Prentice v Fortune & Anor

[2014] FCCA 2199

FEDERAL CIRCUIT COURT OF AUSTRALIA

PRENTICE v FORTUNE & ANOR [2014] FCCA 2199

Catchwords:
BANKRUPTCY – Application by trustee in bankruptcy for an order granting vacant possession of property occupied by bankrupt – whether source of power to make order is s.30(5) of the Bankruptcy Act 1966 (Cth) (Act) – whether source of power is in s.77(1)(g) combined with s.30(1)(b) of the Act – orders granted.

Legislation:

Bankruptcy Act 1966 (Cth), ss.30(1)(b), 30(5), 77(1)(g)

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: MAXWELL WILLIAM PRENTICE

First Respondent: ROBERT WAYNE FORTUNE

Second Respondent: DENISE ROBIN FORTUNE

File Number: SYG 2164 of 2014

Judgment of: Judge Manousaridis

Hearing date: 22 September 2014

Delivered at: Sydney

Delivered on: 24 September 2014

REPRESENTATION

Solicitors for the Applicant:

Mr N. Dale

Gillis Delaney Lawyers

No appearance by or on behalf of the respondents.

ORDERS

1. Pursuant to s.30(1)(b) of the Bankruptcy Act 1966 (Cth) (Act) by 17 October 2014 Robert Wayne Fortune and Denise Robin Fortune vacate and surrender possession of the property known as 33 Flourite Place, Eagle Vale, in the State of New South Wales (being the whole of the land described in Folio 4208/261630) (Property).

2. Pursuant to s.30(1)(b) of the Act by 17 October 2014 Robert Wayne Fortune and Denise Robin Fortune remove from the Property all vehicles, rubbish, and chattels (being all items of personal property including furniture and personal effects but excluding fixtures).

3. Pursuant to s.30(1)(b) of the Act by 17 October 2014 Robert Wayne Fortune and Denise Robin Fortune deliver up all keys for buildings and improvements on the Property to the office of the trustee, Maxwell William Prentice, at Level 18, 201 Kent Street, Sydney.

4. If Robert Wayne Fortune and Denise Robin Fortune do not deliver possession of the Property as required by order 1, a writ of possession shall issue forthwith.

5. The trustee’s costs of the application be paid out of the bankrupt estates of Robert Wayne Fortune and Denise Robin Fortune.

6. A sealed copy of these orders must be served on the respondents by 26 September 2014 by:

   (a)serving a sealed copy of these orders personally on either Robert Wayne Fortune or Denise Robin Fortune; or

   (b)if it is not possible to effect service in the manner referred to in (a):

   (i)by affixing to the front door of the Property an envelope addressed to Robert Wayne Fortune and Denise Robin Fortune containing a sealed copy of these orders ; and

   (ii)placing in the letterbox at the Property an envelope addressed to Robert Wayne Fortune and Denise Robin Fortune containing a sealed copy of these orders.

7. There be liberty to apply on such notice as the circumstances warrant in relation to the implementation of these orders.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 2164 of 2014

MAXWELL WILLIAM PRENTICE

Applicant

And

ROBERT WAYNE FORTUNE

First Respondent

DENISE ROBIN FORTUNE

Second Respondent

REASONS FOR JUDGMENT

Introduction

1. Before the Court is an application by the trustee in bankruptcy of the estates of Robert Wayne Fortune and Denise Robin Fortune (respondents) for an order that the respondents vacate and surrender possession of a property situated at 33 Flourite Place, Eagle Vale (Property).

2. The application is made under s.30(5) of the Bankruptcy Act 1966 (Cth) (Act). That subsection relevantly provides that, where a bankrupt “has failed to comply with…a direction or requirement of an Official Receiver or trustee, under this Act . . . the Court may, on the application of the . . . trustee . . . order the person who has failed to comply with the order, direction, requirement or request, as the case may be, to comply with it”.

Background

1. On 2 December 2013 a sequestration order was made against the estates of the respondents, and Maxwell William Prentice was appointed trustee of those estates (trustee). At the time the sequestration order was made, the respondents were the registered proprietors of the Property as joint tenants. After his appointment, the trustee became the sole registered proprietor of the Property.

2. On 2 June 2014 the respondents met with Mr Ma, an employee of the trustee. At the meeting, Mr Ma handed to each of the respondents what Mr Ma described to the respondents as “the Trustee’s Notice to Vacate dated 30 May 2014 requiring you to vacate the property by 30 June 2014”.[1] The letter, which was addressed to the respondents, stated as follows:[2]

   [1] Affidavit of A. Ma, 29.07.2014, [17]

   [2] Affidavit of A. Ma, 29.07.2014, annexure “E”

   As you are aware, I was appointed Trustee in Bankruptcy of your estate on 2 December 2013.

