Condon (Trustee), in the matter of Cleaver (Bankrupt) v Cleaver
[2023] FedCFamC2G 305
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Condon (Trustee), in the matter of Cleaver (Bankrupt) v Cleaver [2023] FedCFamC2G 305
File number(s): SYG 1875 of 2022 Judgment of: JUDGE CAMERON Date of judgment: 27 April 2023 Catchwords: BANKRUPTCY – Trustee seeking vacant possession of land for the purpose of sale – no appearance by the respondent.
REAL PROPERTY – Co-ownership - Trustee as tenant in common – tenants in common’s rights of possession.
Legislation: Bankruptcy Act 1966 (Cth), ss. 19, 30, 58, 77, 127, 129AA, 132, 134, 140
Judiciary Act 1903 (Cth), s 79
Civil Procedure Act 2005 (NSW), s 104
Federal Circuit and Family Court of Australia Act2021 (Cth) s 213
Cases cited: Adsett v Berlouis (1992) 37 FCR 201
Coshott v Prentice (2014) 221 FCR 450
Aravanis & Roy (Trustees), Re; Destanovic (Bankrupt) vDestanovic [2016] FCA 388
Commonwealth Bank of Australia v Macdonald (2000) 10 BPR 18,111
New South Wales v Koumdjiev (2005) 63 NSWLR 353
Merl v Merl [2022] NSWSC 434
Division: General Number of paragraphs: 22 Date of hearing: 6 April 2023 Place: Sydney Solicitor for the Applicant: Ms D. Fazio (Daniela Fazio Lawyers) Counsel for the Respondent: No appearance by or on behalf of the respondent ORDERS
SYG 1875 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
IN THE MATTER OF EVAN CLEAVER
BETWEEN: SCHON GREGORY CONDON, IN HIS CAPACITY AS TRUSTEE OF THE PROPERTY OF EVAN CLEAVER ALSO KNOWN AS EVAN ALFRED CLEAVER, A BANKRUPT
Applicant
AND: EVAN CLEAVER ALSO KNOWN AS EVAN ALFRED CLEAVER
Respondent
order made by:
JUDGE CAMERON
DATE OF ORDER:
27 April 2023
THE COURT ORDERS THAT:
1.The respondent vacate the following properties and remove from each of them all vehicles, rubbish and chattels which have not vested in the applicant (“Personal Property”) within 21 days after service of this order:
(a)the real property known and described as “The Retreat”, Newell Highway, Parkes in the State of New South Wales 2870 being the land contained in:
(i)Auto Consol 6355-166 being all that part and parcel of the land contained in lot 2 deposited plan 113810; lots 441-444 in deposited plan 750152;
(ii)lot 445-448 in deposited plan 750152; and
(iii)Auto Consol 5607-184 being all that part and parcel of the land contained in lot 781 in deposited plan 750152; lots 784-785 in deposited plan 750152; lot 1 in deposited plan 1090368;
(b)the real property known and described as “Rockview Cookamidgera”, 193 Cleavers Lane, Parkes in the State of New South Wales 2870 being the land contained in:
(i)Auto Consol 8288-175 being all that part and parcel of the land contained in lot 1-2 in deposited plan 1072428; and
(ii)lot 58 in deposited plan 750148; and
(iii)lot 59 in deposited plan 750148
(collectively the “Properties”).
2.In the event that order 1 is not complied with:
(a)the applicant have leave to issue a writ of possession forthwith; and
(b)the applicant be allowed to remove and dispose of the Personal Property on the Properties as he sees fit after 21 days have passed after service of this order.
3.Within 21 days of the date of this order the respondent deliver up the keys and security codes (if any) for the Properties to the applicant at his solicitor’s address being Level 13, 111 Elizabeth Street, Sydney NSW 2000.
4.On the date the Court makes an order for possession of the Properties in favour of the applicant, the respondent and his servants and agents be restrained from:
(a)entering on or remaining on the Properties;
(b)going within 30 metres of the Properties; and
(c)hindering the sale of the Properties.
5.Service of this order be effected by placing same in a sealed envelope and placing it in the letterbox of the Properties and if there is no letterbox, affixing the order in a sealed envelope to the fence or the front door of the Properties.
