Quin v Smalley

[2017] FCCA 594

FEDERAL CIRCUIT COURT OF AUSTRALIA

QUIN v SMALLEY [2017] FCCA 594

Catchwords:
BANKRUPTCY – Application to obtain vacant possession of real property – where Respondent did not participate in proceedings – where trustee has taken appropriate steps – Respondent vacate real property within 21 days – should Respondent fail to comply, writ of possession to issue – Respondent remove all rubbish and chattels within 21 days – should Respondent fail to comply, Applicant empowered to remove and dispose of all personal property.

Legislation:

Bankruptcy Act 1966, ss.30, 77

Applicant: DAVID CHARLES QUIN (IN HIS CAPACITY AS TRUSTEE OF THE BANKRUPT ESTATE OF ADAM ROY SMALLEY)

Respondent: ADAM ROY SMALLEY

File Number: MLG 2182 of 2016

Judgment of: Judge Hartnett

Hearing date: 28 February 2017

Delivered at: Melbourne

Delivered on: 28 February 2017

REPRESENTATION

Counsel for the Applicant: Mr Dunnell

The Respondent: No appearance

THE COURT ORDERS THAT:

1. The Respondent and any other occupants of the property situate at and known as 30 Gateshead Street Craigieburn in the State of Victoria, being the land more particularly described in Certificate of Title Volume 11352 Folio 538 (‘the property’) vacate the Property within 21 days of the date of this order.

2. In the event that the Respondent fails to deliver vacant possession of the property in accordance with Order 1 a Writ of Possession in favour of the Applicant shall issue forthwith.

3. The Respondent shall remove from the property all vehicles, rubbish and chattels (the personal property) which have not vested in the Applicant within 21 days of the date of this order.

4. In the event the Respondent fails to comply with order number 3 herein, the Applicant is empowered to remove and dispose of any and all personal property on the property as he sees fit.

5. The Applicant’s costs of this application be paid from the Respondent’s bankrupt estate.

6. There be liberty to apply.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLG 2182 of 2016

DAVID CHARLES QUIN (IN HIS CAPACITY AS TRUSTEE OF THE BANKRUPT ESTATE OF ADAM ROY SMALLEY)

Applicant

And

ADAM ROY SMALLEY

Respondent

REASONS FOR JUDGMENT

1. These proceedings commenced with the filing of an application by Mr David Charles Quin in his capacity as trustee of the bankrupt estate of the Respondent on 7 October 2016. The orders which the Applicant trustee seeks are sought pursuant to sections 30 and 77 of the Bankruptcy Act 1966 (Cth) (‘the Act’). These proceedings are undefended and the Court makes the orders which are sought by the Applicant this day.

2. The Applicant was appointed as the sole trustee of the Respondent’s bankrupt estate on 16 May 2016.  The Applicant seeks orders that the Respondent vacate the real property situate at 30 Gateshead Street Craigieburn in the State of Victoria and being the land more particularly described in Certificate of Title Volume 11352 Folio 538 (‘the property’). The Applicant trustee also seeks orders that if the Respondent fails to deliver vacant possession of the property in accordance with the orders of the Court then a writ of possession in favour of the Applicant issue forthwith.

3. There are also orders sought requiring the Respondent to remove from the property all vehicles, rubbish and chattels which are not vested in the Applicant within 21 days of the date of this order, and that in the event the Respondent fails to comply with an order to that effect that the Applicant is empowered to remove and dispose of any and all personal property on the property as he sees fit.

Background

1. By interim application dated 7 November 2016 the Applicant sought that the requirement for personal service on the Respondent of the application filed 7 October 2016 and the affidavit of Mr Quin sworn 4 October 2016 be dispensed with.

2. On 8 November 2016 Registrar Caporale made orders in the proceedings including an order that personal service of the application and the affidavit of David Charles Quin, sworn on 4 October 2016, be dispensed with.  In those same orders, Registrar Caporale ordered for service to be effected in the manner set out in order 3 of those orders, with order 4 providing that service of the documents in accordance with order 3 should be deemed good and sufficient service on the Respondent, if the events referred to in order 3 of the orders occur by 16 January 2016.  The Court is satisfied on the affidavit evidence before it that the Applicant complied with order 3 of Registrar Caporale’s orders of 8 November 2016, as deposed to by Mr Patrick John Dunell, the solicitor who has the care and conduct of the application on behalf of the Applicant in his affidavit sworn 22 November 2016.

