The Trustee of the Property of Hoskin, a Bankrupt v Hoskin
[2021] FedCFamC2G 128
•3 September 2021
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)The Trustee of the Property of Hoskin, a Bankrupt v Hoskin [2021] FedCFamC2G 128
File number(s): SYG 2114 of 2020 Judgment of: JUDGE BAIRD Date of judgment: 3 September 2021 Catchwords: BANKRUPTCY – application for sequestration order and vacant possession – where respondent bankrupt failed to comply with obligations under the Act – failed to comply with notices to vacate – failed to deliver vacant possession – respondent makes interim application – interim application dismissed – application allowed Legislation: Bankruptcy Act 1966 (Cth) ss 19, 30, 58, 77, 129, 149D
Federal Circuit and Family Court of Australia Act 2021 (Cth) s 213
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) r 25.11Cases cited: Carrafa v Chaplin in the matter of the bankrupt estate of Michael Chaplin [2019] FCA 415
Coshott v Prentice [2014] FCA FC88, (2014) 22 FCR 450
Culleton v BalwynNominees Pty Limited [2017] FCAFC 8
Weston & Anor v Szepesvary & Anor (No 2) [2015] FCCA 3517
Weston (Trustee) in the matter of Jeffery v Jeffery [2019] FCA 554Division: Division 2 General Federal Law Number of paragraphs: 59 Date of last submission/s: 3 September 2021 Date of hearing: 3 September 2021 Place: Sydney Solicitor for the Applicant: Ms H Hitch, Matthews Folbigg Lawyers Solicitor for the Respondent: The respondent appeared in person ORDERS
SYG 2114 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: THE TRUSTEE OF THE PROPERTY OF JULIE HOSKIN, A BANKRUPT
Applicant
AND: JULIE HOSKIN
Respondent
ORDER MADE BY:
JUDGE BAIRD
DATE OF ORDER:
3 SEPTEMBER 2021
THE COURT:
1.GRANTS LEAVE to the respondent, Ms Julie Hoskin, to move on the interim application dated 2 September 2021, and excuses the respondent from any time for service requirements.
2.DISMISSES the interim application dated 2 September 2021.
3.DECLARES that pursuant to s 58 of the Bankruptcy Act 1966 (Cth) Ms Hoskin’s interest in real property located at 19 Ligar Street, Kennington in the State of Victoria, 3550 and recorded as folio identifier 1/375681P (Volume 04938 Folio 477) (the Property) on and from 20 September 2018 vested in the application, David John Kerr as Trustee for the property of Julie Hoskin, a bankrupt.
4.ORDERS pursuant to sections 30, 77(1)(e) and 77(1)(g)he Act, that within 150 days of the making of these orders, Ms Hoskin:
(a)vacate and deliver up to the Trustee vacant possession of the Property;
(b)deliver up to the Trustee the keys for all buildings and improvements on the Property;
(c)remove from the Property all vehicle, rubbish and any other chattels or personal property which have not vested in the Trustee (as Ms Hoskin’s trustee in Bankruptcy) (personal property).
5.ORDERS pursuant to sections 30, 77(1)(e) and 77(1)(g) of the Act, in the event Ms Hoskin fails to comply with order 4(c) above, the Trustee is empowered to remove and dispose of any and all personal property on the Property he sees fit.
6.ORDERS pursuant to sections 30, 77(1)(e) and 77(1)(g) of the Act, a Warrant of Possession issue in respect of the Property, such warrant to lie in the Registry of the Court until the filing by the Trustee, not before 151 days from the date of these orders, an affidavit stating that Ms Hosking has not given vacant possession of the Property (if that be the case), whereupon after receipt of said Trustee’s affidavit, the Registry release the Warrant of Possession to the Trustee forthwith.
7.ORDERS Ms Hoskin execute all documents and do all things necessary to enable the Trustee to effect the sale of the Property, such sale of the Property to occur only upon the Trustee undertaking his best endeavours to obtain a fair and objective market value, either at public auction, or as otherwise first advised by at least 2 independent licenced real estate agents operating in Victoria.
8.ORDERS the Trustee in the conduct of obtaining vacant possession and sale of the Property, not deal with any of the following individuals and firms:
(a)Mouhammad Merhabi
(b)Hasan Ataman Atlas
(c)Atlas Legal
(d)Ozkan Abdullah
(e)Ausecon Developments
(f)Senad Dizdaravic
(g)Ascot Solicitors
(h)David Markham
(i)Hall & Wilcox
(j)Robert Balzola
or any related entity, person, forum, or entity having any direct or indirect association or other relationship with any of the above, or in which any of the above have any legal or equitable interest.