6.The applicant’s costs of this proceeding and the applicant’s remuneration, costs and expenses of attending to remove and dispose any Personal Property on the Properties be paid in priority out of the bankrupt estate of the respondent pursuant to s.109(1) of the Bankruptcy Act 1966 (Cth).
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE CAMERON
INTRODUCTION
The applicant, Mr Condon, is trustee (“Trustee”) of the bankrupt estate of the respondent, Evan Alfred Cleaver, and filed an originating application on 16 December 2022 seeking orders that Mr Cleaver vacate the property knowns as “The Retreat”, Newell Highway, Parkes NSW 2870 and the property known as “Rockview Cookamidgera”, 193 Cleavers Lane, Parkes NSW 2870 (collectively the “Properties”).
The Trustee’s originating application sought from the Court orders to the effect that:
(a)Mr Cleaver vacate the Properties, deliver up the keys and any security codes to the Properties and remove any vehicles, rubbish, chattels and other personal property not vested in the Trustee;
(b)the Trustee have leave to issue a writ of possession should Mr Cleaver fail to vacate the Properties and remove his possessions;
(c)Mr Cleaver be restrained from entering or remaining on the Properties, going within 30 metres of the Properties or hindering the sale of the Properties;
(d)the Trustee be allowed to remove and dispose of the personal property should Mr Cleaver fail to vacate the Properties and remove his possessions; and
(e)the Trustee’s costs of this proceeding and his expenses of removing any personal property left on the Properties be paid out of Mr Cleaver’s estate.
Substituted service
On 10 March 2023, the Court made substituted service orders permitting service on Mr Cleaver of copies of those orders, the application commencing this proceeding, and the Trustee’s affidavit filed 16 December 2022 and its exhibits marked 1 to 4 (“Documents”) by handing them to any person apparently over the age of 16 years at, or leaving them at the front gate of, “The Retreat” and by sending a specified text (SMS) message to Mr Cleaver’s last known mobile number.
The Trustee read an affidavit of Gavin King who deposed that he sent a text (SMS) message to Mr Cleaver on 16 March 2023 in accordance with the orders of 10 March 2023. The Trustee also read an affidavit of Luana Hill who deposed that she served Mr Cleaver on 17 March 2023 by placing the Documents in a sealed, waterproof envelope which she affixed to the front entrance of “The Retreat” property.
Although Mr Cleaver did not appear at the hearing and has not filed a notice of appearance or any other form of document, I am satisfied that it is appropriate to proceed to determine the application.
FACTUAL BACKGROUND
The history of the matter, as it appears from the Trustee’s affidavit of 15 December 2022, is as follows:
(a)the late Walter Cleaver was formerly the registered proprietor of the properties;
(b)on or around 30 June 1999, by way of a devise, Nancy Cleaver (“Mrs Cleaver”) was given a life tenancy in the Properties while Mr Cleaver and his 3 siblings were given the remainder in equal shares as tenants in common;
(c)on 23 December 2005 Mr Cleaver became bankrupt on the making of a sequestration order in this Court’s proceeding SYG3458/2005. Mr Cleaver failed in his subsequent statement of affairs to disclose his interest in the Properties;
(d)pursuant to s.58 of the Bankruptcy Act 1966 (Cth) (“Bankruptcy Act”), upon becoming bankrupt, Mr Cleaver’s interests in the Properties vested in the Trustee;
(e)on 3 May 2006 the Trustee lodged a caveat against Mr Cleaver’s interests in the Properties;
(f)on 6 July 2009 Mr Cleaver was discharged from bankruptcy;
(g)on 16 September 2017 Mrs Cleaver died, of which the Trustee became aware on about 12 July 2019;
(h)following Mrs Cleaver’s death and the consequent registration of the remaindermen as tenants in common, the Trustee was substituted for Mr Cleaver on the Properties’ titles as a registered proprietor;
(i)presently, the Properties are held by Mr Cleaver’s siblings and the Trustee as tenants in common in equal shares;
(j)on 26 May 2022 the Trustee caused to be served on Mr Cleaver at “The Retreat” a notice to occupier and a direction to vacate, directing him to vacate the Properties within 14 days.
