Weston v SZEPESVARY
[2016] FCCA 1367
•10 May 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| WESTON & ANOR v SZEPESVARY & ANOR | [2016] FCCA 1367 |
| Catchwords: BANKRUPTCY – Ex parte interlocutory application – s.30 Bankruptcy Act 1966 (Cth) – orders made as sought. |
| Legislation: Bankruptcy Act 1966, ss.30, 153B, 154 |
| Cases cited: Weston & Anor v Szepesvary & Anor (No.2) [2015] FCCA 3517 Szepsevary v Weston [2016] FCA 91 (12 February 2016) |
| First Applicant: | PAUL GERARD WESTON |
| Second Applicant: | PETER VRSECKY |
| First Respondent: | AARON PAUL SZEPESVARY |
| Second Respondent: | BUKET OZDIL |
| File Number: | MLG 1036 of 2015 |
| Judgment of: | Judge Hartnett |
| Hearing date: | 10 May 2016 |
| Delivered at: | Melbourne |
| Delivered on: | 10 May 2016 |
REPRESENTATION
| Counsel for the Applicant: | Mr Devanny |
| Solicitors for the Applicant: | Smith Leonard Fahey |
THE COURT ORDERS EX PARTE THAT:
Pursuant to section 30 of the Bankruptcy Act 1966 (Cth) the bankrupts AARON PAUL SZEPESVARY and BUKET OZDIL (‘the bankrupts’) be restrained from:-
(a)contacting the sale agent, Mr Joe Zucco of Paul McDonald Real Estate; and/or
(b)contacting any employee or agent of Mr Joe Zucco regarding the sale of 44B Woodland Street, Strathmore in the State of Victoria; and/or
(c)taking any other steps to interfere in any way in the sale of 44B Woodland Street, Strathmore in the State of Victoria, including attendance at the auction on 14 May 2016, together with any delayed auction that may be relisted.
Service of this order be effected forthwith by email upon the bankrupts by the solicitors for the Applicants to the email address at [email protected].
Liberty to apply to the bankrupts on short notice.
Liberty to apply generally.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 1036 of 2015
| PAUL GERARD WESTON |
First Applicant
| PETER VRSECKY |
Second Applicant
And
| AARON PAUL SZEPESVARY |
First Respondent
| BUKET OZDIL |
Second Respondent
REASONS FOR JUDGMENT
(Edited Ex Tempore Reasons)
History
Before the Court is an interlocutory application brought pursuant to s.30 of the Bankruptcy Act 1966 (Cth) (‘the Act’) seeking orders which the Court makes this day. The application is supported by affidavit sworn by Lisa Maree McNicholas on 10 May 2016. Ms McNicholas is the solicitor for the Applicants in the interlocutory proceeding who, subject to supervision by her principal, has the conduct and control of the matter on behalf of the Applicants.
On 21 December 2015, her Honour Judge Riley made orders in favour of the Applicants for vacant possession of the property known as and situate at 44B Woodland Street Strathmore in the State of Victoria (‘the property’).[1]
[1] Weston & Anor v Szepesvary & Anor (No.2) [2015] FCCA 3517.
On 25 January 2016 the Court issued a warrant of possession in favour of the Applicants in relation to the property.
On 23 February 2016 the warrant of possession in favour of the Applicants was executed by the Sheriff’s Office of Victoria with the assistance of Victoria Police, and possession of the property was handed over to the Applicants.
On or about 25 February 2016 Mr Joe Zucco of Paul McDonald Real Estate was engaged on behalf of the Applicants to undertake the sale of the property. Mr Zucco listed the property for sale by auction on 14 May 2016.
On 7 April 2016 the Applicants became aware that the bankrupts had broken into the property and sought to re-take possession, of it.
On 12 April 2016 officers from the Moonee Ponds Police Station assisted the Applicants in again evicting the bankrupts from the property.
Since his engagement on 25 February 2016, Mr Zucco has been contacted by the bankrupts as follows:-
(a) by telephone on three or four occasions;
(b)by voicemail messages on Mr Zucco’s mobile phone on four occasions; and
(c)on 12 April 2016 Ms Ozdil, one of the bankrupts, emailed Mr Zucco stating, inter alia, as follows:
‘It is Buket Ozdil here from 44B Woodland Street, Strathmore.