9.ORDERS the Trustee’s costs be costs in the administration of the estate.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review 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).
SUPPLEMENTARY REASONS FOR JUDGMENT
Judge Baird
In these supplementary reasons terms have the same meanings as in the principal judgment
On the evening of 3 September 2021, following the hearing that day of the Trustee’s application for a sequestration in respect of the Property, delivery of my reasons ex tempore, and the making of orders (September Orders), the respondent, Ms Hoskin, emailed my Chambers to inform the Court that Ask Funding should be on the list of persons set out in Order 8 of the September Orders.
On Monday, 6 September 2021, Ms Hayley Hitch, solicitor, of the Trustee’s solicitors wrote to my Chambers with the following request:
1.Ask Funding (formerly known as Impact Capital) hold a registered caveat on title of the property and claims an equitable charge over the proceeds of sale.
2. The solicitors most recently representing Ask Funding were Hall & Wilcox.
3.The Trustee will therefore need to liaise with Ask Funding and its solicitor in order to effect any sale of the Property the subject of the Orders.
4.The Trustee would therefore request that any order preventing him from dealing with Aski Funding or its solicitors not prevent the Trustee from dealing with Ask Funding or its solicitors to this extent.
5.A possible form of wording for order 8(h) and (i) and any order including Ask Funding could be, subject to the Court’s preference:
(a)“(h) David Markham (other than in his capacity as solicitor for Ask Funding and in respect of its caveat and claimed interest in the Property;”
(b)“(i) Hall & Wilcox (other than as solicitors for Ask Funding and in respect of its caveat and claimed interest in the Property)”
(c)Possible 8(k): “Ask Funding (other than in respect of its caveat and claimed interest in the Property)”.
In substance, the Trustee sought a variation of the September Orders.
Also On 6 September 2021, the respondent, Ms Julie Hoskin responded to Ms Hitch’s email, reiterating the issues canvassed at length prior to, and at the hearing, that she has with Ask Funding and with the Trustee dealing with Ask Funding, and that in her view “There should NEVER have been a caveat applied to the estate for Ask Funding AFTER the fact. This is a matter for the authorities.”
On 29 September 2021, the Trustee’s solicitors enquired whether the Court had made any amendments to the September Orders.
On 6 October 2021, I made the following orders in Chambers:
1.DIRECTS on or before 21 October 2021, the applicant, David Kerr, in his capacity as Trustee of the Property of Julie Hoskin, a Bankrupt, by his solicitors in writing provide to the Chambers of Judge Baird and serve on Ms Julie Hoskin the following information, and identify with precision where in the evidence read at hearing on 3 September 2021, the evidence substantiating the information is located (to the extent applicable):
(a)confirm whether the full name and ACN of the entity known as ‘Ask Funding (formerly known as Impact Capital)’ is Ask Funding Limited (ACN 094 503 385);
(b)details of Ask Funding’s registered caveat on title of the Property (see [3] of Orders made 3 September 2021), and claim to an equitable charge over the proceeds of sale of the Property (noting that the registered caveat may be AF515229) and amounts claimed if known;
(c)the claim by Ask Funding to be a creditor of the Estate of Ms Hoskin, and the present amount of such claim, and whether this claim is additional to that identified in (b) above;
(d)what the Trustee envisages he will require to do by way of liaison with Ask Funding (or its legal representative) in order to effect the sale of the Property in furtherance of [7] of the Orders;
(e)what steps the Trustee is able to undertake in order to ensure that any claim by Ask Funding to be a creditor of the Estate is objectively and critically assessed;
(f)the status of the Trustee’s attempts to engage with Ask Funding referred to at Item 1.1 ‘Ask Funding Indemnity for Costs’ of the Trustee’s Report to Creditors dated 1 June 2021 (Report);
(g)the status of the Trustee’s pursuit of costs orders made in Ms Hoskin’s favour referred to in Item 1.6 of the Report (regarding claims against VGSO and Ask Funding); and
(h)any other information the Trustee considers relevant to the Trustee’s request by his solicitors that the Orders not prevent him from dealing with Ask Funding or its last known solicitors Mr David Markham, and Hall & Wilcox, to obtain possession of the Property and effect its sale, and realisation of proceeds of sale.
