Palmer as trustee of the Bankrupt Estates of Frank Capocchiano, Italia Capocchiano v Capocchiano

[2016] FCCA 1291

FEDERAL CIRCUIT COURT OF AUSTRALIA

PALMER AS TRUSTEE OF THE BANKRUPT ESTATES OF FRANK CAPOCCHIANO, ITALIA CAPOCCHIANO v CAPOCCHIANO & ANOR [2016] FCCA 1291

BANKRUPTCY – Application by trustee in bankruptcy for an order granting vacant possession of property occupied by bankrupts – whether bankrupts served with application – whether appropriate to make orders for possession source – order granted.

Legislation:

Bankruptcy Act 1966 (Cth), ss.30, 30(1)(b), 77(1)(g)

Cases cited:
Cook v Tagamilitsky [2001] FMCA 117
Horne (as trustee of the Bankrupt Estate of Sekulovski) v Sekulovski [2009] FCA 1164
Vince (Trustee), in the matter of Sopikiotis (Bankrupt) v Sopikiotis (No 2) [2012] FCA 1298

Applicant: CHRISTOPHER JOHN PALMER AS TRUSTEE OF THE BANKRUPT ESTATES OF FRANK CAPOCCHIANO, ITALIA CAPOCCHIANO

First Respondent: FRANK CAPOCCHIANO

Second Respondent: ITALIA CAPOCCHIANO

File Number: SYG 1060 of 2016

Judgment of: Judge Manousaridis

Hearing date: 25 May 2016

Delivered at: Sydney

Delivered on: 25 May 2016

REPRESENTATION

Solicitors for the Applicant: Mrs C Perry

No appearance on behalf of or by the first and second respondent

ORDERS

1. That the first and second respondents (“the bankrupts”) vacate the property having the street address of 149 Croome Road, Albion Park Rail, New South Wales 2527 being the property, contained in folio identifiers 2/1194726 and 1/1055678 within 21 days of the date of these orders.

2. In the event that the order contained in paragraph 1 is not complied with, that leave be granted to issue a writ of possession forthwith.

3. The first and second respondents deliver up to the applicant, within 21 days of the date of this order to the extent possible, the title deeds for the property being certificates of title folio identifiers 2/1194726 and 1/1055678 together with any keys, or security codes for the property to the applicant at his solicitor’s address being level 17, 23 Hunter Street, Sydney in the state of New South Wales.

4. Service of this order be effected by placing the same in a sealed envelope and affixing it to the gate of the property by placing a copy of the order on the gate using adhesive to prevent the order from being torn off the gate.

5. The applicant’s costs of the proceedings be paid in priority out of the property of the bankrupt estate of the respondents.

6. Liberty to apply on 3 days’ notice.

7. These orders be entered forthwith.

8. The applicant also serve, together with the order, a copy of rule 16.05 of the Federal Circuit Court Rules 2001 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 1060 of 2016

CHRISTOPHER JOHN PALMER AS TRUSTEE OF THE BANKRUPT ESTATES OF FRANK CAPOCCHIANO, ITALIA CAPOCCHIANO

Applicant

And

FRANK CAPOCCHIANO

First Respondent

ITALIA CAPOCCHIANO

Second Respondent

REASONS FOR JUDGMENT

(revised from transcript)

1. On 17 December 2015 a sequestration order was made against the estates of the respondents, Mr Frank Capocchiano and Mrs Italia Capocchiano, and Mr Christopher John Palmer was appointed trustee of those estates (the trustee). The respondents are the registered proprietors of a property situated at 149 Croome Road, Albion Park Rail, which is comprised in folio identifier 2/1194726 and 1/1055678 (property). 

2. In early 2016, the trustee sought to obtain a valuation of the property.  To that end, on 4 February 2016 the valuer whom the trustee proposed to engage sent an email to the email address of Mr and Mrs Capocchiano in which the valuer stated he had been instructed by the trustee to undertake a valuation of the property.

3. Mr Capocchiano replied by email sent on 5 February 2016 as follows:[1]

   [A]’m Frank Capocchiano and order you to stay away from my property, because if I see you, I will kill you  du you understand?

