Official Trustee in Bankruptcy as the Trustee of the Property of Miller a Bankrupt v Miller
[2017] FCCA 1690
•20 July 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| OFFICIAL TRUSTEE IN BANKRUPTCY AS THE TRUSTEE OF THE PROPERTY OF MILLER A BANKRUPT v MILLER & ANOR | [2017] FCCA 1690 |
| Catchwords: PRACTICE AND PROCEDURE – Interim injunction application – whether serious issue to be tried – whether arguable case on serious issue – whether balance of convenience favours restraint on sale. |
| Legislation: Bankruptcy Act 1966 (Cth), ss.30(1)(b), 58 |
| Cases cited: Australian Broadcasting Corporation v O’Neill [2006] HCA 46; (2006) 227 CLR 57; (2006) 80 ALJR 1672; (2006) 229 ALR 457 Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148; (1986) 60 ALJR 679; (1986) 67 ALR 553 Daemar v Industrial Commission of New South Wales & Anor [No 2] (1990) 22 NSWLR 178; (1990) 99 ALR 789 Murdaca v Pizzinga [2013] NSWSC 396; (2013) 11 ABC(NS) 159 |
| Applicant: | OFFICIAL TRUSTEE IN BANKRUPTCY AS THE TRUSTEE OF THE PROPERTY OF LYNETTE MILLER A BANKRUPT |
| First Respondent: | LYNETTE MILLER |
| Second Respondent: | DANIEL CRIMMINS |
| File Number: | PEG 380 of 2017 |
| Judgment of: | Judge Antoni Lucev |
| Hearing date: | 19 July 2017 |
| Date of Last Submission: | 19 July 2017 |
| Delivered at: | Perth |
| Delivered on: | 20 July 2017 |
REPRESENTATION
| Counsel for the Applicant: | Mr G Cobby |
| Solicitors for the Applicant: | Craddock Murray Neumann Lawyers Pty Ltd |
| For the Respondents: | No appearance |
ORDERS (as made on 19 July 2017)
The applicant having given the usual undertaking as to damages, and until further order, the first respondent and the second respondent, and their servants or agents, be restrained from selling (or purporting to sell) or otherwise disposing, encumbering, or moving (or attempting to move), or altering (or attempting to alter) any part of the structure of, or doing any act which may diminish the value of, the transportable home located on the land comprised in Lot 27 of Deposited Plan 222558 known as 42 Roberts Road, Hamel in the State of Western Australia.
A copy of each of this order, the application, any affidavits filed, and the Court’s order of 18 July 2017, be served personally on each of the first respondent and the second respondent within 14 days.
The matter otherwise be adjourned to a directions hearing at 9.30am on 9 August 2017.
Formal written Reasons for Judgment to be published electronically from Chambers at a later date.
Costs in the cause.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PERTH |
PEG 380 of 2017
| OFFICIAL TRUSTEE IN BANKRUPTCY AS THE TRUSTEE OF THE PROPERTY OF LYNETTE MILLER A BANKRUPT |
Applicant
And
| LYNETTE MILLER |
First Respondent
| DANIEL CRIMMINS |
Second Respondent
REASONS FOR JUDGMENT
Orders made
On 19 July 2017 the Court made the following orders in this matter:
1.The applicant having given the usual undertaking as to damages, and until further order, the first respondent and the second respondent, and their servants or agents, be restrained from selling (or purporting to sell) or otherwise disposing, encumbering, or moving (or attempting to move), or altering (or attempting to alter) any part of the structure of, or doing any act which may diminish the value of, the transportable home located on the land comprised in Lot 27 of Deposited Plan 222558 known as 42 Roberts Road, Hamel in the State of Western Australia.
2.A copy of each of this order, the application, any affidavits filed, and the Court’s order of 18 July 2017, be served personally on each of the first respondent and the second respondent within 14 days.
3.The matter otherwise be adjourned to a directions hearing at 9.30am on 9 August 2017.
4.Formal written Reasons for Judgment to be published electronically from Chambers at a later date.
5.Costs in the cause.
