in the matter of Fergusson v Ciardullo
[2021] FCA 250
•22 March 2021
FEDERAL COURT OF AUSTRALIA
Nicholls (Trustee); in the matter of Fergusson v Ciardullo [2021] FCA 250
File number: NSD 1268 of 2020 Judgment of: FLICK J Date of judgment: 22 March 2021 Catchwords: BANKRUPTCY – order for vacant possession – period of time in which vacant possession to be granted – Trustee seeks 21 days – period fixed at 60 days
BANKRUPTCY – order for execution of document to facilitate transfer of property
Legislation: Bankruptcy Act1966 (Cth) s 30, 58, 77
Residential Tenancies Act1997 (ACT) ss 36, 64
Cases cited: Carrafa v Saxton [2020] FCCA 218
Ramsay (as Trustee of the Bankrupt Estate of Coorey) v Coorey [2020] FCA 1301
Re Bond; Ex parte Ramsay (1994) 54 FCR 394
Talacko v Talacko [2018] VSC 751
Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: General and Personal Insolvency Number of paragraphs: 32 Date of hearing: 9 March 2021 Counsel for the Applicant: Mr S Lipp Solicitor for the Applicant: Corsair Lawyers Solicitor for the Respondents: Mr H Smith of Chamberlains ORDERS
NSD 1268 of 2020 IN THE MATTER OF MARTA FERGUSSON
BETWEEN: ALAN RICHARD NICHOLLS IN HIS CAPACITY AS TRUSTEE OF THE PROPERTY OF MARTA FERGUSSON
Applicant
AND: VINCE CIARDULLO
First Respondent
MARIA CIARDULLO
Second Respondent
MARTA FERGUSSON
Third Respondent
ORDER MADE BY:
FLICK J
DATE OF ORDER:
22 MARCH 2021
THE COURT DECLARES THAT:
1.Pursuant to s 30(1)(b) of the Bankruptcy Act 1966 (Cth), the Applicant is the beneficial owner of the property known as 115 Walker Crescent, Narrabundah ACT 2604 being Volume 149 Folio 6 Edition 4 and Section 90 Block 24 on Deposited Plan 943 (the “Property”).
AND THE COURT ORDERS THAT:
2.Pursuant to s 30(1)(b) of the Bankruptcy Act 1966 (Cth), the First and Second Respondents vacate and deliver up to the Applicant vacant possession of the Property within 60 days of the making of this order.
3.Pursuant to s 30(1)(b) of the Bankruptcy Act 1966 (Cth), the First and Second Respondents deliver up to the Applicant the keys for all buildings and improvements on the Property within 60 days of the making of this order.
4.Pursuant to s 30(1)(b) of the Bankruptcy Act 1966 (Cth), the First and Second Respondents remove from the Property within 60 days of the making of this order all motor vehicles, rubbish, and any other chattels.
5.In the event the First and Second Respondents fail to comply with order 4, the Applicant is empowered to remove and dispose of any and all personal property on the Property as he sees fit.
6.In the event the First and Second Respondents fail to give vacant possession of the Property to the Applicant in compliance with order 2, order 2 is to take effect as an order for possession of land.
7.Pursuant to s 77(1)(e) of the Bankruptcy Act 1966 (Cth), within 7 days the Third Respondent is to execute and provide to the Trustee a Form 009-CN Application to Note Change of Name on Certificate of Title to effect a change of name on title to the Property from Marta Ciardullo to Marta Fergusson.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
FLICK J:
The Applicant in the present proceeding, Mr Alan Nicholls, is the Trustee in bankruptcy of the bankrupt estate of the Third Respondent, Ms Marta Fergusson (“the bankrupt”). Mr Nicholls was appointed as Trustee in November 2014. Ms Fergusson’s maiden name was Marta Ciardullo. The First Respondent is Mr Vince Ciardullo, the father of the bankrupt; the Second Respondent is Mrs Maria Ciardullo, the wife of the First Respondent.
At the heart of the present dispute is a property in Narrabundah, a suburb of Canberra. The bankrupt, Ms Marta Fergusson, inherited the property from her grandmother, Mrs Marta Ciardullo. Mr Vince Ciardullo was the trustee of her will. The First and Second Respondents presently reside in the home on that property and have done so for a period of about 60 years.
