Harrison (Trustee) v King (Bankrupt)
[2021] FCCA 185
•4 February 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
Harrison (Trustee) v King (Bankrupt) [2021] FCCA 185
File number(s): BRG 803 of 2019 Judgment of: JUDGE JARRETT Date of judgment: 4 February 2021 Catchwords: BANKRUPTCY – Bankruptcy courts – jurisdiction and powers of court – particular cases.
REAL PROPERTY – Partition of land – statutory trust for sale or partition – generally.
Legislation: Bankruptcy Act 1966 (Cth), s.58
Federal Circuit Court of Australia Act 1999 (Cth), s.17A
Federal Circuit Court Rules 2001 (Cth), rr.13.03A(2), 13.03B(2)(d), 13.07, 15.31
Judiciary Act 1903 (Cth), s.79
Property Law Act 1974 (Qld), s.38
Cases cited: Coshott v Prentice (2014) 311 ALR 428
Ex Parte Eimbart Pty Ltd [1982] Qd R 398
Re Permanent Trustee Nominees (Canberra) Limited [1989] 1 Qd R 314
Speedo Holdings BV v Evans (No 2) [2011] FCA 1227
Number of paragraphs: 39 Date of last submission/s: 3 September 2020 Date of hearing: 3 September 2020 Place: Brisbane Solicitor for the Applicant: Bennett & Philp The First Respondent:: No Appearance The Second Respondent: No Appearance The Third Respondent: Self-represented ORDERS
BRG 803 of 2019 BETWEEN: BRETT RICHARD GEOFFREY HARRISON (TRUSTEE OF THE BANKRUPT ESTATE OF JEROME KING)
Applicant
AND: JEROME KING
First Respondent
LARISA IVANOVNA YUSHKOVA
Second Respondent
JEREMY DAVID ALLEN KING
Third Respondent
ORDER MADE BY:
JUDGE JARRETT
DATE OF ORDER:
4 FEBRUARY 2021
THE COURT ORDERS THAT:
1.That default judgment is entered for the Applicant against the First, Second and/or Third Respondents pursuant to rule 13.03B(2)(d) of the Federal Circuit Court Rules 2001 (Cth).
THE COURT DECLARES THAT:
2.Immediately prior to the sequestration order dated 13 July, 2016 being made against the First Respondent:
(a)the name of Jeremy David Allen King, shown as a former registered proprietor of the land described as Lot 801 on Registered Plan 162672 with title reference 15771110 also known as 13 Bairnsdale Court, Helensvale in the State of Queensland (“the property”) was an alias of the First Respondent; and
(b)the First Respondent had a legal and beneficial interest in the property as a joint tenant with the Second Respondent.
3.Immediately prior to this Order being made, Jeremy David Allen King’s interest in the property vested in the Applicant pursuant to s.58 of the Bankruptcy Act 1966 (Cth).
THE COURT FURTHER ORDERS THAT:
4.Pursuant to s.79 of the Judiciary Act 1903 (Cth) and s.38 of the Property Law Act 1974 (Qld), the property vest in Gavin Morton and Leon Lee (“the Trustees”), subject to encumbrances affecting the entirety but free from encumbrances affecting any undivided shares, on the statutory trust for sale and that the Trustees stand possessed of the net proceeds of sale.
5.Each Respondent deliver up vacant possession of the property to the Trustees within 42 days of these orders.
6.The Trustees are entitled to sell the property in such way as they consider appropriate in the circumstances including but not limited to sale by auction or by private treaty.
7.The Second Respondent is at liberty to purchase the property upon terms that she shall not be required to pay any deposit and that she may set-off against the purchase price the value of the whole of her share in the property.
8.The Trustees shall distribute the sale proceeds in the following manner and order of priority:
(a)in payment of all costs and expenses of and incidental to the sale as provided for by s.37A of the Property Law Act 1974 (Qld) including those of any appointed real estate agent and agent’s commission, legal costs, marketing and advertising costs;
(b)in discharge of any valid encumbrance over the title of the property;
(c)in payment of the Trustees’ reasonable fees and disbursements incurred by them in performance of their obligations pursuant to these orders;
(d)in payment of any costs order made in the Applicant’s favour against Respondent/s from the share/s of the relevant Respondent/s (and if against both owners then from their shares equally); and
(e)the remains to be paid to the Applicant and the Second Respondent in equal shares, subject to paragraph 7 and 8(d) hereof.
9.The Respondents pay the Applicant’s costs of and incidental to these proceedings including reserved costs, if any, to be taxed on an indemnity basis in accordance with the Federal Circuit Court (Bankruptcy) Rules 2016.