(“19 July 2017 Orders”).
What follows are the Court’s Reasons for Judgment referred to in order 4 of the 19 July 2017 Orders.
Application
The substantive application before the Court seeks a declaration that a transportable house (“Transportable House”) located on the land referred to in order 1 of the 19 July 2017 Orders (“Land”) belonged to the first respondent, Lynette Miller (“Ms Miller”), and thus vested in the applicant, the Official Trustee in Bankruptcy (“Official Trustee”), pursuant to s.58 of the Bankruptcy Act 1966 (Cth), and for other orders in relation to vacant possession and sale of the Land which might be described as the usual orders in relation to an Official Trustee selling land part of a bankrupt estate.
Orders made on 18 July 2017
The matter came before the Court, effectively ex parte, on 18 July 2017, at which time orders were made in the following terms:
1. Upon the applicant’s solicitor giving an undertaking to pay the appropriate filing fees, leave be granted to the applicant to file in Court:
a. application dated 18 July 2017; and
b. the affidavits sworn by Leon Mahtani and Ravi-Inder Singh Kaura on 18 July 2017.
2. The time for service of the application and the affidavits of Leon Mahtani and Ravi-Inder Singh Kaura (together, the “Documents”) be abridged to 5.00pm Tuesday 18 July 2017.
3. Service of the Documents and these orders upon Vicki Mountain of Mountains Lawyers (solicitors for the first and second respondents) by transmission of an email of a sealed copy thereof be deemed to be effective service on the first and second respondents.
4.The application be made returnable before Judge Lucev at 2.15pm on Wednesday, 19 July 2017.
5. Costs in the cause.
Hearing on 19 July 2017
When the matter was before the Court on 19 July 2017 the Official Trustee sought an interim injunction to restrain the selling, disposing, encumbering or doing of any act which may diminish the value of the Land.
There was no appearance from either Ms Miller, or the second respondent, her son, Daniel Crimmins (“Mr Crimmins”), and again, the matter was effectively heard ex parte, with the Court making the orders as set out at [1] above.
The Court notes that Ms Miller’s and Mr Crimmins’ former lawyers had, quite properly, informed the Court and the Official Trustee earlier on 19 July 2017 that they had no instructions from either Ms Miller or Mr Crimmins, including no instructions to file a notice of appearance, and that the lawyers would therefore not be appearing.
Affidavit evidence
The Court notes that affidavits have been filed on behalf of the Official Trustee by:
a)Leon Mahtani, sworn 18 July 2017 (“First Mahtani Affidavit”);
b)Ravi-Inder Singh Kaura, sworn10 July 2017 (“Kaura Affidavit”); and
c)Leon Mahtani, sworn 19 July 2017 (“Second Mahtani Affidavit”).
Consideration
As indicated above, the Official Trustee, as Trustee in Bankruptcy of Ms Miller’s bankrupt estate, seeks an interim injunction restraining the sale of the Transportable House upon the Land. The Transportable House was relocated to the Land in 2009: Kaura Affidavit at page 92.
Ms Miller was discharged from bankruptcy on 14 June 2014: Kaura Affidavit at page 69. Notwithstanding Ms Miller’s discharge from bankruptcy, her property remains vested in the Official Trustee, and her discharge from bankruptcy does not prevent the Official Trustee realising the assets of the bankrupt estate and making a distribution to her unpaid creditors: Daemar v Industrial Commission of New South Wales & Anor [No 2] (1990) 22 NSWLR 178; (1990) 99 ALR 789, NSWLR at 185 per Kirby P; Murdaca v Pizzinga [2013] NSWSC 396; (2013) 11 ABC(NS) 159 at [56] per Bellew J; Willoughby v Official Trustee in Bankruptcy (WA) [1999] FCA 1715 at [30] per RD Nicholson J.
