Official Receiver v Maher
[2010] FMCA 857
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| OFFICIAL RECEIVER v MAHER | [2010] FMCA 857 |
| BANKRUPTCY – Application for the sale of property – power to make orders. |
| Bankruptcy Act 1966 (Cth), ss.19, 30, 77(1)(e) and (g) Federal Magistrates Court Rules 2001 (Cth), rr.13.03A(2)(b)(iii), 13.03B(2)(e), 13.07(2) Property Law Act 1969 (WA), s.126(1) |
| Bray v Bray (1926) 38 CLR 542; [1926] HCA 40 Cook v Schwarcz [2005] FMCA 1598 Cook v Tagamilitsky [2001] FMCA 117 Official Receiver v Fall (2008) 5 ABC(NS) 772; [2008] FMCA 489 Official Receiver v Tregaskis [2006] FMCA 1915 Pascoe v Hooper [2009] FMCA 520 Pattinson v McKinnon [2008] FCA 1624 Re Bilen; Ex parte Sistrom [1985] FCA 120 |
| Applicant: | OFFICIAL RECEIVER FOR AND ON BEHALF OF THE OFFICIAL TRUSTEE IN BANKRUPTCY |
| Respondent: | GILBERT FRANCIS MAHER |
| File Number: | PEG 154 of 2010 |
| Judgment of: | Lucev FM |
| Hearing date: | 3 November 2010 |
| Date of Last Submission: | 3 November 2010 |
| Delivered at: | Perth |
| Delivered on: | 3 November 2010 |
REPRESENTATION
| Counsel for the Applicant: | Mr C. Donoghue |
| Solicitors for the Applicant: | Carles Solicitors |
| the Respondent: | No appearance |
DECLARATION
The applicant and the respondent are the beneficial owners of the land comprised in Certificate of Title Volume 1478 Folio 682 and known as 82 Kurrajong Road, Safety Bay, Western Australia (“the Land”) as tenants in common in equal shares.
ORDERS
The Land be sold free from the encumbrances (if any) of such of the encumbrancers as shall consent to the sale and subject to the encumbrances of such of them as shall not consent.
The applicant is to decide whether the Land is to be sold by public auction or private treaty.
The Land be sold subject to the latest version of the Law Society of Western Australia’s General Conditions for the Sale of Land.
The applicant is to decide whether or not to set a reserve price for any auction of the Land and, if set, at what price.
The applicant have the conduct of the sale and be authorised to instruct an agent and auctioneer for that purpose.
The applicant be empowered to sign any contract of sale, Transfer of Land and any other conveyancing documents on behalf of the respondent to give effect to the sale in the event that the respondent fails or refuses to sign these documents within such time as required by the applicant’s solicitors.
The respondent do all such things as may be reasonably required by the applicant, its selling agent or solicitors for the purpose of achieving a sale of the Land including providing access to buildings on the Land for the purposes of valuation and viewing by potential purchasers.
The respondent has liberty to bid at the sale.
The net proceeds of the sale of the Land, after payment of what shall be due to any encumbrancer or encumbrancers according to their priorities and of all other proper costs, charges and expenses of the sale, be paid to the applicant and respondent in equal shares subject to the adjustment in order 13 below.
The respondent be served personally with this order within 10 days from the date hereof and that they deliver up vacant possession of the Land together with all keys for all buildings and improvements on the Land to the applicant’s solicitors within 21 days after service of the order on them.
The mediation conference listed for 10:00am Friday 12 November 2010 be vacated.
The applicant’s costs of the action against the respondent be fixed in the sum of $3,409.14 and be paid out of the respondent’s share of the proceeds of sale of the Land.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH |
PEG 154 of 2010
| OFFICIAL RECEIVER FOR AND ON BEHALF OF THE OFFICIAL TRUSTEE IN BANKRUPTCY |
Applicant
And
| GILBERT FRANCIS MAHER |
Respondent
REASONS FOR JUDGMENT
Application
This is an interlocutory application filed on 26 October 2010 for default judgment pursuant to rr.13.03A(2)(b)(iii) and 13.03B(2)(e) of the Federal Magistrates Court Rules 2001 (Cth),[1] or alternatively for summary judgment pursuant to r.13.07(2) of the FMC Rules.
[1] “FMC Rules”.
The applicant seeks the same orders and declarations that were sought in the original application for vacant possession and the sale of land against the respondent so that the applicant’s equity in the land may be realised for the benefit of the Bankrupt’s creditors.