REASONS FOR JUDGMENT
JUDGE JARRETT:
By this application, the applicant, as trustee of the bankrupt estate of the first respondent Jerome King, seeks default judgment for the relief claimed in the principal proceedings. That relief is for certain declarations and an order for possession and sale of certain real property. For the reasons that follow it is appropriate to grant the applicant the relief sought.
The first respondent was made bankrupt upon a judgment secured against him by a firm of solicitors. The solicitors commenced proceedings against “Jerome King” and “Larissa King” claiming that those people had retained the firm to perform legal work on their behalf. The solicitors claimed that they had not been paid for that work. Judgment was entered against Jerome King.
Subsequently a creditor’s petition was presented and a sequestration order was made on 13 July, 2016 against the estate of Jerome King. The evidence shows that at that time a parcel of real property situated at 13 Bairnsdale Court, Helensvale and described as Lot 801 on Registered Plan 162672, title reference 15771110 was registered to “Jeremy David Allen King” and the second respondent, as joint tenants.
The primary issue in these proceedings is whether Jeremy David Allen King is the same person as Jerome King. I have concluded that on the balance of probabilities, he is.
No Statement of Affairs has been lodged by Jerome King in his bankruptcy.
None of the respondents have taken any active steps to defend these proceedings, although they have participated to some extent. On 16 December, 2019 the second respondent filed a notice of appearance. She has not filed any other documents in the proceedings.
The first respondent has not entered an appearance in the present proceedings. However, on 6 May, 2020 an application in a case and an affidavit was filed, purportedly by the first respondent. By the application in a case, Mr King sought orders that the present applicant account to him and the second respondent for rents that had been received in respect of the Bairnsdale Court property. After his appointment, the applicant had taken steps to become registered as trustee in bankruptcy of the interest held by Jeremy David Allen King in that property and had directed payment of half of the rent to the trustee.
The affidavit uses the name Jerome King and the name Jeremy David Allen King interchangeably. For example, the name of the deponent is described as Jerome King in the affidavit and it is described as being prepared by Jerome King. It is then said to be sworn by Jeremy David Allen King. It concludes with the assertion that “Jerome King, as stated in the Court Judgement, M3541/15, and the Bankruptcy Order, BRG 323/2016, is not Jeremy David Allen King”.
When Mr King’s application in a case came before me on 22 May, 2020 a person describing himself as Jeremy David Allen King appeared. There was no appearance for Jerome King. It became apparent that the person describing himself as Jeremy David Allen King had filed the application in a case and affidavit then before the court. I made certain directions on the application. At that stage the principal proceedings were constituted between the applicant and the first and second respondents. I ordered that Jeremy David Allen King be joined as a party to the proceedings and designated as the third respondent. I made the following further directions:
(a)the first respondent and the second respondent file and serve any affidavits of evidence in chief that they wish to rely by themselves or any other witnesses in the case by no later than 4:00pm on 5 June, 2020; and
(b)the applicant file and serve any affidavits of evidence in chief that he wishes to rely by himself or any other witnesses in the case by no later than 4:00pm on 19 June, 2020.
The application was referred to a registrar for mediation and otherwise adjourned to 24 July, 2020 at 9:30am for directions and the hearing of any outstanding interim or interlocutory applications.
On 24 July, 2020 there was no appearance by any of the respondents. Consequently, the interlocutory application filed on 6 May, 2020 was dismissed. The application was further adjourned for directions to 21 August, 2020. On that day, the application was adjourned to 3 September, 2020 for the hearing of the present application.
None of the respondents filed any evidence in accordance with the directions that were made on 22 May, 2020. A person purporting to be Jerome David Allen King appeared by telephone and opposed the application by the trustee. On several occasions he asked for me to transfer the matter to the District Court of New Zealand but he was unable to point me to any authority which would permit me to make that order. He also sought transfer of the matter to the state courts of Queensland but again, was unable to point me to any authority to permit me to make that order.
On 24 July, 2020 the applicant served a notice to admit facts on each respondent requiring them to admit that:
1. Jeremy David Allen King (who as at 12 July 2016 was a registered co-owner of the property described as Lot 801 on Registered Plan 162672 with title reference 15771110) (“Jeremy”) is one and the same person as Jerome King named in the Judgment of the Magistrates Court of Queensland proceedings numbered M3541/15.
2. As at 12 July 2016, Jeremy had a 50% legal and beneficial interest in the property mentioned in paragraph 1 above.
The evidence shows that none of the respondents served a notice on the applicant or his solicitors disputing the facts set out in the notices to admit facts. Accordingly, the respondents are each taken to admit, for these proceedings only, the facts set out in the notices: rule 15.31(2) of the Federal Circuit Court Rules 2001 (Cth). Thus, they admit that Jeremy David Allen King is one and the same person as Jerome King named in the judgment of the Magistrates Court of Queensland in proceedings M3541/15 and that as at 12 July, 2016 Jeremy David Allen King had a 50% legal and beneficial interest in the Bairnsdale Court property.