At the time of her bankruptcy, Ms Miller was a joint registered proprietor of the Land, but by order 1 of orders made by the Family Court of Western Australia on 2 December 2008, Ms Miller was effectively entitled to be registered as the sole proprietor of the Land: Kaura Affidavit at pages 102-103. The Official Trustee thereafter obtained registration as the proprietor of the whole of the Land on 30 June 2016, after Ms Miller’s discharge from bankruptcy: Kaura Affidavit at pages 69 and 101.
After the Official Trustee obtained registration as proprietor of the Land, Ms Miller claimed, for the first time, that Mr Crimmins (who is her son) owned the Transportable House on the Land: Kaura Affidavit at page 69. The Court notes that in a further report to creditors dated 28 February 2017 where Mr Crimmins’ claim first appears it is noted that the claim is contrary to what Ms Miller said in her statement of affairs, that there is no other evidence of the asserted fact, and that the mortgagee of the Land was not aware of the arrangement: Kaura Affidavit at page 69. The Court also notes that Ms Miller’s former partner, Mr Prentice, states that the Transportable House was gifted to Ms Miller, but he does not say by whom it was so gifted: Kaura Affidavit at pages 99-100.
Mr Crimmins claims to have purchased the Transportable House in 2008 and had it transported to the Land in 2009, with Ms Miller paying the cost of the transportation: Kaura Affidavit at pages 92-93. Mr Crimmins further claims that the Transportable House is not affixed to the Land, and that he therefore has the right to deal with the Transportable House as he sees fit: First Mahtani Affidavit at page 15 (being a letter from Mr Crimmins’ former lawyers dated 13 July 2017).
Since at least December 2016 Mr Crimmins’ lawyers have been aware that the Official Trustee claims title to the Transportable House on the basis that it is a fixture, and therefore part of the Land: Kaura Affidavit at pages 109-110, being a letter to the former lawyers for Ms Miller and Mr Crimmins from the Official Trustee’s lawyers dated 23 December 2016 advising that:
Our client’s view remains that the residential building currently located on the Property was affixed to the Property in 2009 with the intention that it would remain in position for an indefinite or substantial period. As a result, the building is a fixture that vested in the Official Trustee in Bankruptcy pursuant to section 58 of the Bankruptcy Act 1966 … when Ms Lynette Miller became bankrupt on 13 June 2011.
On or about 7 July 2017 the Official Trustee became aware that Mr Crimmins had entered into an agreement to sell the Transportable House to a Mr Dwayne Anderson, having become so aware as a result of Mr Anderson having made a request to the local shire council for a copy of the building approval in relation to the Transportable House: First Mahtani Affidavit at pages 6-7. The Official Trustee had not been informed of the sale (or purported sale) by either Mr Crimmins or Ms Miller, in relation to which Mr Anderson has paid a deposit of $10,000 on a sale price for the Transportable House of $58,000: First Mahtani Affidavit at pages 6-7 and 10-11.
The Transportable House was inspected by a Mr Mitchell of South West Property Inspections in November 2016, who described the house as a “detached transportable house” with a “suspended steel framed” floor, in a report to the Official Trustee’s lawyers: Kaura Affidavit at page 77. In relatively poor quality photographs at pages 72 and 79 of the Kaura Affidavit there appears a photograph of the Transportable House and what appear to be foundations for the house (or arguably so). Nevertheless, it remains unclear from the evidence as to whether the house rests on its own weight, or if the steel supports have been affixed to the Land, possibly via the foundations appearing in the photograph at page 79 of the Kaura Affidavit.
Since the Transportable House was moved to the Land in 2009, Ms Miller has resided in the Transportable House, paid no rent, and seemingly, through a company with which she is associated (Well Woof Pty Ltd), bred pug dogs upon the Land: Kaura Affidavit at pages 36-67 and 93.
In Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148; (1986) 60 ALJR 679; (1986) 67 ALR 553; CLR at 153 per Mason ACJ principles governing the grant or refusal of interlocutory injunctions were summarised, and referred to a plaintiff having to show “that there is a serious issue to be tried or that the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief” and that the balance of convenience favours the issuance of an injunction. An applicant seeking an interlocutory injunction is not required to show that it is more probable than not that the applicant will succeed at final hearing: it is sufficient that the applicant show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the hearing of the application: Australian Broadcasting Corporation v O’Neill [2006] HCA 46; (2006) 227 CLR 57; (2006) 80 ALJR 1672; (2006) 229 ALR 457 at [65] per Gummow and Hayne JJ.
