King as Bankruptcy Trustee of Jose Fernandas De Silva v De Silva
[2024] WASC 367
•8 OCTOBER 2024
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: KING AS BANKRUPTCY TRUSTEE OF JOSE FERNANDAS DE SILVA -v- DE SILVA [2024] WASC 367
CORAM: LUNDBERG J
HEARD: 8 OCTOBER 2024
DELIVERED : 8 OCTOBER 2024
FILE NO/S: CIV 1528 of 2024
BETWEEN: GAVIN KING AS BANKRUPTCY TRUSTEE OF JOSE FERNANDAS DE SILVA
Plaintiff
AND
JOSE FERNANDAS DE SILVA
First Defendant
REGISTRAR OF TITLES
Second Defendant
Catchwords:
Bankruptcy - Application by trustee in bankruptcy for vesting orders in relation to real property - Property originally held as a joint tenancy - Effect of subsequent death of one joint tenant followed by commencement of bankruptcy of other joint tenant - Death of one holder not reflected on certificate of title - Whether title ought to have reflected that entire interest in land held by bankrupt party through operation of survivorship - Operation of s 58 of the Bankruptcy Act 1966 (Cth) to vest property in trustee in bankruptcy in equity - Certificate of title wrongly recorded deceased person as holding interest as a tenant in common - Whether title should record that the entire interest in land held by the bankrupt - Vesting orders sought by the trustee in bankruptcy with respect to the interest on title in name of the deceased as a tenant in common - Power of the Court to grant vesting orders under Trustees Act 1962 (WA) - Whether expedient to make such orders - Power to order vacant possession - Turns on own facts
Practice and procedure - Power of the Court to proceed in the absence of an appointed personal representative - Scope of the power in O 18 r 15(1) of the Rules of the Supreme Court 1971 (WA) - Turns on own facts
Legislation:
Bankruptcy Act 1966 (Cth), s 58(1)(a), s 58(2), s 109, s 132(2), s 132(3)
Chancery Amendment Act (15 & 16 Vict c.86) 1852 (UK), s 44
Rules of the Supreme Court 1971 (WA), O 18 r 15(1), O 37 r 2
Supreme Court Act 1935 (WA), s 16(1)(d)(i)
Transfer of Land Act 1893 (WA), s 227, s 234, s 242
Trustees Act 1962 (WA), s 78(2)(n)
Result:
Vesting orders made, together with orders for vacant possession.
Category: B
Representation:
Counsel:
| Plaintiff | : | S R Pack |
| First Defendant | : | No appearance |
| Second Defendant | : | No appearance |
Solicitors:
| Plaintiff | : | Roser Lawyers |
| First Defendant | : | In Person |
| Second Defendant | : | In Person |
Case(s) referred to in decision(s):
Bushby v Bushby (as executor of the estate of Born) [2024] WASC 54
Crossley v City of Glasgow Life Assurance Company (1876) 4 Ch D 421
Curtius v Caledonian Fire and Life Insurance Company (1881) 14 Ch D 534
Elovalis v Elovalis [2008] WASCA 141
Gemini Energy and Minerals Pty Ltd v Luff [2018] WASC 341
In re estate of McCready [2004] NSWSC 887
Lewis v Martinez and the persons named in the Schedule (No 4) [2024] NSWSC 308
Pope v DRP Nominees Pty Ltd [1999] SASC 337; (1999) 74 SASR 78
Porteous v Rinehart (1998) 19 WAR 495
Scaffidi v Montevento Holdings Pty Ltd [2011] WASCA 146
Singh v Kaur Bal [No 2] [2014] WASCA 88
Steinecke v Wayne [2011] NSWSC 428
Whitbread v Whitbread (1967) 10 FLR 120
Table of Contents
A. Introduction and overview
B. Relief sought
C. Notice to interested parties
First defendant
Second defendant
Ms Da Silva
Beneficiaries of the estate of Ms Da Silva
Should the Court proceed in the absence of these persons?
D. The plaintiff's submissions
E. Disposition
Vesting order
Vacant possession
F. Conclusion and orders
ATTACHMENT A ORDERS OF THE COURT MADE ON 8 OCTOBER 2024
LUNDBERG J:
(This decision was delivered ex temporaneously on 8 October 2024 and has been edited from the transcript to correct matters of grammar, add headings, and include complete references.)