The Trustee deposed that Mr Cleaver’s siblings have indicated a desire to sell and realise their interests in the Properties and that an in-principal agreement had been reached. On 15 October 2021 his solicitors wrote to Mr Cleaver, saying:
Your siblings, Ms Norma Irene Rhynehart, Mr Bruce Arthur Cleaver and Mr Murray Alan Cleaver and the co-owners of the properties have agreed to join the Trustee in a sale of the properties. The Trustee intends to sell the properties together with your siblings as he believes this will be the most commercially sensible option in the circumstances.
The Trustee deposed that, because of his appointment as Trustee of Mr Cleaver’s property and his experience in the sale of real properties and obtaining vacant possession, Mr Cleaver’s siblings as co-owners had consented to him obtaining vacant possession and ultimately selling the Properties for the benefit of them and Mr Cleaver’s bankrupt estate.
Attempts were made to contact Mr Cleaver to ascertain his position in respect of the Properties, which the Trustee detailed in his affidavit. The Trustee deposed that the realisation of Mr Cleaver’s interests in Properties might be sufficient to annul his bankruptcy and to achieve a surplus that could be paid to him.
The Trustee deposed that the only contact with Mr Cleaver had been on 2 June 2022 when he rang the Trustee’s solicitor to seek a short extension of time to complete harvesting. An extension to 1 July 2022 was granted and communicated to Mr Cleaver by letter. On 4 July 2022 a paralegal for the Trustee sought to ascertain if Mr Cleaver had vacated the property and Mr Cleaver advised that he had a couple more hours of packing up and had left some farm machinery at “Rockview Cookamidgera” which he would collect around October or November 2022. The Trustee deposed that he had attempted to telephone Mr Cleaver on 26 October 2022 and 15 November 2022 to ascertain his current residential address but had received no response.
The Trustee deposed that he believed Mr Cleaver had occupied “The Retreat” as his primary place of residence up to approximately 26 October 2022, following which he was advised that the property appeared vacant, although someone had erected a fence around the perimeter which prevented access to the front door of the house on the property. The Trustee deposed that the “Rockview Cookamidgera” property appeared vacant, however, had been attended by third parties who risked damaging the property and diminishing the value of the land. He said:
I am concerned that there have been a number of reports/complaints … of “hoons” entering onto the Rockview property and “tearing up the soil” with their “pig dogs and four wheel drives.” I do not suggest these “hoons” are in any way related to the Respondent or agents of the Respondent, however I am concerned that if these hoons remain at the property, they will diminish the value of the land thereby bringing about a smaller return to the bankrupt estate, and the co-owners.
Exhibited with the Trustee’s affidavit are photographs of the “Rockview Cookamidgera” property, one of which depicted a sign reading:
Trespass [sic] will be shot.
The Trustee deposed that he sought an order for vacant possession for abundant caution which would enable him lawfully to remove the fence around “The Retreat” and access “Rockview Cookamidgera” and commence marketing of the Properties.
The Trustee sought an order for substituted service of the final orders in this proceeding similar in terms to the order for substituted service made earlier in the case, namely that service of the orders be effected:
(a)by handing them to any person apparently over the age of 16 years at Mr Cleaver’s last known address, “The Retreat”, Newell Highway, Parkes NSW 2870;
(b)if that is not possible, by leaving them at the entry front gate of “The Retreat”, Newell Highway, Parkes NSW 2870 addressed to Mr Cleaver; and
(c)by a text (SMS) message sent or caused to be sent to Mr Cleaver with a specified message.
LEGISLATION AND RULES
The Bankruptcy Act relevantly provides:
19 Duties etc. of trustee
(1) The duties of the trustee of the estate of a bankrupt include the following:
(a) notifying the bankrupt’s creditors of the bankruptcy;
(b) determining whether the estate includes property that can be realised to pay a dividend to creditors;
…
(f) taking appropriate steps to recover property for the benefit of the estate;
(g) taking whatever action is practicable to try to ensure that the bankrupt discharges all of the bankrupt’s duties under this Act;
…
(k) exercising powers and performing functions in a commercially sound way;
(l) the duties imposed on the trustee under Schedule 2.