   [1] Affidavit of C J Palmer, 6.05.2016, [17]; Exhibit CJP-1, pages 142-143

4. The evidence reveals that further unsuccessful attempts were made to communicate with Mr and Mrs Capocchiano.  In the light of these unsuccessful efforts, on 2 May 2016 the trustee filed an application with this Court seeking orders designed to give to the trustee possession of the property.  The trustee also applied for an order for substituted service of the application and other documents.

5. The matter came before me on 3 May 2016.  On that day I made orders for substituted service and adjourned the application for directions at 9.30 am this morning, that is, on 25 May 2016.  I noted in the orders I made that if Mr and Mrs Capocchiano were not to appear at that time and day, the trustee would be at liberty to apply at the directions hearing for the final orders the applicant seeks in the application.  When the matter was called this morning, there was no appearance by or on behalf of Mr and Mrs Capocchiano.  The trustee, through his solicitor Mrs Perry, therefore applied to the Court for the making of the orders sought in the application. 

6. The first matter of which I need to be satisfied is that the trustee complied with the orders for substituted service I made on 3 May 2016, or that Mr and Mrs Capocchiano have otherwise been properly served.  On 3 May 2016 I ordered that the application, a sealed copy of the orders I made on that day, and a number of affidavits referred to in those orders be served in two ways.  The first was by those documents being included in an envelope or envelopes and affixing the envelope or envelopes at the gate of the property or, if that were not possible, by placing the envelope or envelopes through the gate of the property. 

7. The documents were not served in the manner required by this part of my orders.  Instead, the documents were personally served on Mr Capocchiano on 14 May 2016.  That the documents, however, were not served as required by the order for substituted service does not matter, because the documents were served personally on Mr Capocchiano, being in the manner in which the documents would need to be served in any event.  I am therefore satisfied that the application, the order I made on 3 May 2016, and the documents referred to in that order have been properly served on Mr Capocchiano. 

8. There is also an affidavit which satisfies me that, at the same time as these documents were served on Mr Capocchiano, they were personally served also on Mrs Capocchiano.  I am therefore satisfied that the application, the orders I made on 3 May 2016, and all the other documents referred to in my order have been properly served on Mrs Capocchiano.

9. The second method by which I ordered that the documents be served was by their being sent to the email address from which Mr Capocchiano sent the email of 5 February 2016 to which I have already referred.  I am satisfied that service in that matter was effected on 9 May 2016 as set out in the affidavit of Ms Angeliah Garland.[2]

   [2] Affidavit of A Garland, 24.05.2016

10. In addition to the service of these documents, on 19 May 2016 Mr Liam Bailey, a partner of the trustee, sent an email, and a translation into Italian of that email, to Mr Capocchiano to the email address from which Mr Capocchiano sent his email of 5 February 2016.   In that email the employee said, among other things, the following:[3]

    As you are also aware, I have notified you both that you are required to vacate the premises at 149 Croome Road, Albion Park Rail, NSW 2527.  To date you have refused to comply with your obligations as bankrupts. 

On 3 May 2016, my solicitor attended the Federal Circuit Court of Australia and sought orders for your removal from the premises.  You will shortly receive notice of the proceedings and a copy of the orders granted by the Court.  These notices will be delivered to the Premises and attached to your front gate in the same manner as previous notices from my office and be provided to you.  Provision of these notices will constitute substituted service and will be considered sufficient to comply with the requirement to provide you with notice of proceedings.

It would be in your best interests to accept service of documents, to consider their content and to obtain legal advice in relation to this matter.  If you do not, then on the next return date the Court is likely to grant orders for your eviction from the property in your absence.

[3] Affidavit of L Bailey, 24.05.2016; Annexure E, pages 22-23

1. Now, as I have said, this email was sent on 19 May 2016.  Its contents are, to some extent, at variance with the fact that, according to affidavits that have been filed, the application and various documents had been served personally on Mr and Mrs Capocchiano on 14 May 2016.  The email seems to assume that that has not yet occurred, but I draw no adverse inference from this apparent discrepancy.  It might well be that the email was sought to be interpreted before valid service was effected.

