Griffin and Khatri v Milne

[2009] FMCA 680

FEDERAL MAGISTRATES COURT OF AUSTRALIA

GRIFFIN & KHATRI v MILNE & ANOR [2009] FMCA 680

BANKRUPTCY – Vesting of property in trustee – real property acquired by bankrupt as trustee for child – property acquired using bankrupt’s property – application for vesting order in favour of trustee.

Bankruptcy Act 1966, ss.139D, 139DA, 139F

Applicants: MICHAEL JOHN GRIFFIN AND RAJENDRA KUMAR KHATRI AS TRUSTEES OF THE BANKRUPT ESTATE OF GEOFFREY MILNE

First Respondent: GEOFFREY MILNE AS TRUSTEE FOR JOANNE JUDITH MILNE

Second Respondent: WENDY MILNE

File Number: BRG 324 of 2009

Judgment of: Wilson FM

Hearing date: 26 June 2009

Date of Last Submission: 26 June 2009

Delivered at: Brisbane

Delivered on: 26 June 2009

REPRESENTATION

Counsel for the Applicant: N/A

Solicitors for the Applicant: Redchip Lawyers

First Respondent in person: Mr Milne

Solicitors for the Second Respondent: McNamara & Associates

ORDERS

1. That the estate in fee simple of the property located at 14 Oak Street, Brightview, more particularly described as lot 181 on registered plan 836902, County of Churchill, parish of Rosewood, Title Reference 18331184 vest in the Trustees of the bankrupt estate of Geoffrey Milne.

2. That by consent, and upon the applicant’s undertaking not to deal with the property without the consent of the second respondent or court order first obtained, the second respondent withdraw caveat number 712074594 within seven (7) days.

3. That the respondents execute any document or documents necessary to comply with the terms of this order and if they should fail or refuse to do so the registrar or deputy registrars of this court shall be authorized to register any necessary documents in order that these order be given effect.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
BRISBANE

BRG 324 of 2009

MICHAEL JOHN GRIFFIN AND RAJENDRA KUMAR KHATRI AS TRUSTEES OF THE BANKRUPT ESTATE OF GEOFFREY MILNE

Applicants

And

GEOFFREY MILNE AS TRUSTEE FOR JOANNE JUDITH MILNE

First Respondent

WENDY MILNE

Second Respondent

REASONS FOR JUDGMENT

1. The trustees of the bankrupt estate of Geoffrey Milne seek an order under s.139DA Bankruptcy Act 1966, that real property situate at 14 Oak Street, Brightview, more particularly described as Lot 181 on Registered Plan 836902, County of Churchill, Parish of Rosewood, Title Reference 18331184, be vested in the trustees, and for consequential relief.

2. The first named respondent Geoffrey Milne became bankrupt on 9 April 2009.  On 1 March 2007 he entered into a contract to purchase the subject property for $300,000.  That conveyance settled on or about 26 March 2007.  The first respondent subsequently became registered as the proprietor of the property as trustee for his then infant daughter Joanne Judith Milne.

3. It is alleged in the Statement of Claim, which is verified by the trustee Mr Griffin, that the purchase moneys used to acquire the property were derived from the sale by the bankrupt of his real property located at 91 Main Street, Redland Bay, on or about the same date, that is 26 March 2007.  The beneficiary, who has now achieved her majority, contributed no moneys to the purchase price of the property.

4. The statutory requirements that must be met before an order can be made under s.139DA of the Act are relatively straightforward. The examinable period in this case dates back four years prior to the commencement of bankruptcy. The subject property was clearly acquired during the examinable period.

5. During that period the first respondent as trustee acquired the property as a direct result of financial contributions made by him. He still has the estate in the property as trustee although his daughter, having achieved her majority, could request that the property be conveyed into her name. The pre-requisites set out in s.139DA of the Act are therefore met in the present case.

6. The Court then retains a discretion as to whether to make an order under s.139D(2) and (3) of the Act. In his written submissions Mr Long has helpfully set out why that discretion should be exercised in favour of making a vesting order. He points out that s.139F of the Act requires the Court to take into account particular matters in considering whether or not to exercise its discretion in favour of making a vesting order.

7. The beneficiary of the trust contributed no moneys towards the acquisition of the property, which came wholly from the bankrupt's own moneys.  Ms Milne informed the Court that the vesting of the property in the trustee will cause hardship to both her and to her sister who currently live in the property.  There is no evidence before me of Ms Milne's current net worth.  I must balance the hardship about which she has spoken with the rights of the bankrupt's creditors to share in the property that should rightfully form part of his estate.

8. There is also to be considered the interests of the second respondent, the bankrupt's former wife, who has commenced proceedings under the Family Law Act for property settlement orders, that I will shortly deal with.  The second respondent consents to the orders sought by the trustees of the bankrupt on the trustee's undertaking not to deal with the property without her consent or order of the Court.

9. I accept that the type of transaction in this case seems to be that which is targeted by s.139DA and it seems to me that the discretion ought be exercised in favour of making an order that the trustees seek.

I certify that the preceding nine (9) paragraphs are a true copy of the reasons for judgment of Wilson FM

Deputy Associate:  J. K. Gasteen

Date:    14 July 2009