE PROPERTY OF GARY STIRLING CAMM
Applicant
AND:

LINKE NOMINEES PTY LTD (ACN 005 860 944)
Respondent

JUDGE:

TRACEY J

DATE OF ORDER:

25 OCTOBER 2010

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:

1. The further hearing of this proceeding be adjourned to a date to be fixed.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.


IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

GENERAL DIVISION

VID 828 of 2009
BETWEEN:

THE TRUSTEES OF THE PROPERTY OF GARY STIRLING CAMM
Applicant
AND:

LINKE NOMINEES PTY LTD (ACN 005 860 944)
Respondent

JUDGE:

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Details
Case
[2010] FCA 1148
Decision Date

CaseChat Overview and Summary

In the matter of Camm v Linke Nominees Pty Ltd, the primary issue before the court was the validity of a property transfer in the context of bankruptcy law. The dispute centred on whether the transfer of Mr. Camm's property interest in the Noosa property to Linke could be avoided under the relevant provisions of the Bankruptcy Act, specifically section 121, and whether the trustees in Mr. Camm's bankruptcies could challenge the transfer. The court was required to determine if section 121 could be applied to render the transfer void against the trustee in bankruptcy, and if the trustees could make an application to obtain orders with respect to the property. This involved assessing the timing of the transfer relative to Mr. Camm's bankruptcy, the nature of the property involved, and the implications of the warehousing arrangements between Mr. Camm and Linke.

The court considered whether the transfer of Mr. Camm's fee simple interest in the Noosa property to Linke was subject to avoidance under section 121 of the Act. Section 121(1) renders a transfer of property by a person before they become bankrupt void against the trustee in their bankruptcy. The court examined whether the entering into the contract of sale constituted a "transfer of property" under section 121(1), or whether such a transfer only occurred at the time of settlement or lodgement of the transfer instrument. The court concluded that the transfer did not constitute a "transfer of property" for the purposes of section 121(1) because it was not completed until after Mr. Camm had become bankrupt, at which point the legal interest in the property had vested in Mr. Schmierer under section 58(1) of the Act. Consequently, section 121 could not be applied to avoid the transfer as it only became effective post-bankruptcy.

The court further deliberated on the availability of section 121 to the trustees in Mr. Camm's bankruptcies. While section 121 could potentially be invoked to challenge property interests devolving on Mr. Camm after his first bankruptcy, such as benefits from a side agreement or sale for undervalue, these issues were not directly presented in the case. The court noted that any application under section 121 in relation to the Noosa land would likely fail if it remained in its current form, but could potentially be successful if amended to cover post-bankruptcy property interests. The court decided to adjourn the hearing to allow the parties to consider these issues and determine appropriate orders.

The court's final orders were to adjourn the further hearing of the proceeding to a date to be fixed, allowing the parties to consider the court's reasons and the potential for amending any application under section 121 of the Act. This decision highlighted the complexities involved in determining the applicability of bankruptcy provisions to property transfers and the need for careful consideration of the timing and nature of such transfers in relation to the onset of bankruptcy.

Orders

Orders of the court

1. The further hearing of this proceeding be adjourned to a date to be fixed.

Note:

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

For the reasons which I have already explained, I do not consider that s 121 of the Act could be relied on to avoid the transfer of the fee simple interest in the Noosa property to Linke. Furthermore, that interest did not constitute “after-acquired property” within the meaning of s 58 because it was not acquired by Mr Camm on or after the date on which he became bankrupt. He had acquired the interest in 1988. For the same reason his interest did not constitute property comprehended by s 59(1)(a) of the Act. It may be that some of Dutney J’s references to property may include the benefits obtained by Mr Camm under the side agreement. These benefits did not devolve upon him until after his first bankruptcy. That property (if it exists) may well constitute after-acquired property.CONCLUSION Had it been necessary to answer Question (b) I would have answered it by recording that s 121 of the Act applied to Mr Camm’s first bankruptcy in the terms in which it has appeared prior to 16 December 1996 and to his second bankruptcy in the terms in which it applied thereafter. On one view the answer to Question (a) is: yes. There is no obstacle in the Act to the trustees making an application under s 121 of the Act. Whether or not such an application would or could be successful is another matter. While the application remains in its present form an application under s 121 in relation to the Noosa land would, for the reasons which I have given, be bound to fail. Were the application to be amended to cover property interests devolving on Mr Camm, after he first became bankrupt, as a result of the side agreement or sale for under value, s 121 may be available to the trustees depending upon how s 59 is construed. While, however, the property which is the subject of the proceeding is confined to Mr Camm’s interest in the fee simple estate in the land at Noosa, these issues are not raised by Question (a). As a result I have difficulty in crafting an answer that will constitute a meaningful response to the question and be of assistance to the parties. It may be that the parties do not press for an answer having regard to the views I have formed as to the construction and potential application of s 121 of the Act. I will hear the parties as to appropriate orders on a date to be fixed once they have had the opportunity of considering these reasons.

Ratio Decidendi

Legal Principle Established

In reply, senior counsel for the trustees submitted that, if, as the trustees had argued, the relevant transfer occurred at settlement or upon registration, the position of the trustees became “entirely hopeless because there can be no doubt then that the person who transferred the interest in the property could only have been Mr Schmierer.”Consideration The first question to be resolved is whether or not s 121 is available, in the circumstances, to avoid the transfer of Mr Camm’s legal interest in the Noosa property to Linke. If, but only if, the answer to this question is “yes” will it become necessary to consider whether s 121 might be invoked by either or both of Mr Camm’s trustees in his first and second bankruptcies. Section 121(1) would render a relevant “transfer of property” by Mr Camm before he became a bankrupt void against the trustee in his bankruptcy. The former s 121 operated in the same manner. It dealt with “a disposition of property” by a person who “subsequently [became] bankrupt.” The policy underlying antecedent transaction provisions such as s 121 of the Act was considered by the Law Reform Commission in its General Insolvency Inquiry. It explained the policy in these terms (Report number 45, Volume 1, paragraph 629):“Insolvency law has long adopted the policy of avoiding transactions by which an insolvent individual or company disposed of property within a relevant period prior to the actual commencement of the formal insolvency in circumstances that are unfair to the general body of unsecured creditors. This area of insolvency law, is consequently, retrospective in nature. Transactions by which property has been disposed of before the formal insolvency administration commenced may be reviewed. If the circumstances under which the transaction occurred and the effect of the transaction offended the policy of the law the transaction may be avoided (hence, the terminology ‘avoidance of antecedent transactions’).” (Emphasis added).The Commission recommended that “the broad policy evident in the existing legislative framework for dealing with the type of antecedent transactions under consideration should continue.” (at paragraph 630). It was this report that led to the amendment of s 121 in 1996. The contract entered into between Mr Camm and Linke on 26 October 1995 provided for the transfer of Mr Camm’s legal interest in the Noosa property to Linke upon the payment, at settlement, of the balance of the purchase price by Linke. The settlement did not occur until after Mr Camm had become bankrupt. Even then the transfer of his legal interest was not perfected at least until the transfer had been lodged with the Land Registry. Section 121 will have no application unless it can be said that the entering into the contract of sale constituted a “transfer of property” for the purposes of s 121(1). If the “transfer of property” only occurred at the time of settlement or upon the lodgement of the instrument of transfer in the Land Registry, s 121(1) cannot operate because the only person who was legally able to act as transferor in respect of both these transactions was Mr Schmierer in whom the legal interest in the property vested, pursuant to s 58(1) of the Act, on 29 November 2005. This will be so whether “the trustee” referred to in s 121(1) is understood to be Mr Schmierer, as trustee in Mr Camm’s first bankruptcy, or the trustees in his subsequent bankruptcy, or both.