The strength of an applicant’s case is a factor to be considered in determining where the balance of convenience lies: Samsung Electronics Co Ltd v Apple Inc [2011] FCAFC 156; (2011) 217 FCR 238; (2011) 286 ALR 257; [2011] AIPC 92-432 at [67]-[74] per Dowsett, Foster and Yates JJ.
The question whether an item is a chattel or a fixture when placed upon land was dealt with by the Federal Court in National Australia Bank Ltd v Blacker & Anor [2000] FCA 1458; (2000) 104 FCR 288; (2000) 179 ALR 97 (“Blacker”).
In Blacker the Federal Court referred to a number of relevant authorities and set out principles including that:
a)a useful starting point is that fixtures are items attached to land in such a way as to become in law part of the land, but this useful starting point ought not attract any decisive significance;
b)whether an item becomes a fixture depends essentially upon the objective intention with which the item was put in place, and two considerations are important and relevant in determining that intention as to whether an item has been fixed to the land, firstly, the degree of annexation, and secondly, the object of the annexation;
c)when the article in question is no further attached to the land than by its own weight it is generally considered to be a mere chattel;
d)the test as to whether a chattel has been to some extent fixed to land and is therefore a fixture is whether it has been fixed with the intention that it shall remain in position permanently or for an indefinite or substantial period, but if fixed with the intent that it shall remain in position only for some temporary purpose it therefore remains a chattel;
e)the intention of the person fixing it must be gathered from the purpose for which and the time during which the user in the fixed position has contemplated, and having regard to whether the thing is securely fixed, and so fixed that it cannot be detached without substantial injury to the thing itself or to that which it is attached, is strong but not necessarily conclusive evidence that a permanent fixing was intended, whereas a slight fixing helps to support an inference that it was not intended to be permanent; and
f)relevant intention is to be determined objectively from facts and circumstances patent for all to see, and not by reference to subjective intention.
See Blacker at [9]-[11] per Conti J.
In Blacker the Federal Court also had regard to the decision of the New South Wales Court of Appeal in NH Dunn Pty Ltd v LM Ericsson Pty Ltd (1979) 2 BPR 9241 observing that the New South Wales Court of Appeal emphasised that whilst the purpose and degree of annexation remain important considerations a court should have regard to all of the facts and circumstances and that there was no single principle or test adequate to determine whether an item of property is a fixture or a chattel: Blacker at [15]-[16] per Conti J.
The Federal Court also observed that where an item of property is affixed to land to any extent, aside from resting on its own weight, it is presumed to be a fixture, and the burden of proof lies upon the party asserting that it is not a fixture; whereas conversely, an item of property not affixed to the land but merely resting on its own weight is presumed to be a chattel and the party asserting that it is instead a fixture bears the onus of proof: Blacker at [17] per Conti J.
A house resting by its own weight upon piers or piles fixed to the ground may not necessarily however be a chattel: Reid v Smith (1906) 3 CLR 656; (1906) 12 ALR 126, and a house constructed off site, moved to land and capable of being moved from that land, does not necessarily mean that the house does not become a fixture: National Dairies WA Ltd v Commissioner of State Revenue [2001] WASCA 112; (2001) 24 WAR 70; (2001) 47 ATR 31 at [41] per Malcolm CJ (with whom Kennedy and Wallwork JJ agreed) where it was said that:
41. It does not follow, however, that every transportable house that is constructed off-site, carted to the site and erected on stumps is a chattel because it is capable of being lifted by a crane and put on a transporter and is, therefore, not a fixture. If the circumstances, looked at objectively, evidence an intention on the part of the owner that the house should remain permanently or indefinitely on the land, the mere fact that it is capable of being removed relatively easily, will not result in its characterisation as a chattel. Where the circumstances are as I have described, they would be likely to lead to an inference of an intention that the house should remain on the site permanently or for an indefinite period. In such circumstances, I consider that it would be characterised as a fixture. The indicia of such an intention would no doubt take into account the extent to which the house was connected to a sewerage or septic tank system, connected to a water supply, whether public or private, and such matters as whether the house was supplemented by the construction of ancillary outbuildings, the installation of a swimming pool and the creation of an extensive garden.
