Official Receiver v Tregaskis

Case [2006] FMCA 1915

FEDERAL MAGISTRATES COURT OF AUSTRALIA

OFFICAL RECEIVER v TREGASKIS & ANOR [2006] FMCA 1915
BANKRUPTCY – Application for sale of property and to vacate land – power to make orders.
Bankruptcy Act 1966 (Cth), ss.19, 30, 30(1), 58, 77(1)(g) & (e), 77C
Federal Magistrates Act 1999 (Cth), s.18
Law of Property Act 1936 (SA), ss.69 and 70
Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth)
Property Law Act 1969 (WA), s.126
Billen: Ex Parte Sistron [1985] FCA 141
Bray v Bray [1926] 38 CLR 542
Cook v Schwarcz [2005] FMCA 1598
Cook v Tagamilitsky [2001] FMCA 117
John Sheahan(Trustee of the Bankrupt Estate of Jillian Helen Marshall and the Bankrupt Estates of Richard John Copper and Simon Vincent Cooper) v Noelene Michelle Cooper & Ors [1998] FCA 1531
Nguyen v Pascoe [2006] FCA 719
Re Holland; Ex parte Official Trustee in Bankruptcy [1985] 5 FCR 165
Sistrom v Urh (1992) 117 ALR 528
Applicant: OFFICAL RECEIVER
First Respondent: RICHARD JOHN  TREGASKIS
Second Respondent: KATRINA OLIVE TREGASKIS
File Number: PEG 294 of 2006
Judgment of: Lucev FM
Hearing date: 13 December 2006
Date of Last Submission: 13 December 2006
Delivered at: Perth
Delivered on: 13 December 2006

REPRESENTATION

Counsel for the Applicant: Ms L Mobilia
Solicitors for the Applicant: Carles Solicitors
Respondents: No Appearance

ORDERS

(1)The First Respondent deliver up vacant possession of the premises known as 18 Harrison Way, Calista being the property described as Lot C457 on Deposited Plan 210539 being the whole of the land in Certificate of Title Volume 1822 Folio 766 (“the Calista land”) to the Applicant within 28 days of the date of this order.

(2)The First Respondent deliver up all keys for all buildings and improvements on the Calista land to the Applicant within 28 days of the date of this order.

(3)In the event that the First Respondent fails to deliver up vacant possession of the Calista land in accordance with Orders 1 and 2 above a writ of possession shall issue forthwith in favour of the Applicant.

(4)The First Respondent must remove from the Calista land all vehicles, rubbish and chattels which have not vested in the Official Trustee in Bankruptcy (“the personal property”) within 28 days of this order.

(5)In the event that the First Respondent fails to comply with Order 4 above the Applicant is empowered to remove and dispose of the personal property on the Calista land as he sees fit after 28 days have passed from the making of this order.

(6)A declaration that the Applicant and the Second Respondent are the beneficial owners of the land described as Lot 27 on Plan 19108 being the whole of the land comprised in Certificate of Title Volume 1965 Folio 54 and known as 27 Cardinal Gardens, Warnbro, Western Australia (“the Warnbro land”) as tenants in common in equal shares.

(7)The Warnbro 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…

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Official Receiver v Tregaskis [2006] FMCA 1915
Case
[2006] FMCA 1915
Decision Date

CaseChat Overview and Summary

The case of Official Receiver v Tregaskis involved the Official Receiver, acting on behalf of the Official Trustee in Bankruptcy, seeking orders for the vacant possession and sale of two properties owned by Richard John Tregaskis, who was declared bankrupt. The Official Receiver sought orders under the Bankruptcy Act to facilitate the sale of the properties and recover assets for the benefit of the bankrupt’s creditors. The two properties in question were located at 18 Harrison Way, Calista, and 27 Cardinal Gardens, Warnbro, both in Western Australia. Richard Tregaskis was the sole proprietor of the Calista property and a joint tenant with the second respondent on the Warnbro property.

The primary legal issue before the court was whether the Official Receiver had the authority to seek orders for the vacant possession and sale of the properties under sections 30, 58, 77(1)(g), and 77(1)(e) of the Bankruptcy Act. The Official Receiver argued that these provisions granted the court the necessary jurisdiction to make the sought orders, despite the absence of a specific codified section addressing the requirement for bankrupts to vacate property. The Official Receiver cited previous cases such as Cook v Tagamilitsky and Cook v Schwarcz to support the assertion that the combination of these sections provided sufficient jurisdictional grounding for the orders.

