Scott as Trustee of the Bankrupt Estate of Williams v State of New South Wales
[2022] FedCFamC2G 569
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Scott as Trustee of the Bankrupt Estate of Williams v State of New South Wales [2022] FedCFamC2G 569
File number: SYG449 of 2022 Judgment of: JUDGE CAMERON Date of judgment: 1 July 2022 Catchwords: BANKRUPTCY – Application for appointment of trustees for sale of land. Legislation: Judiciary Act 1903 (Cth) s 79
Conveyancing Act 1999 (NSW) s 66G
Bankruptcy Act 1966 (Cth) ss 30, 58, 77
Cases cited: Coshott v Prentice (2014) 221 FCR 450
The Trustee of the Property of Currey (a bankrupt) & Anor v Currey & Anor [2017] FCCA 2692
Division: Division 2 General Federal Law Number of paragraphs: 18 Date of hearing: 27 June 2022 Place: Sydney Counsel for the Applicant: Mr C. Moschoudis Solicitor for the Applicant: Recoveries & Reconstruction Legal The First Respondent: The First Respondent did not appear The Second Respondent: The Second Respondent did not appear ORDERS
SYG449 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
IN THE MATTER OF ELLEN CLARA WILLIAMS, BANKRUPT
BETWEEN: ANDREW JOHN SCOTT AS TRUSTEE OF THE BANKRUPT ESTATE OF ELLEN CLARA WILLIAMS
Applicant
AND: THE STATE OF NEW SOUTH WALES
First Respondent
ELLEN CLARA WILLIAMS
Second Respondent
ORDER MADE BY:
JUDGE CAMERON
DATE OF ORDER:
1 JULY 2022
THE COURT ORDERS THAT:
1.Pursuant to ss.30, 77(1)(e) and 77(1)(g) of the Bankruptcy Act 1966 (Cth), the second respondent, within twenty-eight (28) days:
(a)vacate and deliver up to the applicant vacant possession of the whole of the land described in Folio Identifier 149/755259, being the property known as 47 Kearsley Selections Road, Kearsley NSW 2325 (“Property”);
(b)deliver up to the applicant the keys for all buildings and improvements on the Property; and
(c)remove from the Property all vehicles, rubbish and any other chattels or personal property which have not vested in the applicant as the second respondent’s trustee in bankruptcy under s.58(1) of the Bankruptcy Act 1966 (Cth).
2.Pursuant to ss.30, 77(1)(e) and 77(1)(g) of the Bankruptcy Act 1966 (Cth), in the event the second respondent fails to comply with order (1)(c) herein, the applicant is empowered to remove and dispose of any and all personal property on the Property as the applicant sees fit.
3.Pursuant to ss.30, 77(1)(e) and 77(1)(g) of the Bankruptcy Act 1966 (Cth), a writ of possession in favour of the applicant issue in respect of the Property, such writ to lie in the Registry until the filing by the applicant, not before twenty-eight (28) days from the date of such order, an affidavit stating that the second respondent has not given vacant possession of the Property whereupon after receipt of such an affidavit, the Registry shall forthwith release the writ of possession to the applicant.
