Matthews as trustee of the Bankrupt Estate of Sellars v Sellars
[2017] FCCA 2323
•22 September 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MATTHEWS AS TRUSTEE OF THE BANKRUPT ESTATE OF SELLARS v SELLARS | [2017] FCCA 2323 |
| Catchwords: BANKRUPTCY – Sequestration order made on 4 March 2013 – antecedent transactions – relation back period – application of section 120 of the Bankruptcy Act – trustee seeks declaration that certain transactions concerning the bankrupt and his wife are void on basis of insufficient or no consideration – matters to be considered – respondent failed to appear at trial – application made for an adjournment in her absence – trustee seeks to proceed on undefended basis – summary judgment – matters to be considered. |
| Legislation: Bankruptcy Act 1966, ss.58, 120 Federal Circuit Court of Australia Act 1999, ss.76, 79 |
| Cases cited: MZZGY v Minister for Immigration & Border Protection [2014] FCA 488 Arthur v Vaupotic Investments Pty Ltd [2005] FCA 433 |
| Applicant: | A C MATTHEWS AS TRUSTEE OF THE BANKRUPT ESTATE OF D R SELLARS |
| Respondent: | JACQUELINE ROBIN SELLARS |
| File Number: | ADG 38 of 2014 |
| Judgment of: | Judge Brown |
| Hearing date: | 28 February 2017 |
| Date of Last Submission: | 28 February 2017 |
| Delivered at: | Adelaide |
| Delivered on: | 22 September 2017 |
REPRESENTATION
| Counsel for the Applicant: | Mr Douglas |
| Solicitors for the Applicant: | O’Toole Lawyers |
| Counsel for the Respondent: | No appearance |
| Solicitors for the Respondent: | Not applicable |
IT IS ORDERED:
The transfer of the Mercedes Benz Altego Campervan motor vehicle registered number SB07ET (herein after referred to as the Mercedes Benz Campervan) from Dean Raymond Sellars (herein after referred to as “the bankrupt”) to Jacqueline Robin Sellars (herein after referred to as the “respondent”) is void.
It is declared and a declaration is made that the applicant Anthony Christopher Matthews, in his capacity as trustee of the estate of the bankrupt (herein after referred to as “the applicant”) is the owner of the Mercedes Benz Campervan.
It is declared and a declaration is made that the applicant is the owner of the Jeep station wagon motor vehicle registered number S732APE.
It is declared and a declaration is made that the applicant is the owner of the following 18 motor vehicles (herein after referred to as the bankrupt’s trucking fleet):
1994 Hino Rigid truck
VOC987
Isuzu Tautliner
WJA937 (now SB96FV)
1996 Isuzu FTR800 Tautliner
SB08CU
1993 Hino FD Hawke Cab
VOE985
1994 Mitsubishi Cab Tray-top
XLG788
1992 Mitsubishi 24 Tray-top
XHN127
International truck Tautliner
URZ943 (now SB40GS)
1986 Mitsubishi FK415 Tray Top Truck
WVC916
1992-94 Inter Acco 22500 Tautliner
RDG579
1991 Ford Cargo Tray Top 8 Tonne
VJZ995
2000 Nissan Patrol Tray Top Ute
WTJ578
Mercedes Benz Altego L54 Cab
WRV678
White Nissan Truck
WIC841;
Hino Truck
SB37GU
2000 Mitsubishi Truck
SB49DY
Kessner Trailer
TUV429
1993 Mitsubishi Dual Cab Tray Top
XGU343
International Tautliner
VDT478
The respondent deliver the trucking fleet to the applicant forthwith to an address to be nominated by the applicant to her in writing within fourteen days of the date of these orders.
In the event that the respondent fails to comply with order 5 hereof the respondent pay to applicant the sum of ONE HUNDRED AND NINETY EIGHT THOUSAND, SEVEN HUNDRED DOLLARS ONLY ($198,700.00).
The respondent pay the applicant the further sum of ONE HUNDRED AND EIGHTY THREE THOUSAND, TWO HUNDRED DOLLARS AND THIRTY TWO CENTS ($183,200.32) within twenty eight days of the date of these orders.
The applicant personally serve a copy of these order and the relating reasons for judgment on the respondent as soon as is reasonably practicable.
The respondent pay the applicant’s costs of and incidentals to these proceedings.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT ADELAIDE |
ADG 38 of 2014
| A C MATTHEWS AS TRUSTEE OF THE BANKRUPT ESTATE OF D R SELLARS |
Applicant
And
| JACQUELINE ROBIN SELLARS |
Respondent
REASONS FOR JUDGMENT
Introduction
These proceedings have been on foot since January of 2014. They relate to the bankruptcy of Dean Raymond Sellars “the bankrupt”. Mr Sellars became a bankrupt on 4 March 2013, on the petition of the WorkCover Corporation. Anthony Christopher Matthews “the trustee” was appointed the trustee of Mr Sellars’ estate on 4 March 2013.
The WorkCover Corporation obtained a judgment, against the bankrupt, in the Magistrates Court of South Australia, on 27 February 2012, in an amount of $23,953.52. This judgment related to WorkCover Corporation levies unpaid by Mr Sellars, incurred whilst he operated a transport business.
A bankruptcy notice issued in July of 2013, which was unsatisfied on 13 August 2013, leading to the relevant sequestration proceedings. Accordingly, the relevant act of bankruptcy, leading to the sequestration order, was committed on 13 August 2012.
Prior to his bankruptcy, Mr Sellars operated several trucking businesses, both personally and utilising various corporate forms. These include Fastline Investments Pty Ltd; Niglou Pty Ltd; and under the business names Adelaide Fast Freight; Dean Sellars (Hire & Lease) Transport; and Dean Sellars Transport.
The second respondent to these proceedings is Jaqueline Robin Sellars. She has been married to the bankrupt for more than forty years. It is her position that, although she and Mr Sellars are not divorced, they have been separated since 2007. She is the trustee of the J R Sellars Family Trust and a beneficiary of it.
The trustee has commenced these proceedings pursuant to the provisions of the Bankruptcy Act 1966 “the Act”, particularly section 120. In general terms, section 120(1) renders void, against a bankrupts trustee, any transfers of property made by a person, who subsequently becomes a bankrupt in the following circumstances:
·The transfer took place in the period of five years preceding the relevant date of bankruptcy (in this case between 13 August 2007 and 13 August 2012 “the relation back period”;
·The relevant transferee of the property “gave no consideration for the transfer or gave consideration of less value than the market value of the property”.
In these proceedings, the trustee contends that, in the relation back period, the bankrupt and Ms Sellars entered into a number of transactions regarding both real property and a number of motor vehicles, including a fleet of trucks, which are void against him, as a consequence of the provisions of section 120(1).
Background
The trustee initially commenced proceedings, in this court, on 31 January 2014, seeking orders in respect of a Mercedes campervan truck and a Jeep station wagon alleged to have been purchased by the bankrupt in June of 2011 and May of 2012 respectively.