A. Introduction and overview
The plaintiff, who is the presently appointed bankruptcy trustee of the first defendant, Mr Jose Fernandas De Silva, has applied for orders by way of an amended originating summons dated 9 July 2024. The first defendant is the subject of sequestration orders made under the Bankruptcy Act 1966 (Cth) (Bankruptcy Act).
The plaintiff has sworn an affidavit in support of the application, which is dated 20 May 2024.[1] This affidavit provides the primary evidence which is relied upon for the purposes of the relief which is sought. The affidavit, insofar as the attachments are concerned, has not been prepared in accordance with O 37 r 2 of the Rules of the Supreme Court 1971 (WA) (RSC).[2]
[1] Affidavit of Gavin King sworn on 20 May 2024 (King Affidavit).
[2] The King Affidavit has been prepared in the form and style I understand is used in New South Wales. The appropriate form in this Court is to individually attach documents to an affidavit as 'Attachments' with each such document being individually numbered (rather than to label all documents as one attachment or exhibit): see O 37 r 2 RSC. This non-compliance is a mere procedural irregularity which does not stand in the way of the substantive consideration of the plaintiff's application. I mention the issue having observed, more than a few times, that practitioners not based in Western Australia have prepared, and filed in this Court, affidavit material otherwise than as required by O 37 RSC.
The relief which is sought by the plaintiff relates specifically to a property in Beldon in Western Australia (the Beldon Property).[3] The plaintiff is seeking, through these proceedings, to secure full title to, possession of, and then to sell, the Beldon Property, in his role as trustee in bankruptcy.
[3] More particularly described as Lot 167 on Plan 14608 on Certificate of Title Volume 1671 Folio 233 (King Affidavit, Attachment GK-1, pg 3 - 4).
The first defendant and his late mother, Ms Da Silva, initially owned the Beldon Property as joint tenants.[4] Ms Da Silva passed away in 2013 and, in the ordinary course of events, it is contended that the first defendant would have become the sole proprietor thereafter. However, it appears his survivorship was never formalised. Thus, when the first defendant's bankruptcy was registered on the title in 2021, it was recorded by the Registrar of Titles as operating to sever the joint tenancy between the first defendant and his then deceased mother. The certificate of title presently records the Beldon Property as being held by the predecessor to the plaintiff and Ms Da Silva as tenants in common.
[4] For reasons which are unclear, there is a difference in the spelling of the first defendant's surname and his mother's surname.
The plaintiff submits that this circumstance has caused a difficulty for the plaintiff in seeking to bring the Beldon Property into the bankrupt estate. Accordingly, the plaintiff seeks the assistance of the Court in overcoming this difficulty.
The plaintiff was appointed as bankruptcy trustee on 24 August 2023, assuming the role in place of the initial trustee who had been appointed on 30 October 2018.[5] The administration of the first defendant's estate by his initial trustee in bankruptcy encountered a number of practical difficulties and was unduly delayed as a result.
[5] King Affidavit, [7] - [8].
Delays were also encountered through the erroneous commencement of proceedings by the initial trustee in the Sydney Registry of the Federal Circuit and Family Court of Australia. This erroneous step was corrected as a result of representations made to the plaintiff by a senior officer at the Registrar of Titles, who identified the appropriate pathway if curial intervention was required by the plaintiff. The Court records its gratitude for the assistance given by the office of the Registrar of Titles in this regard.
B. Relief sought
The relief is sought by the plaintiff pursuant to s 78(2)(n) of the Trustees Act 1962 (WA) (Trustees Act), in conjunction with s 242 of the Transfer of Land Act 1893 (WA) (TLA), as well as the inherent jurisdiction of the Court.
The orders sought are:[6]
a.The one undivided half share of Maria Fernandas De Silva in the [Beldon Property] be vested in the plaintiff in his capacity as the trustee in bankruptcy of the first defendant.
b.Within 30 days of the date of the order, an order is sought that the first defendant deliver up vacant possession of the [Beldon Property] to the plaintiff, that the first defendant and any other occupiers of the [Beldon Property] vacate the property and remove items that have not vested in the plaintiff, and the first defendant must give the plaintiff keys to the [Beldon Property] and any alarm or access codes for the [Beldon Property].
c.The trustee must sell the [Beldon Property] and apply the proceeds in accordance with section 109 of the Bankruptcy Act.
d.The first defendant must do all things as may reasonably be required by the plaintiff their selling agent or their solicitors for the purpose of achieving a sale of the [Beldon Property] with vacant possession no earlier than 30 days from the date of the order, including but not limited to, providing access to the [Beldon Property] for the purpose of a valuation or for viewing by potential purchases.
e.The plaintiff's costs of the proceeding are sought to be paid from the bankrupt estate of the first defendant.
