Walford and Bantock
[2020] FamCA 78
•18 February 2020
FAMILY COURT OF AUSTRALIA
| WALFORD & BANTOCK | [2020] FamCA 78 |
| FAMILY LAW – PROPERTY – bankrupt applicant – trustee-in-bankruptcy appointed – real property is vested property for the purposes of the bankruptcy – applicant seeking leave to make submissions in the proceeding despite the trustee’s appointment – whether she demonstrated exceptional circumstances – none shown. |
| Bankruptcy Act 1966 (Cth), ss 58(1), 116(1) Family Law Act 1975 (Cth), ss 90SM(15), 90SM(16) Migration Act 1958 (Cth), pt 7AA |
| An v Minister for Immigration and Citizenship (2007) 160 FCR 480 Hasim & Ors v Attorney General (Cth) (2013) 218 FCR 25 Hatcher v Cohn & Ors (2004) 139 FCR 425 |
| APPLICANT: | Ms Walford |
| FIRST RESPONDENT: | Mr Bantock |
| SECOND RESPONDENT: | Mr Michel (trustee-in-bankruptcy) |
| FILE NUMBER: | MLC | 9336 | of | 2018 |
| DATE DELIVERED: | 18 February 2020 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | The Honourable Justice Wilson |
| HEARING DATE: | 7 February 2020 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Not applicable |
| SOLICITOR FOR THE APPLICANT: | Not applicable |
| COUNSEL FOR THE FIRST RESPONDENT: | Not applicable |
| SOLICITOR FOR THE FIRST RESPONDENT: | Not applicable |
| COUNSEL FOR THE SECOND RESPONDENT: | Not applicable |
| SOLICITOR FOR THE SECOND RESPONDENT: | Aitken Partners Pty Ltd |
Orders
The applicant’s application for leave under s 90SM(16) of the Family Law Act to make submissions in relation to vested property is refused.
This proceeding is referred to the senior registrar for further case management.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Walford & Bantock has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLC 9336 of 2018
| Ms Walford |
Applicant
And
| Mr Bantock |
First Respondent
And
| Mr Michel (trustee-in-bankruptcy) |
Second Respondent
REASONS FOR JUDGMENT
Introduction
The applicant’s interim application in this proceeding was referred to me by the senior registrar on 16 January 2020.
In essence, the applicant argued that exceptional circumstances existed for her to personally participate in this proceeding in relation to vested property notwithstanding the appointment of a trustee-in-bankruptcy over the applicant’s bankrupt estate.
On 16 January 2020 I gave leave to the applicant to file such other additional information on which she wished to rely in support of her contentions that exceptional circumstances existed in relation to her standing in the bankruptcy. She had until 23 January 2020 to do that. She prepared an affidavit made 23 January 2020. She did not file and serve it as ordered and instead handed it up to me in open court on 7 February 2020. Mr Tatti, who appeared for the trustee-in-bankruptcy, did not complain about the late provision of that affidavit as he said its contents were elsewhere deposed to in the applicant’s material.
In précis form, the relevant facts may be shortly stated. They were as follows –
a)the applicant and first respondent commenced cohabitation in April 2012 and separated on 2 May 2018, the relationship being a little over 6 years’ duration;
b)they did not marry so the provisions of Part VIIIAB of the Family Law Act apply;
c)at the commencement of their relationship the parties owned no property of significance beyond the first respondent’s superannuation of $48,000;
d)the applicant was indebted to various persons for amounts up to $55,000 when the parties commenced their relationship;
e)in July 2013 the first respondent received a property settlement from his former wife of a little over $136,000;
f)in May 2013 the applicant and first respondent purchased the unimproved land known as B Street, Suburb C (“the land”) for $179,000, part of the purchase price being funded by the first respondent from his property settlement, from mortgage finance and from $1,000 provided by the applicant;
g)the first respondent entered into a contract with a builder to construct a home on that land, the construction price being $243,000;
h)the applicant and first respondent agreed that the applicant would conduct her business from the premises;
i)in May 2014 the parties moved into their home that had been constructed on the land;
j)on 11 November 2015 the applicant presented her own debtor’s petition in bankruptcy; and
k)during the relationship the applicant transferred to the first respondent a little over $175,000 which was applied for the joint benefit of the parties.
