Official Receiver v Maher and Anor (No.3)
[2011] FMCA 603
•3 August 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| OFFICIAL RECEIVER v MAHER & ANOR (No.3) | [2011] FMCA 603 |
| BANKRUPTCY – Application for issuance of Property (Seizure and Delivery) Order – non-compliance with Court Orders – failure to deliver up vacant possession of premises. |
| Bankruptcy Act 1966 (Cth), s.77(1)(g) Civil Judgments Enforcement Act 2004 (WA), s.59(1) Federal Court Rules (Cth), O.37, r.7(2) Federal Magistrates Act 1999 (Cth), s.78(2) and (3) Rules of the Supreme Court 1971 (WA), O.46, r.2(1)(a) |
| Official Receiver for and on Behalf of the Official Trustee in Bankruptcy v Maher [2010] FMCA 857 Official Receiver for and on Behalf of the Official Trustee in Bankruptcy v Maher (No.2) [2011] FMCA 365 |
| Applicant: | OFFICIAL RECEIVER FOR AND ON BEHALF OF THE OFFICIAL TRUSTEE IN BANKRUPTCY |
| First Respondent: | GILBERT FRANCIS MAHER |
| Second Respondent: | JANICE MAHER |
| File Number: | PEG 154 of 2010 |
| Judgment of: | Lucev FM |
| Hearing date: | 3 August 2011 |
| Date of Last Submission: | 3 August 2011 |
| Delivered at: | Perth |
| Delivered on: | 3 August 2011 |
REPRESENTATION
| Counsel for the Applicant: | Mr C Donoghue |
| Solicitors for the Applicant: | Carles Solicitors |
| For the First Respondent: | No appearance |
| For the Second Respondent: | No appearance |
ORDERS
A Property (Seizure and Deliver) Order (“PSDO”) be issued by a Registrar of this Court in terms of the draft PSDO Order filed in the Court Registry 24 June 2011, to give effect to Order 11 handed down by Federal Magistrate Lucev on 3 November 2010 and Order 3 handed down by Federal Magistrate Lucev on 16 May 2011.
| 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 |
First Respondent
| JANICE MAHER |
Second Respondent
REASONS FOR JUDGMENT
(Ex tempore reasons – edited from transcript)
Introduction
In this matter the applicant, the Official Receiver for and on behalf of the Official Trustee in Bankruptcy, seeks, as amended during the hearing today, a Property Seizure and Delivery Order[1] to be issued in terms of the draft PSDO filed in the Court Registry on 24 June 2011, to give effect to:
a)Order 11 handed down by the Court as presently constituted on 3 November 2001; and
b)Order 3 handed down by the Court as presently constituted on 16 May 2011.
[1] “PSDO”.
The first respondent, Mr Maher, is the partner of the second respondent, Ms Maher. The second respondent is a bankrupt, and the Official Receiver acts for and on behalf of the Official Trustee of her bankrupt estate.
Background
The relevant facts are conveniently set out, in large part, in the affidavit of Jacqueline Riley, sworn 23 June 2011.[2] Ms Riley is a public servant employed in the office of the Official Receiver in Perth. Relevantly, that affidavit says:
2.On the 3 November 2010 the Official Trustee obtained orders (“the First Orders”) in these proceedings which were personally served on the First Respondent on 23 November 2010.
3.The First Orders provided among other things that the First Respondent vacate the premises known as 82 Kurrajong Road, Safety Bay (“the Premises”) and deliver up the keys to the Premises to the Official Trustee’s solicitors within 21 days after the service of the order on him.
4.On 16 May 2011 the Official Trustee obtained orders (“the Second Orders”) in these proceedings which were personally served on the Second Respondent on 24 May 2011.
5.The Second Orders provided among other things that the Second Respondent vacate the Premises and deliver up the keys to the Premises to the Official Trustee’s solicitors within 21 days after the service of the order on her.
6.The Official Trustee’s solicitors informed me by telephone on 15 June 2011 and I verily believe that the keys to the Premises have never been delivered to the Official Trustee’s solicitors.