[6] See the amended originating summons dated 9 July 2024.
Section 78 of the Trustees Act relevantly provides:
78 . Vesting orders, when Court may make
(1) The Court may make an order, in this Act called a vesting order , that has effect as provided in section 85.
(2) A vesting order may be made in any of the following cases, namely — …
(n) where property is vested in a trustee and it appears to the Court to be expedient to make a vesting order.
(3) Where the provisions of subsection (2) are applicable, they extend to a trustee entitled to, or possessed of, any property either solely or jointly with any other person and whether by way of mortgage or otherwise.
Section 242 of the TLA provides:
242.Interests disposed of or created by court order etc., registration of
(1A) Where by the operation of any statute or statutory or other power or by virtue of any vesting order of any court or judge or tribunal or an order appointing a person to convey or of a vesting declaration appointment or other assurance an interest in land under this Act being an interest capable of being registered is disposed of or created the registered proprietor shall subject to proper provision being made for payment of costs, be bound to give effect to the disposition.
(1B) If the registered proprietor is unable or refuses to make the requisite transfer or other disposition under this Act or cannot be found or if for any other reason a transfer or other disposition by him under this Act cannot be obtained within a reasonable time then the Registrar upon the direction of the Commissioner may give effect thereto in the Register by making an entry therein containing such particulars relating to such disposition as he may consider necessary.
(1C) The disposition shall take effect in like manner as nearly as may be as if it had been made by the registered proprietor by transfer or other registered disposition.
(1D) Nothing in subsections (1A) to (1C) shall prejudicially affect the rights of a personal representative in relation to the estate of the decease.
(2) This section shall apply whether the disposition to which the registered proprietor is bound to give effect subject as aforesaid is made before or after the commencement of this Act.
(3) This section shall not apply in those cases in which other provision has been made for giving effect in the Register to any disposition.
(4) In this section, except where a contrary intention appears —
disposition includes a disclaimer surrender or release; and
registered disposition means a disposition which takes effect under the powers conferred by this Act on the registered proprietor of land by way of transfer, lease, mortgage, charge, carbon right, carbon covenant or tree plantation agreement or otherwise.
C. Notice to interested parties
There was no appearance today from either of the defendants on the record, nor from any other party who might be thought to be interested in the relief being sought. Accordingly, as counsel for the plaintiff correctly noted, before I turn to the substance of the application, it is important to consider whether the parties on the record and the potential interested parties have had proper notice of the proceeding and whether it is appropriate for the Court to proceed to determine the application.
First defendant
The hearing today proceeded in the absence of the first defendant. I am satisfied on the basis of the affidavit material adduced by the plaintiff that the first defendant was served with the proceedings and was given proper notice of the hearing today.[7]
Second defendant
[7] Affidavits of Ian Brent-White sworn on 7 June 2024 and 29 June 2024.
The second defendant, the Registrar of Titles, has been served with the proceedings and has indicated he does not seek to be heard on the application. I have been informed that the plaintiff and the second defendant have in fact conferred in crafting the proposed orders sought and the second defendant has indicated he is content with the form of the proposed orders.[8]
Ms Da Silva
[8] King Affidavit, Attachment GK-1, pg 158; and the letter from the Registrar of Titles dated 15 July 2024.
The plaintiff accepts that the late Ms Da Silva could be said to be interested in the proceedings as she is currently listed on the title to the Beldon Property as having a half share as tenants in common with the plaintiff's predecessor.
As matters stand, no personal representative has been appointed to the personal estate of Ms Da Silva. The first defendant had been nominated as the executor of Ms Da Silva's estate under her will, but it appears the first defendant did not seek formal probate orders.[9]
[9] King Affidavit, [31] - [32].
The plaintiff seeks to proceed in the absence of any personal representative of Ms Da Silva's estate, pointing to the power to do so under O 18 r 15(1) RSC.