On 21 October 2021, in accordance with the orders made 6 October 2021, the solicitor for the Trustee filed a written explanation and submissions addressing certain of the questions raised by the Court.
In substance, the Trustee requests that Ask Funding not be included in Order 8 of the September Orders, and that the last known solicitors of Ask Funding (David Markham and Hall & Wilcox) be removed from the Order, or the wording altered to enable the Trustee to sell the Property in accordance with the September Orders.
Ask Funding has a registered caveat over the Property, and claims to be a secure creditor of the Estate of Ms Hoskin. The Trustee envisages he will be required liaise with Ask Funding and/or its lawyers to:
(a)arrange for the removal of its caveat from the Property in order to convey clear title to any purchaser of the Property;
(b)determine the claim of Ask Funding to be a secured creditor in respect of the Property, which may include possibly commencing Court proceedings to remove the caveat, and to quarantine sufficient of the proceeds of sale to cover its claim;
(c)determine the quantity of any claim by Ask Funding as a secured creditor, to resolve the Trustee’s claims for priority, and
generally to keep it informed regarding the steps taken by the Trustee to give effect to the sale, to reduce the scope for dispute, and costs.
The Trustee notes that the September Orders as they stand do not prevent the Trustee from liaising with Ask Funding. Finally, the Trustee seeks the Court’s assistance to ensure that he does not inadvertently breach the September Orders.
I have considered the Trustee’s explanation, submissions, and the communications received from Ms Hoskin.
I do not consider it is appropriate to add Ask Funding to the list in Order 8 of the September Orders. I was satisfied at the hearing on 3 September 2021 that the Trustee, in order to properly perform his duties, and obligation in respect of the bankruptcy, and to realise the assets as required, should not be prevented from dealing with Ask Funding, including in the ways envisaged above. I remain of that view. I decline Ms Hoskin’s request.
I am not satisfied on the submissions provided by the Trustee that the Order 8 of the September Order should be amended as sought by the Trustee (see as proposed in Ms Hitch’s email of 6 September 2021. I do not otherwise propose to vary Order 8 of the September Orders. As the Trustee notes, he is not prevented by the September Orders from liaising with Ask Funding. By Order 8, the Court provided a balance to ensure that the Trustee could perform his duties and that Ms Hoskin’s concerns about third parties were managed.
The Trustee may apply to vary the Order, should the circumstances requiring any such variation in fact arise.
I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Supplementary Reasons for Judgment of Judge Baird. Deputy Associate:
Dated: 9 December 2021
REASONS FOR JUDGMENT
(ex tempore, revised from transcript)Judge Baird
INTRODUCTION
This is an application pursuant to s 30 of the Bankruptcy Act 1966 (Cth) by Mr David Kerr, as Trustee of the Property of Ms Julie Hoskin, a Bankrupt, that the respondent, Ms Hoskin deliver up to the Trustee vacant possession of certain real property occupied by Ms Hoskin, being 19 (including 19A) Ligar Street, Kennington, Victoria, 3350, volume and recorded as folio identifier 1/275681P (04938, folio 477) (Property). The Trustee also seeks orders for delivery of the keys for the buildings and improvements on the Property, removal of vehicles, rubbish, chattels and personal belongings, and as a consequence of any failure to remove any of those items from the Property, that the Trustee may then deal with such property as he sees fit.
Ms Hoskin is a bankrupt pursuant to a sequestration order of the Federal Circuit Court of Australia (now the Federal Circuit and Family Court of Australia (Division 2)) in proceeding SYG1440 of 2018. That order was made by Judge Street in this Court on 20 September 2020 upon the application of the petitioning creditor, Robert Balzola & Associates. Pursuant to that order, and further to the consent to act as trustee, the Trustee was appointed and continues to be Ms Hoskin’s Trustee in bankruptcy.
The Property
Prior to her bankruptcy, Ms Hoskin was the registered proprietor of the Property. As a result of her bankruptcy, the Property is vested in the Trustee pursuant to s 58(1) of the Act.
Ms Hoskin was living in the Property at the time of her bankruptcy, and following her bankruptcy has remained living at the Property. She has refused to vacate the Property, despite, as the evidence shows, the Trustee providing Ms Hoskin with notices to vacate the Property since at least a first notice issued 14 November 2019.
