Newman (Trustee), in the matter of Cameron-Clarke (Bankrupt) v Mackay
[2023] FedCFamC2G 1139
•4 December 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Newman (Trustee), in the matter of Cameron-Clarke (Bankrupt) v Mackay [2023] FedCFamC2G 1139
File number(s): MLG 771 of 2023 Judgment of: JUDGE J YOUNG Date of judgment: 4 December 2023 Catchwords: BANKRUPTCY – application for possession of property – applicant is trustee of the bankrupt estate of second respondent – applicant and first respondent are co-owners of the property – applicant seeks vacant possession of property – application proceeded on an undefended basis in the respondents’ absence – orders for the respondents to vacate the property – warrant of possession of property issued. Legislation: Bankruptcy Act 1966 (Cth) ss 30, 55(4A)(b), 58(1)(a), 77(1)(e)(g), 116, 181A.
Judiciary Act 1903 (Cth) 79
Conveyancing Act 1919 (NSW) ss 7(1), 66F(1)(2), 66G(1)(3)
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) r 13.06(1)(e).
Cases cited: Allesch v Maunz (2003) 203 CLR 172, [38]-[40]
Horne (as trustee of the bankrupt estate of Sekulovksi) v Sekulovski [2009] FCA 1164
Pascoe v Dyason [2011] NSWSC 1217
Paten v Cribb (1862) 1 QSCR 40
Re Francis; Ex parte Official Trustee in Bankruptcy (1988) 19 FCR 149
Re Holland; Ex parte Official Trustee in Bankruptcy (1985) 5 FCR 165
Ruhe (Trustee) v Australian Securities and Investments Commission [2022] FCA 354
Soutar Accountants Pty Ltd v Combis & Sijabat as Trustees of the Bankrupt Estate of Cosimo Gasparre [2019] FCCA 1766
Division: Division 2 General Federal Law Number of paragraphs: 40 Date of hearing: 31 July 2023 Place: Melbourne Solicitor for the Applicant: Mr Pennini of Mills Oakley Solicitor for the First Respondent: Did not participate Solicitor for the Second Respondent: Did not participate ORDERS
MLG 771 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
IN THE MATTER OF GRAEME LEE CAMERON-CLARKE, BANKRUPT
BETWEEN: PHILIP NEWMAN AS TRUSTEE OF THE BANKRUPT ESTATE OF GRAEME LEE CAMERON-CLARKE
Applicant
AND: WENDY LYNETTE MACKAY
First Respondent
GRAEME LEE CAMERON-CLARKE
Second Respondent
ORDER MADE BY:
JUDGE J YOUNG
DATE OF ORDER:
4 DECEMBER 2023
THE COURT DECLARES THAT:
1.Pursuant to ss 58 and 116 of the Bankruptcy Act 1966 (Cth), the Second Respondent’s interest in the land known as Lot X, W Street, W Locality, New South Wales (more particularly described in Folio Identifier XXX) (Property) vested in the Applicant as trustee of the bankrupt estate of the Second Respondent on 22 March 2022.
THE COURT ORDERS THAT:
Vacant possession
2.Pursuant to ss 30, 77(1)(e) and 77(1)(g) of the Bankruptcy Act 1966 (Cth), the Respondents and any other occupants of the whole of the Property, within twenty-eight (28) days after the date of these Orders:
(a)vacate the Property and provide vacant possession to the Applicant;
(b)deliver up to the Applicant the keys and access cards for any buildings and improvements on the Property (if any); and
(c)remove all personal property, being vehicles, rubbish and chattels (together Personal Effects) which are not vested in the Applicant (if any).
3.Pursuant to ss 30, 77(1)(e) and 77(1)(g) of the Bankruptcy Act 1966 (Cth), in the event any of the Respondents fail to comply with the paragraph 2(c) of this Order, the Applicant be authorised and empowered to remove and/or dispose of any Personal Effects that remain on the Property at the cost of the Respondents after twenty-eight (28) days have passed from the making of these Orders, without any obligation to account to the Respondents for such Personal Effects.
