Miao v Michell
[2018] FCCA 1068
•3 May 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MIAO v MICHELL | [2018] FCCA 1068 |
| Catchwords: BANKRUPTCY – Interim injunction by bankrupt to prevent completion of contract of sale by trustee in bankruptcy – application grounded upon contention that bankruptcy had been annulled – no serious question to be tried – balance of convenience favours refusal of interim relief. |
| Legislation: Bankruptcy Act 1966 (Cth) ss.58, 153A |
| Cases cited: Australian Broadcasting Authority & Lenah Game Meats Pty Ltd (2001) 208 CLR 199 Findley v MSS Security Pty Ltd [2017] FCCA 466 |
| Applicant: | SHIRLEY MIAO |
| Respondent: | STEPHEN JOHN MICHELL |
| File Number: | MLG 1004 of 2018 |
| Judgment of: | Judge A Kelly |
| Hearing date: | 20 April 2018 |
| Date of Last Submission: | 20 April 2018 |
| Delivered at: | Melbourne |
| Delivered on: | 3 May 2018 |
REPRESENTATION
| The Applicant: | Ms Miao in person |
| Solicitor for the Respondent: | Mr Quah |
| Solicitors for the Respondent: | SLF Lawyers |
ORDERS
The application for interim relief, filed on 17 April 2018, be dismissed.
The applicant pay the respondent’s costs of an incidental to this application.
The respondent’s costs in this proceeding be costs in the administration of the bankrupt’s estate.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 1004 of 2018
| SHIRLEY MIAO |
Applicant
And
| STEPHEN JOHN MICHELL |
Respondent
REASONS FOR JUDGMENT
(REVISED FROM EX TEMPORE REASONS)
Background
The applicant, Shirley Miao, is a Chinese national.
On 3 July 2014, an order was made in the Federal Circuit Court of Australia for the sequestration of the applicant’s estate. The sequestration order was made upon the application of Body Corporate SP31235U. On that date, the respondent, Stephen John Michell, was appointed trustee of the bankrupt estate.
By application, filed on 17 April 2018, the bankrupt makes application for an interim injunction to restrain the respondent from proceeding to complete a contract of sale in relation to a property situate at unit 2/144-148 Nicholson Street, Footscray, in the State of Victoria (property).
The contract pursuant to which the sale is proposed is the second occasion on which the respondent has attempted to sell the property.
In order to establish that an injunction should be granted, the applicant must demonstrate that there is a serious question to be tried and that the balance of convenience favours the grant of relief. What must be shown is that there is a sufficient colour of right to the final relief in aid of which an injunction is sought: see Australian Broadcasting Authority & Lenah Game Meats Pty Ltd (2001) 208 CLR 199 at [11], [17]-[18] Gleeson CJ, [59]-[60] Gaudron J, [96]-[99], [105] Gummow and Hayne JJ, [159(4)] Kirby J and [246] Callinan J; cf Findley v MSS Security Pty Ltd [2017] FCCA 466, [30], (McNab J).
The Property
By force of s 58 of the Bankruptcy Act 1966 (Cth) the property of the bankrupt vested in the respondent as trustee of her estate upon his appointment. By letter dated 23 July 2014, the trustee notified the applicant of his intention to realise the property for the benefit of the creditors of her estate. By this letter, the respondent requested the applicant to provide him with the certificate of title in relation to the property. The letter was sent by registered post. There is some evidence indicating that the respondent’s letter dated 23 July 2014 was returned to the respondent as unclaimed mail.
The bankrupt submitted a statement of affairs on about 23 January 2015. By letters dated 24 November 2015 and 2 June 2016, respectively, the trustee again wrote to the applicant, concerning the sale of the property, in which he requested that she deliver the certificate of title to his office. It appears that she declined to do so.
On 10 October 2016, the respondent became registered as proprietor of the fee simple estate in the applicant’s property, as trustee of her estate. The respondent thereupon appointed an agent to sell the property.
In December 2017, the respondent accepted an offer to purchase the property. However, the purchaser under this contract exercised a right to terminate the contract during a statutory ‘cooling off’ period.