Following the making of the sequestration order, the Trustee obtained a caveat over the Property which continued in place until the Trustee became the registered proprietor of the Property. The evidence establishes that the Trustee became the registered proprietor, and the title of the Property was transmitted into the name of the Trustee pursuant to s 51 of the Transfer of Land Act 1958 (Vic), on 10 December 2019.
I am informed by the Trustee on affidavit that on 23 December 2019 the original certificate of title to the Property was provided to his solicitors, Matthews Folbigg, where it remains in their safe custody.
On 12 December 2019, the alleged creditor, Ask Funding, claimed an account of $425,348.87 plus interest accruing secured against the title of the Property. Ask Funding has a caveat on the Property which was present on the Property as at the time the Property title was transmitted into the name of the Trustee.
Trustee’s Notices and correspondence
I have referred above to the first notice to vacate the Property issued on 14 November 2019 by the Trustee to Ms Hoskin and any other occupants of the Property. That notice sought the vacation by 5 pm on 12 December 2019. Further follow-up notices and/or reminders to Ms Hoskin were issued on 20 November 2019, on 26 November 2019, and on 28 November 2019. There appear to have been other items of correspondence as well that were communicated to Ms Hoskin by either the Trustee or by Matthews Folbigg.
By letter dated 28 November 2019, sent by registered post by the Trustee directly to Ms Hoskin, she was informed about her options for annulment of her bankruptcy and was provided with disclosure of the debts due by her bankrupt estate and subsequent investigations that the Trustee undertook. In that correspondence, the Trustee stated as an important note that:
(a)he had not yet reviewed the claims that were listed in the letter and had not formally adjudicated on any claims in the bankrupt estate;
(b)a trustee in bankruptcy will normally only do this when there are funds in the estate to pay a dividend to creditors, and he proposed to follow this course in relation to Ms Hoskin’s bankrupt estate;
(c)he had not yet been provided with confirmation of the debt from Ask Funding Pty Limited (ACN 094 503 385) (Ask Funding);
(d)he understands the amount due is secured over the Property; and
(e)his investigations are ongoing.
The Trustee identified that there were creditor claims at that time totalling over $637,000. The Trustee identified that these amounts may be reduced upon adjudication, including because of any set off claims. However, it would not be possible to know this until the Trustee was in a position to adjudicate on any creditor claims. The Trustee referred further to the remuneration and expenses that the Trustee incurs, including legal expenses, in the course of and as Trustee in bankruptcy. The Trustee then said:
Unfortunately, because your Property is vested in me as your bankruptcy Trustee, and because it is said to be secured by a charge in favour of Ask Funding Pty Limited [sic], it will not be possible to use your Property as security for the amount which you wish to pay. Whilst I understand that you may dispute the Ask Funding claim, in order to settle your bankruptcy debt, it will not be possible at present to use your Property.
Further correspondence has been ongoing, including after the date the Trustee proposed for vacation of the Property.
On 12 December 2019, the alleged creditor, Ask Funding, claimed an account of $425,348.87 plus interest accruing secured against the title of the Property. Ask Funding has a caveat on the Property which was present on the Property as at the time the Property title was transmitted into the name of the Trustee.
Personal property listed in statement of affairs
In a statement of affairs made by Ms Hoskin signed on 20 September 2018, Ms Hoskin listed the Property as an asset, claiming to be both owner of, and resident at, the Property. Ms Hoskin also listed creditors totalling approximately $131,000. Further, in her statement of affairs Ms Hoskin listed in summary form some personal property comprising bullion and jewellery. It appears that at least some of that bullion and jewellery has been dealt with by former solicitors of Ms Hoskin. The Trustee has not been able to ascertain the full identity of that personal property, nor its current whereabouts. Whilst this was a matter of some inquiry by me during the course of the hearing, I have not been able to establish anything further, nor is it relevant to the application before me.
Some procedural history
This proceeding was commenced by application filed on 9 September 2020 by the Trustee. The matter has been the subject of a number of applications before me in the course of case management. Considerable correspondence has ensued, and a considerable number of affidavits filed by Ms Hoskin during the interlocutory steps in the proceeding. Ms Hoskin has at all times been self-represented.
On or about 1 October 2018, Ms Hoskin commenced proceedings NSD2036 of 2018 in the Federal Court of Australia seeking an extension of time to appeal the sequestration order. On 23 August 2019, orders were made in the Federal Court proceeding by Justice Bromwich dismissing Ms Hoskin’s appeal against the sequestration orders made by Judge Street. On 26 September 2019, the Trustee notified Ms Hoskin of his intention to realise the Property within her bankrupt estate and to obtain a valuation of the Property.