7.On instructions from me, AAC Process Servers & Investigations (“AAC”) carried out an occupancy check on the 18 June 2011 at the Premises. Annexed hereto and marked “A” is a true copy of the occupancy check report from AAC.
8.The Respondents have failed to deliver up vacant possession of the Premises and I swear this Affidavit in support of the Official Trustee’s application for a Property (Seizure and Delivery) Order in relation to the Premises in accordance with the First and Second Orders.
[2] “Ms Riley’s Affidavit”.
The Court also notes that in a judgment delivered in this matter on 16 May 2011, it said the following:
3.On 25 March 2011, the Official Receiver filed an application seeking orders against Ms Maher in the following terms:
1.That Janice Maher be joined as the Second Respondent to these proceedings.
2.An order pursuant to section 30(5) of the Bankruptcy Act 1966 (“the Act”) that the Second Respondent comply with the Official Trustee’s Notice under section 77(1)(e) and (g) of the Act served on the Second Respondent on 1 February 2011 requiring the Second Respondent to vacate and surrender possession of the property known as 82 Kurrajong Road, Safety Bay and more particularly described as Lot 82 on Plan 11948 being the whole of the land comprised in Certificate of Title Volume 1478 Folio 682 (“the Land”).
3.The Second Respondent be personally served with these orders within 10 days from the date the orders are made and that the Second Respondent 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 orders on her.
4.The Second Respondent pay the Applicant’s costs of this application to be fixed, or alternatively, taxed.
The application and a supporting affidavit were served on Ms Maher on 4 April.
4.On 11 April 2011, the 25 March application came before the Court for directions. There was no appearance by Ms Maher. Relevantly, the Court ordered on 11 April 2011 that there be orders in the following terms:
2. Janice Maher of 82 Kurrajong Road, Safety Bay in the State of Western Australia file and serve:
(a) a notice of address for service;
(b) any notice of grounds of opposition to the application; and
(c) any affidavit in support of the notice of grounds of opposition to the application,
by 28 April 2011.
3. The Applicant file and serve:
(a) any reply to the notice of grounds of opposition to the application; and
(b) any affidavit in support of the reply,
by 12 May 2011.
4. The application be listed for final hearing at 10:15am on 16 May 2011.
5. The Applicant file and serve on Janice Maher a copy of these orders within 7 days and file an affidavit of service within 10 days.
5.The Court is satisfied that its orders of 11 April 2011 have been served on Ms Maher in accordance with order 5 of the orders of 11 April 2011.
6.There was no appearance by Ms Maher when the matter was announced in Court today. The matter was called outside and there was still no appearance.
7.The evidence in support of the application is relevantly, in the following terms:
6.On the 1 February 2011 the Bankrupt was served with a Notice under Section 77(1)(e) and (g) of the Act (“the Notice), in which the Applicant required the Bankrupt to vacate and surrender possession of the Land on or before 21 days of the date of service of the Notice. Annexed hereto and marked “A” (pages 3-8) is a true copy of the Notice. Service of the notice is evidenced by the affidavit of Gary James Boyce sworn 17 February 2011.
7.The Bankrupt has failed to comply with the Applicant’s Notice on or before 21 days of the date of service of the Notice. To date the Bankrupt has not delivered up any keys for any buildings and improvements on the Land to the office of the Official Trustee pursuant to clause 3 of the Notice. I have received no communication from the Bankrupt in response to the Notice and as far as I am aware the Applicant has not received any such response.
There is no evidence of any response to any of the materials served on Ms Maher by the Official Receiver.
8.Notice was given under s.77(1)(e) and (g) of the Bankruptcy Act 1966 (Cth) to Ms Maher in the following terms:
TAKE NOTICE that the OFFICIAL TRUSTEE IN BANKRUPTCY as trustee of your bankrupt estate number WA 1018/8/2 and by virtue of sections 77(1)(e) and 77(1)(g) of the Bankruptcy Act 1966 requires that you:
1.Vacate and surrender possession of the property at 82 Kurrajong Road, Safety Bay, being the whole of the land described as Lot 82 on Plan 11948 comprised in Certificate of Title Volume 1478 Folio 682 (“the Property”) on or before 21 days of the date of service of this notice on you.