The registered proprietor of the land described in certificate of title volume…folio… (the land) was and remains Mr Bantock.
No dispute existed that the applicant required leave under s 90SM(16) of the Family Law Act to make submissions in respect of vested property. Similarly, no dispute existed that the applicant’s property relevant to this case was vested property for the purposes of s 90SM(15) of the Family Law Act.
The applicant contended that “exceptional circumstances” existed in this case warranting my granting leave to her to advocate her case in this litigation despite the involvement of the trustee-in-bankruptcy. When I asked her to articulate in a few propositions what the basis was of her contentions that exceptional circumstances existed she said it was the totality of her contentions in this property division application.
Synopsis
For the reasons that follow I refuse the applicant leave under s 90SM(15) or s 90SM(16) of the Family Law Act to separately make submissions in connection with any vested bankruptcy property in relation to the bankrupt property.
Analysis
No dispute arose about whether the applicant’s interest in the land was vested in the trustee. It was common ground that the land was purchased in an unimproved state and the parties chose to register the first respondent as the sole registered proprietor. That appears to have been based on a desire to immunise the property from the reach of her creditors. Upon the presentation of the applicant’s own petition in bankruptcy, pursuant to s 58(1) and 116(1) of the Bankruptcy Act, the applicant’s interest in the land vested in the trustee-in-bankruptcy. The observations of the High Court in Trustees of the Property of Cummins (a bankrupt) v Cummins[1] are on point. In this case the applicant relies on equitable principles to support her contentions in relation to property division.
[1] (2006) 227 CLR 278.
On behalf of the trustee, Mr Tatti submitted, correctly in my view, that the applicant is free to agitate for an interest in non-vested property including superannuation.
Precisely what amounts to exceptional circumstances does not admit of an easy answer. I addressed the question in Goodridge & Beadle.[2] Of that decision Mr Tatti extracted the following –
a)the standing of a bankrupt is only affected insofar as the court is dealing with vested property;
b)the section is “…mandatory in terms”; and
c)“exceptional circumstances” require “…circumstances that are beyond ordinary”.
[2] [2019] FamCA 709.
Further in my reasons in Goodridge & Beadle I addressed the judicial interpretation of “exceptional circumstances”. It is utile to repeat what I said there –
As I held in Sala & Habner,[3] many, although not all, of the relevant authorities were drawn together by White J in the context of part 7AA of the Migration Act in BVZ16 v Minister for Immigration and Border Protection.[4] Those authorities may be catalogued in the following manner –
a)the word “exceptional” is to be construed as an ordinary, familiar English adjective and not as a term of art, describing a circumstance that is such as to form an exception, being something out of the ordinary, something unusual, something special or uncommon yet it need not be unique, unprecedented or very rare but it cannot be something that is regularly, routinely or normally encountered (Lord Bingham of Cornhill CJ in R v Kelly (Attorney General’s Reference No 53 of 1998)[5] and Maan v Minister for Immigration and Citizenship);[6]
b)all relevant circumstances must be examined in order to determine whether exceptional circumstances exist because even though no single factor may be exceptional, in combination the circumstances may be such as reasonably to be regarded as exceptional (Brennan and Dawson JJ in Griffiths v The Queen,[7] Baker v The Queen,[8] Ho v Professional Services Review Committee No 295[9] and Hasim & Ors v Attorney General (Cth));[10] and
c)subject to the particular statutory context, circumstances will be exceptional if they are out of the ordinary or they are unusual (Keifel J in Hatcher v Cohn & Ors,[11] Lindgren J in An v Minister for Immigration and Citizenship[12] and my own decision in CSJ17 v Minister for Immigration and Border Protection[13]).
