Cant (Trustee) v Baker

[2016] FCCA 2239

FEDERAL CIRCUIT COURT OF AUSTRALIA

CANT (TRUSTEE) v BAKER & ANOR [2016] FCCA 2239

Catchwords:
BANKRUPTCY – Application by Trustee in bankruptcy for real property to be sold – property vested in the Applicant – proceedings undefended by First Respondent – Court orders sale of real property and consequential orders.

Legislation:

Civil Dispute Resolution Act 2011 (Cth), s.6

Bankruptcy Act 1966 (Cth), ss. 30, 54, 58, 77(1), 152

Federal Circuit Court Rules 2001 (Cth), r.4.09
Property Law Act 1958 (Vic), ss. 225, 228, 231, 232

Applicant: ANTHONY ROBERT CANT (AS TRUSTEE OF THE BANKRUPT ESTATE OF KERRY BAKER ALSO KNOWN AS KERRY YVONNE BAKER)

First Respondent: ROYCE DAVID BAKER

Second Respondent: KERRY BAKER (ALSO KNOWN AS KERRY YVONNE BAKER)

File Number: MLG 722 of 2016

Judgment of: Judge Hartnett

Hearing date: 1 August 2016

Delivered at: Melbourne

Delivered on: 1 August 2016

REPRESENTATION

Counsel for the Applicant: Mr Brodie

Solicitors for the Applicant: White Cleland Pty Ltd

The First Respondent:	No appearance
The Second Respondent:	In Person (by telephone)

THE COURT DECLARES THAT:

The Applicant, in his capacity as Trustee of the Bankrupt Estate of the Second Respondent, and the First Respondent are declared to be the beneficial owners in equal shares of the whole of that piece of property situated at 91 Tucketts Road, Betley Victoria 3472 and described in Certificate of Title Volume 10746 Folio 382 (“the Property”).

THE COURT ORDERS THAT:

1. Pursuant to sections 225 and 228 of the Property Law Act 1958 (Vic), the Property be sold free from such of the encumbrancers as shall consent to the sale and subject to the encumbrances of such of them as shall not consent.

2. The Applicant have the sole conduct and control of the sale of the Property and be authorised to instruct an agent and/or auctioneer and conveyancer for that purpose, and to do all things necessary to give effect to the sale.

3. The Applicant is to decide whether the Property is to be sold by public auction or by private treaty. The Applicant is to decide whether or not to set a reserve price for any auction of the Property and, if set, at what price.

4. The Applicant be empowered to sign any contract of sale, discharge of mortgage authority, Transfer of Land and any other documents on behalf of the First and Second Respondents as necessary to give effect to the sale.

5. The First and Second Respondents do all things as may be required by the Applicant, his selling agent or his solicitors for the purpose of facilitating a sale of the Property including providing access to buildings on the Property for the purposes of valuation and inspection by potential purchasers.

6. The First and Second Respondents are required to deliver vacant possession of the Property to the Applicant, and deliver all keys to the Property to the Applicant’s solicitors, by 5 September 2016.

7. In the event that the First and Second Respondents fail to deliver vacant possession of the Property to the Applicant by 5 September 2016, a warrant of possession in respect of the Property shall issue in favour of the Applicant upon the Applicant filing an affidavit sworn by the Applicant's solicitor to the effect that vacant possession of the Property was not delivered to the Applicant by 5 September 2016.

8. The First and Second Respondents must remove from the Property all vehicles, chattels and personal belongings which have not vested in the Applicant as the Trustee of the Second Respondent’s Bankrupt Estate (“the personal property”) by 5 September 2016.

9. In the event that the First and Second Respondents fail to comply with order 8 above, the Applicant is empowered to remove and dispose of any personal property remaining on the Property as he sees fit.

10. The net proceeds of sale of the Property, after payment of what shall be due to any encumbrancer or encumbrances according to their priorities and of all other costs, charges and expenses of the sale, be paid to the Applicant and the First Respondent in equal shares subject to any costs order to be met out of the First Respondent's share.

11. The Respondents are to deliver the original Duplicate Certificate of Title for the Property to the Applicant's solicitors by 5 September 2016, failing which the Registrar of Titles is directed to cancel the Duplicate Certificate of Title and issue a replacement Duplicate Certificate of Title to the Applicant at the Applicant's request.