The court found that the Official Receiver had the requisite authority under the cited sections of the Bankruptcy Act to make the orders sought. The court acknowledged the broad powers granted to it under section 30 of the Act to make orders to give effect to the Act, which included ordering the sale and vacant possession of the properties. The court also considered the Property Law Act 1969 (WA) and noted that the Official Receiver was entitled to orders as of right, given the respondents' failure to demonstrate that partition was a better option. The court ruled that it was not limited by the restrictions found in section 126 of the Property Law Act (WA), allowing it to proceed with the orders.

In light of the findings, the court granted the Official Receiver’s application, issuing orders for the vacant possession of both properties, the removal of personal property, and the sale of the Warnbro land. The court also declared that the Official Receiver and the second respondent were beneficial owners of the Warnbro land as tenants in common in equal shares. The net proceeds of the sale were to be divided equally between the Official Receiver and the second respondent, subject to any costs order. The Official Receiver's costs against each respondent were fixed at $1,340.15, alternatively to be taxed and paid out of the respective shares of the proceeds of sale. The parties were granted liberty to apply for further orders as necessary.

Orders

Orders of the court

(1) The First Respondent deliver up vacant possession of the premises known as 18 Harrison Way, Calista being the property described as Lot C457 on Deposited Plan 210539 being the whole of the land in Certificate of Title Volume 1822 Folio 766 (“the Calista land”) to the Applicant within 28 days of the date of this order.

(2) The First Respondent deliver up all keys for all buildings and improvements on the Calista land to the Applicant within 28 days of the date of this order.

(3) In the event that the First Respondent fails to deliver up vacant possession of the Calista land in accordance with Orders 1 and 2 above a writ of possession shall issue forthwith in favour of the Applicant.

(4) The First Respondent must remove from the Calista land all vehicles, rubbish and chattels which have not vested in the Official Trustee in Bankruptcy (“the personal property”) within 28 days of this order.

(5) In the event that the First Respondent fails to comply with Order 4 above the Applicant is empowered to remove and dispose of the personal property on the Calista land as he sees fit after 28 days have passed from the making of this order.

(6) A declaration that the Applicant and the Second Respondent are the beneficial owners of the land described as Lot 27 on Plan 19108 being the whole of the land comprised in Certificate of Title Volume 1965 Folio 54 and known as 27 Cardinal Gardens, Warnbro, Western Australia (“the Warnbro land”) as tenants in common in equal shares.

(7) The Warnbro 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.

(8) The Warnbro land be sold subject to the Law Society of Western Australia’s General Conditions for the Sale of Land.

(9) The Applicant have the sole conduct of the sale of the Warnbro land and be authorised to instruct an agent and/or auctioneer for that purpose.

(10) The Applicant is to decide whether the Warnbro land is to be sold by public auction or by private treaty.

(11) The Applicant is to decide whether or not to set a reserve price for any auction of the Warnbro land and, if set, at what price.

(12) The Applicant be empowered to sign any contract of sale, discharge of mortgage authority, Transfer of Land and any other documents, on behalf of the Second Respondent necessary to give effect to the sale in the event that the Second Respondent fails or refuses to sign such documents within such time as required by the Applicant’s solicitors.

(13) The First and Second Respondents 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 Warnbro land including providing access to buildings on the Warnbro land for the purposes of valuation and viewing by potential purchasers.

(14) The Second Respondent have liberty to bid at the sale of the Warnbro land.

(15) The First and Second Respondents be served personally with this order within 10 days from the date hereof and they shall deliver up vacant possession of the Warnbro land together with all keys for all buildings and improvements on the Warnbro land to the Applicant’s solicitors within 28 days after service of the order on them.

(16) In the event that the First and Second Respondents fail to deliver up vacant possession of the Warnbro land in accordance with Order 15 above a writ of possession shall issue forthwith in favour of the Applicant.

(17) The First and Second Respondents must remove from the Warnbro land all vehicles, rubbish and chattels which have not vested in the Official Trustee in Bankruptcy (“the personal property”) within 28 days of this order.

(18) In the event that the First and Second Respondent fail to comply with Order 17 above the Applicant is empowered to remove and dispose of the personal property on the Warnbro land as he sees fit after 28 days have passed from the making of this order.

(19) The net proceeds of sale of the Warnbro land, after payment of what shall be due to any encumbrancer or encumbrances according to their priorities and of all other proper costs, charges and expenses of the sale be paid to the Applicant and Second Respondent in equal shares subject to any costs order to be met out of the Second Respondent’s share.

(20) The Applicant’s costs of the action against the Second Respondent be fixed in the sum of $1,340.15, or alternatively taxed and paid out of the Second Respondent’s share of the proceeds of sale of the Warnbro land.

(21) The Applicant’s costs of the action against the First Respondent be fixed in the sum of $1,340.15, or alternatively taxed and paid out of the bankrupt estate of the First Respondent.

