Official Trustee in Bankruptcy v Piua
[2010] FMCA 306
•21 April 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| OFFICIAL TRUSTEE IN BANKRUPTCY v PIUA | [2010] FMCA 306 |
| BANKRUPTCY – Application by Trustee to disclaim onerous lease entered into by the bankrupts without notice to Trustee – concern about tension within subsections of s.133 Bankruptcy Act 1966 – not necessary to resolve in order to dispose of matter. |
| Bankruptcy Act 1966, ss.133, 178 |
| Applicant: | OFFICIAL TRUSTEE IN BANKRUPTCY |
| Respondent: | PROTECTION & INDEMNITY UNDERWRITING AGENCY PTY LTD ACN 000 683 509 |
| File Number: | SYG 857 of 2010 |
| Judgment of: | Raphael FM |
| Hearing date: | 21 April 2010 |
| Date of Last Submission: | 21 April 2010 |
| Delivered at: | Sydney |
| Delivered on: | 21 April 2010 |
REPRESENTATION
| Counsel for the Applicant: | Mr Assaf |
| Solicitors for the Applicant: | Harris Freidman Hyde |
| Counsel for the Respondent: | Mr J Drummond |
| Solicitors for the Respondent: | Watkins Tapsell |
ORDERS
The Application filed by the Applicant 21 April 2010 be made returnable instanter.
Service of the Application be abridged to the time the Application was served on the Respondent.
Under s.133(4) of the Bankruptcy Act 1966 the Applicant be granted leave to disclaim the unregistered lease between the Respondent as Lessor and the Bankrupts as Lessees in respect of the land comprised in Certificates of Title Folio Identifiers 6/659133 and 5/1120771 and for a period commencing 1 November 2009 and ending 31 March 2014 (“the Lease”).
The Trustee to give notice of these orders to the Bankrupts within 3 business days of the making of these orders.
An order under s.133(6)(b) of the Bankruptcy Act 1966 that the time for the Applicant to disclaim the Lease be extended until 5.00p.m. 30 April 2010.
Costs of the Applicant and the Respondent in respect of the application be paid out of the estates of the Bankrupts.
AND the Court notes the Application is concluded save for any ancillary relief which the Respondent may seek under the Bankruptcy Act 1966.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 857 of 2010
| OFFICIAL TRUSTEE IN BANKRUPTCY |
Applicant
And
| PROTECTION AND INDEMNITY UNDERWRITING AGENCY PTY LTD ACN 000 683 509 |
Respondent
REASONS FOR JUDGMENT
There comes before me this afternoon an application by the Official Trustee in Bankruptcy as the Trustee of Harry and Cheryl Trikeriotis for some interim orders and final orders under s.133(4) of the Bankruptcy Act 1966 (the “Act”), that the Trustee be granted leave to disclaim an unregistered lease between Protection and Indemnity Underwriting Agency Pty Limited ACN 000 683 509, the respondent to these proceedings, and the bankrupts, in respect of land comprising Certificate of Title Folio Identifier 6/659133 and 5/1120771, which was for a period commencing 1 November 2009 and ending on 31 March 2015. The interim relief requested by the applicant was that the application be made returnable instanter and that the time for service of the application be abridged.
The background to the application is that the bankrupts have for many years run a child care centre from the property which is the subject of the lease. They entered into leases with the respondent before they became bankrupt but since 1 May 2007, at which time they were bankrupt, they have not had the benefit of a formal lease. It would appear that, without disclosing the existence of the sequestration orders against them, Mr Harry Trikeriotis negotiated and he and Ms Cheryl Ann Trikeriotis signed a lease for the premises. In an affidavit dated 20 April 2010, sworn by Alan Ma, a senior case manager of the applicant trustee, he advises that the land, the subject matter of the lease, is burdened with onerous covenants:
“In that the lease imposes an obligation on the lessee to use the land the subject of the lease only for the Permitted Use referred to in item 3 of the Reference Schedule and poses on the lessee and obligation pursuant to clause 3.1 thereof to maintain and renew from time to time all licences, permits, consents and registrations required by any Authority with the consequence that if the Applicant were to adopt the lease it would be compelled to continue to operate the child care centre, to employ staff in connection with the same, to incur liability for further licence fees contemplated by annexure “I” and also to meet rent and outgoings in accordance with clauses 4.1 and 4.9 of the lease.”
Mr Ma also deposes to the fact that several attempts have been made to sell this business without success over the preceding years. It seems to me that there is a very good case to be put by the trustee for disclaiming this lease, which it had no knowledge of and which the bankrupts entered into without consultation with the trustee and in breach of their obligations as bankrupts.
The court has been involved in this matter because the respondent issued a notice to the trustee pursuant to s.133(6) of the Act requiring the trustee to determine whether or not it should disclaim the lease and requiring the trustee to seek the approval of the court if the trustee’s decision was to disclaim. Mr Assaf, who appears on behalf of the trustee, explained that there appears to be some tension in the way s.133 is drawn between the trustee’s rights itself to disclaim and the reaction to the 133(6) notice.
Because the respondent does not oppose the application which is made today, under 133(4), to grant the trustee leave to disclaim, it is not necessary for me to consider or discuss in any detail that tension. Suffice to say that it could be argued by the bankrupts that if the trustee merely responded to the notice under subsection (6) without obtaining the leave of the court, the disclaimer was not valid.
In these circumstances I think it is appropriate to give the trustee the orders he requests, but also to ensure fairness towards the bankrupts, to order that they be notified of their appeal rights under s.178 of the Act. I make the following orders:
(i)The Application filed by the Applicant 21 April 2010 be made returnable instanter.
(ii)Service of the Application be abridged to the time the Application was served on the Respondent.
(iii)Under s.133(4) of the Bankruptcy Act 1966 the Applicant be granted leave to disclaim the unregistered lease between the Respondent as Lessor and the Bankrupts as Lessees in respect of the land comprised in Certificates of Title Folio Identifiers 6/659133 and 5/1120771 and for a period commencing 1 November 2009 and ending 31 March 2014 (“the Lease”).
(iv)The Trustee to give notice of these orders to the Bankrupts within 3 business days of the making of these orders.
(v)An order under s.133(6)(b) of the Bankruptcy Act 1966 that the time for the Applicant to disclaim the Lease be extended until 5.00p.m. 30 April 2010.
(vi)Costs of the Applicant and the Respondent in respect of the application be paid out of the estates of the Bankrupts.
AND the Court notes the Application is concluded save for any ancillary relief which the Respondent may seek under the Bankruptcy Act 1966.
I certify that the preceding six (6) paragraphs are a true copy of the reasons for judgment of Raphael FM
Associate:
Date: 11 May 2010
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