12. The Respondents pay the Applicant's costs of this proceeding to be taxed in the absence of agreement. In respect of the First Respondent, this sum may be paid out of the First Respondent's share of the proceeds of sale of the Property, and in respect of the Second Respondent, this sum is to be paid as a cost of the bankrupt estate.

13. The Applicant is to serve a copy of this Order on the Respondents by posting the same by ordinary pre-paid post to the Respondents at 91 Tucketts Road, Betley Victoria 3472.

14. The Applicant has liberty to apply on short notice.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLG 722 of 2016

ANTHONY ROBERT CANT

Applicant

And

ROYCE DAVID BAKER

First Respondent

KERRY BAKER

Second Respondent

REASONS FOR JUDGMENT

(Edited Ex Tempore Reasons)

1. Before the Court is an application filed on 8 April 2016, made pursuant to ss.30, 58 and 77(1) of the Bankruptcy Act 1966 (Cth) (‘the Act’) and ss.225, 228, 231 and 232 of the Property Law Act 1958 (Vic). The grounds of the application were stated in the affidavit evidence in support of the application in an affidavit sworn by Mr Anthony Robert Cant on 8 April 2016. The orders which the Court makes this day on an undefended basis are, essentially, those sought in the application served upon the First and Second Respondents.

History of the matter

1. There is filed an Applicant’s genuine steps statement pursuant to r.4.09 of the Federal Circuit Court Rules 2001 (Cth), the genuine steps statement being required by s.6 of the Civil Dispute Resolution Act 2011 (Cth). The steps taken by the Applicant to try and resolve the issues in dispute between the parties included the Applicant and his Solicitors having contacted the Respondents on numerous occasions between September 2014 and November 2015 asking them to present a proposal to deal with the Applicant’s interest in the real property known as and situated at 91 Tucketts Road, Betley in the State of Victoria (‘the property’).

2. No proposal has ever been received by the Applicant from the Respondents in respect of the Respondents dealing with the Applicant’s interest in the property. The Applicant noted that he was obliged to realise his interest in the property for the benefit of unsecured creditors pursuant to the provisions of the Act.

3. The matter first came before the Court on 4 May 2016.  The Court was satisfied on that date that the application and affidavit in support of the application sworn by Mr Cant together with the Applicant’s genuine steps statement dated 8 April 2016 had been served upon the Second Respondent by personal service to the Second Respondent at 91 Tucketts Road, Betley in the State of Victoria on 15 April 2016. On that date, personal service was unable to be effected upon the First Respondent, Mr Royce David Baker, as deposed to by Mr Jolley in his affidavit sworn 25 April 2016.

4. Paragraph 4 of that affidavit is as follows:-

   “Immediately after effecting service, I asked Mrs Baker whether the First Respondent, Royce David Baker (“Mr Baker”) was present at 91 Tucketts Road, Betley. Mrs Baker said that Mr Baker no longer resides at the given address, and that he is unwell and now resides in a medical institute in Melbourne. I asked Mrs Baker for Mr Baker’s new address, however Mrs Baker refused to tell me Mr Baker’s current address.”

5. On 4 May 2016, orders were made by the Court in the absence of the Respondents such that the application was adjourned for a further directions hearing on 20 June 2016 at 10 am. 

6. Thereafter, an affidavit was filed in the proceedings on 17 June 2016 and sworn 17 June 2016 by Mr Gareth Vaughan Brodie as to attempts to serve the First Respondent, Mr Royce David Baker, with the application filed 8 April 2016 and the affidavit of Anthony Robert Cant sworn 8 April 2016 together with its annexures. 

7. Mr Brodie, Solicitor for the Applicant, on 20 April 2016 engaged an inquiry agent, Steve Wallis and Associates, to attempt to locate the First Respondent. On that same date Mr Brodie, Solicitor for the Applicant, sent a letter to the Second Respondent requiring her to provide contact details for the First Respondent pursuant to s.152 of the Act. No response was received to that correspondence.

