Corbett v David John Cranstoun as Trustee for the Bankrupt Estate of Anne Shirley Corbett
[2005] FCA 554
•28 APRIL 2005
FEDERAL COURT OF AUSTRALIA
Corbett v David John Cranstoun as Trustee for the Bankrupt Estate of Anne Shirley Corbett [2005] FCA 554
Statutes
Bankruptcy Act 1966 (Cth) ss 73, 178 (1)
ANNE SHIRLEY CORBETT v DAVID JOHN CRANSTOUN AS TRUSTEE OF THE BANKRUPT ESTATE OF ANNE SHIRLEY CORBETT
QUD 104 OF 2005KIEFEL J
BRISBANE
28 APRIL 2005
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
QUD 104 OF 2005
BETWEEN:
ANNE SHIRLEY CORBETT
APPLICANTAND:
DAVID JOHN CRANSTOUN AS T/EE OF THE BANKRUPT ESTATE OF ANNE SHIRLEY CORBETT
RESPONDENTJUDGE:
KIEFEL J
DATE OF ORDER:
28 APRIL 2005
WHERE MADE:
BRISBANE
THE COURT ORDERS THAT:
1.The application be dismissed.
2.The applicant pay the respondent’s costs.
3.The applicant pay the costs of the interested third party, Mr David Lewis Clout.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
QUD 104 OF 2005
BETWEEN:
ANNE SHIRLEY CORBETT
APPLICANTAND:
DAVID JOHN CRANSTOUN AS T/EE OF THE BANKRUPT ESTATE OF ANNE SHIRLEY CORBETT
RESPONDENT
JUDGE:
KIEFEL J
DATE:
28 APRIL 2005
PLACE:
BRISBANE
REASONS FOR JUDGMENT
The applicant, Ms Corbett, brings an application against her trustee in bankruptcy with respect to a decision on his part to market and to sell her house property at 76 Cantwell Street, Anstead. The applicant has owned the property for some time, since about 1989 and it has been her family home. In April 2003 Mr Clout, who is a trustee of the estate of one Dexter, obtained declarations in proceedings QG7308 of 1998 that $26.3 m paid to Anscor by Dexter comprised transfers which were void pursuant to s 120 of the Bankruptcy Act 1966 (Cth) (‘the Act’). That trustee was also successful in tracing claims and this resulted in a charge on the applicant’s Anstead property, amongst others, to secure the sum of $676 067 plus interest. The claim appears to have been based upon the applicant’s purchase of the property with commission moneys traced through Anscor. The current amount secured by the charge over the property is in the order of $1.047 m.
On 1 May 2003 the applicant, with others, appealed the order of Drummond J. On 26 March 2004 the Full Court upheld his Honour’s decision. An application for special leave to the High Court was filed on 23 April 2004 and, I am told, it is likely to be heard in the June sittings this year.
On 31 August 2004 the applicant’s estate was sequestrated on her own petition. Towards the end of last year there were discussions between the trustee and the applicant concerning the prospective sale of the property and some arrangements were made to allow the applicant to continue to reside there until, and if, that took place.
There had been a previous attempt to sell the property through the Sheriff of the Supreme Court of Queensland in 2004 by private treaty, in conjunction with neighbouring and other properties owned by the applicant. That was unsuccessful.
Discussions were also had with the trustee in about March of this year with the applicant. The applicant, at that time, suggested that there might be a family-backed proposal pursuant to s 73 of the Act, whereby the sum of $1.1 m was to be made available to creditors. The response of the creditors was that the sum of $1.35 m would need to be provided. The trustee advised the applicant that the marketing of the property might be suspended if this was to occur. Nothing further appears to have been heard from the applicant or her family about this proposal and there is no material put before the trustee or before this Court as to how the s 73 proposal was to be funded and whether it can proceed. On 31 March 2005 the applicant threatened the bringing of these proceedings. They were not, however, filed until 20 April 2005.
The applicant seeks a review of the trustee’s decision pursuant to s 178 (1) of the Act and an injunction restraining the sale of the property pending the application for special leave and if successful, until judgment in the appeal. Present indications are that if the special leave application were successful, the matter might not be heard and determined by the High Court for another year. That does not seem to me to be unrealistic.