[3] (2018) 337 FLR 299.
[4] [2017] FCA 958.
[5] [2000] 1 QB 198.
[6] (2009) 179 FCR 581.
[7] (1989) 167 CLR 372, 379.
[8] (2004) 223 CLR 513.
[9] [2007] FCA 388.
[10] (2013) 218 FCR 25.
[11] (2004) 139 FCR 425.
[12] (2007) 160 FCR 480.
[13] (2018) 328 FLR 431.
Mr Tatti also brought to my attention the decision in Megalos & Katsaros.[14] There, leave to the bankrupt was given to make submissions on the basis that if funds were recovered, and a significant distribution to the bankrupt was likely, the bankrupt should have leave to be heard. That is not this case as the trustee has indicated that the distribution to unsecured creditors is likely to be less than 50 cents in the dollar. There will be no surplus in respect of which the bankrupt may have a claim in expectation.
[14] [2015] FamCA 1094.
The authorities reveal other situations where leave has been given to the bankrupt to make submissions. They include instances where the trustee does not participate in the litigation (that is not this case) as was the situation in Redmond & Mullins[15] and Crowley & Pappas.[16] They also include instances where there is no objection to the bankrupt being granted the requisite leave (also not this case) as was the situation in Hanlon & Hanlon[17] and Reua & Reua.[18] Here, the trustee is most trenchant in his opposition to the applicant being granted the leave she seeks.
[15] [2015] FamCAFC 69.
[16] [2014] FamCA 241.
[17] [2008] FamCA 411.
[18] [2008] FamCA 1038.
As to the content of the information the applicant says represents the exceptional circumstances on which she relies, the trustee submitted that none of it was in fact or law information that revealed factual material that was out of the ordinary. Pointing specifically to the 23 January 2020 affidavit of the applicant, the trustee submitted that –
a)in paragraphs 5 to 11, the applicant deposed to matters which provided background to the relationship;
b)in paragraphs 12 to 25, the applicant deposed to the background of her relationship and provided further evidence of her debts which comprised her estate as well as the circumstances in which she filed her debtor’s petition;
c)in paragraphs 26 to 30, the applicant set out her evidence of her relationship with the first respondent after she became a bankrupt;
d)in paragraphs 31 to 46, the applicant set out matters which arose after separation, as well as matters which related to how the proceeding had evolved and deposed to matters involving obtaining information from the trustee;
e)in paragraphs 47(a) to (q), the applicant provided a summary (some of which was recorded in more detail in previous affidavits) of her financial contributions;
f)in paragraphs 48(aa) to (kk), the applicant set out her non-financial contributions; and
g)in paragraphs 49 to 51, the applicant set out a summary of what she said were issues with the manner in which the first respondent conducted himself as well as a summary of her current circumstances.
That distillation of the factual scenario presented by the applicant led the trustee to advance a collection of submissions directed to whether or not exceptional circumstances existed, as that phrase has been judicially interpreted. The trustee submitted –
a)there is nothing in the applicant’s affidavit which pointed to any assistance she can give the court in terms of relevant submissions which the trustee cannot give with respect to vested property;
b)the assistance which the applicant can give to the court is in terms of evidence which she has now put before the court in numerous affidavits;
c)there are no real complexities to the case, the only substantial asset in the pool is the vested property and the applicant and first respondent have put on extensive evidence about the property including their contributions;
d)in terms of legal submissions, the trustee is well placed to advance them and no suggestion is made that he is not or will not make appropriate submissions based on the evidence;
e)there is no prospect of a return to the applicant if any funds are paid to the trustee; and
f)the pool is small, effectively confined to one asset.