Evidence
The applicant relies on the affidavits of the following:
a)affidavit of Jacqueline Riley sworn 24 August 2010;[2]
b)affidavit of service of Gary James Boyce sworn 15 September 2010;[3]
c)affidavit of service of Kristina Balik sworn 19 October 2010;[4]
d)affidavit of Jacqueline Riley sworn 25 October 2010;[5] and
e)affidavit of service of Gary James Boyce sworn 1 November 2010.[6]
[2] “Ms Riley’s August 2010 Affidavit”.
[3] “Mr Boyce’s Affidavit of Service”.
[4] “Ms Balik’s Affidavit of Service”.
[5] “Ms Riley’s October 2010 Affidavit”.
[6] “Mr Boyce’s Second Affidavit of Service”.
Ms Riley’s August 2010 Affidavit deposes to the relevant facts as follows:
a)she is an officer employed in the Perth office of the Official Receiver who acts for and on behalf of the Official Trustee in Bankruptcy[7] and is authorised to swear this affidavit on its behalf;
[7] “Official Trustee”.
b)on 19 August 2008 the Official Trustee became the trustee of the bankrupt estate of Janice Maher,[8] who became bankrupt on that date;
[8] “the Bankrupt”.
c)the respondent is the husband of the Bankrupt;
d)the respondent and the Bankrupt are the joint registered proprietors of the land comprised in Certificate of Title Volume 1478 Folio 682 and known as 82 Kurrajong Road, Safety Bay, Western Australia;[9]
e)the Official Trustee wrote to the respondent on 12 February 2009 and 17 April 2009 in relation to the Safety Bay Property;
f)the Official Trustee wrote to the respondent on 9 March 2010 to inform him of the effect of his wife’s bankruptcy on him as co-owner of the Safety Bay Property and of the Official Trustee’s rights and obligations, and a process server personally served this letter on the respondent on 10 March 2010, as evidenced by way of affidavit;
g)the Official Trustee wrote to the respondent again on 30 March 2010 in this regard, and a process server personally served this letter on the respondent on 8 April 2010, as evidenced by way of affidavit;
h)the Official Receiver has not received a response to any of his correspondence to the respondent annexed to this affidavit;
i)the Official Receiver’s solicitor wrote to the respondent on 15 June 2010 and no response to that letter has been received;
j)a kerbside sworn valuation of 27 May 2010 obtained by the Official Receiver for the Safety Bay Property indicates that the market value of the Safety Bay Property is $350,000;
k)GE Mortgage Solutions Ltd, being the mortgagee over the Safety Bay Property provided a security questionnaire to the Official Receiver that shows an indicative payout figure of $86,423.53 as at 13 July 2009;
l)on 2 August 2010 she had a telephone conversation with a representative of the mortgagee, in which she was advised that the joint mortgage debt was $86,863 with a $1,900 “break” cost if the mortgage was paid out. The representative confirmed that the mortgage payments were up to date and that a payment of $90,000 would be sufficient to totally discharge the mortgage debt as security as at 2 August 2010;
m)the Bankrupt has yet to file her statement of affairs and the only known unsecured creditor in the Estate at this stage is the Australian Tax Office with a debt of $82,277.16 plus petitioning creditor’s costs of $912 owed to that creditor.
[9] “the Safety Bay Property”.
Mr Boyce’s Affidavit of Service deposes to personal service of the application for Orders under Section 30 of the Bankruptcy Act 1966 for the sale of land filed 30 August 2010, and Ms Riley’s August 2010 Affidavit upon the respondent on 1 September 2010.
Ms Balik’s Affidavit of Service relevantly deposes to service by way of registered post of a cover letter dated 20 September 2010 from the Official Receiver’s solicitors and a copy of the Court’s Orders of 17 September 2010 addressed to the respondent of 82 Kurrajong Road, Safety Bay, Western Australia
Ms Riley’s October 2010 Affidavit relevantly deposes to the following:
a)the first hearing date for the application was set down for 9:45am on 17 September 2010 at which the respondent did not appear and programming orders were made;
b)the respondent was served with a copy of the Court’s Orders by dated 17 September 2010 by registered mail;
c)the respondent has not filed and served a notice of grounds of opposition to the application by 8 October 2010 as was required in Orders 1(a) and (b) of the Court’s Orders;
d)as the respondent has failed to comply with Order 1 of the Court’s Orders she has, pursuant to Order 6 of the Court’s Orders, instructed the Official Receiver’s solicitors to file an interim application for orders or judgment on default or, as an alternative, summary judgment;
e)she believes that the respondent has:
i)no answer to the whole or any part of the claim of the Official Receiver in these proceedings; and
ii)no reasonable prospect of successfully defending the whole or any party of the Official Receiver’s claim.