4.Pursuant to s.79 of the Judiciary Act 1903 (Cth) and s.66G of the Conveyancing Act 1919 (NSW):
(a)the applicant and Daniel Austin Walley (“Statutory Trustees”) are appointed as statutory trustees for the sale of the Property;
(b)the Property vests in the Statutory Trustees subject to any incumbrances affecting the entirety of the Property but free from incumbrances (if any) affecting any undivided share or shares therein to be held by the said Statutory Trustees upon statutory trust for sale;
(c)the Statutory Trustees are empowered to offer the Property for sale and to sell the Property by public auction with power to fix a reserve price, or alternatively, to sell the Property by private treaty;
(d)the Statutory Trustees have the sole conduct of the sale of the Property and are authorised to appoint a licensed real estate agent and, if necessary, a licensed auctioneer;
(e)the Statutory Trustees be reimbursed their costs and be paid remuneration in connection with the discharge of their duties as the Statutory Trustees at the same rate and on the same basis as of their remuneration as bankruptcy trustees;
(f)following the sale of the Property, the Statutory Trustees are empowered to deduct from the proceeds of sale:
(i)commission and other expenses of any real estate agent, and auctioneer, retained by the Statutory Trustees for the sale of the Property;
(ii)insurance, repairs and any other reasonable expenses for the protection and maintenance of the Property;
(iii)all necessary adjustments and/or payment of any council rates, water rates, water usage and any other utility or statutory imposts in respect to the Property;
(iv)all legal costs and disbursements associated with the sale and transfer of the Property;
(v)remuneration and expenses of the Statutory Trustees in relation to the sale of the Property; and
(vi)the applicant’s legal costs of this proceeding;
(g)the Statutory Trustees shall hold the net proceeds of the sale of the Property, after the deductions identified above, upon trust:
(i)as to one half of the balance, for the applicant as trustee of the Bankrupt Estate of Ellen Clara Williams, payable to the applicant as trustee of the Bankrupt Estate of Ellen Clara Williams; and
(ii)as to one half of the balance, for the first respondent or where by order of the Federal Court of Australia the first respondent’s interest in the Property transfers to Aaron Kevin Lucan in his capacity as trustee of the Bankrupt Estate of Christopher Williams, for Aaron Kevin Lucan in such capacity, payable to:
A.the first respondent; or
B.Aaron Kevin Lucan in his capacity as trustee of the Bankrupt Estate of Christopher Williams, where an order is made in the Federal Court of Australia in proceedings NSD157/2022 that the first respondent’s interest in the Property transfers to Aaron Kevin Lucan in his capacity as trustee of the Bankrupt Estate of Christopher Williams,
at any time following orders being made in Federal Court of Australia proceeding NSD157/2022; and
(h)the Statutory Trustees have liberty to apply in relation to the working out of order 4(g).
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).
REASONS FOR JUDGMENT
JUDGE CAMERON
INTRODUCTION
The applicant, Andrew Scott, is trustee (“Trustee”) of the bankrupt estate of Ellen Clara Williams and filed an originating application on 25 March 2022 seeking orders that Ms Williams, the second respondent, vacate the property at 47 Kearsley Selections Road, Kearsley, New South Wales, 2325, (“Property”) so it might be sold.
The Trustee’s originating application sought from the Court orders to the effect that:
(a)Ms Williams vacate and deliver possession of the whole of the Property to the Trustee together with keys to the Property while also removing any personal property not vested in the Trustee;
(b)should Ms Williams fail to remove “vehicles, rubbish, and any other chattels or personal property” which have not vested in the applicant as her trustee in bankruptcy, the Trustee is authorised to remove and dispose of that;
(c)in the event that Ms Williams does not quit the property, the Court issue a writ of possession; and
(d)pursuant to s.79 of the Judiciary Act 1903 (Cth) and s.66G of the Conveyancing Act 1999 (NSW), the Trustee and Daniel Austin Walley be appointed statutory trustees for sale of the property.
On 14 April 2022, the State of New South Wales (“State of NSW”), the first respondent, filed an appearance submitting to any order other than an order as to costs.
On 29 April 2022, the Court made substituted service orders in relation to service on Ms Williams of the documents commencing this proceeding. The Trustee filed and read an affidavit of Christopher Robert Murray sworn 30 May 2022 in which Mr Murray deposed that he effected substituted service on Ms Williams on 6 May 2022 in accordance with those orders.
A further affidavit of Mr Murray, sworn 24 June 2022, deposed to Ms Williams being served with a copy of the Court’s order listing the matter for hearing today, service being effected in accordance with the substituted service order to which I have referred. Mr Murray’s latter affidavit also deposed to having served the State of NSW with a copy of the order listing the matter for today. Mr Murray also served on the respondents the Trustee’s outline of submissions and what is called the Citation Bundle, which is a list of statutes and authorities.
