Re Bilen; Ex parte Sistrom

[1985] FCA 141

Re: VINKO BILEN
Ex Parte: DAVID WILLIAM SISTROM
And: GRACE BILEN
No. NSW 706 of 1983
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DIVISION OF THE STATE OF NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL TERRITORY
Neaves J.

CATCHWORDS

Bankruptcy - property of bankrupt - Bankrupt and wife registered as joint tenants of Crown leasehold - Trustee in bankruptcy registered in respect of estate and interest of the bankrupt - Proceedings in Supreme Court of the Australian Capital Territory by trustee under Partition Act, 1900 (N.S.W.) in its application to the Territory and by wife for declaration as to the extent of her interest in the property - Application to Federal Court of Australia by trustee for declaration as to extent of his interest in the property and consequential orders - Application by wife that those proceedings be stayed.

Partition Act, 1900 (N.S.W.)

HEARING

CANBERRA
#DATE 11:4:1985

ORDER

1. The application by Grace Bilen, the respondent, for an order staying further proceedings upon the application dated 9 October 1984 filed on behalf of David William Sistrom, the trustee of the estate of Vinko Bilen, a bankrupt, be dismissed.

2. The trustee may proceed with the said application only upon his undertaking to discontinue the proceedings commenced by him in the Supreme Court of the Australian Capital Territory by originating summons dated 11 April 1984 and to pay the respondent's costs of and incidental to those proceedings.

3. The costs of the present application be reserved.

4. The parties have liberty to apply to the Court on two days' notice for further directions in this matter and generally.
   
   Note: Settlement and entry of orders is dealt with in Order 36
   

of the Federal Court Rules.

JUDGE1

Pending in the Court is an application by David William Sistrom, the trustee of the bankrupt estate of Vinko Bilen, for declarations -

(a) that he as such trustee is beneficially entitled to one undivided half share of Crown Lease Register Book Volume 663, folio 73 being Block 31, Section 102, Division of Kaleen in the Australian Capital Territory; and

(b) that he is entitled to dispose of or otherwise deal with the said undivided half share pursuant to his powers as such trustee;

and for an order that the costs of the application be paid by the respondent to the application, Grace Bilen, the wife of the bankrupt. The respondent has applied for an order staying until further order all further proceedings upon the trustee's application.

1. A sequestration order was made against the bankrupt on 29 July 1983 and by virtue of sub-section 156A(3) of the Bankruptcy Act 1966 David William Sistrom became the trustee of his estate.

2. At the date of his bankruptcy the bankrupt and his wife were registered as the proprietors as joint tenants of a Crown lease (Register Book Volume 663, folio 73) granted pursuant to the City Area Leases Ordinance 1936 (A.C.T.) over Block 31, Section 102, Division of Kaleen in the Australian Capital Territory ("the property"). On 5 January 1984 the trustee became registered in respect of all the estate and interest of the bankrupt in the property. Registered on the title is a mortgage in favour of the Commissioner for Housing and a caveat by Citicorp Person to Person Finance Services Pty. Limited.

3. On 11 April 1984 the trustee, as plaintiff, commenced proceedings in the Supreme Court of the Australian Capital Territory by originating summons, naming Grace Bilen as defendant, seeking the following orders -
   
   

"1. That the land being Block 31 Section 102 Division of Kaleen in the Australian Capital Territory entered in register book volume 663 folio 73 (the said land) be sold out of Court by the plaintiff under the direction of a Judge in Chambers.

2. That the gross proceeds of the sale of the said land after payment of the balance owing on the mortgage registered number 266746 to the Commissioner for Housing and agent's and auctioneer's commission if appropriate be paid by the plaintiff into Court to stand to the credit of this action.

3. That from the gross proceeds of the sale be paid:

(a) the ordinary costs, charges and expenses of the said sale not already provided for;

(b) the plaintiff's costs of this action as agreed or taxed;

(c) such other sum as is agreed or ordered to be paid by the Court.

