Weston and ANOR v SZEPESVARY and ANOR (No.2)
[2015] FCCA 3517
•21 December 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| WESTON & ANOR v SZEPESVARY & ANOR (No.2) | [2015] FCCA 3517 |
| Catchwords: BANKRUPTCY – Trustees seeking vacant possession of property formerly vested in bankrupts – oral claim property acquired partly with protected monies – s.116(4) of Bankruptcy Act 1966 applies. |
| Legislation: Bankruptcy Act 1966 ss.58, 115(1), 116(1), 116(2)(d)(iii)(A), 116(2)(iv), 116(2)(n), 116(3), 116(4) Judiciary Act 1903 s.79(1) Property Law Act 1958 (Vic) s.234D |
| First Applicant: | PAUL GERARD WESTON |
| Second Applicant: | PETR VRSECKY |
| First Respondent: | AARON SZEPESVARY |
| Second Respondent: | BUKET OZDIL |
| File number: | MLG 1036 of 2015 |
| Judgment of: | Judge Riley |
| Hearing date: | 21 December 2015 |
| Date of last submission: | 21 December 2015 |
| Delivered at: | Melbourne |
| Delivered on: | 21 December 2015 |
REPRESENTATION
| Counsel for the applicants: | Brenton P. Devanny |
| Solicitors for the applicants: | Smith Leonard Fahey Lawyers |
| Counsel for the first respondent: | The first respondent appeared in person |
| Solicitors for the first respondent: | The first respondent was not represented |
| Counsel for the second respondent: | The second respondent appeared in person |
| Solicitors for the second respondent: | The second respondent was not represented |
DECLARATION
The land described as Lot 2 on Plan of Subdivision 324371G being the whole of the land in Certificate of Title Volume 10101 Folio 392 (“the Land”) being the land known as 44B Woodland Street, Strathmore, in the State of Victoria vests in the applicants pursuant to ss.58, 115(1) and 116(1) of the Bankruptcy Act 1966 (Cth) as tenants in common in equal shares.
ORDERS
The respondents deliver up to the applicants vacant possession of the Land within 14 days of this order.
Pursuant to s.234D of the Property Law Act 1958 (Vic) as applied by s.79(1) of the Judiciary Act 1903, the land and buildings comprising the property be sold by the applicants.
The applicants have the sole conduct and control of the sale of the Land, and are authorised to make all decisions with regard to the sale including appointing a real estate agent, appointing solicitors to undertake the necessary conveyance, choosing the method of sale and setting the reserve price (if any) for the sale.
In the event that the respondents fail to deliver up vacant possession of the Land in accordance with the order 2 above, a warrant of possession shall issue forthwith in favour of the applicants.
The respondents at their own cost and expense must remove from the Land all vehicles, chattels and personal possessions on the Land and any rubbish on the Land which has not vested in the applicants (the personal property) within 14 days of the date of this order.
In the event that the respondents fail to comply with order 6 above, the applicants are empowered to remove and dispose of the personal property as they see fit after 14 days have passed from the making of this order.
The respondents have liberty to bid at any auction sale of the Land on the condition that they have demonstrated, prior to any auction, the financial means to purchase the Land.
The proceeds of the sale of the Land be disbursed as follows:
(a)first, in payment of all selling costs including agent’s commissions, advertising and marketing expenses and all conveyancing and legal costs associated with the sale and the applicants’ realisation costs;
(b)secondly, in payment of the amount owing (if any) to the encumbrancer (if any); and
(c)thirdly, the then available proceeds to be divided equally between the first and second applicant.
The applicants’ costs of this application be paid by the respondents, to be taxed in default of agreement.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 1036 of 2015
| PAUL GERARD WESTON |
First Applicant
| PETR VRSECKY |
Second Applicant
And
| AARON SZEPESVARY |
First Respondent
| BUKET OZDIL |
Second Respondent
REASONS FOR JUDGMENT
(revised from the transcript)
Before the court is an application by the trustees of two bankrupts who were the joint owners of a particular property. The trustees are seeking vacant possession of that property.
The matter has been before the court a number of times. When the matter first came before the court, the bankrupts said that they wished to challenge the amount of the debt which the trustees claimed was owing. There was a suggestion that the bankrupts would be able to get an annulment if the amount of the fees of the trustees were reduced to a proper amount. It was also suggested that the initial debt that the petitioning creditor relied upon was really quite small and that the trustees had inflated the amounts that were owing through some nefarious means.
The matter was adjourned a number of times and orders were made for the trustees to provide information about how the total amount that would be required to annul the bankruptcy had been calculated. There were some defaults by the trustees in providing that information which led to a further adjournment. However, I am satisfied that there is no proper basis to further adjourn the matter. The applicants have a clear entitlement to have the bankrupts give up possession of the property. The bankrupts have not filed any application for an annulment. They have said things to the court which were not entirely true. They have had ample time to make such application as they wished, but have not done so.
Before the court today, the bankrupts resisted the order for vacant possession saying that there were protected moneys that had been put into the mortgage on the property. They said that, under ss.16(2)(d)(iii)(A) and (iv) of the Bankruptcy Act 1966 (“the Act”), the moneys that they had taken from their superannuation funds and put into the mortgage on the property meant that the trustee should not be able to sell the property. Subsection 116(3) of the Act provides that, where the whole, or substantially the whole, of the money paid for a particular item is protected money, then s.116(2)(n) of the Act applies.
There is no evidence before the court that the bankrupts have put any superannuation money into the mortgage. They said from the bar table that there was such money. They said that they each put $35,000 to $40,000 from their superannuation into the mortgage. However, the equity in the property is in the vicinity of $300,000 to $400,000. Consequently, the amount of superannuation that, on the bankrupts’ case, has been put into the property could not be described as the whole, or substantially the whole, of the money paid for the property. Therefore s.116(4) of the Act would apply. That subsection provides that, where property realised by the trustee includes property that has been acquired partly with protected money, the trustees can realise that property and pay to the bankrupt such proportion of the proceeds as are referable to the protected money.
It seems to me that that is the course that would need to be adopted in this case. That is, I do not see the possibility of there being protected money placed on to the mortgage as being a reason to refrain from granting the orders sought by the trustees.
The bankrupts also said today that they should not have been made bankrupt. They sought to revisit the matters that they have been given ample time to demonstrate. It seems to me that there is simply no prospect of the bankrupts being able to either have the bankruptcy annulled or have the bankruptcy set aside.
For these reasons, the orders sought by the trustees will be made. I should add the trustees propose that the bankrupts vacate the property within 14 days. I am very conscious of the time of year. However, 14 days will make it shortly after Christmas. There was material provided to the court from the bar table indicating that the mortgagee of the property has commenced enforcement action and will not proceed with it if the mortgage is brought entirely up to date by
7 January 2016.
It seems that it probably is in everybody’s interests if the trustees in bankruptcy organise the sale rather than the mortgagee. The trustees are probably in a better position to effect the sale than the mortgagee. So, for that reason, I consider that the 14 days, although short and although at a very unfortunate time of year, is the most reasonable outcome in this proceeding.
I certify that the preceding nine (9) paragraphs are a true copy of the reasons for judgment of Judge Riley
Associate:
Date: 12 January 2016
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