Pascoe v Smirneos and Ors (No.2)
[2014] FCCA 2765
•5 November 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| PASCOE v SMIRNEOS & ORS (No.2) | [2014] FCCA 2765 |
| Catchwords: BANKRUPTCY – Funds paid into Court from proceeds of sale of property – application for payment of part of those funds by trustee of bankrupt estate of co-owner of the property. |
| Legislation: Federal Circuit Court Rules 2001 (Cth), r.1.05 Federal Court Rules 2011 (Cth), r.2.43 |
| Bou-Simon v Attorney-General of the Commonwealth of Australia [2003] FCA 1303 Pascoe v Smirneos & Ors [2010] FMCA 404 Pascoe v Smirneos & Ors [2014] FCCA 2764 |
| Applicant: | SCOTT DARREN PASCOE IN HIS CAPACITY AS TRUSTEE OF THE PROPERTY OF HELEN SMIRNEOS, A BANKRUPT |
| First Respondent: | HELEN SMIRNEOS, A BANKRUPT |
| Second Respondent: | ANDREW SMIRNEOS |
| Third Respondent: | GEOFFREY REIDY IN HIS CAPACITY AS TRUSTEE OF THE PROPERTY OF PETER SMIRNEOS, A BANKRUPT |
| Fourth Respondent: | WESTPAC BANKING CORPORATION ABN 33 007 457 141 |
| Fifth Respondent: | NATIONAL LENDING PTY LTD ACN 119 336 631 |
| Sixth Respondent: | STEVE SMIRNEOS |
| Seventh Respondent: | PETER SMIRNEOS |
| Eighth Respondent: | BARBARA SMIRNEOS |
| File Number: | SYG 346 of 2010 |
| Judgment of: | Judge Barnes |
| Hearing date: | 5 November 2014 |
| Delivered at: | Sydney |
| Delivered on: | 5 November 2014 |
REPRESENTATION
| Solicitors for the Applicant: | Kemp Strang |
| Counsel for the Third Respondent: | Mr P Cutler |
| Solicitors for the Fifth Respondent: | Tucker & Cowen Solicitors |
ORDERS
In respect of the funds paid into Court on 22 November 2013 pursuant to paragraph 8(b) of the Orders made by Federal Magistrate Smith on 7 June 2010 (the Fund in Court):
(a) the sum of $15,000 be paid out of the Fund in Court to the Third Respondent Geoffrey Reidy at PO Box Q399, QVB Post Office, NSW 1230, in his capacity as Trustee of the property of Peter Smirneos, a Bankrupt; and
(b) one half of the balance of the Fund in Court (after payment of $15,000 in accordance with paragraph (a) of this Order) be paid out of the Fund in Court to the Applicant, Scott Darren Pascoe, c/o- Kemp Strang, Level 17, 175 Pitt Street, Sydney 2000, in his capacity as Trustee of the property of Helen Smirneos, a Bankrupt.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 346 of 2010
| SCOTT DARREN PASCOE IN HIS CAPACITY AS TRUSTEE OF THE PROPERTY OF HELEN SMIRNEOS, A BANKRUPT |
Applicant
And
| HELEN SMIRNEOS, A BANKRUPT |
First Respondent
| ANDREW SMIRNEOS |
Second Respondent
| GEOFFREY REIDY IN HIS CAPACITY AS TRUSTEE OF THE PROPERTY OF PETER SMIRNEOS, A BANKRUPT |
Third Respondent
| WESTPAC BANKING CORPORATION ABN 33 007 457 141 |
Fourth Respondent
| NATIONAL LENDING PTY LTD ACN 119 336 631 |
Fifth Respondent
| STEVE SMIRNEOS |
Sixth Respondent
| PETER SMIRNEOS |
Seventh Respondent
| BARBARA SMIRNEOS |
Eighth Respondent
REASONS FOR JUDGMENT
(Revised from transcript)
This is an Application in a case filed on 10 October 2014 by Scott Darren Pascoe in his capacity as trustee of the property of Helen Smirneos, a bankrupt. There are eight respondents: Ms Smirneos; Andrew Smirneos; Mr Reidy, in his capacity as trustee of the property of Peter Smirneos who is said to be the son of Helen and Andrew Smirneos; Westpac Banking Corporation (which has not participated in these proceedings); National Lending Pty Ltd; and three other members of the Smirneos family. There are appearances for the Applicant, Mr Reidy and National Lending.