3. On 6 February 2017 the Respondent failed to appear before the Court.  The Court ordered on that date the following:-

   “(1) The Respondent file and serve any response to the application together with any affidavit in support upon which he intends to rely by 13 February 2017. In the event the Respondent fails to comply with this order there is liberty to the Applicant to seek to proceed to obtain final orders on an undefended basis.

   (2) The Applicant file and serve any further affidavit material by 20 February 2017.

   (3) The Application be adjourned for hearing to 28 February 2017 at 9.30am.

   (4) A sealed copy of these orders, together with a covering letter setting out the date and time of the adjourned hearing and the address of the Court (‘Documents’), be served on the Respondent as follows:-

   (a) by posting the Documents addressed to the Respondent at 30 Gateshead Street, Craigieburn VICTORIA 3064; and

   (b) by sending the Documents as an attachment in an email to the Respondent at [email protected].

   (5) The Applicant’s cost of this application be reserved.

   (6) There be liberty to apply.”

4. The Court is satisfied that there was compliance by the Applicant with order 4 of the orders made on 6 February 2017, as sworn by Mr Dunell in the affidavit sworn and filed by him on 14 February 2017.

5. The Respondent has not filed nor served any response to the application nor any affidavits in these proceedings.  The Respondent has failed to file a notice for address for service.  Accordingly, and by reference to order 1 of the orders made 6 February 2017, the Applicant sought this day to proceed to obtain final orders on an undefended basis.

6. The Court received, by email this morning, information from Ms Sheridan Cheek, client service officer which was as follows:-

   “the Respondent in this matter is under arrest at Heidelberg Police Station.  A detective just called to inform us he will not be attending the hearing today.”

7. The above provided a possible reason for the Respondent’s non-attendance this day. The Applicant sought to proceed on the basis of the Respondent’s non-compliance with order 1 of the orders made 6 February 2017.  The Court determined to proceed in the absence of the Respondent, given the Respondent’s lack of participation in the proceedings to date and lack of communication, with the Applicant trustee.

Consideration

1. The Court is satisfied that the application, the interim applications and the affidavits relied upon in the proceedings have all been served on the Respondent.

2. The Respondent provided the Applicant with a completed statement of affairs dated 6 June 2016.  He disclosed in that statement of affairs that he was the registered proprietor of the property.

3. On 24 June 2016, the Applicant wrote to the Respondent, in response to a request by the Respondent, as to his intention to procure sufficient funds to annul his bankruptcy. The Respondent was advised by the Applicant that the estimated amount required to be paid to annul his bankruptcy at that date was $93,698.30.  That amount included the fees and disbursements incurred in administering the Respondent’s estate to that date, and estimated future fees and disbursements to annul the bankruptcy.  In that correspondence of 24 June 2016, the Applicant requested the Respondent advise if he intended to proceed with the annulment of his bankruptcy within 14 days of the correspondence.  No response was received by the Applicant from the Respondent.

4. On 15 July 2016, the Applicant sought a valuation of the property to determine whether it could be realised for the benefit of creditors.  Barry Plant Craigieburn real estate agents provided a curb-side appraisal for the property in the range of $400-440,000.  The Applicant was not able to obtain a sworn valuation from a licenced valuer due to the Respondent remaining in possession of the property.

5. On 11 August 2016, the Applicant transmitted title to the property into his name in his capacity as trustee of the Respondent’s bankrupt estate.  The Court has before it a true copy of the title search, dated 7 September 2016, recording the Applicant as the sole registered proprietor of the property.

6. By letter dated 12 August 2016, the Respondent was advised by the Applicant that he had transmitted title to the property into the Applicant’s name.  The Applicant indicated to the Respondent that he required him to vacate the property within 14 days and that in the event he failed to do so, the Respondent was placed on notice that the Applicant would commence proceedings to achieve that end.

7. The Respondent did not vacate the property within the 14 day period, and the trustee engaged solicitors Oakley Thompson & Co to assist the trustee to obtain vacant possession.  Correspondence was sent to a solicitor, Samuel Slee, who had telephoned the offices of Oakley Thompson & Co solicitors, indicating that he acted on behalf of the Respondent.  That correspondence was dated 13 September 2016, and provided the Respondent with a further opportunity to vacate the property by 20 September 2016.  No response was received to that correspondence.