It was Ms Sellars’ position that the campervan was owned by her and the bankrupt jointly and the Jeep was her property alone. She opposed any order that the two vehicles be surrendered to the trustee.
Essentially, the trustee asserted that title in the Jeep had vested in him, pursuant to the provisions of section 58(1) of the Act. One of the consequences of bankruptcy is that property owned by the bankrupt concerns vests in the relevant trustee. The trustee also sought an order that the campervan be delivered up for safe keeping, until such time as details of its ownership had been clarified.
Ms Sellars agreed that the Jeep had been purchased, in May of 2012. It was her case that the sum required to purchase the vehicle had been provided by an insurance policy covering another vehicle, which was owned by her, although it had been registered and insured under Mr Sellars’ name, when it had been written off. Accordingly, as the Jeep effectively replaced her vehicle, it was her position that she owned it and it fell outside of Mr Sellars’ bankruptcy.
Against this background, on 6 February 2014, and then on 6 March 2014 firstly Judge Lindsay and then secondly Judge Cassidy made orders restraining Mr Sellars and Ms Sellars from dealing with firstly the campervan and then the Jeep motor vehicle, particularly in respect of encumbering either such vehicle or utilising it as security for any form of loan.
At the time of the trustee’s initial application, Ms Sellars deposed that she and the bankrupt had separated amicably in 2007 and had effected an informal settlement of their matrimonial property affairs, after their forty year marriage. As part of this settlement, their former matrimonial home, subject to a joint mortgage, located at 31 Kooralla Grove, Kidman Park had been sold and Ms Sellars had received all of the proceeds.
Ms Sellars deposed as follows:
“Whilst the first respondent [Mr Sellars] and I did not undergo a formal matrimonial property division, it was understood that I held a greater equitable interest in the matrimonial and business assets by virtue of having contributed nearly all funds to purchase various motor vehicles over the years.”[1]
[1] See Ms Sellar’s affidavit filed 7 April 2014 at paragraph 6
Ms Sellars has had a long career as a public servant, employed by the South Australian Government. She has been a regular income earner. On the other hand, the bankrupt has apparently had a more precarious career of self-employment, in the transport industry, during which he operated a fleet of trucks.
It is Ms Sellars’ assertion that, at relevant times, she or entities, which she controlled, purchased various vehicles used in the trucking business and accordingly, they do not form part of the bankrupt’s estate. The trustee asserts otherwise, contending that transactions relating to the various trucks, the proceeds of sale of some real estate and dealings in respect of the campervan and Jeep, fall within the relation back period and so are subject to Mr Sellars’ bankruptcy.
In particular, Ms Sellars asserts that the J R Sellars Family Trust, which utilised the trading name Adelaide Fast Freight, acquired the bankrupt’s business of Dean Sellars Transport, when Mr Sellars fell ill. She further contends that when Niglou Pty Ltd was placed into liquidation, she purchased various trucks owned by it, for the sum of $35,000.00, which she withdrew from her superannuation and paid to the relevant liquidator.
On 30 June 2014 the trustee filed an application in a case in which he sought the delivery up of the campervan and Jeep to the premises of a firm of motor vehicle auctioneers. In addition, the trustee sought an injunction restraining the bankrupt, Ms Sellars and another person, Mr Colbert, who operated a business known as Colbert Transport from dealing with 14 specified motor vehicles, described as follows:[2]
[2] I have elected to use the registration numbers of each vehicle, rather than other identifying numbers, such as chassis or engine numbers. The application refers to 15 motor vehicles, however an analysis of the registration numbers provided indicates that there has been a duplication in respect of the 2000 Nissan Patrol Tray Top Ute WTJ578. Accordingly, there appear to be fourteen rather than fifteen vehicles.
1994 Hino Rigid truck
VOC987
Isuzu Tautliner
WJA937
1996 Isuzu FTR800 Tautliner
SBO8CU
1993 Hino FD Hawke
VOE985
1994 Mitsubishi Cab Tray Top
XLG788
1992 Mitsubishi 24 Tray Top
XHN127
2000 Nissan Patrol Tray Top Ute
WTJ578
Mercedes Benz Altego L54 Cab
WRV678
International Truck Tautliner
URZ943
1991 Ford Cargo Tray Top
VJZ955
Nissan truck
WIC841
Nissan tray top and crane
FV
Isuzu Truck
SB96FV
Pup Trailer
YHM657
In addition, the trustee sought the joinder of the SR Sellars Family Trust as a party to the proceedings. The trustee sought these various orders, on the following basis:
·Ms Sellars had utilised the campervan as security for a short term commercial loan, which was in breach of Judge Lindsay’s injunction of 6 February 2014.
·As a consequence, the trustee had no confidence that Ms Sellars would abide by Judge Cassidy’s order of 6 March 2014, in respect of the Jeep.
·In these circumstances, the trustee sought the delivery up of both vehicles, for safe keeping.
·The bankrupt had provided personal services to or on behalf of the J R Sellars Family Trust, during the relation back period, in respect of which he had not received remuneration, which had benefitted the trust.
·The trustee had ascertained that either Mr Sellars, Ms Sellars or Mr Colbert was in either control or possession of the fifteen vehicles enumerated above, which had been leased to one Shannon Black;
·In these circumstances, there was a risk that some or all of the fleet of trucks might be disposed of in order to defeat the administration of the bankruptcy.
This application was heard by me on 22 September 2014, with judgment being delivered on 26 September 2014.[3]
[3] See Matthews v Sellars [2014] FCCA 2230
For the reasons provided, I made the following orders:
·The bankrupt deliver up the campervan and Jeep for safekeeping;
·Six motor vehicles being:
Ø 1994 Hino Rigid Truck Registration No: VOC987, Engine No: H07C0035581, Vin: JHDFF2HPLXXX100;
Ø Isuzu Tautliner Registration No: WJA937, Engine No: 6HH1212948, Vin: JALFTR33P73000094;
Ø 1996 Isuzu FTR800 Tautliner 8 tonne plus Tailgate – Red Registration No: SBO8CU, Vin: JALFTR32NR30000956;
Ø 1993 Hino FD Hawk Cab Chassis Registration No: VOE9850, Vin: JHFDLLXXX10127;
Ø 1994 Mitsubishi Cab Tray Top Registration No: XLG788;
Ø 1992 Mitsubishi “24” Tray Top Registration No: XHN127;
be subject to an injunction against further dealing.
·Ms Sellars be orally examined. It being the case that the J R Sellars Family Trust had been joined as a party to the proceedings on 4 July 2014.