In very summary form, the Trustee seeks:
·a declaration that he is the beneficial owner of the Narrabundah property;
·an order that the First and Second Respondents vacate and deliver up the Narrabundah property within 21 days, together with associated orders;
·an order that the Third Respondent execute and provide a document which will enable a change of name to the title to the property from Marta Ciardullo to Marta Fergusson.
It is concluded that such relief should be granted. Indeed, at the hearing the Respondents did not put in issue the power of the Court to make the orders sought by the Trustee and only sought to be heard on the date upon which vacant possession of the property should be given. In their submission, the First and Second Respondents should be given a period of up to 120 days or “at the very least” 60 days.
It is concluded that the First and Second Respondents should vacate the Narrabundah property within 60 days from the making of orders.
Given the position adopted by the First and Second Respondents at the hearing, it is only necessary to briefly refer to the bases upon which it has been concluded that the Trustee is entitled to the relief claimed.
Beneficial ownership
The Statement of Affairs lodged by Ms Fergusson at the outset of her bankruptcy listed the Narrabundah property as an asset. It was described as a “House + Granny Flat”.
In the absence of any reason to reach a different conclusion, that property would have vested in the Trustee pursuant to s 58(1)(a) of the Bankruptcy Act1966 (Cth) (the “Bankruptcy Act”). That sub-section provides as follows:
Vesting of property upon bankruptcy––general rule
(1) Subject to this Act, where a debtor becomes a bankrupt:
(a)the property of the bankrupt, not being after-acquired property, vests forthwith in the Official Trustee or, if, at the time when the debtor becomes a bankrupt, a registered trustee becomes the trustee of the estate of the bankrupt by virtue of section 156A, in that registered trustee; and
…
At one point in time, the First and Second Respondents sought to resist the Trustee’s request for possession of the Narrabundah property on the basis that the bankrupt held the property as a trustee. The argument was that the bankrupt had been granted a life estate in the property pursuant to a provision in the will of her grandmother. That argument was abandoned when it emerged that the will contained no such provision. A further argument that it was nevertheless the testamentary intention of the bankrupt’s grandmother to grant a life estate to the First and Second Respondents was also abandoned. At least one potential difficulty with such an argument was that such an asserted testamentary intention was contradicted by the very terms of the will.
The Respondents, during the course of the recent hearing, have not sought to further bolster or support their earlier contention that they had some form of interest in the Narrabundah property.
The Court can thus be satisfied that the Narrabundah property became vested in the Trustee pursuant to s 58(1)(a) of the Bankruptcy Act. A declaration to that effect should thus be made.
Vacant possession?
Between 2014 and 2020 the Trustee has taken a number of steps to secure vacant possession of the Narrabundah property. But the First and Second Respondents have steadfastly refused to grant vacant possession.
It is sufficient for present purposes to refer to a Conditional Deed of Release, executed copies of which were finally exchanged in January 2020. This Deed was the Third Deed prepared by the Trustee with a view to ultimately gaining possession.
That Third Deed provided in part as follows:
4) Agreement to vacate
a)In consideration for the Trustee agreeing not to seek immediate possession of the Property and for his entering into this Deed, the Occupants agree that they will provide vacant possession of the Property in accordance with this clause.
b)The Bankrupt and the Occupants agree and warrant that the Occupants have been given a right to occupy the Property by the Bankrupt for value.
c)In accordance with section 64 of the Residential Tenancies Act 1997 (ACT), the Trustee hereby gives notice to the Occupants that:
i)he would be entitled to immediate possession of the Property apart from section 36 of the Residential Tenancies Act 1997 (ACT); and
ii)the Bankrupt is no longer lessor of the Property; and
iii)the Occupants are to vacate the Property on the day that is eight weeks after the date that this Deed is exchanged.
d) The Occupants hereby agree that:
i)They will vacate and deliver to the Trustee vacant possession of the Property on 30 March 2020;
…
Leaving aside the fact that the agreement on the part of the First and Second Respondents to vacate the Narrabundah property on 30 March 2020 does not sit comfortably with their assertion as to a life estate, cl 4 of the Third Deed unequivocally expresses an agreement to vacate.
The First and Second Respondents did not dispute during the present hearing that they agreed to vacate the premises and have not done so.