I wanted to advise you that the property and the Title of the Property is under appeal with the Federal Court [sic] Australia.
Attached are our appeal documents showing the date of May 10th 2016. The lawyers acting for the Bankruptcy Trustees may not have explained the circumstances surrounding the property you are about to list.
I believe that as an Estate Agent there are certain guidelines to be followed under the Estate Agents Act 1980. I believe that you may not have been made aware of the true circumstances regarding the potential sale of this property.
Below, an article from the media about our situation which might give you a background on our whole situation ....’
On 6 May 2016 Ms Ozdil emailed Mr Zucco stating relevantly as follows:
‘Just a quick update as you know we have a hearing on Tuesday 10 May and I now have a further hearing on June 16th to dismiss my Bankruptcy which has been accepted by the court. Just a heads up to let any prospective buyers who may be interested in the property be correctly advised that the Federal Court has allowed a hearing for my bankruptcy annulment, which could ultimately dismiss my bankruptcy altogether. You may wish to let people know that if my bankruptcy annulment is accepted the property will vest and revert back to Aaron and myself.’
On 30 December 2015 the bankrupts had appealed the judgment of Judge Riley given on 21 December 2015. That appeal is listed before Jessup J in the Federal Court of Australia. After filing the appeal in the Federal Court of Australia, the bankrupts applied for a stay of the orders made by the Court on 21 December 2015. On 5 January 2016 Bromberg J made an order in the Federal Court of Australia on that application for a stay in the following terms:-
‘On the condition that on or before 7 January 2016 the appellants pay the National Australia Bank $5,000.00 in respect of monies due under a mortgage with the National Australia Bank upon 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 orders made by Judge Riley of the Federal Circuit of Australia on 21 December 2015 in proceeding MLG1036 of 2015 are stayed forthwith, until further order or until the hearing and determination of this appeal.’
The condition referred to in the above order was not satisfied. The matter then came before Tracey J in the Federal Court of Australia on 22 January 2016. In an ex tempore judgment his Honour made it clear that the condition not having been satisfied, the stay thereupon lapsed and there was, as at the date of his Honour’s judgment, no stay in place.
The Trustees then caused the warrant of possession to issue as referred to in paragraph 3 herein in reliance on order 5 of the orders made by the Court on 21 December 2015. As a consequence, the bankrupts made a further application to the Federal Court of Australia which came before Jessup J on 12 February 2016. His Honour said in paragraph 4 of his judgment of 12 February 2016:
‘The original basis of that application was a mistaken belief on the part of the appellants that Bromberg J’s stay remained in place. By the time the second appellant appeared in court today however, she had read Tracey J’s judgment and understood that the stay no longer existed. She is in a position, therefore, of being obliged to secure a fresh stay pending the hearing and determination of her appeal and the appeal of the first appellant.’[2]
[2] Szepsevary v Weston [2016] FCA 91 (12 February 2016).
Having considered the apparent merits of the proposed appeal, Jessup J took the view that it would have negligible prospects of success. He then turned to the balance of convenience, and other discretionary considerations, and determined to reject the interlocutory application made to him by the bankrupts that day.
On the morning of 10 May 2016, and before the interlocutory application came before this Court, the parties had appeared before Jessup J in the Federal Court of Australia. Jessup J dismissed the bankrupt’s application for a stay of the orders of Judge Riley. The application before me was mentioned in open court as submitted to the Court by counsel for the Applicants. The affidavit in support of the interlocutory application before this Court, had been re-sworn by the deponent of the affidavit for the purposes of the proceedings in this Court, and was the same affidavit relied upon in the appeal court proceedings in the Federal Court of Australia.
There remains an annulment of bankruptcy application filed by Ms Ozdil, one of the bankrupts, to be heard. That application was filed in the Federal Court of Australia, and is listed before his Honour Jessup J.
The position in respect of the property at the present time, is that there are arrears in respect of the mortgage repayments in relation to the mortgage secured over the title to the real property, and ongoing no mortgage repayments are being made by the bankrupts or anyone on their behalf. As determined by Judge Riley on 21 December 2015, the applicants have the sole conduct and control of the sale of the property, and they seek to conduct that sale in an orderly manner so that the best sale price can be achieved, without disruption by the bankrupts. Ms Ozdil’s reference to a reversion of the property back to herself and the other bankrupt was not an accurate statement of the law.