Having regard to all the facts and circumstances as they presently appear on the application for an interim injunction it is the Court’s view that:
a)Ms Miller paid for the transport of the Transportable House to the Land;
b)the installation of the Transportable House on the Land allowed her to reside in the Transportable House and on the Land;
c)Ms Miller has resided in the Transportable House on the Land for more than eight years rent-free;
d)whilst living in the Transportable House on the Land Ms Miller appears to have run a pug dog breeding business;
e)there is evidence of other used buildings on the Land such as dog kennels (presumably used for the pug dog breeding business), a bird aviary, a metal garden shed and a steel shed; and
f)“apparatus for the treatment of sewerage” have either been constructed or installed on the Land: First Mahtani Affidavit at page 32; see also pages 28-31,
and each of the above are indicators that the Transportable House could arguably be considered to be a fixture on the land, and which indicate that that argument has some prospects of success at hearing, and that there is a serious question to therefore be tried as to whether the Transportable House is properly to be characterised as a fixture on the Land.
The Court also notes that there is some, albeit faint, evidence that the Transportable House was gifted to Ms Miller, and that Mr Crimmins’ claim that it was intended to relocate the Transportable House once he purchased a property of his own, is not determinative of the issue as to whether it is a fixture or a chattel: Blacker at [12] per Conti J.
In relation to the balance of convenience the Court observes that it is necessary, and consistent with the purposes of the Bankruptcy Act generally, and the purposes of the appointment of an Official Trustee to administer a bankrupt’s estate, that the creditors of the bankrupt estate do not lose the benefit of an asset of that estate without proper consideration being given to whether or not particular property is an asset of the estate, liable to sale by the Official Trustee, with proceeds distributed to the creditors: Bankruptcy Act, s.30(1)(b); Re Hepburn (unreported, Federal Court of Australia, Hill J, 10 July 1989). The balance of convenience in this regard weighs heavily in favour of the necessity for an interim injunction to prevent removal from the Land of a potential asset in the bankrupt estate of Ms Miller. Further, Mr Crimmins has not accounted to the Official Trustee in respect of the $10,000 deposit already received by him, or taken any steps on his own behalf (either personally or through his then lawyers) to advise the Official Trustee of the sale, or purported sale, of the Transportable House, which Mr Crimmins, through his then lawyers, either knew, or ought to be taken to have known, was the subject of a claim by the Official Trustee. Nor has there been any offer to preserve any amount from the sale of the Transportable House. The Court can infer, therefore, that there is a real or substantial risk that the proceeds of the sale of the Transportable House will be dissipated if the sale, or purported sale, is not restrained. Mr Crimmins’ position is protected by the undertaking as to damages given by the Official Trustee at the hearing of the interim injunction.
In all of the above circumstances, the Court considered that there was a serious issue to be tried, and an arguable case which might succeed at trial that the Transportable House was a fixture on the Land, and that the balance of convenience weighed in favour of any sale of that Transportable House on the Land being restrained. Accordingly, an interim injunction ought to issue.
In relation to service, it is appropriate, given that Ms Miller’s and Mr Crimmins’ former lawyers no longer act for them, and that they have only ceased to act sometime after 13 July 2017: see First Mahtani Affidavit at pages 15-16, that there be appropriate orders for personal service of all relevant documents in the proceedings on both Ms Miller and Mr Crimmins. Otherwise, the proceedings are to be adjourned to a directions hearing at 9.30am on 9 August 2017 with costs in the cause.
I certify that the preceding twenty-nine (29) paragraphs are a true copy of the reasons for judgment of Judge Antoni Lucev
Date: 20 July 2017
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