2.Remove from the Property all vehicles, rubbish, and chattels (being all items of personal property, including furniture and personal effects but excluding fixtures) on or before 21 days of the date of service of this notice on you.
3.Deliver up all keys for all buildings and improvements on the Property to the office of the Official Trustee in Bankruptcy at Level 12, 263 Adelaide Terrace, Perth WA 6000 on or before 21 days of the date of service of this notice on you.
AND FURTHER TAKE NOTICE THAT under section 30(5) of the Bankruptcy Act 1966, the Official Trustee in Bankruptcy is entitled to apply to the Court for an order that you comply with an order or direction of the trustee of your bankrupt estate.
Failure to deliver up vacant possession of the premises
The AAC Process Servers and Investigations Report[3] referred to in Ms Riley’s Affidavit reveals that an occupancy check of the Safety Bay property, as it has been described in the earlier judgments, was conducted on 18 June 2011.[4] It found certainly that the second respondent was still at the premises, and that there were no signs that the occupants of the premises were preparing to vacate the Safety Bay property in any way. It is also apparent from:
a)the applicant’s application;
b)Ms Riley’s Affidavit; and
c)the AAC Report,
that vacant possession of the Safety Bay property has not been delivered up by the first or second respondents, to the applicant or the applicant’s solicitors, as ordered by this Court on 3 November 2010 and 16 May 2011. In both incidences, therefore, the orders made by the Court have not been complied with.
[3] “AAC Report”.
[4] Ms Riley’s Affidavit, Annexure A.
Non-appearance of the respondents
The Court has made observations about the non-appearance of each of the first and second respondents, in earlier Reasons for Judgment on 3 November 2011:
7.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 [sic] of the Official Receiver’s claim.
8.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.
9.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.The applicant seeks orders and declarations under s.30 of the Bankruptcy Act for the sale of land.
11.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.
12.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.
13.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. 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. The same principles apply in the current circumstances.
14.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.Alternatively, the Court has accrued jurisdiction to make orders for sale of land under s.126 of the Property Law Act.
16.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.It follows that this Court will not be limited by any restrictions found in s.126 of the Property Law Act.
18.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.
19.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.
20.The respondent has been given opportunities to purchase the trustee’s equity in the Safety Bay Property, but has failed to do so.
21.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.[5]
[5] Official Receiver for and on Behalf of the Official Trustee in Bankruptcy v Maher [2010] FMCA 857 at paras.7-21 per Lucev FM (footnotes omitted).
Failure to comply with duties of bankrupt
The Court also quotes from its Reasons for Judgment on 16 May 2011:
12.Where, as here, the Official Receiver on behalf of the trustee has:
a)determined what property is included in the estate and available for sale;
b)taken appropriate steps to obtain a Court order against the respondent and given a notice under s.77 of the Bankruptcy Act to the bankrupt, Ms Maher; and
c)taken action, including that which has been outlined above,
to ensure that the bankrupt, Ms Maher, discharges the bankrupt’s duties, but the trustee is then met with a complete lack of cooperation and failure on the part of the bankrupt, Ms Maher, so as not to allow the trustee to carry out the trustee’s duties, in particular, to recover the Safety Bay Property, it cannot then be said that the trustee has been able to fulfil its other duties, namely, administering the estate as efficiently and economically as possible and exercising powers and performing functions in a commercially sound way.
13.The duties of a bankrupt are relevantly spelt out in s.77(1)(e) and (g) of the Bankruptcy Act as follows:
(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 realization as are required by this Act or by the trustee or as are ordered by the Court upon the application of the trustee; and
…
(g) aid to the utmost of his or her power in the administration of his or her estate.
14.A demand for vacation and surrender of the Safety Bay Property having been made by the trustee, Ms Maher is obliged to comply with that demand.
15.In summary, the position is that:
a)in accordance with the trustee’s duties, there has been a demand for the vacation and surrender of the Safety Bay Property made to the bankrupt, Ms Maher;
b)Ms Maher has failed to comply with the trustee’s demand;
c)the trustee’s demand is in accordance with the trustee’s duties under s.19 of the Bankruptcy Act; and
d)Ms Maher’s failure to comply with the trustee’s demand is contrary to her duty as a bankrupt under s.77(1)(e) and (g) of the Bankruptcy Act.
