Higham v Official Trustee in Bankruptcy

[2001] FCA 677

FEDERAL COURT OF AUSTRALIA

Higham v Official Trustee in Bankruptcy [2001] FCA 677

BANKRUPTCY – application for interlocutory relief – notice to vacate – claims for possession – applicant seeking orders that eviction be suspended – whether applicant has an arguable case that she has a proprietary interest in subject land – whether applicant could establish a claim in equity based on improvements and moneys spent.

LORRAINE HIGHAM v THE OFFICIAL TRUSTEE IN BANKRUPTCY
NO. NG 7183 OF 2001

JUDGE:         BEAUMONT J

DATE:           10 APRIL 2001
PLACE:         SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 7183 OF 2001

BETWEEN:	LORRAINE HIGHAM APPLICANT
AND:	THE OFFICIAL TRUSTEE IN BANKRUPTCY RESPONDENT
JUDGE:	BEAUMONT J
DATE OF ORDER:	10 APRIL 2001
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.Application for interlocutory relief be dismissed but without prejudice to a claim, if any, that may be made by the applicant by way of charge or other equity in respect of her claim to have made expenditure by way of improvements or maintenance of the subject property. 

2.The applicant pay the respondent’s costs of the claim for interlocutory relief.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 7183 OF 2001

BETWEEN:	LORRAINE HIGHAM APPLICANT
AND:	THE OFFICIAL TRUSTEE IN BANKRUPTCY RESPONDENT

JUDGE:	BEAUMONT J
DATE:	10 APRIL 2001
PLACE:	SYDNEY

REASONS FOR JUDGMENT

BEAUMONT J:

1. Before the Court is an application for urgent interlocutory relief in relation to a notice to vacate issued by the Supreme Court of New South Wales following proceedings instituted  in that Court many years ago.

2. The background to the matter is that the applicant was a bankrupt pursuant to a debtor’s petition accepted by the Court on 30 August 1984.  She was discharged from that bankruptcy by operation of law in 1987.   She was the joint registered proprietor of certain land situated at Riverstone along with the second plaintiff to the proceeding in the Supreme Court, namely her husband, from whom she has been separated for seven years.

3. The ejectment proceedings brought in the Supreme Court (No 11006 of 1999) were brought by the Official Trustee and by the applicant’s husband and the plaintiffs claimed in those proceedings that upon bankruptcy the joint tenancy between the parties as husband and wife was severed and they became registered proprietors as tenants in common in equal shares.  The statement of claim alleged that the applicant was in occupation of the land described in the schedule and that half of the property vested in the Official Trustee by operation of a division of the Bankruptcy Act 1966 (Cth). The claim then asserted that the plaintiffs in those proceedings were the registered proprietors of the whole of the property; that on 27 July 1998 and 25 November 1998 the defendant, being the present applicant, was personally served with a notice to vacate; and that vacant possession had not been entered. The plaintiffs in the Supreme Court therefore claimed that they were entitled to possession of the land.

4. I have been shown by Ms Nash, the solicitor for the Official Trustee, a print-out of the proceedings in the Supreme Court which consists of five pages and, therefore, I will not endeavour to even summarise it.  It does, however, state that on 3 February 2000 the Court made orders which included an order that the defendant, that is, the present applicant, give the plaintiffs possession of the land described in the schedule being the subject land.  The Court further ordered that the plaintiffs have leave to issue a writ of possession on the land but that the writ of possession not be issued until 3 April 2000.

5. The matter was then before the Court on numerous occasions, indeed virtually every month in the year 2000, in which various adjournment applications were made and dealt with.  Ultimately, an interim arrangement seems to have been arrived at whereby a temporary stay of the proceedings on the notice to vacate was granted.  However, on 15 February 2000, the notice of motion for a stay was dismissed.

6. A notice to vacate dated 5 April 2001 has now issued requiring that the premises be vacated by Wednesday 11 April 2001.  In those circumstances, the applicant, who has appeared without legal representation, first approached a Registrar in the Supreme Court and was informed that this was a bankruptcy matter and the matter should be litigated in the Federal Court.   Subsequently, the applicant has prepared a claim in the form of a general application to the Court supported by an affidavit sworn by herself today.  In the general application, the applicant seeks an order that the subject land be returned to her as a discharged bankrupt and that all fees and charges of the Trustee be declared void and makes a claim for unspecified damages.

7. The application also includes, as I have mentioned, a claim for interlocutory relief.  That is to say, that the eviction of the applicant under the notice to vacate be suspended until such time as the general application has been served.  I was informed by Ms Nash, and it appears to be common ground, that there are various proceedings on foot between the applicant and the Official Trustee in the Administrative Appeals Tribunal and it appears that the issues agitated in that Tribunal are similar to the issues sought to be raised by the applicant in the statement of claim in these proceedings dated 10 April 2001, which charges that the Trustee has failed in his duty of care in the administration of the estate.

8. In support of that charge, several particulars are given.  They include a reference to disclaimer of onerous property “duties etc. of trustee”, taxation of costs and other such matters.  As I have mentioned, in support of her application for interlocutory relief the applicant has filed an affidavit sworn 10 April 2001.  Amongst other things in that affidavit, the applicant states that she returned to reside on the subject property in February 1994 and since that time has paid all outgoings including rates and payments on the mortgage.  She informed me that she has paid a total sum of about $35,000 in this regard.  That is to say, an amount of about $100 a week.  On the other hand, I was informed that she has paid no rent.  It would seem that rent in the order of $100 would be a minimum that would be allowed for rent of a dwelling house in the location in question.

9. In her affidavit, the applicant also raises some questions concerning an assignment of debt, but I do not think this affects the present position.  On any view, in order to sustain a claim for interlocutory relief suspending action upon the notice to vacate, the applicant must show an arguable case that she has a proprietary interest which may be set up in response to the claims of possession.  In my opinion, the only conceivable proprietary interest that the applicant could establish at this stage is a claim in the nature of a constructive trust or similar equity by virtue of moneys she has spent in improvement of the property and in outgoings in that connection.  She informed me that she has carried out some improvements on the property.  They have not been quantified.  I have already mentioned the sum of $35,000 expenditure by way of rates and by way of mortgage payments.

10. On the other hand, as indicated, presumably there needs to be taken into account an allowance for rent.  In those circumstances, it seems to me that I should dismiss the claim for interlocutory relief, but that I should do so on the footing that it is without prejudice to any claim that the applicant may have by way of equity in respect of the payments she has made by way of the improvements to the property or by way of outgoings.  That is to say, taking the most optimistic view of the applicant’s case, in my opinion, the very most that she could conceivably expect is to obtain an order by way of a charge securing her contributions.  At present I am unable to quantify that.

    ORDERS

11. The formal order I will make, therefore, is that the application for interlocutory relief is dismissed but that this dismissal is without prejudice to a claim if any that may be made by the applicant by way of charge or other equity in respect of her claim to have made expenditure by way of improvements or maintenance of the subject property.  Costs must follow the event and I order that the applicant pay the respondent’s costs of the claim for interlocutory relief.

I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Beaumont.

Associate:

Dated:               24 July 2001

Solicitor for the Applicant:	The applicant appeared in person
Solicitor for the Respondent:	Sally Nash & Co
Date of Hearing:	10 April 2001
Date of Judgment:	10 April 2001