The oral examination process had a tortuous passage through the court. Ms Sellars was examined, before me, on 20 November 2014. Later a summons for the examination of Mr Maurice Harris issued.[4] Mr Harris is an accountant and the principal of M V Harris & Partners. He was the bankrupt’s accountant at relevant times and later of Ms Sellars. Mr Harris was examined on 27 January 2015. Later again, a summons issued for the examination of Adele Scateri.[5] She is an assistant accountant at Mr Harris’ office. She was examined on 25 May 2015.
[4] See summons for examination filed 8 October 2014
[5] See summons for examination filed 2 April 2015
Following these examinations, the trustee commenced the current proceedings, by way of a statement of claim field on 23 December 2015. This statement of claim has been subsequently amended, most recently on 28 February 2017. Ms Sellars has remained the sole respondent to the action.
In the statement of claim, the trustee asserts that the bankrupt was a party to seven sets of transactions, which occurred in the relation back period falling between 13 August 2007 and 13 August 2012, which are void against him, as a consequence of various provisions of the Bankruptcy Act. The seven transactions are impugned on one or more of the following grounds:
·The bankrupt had either a legal or equitable interest in property, which had vested in the trustee pursuant to the provisions of section 58 of the Act, but had unlawfully failed to transfer these interests to the trustee; or
·The bankrupt had entered into the transactions in question, with Ms Sellars, in respect of the transfer of property, by him to her, in respect of which he had failed to give either proper consideration or had provided consideration of less than market value, in contravention of section 120 of the Act; or
·The bankrupt and Ms Sellars, either in her own right or as trustee of the J R Sellars Family Trust, had entered into the various transactions with one another in order to defeat the bankrupt’s creditors, in contravention of section 121 of the Act.
Relevant legal provisions
Section 58(1) of the Act provides that when a person becomes a bankrupt, property of that person vests forthwith in his or her trustee. It is the trustee’s position that when Mr Sellars became bankrupt, his proprietorial interests vested in the trustee and, as a consequence, Mr Sellars was under a legal obligation to ensure that all relevant assets were disclosed and transferred.
Section 120 is headed undervalued transactions. Section 120(1) reads as follows:
“(1) A transfer of property by a person who later becomes a bankrupt (the transferor) to another person (the transferee) is void against the trustee in the transferor’s bankruptcy if:
(a)the transfer took place in the period beginning 5 years before the commencement of the bankruptcy and ending on the date of the bankruptcy; and
(b)the transferee gave no consideration for the transfer or gave consideration of less value than the market value of the property.”
Section 121 is headed transfers to defeat creditors. Section 121(1) reads as follows:
“(1) A transfer of property by a person who later becomes a bankrupt (the transferor) to another person (the transferee) is void against the trustee in the transferor’s bankruptcy if:
(a) the property would probably have become part of the transferor’s estate or would probably have been available to creditors if the property had not been transferred; and
(b) the transferor’s main purpose in making the transfer was:
(i) to prevent the transferred property from becoming divisible among the transferor’s creditors; or
(ii) to hinder or delay the process of making property available for division among the transferor’s creditors.”
Summary of the seven impugned transactions
a)31 Kooralla Grove, Kidman Park
Ms Sellars is alleged to have purchased 31 Kooralla Grove, Kidman Park, for the sum of $425,000.00, on 23 January 2007. The property was registered in her sole name. It was subject to a mortgage in favour of the National Australia Bank, in the names of both Ms Sellars and the bankrupt.
The trustee alleges that both the bankrupt and Ms Sellars lived in the premises and maintained a matrimonial relationship, which entailed both making regular contributions towards the mortgage in question and the maintenance of the property itself, both of which occurred during the relation back period.
In these circumstances, it is the trustee’s position that the bankrupt held an equitable interest in fifty percent of the property’s net worth, which Ms Sellars held constructively on trust on his behalf.
On 23 December 2009, Ms Sellars entered into a contract to sell the property for the sum of $500,000.00. It is the trustee’s position that Ms Sellars held fifty percent of the property’s increase in value – $37,500.00 – by way of this constructive trust on behalf of the bankrupt, which should have been disclosed to the trustee, as a consequence of the operation of section 58(1).
b) Boundary Road, Morgan
In August 2005, the bankrupt and Ms Sellars purchased four adjoining parcels of land at Morgan. The land was subsequently sold between 27 August 2007 and February 2010 for a combined total of $227,400.64, which was used to reduce the mortgage on the Kidman Park property.
The trustee seeks to be paid the sum of $113,700.32, which is fifty percent of the Morgan land sale price, on the basis that either Ms Sellars held this sum on trust for the bankrupt or alternatively the bankrupt provided no consideration for any transfer of the moneys to his spouse and accordingly, any such transfer is void, against the trustee.
In this context, section 120(5)(b) provides that a deed indicating a transfer of property in favour of a spouse has no value as consideration for the purposes of the bankruptcy legislation. Essentially, the natural love and affection one spouse feels for the other is not considered a proper form of consideration.
c) 15 Dunstone Place, Kadina
In December of 2011, Ms Sellars entered into a contract to purchase a piece of real property located at 15 Dunstone Place, Kadina for the sum of $310,000.00. She applied to a finance company, Liberty Financial, for a loan of $248,000.00 to finance the purchase.
Amongst her assets, disclosed on the finance application form, Ms Sellars indicated a gift to her of $20,000.00. This gift was evidenced by a statutory declaration, from the bankrupt, which indicated his intention to gift Ms Sellars this sum to aid her purchasing the Dunstone Place, Kadina property.
In July of 2013, Ms Sellars sold the Dunstone Place, Kadina property for the sum of $312,000.00, which netted her $53,758.61. The trustee claims that the purported transfer of the sum of $20,000.00 by the bankrupt to Ms Sellars occurred in the relation back period and Ms Sellars gave non-consideration for it, given the operation of section 120(5)(b) given that the bankrupt and Ms Sellars were and remain married to one another.
d) Mercedes Benz Campervan
The trustee alleges that the bankrupt purchased the campervan in June of 2011 for $40,000.00. Subsequently, the registration of the vehicle was transferred from the bankrupt to Ms Sellars. It is the trustee’s position that the bankrupt purported to sell the campervan to Ms Sellars, for $25,000.00, after his bankruptcy.
In these circumstances, it is the trustee’s position that the bankrupt had no title to give in respect of the campervan, as its ownership had vested in him (the trustee) and further Ms Sellars gave insufficient consideration for the vehicle, which was worth significantly more than $25,000.00.
e) The Jeep station wagon
The trustee alleges that the bankrupt purchased the Jeep station wagon for $14,000.00 on 23 April 2012. As previously indicated, it is Ms Sellars’ positon that the Jeep station wagon is owned by her. The trustee does not accept this is the case.
The trustee asserts that the bankrupt entered into the relevant contract of sale for purchase of the vehicle; executed the relevant documents to register the vehicle in his name; and signed the necessary cheque, tendered to the motor vehicle dealer concerned, which provided the consideration for the purchase; which in the trustee’s contention all indicate that the bankrupt owned the vehicle and therefore it fell within the purview of section 58.
f) Other motor vehicles
In the amended statement of claim filed on 1 March 2017, the trustee asserts that the bankrupt owned eighteen vehicles, at the time the sequestration order was made, which were utilised by him in his trucking business. These vehicles include some of those listed in these reasons for judgment above and others.