The matter came before the Court from the Registrar’s bankruptcy list on 3 November 2014. At that stage there was affidavit evidence of service on the respondents who were not present. However, as I was not able to deal with the matter that day, it was adjourned until today and the respondents notified of the adjournment. I am satisfied on the evidence now before me of service on all the respondents. Insofar as the solicitor on the record for the Smirneos family has indicated that he is not acting, he is still on the record. In any event, notification was also given to each of the Smirneoses at the last addresses known to the Applicant.
In these circumstances, I consider it appropriate to proceed with the application for orders in respect of funds paid into court on 22 November 2013 pursuant to paragraph 8(b) of orders made by Smith FM on 7 June 2010 (see Pascoe v Smirneos & Ors [2010] FMCA 404). The orders sought are that $15,000 be paid out of the fund to the third respondent, Mr Reidy, in his capacity as trustee for the property of Peter Smirneos, and that half of the balance of the fund (after payment of the $15,000) be paid out of the fund paid into court to Mr Pascoe in his capacity as trustee of the property of Helen Smirneos.
In support of this application Mr Pascoe relies on his affidavit sworn on 7 October 2014. It annexes a copy of the sequestration order made against the estate of Helen Smirneos on 2 August 2006, and the certificate of appointment of Mr Pascoe as trustee, and explains that Helen Smirneos and Andrew Smirneos were the registered proprietors as joint tenants of land at Tennyson Road, Gladesville in the State of New South Wales (the property). On 17 October 2007 (after the sequestration order) Helen Smirneos was removed as registered proprietor and Mr Pascoe became registered proprietor in her place as trustee of her bankrupt estate.
On 7 June 2010 Smith FM made orders which, among other things, appointed trustees for sale of the property, empowered the trustees to sell the property and ordered that they should hold the net proceeds of sale of the property (after deduction of costs and expenses etcetera) upon trust for (a) Westpac Banking Corporation in an amount secured by a mortgage; (b) to pay an amount of $82,520.02 into court to be administered according to the Federal Magistrates Court Rules which adopted the then applicable Federal Court Rules; (c) for National Lending in the amount of its costs of the application then before the Court on an indemnity basis; (d) as to one half of the balance to the Applicant as trustee in bankruptcy of the property of Helen Smirneos; (e) the remaining half of the balance for National Lending in the amount owing by Andrew Smirneos under a judgment of the District Court, including interest and enforcement costs; (f) and to pay any remaining money into court.
Mr Pascoe was appointed one of the trustees for sale. He attested that in accordance with such orders the proceeds of sale were distributed from a settlement sum of just short of $1.2 million to the trustees for sale, then Westpac Banking Corporation, the Litigation Fund, National Lending, himself as trustee for Helen Smirneos and National Lending in accordance with those orders.
In his judgment, Smith FM referred to the fact that Mr Reidy, as trustee of the bankrupt estate of Peter Smirneos, had lodged a caveat claiming an interest in the property. His Honour discussed Mr Reidy’s asserted claim in relation to underlying transactions involving members of the Smirneos family and the suggestion that money to which Peter Smirneos had a claim had been used for the benefit of his parents when refinancing their property. Smith FM pointed out that there was a lack of evidence as to the underlying transactions. He noted that while the proceedings might have given the opportunity to Mr Reidy or other members of the Smirneos family to put evidence before the court, they had chosen not to do so and that Mr Reidy had not presented evidence establishing any claimed equitable interest in the property, although he was on notice that this was in issue (at [10] – [11]).