On 10 December 2019, Ms Hoskin commenced the Federal Circuit Court of Australia proceeding, MLG4349 of 2019, seeking a stay of the notices to vacate, and replacement of the Trustee, amongst other things. That application has been included in the evidence before me. It provides claims by reference to certain sections of the Act, an Inspector General Practice Directions and the like.
On 30 January 2020, Judge Riethmuller in this Court made orders that the application in proceeding MLG4349 of 2019 be struck out, and the Trustee’s costs be costs in the administration of the Estate. His Honour noted that the order that the application be struck out is not intended to create an issue estoppel in order to restrict the applicant from bringing further action when there is a basis for that application. My attention has not been drawn to any such application. [The order does say “when”].
THE PRESENT HEARING
Ms Hitch of the Trustee’s solicitors, Matthews Folbigg Lawyers, appeared for the Trustee at the hearing. As I have said, Ms Hoskin appears on her own account.
Interim application, and police raid
Yesterday, on 2 September 2021, the Court Registry processed an interim application by Ms Hoskin and a supporting affidavit made by her also dated 2 September 2021. The interim application seeks interim orders, including that I order a criminal investigation to be conducted at the Federal level in relation to dealings pertaining to the bankruptcy listed with AFSA as “NSW 3672/18/2”. Ms Hoskin also seeks orders that this proceeding be set aside or dismissed, the Trustee be removed, there be various other orders in relation to paper certificates of title issued in 2006 and following, and orders for the Registrar of Titles in Victoria to produce documents relating to the Property, including a copy of each of the paper certificates of title issued in relation to the Property.
Amongst the orders sought by Ms Hoskin in the interim application is [9] as follows:
I seek orders for AFSA to produce the affidavit and evidence that was presented to the Melbourne courts to obtain a warrant to search my property, which took place on August 3, 2021 at around 7 am and for AFSA to produce the recordings and the video footage taken of every area of my home and unit, inside and outside, that AFSA instructed the Victorian police to take and the details of who has had access to the video footage.
Notwithstanding the short time in which the interim application has been brought and made returnable before me today, I have considered the interim application and Ms Hoskin’s affidavit in support. I have reviewed each of the paragraphs, and am satisfied that the subject matters are either irrelevant for today’s purposes in this proceeding, or otherwise outside the purview of this Court. I have formed the view that the interim application should be dismissed. Nonetheless, I have a concern, which I raised with Ms Hitch, as to the circumstances described in, and giving rise to the orders sought in [9] of the interim application. During the course of the hearing today Ms Hitch has informed me she has obtained the following instructions from the Trustee in relation to these matters:
(a)the Trustee’s involvement in relation to the matters referred to and the circumstances surrounding the matter referred to at [9] of Ms Hoskin’s interim application is that the Trustee issued a referral to AFSA pursuant to s 19(1)(h) and (i) of the Act in relation to certain assets of the bankruptcy, namely, the personal property;
(b)the Trustee’s office received a phone call in July 2021 from a representative of AFSA, inquiring as to orders that have previously been made in connection with Ms Hoskin’s bankruptcy, including the sequestration order and the orders of Bromwich J; and
(c)on approximately 17 August 2021, Richard Locke, an employee of the Trustee’s office, received a call from a representative of AFSA, informing the Trustee’s office that the warrant had been executed on Ms Hoskin at the Property, that none of the personal property referred to had been found, and that the representative made an observation as to the current state of the Property.
From the Bar table, Ms Hitch informed me that after the execution of the search warrant, another person had called the Trustee’s office to inform them that the warrant had been executed. The above is the extent of the evidence before me as to the involvement of the Trustee.
I make these observations on the matter of the raid, and the Trustee’s involvement in precipitating it. It is unfortunate that such a raid occurred, notwithstanding it does seem to be a consequence of Ms Hoskin not providing proper detail, or any detail, of the particular personal property, which she referred to in her statement of affairs.
Whilst there appears to be a dispute between Ms Hoskin and her former solicitors, Ascot Lawyers, as to what happened to the personal property she has informed the Court that she provided to Ascot Lawyers, that dispute has not been able to be resolved. Further, the Trustee instructs that he has not been able to get a satisfactory response from persons at Ascot Lawyers. It is unnecessary in this proceeding for me to say more than that on the material before me, except that the manner in which the police and AFSA appear to have executed search warrants on Ms Hoskin and her Property, cannot be condoned.
