Cull (Trustee), in the matter of Cuthbertson (Bankrupt) v Cuthbertson

[2023] FedCFamC2G 442

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 2)

Cull (Trustee), in the matter of Cuthbertson (Bankrupt) v Cuthbertson [2023] FedCFamC2G 442   

File number:

MLG 309 of 2023

Judgment of:

JUDGE CHAMPION

Date of judgment:

29 May 2023

Catchwords:

BANKRUPTCY – Application proceeded in the Respondent’s absence – Orders for the bankrupt to vacate property – Warrant of possession of bankrupt’s property – Orders made.

Legislation:

Bankruptcy Act 1966 (Cth) ss. 30, 508, 77, 109, 132

Federal Circuit and Family Court of Australia Act 2021 (Cth) s. 213

Federal Circuit and Family Court of Australia (General Federal Law) (Division 2) Rules 2021 (Cth) rr. 12.06, 25.11

Supreme Court (General Civil Procedure) Rules 2015 (Victoria) r. 53.08

Cases cited:

Allesch v Maunz (2000) 203 CLR 172

Coshott v Prentice (2014) 221 FCR 450

Horne (as trustee of the bankrupt estate of Sekulovksi) v Sekulovski [2009] FCA 1164

Ruhe (Trustee) v Australian Securities and Investments Commission [2022] FCA 354

Singh v Minister for Immigration and Border Protection [2017] FCA 216

Trustee of the Property of Brian John Byrne, a Bankrupt v Byrne [2020] FCA 1532

Division:

Division 2 General Federal Law

Number of paragraphs:

32

Date of last submissions:

25 May 2023

Date of hearing:

25 May 2023

Place:

Melbourne

Counsel for the Applicants:

Mr Segal

Solicitor for the Applicants:

Scanlan Carroll

Respondent:

No appearance

ORDERS

MLG 309 of 2023

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)

IN THE MATTER OF THE BANKRUPT ESTATE OF LISA CUTHBERSTON

BETWEEN:

INNIS ANTHONY CULL

First Applicant

GESS MICHAEL RAMBALDI

Second Applicant

AND:

LISA CUTHBERTSON

Respondent

order made by:	JUDGE CHAMPION
DATE OF ORDER:	29 may 2023

Amended pursuant to r. 17.05 of the Federal Circuit and Family Court Rules (Division 2) (General Federal Law) 2021 on 31 May 2023

THE COURT DECLARES THAT:

1.The Respondent’s interest in the real property identified in Certificate of Title Volume 10671 Folio 677, more particularly known as 9 Fellmongers Road, Breakwater in the State of Victoria (Property) vested in the Applicants on and from the Respondent becoming bankrupt on 23 December 2021 pursuant to section 58(1)(a) and section 132(1) of the Bankruptcy Act1966 (Cth).

THE COURT ORDERS THAT:

2.By 4:00 pm on 28 June 2023 the Respondent must:

(a)vacate the Property, and

(b)give possession of the Property to the Applicants.

3.A warrant of possession be issued forthwith substantially in the form of Annexure A to this order, such warrant to lie in the Registry and not to be acted upon unless the Applicants file an affidavit on after 4:00 pm on  28 June 2023 deposing that:

(a)the Respondent has not complied with all of Order 1, and

(b)the Applicants do not have possession of the Property.

4.The affidavit referred to in Order 2 3 may be made by the Applicants’ solicitors.

5.On the Applicants or the Sheriff taking possession of the Property, the Respondent, her servants and agents be restrained from:

(a)entering on or remaining on the Property,

(b)going within 30 metres of the Property, and

(c)hindering the sale of the Property by the Applicants.

6.The Respondent must remove from the Property all vehicles, rubbish and chattels which have not vested in the Applicants in their capacity as trustees of the bankrupt estate of Lisa Cuthbertson (Personal Property).

7.If the Respondent fail to comply with Order 5 6, the Applicants are empowered to remove and dispose of any and all Personal Property on the Property as they see fit.

8.The Applicants be at liberty to sell the Property and to sell any Personal Property and receive the net proceeds of sale.

9.The Applicants’ costs of selling the Property be paid from the sale proceeds of the Property and be costs in the bankrupt estate of the Respondent.