4.Pursuant to ss 30, 77(1)(e) and 77(1)(g) of the Bankruptcy Act 1966 (Cth), ss 213(2) and (3) of the Federal Circuit and Family Court of Australia Act 2021 (Cth) and r 25.11(1) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (Rules), a Writ of Possession in favour of the Applicant issue in respect of the Property, such Writ to lie in the Registry until the filing by the Applicant, not before twenty-eight (28) days from the date of the making of these Orders, an Affidavit sworn or affirmed by the Applicant or the Applicant’s solicitor deposing that a Respondent or Respondents have not given up vacant possession of the Property whereupon after receipt of such an Affidavit, the Registry shall forthwith release the Writ to the Applicant or the Applicant’s solicitors.
Appointment of statutory trustees for sale
5.Pursuant to s 79 of the Judiciary Act 1903 (Cth) and s 66G of the Conveyancing Act 1919 (NSW):
(a)the Applicant and David Charles Quin be appointed as statutory trustees for the sale of the Property (together Statutory Trustees);
(b)the Property be vested in the Statutory Trustees subject to any encumbrances affecting the whole of the Property but free from encumbrances, if any, affecting any undivided share or shares therein to be held by the said Statutory Trustees upon statutory trust for sale;
(c)the Statutory Trustees be authorised and empowered to offer the Property for sale and to sell the Property by public auction with power to fix a reserve price, or alternatively, to sell the Property by private treaty;
(d)the Statutory Trustees have the sole conduct of the sale of the Property and be authorised and empowered to retain a solicitor or conveyancer, certified practising valuer, real estate agent and, if necessary, an auctioneer;
(e)the Statutory Trustees be reimbursed their costs and be paid remuneration in connection with the discharge of their duties as the Statutory Trustees at the same rate and on the same basis as their remuneration as registered trustees in bankruptcy;
(f)following the sale of the Property, the Statutory Trustees be authorised and empowered to deduct from the proceeds of sale and apply those proceeds in the following priority:
(i)first, in payment of all sale and transfer costs, including agent’s fees and commission, advertising and marketing expenses, valuer’s and auctioneer’s fees, conveyancing and legal costs associated with the sale;
(ii)second, in payment of any council rates, taxes, water rates, water usage and any other utility or statutory imposts or outgoings;
(iii)third, repairs and any other reasonable expenses for the protection and maintenance of the Property;
(iv)fourth, in payment of moneys owing to Commonwealth Bank of Australia Ltd under the mortgage registered in dealing AF534765;
(v)fifth, in payment of moneys owing to Tradelink Ltd under the caveat registered in dealing Al458314;
(vi)sixth, the remuneration and expenses of the Statutory Trustees in relation to the sale of the Property, including steps taken by the Applicant to attempt to co-operatively sell the Property prior to the commencement of the proceeding; and
(vii)seventh, the Applicant’s legal costs of and related to this proceeding as determined pursuant to paragraphs 10 and 11 of these Orders; and
(g)the Statutory Trustees shall hold the net proceeds of the sale of the Property, after deducting and applying the payments set out at paragraph 5(f) above, upon trust:
(i)as to one-half of the balance, for the Applicant as trustee of the bankrupt estate of the Second Respondent, payable to the Applicant as trustee of the bankrupt estate of the Second Respondent; and
(ii)as to one-half of the balance, for the First Respondent, payable to the First Respondent (First Respondent’s Share).
Ancillary orders
6.Pursuant to ss 30 and 134(1)(k) of the Bankruptcy Act 1966 (Cth), the Applicant and/or the Statutory Trustees be authorised and empowered forthwith to do all things and sign all documents on behalf of the First Respondent, including by signing any contract of sale, discharge of mortgage or other encumbrance, authority, transfer form or other document required to effect a sale of the Property.
7.Pursuant to ss 30, 77(1)(e) and 77(1)(g) of the Bankruptcy Act 1966 (Cth), the Respondents shall:
(a)deliver to the Applicant and/or the Statutory Trustees or the Applicant and/or the Statutory Trustees solicitors, within fourteen (14) days of any written request, any documents in their possession or under their control relating to the Property that are reasonably required by the Applicant and/or the Statutory Trustees to effect the sale of the Property; and
(b)do all things as may be reasonably required by the Applicant and/or the Statutory Trustees or their certified practising valuer, licensed real estate agent, auctioneer, solicitors or conveyancers for the purpose of:
(i)effecting a sale of the Property, including providing access to the Property and any buildings and improvements on the Property; and
(ii)an income tax return being lodged for the Second Respondent’s bankrupt estate to calculate any capital gains tax or other tax arising from the sale of the Property.
