Ferella v The Official Trustee in Bankruptcy
[2015] NSWCA 81
•2 April 2015
|
New South Wales |
Case Name: | Ferella v The Official Trustee in Bankruptcy |
Medium Neutral Citation: | [2015] NSWCA 81 |
Hearing Date(s): | 30 March 2015 |
Date of Orders: | 30 March 2015 |
Decision Date: | 2 April 2015 |
Before: | Meagher JA |
Decision: | Application for a stay refused. |
Catchwords: | PROCEDURE – civil – judgments and orders – stay of orders pending appeal – orders under Conveyancing Act 1919 (NSW), s 66G appointing trustees for sale of property – exercise of discretion – concessions made during course of argument before primary judge – appeal having no realistic prospects of success |
Legislation Cited: | Bankruptcy Act 1966 (Cth), s 179 |
Cases Cited: | Alexander v Cambridge Credit Corporation Limited (1985) 2 NSWLR 685 |
Category: | Procedural and other rulings |
Parties: | Nida Ferella (First Appellant) |
Representation: | Counsel: |
File Number(s): | 2014/374828 |
Decision under appeal: | |
Court or Tribunal: | Supreme Court of NSW |
Jurisdiction: | Equity |
Date of Decision: | 18 December 2014 |
Before: | Nicholas AJ |
File Number(s): | SC2014/204343 |
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
JUDGMENT
MEAGHER JA: On 30 March 2015 I dismissed with costs the appellants’ application for a stay, pending the hearing of an appeal in this Court, of orders made by the primary judge (Nicholas AJ) on 18 December 2014. These are my reasons for doing so.
The application to the primary judge was for orders under s 66G of the Conveyancing Act 1919 (NSW) appointing trustees for sale of four properties – two at Blacktown, one at North Entrance and one at Box Hill – jointly owned by the first appellant (Mrs Ferella) and the first respondent as The Official Trustee in Bankruptcy of the second appellant (Mr Ferella). As a result of his bankruptcy in October 2003 Mr Ferella’s interest as co-owner in those properties vested in the Official Trustee.
There is a dispute between Mr Ferella and the Official Trustee as to the amounts to which the latter is entitled by way of costs, charges and expenses of the administration of the bankruptcy. The amount said to be due by the Official Trustee exceeds $900,000. Mr Ferella contends that the amount properly due is significantly lower.
More relevantly for present purposes, that dispute is the subject of an application made by Mr Ferella in the Federal Court of Australia under s 179 of the Bankruptcy Act 1966 (Cth) for an inquiry into the conduct of the Official Trustee in relation to the bankruptcy and for consequential relief. That application was heard and judgment reserved by Yates J on 8 September 2014.
On 18 December 2014 the primary judge made orders appointing trustees for sale of the properties referred to above other than the property at Box Hill. On 9 February 2015 the Chief Judge in Equity, Bergin J, stayed the operation of orders 4 to 11 made by Nicholas AJ until 4pm on 18 March 2015. On that day the appellants filed their notice of appeal to this Court and obtained an order from Slattery J staying the operation of orders 4 to 11 until 4pm on 30 March 2015.
Since the hearing before Nicholas AJ the parties have agreed on the sale of the Official Trustee’s interest in the North Entrance property to Mrs Ferella for $210,000. Accordingly the subject matter of the current application is the orders relating to the appointment of trustees for sale of the two Blacktown properties. Those properties are investment properties and estimated to have a total value of approximately $1.55 million. Neither property, if sold alone, would generate sufficient funds to satisfy the Official Trustee’s full claim.
On an application for the stay of orders pending an appeal the applicant must demonstrate a reason or an appropriate case to warrant the exercise of discretion in his or her favour. The matters relevant to be considered in a case such as the present include an assessment, albeit on a preliminary basis, of whether the appellants have an arguable case and a consideration of whether the appeal will be rendered of no effect or utility unless a stay is granted: Alexander v Cambridge Credit Corporation Limited (1985) 2 NSWLR 685 at 694 – 695.
Before the primary judge the appellants argued that there were circumstances justifying the deferral or refusal of the application under s 66G in the exercise of the Court’s discretion. It was argued that until the outcome of the s 179 application was known the amount to which the Official Trustee was entitled was uncertain. The appellants’ position was that once the final amount was known, assuming anything was payable, they would prefer to pay that sum to the Official Trustee rather than lose the properties and incur the expenditure involved in a sale by trustees.
In the course of that argument the primary judge suggested that a way of accommodating the appellants’ concern was to make provision for a “staged sale”. The parties were then given the opportunity to consider their position in relation to such a proposal. After a short adjournment, counsel for the Official Trustee produced revised proposed orders which did not include the Box Hill property, the most valuable of the four properties. After the appellants’ counsel had had the opportunity to consider those revised orders, the following exchange occurred between him and the primary judge: (tcpt 18/12/14, p 20)
Counsel: Well, your Honour, whilst I do not have instructions either to consent or oppose those orders, and I'd have to concede that to some extent the temporary excision of the Box Hill property would partly meet the submissions that I made earlier. It does seem to me a course which is potentially open to your Honour.
His Honour: I entirely agree. And you are protected in this sense, or everybody is, because there's liberty to apply in any event. But it does seem to me that that's [an] absolutely commercially sensible and realistic way of going about things.
Counsel: As the Court pleases.
His Honour: So I see no reason in the circumstances why I shouldn’t make these orders.
Counsel: Yes, your Honour.
Understandably, in the face of that exchange the primary judge did not proceed to deliver any reasons for the making of the revised orders as sought.
The grounds of appeal do not claim that there was any error on the part of the primary judge in not giving reasons for the orders made. That immediately presents a difficulty for an appellant seeking to challenge the Court’s exercise of a discretion which on the face of it was not manifestly unreasonable.
The three grounds in the notice of appeal argue that the primary judge erred in not exercising his discretion against making an order under s 66G or in not deferring consideration of the application under s 66G until after the delivery of judgment in the Federal Court proceedings. Neither of those arguments can stand with the concessions made by counsel for the appellants in the exchange extracted above. Those concessions were that the primary judge would be justified in making an order under s 66G and that the material before the Court provided a basis for the making of orders in the terms sought. In the face of those concessions, which in my view were properly made, the primary judge made no error in proceeding as he did.
That being the position the appeal has no realistic prospects of success. For that reason I refused the application for a stay of the primary judge’s orders.
The present case is not one in which the appointment of trustees for sale would be inconsistent with any proprietary right of either of the appellants or with any contractual or equitable obligation owed by the Official Trustee to Mr Ferella: cf Williams v Legg (1993) 29 NSWLR 687 at 692 - 693.
The dispute with which this litigation is concerned is that between Mr Ferella and the Official Trustee. It is whether the latter is entitled to apply property vested in it towards payment of the costs, charges and expenses incurred in the bankruptcy administration. The amount of those costs and expenses is the subject of proceedings in the Federal Court. If Mr Ferella seeks to prevent the Official Trustee from exercising its power of sale until that dispute has been determined, there would appear to be no good reason why such an application could not be made to the Federal Court. The possibility of Mr Ferella making such an application was raised in the proceedings before the primary judge.
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