8. The Respondent remains in occupation of the property, without the leave of the Applicant.  Based on this conduct, the Applicant has formed the belief that the Respondent will not voluntarily vacate the property.  The Respondent’s Statement of Affairs do not disclose any other assets or moneys of the Respondent’s bankrupt estate likely to be realisable to assist with the payment of a dividend to the Respondent’s creditors.

9. Members Equity Bank Proprietary Limited (MEB) is the secured creditor of the Respondent, by way of mortgages registered on the property title.  Mr Quinn gave evidence this day, that the amounts outstanding to discharge the mortgages are in the sum of $183,399.34, and $161,627.09.  This is a total sum of $345, 026.43. Mr Quinn’s estimate as to the trustees costs and disbursements is that they are now, approximately, $120,000, subject to proof of same to creditors.

10. The asset position of the Respondent is deteriorating.  The registered mortgages over the property are both in arrears:  one in the sum of $7522, approximately, and the other $6307, approximately, on the evidence of Mr Quinn given this day.

11. The Applicant relies on ss.30 and 77 of the Act. Section 30 is as follows:

    “BANKRUPTCY ACT 1966 - SECT 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.

    (2)  The Court may direct such inquiries to be made and accounts to be taken for the purposes of any proceeding before the Court as the Court considers necessary and may, when directing an account to be taken, or subsequently, give special directions as to the manner in which the account is to be taken or vouched.

    (3)  If in a proceeding before the Federal Court under this Act a question of fact arises that a party desires to have tried before a jury, the Federal Court may, if it thinks fit, direct the trial of that question to be had before a jury, and the trial may be had accordingly in the same manner as if it were the trial of an issue of fact in an action.

    (5)  Where:

    (a)  a bankrupt, a debtor or any other person has failed to comply with an order or direction of a Registrar, or with a direction or requirement of an Official Receiver or trustee, under this Act; or

    (b)  a trustee has failed to comply with an order, direction or requirement of a Registrar, or with a requirement or request of the Inspector-General, under this Act;

    the Court may, on the application of the Registrar, Official Receiver, trustee or Inspector-General, as the case requires:

    (c)  order the person who has failed to comply with the order, direction, requirement or request, as the case may be, to comply with it; or

    (d)  if it thinks fit, make an immediate order for the committal to prison of that person.

    (6)  The power conferred on the Court by subsection (5) is in addition to, and not in substitution for, any other right or remedy in respect of the failure to comply with the order, direction, requirement or request, as the case may be.

12. Section 77 is as follows:-

    BANKRUPTCY ACT 1966 - SECT 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:

    (a)  forthwith after becoming a bankrupt, give to the trustee:

    (i)  all books (including books of an associated entity of the bankrupt) that are in the possession of the bankrupt and relate to any of his or her examinable affairs; and

(ii)  any passport or document issued for the purposes of travel held by the bankrupt; and

(b)  attend the trustee whenever the trustee reasonably requires; and

(ba)  give such information about any of the bankrupt's conduct and examinable affairs as the trustee requires; and

(bb)  as soon as practicable after becoming a bankrupt, advise the trustee of any material change that occurred between the time the bankrupt lodged his or her statement of affairs and the time the bankrupt became a bankrupt; and

(bc)  if a material change occurred later, advise the trustee of that change as soon as practicable after the change occurs; and

(c)  attend a meeting of creditors whenever the trustee requires; and

(d)  at each meeting of creditors at which the bankrupt is present, give such information about any of the bankrupt's conduct and examinable affairs as the meeting requires; and

(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

(f)  disclose to the trustee, as soon as practicable, property that is acquired by him or her, or devolves on him or her, before his or her discharge, being property divisible amongst his or her creditors; and

(g)  aid to the utmost of his or her power in the administration of his or her estate.

(2)  In this section:

“material change” means a change in the particulars contained in the bankrupt's statement of affairs, where the change could reasonably be expected to be relevant to the administration of the bankrupt's estate.

1. It is clear there has been no compliance by the Respondent with the trustee’s requests.  The Respondent has had opportunity to vacate the property and has failed to do so.  The Applicant is required to be in a position to provide any purchaser of the property with vacant possession. In order to achieve a sale at maximum value, the property needs to be placed in a condition that will appeal to potential purchasers.  It is also necessary that the Applicant not expend further funds on returning to the Court to enforce any orders made this day.  Accordingly, the Court determines that the orders, as sought in the application in their totality should be made.  The Court so orders.

I certify that the preceding twenty-three (23) paragraphs are a true copy of the reasons for judgment of Judge Hartnett

Associate: 

Date:  27 March 2017