…
30 General powers of Courts in bankruptcy
(1) The Court:
(a)has full power to decide all questions, whether of law or of fact, in any case of bankruptcy or any matter under Part IX, X or XI coming within the cognizance of the Court; and
(b)may make such orders (including declaratory orders and orders granting injunctions or other equitable remedies) as the Court considers necessary for the purposes of carrying out or giving effect to this Act in any such case or matter.
...
58 Vesting of property upon bankruptcy—general rule
(1) Subject to this Act, where a debtor becomes a bankrupt:
(a)the property of the bankrupt, not being after‑acquired property, vests forthwith in the Official Trustee or, if, at the time when the debtor becomes a bankrupt, a registered trustee becomes the trustee of the estate of the bankrupt by virtue of section 156A, in that registered trustee; and
(b)after‑acquired property of the bankrupt vests, as soon as it is acquired by, or devolves on, the bankrupt, in the Official Trustee or, if a registered trustee is the trustee of the estate of the bankrupt, in that registered trustee.
…
...
77 Duties of bankrupt as to discovery etc. of property
(1)A bankrupt shall, unless excused by the trustee or prevented by illness or other sufficient cause:
…
(e)execute such instruments and generally do all such acts and things in relation to his or her property and its realization as are required by this Act or by the trustee or as are ordered by the Court upon the application of the trustee; and
(f)disclose to the trustee, as soon as practicable, property that is acquired by him or her, or devolves on him or her, before his or her discharge, being property divisible amongst his or her creditors; and
(g)aid to the utmost of his or her power in the administration of his or her estate.
…
...
127 Limitation of time for making claims by trustee etc.
(1)After the expiration of 20 years from the date on which a person became a bankrupt, a claim shall not be made by the trustee in the bankruptcy to any property of the bankrupt, and that property shall, subject to the rights, if any, of a person other than the trustee in respect of the property, be deemed to be vested in the bankrupt, or a person claiming through or under him or her, as the case may be.
...
…
129AA Time limit for realising property
(1) This section applies only to:
(a)property (other than cash) that was disclosed in the bankrupt’s statement of affairs; and
(b)after‑acquired property (other than cash) that the bankrupt discloses in writing to the trustee within 14 days after the bankrupt becomes aware that the property devolved on, or was acquired by, the bankrupt.
In this subsection, cash includes amounts standing to the credit of a bank account or similar account.
(2)If any such property is still vested in the trustee immediately before the revesting time, then it becomes vested in the bankrupt at the revesting time by force of this section.
(3) Initially, the revesting time for property is:
(a)for property disclosed in the statement of affairs—the beginning of the day that is the sixth anniversary of the day on which the bankrupt is discharged from the bankruptcy; and
(b)for after-acquired property that is disclosed before the bankrupt is discharged from the bankruptcy—the beginning of the day that is the sixth anniversary of the day on which the bankrupt is discharged; and
(c)for after-acquired property that is disclosed after the bankrupt is discharged from the bankruptcy—the beginning of the day that is the sixth anniversary of the day on which the bankrupt disclosed the property to the trustee.
…
...
132 Vesting and transfer of property
(1)Subject to this section, and to section 158, where a trustee is appointed by the creditors, the property of the bankrupt passes to and vests in the trustee so appointed on the day on which the appointment takes effect.
…
...
134 Powers exercisable at discretion of trustee
(1)Subject to this Act, the trustee may do all or any of the following things:
(a) sell all or any part of the property of the bankrupt;
…
...
140 Declaration and distribution of dividends
(1)The trustee of the estate of a bankrupt shall, subject to this section, with all convenient speed, declare and distribute dividends amongst the creditors who have proved their debts.
…
The Judiciary Act 1903 (Cth) relevantly provides:
79 State or Territory laws to govern where applicable
(1)The laws of each State or Territory, including the laws relating to procedure, evidence, and the competency of witnesses, shall, except as otherwise provided by the Constitution or the laws of the Commonwealth, be binding on all Courts exercising federal jurisdiction in that State or Territory in all cases to which they are applicable.
…
The Civil Procedure Act 2005 (NSW) relevantly provides:
104 Judgments for possession of land
(1) A judgment for the possession of land may be enforced by a writ of possession.