8. Also relied upon by the Applicant in the proceedings is an affidavit sworn by Patricia Joyce Wheeldon, a licensed private inquiry agent who received instructions from the Applicant’s solicitors on 21 April 2016 to conduct inquiries to locate the First Respondent, Mr Baker.  That affidavit sets out the inquiries undertaken by Ms Wheeldon.  Such inquiries were extensive as set out in that affidavit.  Mr Brodie, in his affidavit of 17 June 2016 refers to paragraph 36 of Ms Wheeldon’s affidavit which is as follows:- 

   36.  I then rang Bruck Textiles Wangaratta on 03 5723 1100 and asked to speak to Carmen Bleakley, however the male answering advised that Carmen Bleakley is in the “Finishing” section of that business, and Ms Bleakley was not in at the time of our call.  Telephone database searches showed CM Bleakley in the Wangaratta area on mobile number 0412 084 887. On 31 May 2016 a 1.02pm I rang 0412 084 887 and spoke directly to Carmen Bleakley.  We had the following conversation: 

   I said:  “Hello, it’s Pat Wheeldon here am I speaking to Carmen Bleakley?”

   The female responded:  “Yes, how can I help you?” 

   I said: “I’m sorry to disturb you, but I’m hoping you can help me. I’m actually trying to get in touch with Royce Baker, and I believed he and Kerry Baker were still residing at 91 Tucketts Road, Betley, but I’ve been told Royce may not be well and was possibly in hospital.  I was unsure as to whether he’s still at the Tucketts Road address?” 

   Ms Bleakley laughed and said: “Yes, he’s still living at that address, but he’s fine. As a matter of fact, I spoke to him less than two hours ago.” 

   I noted that Ms Bleakley seemed perplexed at my statement that Royce Baker was possibly ill. I thanked Ms Bleakley for her assistance and terminated the call.” 

9. As a consequence of the above information and on 31 May 2016, Mr Brodie, as Solicitor for the Applicant, instructed process servers Steve Wallis and Associates to attempt to serve the relevant court documents on the First Respondent at the property. 

10. The affidavit of service of Mr Ben Jolley, licensed process server, filed in the proceedings on 17 June 2016 and sworn 17 June 2016 provides evidence as to Mr Jolley’s attempts to effect service upon the First Respondent as set out in paragraph 5 of that affidavit.  That paragraph is as follows:- 

    “How were they served on the person?

    I effected service at 10.25 am by attaching the documents to the front gate of the property located at 91 TUCKETTS ROAD, BETLEY in a sealed envelope marked private and confidential and addressed to the defendant. 

    I initially attended 91 TUCKETTS ROAD, BETLEY at 9.45am to attempt service on Royce David Baker.

    I spoke with a female at the front door who identified herself as Kerry Baker, the wife of Royce.

    I asked the female “Does Royce David Baker reside at this address and is he available to speak with as I have an important document to give him?” 

    Kerry said “Royce no longer resides at this property as he suffers a serious medical condition and now resides in a medical institution in Melbourne.” 

    Kerry then said “I will not speak with you anymore and you now need to leave.” 

    Kerry then escorted me from the property.

    I then attended at 61 TUCKETTS ROAD, BETLEY and spoke with a male who identified himself as Wayne.

    I asked the male “Does Royce David Baker still reside next-door at 91 TUCKETTS ROAD, BETLEY, as I need to speak with him regarding an urgent matter?”

    Wayne said “Royce David Baker does still reside at 91 TUCKETTS ROAD, BETLEY as I only saw him the previous evening in the front yard.”

    Wayne also said “To the best of my knowledge, Royce is not ill and I see him on a regular basis at the address from my property.”

    I verily believe that any documents left at 91 TUCKETTS ROAD, BETLEY will be delivered to Royce David Baker.” 

11. On 9 June 2016, the Applicant’s Solicitor sent a letter to the First Respondent by ordinary post to the property address stating that:-

    a)the directions hearing on 4 May 2016 had been adjourned to 20 June 2016;

    b)Mr Brodie considered the delivery of the documents to the address and attaching them to the front gate was sufficient to bring the documents to his attention; and

    c)Mr Brodie intended to attend the directions hearing on 20 June 2016 and seek orders that service of the documents be deemed to have been effected on him along with orders for the future conduct of the proceeding, including orders that the proceeding be listed for final hearing as an unopposed matter. 