4. That after payment of the amount herein referred to, the balance shall be paid:

(a) one half to the plaintiff to be applied in accordance with the order of the Federal Court of Australia made on the 29th day of July, 1983;

(b) one half to the defendant PROVIDED THAT from the amount payable to the defendant there shall be paid such sum as may be outstanding to Citicorp Person to Person Financial Services Pty Limited pursuant to Deed of Loan and Charge dated the 22nd day of March, 1983 and notified on the Title to the said land by Caveat number 7783.

5. That the defendant join in the sale and execute all documents necessary to give effect to the transfer of the said land and in the event of the defendant neglecting or refusing to execute any documents presented to her for execution, then the Registrar is hereby empowered to execute those documents in the name of the defendant.

6. That either party have liberty to apply on two days notice."

Those proceedings were brought pursuant to the provisions of the Partition Act, 1900 of the State of New South Wales in its application to the Australian Capital Territory.

1. The respondent filed an affidavit in those proceedings setting out facts on which she relies in opposition to the orders sought by the trustee. The originating summons has not been heard and at present stands adjourned generally.

2. On 26 June 1984 the respondent commenced an action in the Supreme Court of the Australian Capital Territory in which she was named as the plaintiff and the trustee was named as defendant. In that action the respondent seeks declarations -
   
   

(a) that she is entitled to the whole of the beneficial interest in the property "pursuant to a resulting trust in respect of which the Plaintiff and the Defendant are the trustees"; and

(b) that she is entitled to a transfer of the whole of the right title and interest held in the property by the trustees;

and consequential orders. Particulars of matters alleged in the statement of claim filed in that action were furnished by the respondent to the trustee in January 1985. No defence has been filed and the action is not ready for hearing.

1. It was suggested by counsel for the respondent that this Court has no jurisdiction to entertain the application of the trustee. It was argued that the declaratory and equitable jurisdiction of this Court when sitting in bankruptcy is only available when it is necessary that that jurisdiction be exercised and that no necessity to exercise the jurisdiction has been shown in this case because the issues can be resolved in the Supreme Court of the Australian Capital Territory in the proceedings pending in that Court between the same parties. In support of the limitation on the jurisdiction of this Court reliance was placed on sub-section 30(1) of the Bankruptcy Act 1966 which provides:
   
   

"30.(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 X or Part 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."

1. I am unable to accept the argument that this Court has no jurisdiction to entertain the trustee's application. In my opinion sub-section 30(1) of the Bankruptcy Act 1966 is not a provision limiting the Court's jurisdiction. It is a facultative provision giving the Court full power, within the limits of its jurisdiction to be found elsewhere, to make such orders as it considers should be made in order to carry out and give effect to the Act. The words used are not words of limitation but of extension.

2. Although it was suggested that the trustee's application should be stayed as being an abuse of the process of the Court, it cannot, I think, be said in terms of Order 20, rule 2 of the Federal Court Rules that any such ground has been established. Rather, the respondent's application appeals to the general power of the Court to control its own proceedings. Reference was made to Hughes Motor Service Pty. Limited v. Wang Computer Pty. Limited (1978) 35 FLR 346 at pp 351-354 where Bowen C.J. discussed matters relevant to the exercise of the Court's general discretion to stay its own proceedings.

3. The respondent's submission was based on the fact that there are proceedings pending in two courts simultaneously regarding the same matter. It was submitted that, in such circumstances, the proceedings commenced later in point of time should be stayed unless it can be shown that there are important advantages for the efficacious resolution of the dispute in allowing those proceedings to continue. It was argued that the proceeding in this Court is not properly to be characterised as a matter falling peculiarly or especially within the purview of the Court sitting in its bankruptcy jurisdiction.

4. It was argued that it is oppressive to the respondent to have to meet proceedings both in the Supreme Court and in this Court concerning the same subject matter and that this circumstance requires that a stay be granted so as to prevent injustice being done to her. It is to be noted, however, that such suggested oppression or injustice as may be thought to arise is due, at least in part, to the institution by the respondent herself of separate proceedings in the Supreme Court.

