Dixon as Trustee of the Bankrupt Estate of Peato v Peato
[2021] FCCA 612
•17 March 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
Dixon as Trustee of the Bankrupt Estate of Peato v Peato [2021] FCCA 612
File number(s): SYG 2957 of 2020 Judgment of: JUDGE MANOUSARIDIS Date of judgment: 17 March 2021 Catchwords: BANKRUPTCY – application by trustee in bankruptcy for an order granting vacant possession of property occupied by bankrupt and also for consequential orders – orders granted. Legislation: Bankruptcy Act 1966 (Cth) Cases cited: Prentice v Fortune& Anor [2014] FCCA 2199 Number of paragraphs: 12 Date of hearing: 17 March 2021 Place: Sydney Solicitor for the Applicant: Mr A Korakis of CLH Lawyers The Respondent: Respondent in person, by telephone ORDERS
SYG 2957 of 2020 IN THE MATTER OF THE BANKRUPT ESTATE OF SAKEA KOLETA PEATO
BETWEEN: STEPHEN ROBERT DIXON IN HIS CAPACITY AS TRUSTEE FOR THE BANKRUPT ESTATE OF SAKEA KOLETA PEATO
Applicant
AND: SAKEA KOLETA PEATO
Respondent
ORDER MADE BY:
JUDGE MANOUSARIDIS
DATE OF ORDER:
17 MARCH 2021
THE COURT ORDERS THAT:
1.Within 30 days after the date of these orders the respondent deliver up to the applicant vacant possession of the property known as 37 Pimelea Place, Rooty Hill in the state of New South Wales being the whole of the land in Certificate of Title Folio identifier 3/1124946 (Property).
2.If the respondent fails to comply with order 1 a writ of possession or warrant for possession as the case may be shall issue in the applicant’s favour forthwith.
3.At the time the respondent is required to deliver up vacant possession of the Property, the respondent must deliver to the applicant or his agent all keys to the Property and must provide to the applicant or his agent all security and access codes relating to the Property.
4.Within 30 days from the date of these orders the respondent must remove from the Property all vehicles, rubbish and goods which have not vested in the applicant.
5.If the respondent fails to comply with order 4 the applicant shall be authorised to dispose of the vehicles and goods referred to in order 4.
6.The applicant’s costs of this application be paid from the bankrupt estate of the respondent.
7.The parties have liberty to apply on such notice as the circumstances warrant in relation to the implementation or interpretation of these orders.
REASONS FOR JUDGMENT
(Revised from transcript)
There is listed before me today an application filed by the trustee in bankruptcy of the estate of Ms Sakea Koleta Peato. In that application, the trustee seeks an order directing Ms Peato to vacate a property of which Ms Peato, at the time she was made bankrupt, was a sole registered proprietor. The trustee also seeks orders consequential or otherwise related to the principal order that he seeks.
The background to the matter is as follows. On 22 November 2018 Ms Peato was declared bankrupt, and the trustee was appointed her trustee in bankruptcy. At the time of the trustee’s appointment, Ms Peato was the registered proprietor of a property known as 37 Pimelea Place, Rooty Hill, in the State of New South Wales, being the land described in a certificate of title folio identified as 3/1124946 (Property). On 28 November 2018 the trustee, through his lawyers, lodged a caveat against the title to the Property. The evidence reveals the Property is encumbered with a mortgage to Westpac Banking Corporation (Westpac). As at 29 May 2020, the outstanding balance owed on that mortgage was $341,452.90. That amount was provided to the trustee by Westpac itself.
On 29 May 2020 the trustee arranged for a market appraisal of the Property, which appraised the property to have a value between $600,000 to $650,000. On the basis of that appraisal the trustee assessed that the Property, if sold for the amount it was appraised, would make available an amount between $242,347 to $266,847 for distribution to the unsecured creditors. On 7 December 2020, the trustee, through his lawyers, undertook a search on what is referred to as the “On the House” website, which provided information that indicated the Property might be valued between $750,000 to $800,000.
On 25 October 2019 the trustee arranged for the calculation of the estimated cost of annulling Ms Peato’s bankruptcy. That amount, at that date, was assessed to be $102,462.73. That amount includes the claims of two unsecured creditors, which totalled $44,284.79. The trustee assessed that if the Property were sold then there will be sufficient funds to provide for the amounts necessary to annul the bankruptcy.
On 11 November 2020, the trustee, through his lawyers, sent to Ms Peato by email and by pre-paid post a letter demanding that she vacate the property by 4 December 2020. That was met with no response. That led the trustee to file on 23 December 2020 the application that is before me today.