10.The costs of the Applicants of removing, disposing and selling any Personal Property be paid from the sale proceeds of the Personal Property, and be paid the bankrupt estate of the Respondent.

11.The costs of the application are proper costs of the bankrupt estate of Lisa Cuthbertson and be paid in priority in accordance with s. 109 of the Act from the property of the bankrupt estate of the Respondent.

12.Liberty to apply on three days’ notice.

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).

ANNEXURE A

Warrant of Possession

No. MLG309 of 2023

Federal Circuit and Family Court of Australia
Registry: Melbourne (General Federal Law)
Rule 53.08 Supreme Court (General Civil Procedure) Rules 2015 (Victoria)
Form 53B

IN THE MATTER OF THE BANKRUPT ESTATE OF LISA CUTHBERTSON
INNIS ANTHONY CULL AND GESS MICHAEL RAMBALDI (AS TRUSTEES FOR THE BANKRUPT ESTATE OF LISA CUTHBERTSON)

Applicants

LISA CUTHBERTSON

Respondent

TO THE SHERIFF:
In respect of the order dated 29 May 2023 by which it was adjudged that the Applicants recover possession of the land described in the schedule, enter the land and cause the Applicants to have possession of it, and indorse on the warrant immediately after you have performed all your obligations under it a statement of the date, time and place at which you have executed or attempted to execute the warrant and the results of the execution and send a copy of the statement to the Applicants.

SCHEDULE

9 Fellmongers Road, Breakwater, VIC, 3219 being the whole of the property contained in certificate of title Volume 10671 Folio 677.

Issued: 29 May 2023

By the Court

REGISTRAR

Issued at the request of the Applicants.
The last known address of the Respondent is 9 Fellmongers Road, Breakwater, VIC, 3219.

REASONS FOR JUDGMENT

JUDGE CHAMPION:

INTRODUCTION

1. On 23 December 2021 the applicants (Trustees) were appointed as the trustees in bankruptcy to the bankrupt estate of Ms Lisa Cuthbertson (Respondent).

2. By an amended application made on 1 March 2023 the Trustees sought orders (among others) that Ms Cuthbertson, and any other persons occupying property at 9 Fellmongers Road, Breakwater, Victoria (Property), deliver up to the Trustees vacant possession of the Property.  The Trustees seek further orders that in the event that Ms Cuthbertson fails to deliver vacant possession of the Property a warrant of possession be issued.

3. The Trustees relied on an affidavit of Mr Innis Anthony Cull made on 23 February 2023 (Mr Cull’s Affidavit) and an affidavit of Ms Alexandra Vrodoljak made on 19 May 2023. The affidavits of Mr Cull and Ms Vrodoljak were read on the application. Their evidence was unchallenged.

   Ms Cuthbertson’s non-participation and proceeding in her absence

4. Ms Cuthbertson did not file a response to this application or any other material. She did not attend the hearing. 

5. On the morning of the hearing (25 May 2023) Ms Cuthbertson telephoned the National Enquiry Centre of the Court.  She advised that she was unable to attend Court because she was sick and she requested an adjournment. She was advised to email the Court to put the adjournment request in writing. Ms Cuthbertson said that she was unable to send an email and a written application would not be possible.  The Trustees opposed the adjournment. 

6. Ms Cuthbertson did not file any written material in support of her adjournment application.  To the extent that she says that she was unwell, no medical material by way of a doctor’s certificate (or otherwise) was provided.  In my view, for an adjournment to be granted for medical reasons, an applicant for an adjournment must provide a meaningful medical certificate or medical material which establishes why it is, or how it is, that the applicant is unable to attend the hearing: Singh v Minister for Immigration and Border Protection [2017] FCA 216 at [13]. Having declined to participate in the proceeding, a telephone call to the Court’s National Enquiry Centre with no supporting material is wholly inadequate. This matter has been listed for hearing for some time. An adjournment is likely to entail at least possible prejudice to Ms Cuthbertson’s creditors as well as inconvenience and delay, including as to the Court’s listings, for other litigants. I refused the request for the adjournment.