Of present relevance, however, is that the Residential Tenancies Act1997 (ACT) (“Residential Tenancies Act”) provides for the termination of a “residential tenancy agreement”. The Trustee accepts that the Third Deed between the First and Second Respondents and the Trustee constitutes such an “agreement”. The Trustee further maintains that that “agreement” has been validly terminated pursuant to s 36 of the Residential Tenancies Act. Section 36(1)(g) provides that a “residential tenancies agreement” may be terminated “if a person takes action in accordance with section 64”. Section 64, in turn, provides in part as follows:
Successor in title to lessor
(1)A person other than a lessor who, apart from section 36, would be entitled to possession of premises, may terminate the residential tenancy agreement relating to the premises by—
(a)notifying the tenant as soon as practicable after becoming so entitled that the person would be entitled to possession apart from section 36 and that the person who was lessor is no longer lessor; and
(b) giving the tenant not less than 8 weeks notice to vacate the premises.
…
(3)If a person has given notices under subsection (1), the relevant residential tenancy agreement terminates at the end of the period of 8 weeks after the date of the notice mentioned in subsection (1) (b) or on the later date specified in the notice.
The Trustee maintains that he has “take[n] action in accordance with section 64” by reason of cl 4(c) of the Third Deed. So much was not put in issue by the First and Second Respondents. Nor did those Respondents dispute compliance with the terms of s 64.
It is concluded that the “residential tenancy agreement” of the First and Second Respondents has been validly terminated.
The Trustee, it is further concluded, is entitled to an order for vacant possession, and associated orders. The First and Second Respondents, again, did not dispute the power or appropriateness of an order for vacant possession being made.
21 days?
The sole matter which divided the parties to the present dispute was whether an order for vacant possession be made giving the First and Second Respondents more than 21 days – and up to 120 days – in which to comply.
In seeking a period greater than 21 days the First and Second Respondents relied upon:
·assertions as to the ill health of the First Respondent, assertions which were not put in issue by the Trustee;
·the length of time during which the First and Second Respondents have been in occupation of the Narrabundah property;
·the fact that both Respondents were elderly; and
·the fact that both Respondents had limited financial resources, both being dependent upon Government assistance.
In opposing any period of time greater than 21 days, the Trustee relied upon:
·the repeated attempts made to secure vacant possession, with the First and Second Respondents repeatedly agreeing to vacate and never doing so – albeit the Third Deed contemplating the vacation of the premises during a period of time affected by the COVID-19 pandemic;
·the absence of any evidence available to the Court as to the ill health of the First Respondent more recent than August 2020 and certainly a lack of any evidence current as at the date of hearing, albeit the Trustee again not putting in issue the current ill‑health of the First Respondent;
·the absence of any difficulties in securing alternative accommodation due to any current COVID-19 restrictions in Canberra; and
·the length of time the First and Second Respondents have already occupied the Narrabundah property whilst on notice of the wish on the part of the Trustee to gain possession.
All such considerations assume relevance to the exercise of the discretion in fixing a time by which vacant possession is to be given.
In Ramsay (as Trustee of the Bankrupt Estate of Coorey) v Coorey [2020] FCA 1301, Logan J allowed a period of 60 days, a period ultimately embraced in that case by the Trustee, Mr Ramsay. In doing so his Honour reasoned as follows:
[8] Initially, Mr Ramsay was disposed to seek vacant possession within 21 days. However, upon being appraised today by Ms Emma Coorey of her mother’s personal circumstances at present, the trustee very properly promoted that vacant possession not be given within 21 days, but rather within 60 days. The allowing of 60 days is appropriate because, in my view, having regard to the imminence of surgery, and what I infer must necessarily be entailed in the giving of vacant possession of a home long occupied within a family, anything less than that would be unjust.
[9] Ms Josephine Coorey, the bankrupt, has, with respect, been very well served by her daughter, Ms Emma Coorey, both in relation to the present proceeding and, from what I can gather from what I heard today, in dealing with her present health situation. This must be the most awfully stressful of times, both for Ms Josephine Coorey as well as her dutiful daughter.
[10] Hard cases, it has been said, can make bad law. Were I to do other than to agree with the operation of the Bankruptcy Act, as submitted by the trustee, in the circumstances, I would be making bad law. That is something I must not do.
In Carrafa v Saxton [2020] FCCA 218 the Federal Circuit Court allowed a period of 90 days. Unlike the facts of that case, however, there was no prior agreement on the part of the occupants of the premises to vacate and a failure to do so. Each individual case, of course, is fact dependent as to what is an appropriate period of time.
On balance, it is concluded that vacant possession should be given within 60 days from the making of orders in this proceeding – taking into account, in particular, the prior agreements on the part of the First and Second Respondents to vacate and their failure to do so. That period of time, albeit a matter which is largely one of balancing competing considerations and ultimately being a matter of judgment, is appropriate.
