Quin (Trustee), in the matter of Neri (Bankrupt) v Neri
[2023] FedCFamC2G 487
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Quin (Trustee), in the matter of Neri (Bankrupt) v Neri [2023] FedCFamC2G 487
File number(s): MLG 450 of 2023 Judgment of: JUDGE J YOUNG Date of judgment: 7 June 2023 Catchwords: BANKRUPTCY – application for possession of property – where respondent bankrupt has failed to provide vacant possession – application proceeded on an undefended basis in the respondent bankrupt’s absence – orders for the respondent bankrupt to vacate the property – warrant of possession of property issued Legislation: Bankruptcy Act 1966 (Cth) ss 30(1)(b), 77(1)(e),(g), 109.
Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 213(2),(3).
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 r 13.06(1)(e).
Cases cited: Allesch v Maunz (2000) 203 CLR 172
Coshott v Prentice (2014) 221 FCR 450
Horne (as trustee of the bankrupt estate of Sekulovksi) v Sekulovski [2009] FCA 1164
Ruhe (Trustee) v Australian Securities and Investments Commission [2022] FCA 354
Division: Division 2 General Federal Law Number of paragraphs: 36 Date of hearing: 7 June 2023 Place: Melbourne Counsel for the Applicant: Ms Parker of KHQ Lawyers Counsel for the Respondent: Did not participate ORDERS
MLG 450 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
IN THE MATTER OF RICKY NERI, BANKRUPT
BETWEEN: DAVID CHARLES QUIN AS TRUSTEE OF THE BANKRUPT ESTATE OF RICKY NERI
Applicant
AND: RICKY NERI
Respondent
order made by:
JUDGE J YOUNG
DATE OF ORDER:
7 June 2023
THE COURT ORDERS THAT:
1.By 4.00pm on 7 July 2023, the Respondent (and any other occupants) must:
(a)vacate the property situated at XXX Suburb, being the whole of the land in the folio of the register with Volume XXX (Property);
(b)deliver all keys for any buildings on the Property to the Applicant; and
(c)give possession of the Property to the Applicant.
2.A warrant of possession be issued forthwith substantially in the form of Annexure A to this Order, with such warrant to lie in the Registry and not be acted upon unless the Applicant files an affidavit after 4.00pm on 7 July 2023, deposing that:
(a)the Respondent has not complied with all of Order 1; and
(b)the Applicant does not have possession of the Property.
3.The affidavit referred to in Order 2 may be made by the Applicant’s solicitors.
4.On the Applicant or the Sheriff taking possession of the Property, the Respondent, his servants and agents be restrained from:
(a)entering on or remaining on the Property; and
(b)going within 30 metres of the Property.
5.By 4.00pm on 7 July 2023, the Respondent (and any other occupants) must remove from the Property all vehicles, rubbish and chattels which have not vested in the Applicant in his capacity as Trustee of the bankrupt estate of Ricky Neri (Personal Property).
6.If the Respondent fails to comply with Order 5, the Applicant is empowered to remove and dispose of any Personal Property on the Property as he sees fit, without being required to account to the Respondent.
7.The costs of removal and disposal of any Personal Property by the Applicant pursuant to Order 6 be paid from the bankrupt estate of the Respondent.
8.By 14 June 2023, the Applicant serve the Respondent with a copy of these Orders by registered post and email.
9.The costs of the Application are proper costs of the bankrupt estate of Ricky Neri and be paid in priority in accordance with s 109 of the Bankruptcy Act 1966 (Cth) from the property of the bankrupt estate of the Respondent.
