Evans v & Riley
[2010] FMCA 798
•15 October 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| EVANS & ANOR v & RILEY & ANOR | [2010] FMCA 798 |
| BANKRUPTCY – Leave to commence or take fresh steps in proceedings in District Court of Western Australia – where property seizure and sale order would serve no purpose because property vested in trustee in bankruptcy –whether leave to be granted. |
| Bankruptcy Act 1966 (Cth), ss.5(1), 27, 58(1) and (3)(b), 116(1) and (2), 178 Civil Judgments Enforcement Act 2004 (WA), ss.59, 102 Transfer of Land Act 1893 (WA), s.133(13) |
| Fraser v Commissioner of Taxation (1996) 69 FCR 99 Kobylinski & Anor v Walker [2008] FMCA 89 Meriton Apartments Pty Ltd & Anor v Industrial Court of New South Wales and Anor (2008) 171 FCR 380; [2008] FCAFC 172 |
| First Applicant: | WAYNE MURRAY EVANS |
| Second Applicant: | MICHELLE ANNE GRACE |
| First Respondent: | JACKIE RILEY OF INSOLVENCY AND TRUSTEE SERVICE AUSTRALIA AS TRUSTEE OF THE BANKRUPT ESTATE OF MARK ANTHONY BRAHAM |
| Second Respondent: | MARK ANTHONY BRAHAM |
| File Number: | PEG 189 of 2010 |
| Judgment of: | Lucev FM |
| Hearing date: | 14 October 2010 |
| Date of Last Submission: | 15 October 2010 |
| Delivered at: | Perth |
| Delivered on: | 15 October 2010 |
REPRESENTATION
| Counsel for the Applicant: | Mr P Marsh |
| Solicitors for the Applicant: | Waterside Legal |
| Counsel for the Respondents: | No appearance |
| Solicitors for the Respondents: | No appearance |
ORDERS
The Applicants application for leave under s.58(3)(b) of the Bankruptcy Act 1966 (Cth) to take a fresh step in proceedings in the District Court of Western Australia in matter number CIVO 141 of 2006 be dismissed.
The Applicants to provide a copy of the orders of this Court and the Reasons for Judgment in matter number PEG 189 of 2010 to the District Court of Western Australia at the hearing today in matter number CIVO 141 of 2006.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH |
PEG 189 of 2010
| WAYNE MURRAY EVANS |
First Applicant
| MICHELLE ANNE GRACE |
Second Applicant
And
| JACKIE RILEY OF INSOLVENCY AND TRUSTEE SERVICE AUSTRALIA AS TRUSTEE OF THE BANKRUPT ESTATE OF MARK ANTHONY BRAHAM |
First Respondent
| MARK ANTHONY BRAHAM |
Second Respondent
REASONS FOR JUDGMENT
Application
This is an urgent application “Application” made yesterday under s.58(3)(b) of the Bankruptcy Act 1966 (Cth)[1] for leave to take a further step in proceedings in the District Court of Western Australia[2] in relation to a property seizure and sale order,[3] “PSSO” first issued by the District Court in 2006, and listed for hearing in the District Court at 10.00am today for a further extension of the PSSO.
[1] “Bankruptcy Act”
[2] “District Court”
[3] “PSSO”.
Order sought
The order sought by Wayne Murray Evans and Michelle Anne Grace[4] is as follows:
Applicant be granted leave pursuant to section 58(3)(b) of the Bankruptcy Act 1966 to commence and proceed with the application in the District Court lodged on 5 October 2010 to extend the Property Seizure and Sale Order pursuant to section 102(2) of the Civil Judgements Enforcement Act 2004 (WA) and extend the sale period of the Property (Seizure and Sale) Order pursuant to section 133(13) of the Transfer of Land Act 1893 (WA)
[4] “Applicants”.