Evidence in this hearing
In support of the application, the Trustee, relied on:
(a)his affidavit sworn 8 September 2020, and exhibit DK‑1 to that affidavit; and
(b)an affidavit of Ms Hayley Hitch, solicitor, affirmed 23 February 2021, together with exhibit HAH‑1 to that affidavit.
Each of those affidavits was read in the proceeding, the exhibits tendered and became exhibits in the hearing. In addition, Ms Hitch tendered a short chronology which I received into evidence.
Ms Hoskin provided a report to creditors from the Trustee dated 1 June 2021, as annexure 1‑D to her most recent affidavit in support of the interim application. I received that report into evidence. Ms Hoskin also relied on two affidavits sworn by her, the first dated 12 March 2021, and the second dated 23 March 2021. I have reviewed those affidavits and supporting annexures. Substantively, the affidavits each relate principally to matters pre-dating the bankruptcy, although not entirely. They also relate to matters in which Ms Hoskin raises her concern as to dealings with the certificates of title and records relating to the Property, and various disputes with solicitors. I did not consider the bulk of that material to be relevant and I rejected it. Nonetheless, I have read it.
Ms Hoskin’s concerns in sum stem from dealings that appear to have taken place with various persons pre-dating the bankruptcy, some of which relate to behaviour of lawyers and behaviour of persons who, historically, appear to have wished to acquire the Property. I have taken those matters into account and have foreshadowed in the orders I made that the Trustee will be directed not to deal with those individuals in any realisation of the Property under the bankruptcy. Those persons include:
(a)Mouhammad Merhabi;
(b)a person called Ozkan Abdullah, a director or principal of an enterprise called AUSECON Developments;
(c)a lawyer, Senad Dizdarevic; and
(d)a solicitor, David Markham of the firm Hall & Wilcox, solicitors for Ask Funding (although I am not persuaded of a direct relationship).
Relevant to this proceeding and this hearing, the Court has not been provided with any notice of objection by Ms Hoskin contrary to orders I have made. Whilst Ms Hoskin has filed affidavits, there has been no affidavit which goes to Ms Hoskin’s capacity to pay out the debts such that there can be an annulment of the bankruptcy.
Evidence before me concerning the Property
Valuations
On 4 March 2020, the Trustee caused to be obtained from First National Real Estate a curb‑side valuation of the Property, then appraised to be valued in the vicinity of $700,000 to $770,000. There was another appraisal also provided on 5 March 2020. These valuations are mere estimates. They are 18 months old. Ms Hoskin has disputed this amount and says that the Property should be valued in the order of $1 million. New valuations will have to be obtained.
The buildings comprising the Property
Ms Hoskin has informed me today, and I accept, that the Property comprises a two‑story house, comprising five bedrooms, a study, a detached unit of two to three bedrooms, and garages. Presently, only Ms Hoskin resides in the house. Ms Hoskin has informed me that in the past she has had tenants, and would normally have about five people boarding in her house. The tenants come for the mines, and I observe that the Property is in Bendigo.
Encumbrances on the Property
The evidence establishes that there is one encumbrance on the title to the Property, caveat AF515229F, registered to Impact Capital Ltd (ACN 094 503 385), now known as Ask Funding Limited.
The Trustee notes that this entity has provided documents relevant to its claimed caveat and claimed interest in the Property. The Trustee informs me that Ask Funding has not taken steps in relation to its security to realise its interest in the Property, and the Trustee has informed Ask Funding of the Trustee’s intentions to realise the Trustee’s vested interest in the Property.
The Assets in the bankrupt’s estate
The Property is the most significant asset in the bankrupt estate of Ms Hoskin. The Trustee has not presently realised any amounts within Ms Hoskin’s bankrupt estate.
I am informed that as at 8 September 2020, nearly a year ago, the liabilities payable in Ms Hoskin’s bankrupt estate as claimed totalled $907,115.65.
Ms Hoskin’s position
Ms Hoskin has informed the Court today that she does not presently have the money to pay out the bankruptcy, but what she does have is a person who has expressed an interest in acquiring the Property. I have informed Ms Hoskin that this is a matter she should raise with the Trustee, and that the Trustee will have an obligation to obtain a fair market price for the Property. I note that Ms Hitch has informed me that a common way of a trustee in Bankruptcy obtaining a fair market price for a property is to sell it at auction.