Smith FM concluded that he would not attempt to determine Mr Reidy’s claim, but that he did not wish to foreclose any such claim by Mr Reidy or, indeed, by other members of the Smirneos family (at [11]) on the evidence before him. His Honour decided to order that the amount in dispute be paid into court to allow any person interested in those funds to establish their claims, including Mr Reidy should he consider it appropriate. On that basis it was ordered that $82,520.02 be paid into court.
It is apparent from the affidavit of Ms Webster, the solicitor for National Lending, sworn on 31 October 2014, that an effort was made to achieve the consent of at least some of the parties in relation to the disposal of the funds paid into court. That effort was unsuccessful, although it appears that Mr Reidy, Mr Pascoe, Westpac and National Lending are of the same view as to the appropriate orders to be made. The consent of Andrew Smirneos (or of the other Smirneos family members) was not obtained.
However, as indicated, I am satisfied that all of the respondents have been notified of the hearing of the application made by Mr Pascoe. There has been no appearance by or on behalf of any members of the Smirneos family. National Lending appeared. It initially supported the orders sought, although the solicitor for National Lending ultimately opposed the orders sought by Mr Pascoe unless an additional order was made in favour of National Lending.
For reasons which I gave (see Pascoe v Smirneos & Ors [2014] FCCA 2764), I was not prepared to make an order in favour of National Lending on the basis of an oral application. Nor was I prepared to postpone the hearing of this application until an application by National Lending might be made.
The parties have all had the opportunity to raise any objection or to file any application in relation to the part of the funds the subject of Mr Pascoe’s application (including National Lending as well as the members of the Smirneos family). I consider it appropriate to deal with that application, albeit that it is in relation to only part of the funds held in Court.
As to the principles that are to be applied, I received no help from the legal representatives in relation to the applicable principles. However, the Court has a discretionary power to make an order under r.2.43(1) of the Federal Court Rules (and see r.1.05(3)(b) of the Federal Circuit Court Rules 2001 (Cth)). The exercise of such a discretion must take into account the particular circumstances of the particular case insofar as that is possible to do on the evidence before the Court (see Bou-Simon v Attorney-General of the Commonwealth [2003] FCA 1303). I have had regard to all the evidence before the Court, including the fact of the judgment of Smith FM as well as the evidence of Mr Pascoe as to what happened thereafter.
The Court’s discretion is a wide one. It is necessary for me to exercise that discretion in a proper and judicial fashion. Despite some initial concern about the lack of clarification in the affidavit evidence of the precise basis on which it was sought that the sum of $15,000 be paid out of the fund to Mr Reidy in his capacity as trustee of the property of Peter Smirneos, I am satisfied on the basis of the evidence before the Court and the submissions of the lawyers for the Applicant and Mr Reidy that this payment is in recognition of the claim made by Mr Reidy in his capacity as trustee of the property of Peter Smirneos in circumstances where, given the limited funds available, the parties who would appear to have a potential interest in the fund (other than the Smirneos family) have reached an agreement that this is an appropriate basis on which to settle Mr Reidy’s claim against the funds representing the proceeds of the sale of the property.
In circumstances where those members of the Smirneos family who might have objected have had the opportunity to do so and in the absence of any objection to such an order, and having regard to the circumstances described in Smith FM’s judgment (insofar as those circumstances do not involve contested facts in issue), I am satisfied that it is in the interests of justice to order that the sum of $15,000 be paid out of the fund in Court to Mr Reidy as trustee of the property of Peter Smirneos.
I am also satisfied that as Helen Smirneos was a joint tenant (together with Andrew Smirneos) in relation to the property until replaced by Mr Pascoe as trustee of her bankrupt estate, it is appropriate that half of the balance of the fund in Court after payment of the $15,000 to Mr Reidy should be paid out of the fund in Court to Mr Pascoe in his capacity of trustee of the property of Helen Smirneos. Such an order recognises the extent and nature of Ms Smirneos’ interest in the property. It is consistent with the orders made by Smith FM in relation to the application of the proceeds of sale of the property.
I certify that the preceding sixteen (16) paragraphs are a true copy of the reasons for judgment of Judge Barnes.
Associate:
Date: 26 November 2014
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