Yeo v Collings

[2012] FMCA 1060

FEDERAL MAGISTRATES COURT OF AUSTRALIA

YEO & ANOR v COLLINGS & ORS [2012] FMCA 1060

BANKRUPTCY – Application by Trustees for vacate possession and sale of real property –undefended – application acceded to.

Civil Dispute Resolution Act 2011 (Cth), s.6
Bankruptcy Act 1966 (Cth), ss.30, 55, 77(1), 73, 129(2), 153A, 188

Nguyen v Pascoe[2006] FCA 719
Official Receiver v Tregaskis[2006] FMCA 1915
Sistrom v Urh 1992 117 ALR 528

Applicants: ANDREW REGINALD YEO AND GESS MICHAEL RAMBALDI (AS TRUSTEES OF THE BANKRUPT ESTATE OF SHARON LEE COLLINGS)

First Respondent: SHARON LEE COLLINGS

Second Respondent: CRAIG NICHOLAS COLLINGS

Third Respondent: KEVIN ROBERT CHANDLER

File Number: MLG 1199 of 2012

Judgment of: Harnett FM

Hearing date: 7 November 2012

Delivered at: Melbourne

Delivered on: 7 November 2012

REPRESENTATION

Counsel for the Applicants: Mr Lhuede

Solicitors for the Applicants: Piper Alderman

The First Respondent: No appearance

The Second Respondent: No appearance

The Third Respondent: No appearance

THE COURT DECLARES THAT:

The First Respondent was, at the date of her bankruptcy, the beneficial owner, and joint registered proprietor together with the Second and Third Respondents, as to a one third interest in the property situated at 16 Bluegum Drive, Badger Creek in Victoria, more particularly described in Certificate of Title Volume 08346 Folio 187 (Property), which interest vested in the Applicants upon the bankruptcy of the First Respondent.

AND THE COURT ORDERS THAT:

1. The Respondents give vacant possession of the Property to the Applicants within 60 days of this order.

2. The Applicants be appointed trustee for the sale of the Property, which is to be sold for such price and in such manner and on such terms as the Applicants may in their absolute discretion determine.

3. The Applicants be appointed as attorneys for the Second Respondent and the Third Respondent for the purposes of effecting the sale of the Property in accordance with these orders including (without limiting the generality of the foregoing) the contract of sale, vendor’s statement, appointment of selling agent and any declaration under the Duties Act 2000 (Vic) and is granted a power of attorney herein for that purpose.

4. These orders be produced as sufficient evidence of the Applicants’ appointment as attorneys of the Second Respondent and the Third Respondent, and the Registrar of Titles is directed to accept these orders as evidence of the Applicants’ appointment as attorney.

5. The Applicants apply the proceeds of the sale of the Property in the following manner:

   5.1First, in payment of all costs, charges and expenses in selling the Property;

   5.2Second, in payment of any mortgage or encumbrance over or in respect of the title to the Property together with any outstanding rates, taxes, charges or other similar outgoings affecting the Property;

   5.3Third, one third of the net balance to the Applicants; and

   5.4Fourth, and subject to Order 9 8, two thirds of the net balance to the Second Respondent and the Third Respondent to be divided in equal shares.

6. The Applicants be empowered to execute a “T1” Transfer of Land on behalf of the Second Respondent and the Third Respondent being the registered proprietors of two equal undivided third shares in the Property as tenants in common with the Applicants in order to effect a transfer of land.

7. The Registrar of Titles is directed to accept the proper execution by the Applicants of the T1 transfer of land on behalf of the Second Respondent and the Third Respondent as being sufficiently executed by the Second Respondent and the Third Respondent.

8. The Second Respondent and the Third Respondent pay the Applicants’ costs of and incidental to this proceeding, including any reserved costs, such costs to be taxed in the absence of agreement and, in the event of a sale of the Property in accordance with Orders 2 to 8 above, be paid from the Second Respondent’s and the Third Respondent’s share of the net balance of the proceeds from the sale of the Property on an equal basis.

9. An order that the Applicants’ costs of the Application are proper costs of the bankruptcy.

10. Liberty to apply.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT MELBOURNE

MLG 1199 of 2012

ANDREW REGINALD YEO AND GESS MICHAEL RAMBALDI (AS TRUSTEES OF THE BANKRUPT ESTATE OF SHARON LEE COLLINGS)

Applicant

And

SHARON LEE COLLINGS

First Respondent

CRAIG NICHOLAS COLLINGS

Second Respondent

KEVIN ROBERT CHANDLER

Third Respondent

REASONS FOR JUDGMENT
(As Corrected)

1. These proceedings commenced by the applicants filing an application on 26 September 2012 seeking orders that will, in effect, be made by the Court this day. There was also filed on 26 September 2012 a genuine steps statement, as required by s.6 of the Civil Dispute Resolution Act 2011 (Cth).