Facts
The Court has limited factual material before it, the only affidavit being a comparatively short one sworn by Mr Waters, the solicitor for the Applicants, with annexures attached. Submissions from the Bar table by Counsel for the Applicants went into further background, but there is no evidence of those further matters before the Court. So far as can be ascertained from the evidence the relevant facts are as follows:
a)on 13 January 2004 Mark Anthony Braham became the registered proprietor of a property at 35 Eureka Street, Hannans[5] (a suburb of Kalgoorlie), and remains the registered proprietor of that property;
[5] “Property”.
b)on 19 October 2006, in relation to Mark Anthony Braham and Allison Lorraine Braham as Judgment Debtors in respect of a judgment debt of $426,113.50, the District Court issued the PSSO against Mark Anthony Braham’s interest in the Property in District Court proceedings bearing a matter number of CIVO 141 of 2006, which matter number has been borne on all subsequent District Court orders related to the PSSO;
c)on 23 April 2007 the PSSO was registered on the Certificate of Title for the Property, and it appears that subsequent orders extending the sale period have been made during the period 2007-2009;
d)on 3 December 2007 the Certificate of Title shows that a caveat was lodged against the Property by Kimberley Braham, Nathan Braham and Jamie-Lee Braham;
e)on 20 May 2009 the Sheriff filed in the District Court an interpleader summons[6] on behalf of Kimberley Braham, Nathan Braham, Jamie-Lee Braham and Mark Braham Pty Ltd as claimants[7] in respect of the Property, but in respect of which it appears that there has been no progress, or at least no substantive progress;
[6] “Interpleader Proceedings”.
[7] “Interpleader Claimants”.
f)on 25 September 2009:
i)the PSSO was extended to 18 October 2009; and
ii)the sale period of the PSSO was extended for a further six months from 30 September 2009;[8]
[8] On the evidence before the Court it does not appear that the various PSSO extensions were necessarily contiguous, but this need not presently trouble this Court.
g)on 26 November 2009 Mark Anthony Braham[9] became bankrupt on his own debtor’s petition, and the Official Trustee in Bankruptcy[10] was appointed as the Bankrupt’s Trustee in Bankruptcy;
[9] “Bankrupt”.
[10] “Official Trustee”.
h)on 3 December 2009 the Certificate of Title shows that a caveat was lodged against the Property by the Official Trustee as to the interest of the Bankrupt only;
i)on 1 October 2010 the Applicants’ solicitors gave notice to the Official Trustee, the Bankrupt’s solicitors and the Interpleader Claimant’s solicitors of the Applicants’ intention to file the Current PSSO Extension Application;
j)on 5 October 2010 the Applicants filed an application “Current PSSO Extension Application” in the District Court seeking to extend:
i)the PSSO for 12 months from 18 October 2010, under s.102(2) of the Civil Judgments Enforcement Act 2004 (WA);[11]
[11] “CJE Act”.
ii)the sale period of the PSSO for six months from 18 October 2010, under s.133(13) of the Transfer of Land Act 1893 (WA);[12]
[12] “TL Act”.
k)on 11 October 2010 the Current PSSO Extension Application was listed for hearing in the District Court at 10.00am today;
l)on 12 October 2010 the Applicants’ solicitors received a letter from Insolvency and Trustee Service Australia[13] advising as follows:
[13] Presumably on behalf of the Official Trustee, although it is not clear on the face of the letter.
BANKRUPT ESTATE OF MARK ANTHONY BRAHAM NO. 1772 OF 2009
Thank you for your letter of the 1 October 2010 and the copies of the letters referred to that appears the trustee did not receive.
The trustee has investigated ownership of the property at 35 Eureka Street, Hannans and is satisfied that the property is owned by the company (Mark Braham Pty Ltd) and not by the above bankrupt in his own right.
m)on 12 October 2010 the solicitors for the Interpleader Claimants advised the Applicants’ solicitors that the Interpleader Claimants neither consented to nor opposed the Current PSSO Extension Application, and therefore did not propose to attend at the District Court hearing of the Current PSSO Extension Application today;
n)on 14 October 2010 the solicitors for the Interpleader Claimants advised the Applicants’ solicitors that the Interpleader Claimants considered the Current PSSO Extension Application to be misconceived because:
i)the Applicants are unsecured creditors of the Bankrupt, and have no right to preference over any other creditor;
ii)the Interpleader Claimants claim an equitable interest, by way of constructive trust, in the Property, and are therefore not creditors of the Bankrupt, but parties having a direct, albeit equitable, interest in the Property;
iii)the Applicants had not complied with s.58(3)(b) of the Bankruptcy Act,
and, therefore, the Interpleader Claimants intended to oppose the Current PSSO Extension Application at the hearing in the District Court today.
o)this application was filed by facsimile at 2.35pm yesterday afternoon, and heard, ex parte, at 3.00pm yesterday afternoon.