8.Pursuant to s 30 of the Bankruptcy Act 1966 (Cth), within twenty-eight (28) days of settlement of the sale of the Property, the First Respondent notify the Applicant and/or the Statutory Trustees in writing of a bank account into which she requires the First Respondent’s Share to be paid (Bank Account Notice), such Bank Account Notice to:
(a)be in writing;
(b)be signed by the First Respondent;
(c)specify the:
(i)bank or institution name;
(ii)account name;
(iii)account number; and
(iv)bank state branch (BSB) number; and
(d)specify the First Respondent’s contact telephone number to enable verbal verification of the details set out in paragraph 8(c) above;
(e)be either:
(i)mailed by prepaid post to the Applicant’s post office box at: PO Box XX Street, M City, Victoria; or
(ii)as a scanned PDF or image file attached to an email from the First Respondent, emailed to: [email protected].
9.Pursuant to s 30 of the Bankruptcy Act 1966 (Cth), in default of compliance with paragraph 8 of this Order, the Applicant and/or the Statutory Trustees pay into the Federal Circuit and Family Court of Australia (Division 2), within fourteen (14) days the First Respondent’s Share, which shall remain in the Court until further order.
Costs
10.Pursuant to r 22.02(1) of the Rules, the Applicant may apply for an order that the Court set the amount of the Applicant’s costs of this proceeding, such application to be made by the Applicant filing and serving (in accordance with the same procedure for service set out in paragraph 14(a)(i) and (b) of these Orders), by no later than 1 January 2024, an Affidavit on which the Applicant relies for such an order.
11.If by 15 January 2024, the Respondents do not file any Affidavit in relation to costs in response to any Affidavit the Applicant may file pursuant to paragraph 10 of these Orders, the Court will be at liberty to set the Applicant’s costs pursuant to r 22.02(2)(a) of the Rules, or alternatively make an order under r 22.02(2)(c) of the Rules referring the costs for taxation under part 40 of the Federal Court Rules 2011 (Cth).
Other orders
12.Pursuant to r 6.14(1) of the Rules, personal service of these Orders be dispensed with.
13.Pursuant to r 6.14(3) of the Rules, service of these Orders is taken to have been effected on the Applicant complying with paragraph 14 of these Orders.
14.The Applicant forthwith serve a sealed copy of these Orders and a copy of r 17.01 of the Rules:
(a)on the Respondents by:
(i)way of ordinary post; and
(ii)affixing to the front door of the dwelling at X Lane, M Town New South Wales an envelope addressed to the Respondents containing a sealed copy of these Orders; and
(b)on the Second Respondent by way of email and text message.
15.There be liberty to:
(a)the Applicant to seek the advice of the Court on any matter arising from his appointment, including as a Statutory Trustee, or from these Orders; and
(b)David Charles Quin to seek the advice of the Court on any matter arising from his appointment as a Statutory Trustee or from these orders.
16.There be liberty to the parties to apply.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
ANNEXURE A
Writ of PossessionNo. MLG 771 of 2023
Federal Circuit and Family Court of Australia (Division 2)
Registry: Melbourne (General Federal Law)
Section 104 of the Civil Procedure Avt 2005 (NSW) and rule 39.1 of the Uniform Civil Procedure Rules 2005 (NSW).
Form 60PHILIP NEWMAN (IN HIS CAPACITY AS TRUSTEE OF THE BANKRUPT ESTATE OF GRAEME LEE CAMERON-CLARKE)
Applicant
WENDY LYNETTE MACKAY
First Respondent
GRAEME LEE CAMERON-CLARKE
Second RespondentJUDGMENT DETAILS
Person entitled to execution of judgment: Philip Newman (in his capacity as trustee of the bankrupt estate of Graeme Lee Cameron-Clarke), Applicant
Persons liable to execution of judgment: Wendy Lynette Mackay and Graeme Lee Cameron-Clarke, Respondents
TO THE SHERIFF OF NEW SOUTH WALES AND ALL SHERRIF’S OFFICERS:
Description of land: Lot X, W Street, W Locality, New South Wales (Folio Identifier XXX)
Total amount to be levied for costs as at date of writ: Not applicable
ISSUING DETAILS
This writ continues to be in force for 12 months from the date of issue or such further time as is permitted under rule 39.20 of the Uniform Civil Procedure Rules 2005 (NSW).