Ms Hoskin has raised a number of concerns which I have dealt with in the course of the hearing, some of which I have dealt with in the course of the hearing today. At this time I need mention three. First, Ms Hoskin is concerned that the Property is sold at market price, that is, at a fair market value. I consider that an offer for sale in the open market and/or public invitation for expressions of interest would be an appropriate way to do that, but it is a matter for the Trustee. Secondly, as I have said above, Ms Hoskin had an expression of interest from a person interested in purchasing the Property, and that expression of interest should be directed to the Trustee, and the Trustee can pass that expression of interest on to any appropriate real estate agent engaged to market and sell the Property. Thirdly, and I consider highly relevant to the orders I make today, there are the limitations or problems with changing one’s residence and leaving one’s house in times of COVID-19. I am conscious that in Victoria, as in New South Wales, presently there are considerable limitations on movement – “lockdowns” – of people.
Further, as I have already identified, Ms Hoskin has serious concerns that the claiming of vacant possession of the Property and selling it would be a means by which the Property would be acquired by one of the named individuals, or any related entity or person, directly or indirectly associated with them that I have previously named at [28] above. The orders I make take these matters into account.
Ms Hoskin has not given vacant possession
The main issue to be determined on this application is vacant possession of the Property to be delivered to the Trustee for the purpose of the Trustee fulfilling his duties as Trustee of Ms Hoskin’s bankrupt estate.
It is apparent that since 14 November 2019, and to September 2021, that Ms Hoskin has not voluntarily vacated the Property. Considering the significant time that has passed since 26 September 2019 when the first correspondence was issued by the Trustee to Ms Hoskin, , and the significant time that has passed since 14 November 2019 when Ms Hoskin was issued with a first notice to vacate, I am satisfied that Ms Hoskin will not voluntarily vacate the Property.
Relevant principles, and legislative provisions and their application
Section 30 of the Act confers general power on the Court to decide questions of fact and law in any case of bankruptcy, and to make orders as the Court considers necessary for the purpose of giving effect to the Act. Section 30 is regarded as a facilitative provision. For example in the matter of Weston (Trustee) in the matter of Jeffery v Jeffery [2019] FCA 554 at [53], the Court was of the view that it had jurisdiction to deal with, inter alia, matters in connection with the possession of the property as a consequence of ss 30 and 77 of the Act.
In the matter of Carrafa v Chaplin in the matter of the bankrupt estate of Michael Chaplin [2019] FCA 415 at [10], Colvin J indicated that “the purposes of the Act relate to the appropriation and equitable distribution of the assets comprising the bankrupt estate, with consequent relief from ongoing liability of the bankrupt for debts existing at the time of the bankruptcy”.
In the matter of Weston & Anor v Szepesvary & Anor (No 2) [2015] FCCA 3517 at [9], an appeal from which was dismissed, the Court made the observation that “it probably is in everybody’s interests if the Trustee in bankruptcy organise the sale, rather than the mortgagee”.
Ms Hitch submits, and I accept, that the same is true in the present case where the caveat creditor, Ask Funding, is not taking steps to realise the Property, and interest is accruing on the judgment debts obtained by Ask Funding against Ms Hoskin, and I add, further, given Ms Hoskin’s concern as to the claim by Ask Funding.
Accordingly, I am persuaded that it is in everybody’s interests if the Trustee organises the sale and not any of the claimed creditors.
In this matter, there has been significant delay. As was the view of the Full Court of the Federal Court in Culleton v BalwynNominees Pty Limited [2017] FCAFC 8; (2017) 343 ALR 632, at [54], delay and prevarication is oftentimes in no one’s interests, including that of the debtor, namely Ms Hoskin. I consider that these observations are apposite to the party’s conduct during the administration of a bankrupt’s estate, and so too, in the present case.
Before I leave s 30 of the Act, I note that there are a number of cases in this Court and in the Federal Court of Australia which provide authority that the section provides sufficient power to make orders against a bankrupt for the vacation of property; the issuing of a warrant of possession, and for the sale of property in circumstances where the bankrupt is not complying with his or her obligations under the Act: see, for example Coshott v Prentice [2014] FCAFC 88, (2014) 22 FCR 450 at [94], Siopsis, Katzmann and Perry JJ.
I next refer to s 58 of the Act. Section 58(1) provides relevantly:
Subject to this Act, where a debtor becomes a bankrupt:
(a)the property of the bankrupt, not being after-acquired property, vests forthwith in the Official Trustee or, if, at the time when the debtor becomes a bankrupt, a registered trustee becomes the trustee of the estate of the bankrupt by virtue of section 156A, in that registered trustee;
...
