Low v Tsoutsoulis
[2013] FCCA 1115
•22 August 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| LOW v TSOUTSOULIS | [2013] FCCA 1115 |
| Catchwords: BANKRUPTCY – Application for orders for sale of property and to vacate land and for issuance of property seizure and delivery order – failure of bankrupt to co-operate with Trustee – power to make orders sought. |
| Legislation: Bankruptcy Act 1966 (Cth), ss.19(1), 30(1), 58(1), 77(1)(e) and (g) |
| Official Receiver v Fall (2008) 5 ABC(NS) 772; [2008] FMCA 489 Official Receiver v Maher & Anor (No.3) [2011] FMCA 603 Official Receiver v Tregaskis [2006] FMCA 1915 |
| Applicant: | JENNIFER ELIZABETH LOW AS TRUSTEE OF THE ESTATE OF BILLY TSOUTSOULIS |
| Respondent: | BILLY TSOUTSOULIS |
| File Number: | PEG 185 of 2013 |
| Judgment of: | Judge Lucev |
| Hearing date: | 15 August 2013 |
| Date of Last Submission: | 15 August 2013 |
| Delivered at: | Perth |
| Delivered on: | 22 August 2013 |
REPRESENTATION
| Counsel for the Applicant: | Mr AJ Mason |
| Solicitors for the Applicant: | Roe Legal Services |
| For the Respondent: | No appearance |
ORDERS
The Respondent deliver up vacant possession of the premises known as 83 Hayes Avenue, Yokine, in the state of Western Australia and more particularly described as Lot 165 on Plan 5023, being all of the land comprised in Certificate of Title Volume 1022 Folio 181 (“the Yokine Land”) to the Applicant within 14 days of the date of this order.
The Respondent deliver up all keys for all building and improvements on the Yokine Land to the Applicant within 14 days of the date of this order.
In the event that the Respondent fails to deliver up vacant possession of the Yokine Land in accordance with orders 1 and 2 a property (seizure and delivery) order pursuant to s.95 of the Civil Judgments Enforcement Act 2004 (WA) shall issue forthwith.
The Respondent must remove from the Yokine Land all vehicles, rubbish and chattels which have not vested in the Official Trustee in Bankruptcy (“the personal property”) within 14 days of the date of this order.
In the event that the Respondent fails to comply with order 4 above the Applicant is empowered to remove and dispose of the personal property on the Yokine Land as she sees fit after 14 days have passed from the making of this order.
The Yokine Land be sold free from the encumbrances (if any) of such of the encumbrancers that consent to the sale of the Yokine Land and subject to the encumbrances of such of them as shall not consent.
The Yokine Land be sold subject to the Law Society of Western Australia’s current Joint Form of General Conditions for the Sale of Land.
The Applicant have the sole conduct of the sale of the Yokine Land and be authorised to instruct an agent or an auctioneer for that purpose.
The Applicant is to decide whether the Yokine Land is to be sold by public auction or private treaty.
The Applicant is to decide whether or not to set a reserve price for any auction of the Yokine Land and, if set, at what price.
The Applicant be empowered to sign, on behalf of the Respondent, any contract of sale, discharge of mortgage authority, transfer of land and any other documents that are necessary to give effect to the sale of the Yokine Land in the event that the Respondent fails or refuses to sign such documents within such time as required by the Applicant’s solicitors.
The Respondent do all such things as may be reasonably required by the Applicant, its selling agent or solicitors for the purposes of achieving a sale of the Yokine Land including providing access to buildings on the Yokine Land for the purposes of valuation and viewing by potential purchasers.
The net proceeds of sale of the Yokine Land, after payment of what shall be due to any encumbrancer according to their priorities and of all other proper costs, charges and expenses of the sale be paid to the Applicant.
The Applicant’s costs of the action against the Respondent be fixed in the sum of $8815.