10.The parties have liberty to apply on three days’ notice.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
ANNEXURE A
Warrant of PossessionNo. MLG450 of 2023
Federal Circuit and Family Court of Australia (Division 2)
Registry: Melbourne (General Federal Law)
Rule 53.08 Supreme Court (General Civil Procedure) Rules 2015 (Victoria)
Form 53BIN THE MATTER OF THE BANKRUPT ESTATE OF RICKY NERI
DAVID CHARLES QUIN (AS TRUSTEE FOR THE BANKRUPT ESTATE OF RICKY NERI)Applicant
RICKY NERI
Respondent
TO THE SHERIFF:
In respect of the order dated 7 June 2023 by which it was adjudged that the Applicant recover possession of the land described in the schedule, enter the land and cause the Applicant to have possession of it, and indorse on the warrant immediately after you have performed all your obligations under it a statement of the date, time and place at which you have executed or attempted to execute the warrant and the results of the execution and send a copy of the statement to the Applicant.SCHEDULE
XXX Suburb being the whole of the property contained in certificate of title Volume XX.
Issued: 7 June 2023
By the Court
REGISTRAR
Issued at the request of the Applicant.
The last known address of the Respondent is XX Suburb.REASONS FOR JUDGMENT
JUDGE J YOUNG:
INTRODUCTION
Mr Neri, the respondent, became bankrupt on 14 July 2022 upon the making of a sequestration Order by this Court. The sequestration order was made on the Application of Hanson Construction Materials Pty Ltd. On the same day, the applicant (Trustee) was appointed as the trustee in bankruptcy of the respondent’s estate.
The Trustee applied to the Court for orders (among others) requiring the respondent to provide vacant possession of the property situated at XXX Suburb (Property). The Trustee seeks further orders that in the event that the respondent fails to deliver vacant possession of the Property, a warrant of possession be issued.
I am satisfied that it is appropriate to make the orders sought by the Trustee. My reasons for this are explained below.
APPLICATION AND EVIDENCE BEFORE THE COURT
The Trustee filed the Application on 15 March 2023 seeking orders pursuant to ss 30(1)(b) and 77(1)(e), and pursuant to oral submissions made at the hearing, s 77(1)(g) of the Bankruptcy Act 1966 (Cth) (Act). The Application was accompanied by a genuine steps statement and an affidavit of the Trustee.
The Application came before me for hearing on 7 June 2023, with Ms Parker, solicitor, appearing for the Trustee and there being no appearance by the respondent.
The Trustee relied on the following:
(a)affidavit of the Trustee, David Charles Quin, filed on 15 March 2023;
(b)affidavit of the process server, filed on 11 April 2023; and
(c)affidavit of Ms Parker, filed 5 June 2023.
The respondent’s non-participation and proceeding in his absence
The respondent did not file a Response to the Application or any other material. As noted, the respondent did not attend the hearing.
The matter proceeded in the respondent’s absence in default of his appearance: r 13.06(1)(e) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (Rules). I am satisfied that the respondent was on notice of the Application and the hearing, and had been afforded an opportunity to be heard. A court cannot force a party to take advantage of that opportunity: Allesch v Maunz (2000) 203 CLR 172, [38]-[40].
On 11 April 2023 the Trustee filed an affidavit of service detailing the service of the Application on the respondent. The respondent did not appear at the directions hearing on 26 April 2023. The Court made orders on 26 April 2023 for the respondent to file a Notice of Appearance, a Response and any affidavit in opposition to the Application by 10 May 2023. On 26 April 2023 the Court made provision for the Trustee to serve a copy of the Orders on the respondent. On 2 June 2023, solicitors for the Trustee filed an affidavit of service detailing the service of the 26 April 2023 Orders on the respondent. I am satisfied that this occurred. The directions made on 26 April 2023 noted that in the event of the respondent’s non-compliance with the directions and/or in the event of his non-appearance at the final hearing, the Court may determine the matter and grant the relief claimed in the Application in his absence.
The respondent did not file any material by 10 May 2023. As I have noted, he did not attend the hearing.
RELEVANT BACKGROUND
Communications between the Trustee and the respondent regarding the Bankrupt Estate
On 29 July 2022, the Trustee wrote to the respondent advising him that his interest in the Property is vested in Mr Quin as Trustee and requested the respondent to confirm whether a third party could make an offer to acquire the Trustees interest in the Property. The Trustee did not receive a response from the respondent.