Beneficiaries of the estate of Ms Da Silva
The plaintiff has also raised the necessity for notice to be given to the potential beneficiaries of Ms Da Silva's estate. The death certificate for Ms Da Silva records that she had two children, being the first defendant and his sister Ms Mariana Gouveia. Ms Da Silva's will left her estate to those children.[10]
[10] King Affidavit, Attachment GK-1, pg 135 - 137.
As to the position of the first defendant, I have addressed that above. As for Ms Gouveia, she previously resided with the first defendant at the Beldon Property, but does not reside there at present it would seem. Concerted attempts at service upon Ms Gouveia have been unsuccessful.[11]
Should the Court proceed in the absence of these persons?
[11] Affidavit of Constantinos Vosnakis sworn 30 September 2024.
I am satisfied the first defendant and the second defendant have been given adequate notice of the proceeding and satisfied the matter can proceed in their absence. As noted above, the second defendant has expressly indicated he does not wish to be further heard on the matter.
As to the absence of the potentially interested persons, most particularly any representative of Ms Da Silva's estate, the Court is empowered to proceed in the absence of a person representing the estate of a deceased person pursuant to O 18 r 15 RSC. That rule provides as follows:
15 .Representation of deceased person interested in proceedings
(1)Where in any proceedings it appears to the Court that a deceased person was interested in the matter in question in the proceedings and that he has no personal representative, the Court may, on the application of any party to the proceedings, proceed in the absence of a person representing the estate of the deceased person or may by order appoint a person to represent that estate for the purposes of the proceedings; and any such order, and any judgment or order subsequently given or made in the proceedings, shall bind the estate of the deceased person to the same extent as it would have been bound had a personal representative of that person been a party to the proceedings.
(2)Before making an order under this rule, the Court may require notice of the application for the order to be given to such (if any) of the persons having an interest in the estate as it thinks fit.
The power in O 18 r 15(1) RSC is engaged in circumstances where no personal representative has been appointed.[12] That is the case in the present circumstances. The discretion may therefore be exercised. That discretion is relatively wide,[13] although the court ought proceed cautiously before making dispositive orders affecting the interests of an estate in the absence of any representative. Indeed, the rule itself affords an alternative pathway to the court, namely to order the appointment of a person to represent the interests of the estate for the limited purposes of the proceeding. In that event, the rule further empowers the court to require that notice be given to particular interested persons: see O 18 r 15(2) RSC.
[12] Curtius v Caledonian Fire and Life Insurance Company (1881) 14 Ch D 534, 537 (Bagallay LJ).
[13] Curtius v Caledonian Fire and Life Insurance Company (537) (Baggallay LJ).
In Steinecke v Wayne,[14] Brereton J (as his Honour then was) addressed the equivalent power applicable in the Supreme Court of New South Wales (being r 7.10(2) of the Uniform Civil Procedure Rules 2005 (NSW)), explaining that the power had in the past been exercised:[15]
…where there are other parties to the proceedings who have the same interests as the estate, where the interest in question is small or contingent, or where the deceased had no practical beneficial interest in the property involved in the proceedings.
[14] Steinecke v Wayne [2011] NSWSC 428.
[15] Steinecke v Wayne [11], citing both Curtius v Caledonian Fire and Life Insurance Company and Crossley v City of Glasgow Life Assurance Company (1876) 4 Ch D 421.
More recently, the power in r 7.10(2) was exercised by Elkaim AJ in Lewis v Martinez and the persons named in the Schedule (No 4),[16] to permit proceedings to continue in the absence of any personal representative having been appointed for one of the defendants, Mr Juan Martinez. An additional safeguard was provided in that case, through an undertaking given by the plaintiff to consent to judgment being set aside in due course, if application was made to that effect by a subsequently appointed personal representative, subject to it being demonstrated that a valid defence could have been presented by a representative of the estate.[17]
[16] Lewis v Martinez and the persons named in the Schedule (No 4) [2024] NSWSC 308.
[17] Lewis v Martinez and the persons named in the Schedule (No 4) [10] - [12].
I do not consider it necessary in this case to order the appointment of any person to represent Ms Da Silva's interests, or to seek any additional undertakings. In the circumstances, I am satisfied it is appropriate for this matter to proceed and for final orders to be made in the absence of any personal representative of Ms Da Silva. I reach this view for the following reasons.