The parties have liberty to apply.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PERTH |
PEG 185 of 2013
| JENNIFER ELIZABETH LOW AS TRUSTEE OF THE ESTATE OF BILLY TSOUTSOULIS |
Applicant
And
| BILLY TSOUTSOULIS |
Respondent
REASONS FOR JUDGMENT
Orders sought
The Applicant, Jennifer Elizabeth Low as Trustee in Bankruptcy[1] of the Estate of Billy Tsoutsoulis,[2] today seeks orders for the sale and vacation of land against the Bankrupt so that the Trustee may realise the assets of the Bankrupt’s estate for the benefit of creditors in accordance with the Trustee’s obligations and duties under the Bankruptcy Act 1966 (Cth).[3]
[1] “Trustee”.
[2] “Bankrupt”.
[3] “Bankruptcy Act”.
The final orders sought are as follows:
1.The Respondent deliver up vacant possession of the premises known as 83 Hayes Avenue, Yokine, in the state of Western Australia and more particularly described as Lot 165 on Plan 2023, being all of the land comprised in Certificate of Title Volume 1022 Folio 181 (the Yokine Land) to the Applicant within 14 days of the date of this order.
2.The Respondent deliver up all keys for all building and improvements on the Yokine Land to the Applicant within 14 days of the date of this order.
3.In the event that the Respondent fails to deliver up vacant possession of the Yokine Land in accordance with orders 1 and 2 above a writ of possession shall forthwith issue in favour of the Applicant, or in the alternative, a property (seizure and sale) order pursuant to s80 of the Civil Judgments Enforcement Act 2004 (WA) shall issue forthwith.
4.The Respondent must remove from the Yokine Land all vehicles, rubbish and chattels which have not vested in the Official Trustee in Bankruptcy (“the personal property”) within 14 days of the date of this order.
5.In the event that the Respondent fails to comply with Order 4 above the Applicant is empowered to remove and dispose of the personal property on the Yokine Land as she sees fit after 14 days have passed from the making of this order.
6.The Yokine Land be sold free from the encumbrances (if any) of such of the encumbrancers that consent to the sale of the Yokine Land and subject to the encumbrances of such of them as shall not consent.
7.The Yokine Land be sold subject to the Law Society of Western Australia’s current Joint Form of General Conditions for the Sale of Land.
8.The Applicant have the sole conduct of the sale of the Yokine Land and be authorised to instruct an agent or an auctioneer for that purpose.
9.The Applicant is to decide whether the Yokine Land is to be sold by public auction or by private treaty.
10.The Applicant is to decide whether or not to set a reserve price for any auction of the Yokine Land and, if set, at what price.
11.The Applicant be empowered to sign, on behalf of the Respondent, any contract of sale, discharge of mortgage authority, transfer of land and any other documents that are necessary to give effect to the sale of the Yokine Land in the event that the Respondent fails or refuses to sign such documents within such time as required by the Applicant’s solicitors.
12.The Respondent do all such things as may be reasonably required by the Applicant, its selling agent or solicitors for the purposes of achieving a sale of the Yokine Land including providing access to buildings on the Yokine Land for the purposes of valuation and viewing by potential purchasers.
13.The net proceeds of sale of the Yokine Land, after payment of what shall be due to any encumbrancer according to their priorities and of all other proper costs, charges and expenses of the sale be paid to the Applicant.
14.The Applicant’s costs of the action against the Respondent be fixed in the sum of $1,340.15, or alternatively taxed and paid out of the bankrupt estate of the Respondent.
15.The parties have liberty to apply.
At hearing, Counsel for the Trustee indicated that the final orders sought were sought to be amended as follows:
a)by substituting “5023” for “2023” in order 1, the latter being a typographical error;[4]
b)to amend order 3 to provide for the deletion of reference to a writ of possession, and for reference to be made to a Property Seizure and Delivery Order[5] pursuant to s.95 of the Civil Judgments Enforcement Act 2004 (WA)[6] in lieu of a property seizure and sale order under s.80 of the CJE Act; and
c)for costs in the sum of $8815 in order 14.
[4] Trustee’s Second Affidavit, paras.2-5.
[5] “PSDO”.
[6] “CJE Act”.