In the course of the hearing on 7 February 2020 I explored with the applicant why she was so insistent upon being separately heard. In essence, she told me she had misgivings that the trustee would not adequately advance her interests in the property division case. Mr Tatti responded in the following manner –
HIS HONOUR: The reason I’m asking is it might be that you say that no matter how heartfelt a point is that Ms Walford wants to advance, you either are unwilling, for your own reasons, to advance it, or you say it’s a worthless point, but that bothers me because we’re hearing a lot about section 75(2) matters here and I expect Ms Walford would be very vocal about health issues and how the division of assets have to reflect that.
MR TATTI: And so, if we take a step back from your Honour’s question, the first question that’s relevant in all of this is, is there vested property.
HIS HONOUR: Of course.
MR TATTI: Because if – once that’s established – and in this case we say it’s very, very clear from the material that her interest, Ms Walford’s interest, in the property has vested in the trustee, the task of the court is thereafter first of all to look at what the common law position is in terms of the common law ownership of the property, the Cummins cases and the like, and following establishing that, the court has got to follow the usual pathway: financial contributions; non‑financial contributions; indirect contributions; 75(2) factors, and it comes up with a distribution, as it always does in the usual course. This is a case where Ms Walford has put on extensive evidence. There are numerous affidavits which go through all of these points. So all of the material is before the court.
HIS HONOUR: Well ‑ ‑ ‑
MR TATTI: In terms of points that my client would choose to raise ‑ ‑ ‑
HIS HONOUR: Well, hang on a second. It’s only before the court if an affidavit is tendered. I’m not going to read material that might have been filed relevant to some other application.
MR TATTI: Of course. Of course. Of course. Perhaps if I put it this way: Ms Walford will be called as a witness on behalf of the trustee and the relevant parts of her affidavit will be sought to be tendered into evidence that deal with the history of the relationship, contributions, 75(2) factors.
HIS HONOUR: So you say she won’t be disadvantaged?
MR TATTI: She won’t be disadvantaged in the sense that her case will be put before the court as though she was putting it herself, because that’s the obligation that my client has. My client, in its capacity as trustee, if this runs to trial, has an obligation to ensure the best return possible to creditors and that means putting the best possible case forward. Now, is my client going to run every point Ms Walford is going to run? Probably not, your Honour, because questions of relevance, questions of admissibility, all those things need to be considered.
Disposition
Here, the relevant property is “vested property”, as defined. The applicant has no standing to advance contentions in relation to vested property. That is the trustee’s function. The trustee is an officer of the court and statutory person charged with certain obligations under the Bankruptcy Act. He is discharging those obligations in this case by standing in the shoes of the applicant in relation to “vested property”. He has no role in relation to non-vested property, nor does he seek to exercise any in this case in relation to non-vested property.
The trustee’s legal representative has assured me that he will advance all propositions of fact and law that are properly maintainable on behalf of the applicant and that she will not be disadvantaged in any way in the ongoing conduct of this case. Mr Tatti has also told me the pool of assets is small and that no distribution is likely in this case. Further, Mr Tatti has told me all affidavit material, extensive as it is, has been filed by the applicant.
In those circumstances I do not consider that the applicant should have leave to separately make submissions in relation to vested property. She has nothing to usefully add. The trustee is best placed to articulate her propositions of fact and law. The applicant is unrepresented. Just in the hearing of this application time was wasted in addressing the applicant’s submissions, many of which were not on point. If she has leave to separately advance what she believes, no matter how heartfelt her contentions, this case is likely to be prolonged unnecessarily thereby generating costs.
The applicant has not demonstrated that exceptional circumstances exist so as to warrant her having standing to advance submissions in relation to vested property. In my view the trustee-in-bankruptcy is the proper party to advance her case.
I refuse the leave she sought under s 90SM(15) and 90SM(16) of the Family Law Act. This proceeding will return to the senior registrar to be dealt with on 5 March 2020.
I certify that the preceding twenty-two (22) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Wilson delivered on 18 February 2020.
Associate:
Date: 18 February 2020
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