Writ issued on:
Issued at:
Signature:Capacity:
Date writ received by Sheriff:
DETAILS OF PERSON ENTITLED TO EXECUTE JUDGMENTName:Philip Newman (in his capacity as trustee of the bankrupt estate of Graeme Lee Cameron-Clarke), Applicant
Address for Service: XXX Q Street, M City VIC
Telephone:(03) XXXX XXXX
Email:[email protected]
ADDITIONAL INFORMATION TO ASSIST SHERIFF’S OFFICE
Is any person in occupation of the land pursuant to a right of occupation under a residential tenancy agreement, within the meaning of the Residential Tenancies Act 2010 (NSW)? NO REASONS FOR JUDGMENT
JUDGE J YOUNG:
INTRODUCTION
The applicant, Philip Newman (Trustee), is the trustee in bankruptcy of the second respondent, Graeme Lee Cameron-Clarke. The first respondent, Wendy Lynette Mackay, is the spouse of the second respondent and the registered proprietor of 1 of 2 equal undivided shares in the property known as Lot X, W Street, W Locality, New South Wales (more particularly described in Folio Identifier XXX) (Property).
The Trustee applied to the Court for orders (among others) requiring the respondents to provide vacant possession of the Property.
APPLICATION AND EVIDENCE BEFORE THE COURT
The Trustee filed the Application on 4 May 2023 seeking orders pursuant to ss 30, 58 and 77(1)(g) of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act), s 66G of the Conveyancing Act 1919 (NSW) (Conveyancing Act) and s 79 of the Judiciary Act 1903 (Cth) (Judiciary Act).
The Application came before the Court for hearing on 31 July 2023, with Mr Pennini, solicitor, appearing for the Trustee and there being no appearance by either the first or second respondent.
The Trustee relied on the following material:
(a)affidavit of Philip Newman filed 4 May 2023;
(b)affidavit of David Charles Quin filed 4 May 2023;
(c)affidavit of Mark Pennini filed 5 June 2023;
(d)affidavit of Mark Pennini filed 31 July 2023; and
(e)the affidavits of service filed in these proceedings (8 in total).
The first and second respondent’s non-participation and proceeding in their absence
The respondents did not file a Response to the Application or any other material. As noted, the respondents did not attend the hearing.
The matter proceeded in the respondents’ absences in default of their appearance: r 13.06(1)(e) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth). I am satisfied that the respondents were on notice of the Application and the hearing, and had been afforded an opportunity to be heard. A court cannot force a party to take advantage of that opportunity: Allesch v Maunz (2003) 203 CLR 172, [38]-[40].
On 5 June 2023, the Trustee filed an affidavit of service detailing the service of the Application on the first and second respondent. The respondents did not appear at the directions hearing on 6 June 2023. The Court made Orders on 6 June 2023 (6 June 2023 Orders) for the respondents to file a Notice of Appearance, a Response and any affidavit in opposition to the Application by 20 June 2023, as well as an order for the Trustee to serve a copy of the Orders on the respondents. On 21 June 2023, process servers for the solicitors of the Trustee filed affidavits of service detailing the service of the 6 June 2023 Orders on the first and second respondent. I am satisfied that this occurred. The 6 June 2023 Orders noted that in the event of the first and second respondent’s non-compliance with the directions and/or in the event of their non-appearance at the final hearing, the Court may determine the matter and grant the relief claimed in the Application in their absence.
Neither the first or second respondent filed any material by 20 June 2023. As noted, they did not attend the hearing.
RELEVANT BACKGROUND
Ownership of the Property
In April 2015 the second respondent became a bankrupt by operation of s 55(4A)(b) of the Bankruptcy Act (Bankruptcy Date).