There are three grounds relied on by the applicant. The first relates to the method of marketing, by which it is said that the property should have been marketed for a minimum of two weeks longer than it has been and that it should have been sold by private treaty and not the proposed auction, which is due to take place this Saturday, in two days time. The second ground relates to the trustee’s decision to sell. It is contended that if the application for special leave and the appeal were successful, the property would not be necessary to meet the creditors’ claim. The third ground relates to the timing of the sale. Here it is said that the trustee of Dexter’s estate cannot distribute until the prosecution and conclusion of the appeal.
I shall deal with each ground briefly given the shortness of time.
In relation to the first ground, the length of a marketing campaign is a very subjective matter. Here there were three different proposals put forward to the trustee and he selected one which appeared to be of better value in terms of costs. It was a proposal for a sale by auction with a six-week marketing period. Whilst it might be said by the other unsuccessful agents that the period for marketing should be longer, the agent employed by the trustee is able to say that the campaign appears to be successful. There have been two written offers in the order of $1.2 and $1.35 m. In addition, those persons say that they will attend the auction. This appears to me to afford some reasonably strong evidence that marketing has not been as unsuccessful as the other agents might contend. In any event, I would need much weightier evidence other than the proposals that they put forward and the assertions they make, to determine that the trustee was in error and that an injunction should be granted.
I really do not give much weight to the different notions of selling by private treaty or auction. Both methods are well known in the sale of real estate and neither has been shown to be preferable.
In relation to the second ground, the trustee in the applicant’s bankruptcy points out that if the appeal is unsuccessful, there will not be sufficient funds to meet the claims of the creditors and of Mr Clout. Taking into account his claim of over $1.1 m and either $740 000 or $900 000 attributable to unsecured creditors in her estate, there will be a shortfall of at least $340 000 together with another $50 000. The latter figure represents one year’s interest accruing on Mr Clout’s charge in the order of $1 000 per week. The trustee’s point is that not only will there be a shortfall but the amount available to unsecured creditors will be reducing at this rate.
The applicant contends that if she were successful the property would not need to be sold to meet the claims of unsecured creditors which she puts at $740 000. As earlier mentioned, it is not however apparent where monies of this order are to come from. It is said that the proposed family arrangement would make $1.1m available but it is nowhere explained how this might come to pass. Whether it is a realistic prospect cannot be assessed. It cannot be assumed that the monies could be simply raised against the house property. In any event this contention does not take into account the potential prejudice if the applicant does not succeed.
The third ground, the timing of the sale, has regard to Mr Clout not being able to distribute to creditors until the appeal. I accept the trustee’s contention that this overlooks the fact that he could be paid out immediately upon a sale being effected even if he has to hold the funds. That would be an end of interest accrual.
A consideration of these grounds does not disclose any error on the part of the trustee who was entitled to take into account the potential prejudice to creditors in determining to sell at this time. A delay of the order sought would result in some $50 000 less being available to meet their claims. No offer or undertaking has been put forward on the part of the applicant to put funds of this order into Court. The applicant has had some time to consider this state of affairs.
Counsel for Mr Clout has also raised doubts regarding the strength of the appeal. I have not had sufficient time to consider the Full Court judgment in detail, although I have read it. I would at least say that the strength of the ground of appeal in relation to the question of consideration is not obvious on a first reading. However, I do not base my decision upon this factor. It confirms, to an extent, the view I have reached that the application should be dismissed. At the least I am not persuaded the applicant clearly has a strong case. In these circumstances the application should be dismissed with costs. My orders will therefore be:
1.The application be dismissed.
2.The applicant pay the respondent’s costs.
3.The applicant pay the costs of the interested third party, Mr David Lewis Clout.
I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kiefel. Associate:
Dated: 28 April 2005
Counsel for the Applicant: Mr P W Hackett Solicitor for the Applicant: Shand Taylor Lawyers Counsel for the Respondent: Mr P A Looney Solicitor for the Respondent Bennett & Philp Solicitors Counsel for the Third Party Mr D A Quayle Solicitor for the Third Party Mallesons Stephen Jaques Date of Hearing: 28 April 2005 Date of Judgment: 28 April 2005
0
0
0