Pattison v Wates

[2007] FMCA 1068

FEDERAL MAGISTRATES COURT OF AUSTRALIA

PATTISON v WATES & ANOR [2007] FMCA 1068

BANKRUPTCY – Trustee application for sale of property.

Official Receiver v Tregaskis & Anor [2006] FMCA 1915

Applicant: PAUL ANTHONY PATTISON AS TRUSTEE OF THE BANKRUPT ESTATE OF KEITH AND MELISSA WATES

First Respondent: KEITH WATES

Second Respondent: MELISSA WATES

File number: MLG 687 of 2007

Judgment of: McInnis FM

Hearing date: 4 July 2007

Delivered at: Melbourne

Delivered on: 4 July 2007

REPRESENTATION

Counsel for the Applicant: Mr T. Scotter

Solicitors for the Applicant: Kemon Pty Ltd t/as O’Neill Behan & Associates

First Respondent: In person

Second Respondent: In person

ORDERS

1. The Respondents vacate the property described as Volume 10092 Folio 946 and having a street address of 18 Ferguson Road, Leopold, Victoria (the property) within 30 days of the date of this order.

2. In the event that the Respondents fail to give vacant possession of the property in accordance with Order 1 hereof, a Writ of Possession may issue forthwith.

3. The Respondents shall pay the Applicant's costs, including reserved costs, if any, to be taxed in default of agreement pursuant to Order 62 of the Federal Court Rules and that the costs of the proceeding shall be paid with priority out of the bankrupt estate of the Respondents.

4. Liberty to apply is granted to the parties upon two days' written notice.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
MELBOURNE

MLG 687 of 2007

PAUL ANTHONY PATTISON AS TRUSTEE OF THE BANKRUPT ESTATE OF KEITH AND MELISSA WATES

Applicant

And

KEITH WATES

First Respondent

MELISSA WATES

Second Respondent

REASONS FOR JUDGMENT

(Revised from transcript)

1. In this matter, Paul Anthony Pattison as Trustee of the Bankrupt Estate of Keith and Melissa Wates makes an application for a number of orders which include the following: 

   “That the respondents vacate the property described as volume 10092 folio 943 and having a street address of 18 Ferguson Road, Leopold, Victoria within 14 days of this order.”

2. Other orders are sought that in the event that the Respondents fail to give vacant possession of the property, then a writ of possession may issue.  The Applicant also seeks costs. 

3. The Applicant, in support of this application, relies upon two affidavits, the first an affidavit sworn 19 January 2007 by the Applicant which recites the background details as follows:-

   “1.I am the Trustee of the Bankrupt Estate of Keith Wates (VB No. 3822 of 2005) and the Bankrupt Estate of Melissa Wates (VB No. 4583 of 2005) having been appointed as Trustee of the Estate of Mr Wates on 25 October 2005 and of Mrs Wates on 22 December 2005.  Now produced and shown to me and marked with the letters ‘PP1’ are extracts from the National Personal Insolvency Index relating to my appointment as Trustee.

   2.…

   3.Since I was appointed Trustee of the Bankrupt Estate of Mr and Mrs Wates, there has been a series of discussions with them and their solicitors and accountants to seek to negotiate payments which may lead to the annulment of the bankruptcy.  This correspondence has been marked ‘without prejudice’.  No resolution has been reached which may lead to the annulment of the bankruptcy of each of the Respondents.

   4.By a letter dated 13 July 2006 to Mr and Mrs Wates, I wrote advising that in the absence of a reasonable offer for the purchase of the property which was acceptable to me within 14 days I would require them to vacate the premises within 30 days.  Now produced and shown to me and marked with the letters ‘PP3’ is a copy of that letter.  I received no response to that letter.

   5.By further letter dated 4 August 2006, I again wrote to Mr and Mrs Wates advising them that in the absence of a reasonable offer to purchase the property by 13 August 2006, I required them to vacate the property by 13 August 2006 and to deliver the keys to the property to me on Monday 14 August 2006.  No delivery has been made to me of the keys and there has been no vacant possession of the property given.  Now produced and shown to me and marked with the letters ‘PP4’ is a copy of that letter.

   6.I instructed Messrs O’Neill Behan & Associates to write a letter of demand prior to issuing this Application.  Now produced and shown to me and marked with the letters ‘PP5’ is a copy of that letter of demand which is dated 8 November 2006.”

4. The second affidavit of the Applicant sworn 20 June 2007 completes in accurate terms the ownership of the property and does so by paragraphs 2 and, to a lesser extent, 3 of that affidavit as follows:-

   “2.Keith Philip Wates was the sole registered proprietor of a property described in Volume 10092 Folio 946 and having a street address as 18 Ferguson Road, Leopold, Victoria.  Now produced and shown to me and marked with the letters ‘PP2’ is a register search statement relating to that property.