On the Bankruptcy Date the joint tenancy of the first and second respondent of the Property severed: Re Holland; Ex parte Official Trustee in Bankruptcy (1985) 5 FCR 165 (see also Paten v Cribb (1862) 1 QSCR 40; Re Francis; Ex parte Official Trustee in Bankruptcy (1988) 19 FCR 149; Soutar Accountants Pty Ltd v Combis & Sijabat as Trustees of the Bankrupt Estate of Cosimo Gasparre [2019] FCCA 1766 at [24]), and the first and second respondents each became the registered proprietor of 1 of 2 equal undivided shares of the Property.
On 22 March 2022, the Official Receiver appointed the Trustee as the trustee of the second respondent’s estate pursuant to s 181A of the Bankruptcy Act (Appointment Date). On the Appointment Date the second respondent’s share of the Property vested in the Official Receiver. Subsequently, on the Appointment Date the second respondent’s share in the Property vested in the Trustee pursuant to s 58(1)(a) of the Bankruptcy Act.
By a bankruptcy application registered in dealing AT084643 by the Registrar-General on 13 May 2023, the Trustee became the registered proprietor of the second respondent’s share in the Property.
Accordingly, as at the date of the Application, the Trustee and the first respondent are the co-owners of the Property.
Communications between the Trustee and the respondents regarding the Bankrupt Estate
The Trustee and its employees have attempted communication or had communication with the respondents between 22 March 2022 and 16 March 2023. The affidavit of Philip Newman filed 4 May 2023 provides a tabled summary of those communications. It shows the Trustee has attempted to call and left a message for the second respondent on nine occasions, called and had a conversation with the second respondent on nine occasions, sent or hand-delivered a message to either or both respondents on five occasions, sent a text message to the second respondent on one occasion and sent an email to the second respondent on one occasion.
The affidavit of Philip Newman filed 4 May 2023 further affirms that:
(a)at no stage has the second respondent provided the Trustee’s office or the office of the Trustee’s legal representative with the first respondent’s telephone number or email address, despite multiple requests;
(b)the first respondent has not responded to any correspondence or otherwise communicated with the Trustee’s office or the office of the Trustee’s legal representative; and
(c)no solicitors have communicated with the Trustee’s office or the office of the Trustee’s legal representative on behalf of either or both of the respondents.
The evidence before the Court establishes that the Applicant has made considerable efforts over an extended period of time to sell the property co-operatively with the first respondent but the first respondent has refused to engage with the Trustee.
Creditors and property value
The information before the Court from Mr Newman’s affidavit of 4 May 2023 demonstrates the following:
·the second respondent was registered as a joint tenant of the Property on or around 16 June 2010, with a consideration of $182,500 paid;
·the property is a vacant lot, based on satellite imagery;
·the Property is subject to:
·A mortgage in favour of Commonwealth Bank of Australia, securing a debt of $106,844.66 (as at 6 March 2023) and;
·A caveat in favour of Tradelink Pty Ltd, securing a debt of $14,112.12 (as at 15 March 2023);
(thus, secured debts total about $120,956.78)
·the Property has a value of about $550,000 to $600,000 based on a market appraisal prepared by LJ Hooker on 17 March 2023; and
·the amount of known unsecured creditors' claims in the Second Respondent's bankrupt estate total $118,943.91
Accordingly, having regard to the matters set out at paragraph [18], and based on a sale of the Property being achieved for the median figure of $575,000, the equity in the Property is likely to be $454,043.22.
LEGAL PRINCIPLES
The Trustee relies upon a number of different provisions of the Act, namely, ss 30(1) and s 77(1)(e) and (g) of the Bankruptcy Act, s 79 of the Judiciary Act and s 66G(1) and s 66F of the Conveyancing Act as the sources of the Court’s power to make an order that the respondents vacate the property and give possession of the Property to the Trustees.
The relevant provisions of the Act are as follows:
30 General powers of Courts in bankruptcy
(1) 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.
77 Duties of bankrupt as to discovery etc. of property
(1)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 realisation as required by the Act or by the trustee or as ordered by the court upon application of the trustee.
(g)aid to the utmost of his or her power in the administration of his or her estate.
Section 66G(1) of the Conveyancing Act provides:
Where any property (other than chattels) is held in co-ownership the court may, on the application of any one or more of the co-owners, appoint trustees of the property and vest the same in such trustees, subject to incumbrances affecting the entirety, but free from incumbrances affecting any undivided shares, to be held by them on the statutory trust for sale or on the statutory trust for partition.