I am satisfied that each of the respondents were served with the present interlocutory application on 26 August, 2020. A person purporting to be the third respondent, who I am also satisfied is the first respondent, appeared at the hearing of the application on 3 September, 2020.
DEFAULT JUDGMENT
Rule 13.03A(2) of the Federal Circuit Court Rules relevantly provides that for FCCR 13.03B, a respondent is in default if the respondent has not satisfied the applicant’s claim and fails to:
(a)file a response before the time for the respondent to file a response has expired; or
(b)comply with an order of the Court in the proceeding; or
(c)file and serve a document required under the FCCR; or
(d)do any act required to be done by the FCCR; or
(e)defend the proceeding with due diligence.
Rule 13.03B(2)(d) of the Federal Circuit Court Rules relevantly provides that if a respondent is in default, the Court may give judgment or make any other order against the respondent.
The Court’s power to enter default judgment is discretionary and must be utilised cautiously: Speedo Holdings BV v Evans (No 2) [2011] FCA 1227 at [20] – [21].
I am satisfied, and I find that the first and third respondent (who for reasons set out below I am satisfied are the same person) is in default as he has not filed any response in accordance with FCCR 4.03. Nor has he complied with the orders made on 22 May, 2020 for the filing of affidavits of evidence in chief. I am further satisfied that he has not defended the proceedings with due diligence.
Further, I am satisfied and I find that the second respondent is in default as she has not defended the proceedings with due diligence, she has failed to comply with the order permitting her to file an affidavit of evidence, she did not attend mediation and has not filed any response as required by FCCR 4.03. She has never appeared at any of the hearings in this matter.
In the circumstances, I accept that it is appropriate for default judgment to be entered against each respondent pursuant to FCCR 13.03B(2)(d).
THE RELIEF SOUGHT BY THE APPLICANT
The relief sought by the applicant depends upon a finding that the first respondent and the third respondent are the same person. Each of the respondents is fixed by the admissions they are deemed to have been made by reason of their failure to respond to the notice to admit facts that was served on them on 24 July, 2020. Those admissions are sufficient to establish that the first respondent and the third respondent are the same person.
Even if that approach is incorrect, I accept that there is ample evidence which demonstrates that the third respondent goes by the alias of “Jerome King” and is one and the same person as the first respondent. The applicant relies upon two affidavits sworn by him and filed on 10 September, 2019 and 25 August, 2020 in which he deposes that:
(a)documents from the file of the solicitors that secured the judgment against the first respondent which shows a birthdate and address of the first respondent, both of which match the birthdate and address provided by the third respondent in a Westpac loan application;
(b)the signature of the first respondent (from the solicitor’s file and the court proceedings involving that firm) matches that of the third respondent;
(c)an online rental advertisement for the property mentioned the name ‘Jerome’; and
(d)a former tenant of the Bairnsdale Court property had a conversation about bankruptcy proceedings with a gentleman who identified himself as “Jerome, the property owner”.
Of particular significance is a Deed of Guarantee between Jeremy David Allen King and Nationwide Investments Limited. In that document, Jeremy David Allen King is described as “also known as Jerome King”. The signature on the deed of guarantee bears a remarkable similarity to the signatures of Jerome King on the documents from the solicitors’ file referred to by Mr Harrison.
I am satisfied on the basis of the evidence contained within Mr Harrison’s affidavits that on the balance of probabilities, the first respondent and the third respondent are the same person. It is appropriate to make a declaration that immediately prior to the sequestration order dated 13 July, 2016 being made against the first respondent:
(a)the name of Jeremy David Allen King, shown as a former registered proprietor of the land described as Lot 801 on Registered Plan 162672 with title reference 15771110 also known as 13 Bairnsdale Court, Helensvale in the State of Queensland was an alias of the first respondent; and
(b)the first respondent had a legal and beneficial interest in the property as a joint tenant with the second respondent.
It follows, that upon the sequestration order being made against the estate of the first respondent, all of his right title and interest in the Bairnsdale Court property vested in the applicant. In those circumstances it is appropriate to make a declaration that upon the making of the sequestration order the interest of Jeremy David Allen King in the land described as Lot 801 on Registered Plan 162672 with title reference 15771110 also known as 13 Bairnsdale Court, Helensvale in the State of Queensland vested in the applicant pursuant to s.58 of the Bankruptcy Act 1966 (Cth).