(22) The parties have liberty to apply.

Background

Background to the litigation

The Applicant relies on the affidavits of the following:a)Affidavit of Kevin Arthur Fraser in support of the Application for Orders for Vacant Possession and Sale of Land under s.30 of the Bankruptcy Act sworn 6 November 2006 (“Mr Fraser’s affidavit”);b)Affidavit of service of Shane Hedley Shaw originally sworn 29 November 2006 and re-sworn 11 December 2006 (Mr Shaw’s affidavits); andc)Affidavit of Leisa Mobilia sworn 11 December 2006 (“Ms Mobilia’s affidavit”).Facts3.The Applicant acts for and behalf of the Official Trustee in Bankruptcy (“the Official Trustee”) as trustee of the bankrupt estate of the First Respondent.4.Mr Fraser’s affidavit deposes to the relevant facts as follows:a)The First Respondent, Richard John Tregaskis (“the Bankrupt”) became bankrupt on 6 December 2005 under a sequestration order on the petition of the Deputy Commissioner of Taxation. The Official Trustee was appointed the Bankrupt’s trustee in bankruptcy. b)The Bankrupt is the sole registered proprietor of land known as 18 Harrison Way, Calista, more particularly described as Lot C457 on Deposited Plan 210539 being the whole of the land in Certificate of Title volume 1822 folio 766 (“the Calista land”). c)The Bankrupt and the Second Respondent are shown as the registered proprietors as joint tenants of the land known as 27 Cardinal Gardens, Warnbro, more particularly described as Lot 27 on Plan 19108 being the whole of the land in Certificate of Title volume 1965 folio 54 (‘the Warnbro land”).d)The Bankrupt’s interest in the Calista land and the Warnbro land vested in the Official Trustee in Bankruptcy upon his bankruptcy pursuant to s.58 of the Bankruptcy Act. e)The Bankrupt was personally served with documents notifying him of his bankruptcy and of his obligations as a bankrupt on 9 March 2006.f)Further correspondence was forwarded to the Bankrupt on28 March 2006 seeking that he file a Statement of Affairs.g)On 5 July 2006 a notice pursuant to s.77C of the Bankruptcy Act was personally served on the Bankrupt requiring him to complete and file a Statement of Affairs.h)On 22 September 2006 the Applicant’s solicitors wrote to the Bankrupt seeking co-operation in relation to its obligations to realise his interest in Land.i)No Statement of Affairs has been received from the Bankrupt and the Applicant and has received no contact from the Bankrupt.j)On 22 September 2006 the Applicant’s solicitors wrote to the Second Respondent seeking co-operation in relation to its obligations to realise the Bankrupt’s interest in the Warnbro Land.k)The Applicant has received no response from the Second Respondent.5.Mr Shaw’s affidavits depose to personal service of the Application and Affidavit of Mr Fraser on the Respondents.6.Ms Mobilia’s affidavit deposes to notice of the 13 December 2006 hearing having been forwarded to the Respondents by prepaid post on 5 December 2006.7.The Respondents have not contacted the Applicant or its Solicitors and have not filed any documents in response to the Application.Relevant authorities8.Pursuant to s.19 of the Bankruptcy Act the Official Trustee is under a duty to recover the property of the Bankrupt for the benefit of the bankrupt estate and the bankrupt's creditors. 9.The Applicant seeks orders pursuant to ss.30, 58, and 77(1)(g) & (e) of the Bankruptcy Act in order to recover the Warnbro and Calista land. 10.In Cook v Tagamilitsky [2001] FMCA 117 (23 November 2001) (“Tagamilitsky”) Federal Magistrate Raphael was of the view that sections 77(1)(g) and 30 of the Bankruptcy Act allowed him to make orders sought by the Applicant, the trustee in bankruptcy of the bankrupt respondent in that case. Those orders included that the bankrupt respondent vacate property, and that a writ of possession issue forthwith in the event that the bankrupt respondent failed to do so. Federal Magistrate Raphael stated at [9]:It is interesting to note that although the recovery of the assets of a debtor frequently involves the sale of the debtor’s property and therefore the necessity to require a debtor to vacate possession of that property, there is no specific section in the Bankruptcy Act dealing with this matter in a codified form. Reference has to be made to a number of sections of the Act. However it is obvious from such cases as Dixon v Ly Ty Tran Cao and Ors, a decision of Beazley J as she then was, unreported 23 June 1995 in the Federal Court and White (as Trustee of the bankrupt estate of Lyn) v Lyn [1999] FCA 841 a decision of Finkelstein J, that the Court has the power to make such orders …11.In Cook v Schwarcz [2005] FMCA 1598 (“Schwarcz”) where orders for vacant possession were sought against a bankrupt Federal Magistrate Barnes agreed with the view of Federal Magistrate Raphael in Tagamilitsky stating at [11] :His Honour was of the view that a combination of s.77(g) and s.30 of the Bankruptcy Act was sufficient to ground the