Holden (Trustee), in the matter of Greaves (Bankrupt) v Greaves
[2011] FCA 1405
•8 December 2011
FEDERAL COURT OF AUSTRALIA
Holden (Trustee), in the matter of Greaves (Bankrupt) v Greaves [2011] FCA 1405
Citation: Holden (Trustee), in the matter of Greaves (Bankrupt) v Greaves [2011] FCA 1405 Parties: TIMOTHY MARK SHUTTLEWORTH HOLDEN (AS THE TRUSTEE OF THE BANKRUPT ESTATE OF NORMAN ALEXANDER GREAVES) v NORMAN ALEXANDER GREAVES, RODNEY GREAVES and RICKY GREAVES File number: VID 1200 of 2011 Judge: DODDS-STREETON J Date of judgment: 8 December 2011 Catchwords: BANKRUPTCY AND INSOLVENCY – Sole significant asset of bankrupt’s estate a residential property – Bankrupt failed to vacate property despite direction by trustee – Granting of order for vacant possession – Orders stayed to afford respondents further opportunity to be heard Legislation: Bankruptcy Act 1966 (Cth), ss 30(1), 58, 77, 116 Date of hearing: 2 December 2011 Date of last submissions: 2 December 2011 Place: Melbourne Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 21 Solicitor for the Applicant: Mr M Lhuede of Piper Alderman Counsel for the Respondents: The Respondents did not appear
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 1200 of 2011
BETWEEN: TIMOTHY MARK SHUTTLEWORTH HOLDEN (AS THE TRUSTEE OF THE BANKRUPT ESTATE OF NORMAN ALEXANDER GREAVES)
ApplicantAND: NORMAN ALEXANDER GREAVES
First RespondentRODNEY GREAVES
Second RespondentRICKY GREAVES
Third Respondent
JUDGE:
DODDS-STREETON J
DATE OF ORDER:
8 DECEMBER 2011
WHERE MADE:
MELBOURNE
THE COURT DECLARES THAT:
1.The First Respondent was, at the date of his bankruptcy, the sole, registered, and beneficial owner of the property situated at 6 Clarence Street, Loch more particularly described in Certificate of Title Volume 6945 Folio 976 (the Property), which rights vested in the Applicant upon the bankruptcy of the Respondent.
AND THE COURT ORDERS THAT:
2.The Respondents give vacant possession of the Property to the Applicant on 28 February 2012.
3.The Applicant's costs of the Application are proper costs of the bankruptcy.
4.This order and declaration shall be stayed and will not take effect until 17 February 2012.
5.The Applicant shall serve a sealed copy of these orders upon each of the Respondents by forwarding such sealed copy by ordinary pre-paid post to each of the Respondents at 6 Clarence Street, Loch, Victoria, 3945 and posted on 2 December 2012.
6.The Applicant and the Respondents have liberty to apply.
Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 1200 of 2011
BETWEEN: TIMOTHY MARK SHUTTLEWORTH HOLDEN (AS THE TRUSTEE OF THE BANKRUPT ESTATE OF NORMAN ALEXANDER GREAVES)
ApplicantAND: NORMAN ALEXANDER GREAVES
First RespondentRODNEY GREAVES
Second RespondentRICKY GREAVES
Third Respondent
JUDGE:
DODDS-STREETON J
DATE:
8 DECEMBER 2011
PLACE:
MELBOURNE
REASONS FOR JUDGMENT
On 2 December 2011, I made the orders set out above, for the following reasons.
By originating application dated 3 November 2011, the applicant, Timothy Holden, as trustee of the bankrupt estate of Norman Greaves, sought relief against the three respondents, Norman, Rodney and Ricky Greaves, including:
1.A declaration that the first respondent was, at the date of his bankruptcy, the sole, registered, and beneficial owner of a residential property situated at 6 Clarence Street, Loch (“the property”) whose rights vested in the trustee upon the bankruptcy.
2.An order that the respondents give vacant possession of the property to the applicant within 30 days of the order.
3.An order that the trustee’s costs of the application are proper costs in the bankruptcy.
The application was supported by the affidavit of Timothy Holden sworn 3 November 2011 and the affidavit of Clifford Ashe sworn 25 November 2011. The application was unopposed. The respondents did not file a notice of address for service and did not appear at the hearing.
EVIDENCE
By an affidavit sworn on 3 November 2011, in support of the application, Mr Holden deposed that he is a registered trustee in bankruptcy. On 5 August 2010, Registrar Hetyey made a sequestration order against the estate of Norman Greaves (“the bankrupt”) and Mr Holden was appointed the trustee.
James Connolly, the petitioning creditor, and the only unsecured creditor of whom Mr Holden was aware, lodged a proof of debt for $28,420.
The bankrupt, Norman Greaves, is the registered proprietor of a residential property in which he resides with his adult son and grandson, the second and third respondents respectively. The property is the only asset in the bankrupt estate warranting realisation. It was valued at approximately $220,000 on 22 March 2011, although it is subject to a registered mortgage to Australian Seniors Finance securing the sum of $29,081 as at 12 April 2011.
Mr Holden deposed to meeting Norman Greaves on 25 August 2010, when Norman Greaves asserted that he had paid Mr Connolly’s debt by cheque at a meeting at their bank, but Mr Connolly’s lawyers in a telephone conversation denied that he had received a cheque.