(2) Execution of a writ of possession does not require any goods to be removed from the land.
The Federal Circuit and Family Court of Australia Act2021 (Cth) relevantly provides:
213 Enforcement of judgment
…
(2)A person in whose favour a judgment of the Federal Circuit and Family Court of Australia (Division 2) is given is entitled to the same remedies for enforcement of the judgment in a State or Territory, by execution or otherwise, as are allowed in like cases by the laws of that State or Territory to persons in whose favour a judgment of the Supreme Court of that State or Territory is given.
…
Consideration
In addition to discharging other duties that are not presently relevant, the Trustee’s role is to get in the bankrupt’s assets and pay creditors: ss.19, 140 of the Bankruptcy Act; Adsett v Berlouis (1992) 37 FCR 201 at 208-209. In the circumstances of this case, it appears that the only asset of value belonging to Mr Cleaver is his share in the family’s rural properties. It is appropriate and necessary that the Trustee attempt to liquidate that asset so that provable debts and the debts of the administration can be paid. Section 30 of the Bankruptcy Act empowers the Court to make such orders as are appropriate and necessary to assist the Trustee to discharge those obligations. It should not be construed narrowly: Coshott v Prentice (2014) 221 FCR 450 at 471 [91]-[93], Aravanis & Roy (Trustees), Re; Destanovic (Bankrupt) vDestanovic [2016] FCA 388 at [17].
In this case, Mr Cleaver inherited his quarter remainder interest in the Properties before he was bankrupted. Upon his bankruptcy that interest vested in the Trustee and, unless dealt with in the course of the administration of the bankrupt estate, will remain so vested for 20 years from the date of the sequestration order, at which time it will re-vest in Mr Cleaver: s.127 of the Bankruptcy Act. While vested in the Trustee, it is available to be dealt with in the administration of Mr Cleaver’s bankrupt estate. In that regard, it is significant to note that s.129AA of the Bankruptcy Act does not apply in this case because Mr Cleaver did not, either in his statement of affairs or at any subsequent time, disclose to the Trustee his remainder interest in the Properties.
The issue in this case is whether an order for possession should be granted and, if so, in what terms. Normally, one would not expect, where all the co-owners were agreed that a property should be sold, that such an order would be necessary. However, it appears that trespassers have been abusing one of the Properties, that an unauthorised person has put up a fence around the other property and that persons who trespass upon “Rockview Cookamidgera” have been warned they may be shot. In the circumstances one can understand the Trustee’s desire to have demonstrable authority to deal with the Properties. I am persuaded that the circumstances justify the making of an order that the Trustee have possession of the Properties.
Section 30 of the Bankruptcy Act is broad enough to support such an order for possession, although not so that it affects the proprietary rights of the other co-owners: Coshott v Prentice at 473 [100]. It might be remarked in that regard that none of the other co-owners participated in this proceeding, either as parties or as witnesses, although it does appear that they are agreeable to the sale of the Properties by the Trustee. Whatever the case, in a tenancy in common, each co-owner holds some interest in the whole of the property and has an equal right to possession of every part of the subject matter of the tenancy. Unity of possession means that each co-owner is, as of right, as much entitled to possession of any part of the property as the others and his or her right of possession does not depend on the permission of the other co‑owners: Commonwealth Bank of Australia v Macdonald (2000) 10 BPR 18,111 at 97,832 [35] - [38]; New South Wales v Koumdjiev (2005) 63 NSWLR 353 at 361-365 [32]-[44]; Merl v Merl [2022] NSWSC 434 at [38], [40]. That is to say, the Trustee as the one of the registered co-owners is entitled to possession of the whole of the Properties to the extent that he does not interfere with the rights of the other co-owners. In the absence of any participation in this proceeding by any of those other co-owners, the significance of the latter point is that the making of the orders sought by the Trustee affords him no greater rights vis à vis the other owners than he had already. The significance of the proposed orders lies in them being evidence of his pre-existing possessory right.
CONCLUSION
Having had regard to all the matters to which I have referred I conclude that it is appropriate to grant the relief sought by the Trustee.
I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Cameron. Associate:
Dated: 27 April 2023
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