jurisdiction of the orders he proposed to make. I agree that such provisions are sufficient to ground the jurisdiction for the orders sought. Submissions12.Sections 77(1)(g) and 30 of the Bankruptcy Act combine to provide jurisdiction for the Court to grant the orders sought against the Bankrupt in the minute of proposed orders currently before it.13.Section 30 of the Bankruptcy Act also gives the Court broad powers to make orders to give effect to the Act. That power extends to making declarations as to the respective beneficial interests of the Applicant and the Second Respondent in relation to the Warnbro land, and to orders for the sale and vacant possession of the Warnbro land: Billen: Ex Parte Sistron [1985] FCA 141; Nguyen v Pascoe [2006] FCA 719.14.Under s.126(1) of the Property Law Act 1969 (WA) “the Court shall, unless it sees good reason to the contrary, direct a sale” where this is requested by a party with one half interest or more in land. The Applicant is entitled to orders as of right where the Respondents have not discharged the onus of showing that partition is a better option: Bray v Bray [1926] 38 CLR 542, High Court of Australia (“Bray”). The same principles apply in the current circumstances.15.In Bray the land was held in a tenancy in common while the land in the present case is registered in the name of the Respondents as joint tenants. This makes no difference in a case of bankruptcy as joint tenancy is severed when a bankruptcy occurs, the Trustee in Bankruptcy becoming an equitable tenant in common with the other co-owner: Re Holland; Ex parte Official Trustee in Bankruptcy [1985] 5 FCR 165; Sistrom v Urh (1992) 117 ALR 528. 16.Alternatively the Court has accrued jurisdiction to make orders for sale under s.126 of the Property Law Act 1969 (WA): s.18 Federal Magistrates Act 1999 (Cth). 17.In John Sheahan (Trustee of the Bankrupt Estate of Jillian Helen Marshall and the Bankrupt Estates of Richard John Copper and Simon Vincent Cooper) v Noelene Michelle Cooper & Ors [1998] 1531 FCA the Federal Court made orders for sale under ss.69 and 70 of Law of Property Act 1936 (SA) which is equivalent to s.126 of the Property Law Act 1969 (WA). The orders were made pursuant to the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) in the absence of submissions stating that that course of action was inappropriate.18.In Re Billen: Ex Parte Sistron at paragraph [17], Neaves J said that: … this court is not restricted in considering what orders it would be appropriate to make in exercise of the power conferred on it by subsection 30(10) of the Bankruptcy Act 1966 by the kinds of limitations which may be found in the Partition Act 1900 (NSW). 19.It follows that this Court is not limited by any restrictions found in s.126 of the Property Law Act (WA).20.The Applicant seeks vacant possession of the Calista and Warnbro land and wishes to have sole conduct of the sale of the Warnbro land (already having sole conduct of the Calista land pursuant to the provisions of the Bankruptcy Act) in order to realise the assets of the bankrupt estate.21.The Bankrupt has failed to do all such acts and things in relation to the realisation of the land and to aid the Official Trustee in the administration of the bankrupt estates as required by s.77(1)(g) & (e) of the Bankruptcy Act.22.Despite request the Respondents have failed to contact the Applicant or its solicitors in relation to the Calista and Warnbro land. 23.The Respondents’ failure to respond to the various correspondences to them and their failure to notify the Applicant if they are willing co-operate in the sale of the land has caused significant delay and increased costs in the administration of the bankrupt estate of the Bankrupt.24.The conduct of the Respondents to date indicates that further delays and costs will be incurred in the administration of the bankrupt estate to the prejudice of the Bankrupt’s creditors if the Applicant is obliged to rely on the Respondents’ cooperation in the sale of the land. 25.The Respondents have been served with the Application and Affidavit of Mr Fraser in these proceedings and have failed to file an appearance, response or affidavits in response to the orders sought by the Applicant.26.There is nothing before the Court preventing it from making the orders sought in the Application.27.The Court has power to make the orders sought pursuant to ss.30 and 77 of the Bankruptcy Act, and to make those orders in the absence of the respondents. In Tagamilitsky and Schwarcz similar orders were made notwithstanding the non-appearance of the respondents (the respondents in those proceedings being bankrupt). 28.For these reasons the Court makes orders in terms of the Minute of Proposed Orders filed with this Court by the Applicant.I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for judgment of Lucev FMAssociate: Date:

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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