Mr Holden then sought evidence from the bankrupt of the alleged payment and sent letters dated 14 September 2010 and 1 February 2011 accordingly, advising that the property would otherwise need to be realised. Mr Holden’s employee, Mr Thexton, telephoned the bankrupt’s son Rodney on 7 March 2011 and discussed the lack of documentation to date. A further meeting was proposed but did not eventuate. Mr Holden then instructed Piper Alderman which, on 29 March 2011, wrote to the bankrupt requesting a proposal to advance sufficient funds to annul the bankruptcy, in order to avoid realising the residential property. The letter advised that it would otherwise be necessary to apply to the Federal Magistrates Court. No response was received, so on 22 September 2011 Piper Alderman wrote to the bankrupt and other occupants of the property seeking that they vacate it within 14 days with a view to sale. Mr Holden deposed that there was no response to or compliance with the trustee’s direction to vacate the property in accordance with s 77 of the Bankruptcy Act 1966 (Cth) (“the Act”), and that he was unaware of any basis on which the respondents or any other person is entitled to possession of the property as against the trustee in bankruptcy. He estimated that it would take $51,707 to annul the bankruptcy, comprising the unsecured creditor’s claim, $14,592 in trustee’s remuneration, disbursements, estimated legal costs and the costs of realisation.
According to the bankrupt’s statement of affairs dated 25 August 2010, the bankrupt’s assets include a bank account containing about $2.00, a vehicle worth $2,000 and shares in Murray Goulburn. The statement of affairs indicated that $20,000 was owed to creditors who held security, which was subsequently identified as a mortgage of the property to Australian Seniors Security. An instrument of mortgage dated 31 July 2006 was exhibited.
The statement of affairs indicated that there were no other owners of the property (an application by the surviving proprietor under s 50 of the Transfer of Land Act 1958 (Vic) dated 23 September 2004 was exhibited), no partner lived at the property and the property was not rented to tenants.
A letter of Australian Seniors Finance to Mr Holden dated 12 April 2011 stated that the loan balance at that date was $29,081.62.
By an affidavit sworn on 25 November 2011, Clifford Ashe, process server, deposed from his own personal knowledge, information and belief that he attended the property on 14 November 2011 and personally served each of the respondents, after asking their identity and receiving confirmation, with a letter from Piper Alderman, a copy of the originating application, the supporting affidavit of Mr Holden sworn on 3 November 2011 and a genuine steps statement.
The letter of Piper Alderman addressed to each respondent stated that the matter was listed for a directions hearing on 2 December 2011 and recommended that the respondents seek legal advice prior to the hearing.
There was no material in evidence to indicate that the respondents had subsequently contacted the trustee and, at the hearing of the application, counsel for the trustee informed me that no contact had been made.
DISCUSSION
Pursuant to s 58 of the Act, when a debtor becomes a bankrupt, the property of the bankrupt vests, and after-acquired property vests, as soon as it is acquired, in the trustee in bankruptcy. Section 116 of the Act further defines the property of the bankrupt.
It is well established that the bankrupt’s property vests in the trustee (subject to the equities which bind the bankrupt) to facilitate its realisation and distribution to satisfy the claims of creditors.
Section 30(1) of the Act provides that the court has power to make such orders (including declaratory orders and orders granting injunctions) as the court considers necessary for the purposes of carrying out or giving effect to the Act in any case of bankruptcy.
Sections 77(e) and (g) of the Act provide:
(1)A bankrupt shall, unless excused by the trustee or prevented by illness or other sufficient cause:
(e)execute such instruments and generally do all such acts and things in relation to his or her property and its realization as are required by this Act or by the trustee or as are ordered by the Court upon the application of the trustee; and
…
(g)aid to the utmost of his or her power in the administration of his or her estate.
I was satisfied that the application and the affidavit of Mr Holden were served on the respondents, who did not appear. The evidence before me established that the bankrupt and the second and third respondents reside at the property and, despite correspondence, negotiation and meeting with the trustee over a prolonged period, the bankrupt had taken no steps to furnish evidence that he had satisfied the petitioning creditor’s debt. Nor had the bankrupt or the second and third respondents responded to the trustee’s letters or complied with the direction that the property be vacated. The trustee asserted his belief that no third party had an entitlement to the property as against the trustee (save for the secured creditor). There was nothing to indicate that the second and third respondents had asserted any claim to the property and the bankrupt’s statement of affairs gave no indication that they or any third party asserted or held an interest therein.
In the circumstances the orders sought appeared necessary for the purposes of carrying out or giving effect to the Act, as the trustee’s attempts to deal with the bankrupt had proved fruitless. Regrettably, given the modest level of the only unsecured debt, there was no apparent means for discharging the debt and the mounting costs of the bankruptcy, save for the sale of the property as the estate’s sole significant asset. The respondents’ vacation of the property is a necessary preliminary step.
Nevertheless, in order to avoid a potentially draconian impact on the respondents, I considered it appropriate to afford them a further opportunity to be heard and therefore stayed the order until 17 February 2012.
I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dodds-Streeton. Associate:
Dated: 8 December 2011
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