   You are registered on title as joint owners of your residential property located at 33 Flourite Place, EAGLE VALE NSW 2558 (“the premises”). Pursuant to provisions of sections 58 and 116 of the Bankruptcy Act 1966 (Cth), I confirm that the premises vest in me, in my capacity as Trustee in Bankruptcy, as an asset of your bankrupt estate.

   I intend to sell the premises and require vacant possession by no later than close of business on Monday 30 June 2014. Accordingly, you are directed to vacate the premises in accordance with the attached Notice to Vacate.

   . . . .

3. Attached to each letter was a document titled “NOTICE TO VACATE” addressed to the respondents which stated as follows:

   I, Max Prentice, as Trustee in Bankruptcy of the property of Robert Wayne Fortune and Denise Robin Fortune, the bankrupts . . . hereby direct you to vacate the [Property] . . . and deliver up the [Property]  . . . to the Trustee in Bankruptcy by close of business on Monday 30 June 2014.

4. When asked to acknowledge receipt of the notice to vacate, Mr Fortune refused to do so. He stated there was no way he and Ms Fortune could move out by 30 June 2014.[3]

   [3] Affidavit of A. Ma, 29.07.2014, [17]

5. On 1 August 2014 the trustee filed this application. Because he was unable to personally serve the application on the respondents, the trustee applied for an order for substituted service which a Registrar of this Court made on 8 September 2014. The orders required the trustee to send a sealed copy of the application, the affidavit verifying the application, and the Registrar’s orders by ordinary prepaid post to the Property, one for each of the respondents, and each marked to the attention of the relevant respondent, and also by placing those documents in an envelope, one for each of the respondents, and each marked to the attention of the relevant respondent, and affixing each envelope to the front door of the Property.

Issues

1. There are two issues I must consider. The first is whether the application and order have been served in accordance with the orders for substituted service made by the Registrar on 8 September 2014. The second is that, assuming service has been properly effected, whether I should make the orders the trustee seeks.

Service

1. I am satisfied the documents were served in the manner required by the Registrar’s orders for substituted service. The documents were put inside stamped envelopes, one addressed to Mr Fortune and the other addressed to Ms Fortune and then placed in a post box at 5.15pm on 11 September 2014. The documents were also placed in envelopes, one marked to the attention of Mr Fortune, and the other marked to the attention of Ms Fortune and, on 12 September 2014, the envelopes were taped to the front door of the Property. I am also of the opinion that the respondents have had sufficient notice of the making of this application.

Whether orders should be granted

1. The trustee submits that s.30(5) of the Act confers the power to order the respondents to vacate possession. Whether it does or not depends on whether the direction contained in the “Notice to Vacate” that was handed to the respondents on 2 June 2014 constitutes a “direction or requirement of a . . . trustee, under this Act”. That, in turn, depends on whether the Act in terms authorises a trustee in bankruptcy to give a bankrupt a direction to vacate property. In my opinion, the Act does not.

2. In any event, there is a substantial body of authority to the effect that the Act confers jurisdiction on this Court to order a bankrupt to vacate possession of real property that forms part of the bankrupt 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 (g) of s.77(1) 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 (b) of s.30(1) 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; Vince (Trustee), in the matter of Sopikiotis (Bankrupt) v Sopikiotis (No 2) [2012] FCA 1298 (Bromberg J)

3. The trustee in this case, therefore, 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, however, to modify the orders the trustee seeks by allowing the respondents twenty-three days to vacate the premises. I also propose to order that if possession is not given within the twenty-three days, a writ of possession be issued immediately.

Method of service of orders

1. The trustee seeks orders that a sealed copy of these orders be deemed to be sufficiently served on the respondents if only one of them is personally served or, if that is not possible, if a sealed copy is placed in an envelope and affixed to the front door of the Property and a sealed copy is also left in the letterbox at the property. Given the difficulties the trustee had in serving the application on the respondents, I am of the opinion that I should make orders to the effect claimed by the trustee.

Costs

1. Finally, I propose to order that the trustee’s costs of this application be paid out of the bankrupt estates.

I certify that the preceding fourteen (14) paragraphs are a true copy of the reasons for judgment of Judge Manousaridis

Associate: 

Date:  24 September 2014