Sellers v Clark McNamara Lawyers
[2010] FMCA 273
•10 May 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| SELLERS v CLARK MCNAMARA LAWYERS | [2010] FMCA 273 |
| BANKRUPTCY – Sequestration order – trust monies held – proof of debt – authorisation. |
| Bankruptcy Act 1966, ss.43 and 129 |
| Applicant: | KEN SELLERS (IN HIS CAPACITY AS TRUSTEE OF THE BANKRUPT ESTATE OF REECE MING) |
| Respondent: | CLARK MCNAMARA LAWYERS |
| File Number: | MLG 1638 of 2009 |
| Judgment of: | Connolly FM |
| Hearing date: | 15 March 2010 |
| Date of Last Submission: | 15 March 2010 |
| Delivered at: | Melbourne |
| Delivered on: | 10 May 2010 |
REPRESENTATION
| Counsel for the Applicant: | N/A |
| Solicitors for the Applicant: | Mr Scott of Cornwall Stodart Solicitors |
| Counsel for the Respondent: | No appearance |
| Solicitors for the Respondent: | No appearance |
ORDERS
Pursuant to s. 129 of the Bankruptcy Act 1966 the trust monies currently held by the Respondent on behalf of the bankrupt be released to the Applicant trustee.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 1638 of 2009
| KEN SELLERS (IN HIS CAPACITY AS TRUSTEE OF THE BANKRUPT ESTATE OF REECE MING) |
Applicant
And
| CLARK MCNAMARA LAWYERS |
Respondent
REASONS FOR JUDGMENT
The Proceedings
This judgment arises from a determination made on 15 March 2010. The Applicant sought orders pursuant to s. 129 of the Bankruptcy Act 1966 that the trust monies currently held by the Respondent on behalf of the bankrupt be released to the Applicant trustee. The application was supported by two affidavits; one sworn by the trustee on 15 December 2009 and filed on 17 December 2009, and the second affidavit was affirmed by the employee of the Applicant, Justin Howlett, on 15 February 2010 and filed in the Court on that date.
The Law
Section 129 of the Bankruptcy Act 1966 states:
129 Trustee to take possession of property of bankrupt
(1) The trustee shall forthwith take possession of all the property of the bankrupt capable of manual delivery, including all deeds, books and documents of the bankrupt.
(2) The Court may, on the application of the trustee, enforce possession accordingly.
(3) A person is not entitled, as against the trustee, to withhold possession of the books of account or any papers or documents of the bankrupt relating to the accounts or to any of the examinable affairs of the bankrupt or to claim any lien on any such papers or documents.
(4) If a person has in his or her possession or power any moneys or security that he or she is not by law entitled to retain as against the bankrupt or the trustee, he or she shall pay or deliver the moneys or security to the trustee.
(4A) Where:
(a) moneys are payable to a person under a law of the Commonwealth or of a State or Territory of the Commonwealth;
(b) that person is a bankrupt or the moneys are payable to the person as the legal personal representative of a person who was at the time of his or her death a bankrupt; and
(c) the moneys constitute property divisible amongst the creditors of the bankrupt or the deceased bankrupt, as the case may be;
those moneys shall, upon demand by the trustee, be paid to the trustee notwithstanding any provision to the contrary in that law.
(4B) A demand under subsection (4A) shall be in accordance with the approved form.
(4C) A payment made in pursuance of a demand under subsection (4A) is, to the extent of the amount paid, a valid discharge to the person making the payment as against the bankrupt or the estate of the deceased bankrupt, as the case may be.
(5) A person who does not pay or deliver to the trustee any moneys or security that he or she is required by subsection (4) or (4A) so to pay or deliver is guilty of contempt of court.
(6) If the person so failing to pay or deliver any moneys or security is a corporation, both the corporation and each officer of the corporation who is responsible for the non‑compliance are guilty of contempt of court.
Findings and Conclusions
On 7 February 2002, Reece Ming (also known as Reece Mingsisouphanh and Ketkeo Mingsisouphanh), bankrupt, became bankrupt pursuant to a sequestration order made by the Federal Court of Australia. The Applicant, Kenneth Stuart Sellars, was appointed trustee of the bankrupt’s estate on 9 May 2002 by way of a sequestration order pursuant to s. 43 of the Bankruptcy Act 1966. The Applicant undertook extensive investigations with regard to recovering all divisible assets of the bankrupt. Those investigations revealed the amount of $48,300.00 being held in the trust account of Clark McNamara Lawyers (the Respondent on behalf of the bankrupt). On 22 October 2003, the trustee requested the release of the trust monies. On 31 October 2003, the Respondent advised that it would not release the trust monies without a court order compelling the same as a claim had been made by a person named Mr Adib Faress in relation to the monies. On 16 March 2006, notwithstanding that the trustee had not received a proof of debt from Mr Faress, the trustee wrote to Mr Faress and requested that he inform the trustee of any objection he had to the release of the trust monies to the Trustee. On 28 June 2007, the trustee instructed solicitors to write to Mr Faress to demand authorisation of the release of those trust monies as they form part of the bankrupt’s estate. Despite the demands made, Mr Faress has not responded and has failed and/or neglected to provide the authority for the release of the trust monies. On 26 May 2009, the trustee again instructed solicitors to write to the Respondent advising them that proceedings would be issued on the trustee’s behalf so as to compel the release of the trust monies and a letter was accordingly written by the solicitors. On 27 May 2009, the solicitors for the trustee received a letter from the Respondent’s solicitors advising that they would not object to the application if no adverse orders were sought against them.
The trustee has not received a proof of debt lodged on behalf of Mr Faress outlining the monies allegedly owing to him by the bankrupt. The monies in trust were paid by a Ms Nicole Robson and Ms Tina Miller who both signed contracts of sale for the purchase of property in Fairfield Heights, New South Wales. The bankrupt was the vendor pursuant to those contracts and the two persons, Ms Miller and Ms Robson, had each paid deposits of $24,000.00 in respect of their purchases. On or about April 2002, Mr Faress arranged for the amount of $48,300.00 to be deposited into the trust account of the Respondent. An agreement was reached between the bankrupt and Mr Adib Faress whereby Mr Faress would provide funds to be returned to Ms Robson and Ms Miller on behalf of the bankrupt and that that return of funds was conditional upon Ms Robson and Ms Miller providing withdrawal of caveat in respect of the Fairfield Heights properties. Since that time both Ms Robson and Ms Miller have filed proofs of debt against the bankrupt in respect of the deposit monies owed to them. The Applicant has entered into agreements with Ms Robson and Ms Miller as to the distribution of the sum of $48,300.00. By letter dated 29 January 2010 the Respondent wrote to the trustee’s solicitor enclosing its notice of appearance, confirming that it had no objection to this application provided that no adverse orders were sought against the Respondent and requesting the documents enclosed with the letter be put before the Court.
In all the circumstances of this matter, I am satisfied that it is appropriate to make the orders sought by the Applicant and I order accordingly.
I certify that the preceding five (5) paragraphs are a true copy of the reasons for judgment of Connolly FM
Date: 10 May 2010
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