They can be summarised as follows:
1994 Hino Rigid truck
VOC987
Isuzu Tautliner
WJA937 (now SB96FV)
1996 Isuzu FTR800 Tautliner
SB08CU
1993 Hino FD Hawke Cab
VOE985
1994 Mitsubishi Cab Tray-top
XLG788
1992 Mitsubishi 24 Tray-top
XHN127
International truck Tautliner
URZ943 (now SB40GS)
1986 Mitsubishi FK415 Tray Top Truck
WVC916
1992-94 Inter Acco 22500 Tautliner
RDG579
1991 Ford Cargo Tray Top 8 Tonne
VJZ995
2000 Nissan Patrol Tray Top Ute
WTJ578
Mercedes Benz Altego L54 Cab
WRV678
White Nissan Truck
WIC841
Hino Truck
SB37GU
2000 Mitsubishi Truck
SB49DY
Kessner Trailer
TUV429
1993 Mitsubishi Dual Cab Tray Top
XGU343
International Tautliner
VDT478
The trustee disputes any assertion that the various vehicles were owned by either Ms Sellars or the J R Sellars Family Trust prior to 4 March 2013. In the alternative, if the fleet of vehicles was transferred to either Ms Sellars or the trust, the trustee asserts that no or undervalued consideration was provided. These issues were canvassed with each of Mr Sellars, Mr Harris and Ms Scateri, during the oral examination process.
g) Insurance payment
In April or May of 2013, the trustee alleges that a motor vehicle owned by the applicant, an ACCO Tautliner (registration no VDT478) was badly damaged in an accident and could not be repaired. It was subject to insurance. The bankrupt made a claim on the relevant insurer and received a payment of $20,000.00.
The trustee asserts that the bankrupt paid $12,000.00 of this sum to Ms Sellars. As the payment occurred after the making of the sequestration order, it is the trustee’s position that this sum vested in him pursuant to the provisions of section 58 of the Act.
Orders sought by the trustee
In the most amended statement of claim, the trustee seeks the following orders and declarations:
1. That the Respondent pay to the Applicant the sum of $37,500.00; being half of the increase in value of the matrimonial property at Kooralla Grove Kidman Park;
2. That the Respondent pay to the Applicant the sum of $113,700.32 being half of the interest in the properties at Sections 13, 14, 15 and 16 Boundary Road, Morgan;
3. That the Respondent pay the Applicant the sum of $20,000.00 in respect of the gift of 15 December 2011;
4. An order that the alleged transfer of the Altego Truck (Mercedes Benz campervan) from the Bankrupt to the Respondent is void;
5. A declaration that the Applicant is the owner of the Altego Truck (Mercedes Benz campervan);
6. A declaration that the Applicant is the owner of the Jeep;
7. A declaration that the Applicant is the owner of the eighteen vehicles set out under paragraph 35 of this claim;
8. An order that the Respondent deliver up to the Applicant the vehicles identified in order 7 above;
9. In the alternative to order 8, an order that the Respondent pay the Applicant compensation in the value of the vehicles identified in order 7 above in an quantum to be assessed by this Honourable Court;
10. An order that the Respondent pay to the Applicant the sum of $12,000.00 in respect of the insurance payment of April 2013;
11. Interest; and
12. An order that the Respondent pay the Applicant's costs of and incidental to these proceedings.”
Ms Sellar’s defence
On 4 March 2016 Ms Sellars filed a defence. She opposes each of the orders sought by the trustee. In her defence, she alleges as follows:
·She and Mr Sellars remain married, but have been separated since early 2007.
·31 Kooralla Grove, Kidman Park was her property, having been purchased by her prior to her separation from the bankrupt.
·She concedes that she and the bankrupt continued to be friends following their separation and he stayed at the Kidman Park property from time to time.
·The various vehicles, which are the subject of these proceedings, are owned by her, in her capacity as the trustee of the J R Sellars Family Trust, except for Mitsubishi truck registration no. WVC-916 and International Tautliner registration no. RDG-579, which were owned by the bankrupt.
·The Mercedes Benz campervan is owned by her, other than for an interest of 37%, which is owned by the bankrupt.
·Ms Sellars, in her capacity as the trustee of the J R Sellars Family Trust, leased vehicles to the bankrupt on the basis that he would register the vehicles in his name and be fully responsible for insuring, repairing and maintaining them, during the period of such leases.
·The bankrupt ceased trading, under the name Dean Sellars Transport, in February 2012. Thereafter, Mr Peter Colbert, trading as Colbert Transport, subsequently leased the vehicles.
·Seven of the vehicles concerned are now missing. It is Ms Sellars contention that the trustee failed to take appropriate steps to secure these vehicles and is therefore liable to her for their loss.
·The trustee has prevented Ms Sellars from earning income from the fleet of vehicles, which she as the trustee owns.
In all these circumstances, Ms Sellars seeks the following orders:
·Compensation for the loss of the missing vehicles.
·Compensation for loss of income, relating to the fleet of vehicles.
·Lease fees of $45,600.00.
·Costs.
·Interest.
The conduct of the proceedings to date
On 5 February 2016 the parties were ordered to file and serve their respective lists of documents on or before 18 March 2016 and complete inspection of relevant documents no later than 15 April 2016. This latter timeframe was later extended to 25 May 2016.
The trustee’s list of documents was filed on 18 March 2016; Ms Sellars was filed on 27 April 2016. Ms Sellars’ list was prepared by her former solicitor, Mr Kaplan.
On 14 July 2016, the case was fixed for final hearing, for two days, on 28 February and 1 March 2017. Ms Sellars appeared on her own behalf. She advised me that she would be legally represented for the hearing.
On 2 December 2016, the solicitors for the trustee filed a Notice to Admit Facts pursuant to rule 15.31 of the Federal Circuit Court Rules 2001. Attached to the Notice to Admit Facts are three volumes of documents amounting to some 609 pages.
Rule 15.31 provides as follows:
“15.31 Notice to admit facts or documents
(1) A party to a proceeding (the first party) may, by notice in accordance with the approved form, ask another party to admit, for the proceeding, the facts or documents specified in the notice.
(2) If the other party does not, within 14 days, serve a notice on the first party disputing the fact or the authenticity of the document, the other party is taken to admit, for the proceeding only, the fact or the authenticity of the document.
(3) The other party may, with the Court’s leave, withdraw an admission taken to have been made under subrule (2).
(4) Unless the Court otherwise orders, if the other party serves a notice disputing a fact or the authenticity of a document and the fact or the authenticity of the document is later proved in the proceeding, the party must pay the costs of the proof.”