That application first came before me on 15 February 2021, having been referred to me by a Registrar. On that day, Ms Peato appeared. It was apparent that Ms Peato did not understand or at least fully understand that she had been declared bankrupt and the consequences of that state of affairs. After explaining to Ms Peato as best as I could the situation she found herself in and the nature of the application that was being made against her, and with the consent of Mr Korakis, who appeared for the trustee, I ordered that the hearing of the application be adjourned to today, that is, 17 March 2021. I also, however, directed that by 15 March 2021 Ms Peato file and serve an affidavit in which she states grounds, if any, on which she opposes the application and, assuming she does not state any grounds, an affidavit which sets out facts supported by documents relevant to showing that Ms Peato has made efforts to raise money to pay the amount required to annul the bankruptcy, and evidence about the prospects of her securing such money.
Ms Peato has not filed any such affidavit. The matter then proceeded this way. Mr Korakis was in the court room at 9:30 am, being the appointed time of the hearing. As is my usual practise, when I was informed by my Associate that Ms Peato had not appeared or had not dialled in by telephone, I waited for 10 minutes. I then came on the bench and Mr Korakis informed me that he had made contact with Ms Peato and had provided her with the telephone details for the hearing. At that stage there was no indication Ms Peato would join the hearing and I proceeded to hear the application. Mr Korakis read the affidavit of the trustee and also an affidavit of service. After having a brief discussion with Mr Korakis about the orders I proposed to make, Ms Peato dialled in to the hearing.
I referred Ms Peato to the documents that were before the Court or at least to two of them. The first was the application. I explained to Ms Peato what the application sought and I explained to her the orders it was likely I would make, subject to any objection or submission from her, these being that I would make an order requiring her to vacate the Property within 30 days and order that if she does not vacate the property, the trustee would be at liberty to apply for a warrant for possession. I also explained that at the time Ms Peato will be required to vacate the Property, she must hand over the keys and any access codes. I also explained that the order I propose to make would include an order that all goods and rubbish be removed from the Property, and also that costs will be ordered to be paid and that they be paid out of the estate.
I then took Ms Peato to the affidavit of the trustee and narrated the effect of that affidavit. I did these things to ensure that Ms Peato understood the material that was being filed in support of the trustee’s application. I failed to mention that before I took Ms Peato to those documents, she indicated to me her partner had made an attempt to obtain finance but the most that could be achieved is a loan for an amount which was far below the amount required to annul the bankruptcy.
After I explained to Ms Peato the documents, she offered no objection to my making the orders sought. I do not take that to be consent, but also, I should note, that on the material that is before me there appears to be no basis on which she can resist the making of the orders. Ms Peato asked if she could have time to find alternative premises. I indicated to her that the order will give her 30 days to move out of the Property. Ms Peato asked whether, even after the orders are made, it would be possible for her to seek to obtain the money to annul the bankruptcy. Of course, that is an option that is open to her, and is one that she should try to pursue. That is, however, a matter that she will need to raise with the trustee; and, obviously, it would be in her interests to keep the trustee informed of the efforts she is making to obtain the money and the prospects of her obtaining the money necessary to put the trustee in a position to annul the bankruptcy.
That is the background. All that remains for me to do now is just to confirm that the Court has the power to make the orders sought. I have examined that question in a judgment of Prentice v Fortune& Anor [2014] FCCA 2199. In paragraph 11 of those reasons for judgment I said:
[T]here is a substantial body of authority to the effect that the Act [that is the Bankruptcy Act 1966 (Cth)] confers jurisdiction on this Court to order a bankrupt to vacate possession of real property that forms part of the bankrupt estate. The source of the Court’s power to order possession has been held to lie in the combined operation of s.77(1)(g) and s.30 of the Act. [See, for example, Horne (as trustee of the Bankrupt Estate of Sekulovski) v Sekulovski [2009] FCA 1164 (Tracey J); Cook v Tagamilitsky [2001] FMCA 117; Vince (Trustee), in the matter of Sopikiotis (Bankrupt) v Sopikiotis (No 2) [2012] FCA 1298 (Bromberg J)]. Paragraph (g) of s.77(1) provides, among other things, that, unless excused by the trustee, or prevented by illness or other sufficient cause, the bankrupt must “aid to the utmost of his of her power in the administration of his or her estate”. Paragraph (b) of s.30(1) provides that the Court may make such orders as the Court considers necessary for the purposes of carrying out or giving effect to the Act.
In these circumstances I am prepared, and will, in a moment, make orders to the effect of those that I explained to Ms Peato.
I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Manousaridis. Associate:
Dated: 29 March 2021
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