Dixon (Trustee) v Gamble (Bankrupt)

[2016] FCCA 572

FEDERAL CIRCUIT COURT OF AUSTRALIA

DIXON (TRUSTEE) v GAMBLE (BANKRUPT) & ANOR [2016] FCCA 572

Catchwords:
BANKRUPTCY – Application for a declaration that real property vests in the Trustees of the Bankrupt Estate –undefended – Court accedes to the application.

Legislation:

Bankruptcy Act 1966 (Cth), ss.58, 77CA, 116

Federal Circuit Court Act 1999 (Cth), s.18
Judiciary Act 1903 (Cth), s.79(1)
Property Law Act 1958 (Vic), ss.225(1), 225(2)(a)

Coshott & Prentice [2014] FCAFC 88

Applicants: STEPHEN ROBERT DIXON AND NICK MELLOS AS JOINT AND SEVERAL TRUSTEES OF THE BANKRUPT ESTATE OF TREVOR MARK GAMBLE

First Respondent: TREVOR MARK GAMBLE

Second Respondent: MELISSA ANNE HORBURY

File Number: MLG 2610 of 2015

Judgment of: Judge Hartnett

Hearing date: 2 March 2016

Delivered at: Melbourne

Delivered on: 2 March 2016

REPRESENTATION

Counsel for the Applicants: Ms Horwood

Solicitors for the Applicants: CLH Lawyers

The First Respondent: No appearance

The Second Respondent: No appearance

ORDERS MADE ON 2 MARCH 2016

THE COURT DELCARES THAT:

Beneficial ownership of the property located at 20 Ronald Court, Ross Creek, Victoria, 3351, and more particularly, described in Certificate of Title Volume 10134, Folio 305 vests in the applicants as joint owners as to one of two equal undivided parts pursuant to ss.58 and 116 of the Bankruptcy Act 1966 (Cth), and in the second respondent as to one of two equal undivided parts, as tenants in common in equal shares (“the property”).

THE COURT ORDERS THAT:

1. The respondents deliver up to the applicant vacant possession of the property within 21 days of the date of these orders.

2. The respondents deliver up all keys for all buildings and improvements on the property to the applicant within 21 days of the date of these orders.

3. In the event that the respondents fail to deliver up vacant possession of the property in accordance with the above orders, a warrant of possession will issue forthwith in favour of the applicants.

4. The respondents must remove from the property all personal property being vehicles, rubbish and any other chattels (“the personal property”), which does not vest in the applicants within 21 days of the date of these orders.

5. In the event that the respondents fail to comply with Order 4, the applicants are empowered to remove and dispose of the personal property on the property as they see fit.

6. The property be sold in lieu of partition, and the applicants have the sole conduct of the sale of the property and be authorised to instruct an agent and/or auctioneer for that purpose.

7. The applicants are to decide whether the property is to be sold by auction or private treaty.

8. The applicants are to decide whether to set a reserve price for any auction of the property, and if so, what price.

9. The applicants be empowered to sign any contract of sale, discharge of mortgage authority, Transfer of Land, Notice to Vacate and any other documents, on behalf of the second respondent necessary to give effect to the sale and settlement of the property with vacant possession, in the event that the second respondent fails or refuses to sign such documents within such time as required by the applicants solicitors.

10. The first and second respondents do all things as may be reasonably required by the applicants, his selling agent or solicitors for the purpose of achieving a sale of the property with vacant possession, including but not limited to, providing access to buildings on the property for the purpose of valuation and viewing by potential purchasers.

11. The second respondent have liberty to bid at the sale of the property, subject to satisfying the applicants of the second respondent’s ability to complete any such purchase.

12. The net proceeds of the sale of the Property to be paid in the following order:

    (a)Firstly to the payment of any monies due to encumbrancers charging the property prior to the bankruptcy, according to their priorities,

    (b)Secondly to the Applicants’ costs of these proceedings, and all other costs, charges and expenses of the sale of the Property;

    (c)Thirdly, 50 % of the balance remaining is to be paid to the applicants;

    (d)Fourthly, from the funds then remaining, payment is to be made of any monies due to any encumbrancers charging the property subsequent to the bankruptcy, according to their priorities, and then to the second respondent.