2. In any event, I am satisfied that notice of the application has been served properly on Mr and Mrs Capocchiano, and I am satisfied that notice has been given to them that if they were not to appear at today’s directions hearing, the trustee would be at liberty to apply for the making of the orders set out in the application. 

3. Before I turn to the merits of the application, I should also note that Mr Capocchiano responded to the email that was sent to him on 19 May 2016 by email on 20 May 2016 written in Italian.  The email, I am satisfied, was in substance the same as an email Mr Capocchiano had sent to the trustee on 14 May 2016.  It referred to a cross-claim to be forwarded to Judge Emmett of this Court.  Accompanying that email is a document titled “Statement of Claim” which purports to be a document which is to be filed in this Court.

4. The persons stated to be plaintiffs in that document are Great Wall Resources Proprietary Limited and Mr and Mrs Capocchiano.  The defendants are stated to be Mr Anthony Autore trading as Autore and Associates, and Mr David Gregory Young.  Mr Young is the liquidator of Great Wall Resources Proprietary Limited (in liquidation).  It was the liquidator, Mr Young, acting on behalf of Great Wall Resources Proprietary Limited who applied for and obtained the sequestration order against the estates of Mr and Mrs Capocchiano. 

5. There is nothing in the “Statement of Claim” that raises any issue in relation to the matters pertaining to the application brought by the trustee for orders for possession of the property and I, therefore, propose to say nothing more about that document.

6. Being satisfied that Mr and Mrs Capocchiano had been served with the application and other documents, the question is whether I have power to make the orders the trustee seeks.  The principal relief the trustee seeks is an order that Mr and Mrs Capocchiano vacate the property and, that in default of their complying with that order, authorise the issuing of a writ of possession.

7. There is a substantial body of authority to the effect that the Bankruptcy Act 1966 (Cth) (Act) confers jurisdiction on this Court to order a bankrupt to vacate real property that forms part of the bankrupt’s estate. The source of the Court’s power to order possession has been held to lie in the combined operation of s.77(1)(g) and s.30 of the Act.[4]  Paragraph 77(1)(g) of the Act provides, among other things, that, unless excused by the trustee or prevented by illness or other sufficient cause, the bankrupt must “aid to the utmost of his or her power in the administration of his or her estate”.  Paragraph 30(1)(b) of the Act provides that the Court may make such orders as the Court considers necessary for the purposes of carrying out or giving effect to the Act. 

   [4] See, for example, Horne (as trustee of the Bankrupt Estate of Sekulovski) v Sekulovski [2009] FCA 1164  (Tracey J); Cook v Tagamilitsky [2001] FMCA 117 (Raphael FM);  Vince (Trustee), in the matter of Sopikiotis (Bankrupt) v Sopikiotis (No 2) [2012] FCA 1298 (Bromberg J).

8. I am satisfied on the evidence before me that Mr and Mrs Capocchiano have not given aid to the utmost of their power in relation to the administration of their estates.  As I have already noted, attempts by the trustee to access the property for the purpose of the valuing of the property with a view to determining how the trustee should deal with that property was met by a robust refusal by Mr Capocchiano.  Although the order for possession the trustee seeks will have grave consequences on Mr and Mrs Capocchiano, these are consequences which unfortunately flow from their having been made bankrupt.  The trustee has not acted with unreasonable haste in seeking the orders for which he applies today. 

9. Given the sequestration order was made on 17 December 2015, a reasonable time has passed to enable Mr and Mrs Capocchiano to attempt, at the very least, to make arrangements for them to leave the property. Nothing has been submitted to the Court by Mr and Mrs Capocchiano to indicate that they need further time or there is some other reason why no orders should be made or no orders should be made at this time. 

10. In my opinion, therefore, the trustee in this case is entitled to possession of the property.  I see no reason why I should not make orders that will have the effect of securing possession of the property.  I propose, therefore, to make orders substantially in the form of the orders sought by the trustee.

I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of Judge Manousaridis

Associate: 

Date:  2 June 2016