“Property” is defined in s 7(1) of the Conveyancing Act so as to include, relevantly, any estate or interest in real property.
Section 66F(1) of the Conveyancing Act defines “co-ownership” as follows:
ownership whether at law or in equity in possession by two or more persons as joint tenants or as tenants in common
Further, s 66F(2) of the Conveyancing Act defines “held on statutory trust” with respect to property to mean a:
trust to sell the same and to stand possessed of the net proceeds of sale, after payment of costs and expenses, and of the net income until sale after payment of costs, expenses, and outgoings, and in the case of land of rates, taxes, costs of insurance, repairs properly payable out of income, and other outgoings upon such trusts, and subject to such powers and provisions as may be requisite for giving effect to the rights of the co-owners.
Section 66G(3) of the Conveyancing Act is also relevant. It provides, in effect, that unless the trustee that is to be appointed is a “trustee corporation”, at least two individuals must be appointed as trustees: Coshott v Prentice [2014] FCAFC 88 at [20] (Coshott).
Section 79 of the Judiciary Act provides that:
The laws of each State or Territory, including the laws relating to procedure, evidence, and the competency of witnesses, shall, except as otherwise provided by the Constitution or the laws of the Commonwealth, be binding on all Courts exercising federal jurisdiction in that State or Territory in all cases to which they are applicable.
CONSIDERATION
Power to make the orders sought
In Coshott at [94] the Court (Siopis, Katzmann and Perry JJ) held that s 30 of the Bankruptcy Act:
provide[s] sufficient power to make orders against a bankrupt for the vacation of property, issuing a warrant of possession and for the sale of property in circumstances where the bankrupt is not complying with his or her obligations under the Act.
In Ruhe (Trustee) v Australian Securities and Investments Commission [2022] FCA 354 O’Callaghan J held at [13]–[14]
13The cases make it clear that the power to make orders under s 30(1)(b) of the Act must be exercised for the purposes of carrying out or giving effect to the Act in the particular case. Those purposes are to provide for the appropriation and equitable distribution of the assets of the insolvent debtor.
14Further, the cases make clear that the provision is not to be construed narrowly. On the contrary, it is a facultative provision giving the court full power (within obvious limits of jurisdiction) to make such orders as it considers should be made to carry out and give effect to the Act. Accordingly, the section has been held to provide sufficient power to make orders against a bankrupt for the vacation of property, issuing a warrant of possession and for the sale of property in circumstances where the bankrupt does not comply with their obligations under the Act.
In Horne (as trustee of the bankrupt estate of Sekulovksi) v Sekulovski [2009] FCA 1164 at [8] Tracey J held:
It is plainly necessary that the Applicant be in a position to provide any purchaser of the property with vacant possession in order to facilitate a sale, and it is also necessary, in order to achieve that end, that the property be placed in such a condition that it may be attractive to a potential purchaser. The Respondents, despite having been given the opportunity to do so, have prevaricated and have not responded to requests that they vacate the premises. Accordingly, in my view, it is appropriate that the orders sought in the application should be made.
In Coshott the Court also held that the power in s 30 of the Bankruptcy Act does not extend to the making of orders against a non-bankrupt co-owner, such as the first respondent, saying at [100]:
…in our opinion it must equally be the case that the general power in s 30(1) of the Bankruptcy Act does not extend to the making of orders for the sale of property which is co-owned by a person who is not the bankrupt thereby destroying their rights in that property. There is no express power to make such an order, nor obligation imposed upon such a person by the Bankruptcy Act from which Parliament’s intention to destroy such rights by an order under s 30(1) might emerge with the clarity required…
However, the Court in Coshott held that pursuant to s 79 of the Judiciary Act, the powers conferred in s 66G of the Conveyancing Act extend to this Court, saying at [109]-[111]:
The power to appoint trustees for sale is conferred upon the “court”. That term is defined in s 7(1) of the Conveyancing Act to mean the Supreme Court. On its face, the power conferred by s 66G does not extend to this Court. Nor in any event could a State law operate directly and of its own force in the exercise of federal jurisdiction: APLA Ltd v Legal Services Commissioner of New South Wales [2005] HCA 44; (2005) 224 CLR 322 at 406 [229] (Gummow J); Re Wakim; Ex parte McNally (1999) 198 CLR 511 (Re Wakim) at 558 [59], 559 [61].
