The Australian Steel Company (Operations) Pty Ltd v Chubb

[2012] FMCA 1093

FEDERAL MAGISTRATES COURT OF AUSTRALIA

THE AUSTRALIAN STEEL COMPANY (OPERATIONS) PTY LTD v CHUBB AND ORS [2012] FMCA 1093

BANKRUPTCY – Costs.

Applicant: THE AUSTRALIAN STEEL COMPANY (OPERATIONS) PTY LTD

First Respondent: MORGAN JAMES CHUBB AS TRUSTEE OF THE BANKRUPT ESTATE OF DAVID JOHN ALLUM AND KYLIE SHERIE ALLUM

Second Respondent: KYLIE SHERIE ALLUM

Third Respondent: DAVID JOHN ALLUM

File Number: BRG 1 of 2012

Judgment of: Jarrett FM

Hearing date: 18 October 2012

Date of Last Submission: 18 October 2012

Delivered at: Brisbane

Delivered on: 18 October 2012

REPRESENTATION

Solicitor for the Applicant: Ms Dennis

Solicitors for the Applicant: Patane Lawyers

No appearance for the First Respondent

No appearance for the Second Respondent:

No appearance for the Third Respondent:

ORDERS

1. All outstanding applications are dismissed.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT BRISBANE

BRG 1 of 2012

THE AUSTRALIAN STEEL COMPANY (OPERATIONS) PTY LTD

Applicant

And

MORGAN JAMES CHUBB AS TRUSTEE OF THE BANKRUPT ESTATE OF DAVID JOHN ALLUM AND KYLIE SHERIE ALLUM

First Respondent

KYLIE SHERIE ALLUM

Second Respondent

DAVID JOHN ALLUM

Third Respondent

REASONS FOR JUDGMENT

Ex tempore

1. On 18 September this year, I delivered some reasons for judgment and made some orders on the applicant’s principal application before me (The Australian Steel Company (Operations) Pty Ltd v Morgan James Chubb as Trustee of the Bankrupt Estate of David John Allum and Kylie Sherie Allum [2012] FMCA 866).

2. The applicant is the supplier of steel products and brought an application in this Court against the trustee of the bankrupt estate of the second and third respondents and against the second and third respondents in their own capacity, seeking a raft of relief which was designed to secure orders for the sale of certain real property owned by the second and third respondents in northern New South Wales.

3. The applicant’s claim was based upon a charging clause in a supply agreement, which I accepted created an equitable charge over the second and third respondent’s real estate in favour of the applicant.  The application, however, failed in a number of respects, although I did conclude that by reason of the general law that permits a court to enforce an equitable charge by the appointment of a receiver and/or making an order for sale, that I could make an order for sale, but having regard to certain authorities, more evidence and information was needed before the Court could exercise its discretion and make the order for sale that was sought.

4. The application was therefore adjourned so that the applicant could consider its position and provide whatever other evidence it wished to so as to secure an appropriate order for sale.  Events seem to have overtaken the matter, though, because the land the subject of the equitable charge has been sold by a secured creditor. 

5. The applicant now seeks its costs of these proceedings against all respondents.

6. The relevant property was the subject of a registered mortgage.  It was submitted that the first respondent disclaimed his interest in that property, no doubt because it was worth less than the amount owed to the registered secured creditor.  The mortgagee has moved to exercise its power of sale and it seems that the property has been sold.  No doubt, the amount realised from the sale of that property was insufficient or is likely to be insufficient to discharge the secured liability over that property. 

7. Although the applicant had notified its interest over the land by way of a caveat, the only conclusion that one can draw is either that the caveat was withdrawn or more likely, the caveat lapsed without having been supported by relevant litigation or relevant acts which might need to have been performed to prevent the caveat from lapsing.

8. So the net effect of it all is that the applicant has lost its secured interest in the land and no order for sale at its request can be made. 

9. Should the first respondent pay the costs of these proceedings in those circumstances?  I do not think so.  What has occurred has nothing to do with what the first respondent has or has not done.  The relief sought by the applicant could only have been granted by the court.  It seems to me that whatever the attitude of the first respondent or the other respondents, the application was necessary. 

10. The ill conceived way in which this application was initially brought by the applicant and the steps that the applicant ought to have taken but has not taken to protect its equitable charge tell against an order for costs. Against the first, second or third respondents.  In all of these circumstances, all outstanding applications will be dismissed.

I certify that the preceding ten (10) paragraphs are a true copy of the reasons for judgment of Jarrett FM

Date: 21 November 2012