The amendments to proposed orders 1, 3 and 14 are uncontroversial and need not be addressed further, save that the power to make the amended proposed order 3 is addressed below.[7]
[7] See paras.12-13 below.
Evidence
The Trustee relies upon her affidavit sworn 23 July 2013,[8] and a second affidavit sworn 14 August 2013.[9] At hearing, the Bankrupt did not appear, and the Trustee was not cross-examined in relation to her affidavits. The Court, therefore, can take the facts as being as asserted by the Trustee in her affidavits.
[8] “Trustee’s Affidavit”.
[9] “Trustee’s Second Affidavit”.
In the Trustee’s Affidavit she deposes as follows:
a)on 9 December 2011 the Bankrupt became bankrupt by order of this Court;[10]
[10] Trustee’s Affidavit, paras.6-7.
b)on 20 July 2012 the Trustee consented to act as Trustee of the Bankrupt’s estate;[11]
[11] Trustee’s Affidavit, paras.8-9.
c)at the time of the Trustee’s appointment the Bankrupt was registered as the proprietor of 83 Hayes Avenue, Yokine, Western Australia, more particularly described as Lot 165 on Plan 5023 being the whole of the land in Certificate of Title Volume 1022 Folio 181;[12]
[12] “Yokine Land”; Trustee’s Affidavit, paras.11-13.
d)on the Trustee’s appointment as Trustee of the Bankrupt’s estate, the Bankrupt’s interest in the Yokine Land vested in the Trustee;[13]
[13] Bankruptcy Act, s.58(1); Trustee’s Affidavit, para.14.
e)on 13 March 2013 the Trustee made an application to the Registrar of Titles, pursuant to s.234 of the Transfer of Land Act 1893 (WA), to be registered as the proprietor of the Bankrupt’s interest in the Yokine Land, and that application was granted and the Trustee is now the registered proprietor of the Bankrupt’s interest in the Yokine Land, and, therefore, in a position to sell the Yokine Land;[14]
[14] Trustee’s Affidavit, paras.15-18 and annexures JEL5 and JEL6.
f)the Trustee’s investigations into the Bankrupt’s acts and dealings have been hampered as a result of the Bankrupt failing to provide the Trustee with books and records, including details of debt due from Highett Pty Ltd (in liquidation) and details of the Bankrupt’s motor vehicle;[15]
[15] Trustee’s Affidavit, para.20.
g)the Trustee has, however, determined to date that the Bankrupt’s assets and liabilities are as follows:
| Description | Statement of Affairs $ | Estimated to Realise $ |
| Assets | ||
| Property at 83 Hayes Avenue, Yokine | 900,000 | 900,000 |
| Mercedes C200 | 5,000 | Exempt |
| Debt – Highett Pty Ltd (in Liquidation) | 650,000 | Nil |
| Assets available for creditors | 1,555,000 | 900,000 |
| Liabilities | ||
| Secured creditor – Bendigo & Adelaide Bank[16] | 594,000 | 599,581 |
| Petitioning Creditor’s Solicitor’s Costs | - | 15,469 |
| Unsecured creditors | 242,000 | 246,248 |
| 836,000 | 861,298 | |
| Surplus as regards unsecured creditors | 719,000 | 38,702 |
[16] “Bendigo Mortgages”.
[17]
[17] Trustee’s Affidavit, para.20.
h)the Bankrupt has also advised the Trustee that he may have another unsecured creditor, Mr Moore, who he believes is owed approximately $200,000. Mr Moore has been sent a proof of debt form, which has not yet been returned;[18]
[18] Trustee’s Affidavit, para.21.
i)the Trustee has engaged in a course of correspondence with the Bankrupt, his son, Mr Chris Tsoutsoulis, Mr Tsoutsoulis’ former adviser, Mr Robert Mancy, and Mr Tsoutsoulis’ brother-in-law, Mr Rodger Spencer, regarding the Yokine Land, and which is summarised as follows:
Date
Narrative
17/8/12
Letter to Bankrupt – advice that Bendigo Mortgages in arrears, Bankrupt must maintain payments until position regarding property is resolved.