13. The parties have liberty to apply on 3 days notice.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLG 2610 of 2015

STEPHEN ROBERT DIXON AND NICK MELLOS AS JOINT AND SEVERAL TRUSTEES OF THE BANKRUPT ESTATE OF TREVOR MARK GAMBLE

Applicant

And

TREVOR MARK GAMBLE

First Respondent

MELISSA ANNE HORBURY

Second Respondent

REASONS FOR JUDGMENT

(Edited Ex Tempore Reasons)

1. Before the Court is an Application filed on 25 of November 2015 wherein the applicants, joint and several Trustees of the Bankrupt Estate of Trevor Mark Gamble, the First Respondent, seek in essence, a declaration that the property located at 20 Ronald Court Ross Creek in the State of Victoria (‘the real property’) vests in the applicants as joint owners as to one of two equal undivided parts by operation of ss.58 and 116 of the Bankruptcy Act 1966 (Cth) (‘the Act’), and orders to provide for the orderly sale of the real property and a division of the net proceeds of sale, following payment of any encumbrances charging the property prior to the bankruptcy, according to the orders sought.  On the date of hearing Counsel for the applicants submitted to the Court that a search conducted this day revealed there were no encumbrances charging the property subsequent to the bankruptcy.

2. The Application is supported by an Affidavit of Stephen Robert Dixon sworn 25 November 2015 and to which is annexed various exhibits.  That, save for affidavits of service, is the evidence relied upon by the applicants in this proceeding.

Service

1. With respect to the issue of service, the Court is satisfied that there has been proper service effected upon both the First and Second Respondents, of the Application, Affidavit of Mr Dixon and all other material relied upon by the applicants in these proceedings.  The affidavits of service establish that the First Respondent was served personally with the sealed copy notice of filing and hearing together with the form 2 application dated 26 November 2015, and a sealed copy Affidavit of Stephen Robert Dixon sworn 25 November 2015 (with exhibits SRD1 to SRD14) (‘the relevant Court documents’) at 20 Ronald Court Ross Creek on the 6^th day of December 2015. The Affidavit of Service is sworn by Rachel Suzanne Greig on 7 December 2015. 

2. An Affidavit of Attempted Service of an attempt to serve Melissa Anne Horbury, the Second Respondent, with the relevant Court documents was filed attesting to service being attempted on the 5^th and 6^th days of December 2015.  Thereafter the applicants filed an Interim Application dated 22 December 2015 seeking that personal service of the notice of filing and hearing application dated 25 November 2015, and the Affidavit of Stephen Robert Dixon sworn 25 November 2015 (and exhibits SRD1 to SRD14) upon the Second Respondent be dispensed with. The applicants sought service of the relevant Court documents be effected by other means as set out in order number 2 of the interim orders sought by the applicants in that Application.  That Application proceeded before Registrar Allaway on 20 January 2016, and the Court ordered dispensation of personal service upon the Second Respondent. The relevant Court documents were to be served upon her by:-

   (a)sending the documents by express post under cover of a letter addressed to the Second Respondent at 20 Ronald Court Ross Creek, Victoria 3351 (the address); and

   (b)placing the documents in an envelope addressed to the Second Respondent and by leaving the envelope in the letterbox at the address. 

   I note that Order number 3 of the orders of Registrar Allaway provided as follows:-

   “3. Service of the documents on the second respondent be deemed to be effected on 17 February 2016 upon condition that the 2 events referred to in paragraph 2 occur by 3 February 2016.”

3. The Court is satisfied that the orders of Registrar Allaway were complied with, and that accordingly service was deemed to be effected on the Second Respondent on 17 February 2016.  There is filed with the Court an Affidavit of Service sworn by Rachel Suzanne Greig on 1 February 2016 attesting to compliance with order 2(b) of the Orders made by Registrar Allaway on 20 January 2016, and an Affidavit of Service sworn on 22 January 2016 by Emma Louise Stritch, a paralegal in the sole and permanent employ of CLH Lawyers, Solicitors for the applicants, deposing to service upon the Second Respondent in accordance with order 2(a) made by Registrar Allaway on 20 January 2016.

4. Otherwise, there is filed and relied upon by the applicants an Affidavit of Service sworn by Emma Louise Stritch on 21 December 2015 deposing to service by ordinary prepaid post to Money3 Corporation Limited (the caveator) of the Affidavit of Mr Dixon, the Form 2 Application, a copy notice of filing and hearing and a covering letter from CLH Lawyers dated 21 December 2015, together with a further Affidavit of Service sworn by Emma Louise Stritch on 21 December 2015, deposing to service by ordinary prepaid post upon Australia and New Zealand Banking Group Limited of those documents provided to the caveator.

5. There is no appearance by the First or Second Respondent on the hearing this day.  No Notices of Objection, nor affidavits, have been filed in the proceedings by either of the respondents. 