7. The matter proceeded in Ms Cuthbertson’s absence in default of her appearance: r. 13.06(1)(e) of the Federal Circuit and Family Court of Australia (General Federal Law) (Division 2) Rules 2021 (Cth).  That Ms Cuthbertson knew of the hearing must follow from her telephone call to the Court’s National Enquiry Centre.  I was satisfied that Ms Cuthbertson was on notice of the application and had been afforded an opportunity to be heard.  A court cannot force a party to take advantage of that opportunity: Allesch v Maunz (2000) 203 CLR 172, [38]-[40].

8. On 8 March 2023 the Trustees filed an affidavit of service detailing the service of the application on the Respondent. The Respondent did not appear at the directions hearing on 20 March 2023.  The Court made orders on 20 March 2023 for Ms Cuthbertson to file a notice of appearance, a response and any affidavit in opposition to the application by 17 April 2023.  On 20 March 2023 the Court made provision for the Trustees to serve a copy of the orders on the Respondent. I am satisfied that this had occurred. The directions made on 20 March 2023 noted that in the event of the Respondent’s non-compliance with the directions and/or in the event of her non-appearance at the final hearing, the Court may determine the matter and grant the relief claimed in the application in her absence.

9. Ms Cuthbertson did not file any material by 17 April 2023.  As I have noted, she did not attend the hearing.

   RELEVANT FACTS

10. By reason of the sequestration order dated 23 December 2021 the Property vested in the Trustees.

11. On 16 December 2022, following a transmission application, the Trustees became the sole registered proprietors of the Property: Mr Cull Affidavit, [35] (title search) (Exhibit Bundle, 203-4).

12. On 30 April 2022 an auction of the Property did not lead to a sale: Mr Cull Affidavit, [22].

13. On 6 May 2022 Mr Paul Doherty, a specialty property agent, inspected the Property. Mr Doherty informed Mr Cull that whilst Ms Cuthbertson remained at the Property, the Trustees would not achieve the best sale price: Mr Cull’s Affidavit, [25].

14. The real estate agent engaged to sell the Property was reluctant to show further parties through the Property as Ms Cuthbertson’s presence in the Property was turning buyers away: Mr Cull’s Affidavit, [26].

15. The Trustees subsequently withdrew the Property from sale as they were concerned that Ms Cuthbertson would refuse to vacate the Property exposing them to a potential damages claim by a purchaser: Mr Cull’s Affidavit, [29].

16. On 20 September 2022, the Trustees’ solicitors sent a demand requiring Ms Cuthbertson to vacate the Property by 28 October 2022: Mr Cull’s Affidavit, [33].

17. On 11 January 2023, the Trustees sent a further demand requiring Ms Cuthbertson to vacate the Property by 1 February 2023: Mr Cull’s Affidavit, [36].

18. Ms Cuthbertson has refused to vacate the Property and has said that she will not voluntarily do so: Mr Cull’s Affidavit, [34].

    LEGAL PRINCIPLES

19. The Trustees rely upon a number of different provisions of the Bankruptcy Act 1966 (Cth) namely, ss. 30(1)(a) and (b), s. 30(5)(a) and 77(1)(g) as the sources of the Court’s power to make an order that Ms Cuthbertson vacate the property and give possession of the Property to the Trustees. Those provisions of the Act are as follows:

    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.

    […]

    (5)  Where:

    (a)bankrupt, a debtor or any other person has failed to comply with an order or direction of a Registrar, or with a direction or requirement of an Official Receiver or trustee, under this Act; or

    […]

    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:

    […]

    (g)aid to the utmost of his or her power in the administration of his or her estate.

20. In Coshott v Prentice (2014) 221 FCR 450 at [94] the Court (Siopis, Katzmann and Perry JJ) held that s. 30 of the Act:

    provide[s] sufficient power to make orders against a bankrupt for the vacation of property, issuing a warrant of possession and for the sale of property in circumstances where the bankrupt is not complying with his or her obligations under the Act

21. In Ruhe (Trustee) v Australian Securities and Investments Commission [2022] FCA 354 O’Callaghan J held at [12]–[14]

    12 Section 30(5)(a) provides that where a bankrupt “has failed to comply with an order or direction of a Registrar, or with a direction or requirement of … [a] trustee, under this Act” the court may “order the person who has failed to comply with the order, direction, requirement or request … to comply with it …”

    13 The cases make it clear that the power to make orders under s 30(1)(b) of the Act must be exercised for the purposes of carrying out or giving effect to the Act in the particular case. Those purposes are to provide for the appropriation and equitable distribution of the assets of the insolvent debtor.