First, I take into account the evidence that the nominated executor, being the first defendant, has had adequate notice of the proceeding.
Second, the only other known potential beneficiary (Ms Gouveia) cannot be located but has previously accepted, through a communication to the plaintiff from her financial counsellor, that the bankruptcy trustee would take possession of and sell the Beldon Property, and I note she is not currently living at the property.[18]
[18] King Affidavit, Attachment GK-1, pg 142 - 148.
Third, and more fundamentally, as the first defendant succeeded to Ms Da Silva's interest in the Beldon Property by way of survivorship, as I will explain below, it is quite clear that the property cannot in fact form part of the deceased estate. Ms Da Silva's estate therefore has no practical beneficial interest in the property involved in the proceedings. This is a recognised circumstance in which the power has been exercised, as noted by Brereton J in the passage I have earlier quoted from Steinecke v Wayne.
In support of its position, the plaintiff expressly relies upon the long-standing decision in Crossley v City of Glasgow Life Assurance Company, which I note is cited in the Red Book commentary to O 18 r 15 RSC.[19]
[19] Gething M, Curwood M and Joseph R, Civil Procedure : Western Australia (vol 1), [18.15.4].
In Crossley v City of Glasgow Life Assurance Company, the then Master of the Rolls, Sir George Jessel, was faced with a predicament that the plaintiff, who held two policies of life insurance in respect of the life of one Julius Sichel, which he held as security for a debt owed, could not recover on those policies upon the death of Mr Sichel. The insurance companies refused to make payment upon the policies without receiving good discharge from Mr Sichel's legal personal representative. As it happened, Mr Sichel had died leaving a will appointing executors, but no orders for representation or probate were obtained.
The Master of the Rolls rejected an argument there had been an equitable assignment of the policies such that good discharge could thereby be effected, but considered the absence of a personal representative could nonetheless be addressed by an exercise of the power in s. 44 of the Chancery Amendment Act (15 & 16 Vict c. 86) 1852 (UK). That provision represents the progenitor of O 18 r 15(1) RSC.
The Master of the Rolls held as follows:[20]
Then he finds fault with the insurance company, who are men of business, because they say that is not satisfactory and they are not willing to pay, the whole difficulty having been occasioned by his own carelessness in not taking an assignment. Then he comes here and brings an action, which he was quite entitled to bring, and there I think I can help him, because, under the power conferred on me by the Legislature, and under the circumstances of the case, seeing that it is sufficiently proved that the money is really due, I can do without the legal personal representative. The 44th section of the Act, 15 & 16 Vict. c. 86, which confers that power, is undoubtedly still in force, for although it is not incorporated by express provision in the new Judicature Rules, yet it is saved by the note at the commencement of the rules, and I have acted upon it recently. I shall, therefore, declare that, it appearing that this is a case in which the presence of the legal personal representative may be dispensed with, the suit may proceed in the absence of the legal personal representative. (emphasis added)
[20] Crossley v City of Glasgow Life Assurance Company(426 - 427), adopting a similarly wide approach to the power which he later adopted in Curtius v Caledonian Fire and Life Insurance Company at first instance, which was upheld on appeal by Lord Coleridge CJ and Lord Justices Baggallay and Lindley.
As is apparent from the emphasised passage, the court in Crossley v City of Glasgow Life Assurance Company found the plaintiff had a good claim to the relief sought and, by force of that reasoning, the estate had no basis to oppose the relief. Such a conclusion provided a sound basis to proceed in the absence of a personal representative. There is no good reason not to follow this approach when considering the exercise of the power in O 18 r 15(1) RSC.
The absence of any practical beneficial interest in the Beldon Property on the part of Ms Da Silva's estate, coupled with the additional grounds mentioned above at [26] and [27], offer a cogent basis to proceed in the absence of any personal representative (and without needing to make orders to appoint such a person for the purposes of resolving this proceeding, or seeking additional undertakings from the plaintiff).
I will now turn to consider the substance of the plaintiff's application.
D. The plaintiff's submissions
The plaintiff's counsel has provided the Court with a helpful outline of submissions dated 1 October 2024 which provides a useful summary of the factual matters which are relevant to this application, and which explain the basis for the relief which is sought.