5. It was also submitted that there is no basis for concluding that this Court is a more convenient forum, in terms of its powers or its expertise, to deal with a matter such as that in issue between the parties, a matter which primarily concerns the law of trusts.

6. For the trustee it was said that the proceedings were commenced in this Court because there is a serious question whether the Supreme Court has jurisdiction to grant the relief which the trustee has sought in the proceedings commenced by him in that Court. The submission that the Supreme Court lacks jurisdiction wore a double aspect. First, it was submitted that the Supreme Court is not a court invested with jurisdiction in bankruptcy, there being no reference to it in section 27 of the Bankruptcy Act 1966, and that the proceedings in that Court, both those commenced by the trustee and those commenced by the respondent, are properly to be characterised as proceedings "under or by virtue of" that Act (see the definition of "bankruptcy" in sub-section 5(1)).

7. Secondly, it was said that the proceedings instituted by the trustee in the Supreme Court have as their foundation a claim that the trustee and the respondent are each entitled to a moiety interest in the property. That view is challenged by the respondent and, under the Partition Act, 1900 (N.S.W.) in its application to the Australian Capital Territory, the power of the Supreme Court to order a sale of property in lieu of partition depends upon the party or parties seeking a sale establishing that he is, or they are collectively, interested in the property to the extent of one moiety or upwards (see sub-section 4(1)(b)).

8. I am far from satisfied that either of the above submissions should be accepted as limiting the jurisdiction of the Supreme Court but, in the view which I take, it is unnecessary to express a definitive view on the point. I shall assume that the Supreme Court is not deprived of jurisdiction to entertain the proceedings at present pending in that Court by reason of section 27 or any other provision of the Bankruptcy Act 1966.

9. Of greater significance, however, for present purposes is the limiting effect which the second of the above submissions, if correct, may have on the powers of the Supreme Court in the exercise of the jurisdiction which I am prepared to assume resides in that Court. In relation to the difficulties to which the Partition Act, 1900 (N.S.W.) may give rise it is sufficient to refer to what was said by Blackburn J. (as he then was) in Witchard v. Witchard (1975) 6 ACTR 31 at p 33, a situation which, despite the lapse of ten years, has not been remedied. Apart from the question whether the Supreme Court has power to order a sale of the property in this case if the respondent were to fail in establishing her entitlement to the whole of the beneficial ownership in the property but succeed in establishing an interest greater than a moiety, the trustee pointed to other difficulties to which the Partition Act, 1900 (N.S.W.) may give rise. A sufficient foundation was thus provided for the view that this Court is the more appropriate and convenient forum in which to determine the issues between the parties.

10. Having considered the various submissions put to the Court, I have concluded that the application by the respondent for a stay of the proceedings commenced in this Court by the trustee should not be granted. My primary reason for reaching this conclusion is that this Court is not restricted in considering what orders it would be appropriate to make in exercise of the power conferred on it by sub-section 30(1) of the Bankruptcy Act 1966 by the kinds of limitations which may be found in the Partition Act, 1900 (N.S.W.). I have also had regard to the circumstance that the proceedings in the Supreme Court are not well advanced and that the costs incurred in those proceedings will not be wholly thrown away as the respondent proposes to raise the same issues, and rely on the same material, in this Court.

11. The application is, therefore, dismissed. I order, however, that the continuation by the trustee of the proceedings commenced in this Court is to be conditional upon his undertaking to discontinue the proceedings commenced by him in the Supreme Court and to pay the respondent's costs of and incidental to those proceedings. I make no order in relation to the action commenced by the respondent in the Supreme Court: the disposition of those proceedings is, I think, properly a matter for that Court. I propose to reserve the costs of the present application. I also reserve to the parties liberty to apply on two days' notice for further directions in the matter and generally.