2. The application was supported by an affidavit sworn by Andrew Reginald Yeo on 19 September 2012, and by affidavits of Courtney Zelma Wright sworn 1 November 2012 and 6 November 2012.  There was also filed by the applicants affidavits of attempted service, together with affidavits of service upon each of Sharon Lee Collings, Craig Nicholas Collings and Kevin Robert Chandler.  Those affidavits of service were filed on 22 October 2012.

3. The Court is satisfied that there has been service of the application, the applicants’ genuine steps statement and the affidavit of Andrew Reginald Yeo, sworn 19 September 2012, on each of the named respondents to the proceedings.

4. At the commencement of the proceedings on 7 November 2012, each of the respondents were called outside the courtroom and failed to respond to the call.  The matter thus proceeded on an undefended basis.  The evidence relied upon by the applicant is that contained in the affidavits referred to above.

History

1. On 13 December 2011 the first respondent, Ms Sharon Collings, executed an authority pursuant to s.188 of the Bankruptcy Act 1966 (Cth) (‘the Act’) and Mr Yeo, together with his colleague, Mr Rambaldi, consented to act as the controlling trustees.  On 24 January 2012, Mr Yeo convened a meeting of creditors to consider the first respondent’s proposal for a personal insolvency agreement and the meeting was adjourned to 3 February 2012.  On the date of the adjourned meeting, the creditors resolved that the first respondent lodge a debtor’s petition and Mr Rambaldi and Mr Yeo consented to being appointed as trustees of the first respondent’s bankrupt estate.

2. On 8 February 2012, the first respondent became bankrupt by virtue of the presentation of a debtor’s petition, pursuant to s.55 of the Act, which was accepted by the Official Receiver on that day (bankruptcy number VRC417 of 2012/3).

3. The statement of affairs of the bankrupt is dated 5 February 2012.  It lists the following unsecured creditors:  (a) the Australian Taxation Office (‘the ATO’), in the amount of $197,906.90 (being as understood by Mr Yeo a joint liability owing by the first respondent and the second respondent);  and (b) Mr Rambaldi and Mr Yeo, in the amount of $15,000, in relation to fees for preparing the personal insolvency agreement.

4. Further to the listing of these above unsecured creditors, Yarra Ranges Council advised the offices of Mr Yeo, and on 18 September 2012, that the Council is a creditor in the amount of $11,547.95 for unpaid council rates. Mr Yeo deposed to his belief that may be a joint debt incurred by the respondents.

5. The statement of affairs of the bankrupt also listed Westpac Banking Corporation Limited as the only secured creditor, with the security being a mortgage registered on the title to the property known as and situate at 16 Bluegum Drive Badger Creek in the State of Victoria and being more particularly described in Certificate of Title Volume 8346 Folio 187 (‘the real property’). The respondents were the joint registered proprietors of the real property until the bankruptcy of Ms Collings.

6. The real property is a residential dwelling in which the first respondent resides with her two children.  The second respondent is the first respondent’s spouse, although according to the statement of affairs completed by the first respondent, the first and second respondents no longer live together.  The third respondent is the first respondent’s father.  The only asset in the first respondent’s bankrupt estate, with a value warranting realisation, is the real property.

7. Shortly after the trustees were appointed as trustees of the first respondent's bankrupt estate the first respondent advised that she was interested in submitting a s.73 of the Act composition to her creditors.  Accordingly on 6 March 2012, Mr Yeo wrote to the first respondent and her solicitor, Mr Innis Cull of ICA Lawyers Pty Ltd and advised that as the ATO was the major creditor of the first respondent's bankrupt estate it was unlikely that the ATO would accept a composition proposal if there were any outstanding taxation lodgements and that the first respondent should urgently attend to the lodgement of all outstanding tax returns. 

8. On 19 March 2012, a Ms Antoni (a senior accountant in the trustees’ firm assisting with the conduct of the first respondent's bankrupt estate) sent an email to Mr Cull requesting Mr Cull to advise the first respondent that in the event the first respondent did not submit a composition proposal by 5pm that day the applicants would discharge their duties without delay including realising a one third interest in the real property. 

9. On 19 March 2012, Ms Antoni received an email from Mr Cull in response to her email which read, inter alia, that the composition proposal would necessarily involve the concurrent settlement of the second respondent’s dispute with the ATO and that the second respondent’s outstanding tax matters would be attended to within the following two weeks.

10. On 20 March 2012, Ms Antoni sent an email to Mr Cull stating that the applicants had agreed to hold off realising their interest in the real property for a further two weeks. On 16 April 2012, Mr Yeo wrote to the first respondent and confirmed that he had not received the composition proposal and that any outstanding taxation lodgements should be submitted to the ATO by 30 April 2012 and failing that, he intended to take immediate steps to realise the applicants’ one third interest in the real property.  Mr Yeo did not receive a response from the first respondent or her solicitors to his correspondence dated 16 April 2012. 