History

1. On 7 April 2015 a sequestration order was made against the First Respondent.  On that same day, the applicants were appointed joint and several Trustees of the First Respondent’s Bankrupt Estate.  Shortly after that appointment, the Trustees confirmed that the First Respondent was a joint registered proprietor of the real property, along with the Second Respondent.

2. By letter dated 9 April 2015 sent by registered post to the bankrupt, amongst other things, the bankrupt was requested by the Trustees to lodge his Statement of Affairs with the Official Receiver within 14 days.  As at 25 November 2015, that being the date of the swearing of Mr Dixon’s Affidavit, the First Respondent had not submitted his Statement of Affairs. 

3. Additionally, and commencing on 2 June 2015, staff of the Trustees attended at the real property to speak with the First Respondent to discuss the bankruptcy process. The First Respondent was not at the time in attendance at the property and a request was left that he make contact with the Trustee’s office.  The First Respondent did so, and was requested to call back to arrange a meeting at the office of the Trustees to further discuss his bankruptcy.  Further correspondence of 30 June 2015 was forwarded by the Trustees to the First Respondent requesting lodgement of his completed Statement of Affairs by no later than 13 July 2015, and indicating that investigations undertaken thus far into his Bankrupt Estate had revealed that the real property had an estimated value of $500,000 with a mortgage of approximately $388,192. 

4. The Trustees estimated the equity available in the real property at $112,708 and the Bankrupt Estate’s entitlement to the equity at $56,354. Mr Dixon indicated to the Bankrupt that he intended to realise his interest in the real property for the benefit of creditors. By letter 30 June 2015 to the Second Respondent, Mr Dixon indicated that he and Mr Mellos were joint and several Trustees of the Bankrupt Estate of the First Respondent and that pursuant to s.58 of the Act, the property of the First Respondent vested in the Trustees, which included 50 per cent of the real property. The Second Respondent was advised of the Trustee’s estimate of their interest in the equity in the real property, and requested that in the event the Second Respondent wished to purchase the Trustee’s interest in the real property, that she forward a written offer to the Trustee’s office by 13 July 2015. No such communication was forthcoming.

5. On 15 July 2015, Mr Dixon submitted an application with the Official Receiver pursuant to s.77CA of the Act to require the First Respondent to submit his Statement of Affairs.

6. The First Respondent telephoned the offices of the Trustees on 15 July 2015 and amongst other things, suggested a meeting at the Trustee’s office on 21 July at 2 pm.  That suggestion was agreed to and confirmation made that the meeting would proceed. The First Respondent failed to attend the meeting. 

7. Despite further written communication and telephone calls, no further communication was received from the respondents, save that the First Respondent made a call on 25 August 2015 and arranged a further appointment to attend the Trustees office for a meeting to discuss his bankruptcy, which was to occur on 27 August 2015 at 2.30 pm.  Again, the First Respondent failed to attend the meeting organised.

Consideration

1. The Application before the Court was necessitated by the First Respondent’s non-submission of a Statement of Affairs and non-engagement in the bankruptcy process, together with the Second Respondent’s failure to respond to any of the Trustees correspondence, nor that of the Trustees solicitors, such that the Second Respondent has not agreed to purchase the First Respondent’s interest in the real property, and nor has she provided to the Trustees her consent to join in an orderly sale of the real property.  The Trustees remain without funds in the administration of the estate despite the equity in the real property.

2. In submissions made on the hearing of this matter, Counsel advised the Court that various claimed debts in respect of the Bankrupt Estate remain outstanding.  These are approximately $130,000 to the Commissioner of Taxation, $33,000 to the Commonwealth Bank, $3,000 in outstanding rates on the real property, and the Trustees fees of approximately $22,000 to date.

3. Counsel took the Court to the decision of the Full Federal Court in Coshott & Prentice (2014) FCAFC 88, which confirms the power of the Court to make the orders which are sought. The orders which are made this day are made pursuant to s.79(1) of the Judiciary Act 1903 (Cth), s.18 of the Federal Circuit Court Act 1999 (Cth) and ss.225(1) and (2)(a) of the Property Law Act 1958 (Vic) together with those sections of the Act already referred to in these reasons.

4. The Court accedes to the Application of the applicants.  It is quite apparent that the respondents will not engage at all in the administration of the Bankrupt Estate and any delay in the hearing of this proceeding, in relation to which the respondents are on notice, will simply add to the Trustees costs and expenses and reduce the little equity that is available for the creditors. The applicants are entitled to the orders that they seek and the evidence before the Court is unchallenged by the respondents who have taken no part in the proceedings.

I certify that the preceding eighteen (18) paragraphs are a true copy of the reasons for judgment of Judge Hartnett

Associate: 

Date: 16 March 2016