Metro Finance Pty Ltd v Mohen

In the Federal Court of Australia, Cameron J considered an interim application brought by Metro Finance Pty Ltd (the applicant) against the respondent. The dispute arose from a judgment debt of $31,509.80 entered in favour of Metro Finance against the respondent in the Local Court of New South Wales. Following the respondent's failure to pay, a bankruptcy notice was issued, and subsequently, a creditor's petition was filed. Metro Finance sought orders under section 50 of the *Bankruptcy Act 1966* (Cth) to appoint a trustee to take control of the respondent's property, specifically the proceeds of the sale of his residential property located at 33 Mimosa Avenue, Mount Claremont, Western Australia.

The court was required to determine whether it was in the interests of creditors to direct a registered trustee to take control of the respondent's property before sequestration, given that the respondent had not complied with the bankruptcy notice. The applicant's concern was that the respondent might transfer his interest in the property before a trustee could be appointed to protect potential claims under sections 120 or 121 of the *Bankruptcy Act 1966* (Cth). The applicant also sought, in the alternative, an order that the surplus proceeds of the property sale be paid into court.

Cameron J applied the principles governing section 50 of the *Bankruptcy Act 1966* (Cth), which allows the court to direct a trustee to take control of a debtor's property after a bankruptcy notice is issued or a creditor's petition is presented, but before the debtor becomes bankrupt. The court noted that this provision is designed to preserve and protect the debtor's property for the benefit of creditors. The evidence before the court indicated that the respondent's property was listed for sale and was "under contract" since January 2021. The respondent had acknowledged the judgment debt and stated his intention to pay it from the equity in the property upon sale. However, no payment had been made, and the applicant had not received a written confirmation of a charge over the property as requested.

The court made orders pursuant to section 50 of the *Bankruptcy Act 1966* (Cth), directing Stephen John Michell to take control of the respondent's property, including the surplus proceeds of the sale of the property at 33 Mimosa Avenue, Mount Claremont, Western Australia. This control was to cease upon the making of a sequestration order in respect of the respondent or any earlier order of the Court.