Prior to Ms Da Silva's death, the certificate of title for the Beldon Property recorded that Ms Da Silva and the first defendant held the property as joint tenants. It follows, it is submitted, that upon the death of Ms Da Silva, the first defendant obtained sole ownership of the Beldon Property by way of survivorship, such that the deceased's interest ceased to exist thereafter. The Beldon Property was therefore not capable of falling into Ms Da Silva's estate or being dealt with by her will.
However, as no steps were taken to deal with Ms Da Silva's estate or to regularise the title to the Beldon Property, both the first defendant and the deceased remained listed on the certificate of title as joint tenants when, in 2021, the former bankruptcy trustee applied to be, and was, registered as proprietor in the place of the first defendant.
The result flowing from these events was that the bankruptcy trustee's registration was perceived to sever the joint tenancy, which was still recorded on the title, notwithstanding the joint tenancy had in reality ended in 2013 upon Ms Da Silva's death.
Accordingly, the certificate of title now records Mr Trafford-Jones (in his capacity of the former bankruptcy trustee) and Ms Da Silva, as each holding a half share in the Beldon Property, as tenants in common.
Accordingly, as a first step, the plaintiff seeks a vesting order to correct the erroneous situation which has arisen with respect to the title of the Beldon Property. For the avoidance of doubt, it is submitted that the vesting order is only sought in respect of the half share in the Beldon Property currently registered in the name of the deceased. The plaintiff can otherwise apply to succeed to the interest currently registered in the name of Mr Trafford-Jones. That much is clear from s 132(2) and s 132(3) of the Bankruptcy Act and s 234 of the TLA.
The effect of the provisions of the Bankruptcy Act just mentioned is to vest the property in the trustee regardless of a failure to register such interest pursuant to relevant legislation, although for the legal interest in land under the Torrens System to vest in the trustee it will be necessary to lodge a transmission application.[21]
[21] Whitbread v Whitbread (1967) 10 FLR 120, 121.
It is submitted that when the first defendant became bankrupt, his property vested in his trustee in bankruptcy by reason of s 58(1)(a) of the Bankruptcy Act. His property at the time included the sole interest in the Beldon Property he acquired by way of survivorship, albeit he had not applied to be formally registered as sole proprietor under s 227 of the TLA. Section 58(2) of the Bankruptcy Act provides that, where the transmission of property must be registered under a State law, a bankrupt's estate in such property vests in equity in the bankruptcy trustee immediately, and will vest in law when the transmission is properly registered. Section 58(2) states:
(2) Where a law of the Commonwealth or of a State or Territory requires the transmission of property to be registered and enables the trustee of the estate of a bankrupt to be registered as the owner of any such property that is part of the property of the bankrupt, that property, notwithstanding that it vests in equity in the trustee by virtue of this section, does not so vest at law until the requirements of that law have been complied with.
Further, s 234(1) of the TLA, entitles a bankruptcy trustee to be registered as the proprietor of any property which falls within the bankrupt estate.
In the circumstances, it is submitted that the only person with any interest in Ms Da Silva's half share in the Beldon Property was the first defendant, and his interest had vested in equity in the plaintiff. Accordingly, it is submitted the plaintiff ought properly be registered as the proprietor in law of that half-share.
E. Disposition
In simple terms, the plaintiff requires the assistance of the Court to achieve the result which he says ought to have followed upon the death of Ms Da Silva, and submits that a vesting order should now be made.
Vesting order
The starting point for the analysis is to examine the legal effect on the ownership of the Beldon Property of the death of Ms Da Silva in October 2013. As I have noted, prior to her death, Ms Da Silva and the first defendant held the Beldon Property as joint tenants. Upon her death, the first defendant obtained sole ownership of the Beldon Property by way of survivorship although he had not applied to be formally registered as such under s 227 of the TLA, such that the deceased's interest ceased to exist thereafter.[22] It is axiomatic that the Beldon Property was therefore not capable of falling into Ms Da Silva's estate, or being dealt with by her will.
[22] Gemini Energy and Minerals Pty Ltd v Luff [2018] WASC 341; and Bushby v Bushby (as executor of the estate of Born) [2024] WASC 54.