On the first page of the document, which is addressed to Ms Sellars, is the following endorsement:
“Take notice that you are required by the above named to admit for the purpose of these proceedings only –
As attached hereto as Annexure 1
You are required to admit for the purpose of these proceedings only the authenticity of the following documents
As attached hereto as Annexure 2
AND FURTHER TAKE NOTICE if you do not, within 14 days after service of this notice upon you, serve a notice on the said Applicant, Anthony Christopher Matthews as Trustee of the Bankrupt Estate of Dean Raymond Sellars (Applicant) disputing any facts (and authenticity of any document) above specified, that fact, (and authenticity of that document) shall, for the purpose of these proceedings, be admitted by you.”
Annexure 1 contains 65 assertions, which largely relate to the seven impugned transactions, which form the substance of these proceedings. Annexure 2 consists of 22 categories of document consisting of many individual documents comprising, as indicated above, some 609 pages in total.
Maureen Maurer, a paralegal employed by the trustee’s solicitors has deposed that she served a computer disk containing the Notice to Admit, by post, on Ms Sellars. Subsequently, the bankrupt himself contacted Ms Maurer and advised that Ms Sellars was unable to access the computer disk, as she did not have a computer.
In these circumstances, arrangements were made between Mr Sellars and Ms Maurer for Mr Sellars to collect a printed, indexed and bound copy of the Notice to Admit on 15 December 2016.[6] I accept that the relevant notice has been served on Ms Sellars.
[6] See affidavit of Ms Maurer filed 25 February 2017
Neither Ms Sellars nor anyone purporting to act on her behalf responded to the Notice to Admit facts. In these circumstances, it is the submission of counsel for the trustee, Mr Douglas that Ms Sellars has admitted the various admissions concerned and accepted the authenticity of the documents attached.
The matter came on for hearing, as scheduled on 28 February 2017. Ms Sellars did not appear. Nor did she instruct counsel to appear on her behalf. Rather, on the previous day, she filed an affidavit in the following terms:
1. I am the Second Respondent herein.
2. I have recently received advice from solicitors in relation to the carriage of this matter and I am overwhelmed by the nature of the work that needs to be done in order to properly present my argument to this Honourable Court.
3. I am also unable to attend the final hearing in this matter on 28 February 2017 to 1 march 2017 due to a medical condition. Now shown to me and annexed hereto as ‘Annexure 1’ is a true copy of the medical certificate provided to me today by Dr Michael (Wai Hung) Lam.
4. If this Honourable Court is inclined to grant me an adjournment, which I kindly request, I intend to use the time granted to obtain further advice from my solicitors and also locate documentation so that I may robustly present my case to this Honourable Court.
5. I cannot afford to instruct solicitors to represent me full-time in this matte, however, I can obtain further advice on an ‘as needed’ basis and I intend to do so. [7]
[7] See Ms Sellar’s affidavit filed 27 February 2017
The medical certificate referred to, by Ms Sellars, was provided by Dr Michael Lam, who practices at Grange, an Adelaide suburb. He certified that he had examined Ms Sellars on 27 February 2017 and, in his opinion, she would be unfit for her normal work between 27 February and 3 March 2017.
Dr Lam did not indicate any reason for her unfitness or indicate what particular medical condition she was suffering and how this condition would potentially impact on Ms Sellars’ ability to appear in court. No detail is provided other than Ms Sellars would be unfit for work on the days allocated for the hearing.
The bankrupt himself appeared on 28 February 2017 before the court. He indicated that Ms Sellars was very unwell, as a consequence of suffering diarrhoea, which he attributed to some form of food poisoning. He was not in a position to provide any further evidence to support his assertions in this regard.
Mr Douglas, counsel for the trustee, opposed any adjournment of the proceedings. It was his submission that the medical certificate in question was inadequate and, given the protracted and convoluted nature of the proceedings to date, he submitted that the late filed affidavit, which occurred against a background of inaction on Ms Sellars’ part, was a device calculated to delay the proceedings.
I was not prepared to adjourn the proceedings in Ms Sellars absence. I was concerned that the original sequestration order in question had been made approximately four years earlier and the controversy relating to the administration of the estate had been on foot for a period over three years in duration.
In addition, I shared Mr Douglas’ concerns that the medical certificate, provided by Ms Sellars, was lacking in detail and had been provided at the last moment. In addition, notwithstanding Ms Sellars earlier indication that she would retain legal representation for the hearing, she had not done so.
I also had regard to what was said by Davies J, albeit in a very different context, in MZZGY v Minister for Immigration & Border Protection[8]. Her Honour said as follows:
“These documents were wholly inadequate to support an adjournment application. The certificate did not state the nature of the appellant’s condition nor explain why it would prevent the appellant from attending and participating effectively in the Court hearing and the fact that some tablets were prescribed was insufficient reason to be satisfied that the appellant could not attend and participate effectively in the Court hearing. Further, wholly unexplained was why it was left until late the day before to seek the adjournment. It is reasonable to infer that the late notice was deliberate and intended to bring about the outcome of an adjournment by the short notice. I accordingly refuse the adjournment application and proceed to hear the appeal on its merits.”
[8] See MZZGY v Minister for Immigration & Border Protection [2014] FCA 488
Having determined not to grant the adjournment, Mr Douglas submitted that the court should proceed with his client’s application and further contended that the court had sufficient material before it to do so. He seeks that the court enter judgment in favour of the trustee in the terms sought in the amended statement of claim.
Rule 13.03A(2) of the Federal Circuit Court Rules 2001 “the Rules” sets out the circumstances in which a respondent is taken to be in default. It includes the following:
·the respondent has not satisfied the applicant’s claim;
·has not complied with an order in the proceedings;
·has not produced a document;
·has not defended the proceedings with due diligence.
The powers of the court, when a respondent is found to be in default, are set out in Rule 13.03B(2) as follows:
“(2) If a respondent is in default, the Court may:
(a)order that a step in the proceeding be taken within the time limited in the order; or
(b)if the claim against the respondent is for a debt or liquidated damages—grant leave to the applicant to enter judgment against the respondent for:
(i) the debt or liquidated damages; and
(ii) if appropriate—costs; or
(c)if the proceeding was commenced by an application supported by a statement of claim or the Court has ordered that the proceeding continue on pleadings—give judgment against the respondent for the relief that:
(i) the applicant appears entitled to on the statement of claim; and
(ii) the Court is satisfied it has power to grant; or
(d)give judgment or make any other order against the respondent; or
(e)make an order mentioned in paragraph (b), (c) or (d) to take effect if the respondent does not take a step ordered by the Court in the proceeding in the time limited in the order.”
Rule 13.03B(2) is to be construed in the manner stated by Heerey J when considering a similar provision of the Federal Court Rules in Arthur v Vaupotic Investments Pty Ltd [9]as follows:
“Since the proceeding was commenced by an application supported by a statement of claim I am empowered to give judgment against the first and second respondents. The rule does not require proof by way of evidence of the applicant's claim; rather that on the face of the statement of claim there is a claim for the relief sought and, of course, that the court has jurisdiction to grant that relief.”