Mr Boyce’s Second Affidavit of Service deposes to personal service on the respondent on 28 October 2010 of the interim application for orders on default, and two affidavits, being, Ms Riley’s October 2010 Affidavit and Ms Balik’s Affidavit of Service.
Consideration
A trustee in bankruptcy has a duty to recover the property of the Bankrupt for the benefit of the bankrupt estate and the bankrupt’s creditors.[10]
[10] Bankruptcy Act, s.19.
The applicant seeks orders and declarations under s.30 of the Bankruptcy Act for the sale of land.
Sections 30 and 77(1)(g) of the Bankruptcy Act combine to provide jurisdiction for this Court to grant the orders sought by the applicant.[11]
[11] See Cook v Tagamilitsky [2001] FMCA 117 at paras.9-10 per Raphael FM (“Tagamilitsky”); Cook v Schwarcz [2005] FMCA 1598 at paras.10-11 per Barnes FM (“Schwarcz”); Official Receiver v Tregaskis [2006] FMCA 1915 at paras.10-13 per Lucev FM (“Tregaskis”); Official Receiver v Fall (2008) 5 ABC(NS) 772; [2008] FMCA 489 at para.11 per Lucev FM (“Fall”); Pascoe v Hooper [2009] FMCA 520 at para.8 per Barnes FM (“Hooper”); Pattinson v McKinnon [2008] FCA 1624 at para.2 per Jessup J (“McKinnon”).
Section 30 of the Bankruptcy Act also gives the Court broad powers to make orders to give effect to the Act, and that power extends to making declarations as to the respective beneficial interests of the applicant and the respondent in relation to the Safety Bay Property, and for orders for the sale and vacant possession of the Safety Bay Property.[12]
[12] See Tregaskis at para.13 per Lucev FM; Fall at para.12 per Lucev FM.
The Court shall, unless it sees good reason to the contrary, direct a sale of land where this is requested by a party with a one half interest or more in land.[13] The applicant is entitled to orders as of right where the respondent has not discharged the onus of showing that partition is a better option.[14] The same principles apply in the current circumstances.
[13] Property Law Act 1969 (WA), s.126(1). (“Property Law Act”).
[14] Bray v Bray (1926) 38 CLR 542; [1926] HCA 40 (“Bray”).
In Bray the land was held in a tenancy in common, while the Safety Bay Property is registered in the name of the Bankrupt and the respondent as joint tenants. This makes no difference in the case of bankruptcy as joint tenancy is severed when a bankruptcy occurs, the trustee becoming an equitable tenant in common with the respondent.[15]
[15] Fall ABC(NS) at 777 per Lucev FM; FMCA at para.14 per Lucev FM.
Alternatively, the Court has accrued jurisdiction to make orders for sale of land under s.126 of the Property Law Act.[16]
[16] Federal Magistrates Act 1999 (Cth), s.18; Fall ABC(NS) at 777 per Lucev FM; FMCA at para.15 per Lucev FM.
The Federal Court has said that there is no restriction in considering what orders it would be appropriate to make in the exercise of the power conferred under the Bankruptcy Act by the kinds of limitations which may be found in property partition legislation.[17]
[17] Re Bilen; Ex parte Sistrom [1985] FCA 120 at para.17 per Neaves J.
It follows that this Court will not be limited by any restrictions found in s.126 of the Property Law Act.[18]
[18] Fall ACB(NS) at 777 per Lucev FM; FMCA at para.17 per Lucev FM.
The applicant seeks vacant possession of the Safety Bay Property and wishes to have sole conduct of the sale of the Safety Bay Property in order to realise the assets of the bankrupt estate.
The Bankrupt has failed to do all such acts and things in relation to the realisation of the Safety Bay Property and to aid the applicant in the administration of the bankrupt estate as required by s.77(1)(e) and (g) of the Bankruptcy Act.
The respondent has been given opportunities to purchase the trustee’s equity in the Safety Bay Property, but has failed to do so.
The respondent has failed to file a notice of grounds of opposition to the application, and has failed to enter an appearance or appear in Court.
There is nothing before the Court that ought prevent it from making the orders sought in the application.
Conclusion
By reason of the respondent’s default, and having regard to the evidence in support of the application, the Court makes orders in terms of the final orders sought by the applicant in the application.
I certify that the preceding twenty-three (23) paragraphs are a true copy of the reasons for judgment of Lucev FM
Associate:
Date: 3 November 2010
3
9
0