On 22 August 2022, the Trustee wrote to the respondent requesting he vacate the Property by 9 September 2022. The respondent was also informed that if he failed to vacate the Property, the Trustee would commence legal proceedings. The Trustee did not receive a response from the respondent, nor did the respondent deliver possession of the Property.
On 23 November 2022, the Trustee’s solicitors at the time sent a letter to the respondent requesting he comply with the demand to vacate the Property by 6 December 2022.
On 8 December 2022, the Trustee’s solicitors at the time contacted the respondent via Facebook message and attached the correspondence from 29 July 2022, 22 August 2022 and 23 November 2022.
On 27 February 2023, the Trustee had a member of Buxton Real Estate Agency attend the Property. Buxton Real Estate Agency advised the Trustee there was a black Toyota Hilux vehicle and Mazda Bravo utility vehicle in the driveway of the Property, and noted the lawn appeared to be recently mowed. These facts led the Trustee to consider that the respondent remained in occupation of the Property as the Toyota Hilux vehicle parked at the Property is similar in appearance to a vehicle VicRoads advised was previously registered in the name of the respondent.
The Trustee did not receive any response from the respondent as to the communications set out above.
Real property in XX Suburb
When the sequestration order was made the respondent was the sole registered proprietor of the real property located at XXX Suburb compromising the whole of the land in the folio of the register with Volume XX.
On 10 February 2023, the Trustee took transmission of the Property and became the sole proprietor of the Property.
The Certificate of Title shows that the Property is encumbered by a mortgage to the Commonwealth Bank of Australia (CBA). On 27 July 2022, CBA advised the Trustee that the payout figure for the mortgage as at 21 July 2022 was $318,987. The Property is also encumbered by the following caveats:
(a)a caveat lodged by Hanson Construction Materials Pty Ltd (Hanson); and
(b)a caveat lodged by Eureka Concrete (Holdings) Pty Ltd (Eureka).
Hanson claims to be owed a debt of $12,988 by the respondent in relation to its caveat. On 26 July 2022, the Trustee wrote to the solicitors for Hanson requesting Hanson surrender their security and remove the caveat pursuant to s 44(5) of the Bankruptcy Act.
On 26 July 2022, Nevetts Lawyers, acting on behalf of Eureka, advised the Trustee that Eureka was owed a debt of $2,917.79 by the respondent as at 30 August 2021.
A kerbside appraisal of the Property provided to the Trustee on 4 August 2022 estimates the value of the property to be $550,000.
Based on these figures, it would appear that the equity in the Property is likely to be $215,107.21.
LEGAL PRINCIPLES
The Trustee relies upon a number of different provisions of the Act, namely, ss 30(1)(b), 77(1)(e) and 77(1)(g) as the sources of the Court’s power to make an order that the respondent vacate the property and give possession of the Property to the Trustee. Those provisions of the Act are as follows:
30 General powers of Courts in bankruptcy
(1) The Court:
(a)has full power to decide all questions, whether of law or of fact, in any case of bankruptcy or any matter under Part IX, X or XI coming within the cognizance of the Court; and
(b) may make such orders (including declaratory orders and orders granting injunctions or other equitable remedies) as the Court considers necessary for the purposes of carrying out or giving effect to this Act in any such case or matter.
77 Duties of bankrupt as to discovery etc. of property
(1)A bankrupt shall, unless excused by the trustee or prevented by illness or other sufficient cause:
[…]
(e)execute such instruments and generally do all such acts and things in relation to his or her property and its realization as are required by this Act or by the trustee or as are ordered by the Court upon the application of the trustee; and
(g) aid to the utmost of his or her power in the administration of his or her estate
In Coshott v Prentice (2014) 221 FCR 450 at [94] (Coshott) the Court held that s. 30 of the Act:
provide[s] sufficient power to make orders against a bankrupt for the vacation of property, issuing a warrant of possession and for the sale of property in circumstances where the bankrupt is not complying with his or her obligations under the Act
In Ruhe (Trustee) v Australian Securities and Investments Commission [2022] FCA 354 (Ruhe) O’Callaghan J held at [12]–[14]
12 Section 30(5)(a) provides that where a bankrupt “has failed to comply with an order or direction of a Registrar, or with a direction or requirement of … [a] trustee, under this Act” the court may “order the person who has failed to comply with the order, direction, requirement or request … to comply with it …”
13 The cases make it clear that the power to make orders under s 30(1)(b) of the Act must be exercised for the purposes of carrying out or giving effect to the Act in the particular case. Those purposes are to provide for the appropriation and equitable distribution of the assets of the insolvent debtor.