[9]Arthur v Vaupotic Investments Pty Ltd [2005] FCA 433 at [3]
In Speedo Holdings BV v Evans (No 2)[10] Flick J identified some principles which are to be applied by the court when considering whether to enter a judgment against a defaulting respondent. They can be summarised as follows: the power is discretionary; and it must necessarily be utilised cautiously.
[10] Speedo Holdings BV v Evans (No 2) [2011] FCA 1227 at [20] – [21]
It is Mr Douglas’s submission that a combination of the statement of claim and the matters taken to be admitted by Ms Sellars, including the various documents annexed to the relevant notice, which are presumed to be authentic, can provide a proper basis for the court entering judgment, against Ms Sellars, in the terms envisaged by the statement of claim.
The essential precursor to this submission is that Ms Sellars is in default, in the terms envisaged by Rule 13.03B(2), because she did has not defended the proceedings with due diligence as demonstrated by her failure to attend court for the final hearing or retain counsel for it, as she had previously informed the court she intended to do.
In addition, Rule 13.03C of the Federal Circuit Court Rules authorises the court specifically to engage the powers available to it, pursuant to Rule 13.03B(2) if a party is absent from a hearing. The Rule provides as follows:
“(1) If a party to a proceeding is absent from a hearing (including a first court date), the Court may do 1 or more of the following:
(a) adjourn the hearing to a specific date or generally;
(b) order that there is not to be any hearing, unless:
(i) the proceeding is again set down for hearing; or
(ii) any other steps that the Court directs are taken;
(c) if the absent party is an applicant dismiss the application;
(d) if the absent party is a party who has made an interlocutory application or a cross-claim dismiss the interlocutory application or cross-claim;
(e) proceed with the hearing generally or in relation to any claim for relief in the proceeding.
(2) If a party to a proceeding is absent from a hearing, the Court may also make an order of the kind mentioned in subrule 13.03B(1), (2) or (4), or any other order, or may give any directions, and specify any consequences for non-compliance with the order, that the Court thinks just.”
Again the power available to the court pursuant to Rule 13.03C(2) is discretionary. It is also subject to considerations of what is just in all the circumstances prevailing.
In addition, the power to enter to judgment, in the absence of a party, is subject to potential revision as a consequence of Rule 16.05(2) of the Rules. It provides that the court “may vary or set aside its judgment or order after it has been entered if:
(a) the order is made in the absence of a party; or
(b) the order is obtained by fraud; or
(c) the order is interlocutory; or
(d)the order is an injunction or for the appointment of a receiver; or
(e) the order does not reflect the intention of the Court; or
(f) the party in whose favour the order is made consents.”
Rule 16.05(2) provides the court with a discretion to set aside its orders in a number of specified circumstances. Accordingly, any judgment entered in default of an appearance by a party is provisional in nature. The discretion arising is to be exercised judicially, as the public has an interest in litigation being finalised. In general terms, there are three criteria which are required to be satisfied before any judgment is set aside, which can be summarised as follows:
·a reasonable explanation for the applicant's absence at the trial or hearing;
·material arguments available to the applicant that might reasonably lead to the making of an order different to that sought to be set aside; and
·no prejudice to the party with the benefit of the orders sought to be set aside that is not able to be adequately addressed by the court.
Matters germane to these three criteria include, but are not limited to, the following:
·whether a party with notice of proceedings disregarded the opportunity of appearing at and participating in the trial;
·delay, if any, in bringing the application to set aside and whether, if during the period of delay the successful party has acted on the judgment, or third parties have acquired rights by reference to it;
·the conduct of the applicant since the judgment or order sought to be set aside was made.[11]
[11] See Clifford & Mountford [2006] FMCAfam 450 at [34]
The power available to the court as a consequence of Rule 16.05, in my view, emphasises the significance of a court entering judgment against a party, in his or her absence. As previously indicated, it is a power to be exercised cautiously.
In Allesch v Maunz[12] Kirby J explained the tensions, which can arise between the desirability that, ordinarily, a person whose interests may be adversely affected, by court order, should be given an opportunity to be heard by the court before any such order is made with the need to conduct litigation in an efficient and timely manner, unimpeded by the delay, caprice or intransigence of a litigant. He said as follows:
[12] Allesch v Maunz (2000) 203 CLR 172 at 184 - 6
“It is a principle of justice that a decision-maker, at least one exercising public power, must ordinarily afford a person whose interests may be adversely affected by a decision an opportunity to present material information and submissions relevant to such a decision before it is made. The principle lies deep in the common law. It has long been expressed as one of the maxims which the common law observes as “an indispensable requirement of justice”. It is a rule of natural justice or “procedural fairness”.
…
[I]t is worth emphasising that the principle just described does not require that the decision-maker actually hear (or receive the submissions of) the party potentially liable to be adversely affected. Sometimes, through stubbornness, confusion, misunderstanding, fear or other emotions, a party may not take advantage of the opportunity to be heard, although such opportunity is provided. Affording the opportunity is all that the law and principle require.
Decision-makers, including the courts, cannot generally force people to protect their own rights, to adduce evidence or other materials, to present submissions or to act rationally in their own best interests.
Nor are courts obliged to delay proceedings indefinitely because one party, although proved to be on notice of the proceedings, refuses or fails to appear in person or to be represented by a lawyer or some other individual permitted to speak for them who can explain the need for an adjournment. The rights of other parties are commonly involved. … [the] rights of non-parties … may be affected. Additionally (as this Court has accepted) the rights of the public in the efficient discharge by courts of their functions must be weighed against unreasonable delay in concluding litigation.” (citations removed)
As Kirby J also pointed out, in the legal process, as with all aspects of human endeavour “mistakes occur”. Mr Douglas’ case rests significantly on the matters which he asserts Ms Sellars has taken to have admitted and which are supported, in turn, by a copious trail of documents. He points to the fact that Ms Sellars has not formally responded to the notice to admit facts and then has failed to advance her case thereafter.
Ms Sellars has had some legal advice in respect of the matters before the court but more recently has not been legally represented. I acknowledge that the notice to admit is a daunting document. However, none of the documents, which it contains can be said to be new to Ms Sellars. In addition, the endorsement on its face and the admonition it contains, is relatively straightforward. A recipient, of such a notice, is given a clear time frame in which to dispute the provenance and accuracy of any documents so provided and to put in issue any other assertions of fact made, otherwise they will be taken to have been admitted.