The provision of assistance
In order to effect the transfer of the Narrabundah property in the name of the Trustee, Ms Marta Fergusson needs to sign a Change of Name Form which will facilitate the change of her name on the Certificate of Title from Ms Marta Ciardullo to her married name, Ms Marta Fergusson.
Ms Marta Fergusson has to-date declined to sign that Form when requested to do so by the Trustee.
In failing to sign the Form, Ms Fergusson failed to discharge her duties as a bankrupt.
Section 77 of the Bankruptcy Act provides in part as follows:
Duties of bankrupt as to discovery etc. of property
(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; …
“The essence” of s 77, it has been said, is that a bankrupt is to “co-operate” with a trustee in bankruptcy and, in the absence of co-operation, a bankrupt “will be compelled in appropriate cases”: Re Bond; Ex parte Ramsay (1994) 54 FCR 394 at 401. Sheppard J there observed:
The point made by counsel for Mr Bond was that a consent given under compulsion, that is a forced consent, was no consent at all. The provisions of s 77 and the other provisions of Pt V of the Act are designed to enable the Trustee to make the fullest investigation into a bankrupt's property, dealings and affairs. At least so far as bankrupts are concerned, the essence is a requirement that they co-operate. Co-operation can and will be compelled in appropriate cases. If this were not the case, bankrupts could make a laughing stock of their obligations. Thus unwilling and uncooperative bankrupts must produce documents and answer questions against their will. That is their obligation. If they fail in that obligation they expose themselves to the risk of being found in contempt of court or in breach of the criminal law. To require Mr Bond to sign the consent here in question is, in my opinion, an ordinary and commonplace incident of his overall obligation to co-operate with his Trustee. He is required to do many things that he is probably unwilling to do. This is but one of them. Accordingly, I reject the submission made on his behalf on what may be called the forced consent point.
…
An order should thus be made requiring Ms Marta Fergusson to sign the Form of Consent as provided by the Trustee. There is no reason to question that the power conferred by s 77(1)(e) would extend to the making of an order to facilitate the transfer of title to land: cf. Talacko v Talacko [2018] VSC 751 at [31] and [47] to [48] per McDonald J. The Respondents’ solicitor did not submit to the contrary.
CONCLUSIONS
Subject to the period within which vacant possession is to be granted, being 60 days and not 21 days, orders should be made substantially as sought by the Trustee.
Concern was expressed during the hearing as to the form of the proposed order “for delivery of possession” in the absence of the First and Second Respondents vacating the Narrabundah property within 60 days. That proposed order was varied and the form of order to be now made is one upon which there is the agreement of the parties.
THE COURT DECLARES THAT:
1.Pursuant to s 30(1)(b) of the Bankruptcy Act 1966 (Cth), the Applicant is the beneficial owner of the property known as 115 Walker Crescent, Narrabundah, ACT 2604, being Volume 149 Folio 6 Edition 4 and Section 90 Block 24 on Deposited Plan 943 (the “Property”).
AND THE COURT ORDERS THAT:
2.Pursuant to s 30(1)(b) of the Bankruptcy Act 1966 (Cth), the First and Second Respondents vacate and deliver up to the Applicant vacant possession of the Property within 60 days of the making of this order.
3.Pursuant to s 30(1)(b) of the Bankruptcy Act 1966 (Cth), the First and Second Respondents deliver up to the Applicant the keys for all buildings and improvements on the Property within 60 days of the making of this order.
4.Pursuant to s 30(1)(b) of the Bankruptcy Act 1966 (Cth), the First and Second Respondents remove from the Property within 60 days of the making of this order all motor vehicles, rubbish, and any other chattels.
5.In the event the First and Second Respondents fail to comply with order 4, the Applicant is empowered to remove and dispose of any and all personal property on the Property as he sees fit.
6.In the event the First and Second Respondents fail to give vacant possession of the Property to the Applicant in compliance with order 2, order 2 is to take effect as an order for possession of land.
7.Pursuant to s 77(1)(e) of the Bankruptcy Act 1966 (Cth), within 7 days the Third Respondent is to execute and provide to the Trustee a Form 009-CN Application to Note Change of Name on Certificate of Title to effect a change of name on title to the Property from Marta Ciardullo to Marta Fergusson.
I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Flick. Associate:
Dated: 22 March 2021
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