The applicant seeks orders appointing a statutory trustee for sale of the property and for the delivery up of vacant possession of the property to the trustee so appointed for that purpose.
Section 38(1) of the Property Law Act 1974 (Qld) relevantly provides:
Where any property (other than chattels personal) is held in co-ownership the court may, on the application of any 1 or more of the co-owners, and despite any other Act, appoint trustees of the property and vest the same in such trustees, subject to encumbrances affecting the entirety, but free from encumbrances affecting any undivided shares, to be held by them on the statutory trust for sale or on the statutory trust for partition.
The court referred to in that section is the Supreme Court of Queensland.
Section 79(1) of the Judiciary Act1903 (Cth) relevantly provides as follows:
The laws of each State or Territory, including the laws relating to procedure, evidence, and the competency of witnesses, shall, except as otherwise provided by the Constitution or the laws of the Commonwealth, be binding on all Courts exercising federal jurisdiction in that State or Territory in all cases to which they are applicable.
That the court referred to in s.38(1) of the Property Law Act is the Supreme Court of Queensland, is no impediment to this Court ‘picking up’ those provisions under s.79 of the Judiciary Act, as this Court is exercising federal jurisdiction in Queensland and the case “is applicable”: Coshott v Prentice (2014) 311 ALR 428 at [105 – 114]. Although that decision was in respect of s.66G of the Conveyancing Act 1919 (NSW), that provision is to substantially the effect as s.38 Property Law Act. I accept the applicant’s submission that the relief sought by him falls within federal jurisdiction because the applicant’s claim for declarations as to his interest in the Bairnsdale Court property and an order for the appointment of statutory trustees, are sought by the applicant in the discharge of his duties to bring to account and realise the assets of the bankrupt: Coshott at [122].
No reason is demonstrated on the material not to make an order under s.38 of the Property Law Act. The applicant, as a registered proprietor of the one half interest of that property is entitled to such an order and there is generally speaking, little discretionary basis to refuse the making of such an order. In Ex Parte Eimbart Pty Ltd [1982] Qd R 398 MacPherson J said of the discretion (at 402):
In such cases (where co-ownership of land subsists in law), where there is no trust or perhaps other fiduciary obligation, it is difficult to conceive of circumstances in which the discretion, if any, conferred by the word `may’ in s 38(1) of the Property Law Act or its New South Wales equivalent would ever be exercised against the appointment of statutory trustees.
See also Re Permanent Trustee Nominees (Canberra) Limited [1989] 1 Qd R 314 at 321.
As part of the judgment to be entered by default, the applicant has established that there ought be orders appointing trustees for the sale of the property and consequential orders for possession. A person’s proposed by the applicant as trustees for sale appear, on the evidence, to be entirely qualified for the task.
SUMMARY JUDGMENT
In the alternative, the applicant seeks summary judgment against the respondents for the relief claimed by him in the proceedings. Section 17A of the Federal Circuit Court of Australia Act 1999 (Cth) which provides the Court with power to give judgment for one party against another if the Court is satisfied that the applicant has no reasonable prospect of successfully defending the proceeding. The Court does not have to be satisfied that the defence is hopeless or bound to fail for it to have no reasonable prospects of succeeding. Section 17A is repeated in FCCR 13.07 of the FCCR. According to that rule the Court may give judgment on the claim and make any orders or directions that the Court considers appropriate if it is satisfied that a respondent has no reasonable prospect of successfully defending the proceedings.
For the reasons I have set out above, I am satisfied that the respondents have no reasonable prospect of successfully defending the proceeding. All of the evidence before me, save for the one statement by the third respondent in the affidavit filed under the name of the first respondent on 6 May, 2020 suggest that the first respondent and the third respondent are the same person. On the basis of the evidence before me, I have set out above a finding on the balance of probabilities that the first respondent and the third respondent are the same person.
I accept the applicant’s submission that on a critical examination of the available materials, it is clear there is no real question of fact or law that should be decided at trial having regard to the circumstances of the case.
In the event that it is inappropriate to enter a judgment by default against the respondents, I am satisfied that it is nonetheless appropriate for judgment to be entered summarily against the respondents and to make the orders sought by the applicant in his principal application.
COSTS
The applicant seeks an order for indemnity costs. In my view, such an order is entirely appropriate. The respondents, and the first/third respondent in particular has made groundless contentions which ought never to have been made. The second respondent has failed to take any steps to actively defend the proceeding. These actions by each of the respondents have unduly prolonged the matter and caused the applicant to incur additional and unnecessary cost. The costs should be paid from the respondents’ respective shares of the sale proceeds of the Bairnsdale Court property.
I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Jarrett. Associate:
Dated: 4 February 2021
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