However, as with all procedural processes, designed to expedite the administration of justice, in my view, such notices and their use in litigation, must be governed by the overall interests of justice. In Aslor Pty Ltd (in liq) v Springmount Pty Ltd; Crema (Vic) Pty Ltd v Aslor Pty Ltd (in liq)[13] Chernov J cautioned against the application of such notices in situations involving unrepresented litigants. He said as follows:
“It should be borne in mind that the relevant defendants are lay people, who are not represented. It is doubtful that they would have understood the full ramification of a failure to respond to the Notice, assuming that they did receive them, notwithstanding that the first page states in terms the consequences of failing to dispute the contentions in the document.”
[13] In Aslor Pty Ltd (in liq) v Springmount Pty Ltd; Crema (Vic) Pty Ltd v Aslor Pty Ltd (in liq) [1998] VSC 108 (15 October 1998) at [30]
On the other hand, such notices have a legitimate purpose in litigation. They are designed to facilitate the making of necessary admissions and so streamline litigation. In Multigroup Distribution Services Pty Ltd v TNT Australia Pty Ltd[14] Gyles J said as follows:
“[The equivalent Federal Court order] is designed to facilitate the making of admissions of specified facts or documents, firstly by providing for default admissions and, secondly, by providing a potential costs sanction. There is no provision for objection to any notice or any part of a notice and the rule does not compel any response.”
[14] Multigroup Distribution Services Pty Ltd v TNT Australia Pty Ltd [2001] FCA 227 at [4] – [5]
He went on to indicate that the best mechanism, through which the court could determine whether an admission had actually been made was best decided in the context of the trial. The difficulty obviously arising, in the current matter, is that there is not to be such a trial, if the court accedes to the trustee’s application.
However, the fact remains that the trustee’s notice to admit remains unrebutted and Ms Sellars herself has failed to attend at court to defend the proceedings, whilst providing a wholly unacceptable explanation for her non-attendance.
In these circumstances, in my view, it is necessary for the court to examine the evidence mustered by the trustee to determine whether it is appropriate that judgment be entered in its favour pursuant to the provisions of Rule 13.03B(2)(c) in conjunction with Rule 13.03C.
The applicant’s evidence
a)31 Kooralla Grove, Kidman Park
The 31 Kooralla Grove, Kidman Park property was purchased prior to the relation back period and registered in Ms Sellars’ sole name. In these circumstances, the gravamen of the trustee’s case, in respect of the property, rests on the admissions to be purported to Ms Sellars, namely:
·Both she and the bankrupt made direct financial contributions to the mortgage secured against the property, in favour of the NAB and therefore the bankrupt contributed financially towards the property.
·Documentary evidence provided by the trustee does establish that the relevant mortgage was in joint names and supports the contention that the bankrupt lived at the address, as mail was forwarded to him there from the NAB.
·Documentary evidence also establishes that the property was sold, within the relation back period, at a profit of $75,000.00, on 4 February 2010.
In all these circumstances, I am prepared to accept the assertions made by the trustee, in the statement of claim, relevant to the property and make the orders sought by him.[15]
[15] See amended statement of claim at paragraphs 9-12
b) The Morgan properties
The various Morgan properties were also purchased in the period prior to the commencement of the relation back period. However, these properties were purchased in the joint names of the parties and each was sold within the relation back period.
In her defence, Ms Sellars has admitted the sale of the various parcels of land and more particularly that the proceeds were utilised to reduce the mortgage on the 31 Kooralla Grove, Kidman Park property. Ms Sellars has also admitted, in her defence, that she received the net proceeds of the sale of this property in her capacity as the trustee of the J R Sellars Family Trust.
In these circumstances, I am satisfied that the trustee has satisfactorily established the matters set out in the relevant portions of the amended statement of claim[16] as required by the provisions of Rule 13.03B(2)(c).
c) 15 Dunstone Place, Kadina
[16] Ibid at paragraph 16
Ms Sellars has formally admitted that she purchased the Kadina property, in January of 2012. In respect of the moneys utilised to purchase the property, by her, the trustee relies on her application for finance to Liberty Financial and the statutory declaration of the bankrupt, dated 15 December 2011. These documents indicate the bankrupt’s intention to loan Ms Sellars the sum of $20,000.00, within the relation back period.
In these circumstances, I am satisfied that the trustee has established the allegation made out in paragraph 20 of the amended statement of claim and it is appropriate for the court to enter judgment in accordance with the rules.
d) The Mercedes Benz campervan
On 7 March 2013, the South Australian Registrar of Motor Vehicles indicated that the Mercedes Benz campervan truck was registered in Mr Sellars’ name. The records further indicate that Mr Sellars had been its registered owner since 26 July 2011, on which date its value was indicated to be $40,000.00.
The vehicle was subsequently registered in Ms Sellars’ name, on 18 April 2013, and a value of $25,000.00 was ascribed to it. In September of 2014, a Mr Korallis, a finance broker indicated that Mr Sellars approached him seeking to use the Mercedes Benz campervan as security for a loan.
The purported sale to Ms Sellars occurred some 35 days after the sequestration order was made against Mr Sellars. Accordingly, prior to its sale, the vehicle in question had vested in the trustee. I am also satisfied that Ms Sellars gave consideration of a lesser value than the vehicles market value.
In all these circumstances, I am satisfied that the trustee has established the allegations set out in paragraphs 25 to 26 of the amended statement of claim and it is appropriate to make the orders sought by him in paragraph 27 of the amended statement of claim.
e) The Jeep motor vehicle
The trustee has produced a contract of sale, dated 24 March 2012, in respect of the Jeep motor vehicle. This is within the relation back period. The bankrupt is named as the purchaser of the Jeep motor vehicle; whilst the seller is Collin Harms, trading as Auto Estate. The price of the vehicle was $14,000.00.
The trustee has also produced a cheque, in the sum of $14,000.00, payable to Auto Estate and dated 23 April 2012. The cheque is drawn on an account in Mr Sellars’ name and apparently carries his signature.
Ms Sellars acknowledges that the Jeep was never registered in the bankrupt’s name. Documents produced by the trustee indicate that it remains registered in Mr Harms’ name.
On 22 September 2014 the court made an order for the delivery up of the Jeep. This order has been complied with. In all these circumstances, I am satisfied that the trustee has established the allegations made out in paragraphs 28 to 33 of the amended statement of claim and it is appropriate to make the declaration sought in paragraph 34.
f) The other motor vehicles
The trustee, in conjunction with the notice to admit facts, has provided documentary evidence that Mr Sellars owned each of the eighteen motor vehicles listed in the amended statement of claim, as at the date of the sequestration order. These documents have included insurance policies in respect of them and registration documents with the Department of Planning, Transport and Infrastructure.
Annexed to the notice to admit facts is a letter dated 19 September 2012 from Mr Harris to Ezy Capital. In the letter, Mr Harris advises that he acts for Mr Sellars, in respect of the running of Mr Sellars’ transport business. In respect of this business, Mr Harris indicates that Mr Sellars “owns a fleet of more than twenty vehicles …”
The letter goes on to indicate that Ms Sellars is desirous of borrowing a sum of approximately $100,000.00 to purchase the fleet of vehicles for the sum of $100,000.00. However, Ms Sellars has not disclosed any such assets either personally or through the J R Sellars Family Trust.
