Davies and Davies and Anor - [2012] FMCAfam 866

FEDERAL MAGISTRATES COURT OF AUSTRALIA

DAVIES & DAVIES & ANOR

[2012] FMCAfam 866

FAMILY LAW – Family Law and Bankruptcy – where claim under Family Law Act later withdrawn and case proceeded under Bankruptcy Act – family home – express trust – resulting trust – whether it is property divisible amongst creditors – where bankrupt made payments relating to the home before and after bankruptcy – where wife in occupation also made payments – where bankrupt and wife mixed finances even though separated, had entered into orders under s.79 Family Law Act, and where husband had been previously bankrupt – where husband trustee for wife but unilaterally borrows further money on security of property – where bankrupt assessed for income contribution but does not pay – competing equities arising from the facts – imposition of charge or lien for expenditure incurred – equitable estoppel.

Bankruptcy Act 1966, ss.58(1)(b), 116(1), 116(2)(a), 120, 121, 139P
Bankruptcy Act 1966, Division 4B, Part VI
Family Law Act 1975, s.79
Federal Magistrates Act 1999, s.14

Barwick v Goodridge (2011) 255 FLR 245
Currie v Hamilton [1984] NSWLR 687
Juratowitch v Iannotti [2009] FMCA 1133
O’Brien v Sheahan [2002] FCA 1292
Octavo Investments Pty Ltd V Knight (1979) 144 CLR 360
Parsons v McBain (2001) 109 FCR 120
Re Gillies;Ex parte Official Trustee in Bankruptcy (1993) 115 ALR 631
Re Gillies; Ex parte Official Trustee in Bankruptcy v Gillies (1993) 42 FCR 571
Re Sharpe; Ex parte Donnelly (1998) 80 FCR 536
Rodway v White [2009] WASC 201
Ryan v Dries [2003] ANZConvR45
Sharment v Official Trustee in Bankruptcy (1988) 22ALR530

Applicant:

MS DAVIES

First Respondent:

MR DAVIES

Second Respondent:

MR ADDIS

File Number:

SYC 5992 of 2010

Judgment of:

Altobelli FM

Hearing dates:

14 – 16 May 2012

Date of Last Submission:

16 May 2012

Delivered at:

Sydney

Delivered on:

22 August 2012

REPRESENTATION

Counsel for the Applicant:

Mr Ash

Solicitors for the Applicant:

Horowitz & Bilinksy

Counsel for the second Respondent:

Mr Combe

Solicitors for the second Respondent:

Sally Nash & Co

ORDERS

A declaration that the whole of the property at Property T being folio identifier [omitted] (“the property”) is vested in the Second Respondent as Trustee in Bankruptcy of the First Respondent.
A declaration that the Applicant Ms Davies has a charge over the property to the extent of 32% of the equity of the same.
Order that the Second Respondent be appointed Trustee for the sale of the property (“the Trustee”).
An Order that the Trustee be empowered to offer the property for sale and to sell the property by public auction with power to fix a reserve price, or alternatively, to sell the property by private treaty at the best available price.
An Order that any sale by the Trustee may be made to the Applicant either as a result of sale at auction or by private treaty, without the requirement for the payment of a deposit and upon such terms as to the payment of…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Keep reading for free

Create a free CaseChat account to read Davies and Davies and Anor and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2012] FMCAfam 866
Decision Date: 22 August 2012

CaseChat Overview and Summary

The case of Davies and Davies and Anor involves a dispute over the ownership and sale of a property identified as folio [omitted]. The Applicant, Ms Davies, sought a declaration of ownership and a charge over the property against the First Respondent, who is in bankruptcy, with the Second Respondent acting as the Trustee in Bankruptcy. The Applicant argued that she was entitled to a 32% share of the property's equity as a charge, while the Second Respondent sought to sell the property to satisfy the debts of the bankrupt estate.

The primary legal issues before the court were whether Ms Davies' claim to a charge over the property was valid and enforceable and whether the Second Respondent, as Trustee in Bankruptcy, had the authority to sell the property in the manner proposed by the Applicant. The court needed to determine the extent of the Applicant's interest in the property and the appropriate procedure for selling the property to satisfy the claims of the creditors and the Applicant.

The court found that Ms Davies was indeed entitled to a charge over the property, amounting to 32% of the equity. The court accepted that the charge was a valid encumbrance on the property and that it should be recognised in the sale process. The court also found that the Second Respondent had the authority to sell the property to satisfy the creditors' claims and that the proposed method of sale, either by public auction or private treaty, was appropriate. The court ordered that the property be sold under the supervision of the Trustee, with specific provisions for the distribution of the sale proceeds among the creditors and the Applicant. The court further detailed the expenses that could be deducted from the sale proceeds and outlined the process for any party to apply for further orders regarding the sale.

In conclusion, the court granted the Applicant a charge over the property and authorised the sale by the Trustee, with specific conditions for the distribution of the proceeds. The court provided detailed orders to ensure that the sale was conducted fairly and transparently, with clear provisions for the payment of debts and the distribution of any remaining funds.

Orders

Orders of the court

A declaration that the whole of the property at Property T being folio identifier [omitted] (“the property”) is vested in the Second Respondent as Trustee in Bankruptcy of the First Respondent.

A declaration that the Applicant Ms Davies has a charge over the property to the extent of 32% of the equity of the same.

Order that the Second Respondent be appointed Trustee for the sale of the property (“the Trustee”).

An Order that the Trustee be empowered to offer the property for sale and to sell the property by public auction with power to fix a reserve price, or alternatively, to sell the property by private treaty at the best available price.

An Order that any sale by the Trustee may be made to the Applicant either as a result of sale at auction or by private treaty, without the requirement for the payment of a deposit and upon such terms as to the payment of the balance of the purchase price as the Trustee considers appropriate.

An Order that the Trustee be empowered and authorised to obtain a valuation of the property by employing a registered valuer, if he thinks it necessary.

An Order that after sale of the property at auction or by private treaty, the said Trustee be empowered to deduct from the proceeds of sale:-

(a) The commission and other expenses of any real estate agent employed by the Trustee;

(b) The reasonable remuneration and expenses of the Trustee in respect of the sale;

(d) Any taxes including but not limited to Capital Gains Tax, Land Tax and Goods and Services Tax (GST);

(e) To make all necessary adjustments of rates and taxes on settlement of the sale; and

(f) Insurance and any other reasonable expenses for protection and maintenance of the property.

An Order that the Trustee hold the proceeds of sale (after deduction of the expenses in Order 7 on trust for the First Respondent as Trustee of the bankrupt estate of the First Respondent and the Applicant in accordance with these Orders.

There be liberty to any party to apply on 7 days written notice to the other parties in relation to any matters arising out of the implementation of these Orders.

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

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.