In all the circumstances, I am satisfied that it is appropriate to proceed to determine the application, notwithstanding that neither of the respondents has appeared today. I should also note that Ms Williams has not filed a notice of appearance or any other form of document.
FACTUAL BACKGROUND
The history of the matter, as it appears from the Trustee’s affidavit of 23 March 2022, is as follows:
(a)Ms Williams and her husband, Christopher Williams, were previously the registered proprietors of the Property as joint tenants;
(b)on 20 March 2009, Mr Williams became bankrupt on the making of a sequestration order in proceeding SYG3072/2008;
(c)pursuant to s.58 of the Bankruptcy Act 1966 (Cth) (“Act”), Mr Williams’s Property vested in the trustee of his bankrupt estate, Mr Malanos. Mr Malanos was recorded as a registered proprietor of the Property with Ms Williams on 8 April 2010;
(d)on 30 June 2011 Mr Malanos disclaimed his interest as trustee in the Property;
(e)presently, one half share in the Property is held by the State of NSW, which was registered in lieu of Mr Malanos as tenant in common in equal shares with Ms Williams on 24 January 2022;
(f)on 20 July 2017, Ms Williams became bankrupt upon the making of a sequestration order in proceedings number SYG1383/2017;
(g)at the time of her bankruptcy, Ms Williams still held one half share in the Property;
(h)pursuant to s.58 of the Act, the property of Ms Williams vested in the Trustee;
(i)on 11 January 2021, the mortgagee of the Property, the National Australia Bank (“NAB”), advised the Trustee that it had elected to discharge its mortgage;
(j)on 28 October 2021, the Trustee caused to be posted to Ms Williams at the Property correspondence advising of his intention to realise the Property and enclosed a notice to vacate the Property addressed to her, directing her to vacate the Property within 30 days. The Trustee also sent a notice to vacate the Property by post to the occupants of the Property. The Trustee did not receive any reply to either notice to vacate.
APPLICANT’S PLEADINGS
As amended at the hearing on 27 June 2022, the Trustee’s application seeks the following relief:
1.Pursuant to sections 30, 77(1)(e) and 77(1)(g) of the Bankruptcy Act 1966 (Cth) the Second Respondent, within twenty eight (28) days of the making of such orders:
(a) vacate and deliver up to the Applicant vacant possession of the whole of the land described in Folio Identifier 149/755259, being the property known as 47 Kearsley Selections Road, Kearsley NSW 2325 (“the Property”)
(b) deliver up to the Applicant the keys for all buildings and improvements on the Property; and
(c) remove from the Property all vehicles, rubbish and any other chattels or personal property which have not vested in the Applicant as the Second Respondent’s trustee in bankruptcy under section 58(1) of the Bankruptcy Act 1966 (Cth).
2.Pursuant to sections 30, 77(1)(e) and 77(1)(g) of the Bankruptcy Act 1966 (Cth), in the event the Second Respondent fails to comply with prayer (1)(c) herein, the Applicant is empowered to remove and dispose of any and all personal property on the Property as the Applicant sees fit.
3.Pursuant to sections 30, 77(1)(e) and 77(1)(g) of the Bankruptcy Act 1966 (Cth), a writ of possession in favour of the Applicant issue in respect of the Property, such writ to lie in the Registry until the filing by the Applicant, not before twenty-eight (28) days from the date of such order, an affidavit stating that the Second Respondent has not given vacant possession of the Property whereupon after receipt of such an affidavit, the Registry shall release the writ of possession to the Applicant forthwith.
4.Pursuant to section 79 of the Judiciary Act 1903 (Cth) and section 66G of the Conveyancing Act 1919 (NSW):
(a) the Applicant and Daniel Austin Walley (the “Statutory Trustees”) are appointed as statutory trustees for the sale of the Property pursuant to section 66G of the Conveyancing Act 1919 (NSW).
(b) the Property vests in the Statutory Trustees subject to any incumbrances affecting the entirety of the Property but free from incumbrances (if any) affecting any undivided share or shares therein to be held by the said Statutory Trustees upon statutory trust for sale.