It is at this point that s 79 of the Judiciary Act comes into play. The section provides that:
The laws of each State or Territory, including the laws relating to procedure, evidence, and the competency of witnesses, shall, except as otherwise provided by the Constitution or the laws of the Commonwealth, be binding on all Courts exercising federal jurisdiction in that State or Territory in all cases to which they are applicable.
The High Court has held that s 79 operates to pick up and apply both procedural and substantive State law as a surrogate federal law, thereby enabling courts exercising federal jurisdiction to provide remedies afforded otherwise only under State law in the exercise of State jurisdiction…
The principles governing the exercise of the power conferred by s 66G(1) of the Conveyancing Act were set out by Black J in Pascoe v Dyason [2011] NSWSC 1217 at [5]-[8] and may be summarised as follows:
(1)section 66G provides a mechanism for terminating the co-ownership of property where co-owners cannot agree on how co-ownership should be determined;
(2)generally, a co-owner having at least a 50% interest in property is entitled almost as of right to an order for sale under s 66G and it has also been described as a prima facie entitlement in such circumstances;
(3)a court will usually consider it appropriate to make an order under s 66G unless persuaded by cogent arguments put in opposition; and
(4)the power is discretionary, but the grounds of refusal are essentially limited to circumstances where exercise of the power of sale would be inconsistent with a proprietary, contractual or fiduciary obligation (for example, a legally binding agreement of a co-owner not to apply to a court under s 66G).
In light of the above, I am satisfied that the Court has the power to make the orders sought. Further, there is nothing in the material before me that could reasonably suggest that an order under s 66G(1) of the Conveyancing Act should not be made and I am satisfied it is appropriate to do so.
Identity of the Trustees
The Trustee seeks that he and Mr David Charles Quin be appointed as trustees for the sale. The Trustee is a registered trustee in bankruptcy since 2003 and a founding director of PCI Partners Pty Ltd (PCI). Mr Quin is also a registered trustee in bankruptcy since 2008 and a liquidator since 2001. He, too, is also a founding director of PCI. Both the Trustee and Mr Quinn, therefore, are persons in whom I can repose confidence to properly discharge their duties as trustees for the sale.
In Coshott it was submitted that a conflict or potential conflict might arise if a trustee in bankruptcy of the estate of one of the co-owners is also appointed one of the trustees for sale. The Full Federal Court did not decide whether the trustee in bankruptcy in that case would have a conflict if appointed; but observed that “no conflict of interest was identified by the appellants with any specificity”.[1] That suggests the Full Court was of the view that a trustee in bankruptcy of the estate of one of the co-owners is not to be presumed to have any conflict or potential conflict of interest only because he is the co-owner’s trustee in bankruptcy. There is nothing before me that could reasonably suggest that the Trustee would have any conflict or potential conflict between his duties to administer the Bankrupt’s estate and the duties he would have if appointed one of the trustees for the sale of the Property. There is also nothing in the material before me that could suggest any potential conflict that might arise out of Mr Quinn being a director of the firm of which the Trustee is a partner.
[1]Coshott v Prentice (2014) 221 FCR 450 at [131].
I will therefore make an order under s 66G(1) of the Conveyancing Act appointing the Trustee and Mr Quin as trustees for sale of the Property.
DISPOSITION
The Applicant seeks a number of ancillary orders. I am satisfied it is appropriate to make the orders sought, save for:
(a)amendments to dates in orders 10 and 11; and
(b)an order that at the time the applicant serves a sealed copy of these orders on the respondents, in accordance with order 14, the applicant also serves a copy of r 17.01 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
The applicant also seeks a declaration that pursuant to s 58(1)(a) and s 116 of the Bankruptcy Act, the second respondent’s interest in the Property vested in the Applicant as trustee of the bankrupt estate of the second respondent on 22 March 2022. I consider such relief to be appropriate and propose to make the declaration sought.
Accordingly, I make the declaration and orders set out at the commencement of this judgment.
I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment of Judge J Young. Associate:
Dated: 4 December 2023
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