The urgency of the Application
The urgency of the Application arises from:
a)the proximity of the hearing of the Current PSSO Extension Application in the District Court;
b)the effect of s.102(5) of the CJE Act which prevents the extension of the PSSO unless the order extending the PSSO is made before the previous PSSO ceases to have effect. In this case the PSSO is due to expire on 18 October 2010.
Put shortly, the PSSO will expire on 18 October 2010 if the Current PSSO Extension Application does not proceed because leave has not been granted to the Applicants to take a further step in the proceedings concerning the PSSO.
Whether current PSSO extension application a “proceeding”
At hearing yesterday Counsel for the Applicants tentatively submitted that it might not have been necessary to make the Application because the PSSO was not made nor extended in a “proceeding” in the District Court, but ultimately did not press the submission.
The Court observes that:
a)in order to make the PSSO an application was required to be made to a court, and a court was empowered to make an order; CJE Act, s.59.
b)the PSSO was made under the provisions of s.59 of the CJE Act;
c)in order to extend the PSSO an application was required to be made to a court, and a court was empowered to make an order;[14]
d)the PSSO was previously extended under the provisions of s.102 of the CJE Act;
e)the PSSO and extension orders are on their face “orders”, and the PSSO and extension orders in evidence all appear to bear the signature of a Registrar or Deputy Registrar of the District Court and have had affixed to them the seal of the District Court;
f)the Current PSSO Extension Application has been listed for hearing today in the District Court, the listing being in the form of a separate “Notice of Hearing” box on the Current PSSO Extension Application form, which contains provision for the insertion of a hearing date, and which is seemingly allocated by the District Court following lodgement with the District Court;
g)it appears from the correspondence in evidence that the making, and extending, of the PSSO could be opposed by parties with an actual or alleged interest in the Property at any hearing in the District Court today.
[14] CJE Act, s.102(2) and (4); TL Act, s.133(13).
In the above circumstances the Court considers that the hearing of the Current PSSO Extension Application must be a “proceeding” for the purposes of s.58(3)(b) of he Bankruptcy Act. Authority supports that view, a “proceeding” under s.58(3)(b) of he Bankruptcy Act having been held by the Federal Court to refer to proceedings for the enforcement of a payment of debt, such as the seizing of property by execution or by the imprisonment of fraudulent debtors.[15]
[15] Fraser v Commissioner of Taxation (1996) 69 FCR 99; Re McCauley; Ex parte Fraser (1995) 61 FCR 251.
Requirements for leave to be granted
The grant of leave under s.58(3)(b) of the Bankruptcy Act does not require the Court to consider the merits of the various issues in contention. Rather, it requires the Court to determine:
a)whether the issues in the proceedings are complex;
b)whether the issues are able to be resolved more thoroughly and expeditiously in the proceedings sought to be commenced or continued than would be the case under the proof of debt process in respect of the bankrupt’s estate;
c)whether there are a multiplicity of claims and whether they ought all be resolved in one proceeding; and
d)whether conditions ought to attach to any grant of leave.[16]
[16] Singh v Official Trustee in Bankruptcy & Anor (2007) 214 FLR 84 at 89 per Lucev FM; [2007] FMCA 1367 at paras 18 and 19 per Lucev FM; Kobylinski & Anor v Walker [2008] FMCA 89 at para.3 per Lucev FM.
The current PSSO extension application and the effect of the Bankrupt’s bankruptcy
The necessity to apply to this Court for leave to take a further step in proceedings in the District Court in relation to the Current PSSO Extension Application only arises because of the Bankrupt’s bankruptcy in November 2009. Previous applications to extend the PSSO were not therefore afflicted by the requirement to apply for leave of this Court. In the current circumstances it is necessary to ask what purpose is to be served by the extension of the PSSO in relation to the Bankrupt’s interest in the Property. That requires an examination of the purpose and effect of the PSSO.