The respondent’s agent had advertised the property for sale, including in the local newspaper. In particular, the property was advertised for sale in the Brimbank & North West Star Weekly, on 23 January 2018. The applicant exhibited a copy of that advertisement to her affidavit.
On 1 February 2018, the respondent entered into a further contract for the sale of a property. It is this contract which is the subject of the present application (contract). By general condition 10 of the contract, settlement of the sale was due to occur on 21 April 2018.
This contract was also subject to finance and, in the event that the present purchaser was unable to secure finance to complete the contract within the period limited to do so. However, the purchaser sought and obtained an extension until 26 February 2018. The purchaser has obtained finance and the contract is now unconditional.
The date for completion of the contract was then fixed for on Monday, 23 April 2018. The respondent’s solicitor, in the proper discharge of his duty of disclosure, candidly informed the Court that in the circumstances giving rise to the present application, the date for completion had been extended for a further seven day period. The extension of the date for completion was granted at the request of the purchaser.
Administration of the Estate
On 13 December 2017, the respondent objected to the bankrupt being discharged from bankruptcy. The applicant sought a review by the Australian Financial Security Authority (AFSA) of the respondent’s decision to file a notice of objection to her discharge from bankruptcy. On 6 March 2018, AFSA refused to review that decision.
Dissatisfied with that refusal, on about 16 March 2018, the applicant commenced a proceeding in the Administrative Appeals Tribunal (AAT) seeking a review of AFSA’s decision not to review the respondent’s objection to her discharge from bankruptcy. The applicant also applied to the AAT for a stay of AFSA’s decision relying, amongst other things, upon the need to place an immediate halt to the progress of completion of the sale of the property under the present contract.
On 13 April 2018, the AAT refused the applicant’s stay application. It provided reasons for doing so, which were adduced in evidence. Relevantly, the AAT concluded as follows:
By letters dated 3 July 2015, 8 July 2016, 6 June 2017 and 23 June 2017 the trustee advised you that failure to deliver up the property and provide information as directed is grounds for an objection to your discharge from bankruptcy. Despite clear warning that an objection to your discharge may be lodged, you failed to comply with the trustee’s requests. Considering all prevailing circumstances, it appears that the filing of a notice of objection was the only way to induce you to discharge your duties under the Act.
. . . for the reasons stated above, I am refusing to conduct a review of the trustee’s decision to object to your discharge, because I do not consider those are reasons sufficient to justify review.
The respondent produced in evidence an extract from the National Personal Insolvency Index in respect of the bankrupt, obtained by him on 19 April 2018. The index confirmed the respondent’s evidence that the applicant continues to be bankrupt and is not scheduled to be discharged from bankruptcy until 28 January 2023.
By letter dated 19 March 2018, the respondent furnished the applicant with a statement of receipts and payments, current as at that date. In addition, the respondent deposed that he had previously provided the applicant with copies of all invoices supporting each of the payments referred to in that statement.
As at 19 March 2018, the respondent has received total income of $109,094.91 in the administration of the estate, and made payments totalling $63,704.66. The respondent deposes that the net income which has been received is approximately $45,000.
In addition, the respondent has received proofs of debts from creditors of the bankrupt (amounting to $119,045.89) which are comprised of debts owed to, by the bankrupt estate, to Owner’s Corporation SP31235U, the Australian Taxation Office and a firm of lawyers.
The respondent further deposed that although he has been the trustee of this estate for a period of four years, he has not been paid any remuneration and has incurred further disbursements which have not yet been paid. The respondent’s outstanding remuneration is said to be $155,451 together with GST. The respondent deposes that he has obtained approval from the creditors of the estate for approximately 33 per cent of his remuneration, and that he will implement appropriate steps to seek approval from the creditors of the estate in relation to his outstanding remuneration, upon completion of his administration.