Thus, in the present case, the Trustee being an appointed Trustee of the bankrupt estate of Ms Hoskin, I am persuaded that s 58(1) of the Act justifies the Court declaring that the Property be vested in the Trustee following the bankruptcy of Ms Hoskin. This will have the effect on the Court record of formalising the position which pertains, on any event, in fact and as a matter of law.
As a bankrupt, Ms Hoskin has duties by virtue of s 77 of the Act, including:
(a)to execute such instruments and generally do all such acts and things in relation to her Property and its realisation as required by the Act or by the Trustee, or as ordered by the Court upon the application of the Trustee; and
(b)to aid to the utmost of her power in the administration of her bankrupt estate.
Pursuant to s 129(2) of the Act, the Court is empowered to enforce possession in respect of all property of a bankrupt capable of manual delivery to the Trustee, such as the keys to the Property which the Trustee in the present case seeks as part of the application.
Enforcement
I have the benefit of [21] to [24] of Ms Hitch’s outline of submissions, in which she usefully refers to relevant legislative provisions and the Court’s Rules for enforcement of the orders for vacation and delivery of vacant possession of property, namely the issue of a writ of execution, and a warrant for possession. It is convenient to adopt those paragraphs here, updating the references to the Court and Rules, because, since 1 September 2021, the name of this Court has changed, the Federal Circuit and Family Court of Australia Act 2021 (Cth) now applies, and the Court has new sets of Rules, substantially in the same form as those that previously operated:
[21]Section 213 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) provides that a person in whose favour a judgment of the Court is given is entitled to the same remedies by execution as are allowed in like cases where a judgment of the Supreme Court of a State has been given.
[22]Rule 25.11 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) provides that a party may apply to the Court to seek an order to issue a writ, order or any other means of enforcement of a judgment or order that can be issued or taken in the Supreme Court of the State in which the judgment or order has been made, as if it were a judgment of that Supreme Court.
[23]Section 79 of the Judiciary Act 1903 (Cth):
“operates to pick up and apply both procedural and substantive State law as a surrogate federal law, thereby enabling Courts exercising federal jurisdiction to provide remedies afforded otherwise only under State law in the exercise of State jurisdiction”.
[24]The Supreme Court of Victoria may issue an enforcement warrant in order to authorise an enforcement officer to deliver possession of land to the person entitled to possession of such land.
Summary of inter partes correspondence and issues raised
I have heard this application over the full day today, and have been taken by Ms Hitch and Ms Hoskin in some detail to their evidence, and to concerns and submissions raised by Ms Hoskin.
During the course of this proceeding, and the evidence shows, beforehand, there has been significant correspondence between the parties. That correspondence Ms Hitch submits, and I accept, has caused a greater workload on the Trustee, and certainly on the Trustee’s solicitors, than may generally occur in the administration of a bankrupt’s estate where, in short, there appears to be one principal asset, namely the residence of the bankrupt.
The voluminous correspondence that has ensued between the parties, and Matthews Folbigg and Ms Hoskin during the course of Ms Hoskin’s bankruptcy and this proceeding relates to a variety of issues, including but not limited to:
(a)Ms Hoskin’s complaints regarding the conduct of the Trustee, his staff and his solicitors;
(b)various allegations of fraudulent and criminal conduct against the Trustee, his staff, his solicitors, and various creditors in Ms Hoskin’s bankrupt estate, as well as other persons dealing with, or who have in the past dealt with, Ms Hoskin, or in respect of her Property and of which she has raised concerns;
(c)disputes regarding creditor claims; and
(d)the assets and liabilities of Ms Hoskin’s bankrupt estate.
I have not, in this judgment, set out all of this correspondence (as I describe the communications). It is sufficient that I summarise them in the above form. To the extent that any of the material is in evidence before me, and relevant to the application, I have considered it.
In sum, although Ms Hoskin has explained to the Court her concerns, and made reference to matters of history, it is the case that she has failed to comply with her obligations under s 77 of the Act, and that has necessitated the Trustee bringing this application.
DISPOSITION
I have considered the evidence, in the light of the relevant legislative provisions and case law. For the above reasons, I am persuaded that it is appropriate to make orders substantially in the form of the application.
I so order.
I certify that the preceding fifty-nine (59) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Baird. Deputy Associate:
Dated: 9 November 2021
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