Ferella v Official Trustee in Bankruptcy

The appeal concerned an application made by the Official Trustee in Bankruptcy under section 66G of the *Conveyancing Act 1919* (NSW) for a statutory trust for sale of real property held in co-ownership. The appellants sought to argue that the primary judge should have exercised discretion against making orders for the sale of the property while related proceedings under section 179 of the *Bankruptcy Act 1966* (Cth) were still pending in the Federal Court of Australia, which could potentially render the orders exorbitant or otiose. The appeal was heard by Bergin CJ in Eq, Tobias AJA, and Emmett AJA.

The central legal issue before the Court of Appeal was whether the primary judge erred in exercising their discretion to make orders for the statutory trust for sale, notwithstanding the pendency of Federal Court proceedings. Specifically, the court had to consider whether the potential for the Federal Court proceedings to impact the efficacy or appropriateness of the section 66G orders warranted a stay or refusal of those orders.

The Court of Appeal found no error in the primary judge's decision. The judges reasoned that the existence of separate proceedings in the Federal Court did not automatically preclude the exercise of the court's power under section 66G of the *Conveyancing Act 1919* (NSW). The court emphasised that the statutory trust for sale mechanism is designed to facilitate the division of property held in co-ownership, particularly in circumstances involving bankruptcy. The pendency of other proceedings, while a factor to be considered, did not, in this instance, create a sufficient basis to override the statutory power or to compel the exercise of discretion against making the orders. The court concluded that the primary judge had properly weighed all relevant considerations.

The appeal was dismissed. The appellants were directed to file any submissions by 5 February 2016 as to why they should not be ordered to pay the first respondent's costs of the appeal on an indemnity basis. In the absence of such submissions, an order for indemnity costs would be made.