Sutherland v Graham
[2009] FMCA 795
•6 August 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| SUTHERLAND v GRAHAM | [2009] FMCA 795 |
| BANKRUPTCY – Application by trustee in bankruptcy for an order that a bankrupt vacate property. |
| Bankruptcy Act 1966 (Cth), ss.30, 77 Federal Magistrates Act 1999 (Cth), s.78 |
| Cook v Tagamilitsky [2001] FMCA 117 Pascoe v Hooper [2009] FMCA 520 Pattison v McKinnon [2008] FCA 1624 |
| Applicant: | RODERICK MACKAY SUTHERLAND AS TRUSTEE IN BANKRUPTCY OF THE BANKRUPT ESTATE OF ANTHONY GRAHAM |
| Respondent: | ANTHONY ARNOLD GRAHAM |
| File Number: | SYG1857 of 2009 |
| Judgment of: | Barnes FM |
| Hearing date: | 6 August 2009 |
| Delivered at: | Sydney |
| Delivered on: | 6 August 2009 |
REPRESENTATION
| Counsel for the Applicant: | Mr S Golledge |
| Solicitors for the Applicant: | Bartier Perry |
| Respondent: | No appearance |
ORDERS
The respondent vacate the property contained in Folio Identifiers 225/14188 and 226/14188 known as 83-85 Renfrew Road, Werri Beach, New South Wales on or before 17 August 2009.
A writ of possession issue in respect of the property referred to in Order 1 above such writ to lie in the Registry until the filing by the applicant, not before 18 August 2009, of an affidavit stating that the respondent has not given vacant possession.
The applicant’s costs of the proceedings be paid out of the property of the bankrupt estate of the respondent bankrupt.
Service of these orders is to be effected by personal service on the respondent.
Liberty to apply on 24 hours notice.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG1857 of 2009
| RODERICK MACKAY SUTHERLAND AS TRUSTEE IN BANKRUPTCY OF THE BANKRUPT ESTATE OF ANTHONY GRAHAM |
Applicant
And
| ANTHONY ARNOLD GRAHAM |
Respondent
REASONS FOR JUDGMENT
(Revised from transcript)
This is an application filed on 4 August 2009 by Roderick Mackay Sutherland in his capacity as trustee of the bankrupt estate of Anthony Graham, seeking orders from the Court pursuant to ss.30 and 77(1)(g) of the Bankruptcy Act 1966 (Cth) that the respondent vacate a property known as 83-85 Renfrew Road, Werri Beach, New South Wales. The application originally sought that this occur by 5 August 2009. The order that is sought now is that the respondent vacate the property on or before 17 August 2009.
As clarified in short minutes of order handed up today and in oral submissions, in addition the trustee seeks an order (to address the possibility that the applicant may not vacate the property) that a writ of possession issue in respect of the property to lie in the registry until filing by the applicant, not before 18 August 2009, of an affidavit stating that the respondent has not given vacant possession of the property.
The application is supported by a number of affidavits, including affidavits in relation to service of this application, which first came before the Court on short notice before Smith FM on 4 August 2009. Smith FM made orders that the application be returnable for hearing on 6 August 2009 and that service of the application and supporting affidavits (without annexures) be effected by facsimile transmission to solicitors for the respondent, who had agreed to accept service, and by courier of the originals and annexures at a later time.
On the basis of the affidavits as to service of Ben Mackay sworn on 5 August 2009 and of Malcolm Hill sworn on 5 August 2009 I am satisfied as to service of the original application and affidavits and annexures. I am satisfied on that basis that the respondent was notified of the date for hearing of the application. There was no appearance by the respondent today on the hearing of the application. I consider however that it is appropriate to consider the application in his absence.
As submitted by counsel for the applicant, the power of the Court to make orders of the nature sought has been considered in a number of decisions in this Court. I refer, in particular, to the discussion by Raphael FM in Cook v Tagamilitsky [2001] FMCA 117. His Honour stated at [9] that:
… It is interesting that although recovery of the assets of a debtor frequently involves the sale of the debtor's property and therefore the necessity to require a debtor to vacate possession of that property, there is no specific section in the Bankruptcy Act dealing with this matter in a codified form. Reference has to be made to a number of sections of the Act. However, it is obvious from cases such as Dixon v Ly Ty Tran Cao and Ors, a decision of Beazley J as she then was, unreported 23 June 1995 in the Federal Court and White (as trustee of the bankrupt estate of Lyn) v Lyn [1999] FCA 841 a decision of Finkelstein J, that the Court has power to make such orders and indeed to stay those orders on terms.
Raphael FM was of the view that s.30 of the Bankruptcy Act taken together with s.77 (see in particular s.77(1)(g)) was sufficient to ground the jurisdiction for the Court to make orders such as those that are sought today. A number of decisions of this Court have taken a similar approach (see, in particular, the discussion in Pascoe v Hooper [2009] FMCA 520 at [8]).
In addition, and relevantly in relation to the second order sought in this case, in Pattison v McKinnon [2008] FCA 1624 Jessup J took the same approach in relation to the power of the Federal Court, acknowledging the correctness of the approach of Raphael FM in Cook v Tagamilitsky (at [2]) and being satisfied that the Federal Court had both the jurisdiction and the power to make the orders sought by the applicant under ss.30 and 77(1)(e) and (g) of the Bankruptcy Act.