(c) the Statutory Trustees are empowered to offer the Property for sale and to sell the Property by public auction with power to fix a reserve price, or alternatively to sell the Property by private treaty.
(d) the Statutory Trustees have the sole conduct of the sale of the Property and are authorised to appoint a licenced real estate agent and, if necessary, a licensed auctioneer.
(e) the Statutory Trustees be reimbursed their costs and be paid remuneration in connection with the discharge of their duties as the Statutory Trustees at the same rate and on the same basis as of their remuneration as bankruptcy trustees.
(f) following the sale of the Property, the Statutory Trustees are empowered to deduct from the proceeds of sale:
(i) commission and other expenses of any real estate agent, and auctioneer, retained by the Statutory Trustees for the sale of the Property;
(ii) insurance, repairs and any other reasonable expenses for the protection and maintenance of the Property;
(iii) all necessary adjustments and/or payment of any council rates, water rates, water usage and any other utility or statutory imposts in respect of the Property;
(iv) all legal costs and disbursements associated with the sale and transfer of the Property;
(v) remuneration and expenses of the Statutory Trustees in relation to the sale of the Property;
(vi) the Applicant’s legal costs of these proceedings.
(g) the Statutory Trustees shall hold the net proceeds of the sale of the Property, after the deductions identified above, upon trust:
(i) as to one half of the balance, for the Applicant as trustee of the Bankrupt Estate of Ellen Clara Williams; and
(ii) as to one half of the balance, for the First Respondent or where by order of the Federal Court of Australia the First Respondent’s interest in the Property transfers to Aaron Kevin Lucan in his capacity as trustee of the Bankrupt Estate of Christopher Williams, for Aaron Kevin Lucan in such capacity.
…
LEGISLATION
The Act relevantly provides:
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.
…
Section 79 of the Judiciary Act provides as follows:
79 State or Territory laws to govern where applicable
(1)The laws of each State or Territory, including the laws relating to procedure, evidence, and the competency of witnesses, shall, except as otherwise provided by the Constitution or the laws of the Commonwealth, be binding on all Courts exercising federal jurisdiction in that State or Territory in all cases to which they are applicable.
…
Section 66G of the Conveyancing Act provides the following:
66G Statutory trusts for sale or partition of property held in co-ownership
(1)Where any property (other than chattels) is held in co-ownership the court may, on the application of any one or more of the co-owners, appoint trustees of the property and vest the same in such trustees, subject to incumbrances affecting the entirety, but free from incumbrances affecting any undivided shares, to be held by them on the statutory trust for sale or on the statutory trust for partition.
…
(3)
(a) Where the entirety of the property is vested at law in co-owners the court may appoint a trust corporation either alone or with one or two individuals (whether or not being co-owners), or two or more individuals, not exceeding four (whether or not including one or more of the co-owners), to be trustees of the property on either of such statutory trusts.
(b) On such appointment the property shall, subject to the provisions of section 78 of the Trustee Act 1925 , vest in the trustees.
…
APPLICANT’S EVIDENCE
The Bankrupt Estate
The Trustee’s evidence concerning the status of Ms Williams’s financial affairs was set out in his affidavit of 23 March 2022 as follows:
(a)Ms Williams provided a statement of affairs to him on 26 July 2019;
(b)the Property is Ms Williams’s only known asset of value;
(c)the NAB was previously the registered mortgagee of the Property, but on 11 January 2021 he was advised by the NAB’s legal representatives that it had elected to discharge the mortgage;
(d)as at 10 July 2020 the Property had an estimated value of between $800,000 and $850,000 with Ms Williams’s bankrupt estate’s share being between $400,000 and $425,000; and
(e)the known liabilities of Ms Williams’s bankrupt estate totalled $54,121.41.
