Klewer v Official Trustee in Bankruptcy

[2007] FMCA 1779

FEDERAL MAGISTRATES COURT OF AUSTRALIA

KLEWER & ANOR v OFFICIAL TRUSTEE IN BANKRUPTCY [2007] FMCA 1779

BANKRUPTCY – Where title in applicant’s property transferred to Official Trustee pursuant to s.58 Bankruptcy Act1966 – whether applicant entitled to have property re-transferred to her name.

Bankruptcy Act 1966, s.58

First Applicant: LUCY KLEWER

Second Applicant: ROBERT KLEWER

Respondent: OFFICIAL TRUSTEE IN BANKRUPTCY

File Number: SYG2205 of 2007

Judgment of: Raphael FM

Hearing date: 9 October 2007

Date of Last Submission: 9 October 2007

Delivered at: Sydney

Delivered on: 9 October 2007

REPRESENTATION

Applicant in person

Solicitors for the Respondent: Harris Freidman Hyde Page

ORDERS

1. The second part of the interim application is dismissed.

2. Applicant to pay the Respondent’s costs assessed in the sum of $350. 

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG2205 of 2007

LUCY KLEWER

Applicant

ROBERT KLEWER

And

OFFICIAL TRUSTEE IN BANKRUPTCY

Respondent

REASONS FOR JUDGMENT

1. The applicants in this matter are a mother and son. The mother is bankrupt. A sequestration order was made against her in 2005. At that time the mother was the registered proprietor of a property known as 30 Coachman's Close, Korora, New South Wales. On or around 20 July 2007, title in that property was transferred pursuant to s.58 of the Bankruptcy Act 1966 (“the Act”) to the Official Trustee. When I say that the transfer took place at that time I am, of course, sensible of the fact that s.58 provides that the property vests forthwith in the Official Trustee upon the debtor becoming bankrupt.

2. The applicants have brought a notice of motion or application in this court filed on 25 July 2007, seeking orders that the residence be declared non-divisible to creditors of the mother. One of the grounds alleged to support that application is that there is a deed of trust, or if not a deed, a declaration, either oral or in writing, pursuant to which the beneficial ownership of the property vests in the son. There are other grounds identified in the affidavit of Ms Klewer, filed on 31 July 2007.

3. The matter came before me on 2 October 2007. At that time the applicants sought an order that the matter be referred to a solicitor or barrister for pro bono assistance pursuant to the rules of this Court. I gave a short judgment declining to do that, and then made orders concerning the future conduct of the proceedings which ended with a hearing on 27 February 2008. At the time Mr Freidman, who appears on behalf of the Official Trustee, gave an undertaking in open Court to Ms Klewer that the Official Trustee would take no steps to dispose of the property, or seek possession pending the hearing of the case. Shortly thereafter, Ms Klewer contacted my associate indicating that she believed that the second interim order that she had sought which is:

   “That the title to the said property remains with the mortgagee, namely, the Commonwealth of Australia”

   had not been dealt with. I returned the matter to the Court so that the applicant could be heard.

4. Today Ms Klewer advised me that she believed she was entitled to have the property re-transferred into her name as there was a dispute as to whether or not it was property to which the Official Trustee was entitled. She also pointed out that the mortgage was being paid to the Commonwealth Bank either by herself or on her behalf, or on behalf of her son. She indicated that she felt it only fair that if the Official Trustee had taken the property he should pay the mortgage, although there were no funds available for that to happen.

5. I do not propose to grant Ms Klewer's request. The Official Trustee is entitled to be registered as owner of the property pursuant to s.58 of the Act. Ms Klewer is bankrupt. The property is in her name. Any alleged trust has yet to be proved. If it is proved and an order is made re‑transferring the property back to her, then she can be heard as to whether or not any loss or damage has been suffered by the original transfer. But as things stand at present and, in particular, with regard to the facts that I am aware of from her own affidavit, the balance of convenience to the extent that such is in any way relevant seems to favour the retention of title in the name of the trustee.

6. I am hoping that the case is still on schedule for a hearing. Ms Klewer and her son may continue to make the mortgage payments, or may decide not to as the case may be; that is a matter for them and advice given to them. The consequences of not paying the mortgage are also matters upon which it is not for this Court to advise. Likewise the effect of having paid the mortgage is a matter upon which Ms Klewer can seek legal advice, which again should not be coming from this Court. I dismiss that part of the interim application to which this re-hearing refers.

7. The applicant has asked that I disqualify myself. As tempting as this may be, given her aggressive attitude towards the Court, I do not propose to do so. She says that I am biased, that I have made a prejudgment in this case. I do not recall ever indicating that I have made a prejudgment in this case. I do recall indicating that I have read the evidence that she has put on, and that I did not find it strong. She says that I have at all times been favourable to the Trustee. The decisions that I have made may indicate that I have felt that the Trustee was correct in the arguments which were put to me by its legal advisor, but that is a fact: it is not bias, nor is it ostensible bias. I do not believe that the applicant has any grounds upon which I could exercise my discretion to cease to adjudicate in this matter.

8. The respondent to the motion has sought costs in this matter. The applicant was unsuccessful in her application and costs should follow the event. I propose to award costs in favour of the Official Trustee which I will assess in the sum of $350.00.

I certify that the preceding eight (8) paragraphs are a true copy of the reasons for judgment of Raphael FM

Associate: 

Date:  24 October 2007