In relation to the order sought in relation to the writ of possession, I note the operation of s.78(2) of the Federal Magistrates Act 1999 (Cth) and s.104 of the Civil Procedure Act 2005 (NSW) and Uniform Civil Procedure Rules and that the application is an application for a writ of possession. It is appropriate, if such an order is to be made, that it be made in terms that a writ of possession issue, but that it should lie in the registry until the applicant files an affidavit stating that the respondent has not given vacant possession of the property. This approach was taken by Jessup J in Pattison v McKinnon. Such an order would mean that while there would be no need for the applicant to come back before a Federal Magistrate to obtain a writ of possession, operation of the writ of possession would be dependent on the respondent not vacating the property in accordance with any order made.
I am of the view that the Court has jurisdiction and power to make the orders sought. I have had regard to the evidence before me in relation to the substantive matters, in particular the affidavits of Danny Vrkic sworn on 4 August 2009 and the exhibit to that affidavit, the further affidavit of Mr Vrkic sworn on 5 August 2009 and the affidavit of Ben Mackay sworn on 5 August 2009.
The background to these proceedings is that the bankrupt was the registered proprietor of a number of properties, including, in particular, the property known as 83-85 Renfrew Road, Werri Beach, New South Wales. That property is the subject of a contract for sale, a copy of which is annexed to the affidavit of Mr Vrkic. Pursuant to that contract for sale, which was entered into on 6 June 2009, vacant possession is to be given to the purchaser. The contract for sale not only provides for vacant possession, but also for the completion date to be the “42nd day after the contract date”, which would have been 20 July 2009 in accordance with clause 15 of that contract. There is also provision in the contract that if completion does not take place by the completion date, then a notice to complete within 14 days may be issued.
The bankrupt did not vacate the property prior to the completion date in the contract. Before me, in the exhibit to the affidavit of Mr Vrkic, is evidence of correspondence and conversations with the bankrupt and with his solicitors in relation to obtaining possession of the property.
In particular there was an exchange of correspondence between the solicitors for the trustee and the solicitors for Mr Graham in relation to Mr Graham vacating the property. On 12 May 2009 the trustee wrote to Mr Graham’s solicitors indicating that an auction was to occur on 6 June 2009 and requesting immediate access to the property and an undertaking that Mr Graham would vacate the premises. In a letter of 15 May 2009 Mr Graham’s solicitors stated that he proposed to vacate the property no later than two weeks prior to the completion date of any sale of the property.
By letter of 20 May 2009 the trustee responded to this proposal, referring to the need for the bankrupt to provide possession, and indicated that he was prepared to allow the bankrupt to remain in the property on terms that he undertook to vacate the property no later than the date two weeks prior to the date scheduled for settlement of the sale of the property. The trustee reserved the right to vary those arrangements on 14 days notice and required the bankrupt to sign and provide a written acknowledgement and undertaking in respect of those terms by 22 May 2009, in the absence of which the trustee advised that he would take such steps as advised in relation to obtaining possession.
No such written acknowledgement and undertaking was provided. There was then further correspondence between the solicitors for the debtor and the trustee in relation to the issue of possession. In addition, on 28 July 2009 Mr Vrkic had a conversation with Mr Graham, in which he offered to send someone to assist Mr Graham to pack and told him that he needed him out of the house by Friday, as the trustee had signed a contract and they needed vacant possession. To this the bankrupt responded “no”.
On 29 July 2009 Mr Vrkic attended Mr Graham’s house and referred to the contract for sale and Mr Graham’s undertaking that he would be out by completion. Mr Graham indicated that things had changed, that his health had deteriorated and that he could not be out until mid-August. This was repeated on 31 July 2009 and by Mr Graham’s solicitors.
These proceedings were commenced on 4 August 2009. In his affidavit of 5 August 2009 Mr Vrkic set out detailed reasons for his concern that the bankrupt may not vacate the property in time for completion of the sale of his family home (perhaps in the hope the sale would not take place). I am now informed that the applicant does not seek an order for possession prior to 17 August 2009 in light of information obtained in relation to the time taken to execute a writ of possession (as attested to in the affidavit of Ben Mackay of 5 August 2009) and confirmation by the solicitors for the purchasers of the property that they would not call for settlement before 18 August 2009.
There was an issue in relation to registration of the trustee on the certificate of title. I am told this has now been attended to by the applicant. Hence the trustee seeks to be in a position to provide vacant possession to the purchaser of this property on 18 August 2009 and in those circumstances is content with an order that the bankrupt vacate the property on or before 17 August 2009.
To allow for the possibility that the bankrupt may not vacate the property, having regard to the unchallenged affidavit evidence indicating the basis for a concern that that may not occur, the applicant seeks, and I consider that it is reasonable and appropriate to order, that leave be granted to issue a writ of possession forthwith to enforce an order for possession, but on the terms that such writ is to lie in the registry unless and until the applicant file, not before 18 August 2009, an affidavit stating that the respondent has not given vacant possession of the property.
The proposed orders give the respondent a reasonable time to vacate the property. They are in accordance with his indications to Mr Vrkic that he will be able to do so by mid-August. At the same time, such orders ensure that the trustee is, as far as possible, in a position to provide vacant possession and hence complete the sale. I note in that respect that the bankrupt was the owner of a considerable number of properties which form part of his bankrupt estate. The properties are under contract and if there is completion there will be a small surplus in the estate. I am told that each sale must complete to enable creditors to be paid in full.
In all the circumstances I consider it appropriate to make the orders sought. Service of these orders should be effected by personal service on the respondent. It is also proposed that there be liberty to apply on 24 hours notice. I consider that to be appropriate in the circumstances of this case.
I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of Barnes FM
Associate:
Date: 17 August 2009
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