Appointment of Statutory Trustee
The Trustee has indicated his consent to being appointed a statutory trustee pursuant to s.66G of the Conveyancing Act for the purpose of realising the Property. In his affidavit affirmed 23 March 2022, Mr Walley, who like the Trustee is a partner at PricewaterhouseCoopers, consented to being appointed a statutory trustee for the sale of the Property pursuant to s.66G of the Conveyancing Act. Mr Walley also deposed the following as to his fitness to act as trustee:
(a)he has been a registered liquidator since 2011;
(b)he has 25 years’ experience working in the insolvency and restructuring advisory industry;
(c)he holds a certificate of public practice from Chartered Accountants Australia and New Zealand; and
(d)he is a professional member of Australian Restructuring Insolvency and Turnaround Association and a full member of Chartered Accountants Australia and New Zealand.
CONSIDERATION
It is apparent from the evidence that Ms Williams has failed to co-operate with the Trustee, relevantly by not voluntary vacating the Property, notwithstanding that, as I accept, she has received a notice to vacate.
It is also to be noted that although the estimated value of the Property considerably exceeds Ms Williams’s liabilities, there seems to be no asset which could be applied to the extinguishment of those liabilities other than the Property.
I accept that the Court has jurisdiction to determine this application not only under the Act, but also under the Conveyancing Act by virtue of s.79 of the Judiciary Act. In that regard, I make specific reference to the decision of the Full Court of the Federal Court in Coshott v Prentice (2014) 221 FCR 450:
[Section 30 of the Bankruptcy Act] 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 a property in circumstances where the bankrupt is not complying with his or her obligations under the Act: see, eg, Vince (trustee) v Sopikiotis (No 2) [2012] FCA 1298 at [4] (Bromberg J); Pattison v McKinnon [2008] FCA 1624 at [2] (Jessup J); Offıcial Receiver v Fall (2008) 5 ABC(NS) 772 at [10]-[12] (Lucev FM (as his Honour then was)). It also expressly extends to ancillary relief such as injunctions and other equitable remedies to prevent the scheme of the Act from being defeated. Such ancillary orders are, as the Full Court observed in Talacko at [17], “neither novel or unusual”: see also Storey at 557 (Gibbs CJ). (at 472 [94])
…
… insofar as the appellants pressed the submission that s 66G of the Conveyancing Act does not apply because its remedies are conferred only on the State Supreme Court, the argument must be rejected for the reasons given above. Section 79 ensures, relevantly, that the remedy that would be available to a co-owner in a matter within State jurisdiction in the State Supreme Court is equally available in proceedings in this Court, “amending” to this extent the terms of s 66G of the Conveyancing Act when applied as a surrogate federal law (assuming that the section otherwise applies). (at 476 [116])
I also note what Judge Jarrett said in The Trustee of the Property of Currey (a bankrupt) & Anor v Currey & Anor [2017] FCCA 2692 at [7]:
Those sections of the Act are sufficient authority for the Court to make an order for the delivery up of vacant possession of real property held by a bankrupt but which has vested in the bankrupt’s trustee in bankruptcy and for the delivery of a statement of affairs: Aravanis & Anor v Daisley [2015] FCCA 3473. Section 30 of the Bankruptcy Act, when read together with ss.77(1)(e) and 77(1)(g) also provides sufficient authority for the Court to order that a respondent vacate real property that has vested in his or her trustee in bankruptcy: Pattison v McKinnon [2008] FCA 1624.
I am satisfied that it is appropriate to grant the relief which the Trustee seeks and that he and Mr Walley be appointed statutory trustees for the sale of the Property. I should also note that the present trustee of the bankrupt estate of Mr Williams has made an application to the Federal Court to set aside the disclaimer of ownerous property made by the earlier trustee Mr Malanos and to be recorded on the register as half‑proprietor of the Property, but Goodman J has reserved his decision on that application. It is appropriate that the orders to be made include something to address the uncertainty associated with the outcome of that proceeding as it remains to be seen whether the application will be successful.
CONCLUSION
In all the circumstances, I am satisfied that it is appropriate to make orders in accordance with the draft orders which were forwarded to the Court earlier today. I further order that the Statutory Trustees have liberty to apply in relation to the working out of order 4(g).
I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Cameron. Associate:
Dated: 14 July 2022
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