Official Receiver v Maher (No.2)
[2011] FMCA 365
•16 May 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| OFFICIAL RECEIVER v MAHER (No.2) | [2011] FMCA 365 |
| BANKRUPTCY – Joinder of bankrupt to proceedings for recovery of property – prior order of Court – duties of trustee – duties of bankrupt – obligation of bankrupt to comply with trustee’s demand for vacation and surrender of the property. |
| Bankruptcy Act 1966 (Cth), ss.19, 77 |
| Adsett v Berlouis & Ors (1992) 37 FCR 201 Mannigel v Aitken (1983) 77 FLR 406 Official Receiver v Maher [2010] FMCA 857 Poole v Attorney-General for the Commonwealth (1955) 92 CLR 1 Re Burgoyne; Ex parte Burgoyne (1891) 8 Morr 139 Re Steigrad (1952) 16 ABC 66 |
| 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: | 16 May 2011 |
| Date of Last Submission: | 16 May 2011 |
| Delivered at: | Perth |
| Delivered on: | 16 May 2011 |
REPRESENTATION
| Counsel for the Applicant: | Mr C M Donoghue |
| Solicitors for the Applicant: | Carles Solicitors |
| For the Respondent: | No appearance |
ORDERS
Janice Maher be joined as Second Respondent to these proceedings.
The Second Respondent be personally served with these orders within 10 days from the date the orders are made.
The Second Respondent deliver up vacant possession of the land 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”) with all keys for all buildings and improvements on the Land to the Applicant’s solicitors within 21 days after service of these orders on her.
The Second Respondent pay the Applicant’s costs of the application, to be taxed by a Registrar of the Court in accordance with Order 62 of the Federal Court Rules (Cth).
| 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
(Ex tempore reasons – edited from transcript)
The bankrupt
On 19 August 2008 Janice Maher became bankrupt and the Official Trustee became the trustee of her bankrupt estate.
Earlier order of the Court
Together with her husband, the respondent, Ms Maher was joint registered proprietor of land comprised in Certificate of Title Volume 1478 Folio 682 known as 82 Kurrajong Road, Safety Bay.[1] In Official Receiver for and on behalf of the Official Trustee in Bankruptcy v Maher,[2] on 3 November 2010, this Court made the following orders:
[1] “Safety Bay Property”.
[2] [2010] FMCA 857.
DECLARATION
(1) 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
(2) 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.
(3) The applicant is to decide whether the Land is to be sold by public auction or private treaty.
(4) The Land be sold subject to the latest version of the Law Society of Western Australia’s General Conditions for the Sale of Land.
(5) 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.
(6) The applicant have the conduct of the sale and be authorised to instruct an agent and auctioneer for that purpose.
(7) 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.
(8) 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.
(9) The respondent has liberty to bid at the sale.
(10) 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.
(11) 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.
(12) The mediation conference listed for 10:00am Friday 12 November 2010 be vacated.
(13) 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.
The application
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.[3]
[3] Affidavit of Mr Gary James Boyce sworn on 6 April 2011, paras.1-5.
First court date
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.
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.[4]
[4] Affidavit of Mr Gary James Boyce sworn 19 April 2011.
The hearing today
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.
Evidence in support of application
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. [5]
There is no evidence of any response to any of the materials served on Ms Maher by the Official Receiver.
[5] Affidavit of Jacqueline Riley, sworn 24 March 2011, paras.6-7 (“Ms Riley’s Affidavit”).
Notice was given under s.77(1)(e) and (g) of the Bankruptcy Act1966 (Cth)[6] 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. [7]
[6] “Bankruptcy Act”.
[7] Ms Riley’s Affidavit, Annexure A.
Duties of trustee
The duties of a trustee of a bankrupt estate include the duties set out in section 19(1)(b), (f), (g), (j) and (k) of the Bankruptcy Act:
(1) The duties of the trustee of the estate of a bankrupt include the following:
…
(b) determining whether the estate includes property that can be realised to pay a dividend to creditors;
…
(f) taking appropriate steps to recover property for the benefit of the estate;
(g) taking whatever action is practicable to try to ensure that the bankrupt discharges all of the bankrupt's duties under this Act;
…
(j) administering the estate as efficiently as possible by avoiding unnecessary expense;
(k) exercising powers and performing functions in a commercially sound way.
The trustee has a dual function, namely:
a)to administer the estate in the interests of the creditors and the bankrupt; and
b)to exercise as a public duty and for the public welfare, the powers given and duties imposed under the Bankruptcy Act.[8]
[8] Adsett v Berlouis & Ors (1992) 37 FCR 201 at 208 per Northrop, Wilcox and Cooper JJ (“Adsett”).
The discharge of the duties imposed on the trustee by the Bankruptcy Act are to be performed in accordance with the requirements of those duties as set out under the Bankruptcy Act, but also in accordance with the trustee’s obligation to administer the estate in such a manner as to maximise satisfaction of the creditors’ claims and any possible surplus for the bankrupt. The trustee is in charge of the assets of the bankrupt and those assets are to be applied for the benefit of the creditors, and if there is any surplus, for the benefit of the bankrupt, in this case, Ms Maher.[9]
[9] Adsett at 208-209 per Northrop, Wilcox and Cooper JJ.; Mannigel v Aitken (1983) 77 FLR 406 at 408-409 per Smithers J.
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.
Duties of bankrupt
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.
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.[10]
[10] Poole v Attorney‑Generalfor the Commonwealth (1955) 92 CLR 1 at 4 per Dixon CJ, Kitto and Taylor JJ. Bankrupts have been committed for failure to give the trustee vacant possession of a property: Re Burgoyne; Ex parte Burgoyne (1891) 8 Morr 39; Re Steigrad (1952) 16 ABC 66.
Summary and conclusion
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.
I certify that the preceding fifteen (15) paragraphs are a true copy of the reasons for judgment of Lucev FM FM
Associate:
Date: 19 May 2011
4
1