Section 59(1) of the CJE Act provides that:
In order to recover a judgment debt, a judgment creditor may apply to the court for an order authorising the Sheriff to seize and sell the judgment debtor’s property to wholly or partially satisfy the judgment debt.
The evident purpose of the PSSO is therefore to allow the Sheriff to seize the Property, sell the Property, and wholly or partially satisfy the debt from the sale proceeds.
The issue that then arises is whether, by reason of the bankruptcy, the PSSO can have any effect in relation to the Bankrupt’s interest in the Property.
Upon bankruptcy the Bankrupt’s interest in the Property vested forthwith in the Official Trustee as the trustee in bankruptcy of the Bankrupt’s estate.[17] The Bankrupt’s interest in the Property, being “property” of the bankrupt is divisible amongst the Bankrupt’s creditors.[18] The Bankrupt’s interest in the Property is therefore, from the time of the bankruptcy, not available to the Sheriff for seizure, and more particularly, sale and distribution of the proceeds of sale, to the Applicants as judgment creditors. The Applicants, as judgment creditors, must await the Official Trustee’s determination as to how any property of the Bankrupt, including the Property, is to be dealt with. The extending of the PSSO (including the extension of any sale period) would therefore have no effect, for it is the Official Trustee who must determine how the Bankrupt’s interest in the Property is to be dealt with, and whether or not it is to be sold and how the proceeds are to be distributed amongst any judgment creditors, and not just the Applicants.
[17] Bankruptcy Act, s.58(1).
[18] Bankruptcy Act, ss.5(1) and 116(1)
In the circumstances, a grant of leave to take a fresh step in the proceedings in the District Court in relation to the PSSO would be futile. It would not therefore assist in the thorough or expeditious resolution of any issues concerning the Bankrupt’s interest in the Property. The Court will therefore not grant leave to take a fresh step in the proceedings in the District Court in relation to the PSSO.
The Court notes that it appears that:
a)the Interpleader Claimants claim some form of equitable interest in the Property, but in the absence of pleadings in the Interpleader Proceedings, or some other detailed explanation of their claimed interest, it is not possible to determine in any way what that interest might be, or how it might effect the divisibility of the Property amongst creditors;[19] and
b)the Official Trustee has indicated that it is satisfied that the property is owned by a company (Mark Braham Pty Ltd), and not by the Bankrupt in his own right.[20] The Official Trustee did not indicate why or how it had arrived at that state of satisfaction, and because these proceedings were heard urgently and ex parte no further explanation has been forthcoming.
[19] Bankruptcy Act, s.116(2).
[20] An “ownership” not reflected in the Certificate of Title.
These are matters properly to be determined by the Official Trustee, or in the event of a dispute as the extent of the interest previously held in the Property by the Bankrupt, by a court exercising bankruptcy jurisdiction, namely this Court or the Federal Court of Australia.[21] No grant of leave to take a fresh step in the proceedings in the District Court in relation to the PSSO can be granted because of these matters. A grant of leave to allow an extension of the PSSO ought not to be granted to enable some sort of “holding pattern” to be put in place whilst disputes over interests in the Property are sorted out, as was implicitly suggested by the submissions made on behalf of the Applicants.
[21] Bankruptcy Act, ss.27 and 178; Meriton Apartments Pty Ltd & Anor v Industrial Court of New South Wales and Anor (2008) 171 FCR 380 at 387 per Branson J and 399 per Greenwood J, [2008] FCAFC 172 at paras.19-20 per Branson J and 80 per Greenwood J.
Conclusion
The Court has concluded that for the reasons set out above it will not grant leave to take a fresh step in the proceedings in the District Court in relation to the PSSO. The Application will therefore be dismissed, and an order made accordingly. There will also be an order requiring the Applicants to provide to the copies of these Reasons for Judgment and the Court’s orders to the District Court hearing today.
The hearing being ex parte, and the Applicants having been unsuccessful, there will be no order as to costs.
I certify that the preceding nineteen (19) paragraphs are a true copy of the reasons for judgment of Lucev FM
Associate:
Date: 15 October 2010
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