    14 Further, the cases make clear that the provision is not to be construed narrowly. On the contrary, it is a facultative provision giving the court full power (within obvious limits of jurisdiction) to make such orders as it considers should be made to carry out and give effect to the Act. Accordingly, the section has been held to provide sufficient power to make orders against a bankrupt for the vacation of property, issuing a warrant of possession and for the sale of property in circumstances where the bankrupt does not comply with their obligations under the Act.

    [Emphasis added]

22. In Horne (as trustee of the bankrupt estate of Sekulovksi) v Sekulovski [2009] FCA 1164 at [8] Tracey J held:

    It is plainly necessary that the Applicant be in a position to provide any purchaser of the property with vacant possession in order to facilitate a sale, and it is also necessary, in order to achieve that end, that the property be placed in such a condition that it may be attractive to a potential purchaser.  The Respondents, despite having been given the opportunity to do so, have prevaricated and have not responded to requests that they vacate the premises.  Accordingly, in my view, it is appropriate that the orders sought in the application should be made.

    CONSIDERATION

23. I am satisfied that the Court has power to make the orders sought: ss. 30(1)(b), 30(5),77(1)(g); Coshott, Ruhe and Horne above.

24. Further, I note that Bromwich J in Trustee of the Property of Brian John Byrne, a Bankrupt v Byrne [2020] FCA 1532 made a declaration that the real property of the bankrupt vested in the trustee in bankruptcy on and from the respondent becoming bankrupt pursuant to ss. 58(1)(a) and 132(1) of the Act.  Bromwich J noted that such relief was “appropriate”: Byrne at [13]. I propose to make a declaration in a substantively similar form to the declaration in Byrne as the Trustees seek such an order.

25. Ms Cuthbertson has not responded to requests to vacate the Property and has indicated that she will not voluntarily do so.  In those circumstances orders that she vacate the property and give possession of the property to the applicants are necessary: Horne, above.

26. The Court will make orders that Ms Cuthbertson vacate the Property and give possession of the Property to the Trustees.  I will allow 30 days from the date of this order for Ms Cuthbertson to vacate the Property.  Ms Cuthbertson must vacate the property by 4:00 pm on 28 June 2023.

27. I will make the ancillary orders the Trustees seek including as to the removal of personal property and orders restraining Ms Cuthbertson from re-entering the Property or hindering any sale.

    A Warrant of Possession

28. In circumstances in which Ms Cuthbertson has indicated that she will not voluntarily vacate the Property, so as to ensure enforcement of the Court’s orders, the Trustees seek that a warrant of possession be issued forthwith. It may be relied upon to enforce the Court’s judgment if needed. 

29. Sections 213(2) and (3) of the Federal Circuit and Family Court of Australia Act 2021 (Cth) provide as follows:

    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.

    (3)Subsection (2) has effect subject to the Rules of Court.

30. Rule 25.11(1) of the Rules provides as follows:

    25.11   Execution generally

    (1)A party may apply to the Court to issue a writ, order or any other means of enforcement of a judgment or order that can be issued or taken in the Supreme Court of the State or Territory in which the judgment or order was made, as if it were a judgment or order of that Supreme Court.

    CONCLUSION

31. I will order that a warrant of possession be issued forthwith. The issue of a warrant now will obviate the need for further attendance in the event there is non-compliance with the Court’s orders. The warrant will lie in the Registry for 30 days. It can be relied upon after that date to enforce the judgment in circumstances in which Ms Cuthbertson does not comply with the Court’s orders to vacate the property and give possession of the Property to the Trustees. An affidavit of lawyers for the Trustees made after 4.00 pm on 28 June 2023 will be sufficient evidence of non-compliance. Justice O’Callaghan adopted this approach by his orders in Ruhe. I intend to adopt a substantively similar approach in this case.

32. The costs of the application are proper costs of the bankrupt estate of Ms Cuthbertson and will be paid in priority in accordance with s. 109 of the Act.

I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Champion.

Associate:

Dated:       29 May 2023