The consequence of the above is that the bankrupt estate is not able to be managed to provide the best return for creditors, or to maximise any surplus for the bankrupt, Ms Maher. In those circumstances, it follows that there ought to be orders as asked by the Official Receiver.[6]
[6] Official Receiver for and on Behalf of the Official Trustee in Bankruptcy v Maher (No.2) [2011] FMCA 365 at paras.12-15 per Lucev FM (footnotes omitted).
Non-compliance with Court Orders
It is apparent from the non-appearance of each of the respondents throughout these proceedings, and their continued non-appearance in the face of service of appropriate court documents, that there can be no reasonable expectation that the first or second respondents have any intention to comply with the earlier orders of the Court. In these circumstances, the applicant seeks a PSDO.
Legislative framework
The power of this Court to issue a PSDO arises from s.78 of the Federal Magistrates Act 1999 (Cth),[7] which provides as follows:
(2) A person in whose favour a judgment of the Federal Magistrates Court is given is entitled to the same remedies for enforcement of the judgment in a State or Territory, by execution or otherwise, as are allowed in like cases by the laws of that State or Territory to persons in whose favour a judgment of the Supreme Court of that State or Territory is given.[8]
[7] “FM Act”.
[8] FM Act, s.78(2).
Section 78(2) of the FM Act, providing for enforcement in a like manner to a judgment of the Supreme Court of Western Australia, requires the Court to turn to the Rules of the Supreme Court 1971 (WA).[9] Order 46, r.2(1)(a) of the Supreme Court Rules provides that an application made under s.59(1) of the Civil Judgments Enforcement Act 2004 (WA)[10] is one which may be dealt with by a Registrar of that Court. Section 59(1) of the Civil Judgments Enforcement Act provides:
(1) In order to recover a judgment debt, a judgment creditor may apply to the court for an order authorising the Sheriff to seize and sell the judgment debtor’s property to wholly or partially satisfy the judgment debt.
The Court makes those observations because it will order for a PSDO to be issued by a Registrar of this Court.
[9] “Supreme Court Rules”.
[10] “Civil Judgments Enforcement Act”.
In the circumstances, the Court is of the view that s.78(2) of the FM Act read together with O 46 r.2(1)(a) of the Supreme Court Rules, and in the absence of any relevant rules of this Court – and the Court makes that observation because s.78(3) of the FM Act makes s.78(2) subject to any rules of this Court – O 37 of the Federal Court Rules (Cth)[11] applies in relation to this Court. Order 37 r.7(2) of the FC Rules provides that:
(2) The modes of procedure and forms of process of the Supreme Court of the State or Territory in which the judgment or order is sought to be enforced shall be available and followed in the Court so far as is practicable mutatis mutandis for the enforcement of orders of the Court.
[11] “FC Rules”.
By reason of O 37 r.7(2) of the FC Rules, the mode of procedure and form of process available to be followed in this Court in relation to the enforcement of orders, is that set out in O 46 r.2(1)(a) of the Supreme Court Rules, because that is the mode of procedure that applies in the Supreme Court of Western Australia.
Conclusion
In the circumstances set out above, and especially bearing in mind:
a)that prior orders of this Court, as to delivery up of vacant possession of the Safety Bay property, have not been complied with by either the first or second respondents; and
b)the complete failure, on the face of the record, of the second respondent to comply with her duty to the Trustee in the administration of her bankrupt estate, pursuant to s.77(1)(g) of the Bankruptcy Act 1966 (Cth),
the Court considers that it is appropriate that a PSDO be issued. It will be issued in the terms requested by the applicant in these proceedings, with the insertion of the words “by a Registrar of this Court” after the word “issued”, and before the words “in terms”.
In the circumstances, and having regard to the applicant’s submission that the necessity for this application arose from an omission to include an alternative of a PSDO in the earlier Court Orders, there will be no order as to costs.
I certify that the preceding fourteen (14) paragraphs are a true copy of the reasons for judgment of Lucev FM
Date: 9 August 2011
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