At the time the first defendant was declared bankrupt, in October 2018, the certificate of title erroneously recorded Ms Da Silva as still holding the Beldon Property as joint tenants with the first defendant. That error was compounded by the change in title thereafter to sever the joint tenancy[23] and to record the bankruptcy trustee and Ms Da Silva as each holding a half share in the Beldon Property as tenants in common.
[23] As explained in Singh v Kaur Bal [No 2] [2014] WASCA 88 [43].
I accept that, by force of s 58(1)(a) of the Bankruptcy Act, the property of the first defendant vested in his trustee in bankruptcy upon sequestration orders being made, which included the sole interest he had acquired by way of survivorship in the Beldon Property.[24] Further, by force of s 58(2) of the Bankruptcy Act, the first defendant's estate and interest in such property immediately thereupon vested in equity in the bankruptcy trustee.
[24] Such property then being divisible amongst the first defendant's creditors by virtue of s 116 of the Bankruptcy Act.
The plaintiff relies upon the Court's equitable jurisdiction and the vesting order powers to address this situation. The court has an equitable jurisdiction to make a vesting order founded upon, or giving effect to, an equitable right. That much is evident from the decision of Barrett J in In re estate of McCready[25] and from the terms of s 16(1)(d)(i) of the Supreme Court Act 1935 (WA).
[25] In re estate of McCready [2004] NSWSC 887 [17].
The plaintiff relies on the express power in s 78(2)(n) of the Trustees Act to grant a vesting order. That power may be exercised where property is vested in a trustee and it appears to the Court to be expedient to make a vesting order. In a general sense, the underlying purpose of the vesting provisions is to ensure that a trust can achieve the purpose for which it was created and that those persons entitled to an interest pursuant to, or as a result of, a trust can receive the benefit or interest to which they are so entitled.
In the context of s 78(2)(n) of the Trustees Act, the power falls to be exercised where it is 'expedient' to do so. The word 'expedient' is a word of wide meaning. That proposition is supported by numerous authorities, including by the analysis of Murphy JA and Hall J (as his Honour then was) in Scaffidi v Montevento Holdings Pty Ltd.[26] As there explained, it may mean advantageous, or merely appropriate, or suitable to the circumstances of the case.
[26] Scaffidi v Montevento Holdings Pty Ltd [2011] WASCA 146 [ 173] (Murphy JA and Hall J), citing Pope v DRP Nominees Pty Ltd [1999] SASC 337; (1999) 74 SASR 78 [33] (Bleby J, with Duggan and Debelle JJ agreeing). See also Elovalis v Elovalis [2008] WASCA 141, [40] (Martin CJ; Buss JA and Newnes AJA agreeing) and the earlier decision of White J in Porteous v Rinehart (1998) 19 WAR 495, 507.
In my view, in the circumstances I have outlined above, it is expedient in the present case, and appropriate, to make a vesting order to give effect to the vesting effected by s 58(1) of the Bankruptcy Act. The vesting order is only required in respect of the half share in the Beldon Property currently registered in the name of Ms Da Silva, as it is open to the plaintiff to apply to succeed to the interest currently registered to Mr Trafford-Jones. That much is clear from s 132(2) and s 132(3) of the Bankruptcy Act and s 234 of the TLA.
The making of the vesting order is expedient given the matters set out below. For the same reasons, it would be, conversely, inexpedient to decline to make the vesting order and, for example, to leave the plaintiff to secure the legal interest of Ms Da Silva in the property by way of a transfer, presumably to be executed by a personal representative of her estate to be appointed at some point in the future.
First, the present situation has arisen through an error in the manner in which the certificate of title has been amended, or not amended, over time. In the ordinary course of events, the title ought to have reflected the sole ownership of the Beldon Property upon the death of Ms Da Silva.
Second, upon the death of Ms Da Silva, it was open to the first defendant to apply to be formally registered as sole owner of the Beldon Property under s 227 of the TLA, which would have meant the deceased's interest ceased to exist thereafter. That was not done.
Third, the vesting order will achieve the intended purpose of the trust which has arisen by operation of the bankruptcy statute, such that this property will not only be held in equity by the plaintiff as trustee in bankruptcy, but title to the property will become vested in him. This will allow the plaintiff to discharge his duties as the appointed trustee in bankruptcy.