12/9/12
Letter to Mancy – calculation of estate’s interest in the property and options available to Bankrupt and his wife.
18/9/12
Letter to Mancy – requesting proof of Bendigo Mortgages payments.
03/10/12
Fax to Mancy – follow up request for proof of Bendigo Mortgages payments.
1/11/12
Letter to Bankrupt (by Registered Post) – including calculation of estate’s interest in property and options available to the Bankrupt and his wife.
13/11/12
Letter to Bankrupt (by Registered Post) – follow up re letter dated 1 November 2012.
18/01/13
Letter to Chris Tsoutsoulis – advising that if arrears on Bendigo Mortgages are not paid, Trustee will instruct her solicitor to commence possession proceedings.
07/02/13
Letter to Bankrupt – advising due to non-payment of Bendigo Mortgages, Trustee has instructed her solicitor to commence repossession proceedings.
06/03/13
File note regarding Bankrupt’s Property (typed) and meeting with Bankrupt, Ms Joyce and Mr Hunter of Sheridans (handwritten).
11/03/13
Letter to Bankrupt – confirming requirements for Deed of Sale in relation to sale of estate’s interest in property to third party.
13/03/13
Email to Bankrupt – setting down heads of agreement re Contract for Sale of property.
28/03/13
Email to Bankrupt – confirmation of extension of time to pay the arrears on Bendigo Mortgages and for Spencer to sign Contract for Sale.
15/04/13
Letter to Bankrupt – re Spencer’s failure to execute Contract for Sale and Bankrupt’s failure to pay Bendigo Mortgages arrears.
30/04/13
Email to Chris Tsoutsoulis – confirmation of revised arrears figure for Bendigo Mortgages.
22/05/13
Email to Chris Tsoutsoulis – acknowledgement of $2,500 in cash as part payment of arrears on Bendigo Mortgages.
30/05/13
Letter to Bankrupt – update re arrears on Bendigo Mortgages. Notification of intention to charge Bankrupt and wife “rent” for period of occupation from 28 March 2013 to the earliest of date of settlement of sale or the date of vacation of the property or the date of repossession, due to non-payment of Bendigo Mortgages.
10/06/13
Email to Chris Tsoutsoulis – confirmation of revised arrears figure for Bendigo Mortgages.
12/06/13
Email to Spencer – confirmation of extended deposit deadline from “within 3 working days” to “on 27 June 2013”, banking details and finance clause set out in the Contract for Sale signed by Spencer on 12 June 2013.
27/06/13
Email to Chris Tsoutsoulis – confirmation of deposit deadline, banking details and finance clause set out in the Contract for Sale signed by Spencer on 12 June 2013.
28/06/13
Email to Spencer (cc to Bankrupt) – grant of further extension to pay deposit from 27 June 2013 to 1 July 2013.
28/06/13
Email to Spencer (cc to Bankrupt) – grant of extension for Notice of Finance Approval from 2 July 2013 to 5 July 2013.
[19]
[19] Trustee’s Affidavit, para.22.
j)the Trustee has had numerous telephone conversations regarding the Yokine Land in relation to the arrears on the Bendigo Mortgages and in relation to the third party, Mr Spencer’s, intention to enter into a Contract for Sale concerning the Yokine Land;[20]
[20] Trustee’s Affidavit, para.23.
k)on 1 March 2013 the Trustee’s lawyer wrote to the Bankrupt demanding that the Bankrupt vacate the Yokine Land by 1 April 2013, a demand that the Bankrupt has not complied with, as a consequence of which the Bankrupt remains in occupation of the Yokine Land, and resides there with his wife;[21]
[21] Trustee’s Affidavit, paras.24 and 25.
l)the Bendigo Mortgages are registered first and second mortgages in respect of the Yokine Land;[22]
[22] Trustee’s Affidavit, para.27.
m)the Yokine Land was valued on 2 May 2012 at $900,000;[23]
[23] Trustee’s Affidavit, para.28 and annexure JEL10.