14 Further, the cases make clear that the provision is not to be construed narrowly. On the contrary, it is a facultative provision giving the court full power (within obvious limits of jurisdiction) to make such orders as it considers should be made to carry out and give effect to the Act. Accordingly, the section has been held to provide sufficient power to make orders against a bankrupt for the vacation of property, issuing a warrant of possession and for the sale of property in circumstances where the bankrupt does not comply with their obligations under the Act.
[Emphasis added]
In Horne (as trustee of the bankrupt estate of Sekulovksi) v Sekulovski [2009] FCA 1164 at [8] (Horne) Tracey J held:
It is plainly necessary that the Applicant be in a position to provide any purchaser of the property with vacant possession in order to facilitate a sale, and it is also necessary, in order to achieve that end, that the property be placed in such a condition that it may be attractive to a potential purchaser. The Respondents, despite having been given the opportunity to do so, have prevaricated and have not responded to requests that they vacate the premises. Accordingly, in my view, it is appropriate that the orders sought in the application should be made.
CONSIDERATION
I am satisfied that the Court has power to make the orders sought: ss 30(1)(b), 77(1)(e) and 77(1)(g); Coshott, Ruhe and Horne above.
Further, I note that whilst the respondent has not participated in the proceedings, I am satisfied he has been put on notice as to the Orders sought by the Trustee. There is no evidence before the Court which suggests that the Trustee has excused the respondent or that the respondent has other sufficient cause as provided for in s 77 of the Act.
The respondent has not responded to requests to vacate the Property, and is likely still occupying the premises. In those circumstances Orders that he vacate the Property and give possession of the Property to the Trustee are necessary: Horne, above.
The Court will make Orders that the respondent vacate the Property and give possession of the Property to the Trustee. I will allow 30 days from the date of this order for the respondent to vacate the Property. The respondent must vacate the Property by 4.00pm on 7 July 2023.
A Warrant of Possession
In circumstances in which the respondent has failed to respond to demands to vacate the Property, and so as to ensure enforcement of the Court’s orders, the Trustee seeks that a warrant of possession be issued. It may be relied upon to enforce the Court’s judgment if needed.
Sections 213(2) and (3) of the Federal Circuit and Family Court of Australia Act 2021 (Cth) provide as follows:
213 Enforcement of judgment
[…]
(1)A person in whose favour a judgment of the Federal Circuit and Family Court of Australia (Division 2) is given is entitled to the same remedies for enforcement of the judgment in a State or Territory, by execution or otherwise, as are allowed in like cases by the laws of that State or Territory to persons in whose favour a judgment of the Supreme Court of that State or Territory is given.
(2)Subsection (2) has effect subject to the Rules of Court.
Rule 25.11(1) of the Rules provides as follows:
25.11 Execution generally
(1)A party may apply to the Court to issue a writ, order or any other means of enforcement of a judgment or order that can be issued or taken in the Supreme Court of the State or Territory in which the judgment or order was made, as if it were a judgment or order of that Supreme Court.
CONCLUSION
I will order that a warrant of possession be issued forthwith. The issue of a warrant now will obviate the need for further attendance in the event there is non-compliance with the Court’s orders.
The costs of the application are proper costs of the bankrupt estate of the respondent and will be paid in priority in accordance with s 109 of the Act.
I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment of Judge J Young. Associate:
Dated: 7 June 2023
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