Pekar v Jess (Trustee)

The present case involves an application by the trustee of the bankrupt estate of Mr Fima Pekar, Mr Kucianski, to vacate a stay of an order for possession of the home of the appellant, Mrs Ida Pekar, and her husband, Mr Pekar. The stay had been ordered by consent on the basis of an agreement between Mr Pekar and his trustee in bankruptcy, Mr Holden. This agreement had subsequently been set aside in a separate proceeding. The Court was required to decide whether any other basis existed to maintain the stay of the order for possession.

The Court considered the issue of whether the proposals set out in Mr Pekar’s affidavit and in Mrs Pekar’s reply submissions provided a basis to maintain the stay of the order for possession. The Court noted that the proposals were in some respects similar to the Agreement, making a sum of money available for the payment of creditors and the trustee remuneration and expenses in lieu of the Trustees enforcing the order for possession. However, the Court held that it is one thing for the parties to agree that a sum of money will be available for the administration of the estate in lieu of the order for possession; it is another for the Court to impose this on the Trustees. Further, it was not clear whether the amount of money in the NAB bank account (or the higher amount proposed in the reply submissions) would be sufficient to cover the payment of creditor claims and the trustee remuneration and expenses. As things presently stood, the amounts would be insufficient to cover the creditor claims (if accepted in full) and the trustee remuneration and expenses.

The Court held that the premise of the consent order made on 18 July 2017 (staying the order for possession made on 30 May 2017) was that the parties had entered into the Agreement. In circumstances where the Agreement has now been terminated, the premise of the consent order no longer exists and, prima facie at least, the consent order should be vacated. This will return the parties to the position they were in before the Agreement was entered into. The Court found that there was no other basis to maintain the stay of the order for possession.

The Court ordered that paragraph 1 of the orders made on 18 July 2017 (whereby it was ordered by consent that paragraphs 4(3) and (4) of the orders made on 30 May 2017 be stayed) be vacated. In relation to the costs of the interlocutory application, the Court ordered that there be no order as to costs, but gave the parties a period of time in which they can file a written submission if they wish to seek a different order. If either party seeks a different costs order, the party may file and serve a written submission (of no more than two pages) within seven days of this order. In that event, the other party may within a further seven days serve a responding written submission (of no more than two pages), and the issue of costs will be determined on the papers.