n)the Trustee estimates that the outcome for the unsecured creditors, subject to any additional claim being submitted by Mr Moore, is as follows:
| Item | $ |
| Property at Hayes Avenue | 900,000 |
| Less: Bendigo & Adelaide Bank | (599,581) |
| 300,419 | |
| Petitioning solicitor’s costs | (15,469) |
| Legal fees (est. inc. GST) | (4,950) |
| Trustee’s fees – to 31 May 2013 (inc. GST) | (54,148) |
| Trustee’s disbursements – to 31 May 2013 (inc. GST) | (4,725) |
| Legal fees – est. future costs (inc. GST) | (13,000) |
| Trustee’s fees – est. future costs (inc. GST) | (22,000) |
| Trustee’s disbursements – est. future costs (inc. GST) | (1,100) |
| Unsecured creditors | (246,248) |
| Deficiency as regards unsecured creditors | (61,221) |
[24]
o)the Trustee is of the view that in order to pay the Bankrupt’s creditors the largest dividend possible and meet the costs of the bankruptcy, the Yokine Land should be sold;[25] and
p)the Trustee is of the view that the Bankrupt has failed to:
i)do such acts and things in relation to the Yokine Land as are required for the Trustee to sell the Yokine Land; and
ii)aid to the utmost of the Bankrupt’s power the administration of his bankrupt estate.[26]
[24] Trustee’s Affidavit, para.35.
[25] Trustee’s Affidavit, para.36.
[26] Trustee’s Affidavit, para.36.
Consideration
Section 19(1) of the Bankruptcy Act relevantly states that:
The duties of the trustee of the estate of a bankrupt include the following:
(b)determining whether the estate includes property that can be realised to pay a dividend to creditors;
(f)taking appropriate steps to recover property for the benefit of the estate;
(g)taking whatever action is practicable to try to ensure that the bankrupt discharges all of the bankrupt’s duties under this Act.
Under s.19 of the Bankruptcy Act the Trustee has a duty to recover the Bankrupt’s property for the benefit of the Bankrupt’s estate and the Bankrupt’s creditors.[27]
[27] Official Receiver v Fall (2008) ABC(NS) 772 at 776 per Lucev FM; [2008] FMCA 489 at para.9 per Lucev FM (“Fall”); Official Receiver v Tregaskis [2006] FMCA 1915 (“Tregaskis”).
Section 30(1) of the Bankruptcy Act states that:
The Court:
(a)has full power to decide all questions, whether of law or of fact, in any case of bankruptcy or any matter under Part IX, X or XI coming within the cognizance of the Court; and
(b)may make such orders (including declaratory orders and orders granting injunctions or other equitable remedies) as the Court considers necessary for the purposes of carrying out or giving effect to this Act in any such case or matter.
Section 77(1)(e) and (g) of the Bankruptcy Act state that:
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.
The Trustee seeks vacant possession of the Yokine Land, and seeks to have sole conduct of the sale of the Yokine Land, in order to fulfil her duties in realising the assets of the Bankrupt’s estate. It is appropriate that the Trustee have that possession, conduct and control for the following reasons:
a)the Bankrupt has failed to do all such acts and things in relation to the realisation of the Yokine Land;
b)the Bankrupt has, by the failure set out above also failed to aid the Trustee in the administration of the Bankrupt’s estate as required by s.77(1)(e) and (g) of the Bankruptcy Act;
c)the failure of the Bankrupt to vacate the Yokine Land is such that the Court considers that if the Trustee is obliged to rely upon the cooperation of the Bankrupt in the sale of the Yokine Land there are likely to be delays and costs incurred in the administration of the Bankrupt’s estate to the prejudice of the creditors, and there would be uncertainty as to when, how and whether the Yokine Land would be sold;
d)the Bankrupt has been served with the application and the Trustee’s Affidavit and has failed to file an appearance, response or grounds of objection, or any affidavits, in relation to the orders sought by the Trustee, and failed to appear at hearing;[28]
e)there is nothing otherwise before the Court preventing it from making the orders sought by the Trustee in the application; and
f)the Court has the power to make the sale and vacation orders sought pursuant to ss.30 and 77 and Bankruptcy Act, and to make those orders in the absence of the Bankrupt.[29]
[28] Service is evidenced by the Affidavit of Service of Geoffrey Stuart Shaw sworn 29 July 2013.