12. Also on 9 June 2016, Mr Brodie, the Applicant’s Solicitor, sent a letter to the Second Respondent by email and by ordinary post to the property address stating that:-

    a)the directions hearing on 4 May 2016 had been adjourned to 20 June 2016;  and

    b)the Solicitor for the Applicant intended to attend the directions hearing on 20 June 2016 and seek orders for the future conduct of the proceeding, including orders that the proceeding be listed for final hearing as an unopposed matter.

13. The Applicant’s Solicitor received no response to his communications to the First and Second Respondents of 9 June 2016. 

14. The matter then proceeded before the Court on 20 June 2016.  Again there was no appearance by or on behalf of the First and Second Respondent.  Orders were made that day, which I include herein for completeness sake which are as follows:-

    “1. Personal service of the application issued 8 April 2016 on the First Respondent be dispensed with pursuant to r.6.14 of the Federal Circuit Court Rules 2001 (Cth).

    2. The Applicant is to serve the following documents on the First Respondent:-

    (a) A copy of the application issued 8 April 2016;

    (b) A copy of the affidavit of Anthony Robert Cant sworn 8 April 2016 including exhibits “ARC-01” – “ARC-09”;

    (c) A copy of the Applicant’s Genuine Steps Statement dated 8 April 2016; and

    (d) A copy of this Order;

    (collectively, “the Documents”)

    3. Provided that the Applicant complies with Order 2 hereof by 24 June 2016, service of the Documents be deemed to have been effected on the First Respondent on 4 July 2016.

    4. The Applicants are to serve a copy of this order on the Second Respondent by posting it by ordinary pre-paid post to her at 91 Tucketts Road, Betley VIC 3472 by 24 June 2016.

    5. If the Respondents intend to oppose the application, the Respondents are to file and serve a notice of address for service by 18 July 2016.

    6. The application issued 8 April 2016 be adjourned for a further directions hearing on 1 August 2016 at 10:00am.

    7. In the event the Respondents fail to comply with Order 5, the directions hearing on 1 August 2016 shall proceed as a final hearing as an unopposed matter, on an estimate of 15 minutes.

    8. The Applicant’s costs be reserved.

    9. There be liberty to apply.”

15. The Respondents have failed to comply with order 5 of the orders made on 20 June 2016.  Order 7 is clear in its terms and provides for the proceeding this day to proceed as a final hearing unopposed.  Prior to Court commencing at 10:00am this morning Ms Kerry Baker contacted the Court to advise that she could not attend the directions hearing but requested that she appear by telephone. Her mobile number was provided. The Court duly contacted Ms Baker, the Second Respondent, on her mobile telephone number so that she could participate in the proceedings this day.

16. The Second Respondent confirmed that she had not filed a notice of address for service in accordance with the earlier orders of the Court.  She confirmed that there was mail awaiting the First Respondent at her property but claimed that the First Respondent had not collected it and was not present on the property.  Further, Ms Baker indicated that if the property was to be placed on the market for sale it would be necessary for persons to remove both she and the First Respondent from the property as they had nowhere else to go.

17. In respect of the Applicant’s compliance with the orders made 20 June 2016 (as to service) the Applicant has filed an affidavit of service sworn on 26 July 2016 by Ms Alexandra Margaret Taylor attesting to service, in accordance with the orders of 20 June 2016, by ordinary prepaid post mailed on 21 June 2016. I accept that evidence. I note Ms Baker continues to assert that Royce David Baker does not reside at the premises. Ms Baker confirmed the evidence as set out in the affidavit of Mr Jolley deposing to his attaching the court documents to the property at an earlier point in time.

The application

1. The evidence supporting the application, which is unchallenged by the Respondents, is that contained in the affidavit of Mr Cant.  The evidence is as set out in the following paragraphs.

2. On 12 July 2012, the Court made a sequestration order against the estate of the Second Respondent, and Mr Cant was appointed the Trustee of her bankrupt estate. 

3. At the date of the sequestration order, the First Respondent, Mr Royce David Baker, and the bankrupt were registered as joint proprietors of land at 91 Tucketts Road, Betley in the State of Victoria, being the whole of the land contained in Certificate of Title, Volume 10746 Folio 382.  The property is a residential property in which Ms Kerry Baker confirms she lives. 