Fourth, as matters stand, in the absence of a personal representative appointed to the estate of Ms Da Silva, the ability of the plaintiff to secure the remaining legal interest in the Beldon Property appears to be overly complicated, likely to be time consuming, and will lead to additional costs and expenses being incurred, which may be avoided through the vesting order which is now sought.
Upon the Court making an order vesting title to the property in the plaintiff, s 242 of the TLA gives statutory effect thereto, allowing the second defendant to amend the registered title accordingly.
Vacant possession
As for the orders sought concerning vacant possession, the evidence indicates that the first defendant may currently be residing at the Beldon Property.[27] No other person is residing at the property. I am very conscious that if the relief sought by the plaintiff is granted the first defendant will need to secure alternative residential accommodation.
[27] King Affidavit, Attachment GK-1, pg 150 - 153; and affidavit of Mr Ian Brent-White sworn 29 June 2024.
I have not heard from the first defendant in this regard and do not know whether he has secured accommodation. However, I take judicial notice that the Perth rental property market has been exceedingly tight and expensive for some considerable time. For many people in this city, securing rental accommodation is an uphill struggle.
That said, I must accept that the plaintiff's role under the Bankruptcy Act is to take possession of the first defendant's property and use it to satisfy the proven debts of creditors. In this particular case, this role involves the plaintiff obtaining vacant possession of the Beldon Property and taking appropriate steps to sell the property.
Further, it is apparent the first defendant has been on notice of the bankruptcy trustee's intentions with respect to the property for some time,[28] and while he has been in denial as to his status as a bankrupt and its implications, and he will no doubt be impacted by the outcome, that is a necessary result of his bankrupt status. Additional delays in the matter may well have an effect on the value of the property, there being evidence that the delays to date have meant the condition of the property has deteriorated.[29]
[28] Indeed, a notice to vacate was issued to the first defendant as long ago as 6 September 2022: King Affidavit, Attachment GK-1, pg 139.
[29] King Affidavit, Attachment GK-1, pg 150.
I should also record there is evidence to the effect that, at least at one point in time whilst the first defendant was being assisted by a financial counsellor from The Spiers Centre, although not legally represented, the first defendant indicated he was willing to consent to orders for vacant possession and for the sale of the property.[30]
[30] King Affidavit, Attachment GK-1, pg 147 - 148.
In these circumstances, and balancing these competing interests, I am of the view it is appropriate to make orders to facilitate the vacant possession of the Beldon Property and to facilitate an efficient sale of the property through the regime which has been proposed by the plaintiff. The first defendant has had more than ample time to organise his affairs and secure alternative accommodation, and it cannot be said that the plaintiff has acted in a hasty or peremptory fashion in any respect.
I am therefore satisfied that the Court has power under the Trustees Act to make the vesting order which is sought by the plaintiff, as well as to make the associated orders to require vacant possession be given and to facilitate an efficient sale of the Beldon Property, and that those powers should be exercised. The making of these orders is necessary to facilitate the role and function of the trustee in bankruptcy under the Bankruptcy Act.
Finally, I am satisfied that the plaintiff should have the costs of the proceeding, to be paid out of the bankrupt estate of the first defendant.
F. Conclusion and orders
Having heard from counsel as to the form of the orders which should now be made, there are two matters to mention.
First, a modification was proposed by the plaintiff to identify the selling agent with more precision, and to confirm that the requirements in proposed order 5 are in effect the requirements communicated by the plaintiff. That is an appropriate amendment which clarifies the terms of the order and ensures the first defendant is aware of the person from he will receive directions.
Second, I have proposed a modification to the structure of the orders which requires that a separate notice be given to the first defendant upon service of the orders. The intention of the notice is to ensure the first defendant is aware of the effect of the orders and draws his attention to the contact details for the applicable Community Legal Centre. I have considered this amendment to be necessary given the concerns I raised at [60] and [61] above, which are directed at the potential accommodation needs of the first defendant more than his legal position, but the Court is confident that the Community Legal Centre would be well-equipped to explain the effect of the orders made and to direct the first defendant to the appropriate agencies which could provide assistance, should any of the Court's concerns as to alternative accommodation, in fact, emerge.
The final form of the orders is set out in Attachment A to these reasons.
ATTACHMENT A
Orders made on 8 October 2024
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
TL
Associate to the Honourable Justice Lundberg
8 OCTOBER 2024
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