[29] Tregaskis at para.12 per Lucev FM; Fall ABC(NS) at 776-777 per Lucev FM; FMCA at paras.12-19 per Lucev FM.
At hearing an issue arose as to the power of the Court to make the PSDO. This question was dealt with by the Court in Official Receiver v Maher & Anor (No.3)[30] in which the Court observed as follows:
[30] [2011] FMCA 603 (“Maher & Anor (No.3)”).
9. The power of this Court to issue a PSDO arises from s.78 of the Federal Magistrates Act 1999 (Cth), which provides as follows:
(2) A person in whose favour a judgment of the Federal Magistrates Court is given is entitled to the same remedies for enforcement of the judgment in a State or Territory, by execution or otherwise, as are allowed in like cases by the laws of that State or Territory to persons in whose favour a judgment of the Supreme Court of that State or Territory is given.
10. Section 78(2) of the FM Act, providing for enforcement in a like manner to a judgment of the Supreme Court of Western Australia, requires the Court to turn to the Rules of the Supreme Court 1971 (WA). Order 46, r.2(1)(a) of the Supreme Court Rules provides that an application made under s.59(1) of the Civil Judgments Enforcement Act 2004 (WA) is one which may be dealt with by a Registrar of that Court. Section 59(1) of the Civil Judgments Enforcement Act provides:
(1) In order to recover a judgment debt, a judgment creditor may apply to the court for an order authorising the Sheriff to seize and sell the judgment debtor’s property to wholly or partially satisfy the judgment debt.
The Court makes those observations because it will order for a PSDO to be issued by a Registrar of this Court.
11. In the circumstances, the Court is of the view that s.78(2) of the FM Act read together with O 46 r.2(1)(a) of the Supreme Court Rules, and in the absence of any relevant rules of this Court – and the Court makes that observation because s.78(3) of the FM Act makes s.78(2) subject to any rules of this Court – O 37 of the Federal Court Rules (Cth) applies in relation to this Court. Order 37 r.7(2) of the FC Rules provides that:
(2) The modes of procedure and forms of process of the Supreme Court of the State or Territory in which the judgment or order is sought to be enforced shall be available and followed in the Court so far as is practicable mutatis mutandis for the enforcement of orders of the Court.
12. By reason of O 37 r.7(2) of the FC Rules, the mode of procedure and form of process available to be followed in this Court in relation to the enforcement of orders, is that set out in O 46 r.2(1)(a) of the Supreme Court Rules, because that is the mode of procedure that applies in the Supreme Court of Western Australia.[31]
[31] Maher & Anor (No.3) at paras.9-12 per Lucev FM (footnotes omitted).
Although that matter dealt with an application to the Court for a discrete PSDO arising from a failure to comply with an earlier order for delivery up and vacant possession of land, the same principle applies in this case, where the PSDO is sought in the event that there is non-compliance with the delivery up and vacant possession order. There is no reason why the Court ought not, or cannot, make an order for a PSDO to issue in the event that the delivery up and vacant possession order is not complied with.[32] In the circumstances of this case, it is appropriate that such a PSDO be made as sought, particularly having regard to the history of the matter and the Bankrupt’s lack of co-operation with the Trustee.
[32] Bankruptcy Act, s.30; Federal Circuit Court of Australia Act 1999 (Cth), s.78(2).
Conclusion
For the reasons set out above, the Court is satisfied that it ought to make the orders sought by the Trustee in the application, with the amendments as explained at hearing.[33]
[33] See paras.2 and 4 above.
I certify that the preceding fourteen (14) paragraphs are a true copy of the reasons for judgment of Judge Lucev
Associate:
Date: 22 August 2013
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