Section 154 of the Act is as follows:-
‘Effect of annulment
(1) If the bankruptcy of a person (in this section called the former bankrupt ) is annulled under this Division:
(a) all sales and dispositions of property and payments duly made, and all acts done, by the trustee or any person acting under the authority of the trustee or the Court before the annulment are taken to have been validly made or done; and
(b) the trustee may apply the property of the former bankrupt still vested in the trustee in payment of the costs, charges and expenses of the administration of the bankruptcy, including the remuneration and expenses of the trustee; and
(c) subject to subsections (3), (6) and (7), the remainder (if any) of the property of the former bankrupt still vested in the trustee reverts to the bankrupt.
(2) If the property of the former bankrupt referred to in paragraph (1)(b) is insufficient to meet the costs, charges and expenses referred to in that paragraph, the amount of the deficiency is a debt due by the former bankrupt to the trustee and is recoverable by the trustee by action against the former bankrupt in a court of competent jurisdiction.
(3) If an application is made to the Court by a person claiming an interest in property referred to in paragraph (1)(c), the Court, after hearing such persons as it thinks fit, may make an order, either unconditionally or on such conditions as the Court considers just and equitable, for the vesting of the property in, or delivery of the property to, a person in whom, or to whom, it seems to the Court to be just and equitable that it should be vested or delivered, or to a trustee for that person.
(4) Subject to subsection (5), if an order vesting property in a person is made under subsection (3), the property vests immediately in the person without any conveyance, transfer or assignment.
(5) If:
(a) the property to which such an order relates is property the transfer of which is required by a law of the Commonwealth, of a State or of a Territory to be registered; and
(b) that law enables the registration of such an order;
the property, even though it vests in equity in the person named in the order, does not vest in that person at law until the requirements of that law have been complied with.
(6) The Court may make an order directing the trustee not to pay or transfer the property, or a specified part of the property, referred to in paragraph (1)(c) to the former bankrupt if:
(a) an application is made for an order under this subsection by a person mentioned in subsection (6A); and
(b) the Court is satisfied that:
(i) proceedings are pending under a proceeds of crime law; and
(ii) property of the former bankrupt may:
(A) become subject to a forfeiture order or interstate forfeiture order made in the proceedings; or
(B) be required to satisfy a pecuniary penalty order or interstate pecuniary penalty order made in the proceedings.
(6A) For the purposes of paragraph (6)(a), the application may be made by:
(a) in the case of pending proceedings in relation to a forfeiture order or a pecuniary penalty order under the Proceeds of Crime Act 2002 --the Commonwealth proceeds of crime authority that is, or that is proposed to be, the responsible authority for the application for the order under that Act; or
(b) in the case of pending proceedings under a corresponding law--a person who is entitled to apply for an interstate confiscation order under the corresponding law.
(7) The Court, on application made to it, may vary or revoke an order made under subsection (6).’
Even were an annulment order to be granted in respect of Ms Ozdil pursuant to s.153B of the Act, given s.154 of the Act, the property would not re-vest in Ms Ozdil.
The Applicants put before the Court evidence of there being a real risk that the bankrupts would interfere with the process of sale of the property, and hence they seek the orders as sought.
The Court is satisfied, on the evidence before it, that it is necessary to make the orders which are sought.
The Court notes additionally that this is an ex parte proceeding, but that the affidavit of Lisa Maree McNicholas, solicitor, sworn 10 May 2016, was served upon the bankrupts this morning. The bankrupts have, however, not been served with a copy of the application. Clearly it is necessary that occur promptly, and they have an opportunity to have this matter brought back before the Court to contest the orders made this day, should they wish to do so. There is no evidence before the Court that the bankrupts have satisfied the condition required by order 8 of the orders made by Judge Riley on 21 December 2015. But obviously that is a matter which they are at liberty to put before the Court.
I certify that the preceding twenty-one (21) paragraphs are a true copy of the reasons for judgment of Judge Hartnett
Associate:
Date: 6 June 2016
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