The respondent further deposed that, as at 13 April 2018, his outstanding internal disbursements are $703, together with third party legal expenses of $56,233. The size of the legal disbursements is explained by at least the following proceedings, which have taken place in the course of the administration of the estate:
a)Federal Court proceeding VID71/2015, commenced by the bankrupt, against the respondent, concerning his refusal to allow her to travel overseas;
b)VCAT proceedings OC1562/2014 and OC1803/2014, being applications brought by the bankrupt disputing the trustee’s ability to collect rent in respect of the property;
c)Federal Circuit Court proceeding MLG1439/2015, which was commenced by the applicant against the respondent and the tenants of the property, seeking both the respondent’s removal from his office, as trustee of her estate, together with an order that the tenants pay rent directly to the bankrupt;
d)Federal Circuit Court proceeding MLG1356/2016, commenced by the respondent against the applicant seeking the issue of a new certificate of title, so as to enable the sale of the property.
As noted above, there is now a pending further application before the AAT, seeking a review of the AFSA’s decision refusing to conduct a review of the respondent’s decision to lodge a notice of objection to the applicant’s discharge from bankruptcy.
Consideration
The ground on which the applicant contends there is a serious question to be tried is that the bankruptcy has been annulled.
By force of s 153A of the Bankruptcy Act, a bankruptcy may be annulled where a trustee is satisfied that all of the bankrupt’s debts have been paid in full. By sub-s 153A(6), the expression ‘bankrupt’s debts’ is defined for the purposes of s 153A to mean:
. . . all debts that have been proved in the bankruptcy and includes interest payable on such of those debts as bear interest, and the costs, charges and expenses of the administration of the bankruptcy, including the remuneration and expenses of the trustee.
I am satisfied that the applicant’s bankruptcy has not been annulled.
As this was the ground upon which the applicant moved for interim relief, the applicant has not satisfied me that there is a serious question to be tried. The applicant has not shown any sufficient colour of right to any final relief in aid of which this interim injunction was sought.
This conclusion renders it strictly unnecessary to consider the question of balance of convenience. However, the facts identified in relation to the matter above have fortified me in the conclusion that the balance of convenience did not favour the grant of an interim injunction.
It is clear that the applicant has persistently failed to provide the certificate of title in relation to the property, having been informed of the respondent’s intention to sell the property for some years. Indeed, it has been necessary for the respondent to take proceedings in this Court to obtain a new certificate of title for the purposes of sale.
As noted above, the applicant exhibited a copy of the advertisement lodged in the January 23, 2018 weekly edition of the Brimbank & North West Star Weekly. I infer that the applicant has been aware, since at least January 2018, that the property was advertised for sale.
The applicant’s evidence and submissions were that she has written to, phoned and sent text messages, both to the respondent and the respondent’s real estate agent, seeking to bring a halt to the sale process. In addition, as noted above, the applicant has sought a stay from the AAT of the decision of the AFSA to refuse to review the respondent’s decision objecting to her discharge from bankruptcy and, in making that application, the applicant had relied in part, upon the necessity to obtain a stay so as to prevent completion of the current sale.
On the weekend of 14 April 2018, the applicant obtained information from the tenant of the adjoining property that he is the purchaser of the property under the contract.
On the respondent’s evidence, the applicant has told the purchaser not to complete the contract of sale and allowed the purchaser to take a photograph (using his mobile phone) of the present application very shortly after the proceeding was commenced. As a result of that photograph being taken, the purchaser contacted the respondent’s real estate agent. It was by this means that the respondent became aware of the present proceeding, on Wednesday, 18 April 2018.
Later on Wednesday, 18 April 2018, the applicant served the respondent with a copy of her application and supporting affidavit.
The applicant also deposes that the respondent has misappropriated moneys and otherwise been guilty of misconduct in a variety of ways. I agree, in the submission of the respondent’s counsel, that the complaints of this kind are matters which would, if established, sound in damages. They are, in any event, on one view of the evidence, complaints which have been in play for some considerable time.
I am satisfied, on the whole of the evidence, that there has been delay in the institution of this proceeding. I am also satisfied that the estate would suffer prejudice if the respondent was delayed in the completion of this (the second) contract of sale. For those reasons, I refuse the application for interim relief.
I certify that the preceding thirty-six (36) paragraphs are a true copy of the reasons for judgment of Judge A. Kelly
Date: 3 May 2018