4. On 12 July 2012, pursuant to s.58 of the Act, the bankrupt’s share of the property vested in Mr Cant as her Trustee in bankruptcy. On 21 December 2012, the Trustee provided a report to the creditor of the bankrupt estate. The Trustee noted that the bankrupt had not lodged her statement of affairs pursuant to s.54 of the Act.

5. In respect of the property, the investigations of the Trustee revealed that the Respondents were joint registered proprietors of the property and that there was no mortgage owing on the property.  At that time the Trustee had obtained a kerbside appraisal from Maryborough First National which indicated that the property would achieve a sale price of between $230,000 and $250,000. 

6. On 7 February 2016, the bankrupt was discharged from bankruptcy.  Mr Cant’s interest in the property remains vested in him as Trustee of the bankrupt estate following the discharge from bankruptcy. 

7. Between July 2012 and September 2014, Mr Cant conducted various investigations into the bankrupt’s financial affairs. Based on those investigations the Trustee discovered only one unsecured creditor claim, being the petitioning creditor who had claimed a debt of $19,300 plus interest and petitioning creditor costs.  The petitioning creditor was Baycorp Collections PDL (Australia) Pty Ltd (‘Baycorp’). The petition was based on a judgment debt to Baycorp of $19,233.49. 

8. The Trustee’s affidavit evidence is that notwithstanding the relatively low number of unsecured creditors, he has been unable to locate any assets other than the property that may be realised in order to satisfy the bankrupt estate. 

9. On 18 September 2014, the Trustee sent a letter to the bankrupt stating that in order to annul the bankruptcy he required her to pay the sum of $43,214.  He also referred her to a number of solicitors and financial counsellors in her area and recommended that she obtain some independent advice. 

10. On 28 October 2014, the Applicant’s Solicitor sent a letter to the bankrupt and to Mr Baker stating that:-

    a)the Trustee required them to deliver the original Certificate of Title to the property to the Trustee;

    b)the Trustee was obliged to realise his interest in the property;  and

    c)the Trustee required the Respondents to submit a proposal that would allow him to realise his interest in the property.

1. On 19 November 2014, the Applicant’s Solicitor received an email from the bankrupt requesting further time to respond and stating she was having trouble locating the title deed to the property.  On 13 January 2015, the Applicant’s Solicitor sent a letter to the bankrupt and to Mr Baker requiring them to present a proposal dealing with the Trustee’s interest in the property by 27 January 2015. On 7 February 2015, the bankrupt emailed the Applicant’s Solicitor stating, amongst other things, that:-

   a)she had exhausted all avenues to satisfy the Trustee in respect of moneys owed, and the Respondents were unable to pay the debt;

   b)the Respondents were not able to provide vacant possession of the property to the Applicant because they did not have money to pay a bond and rent or to remove the bankrupt’s furniture;

   c)the bankrupt was unable to attend Court in Melbourne because she is a full-time carer for Mr Baker who has a brain injury and dementia, and she is unable to leave him on his own.

2. On 10 November 2015, the Applicant’s Solicitor sent a letter to the bankrupt and to Mr Baker stating that unless a written proposal was received that would allow the Trustee to realise his interest in the property the Applicant intended to issue the proceedings now before the Court. No further correspondence was received from the Respondents by the Applicant or the Applicant’s Solicitor. 

3. The Applicant deposed, in paragraph 16 of his affidavit sworn 8 April 2016, that due to the nature of the property (being a residential house which cannot be divided) and due to the nature of the Trustee’s interest and Mr Baker’s interest in the property, the Trustee was of the belief that orders for the sale of the property and division of the proceeds of sale would be more beneficial to the parties than orders for the physical division of the property. 

4. The orders made this day provide for the Applicant to set the reserve price of the property.  The Applicant noted in correspondence to the Respondents on 10 November 2015 that the property then had an estimated value of $210,000.  Ms Baker said, during the course of the proceedings this day, that the improved value of the property as stated on the relevant rate notice was $180,000, and in her view, the value of the property, albeit she is not an expert, is that its value might be $200,000 or less. 

5. The proceedings being essentially undefended, there being no evidence filed by the Respondents in the proceedings, and there being affidavit evidence of the Applicant to support the making of the orders as sought in the application, the application is acceded to.

I certify that the preceding thirty-three (33) paragraphs are a true copy of the reasons for judgment of Judge Hartnett

Date: 30 August 2016