   3.On 24 July 2006 as Trustee I became the registered proprietor of the property described in Volume 10092 Folio 946 and having the street address as 18 Ferguson Road, Leopold, Victoria.  Now produced and shown to me and marked with the letters ‘PP3’ is a register search statement relating to that property.”

5. The Respondents have filed a notice of opposition and that notice of opposition dated 27 June 2007 I take to be effectively in the form of a further sworn affidavit by the First Respondent, Keith Phillip Wates.  There is another document which is also an affidavit of Mr Wates but also sworn 27 June 2007.  Both Mr and Mrs Wates appear before the court this day. 

6. Somewhat unusually, there seems to be general agreement about the state of ownership of the property and also general agreement that there have been what can only be described as extensive though not fruitful negotiations between the parties in order to reach an outcome which would not result in what clearly are the somewhat draconian consequences of orders sought in this application given that the respondents, a married couple, reside in the property with their two young children who I am told are aged seven and three years.

7. Regrettably, the negotiations have proved unsuccessful as it appears a significant hurdle in those discussions would appear to be an assessment of the amount that might be required to discharge the creditors' claims and achieve annulment of the bankruptcy.  It is noted in passing that there appear to be debts owed to a first mortgagee and those debts appear to be in a significant sum, leaving what can only be described as potentially a modest net equity in the property after allowing for the expenses associated with a sale. 

8. Nevertheless, there is sufficient equity in my view on the material before me to make it clear that the orders sought by the applicant are appropriate and in the interests of all creditors.  Although it was asserted from the bar table that some creditors may not have been notified of these proceedings by the Trustee, it seems to me the orders sought are clearly in any event designed to benefit the other creditors by obtaining the modest equity which may be available in the property for distribution according to law by the trustee, which includes of course distribution of net proceeds, if any, to in part satisfy the demands of creditors.

9. The process in this case is a process which is clearly available to the trustee and I am satisfied that the relevant authorities which apply in an application of this kind have been conveniently referred to in the decision of Lucev FM in the matter of Official Receiver v Tregaskis & Anor [2006] FMCA 1915 (Tregaskis) in the following paragraphs of His Honour's judgment.

   “8.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.

   Submissions

   12.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.”

10. Having regard to the affidavit material referred to earlier in this judgment filed on behalf of the Applicant, and applying the principles of law set out in this judgment and referred to earlier in the decision of the court in Tregaskis, it is clear to me that in the exercise of the Court's discretion, it is appropriate to make the orders sought, with some modification, by the Applicant. 

11. It is clear to me in this instance that the parties have had extensive opportunity over a significant period of time to resolve this matter without resort to these orders, and as indicated earlier, unfortunately that has not resulted in a satisfactory agreement.  I should add that exhibits which were annexed to the affidavit of Mr Wates, to the extent that they relate to without prejudice communication, are disregarded by the Court and, I rule, are inadmissible.  However, without referring to the without prejudice documents, it is clear otherwise from the material before this Court and from what the court has been advised by both parties from the bar table that there have indeed been extensive unfruitful negotiations.

12. The only matter in my view which remains outstanding for the Court's discretion is the question of the period of time within which vacant possession should be provided.  The order seeks that it be provided within 14 days but no objection is taken, properly in my view, to a period being imposed of 30 days.  Thirty days would at least give the Wates family an opportunity to seek and obtain alternate accommodation in an orderly fashion.  Although Mr Wates had sought to occupy the premises up to and including the date of sale, I am satisfied that that would not be appropriate, nor would it be an arrangement which would properly facilitate in an orderly fashion the sale of this property.

13. Accordingly I make the following orders:-

    (1)The Respondents vacate the property described as Volume 10092 Folio 946 and having a street address of 18 Ferguson Road, Leopold, Victoria (the property) within 30 days of the date of this order.

    (2)In the event that the Respondents fail to give vacant possession of the property in accordance with Order 1 hereof, a Writ of Possession may issue forthwith.

    (3)The Respondents shall pay the Applicant's costs, including reserved costs, if any, to be taxed in default of agreement pursuant to Order 62 of the Federal Court Rules and that the costs of the proceeding shall be paid with priority out of the bankrupt estate of the Respondents.

    (4)Liberty to apply is granted to the parties upon two days' written notice.

I certify that the preceding thirteen (13) paragraphs are a true copy of the reasons for judgment of McInnis FM

Associate: 

Date:  4 July 2007