Mr Harris has prepared a statutory declaration, on 26 August 2014, in which he has deposed that the J R Sellars Family Trust never traded as Adelaide Fast Freight and he has never prepared, sighted or been made aware of any agreement between Ms Sellars and Mr Sellars or the J R Sellars Family Trust in relation to the sale or insurance of any vehicles relating to these individuals or entities.
In these circumstances, I accept that the eighteen vehicles were used by the bankrupt in a trucking business operated by him, under the name of Adelaide Fast Freight, which he was operating on the date his estate was subject to sequestration.
I further accept that the trustee has established that none of these vehicles was sold, for proper consideration, to either Ms Sellars personally or to the J R Sellars Family Trust, prior to 24 March 2013. In these circumstances, I am satisfied that the trustee is entitled to the orders sought in paragraph 40 of the statement of claim.
g) The insurance payment
There is a dearth of documents so far as the seventh impugned transaction is concerned. The trustee has provided evidence that the bankrupt was registered as the owner of an International Tautliner truck registered number VDT478 and this vehicle was subject to insurance.
The trustee asserts that the vehicle was badly damaged in April or May of 2013, shortly after the relevant sequestration order was made. It is further alleged that Mr Sellars received indemnity in respect of the damaged vehicle, in the sum of $20,000.00, which he provided to Ms Sellars.
Ms Sellars has formally denied this assertion in her defence. However, as previously indicated, she has not formerly refuted assertions in the notice to admit facts in respect of the transaction.
In my view, the circumstances surrounding this transaction are different to the earlier transactions, in the sense that the trustee has not been able to provide such a compelling change of supporting documentary evidence.
However, given the circumstances of Ms Sellars’ non-appearance and given her failure to formally rebut the allegations contained in the notice to admit, I am prepared to make the order sought by the trustee in paragraphs 42 to 43 of the amended statement of claim.
Conclusions
It is my view that the evidence available to me, incomplete as it is, indicates that Mr Sellar’s financial affairs, both before and after his bankruptcy, have a significant degree of complexity about them. I am also satisfied that these affairs have involved Ms Sellars.
In my view, Ms Sellars was given an opportunity to take part in the proceedings, which had been fixed for a significant period prior to the date scheduled for their commencement. The proceedings were fixed after a process of oral examination, which led to the production of a significant amount of documents, which the trustee has utilised to shed some light on the somewhat abstruse financial affairs of Mr and Ms Sellars.
Given Ms Sellar’s failure to engage in the process of the final hearing, notwithstanding her earlier indication that she would do so and given what I regard as an unacceptable explanation for being ready to proceed with the case, the court, in my view, has no viable alternative but to deal with the evidence which the trustee has been able to muster through the process of discovery and the oral examination of the various witnesses concerned.
I accept that Ms Sellars and indeed the bankrupt are likely to have a different view of much of that evidence, but for the reasons outlined above, I am satisfied that the trustee has made out its case for the entry of judgment, in his favour, in terms of the matters alleged in the applicable statement of claim.
In particular, I am satisfied that the various transactions sought to be impugned by the trustee did occur within the relating back period and as such are void against the trustee. This must result in the trustee being entitled to the payment of a liquid sum in from Ms Sellars arising from the various real estate and other transactions concerned and orders, in the form of declarations, that property in the Mercedes Benz campervan and the Jeep motor vehicle vests in him.
A more difficult aspect of the case concerns the eighteen vehicles, which comprised the fleet of vehicles operated by the bankrupt in his trucking business, the whereabouts of which are currently unknown to the trustee. In those circumstances, I turn now to the specific form of the orders required to give effect to these reasons for judgment.
The solicitor for the trustee has arranged for Gavin Dempsey, who is the National Manager Advisory & Finance of Pickles Valuation Services to value the eighteen vehicles in question. Mr Dempsey has valued the vehicles in question at $198,700.00. This valuation is based on a depreciated value, as at 27 February 2017, on the basis of what would be achieved in a fair market for the vehicles on a sight unseen basis.
Mr Dempsey has also valued the Mercedes Benz campervan and the Jeep motor vehicle at $12,000.00 and $6,000.00 respectively, again as at 27 February 2017.
In default of delivery up of the eighteen vehicles comprising the trucking fleet, the trustee seeks the sum of $198,700.00 from Ms Sellars. The trustee also seeks interest, in respect of the sums due to it, in an amount of $96,224.50.
This amount includes both pre-judgment and post-judgment interest and has been calculated pursuant to the provisions of Rule 26.01 of the Federal Circuit Court Rules, which provides that the rate of interest relevant to general federal law proceedings, in this court, is the rate prescribed by the applicable provisions of the Federal Court Rules.
Pursuant to section 76(2) of the Federal Circuit Court of Australia 1999 a party may apply to the court for interest up to judgment. The applicant in these proceedings has made such an application.
Section 79(3) provides as follows:
(3) If:
(a) an application is made under subsection (2); and
(b) the Federal Circuit Court of Australia or the Judge is not satisfied that good cause has been shown for not making an order under this subsection;
the Federal Circuit Court of Australia or the Judge must either:
(c) order that there be included in the sum for which judgment is given interest at such rate as the Federal Circuit Court of Australia or the Judge thinks fit on the whole or any part of the money for the whole or any part of the period between:
(i) the date when the cause of action arose; and
(ii) the date as of which judgment is entered; or
(d) without proceeding to calculate interest in accordance with paragraph (c), order that there be included in the sum for which judgment is given a lump sum in lieu of any such interest.
The trustee has made an application under section 76(2). Accordingly section 79(3) is engaged. The double negative in sub-section (b) is challenging. The equivalent provision in the Federal Court Act [section 51A] provides for the payment of interest up to judgment unless good cause is shown to the contrary. There is no contradictor to the trustee’s application for pre-judgment interest, particularly whether there is such good cause for it not being awarded.
In this case, it is noteworthy that the debt which led to the sequestration of Mr Sellar’s estate was one of a modest amount, being less than $25,000.00. I have not been advised whether there are other creditors of the estate and what is the amount of the debts due to them. As a consequence of the manner in which the litigation has played out, this sum has paled into insignificance.
I will direct that Ms Sellars surrender the eighteen vehicles in question to the trustee and make a declaration that property in those vehicles vest in him. If the respondent fails to comply with this order, within twenty eight days, I will direct that she pay the trustee the sum of $198,700.00 as sought. I decline to make an order for interest. Given the highly unusual circumstances of this case, I consider that there is good cause as to why it should not be levied.
The respondent should pay the trustee’s costs of these proceedings.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding one hundred and thirty (130) paragraphs are a true copy of the reasons for judgment of Judge Brown
Date: 22 September 2017
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