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| FAMILY LAW – Family Law and Bankruptcy – where claim under Family Law Act later withdrawn and case proceeded under Bankruptcy Act – family home – express trust – resulting trust – whether it is property divisible amongst creditors – where bankrupt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…
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- Case
- [2012] FMCAfam 866
- Decision Date
CaseChat Overview and Summary
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
1.
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.
2.
A declaration that the Applicant Ms Davies has a charge over the property to the extent of 32% of the equity of the same.
3.
Order that the Second Respondent be appointed Trustee for the sale of the property (“the Trustee”).
4.
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.
5.
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.
6.
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.
7.
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;
(c) The reasonable legal expenses of transferring the land to the purchaser;
(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.
8.
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.
9.
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
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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