11. Thereafter Mr Cull advised that a third party might have been able to provide sufficient funds to annul the first respondent’s bankrupt estate, pursuant to s.153A of the Act. Subsequently on 25 May 2012, Mr Yeo sent a letter to Mr Cull detailing the current costs in the estate and requesting that sufficient funds be provided by 4 June 2012. In that letter Mr Yeo stated further:

    “Should your client fail to provide sufficient funds to annul her bankrupt estate before 4 June 2012, I intend to discharge my obligations as Trustee of the bankrupt estate and take immediate steps to realise my one third interest in the Healesville property without further notice to you.”

12. No response was received from Mr Cull or the first respondent in relation to that correspondence. 

13. On 29 May 2012, Mr Yeo wrote to the second respondent and the third respondent and invited them to make a reasonable written offer to purchase his interest in the real property by 12 June 2012.  No response was received from the second or third named respondent to that correspondence.

14. Various actions were then taken by the applicants through their solicitors, as set out in paragraphs 19 to 21 inclusive of Mr Yeo’s affidavit sworn 19 September 2012.  In essence, the respondents were put on notice that vacant possession would be required of the real property and an application made to the Court for orders requiring same, and an order for sale in the absence of one of the other registered co-owners of the property offering to buy the applicants’ interest in the property in terms acceptable to the applicants. 

15. No resolution of the matter was achieved, despite the respondents being offered numerous opportunities to purchase the applicants’ interest in the property or to join in the sale of the property with the applicants. 

16. On 17 July 2012, Mr Yeo received a letter from Westpac Banking Corporation Limited, which stated that the balance of the loan secured by the mortgage on the real property was $92,134.27, as at that date.  On 20 December 2011 Ray White Real Estate, Healesville, had earlier provided to the trustees of the bankrupt estate of the first respondent a kerbside valuation of the real property to the effect that its value was approximately $285,000. The evidence of Mr Yeo is that he believes the property, if sold at its estimated value of $285,000, would produce approximately $60,439.33 in surplus sale proceeds available to the creditors of the first respondent’s bankrupt estate, there being available to the bankrupt estate a one third equity in the real property.

17. The affidavit of Ms Wright sworn 1 November 2012, provided evidentiary support to the matters deposed to by Mr Yeo in his affidavit sworn 19 September 2012, and confirmed that Ms Wright, a solicitor of the firm Piper Alderman, solicitors for the applicant who was assisting with the care and conduct of the proceedings on behalf of the applicants, had not had any communication with the third respondent in response to him being served with the documents and orders sought by the applicants in the application, and that further she had caused a letter to be sent to the third respondent, by way of covering letter, which included words to the effect that the third respondent was again invited to make an offer to purchase the applicants’ interest in the real property or to join with the applicants in the sale of the property within seven days thereof.

18. In her affidavit sworn 6 November 2012, Ms Wright again confirmed that she had no contact or response with or from the third respondent, nor had she had any communication from the first respondent. She set out in paragraph 4 of her affidavit her contact with the second respondent, Mr Craig Collings.  Although Mr Collings indicated  that he had a potential purchaser willing to purchase the real property, nothing eventuated from that suggestion.

Application this day

1. The applicants sought orders for the sale of the real property against the second and third named respondents and orders that the respondents vacate the real property in order for the official trustees in bankruptcy to realise the assets of the bankrupt estate of the first respondent for the benefit of the creditors of her bankrupt estate in accordance with their obligations and duties under the Act.

2. The applicants sought orders pursuant to ss.30, 77(1)(e), 77(1)(g) and 129(2) of the Act and a declaration that the first respondent was at the date of her bankruptcy the beneficial owner and joint registered proprietor, together with the second and third respondents as to a one-third interest in the real property, which interest vested in the applicants upon the bankruptcy of the first respondent. The Court shall on the evidence before it make the declaration sought.

3. As to the orders sought, the Court is mindful that the first respondent resides in the residential premises situate on the real property with her two children and that vacant possession to be provided within 30 days of this order may present an onerous time frame and thus proposes that vacant possession be given within 60 days of the date of this order.

4. Sections 30 and 77(1)(g) of the Act combine to provide jurisdiction for this Court to grant the orders sought against the bankrupt as set out in the minute of orders sought by the applicants.

5. Section 30 of the Act also gives the Court broad powers to make orders to give effect to the Act. That power extends to making declarations in respect of the beneficial interests of the applicant and the second and third named respondents in relation to the real property and to orders for the sale and vacant possession of the real property (Nguyen v Pascoe[2006] FCA 719 and as referred to by Lucev FM in Official Receiver v Tregaskis[2006] FMCA 1915.)

6. When a bankruptcy occurs, the joint tenancy is severed and the trustee in bankruptcy becomes an equitable tenant in common with the other co-owners (Sistrom v Urh 1992 117 ALR 528). The bankrupt has failed to do all such actions and things in relation to the realisation of the real property and to aid the official trustee in the administration of the bankrupt estate, as required by s.77(1)(e) and (g) of the Act. Despite requests, each of the respondents have failed to respond effectively to the proposals as put by the applicants. The correspondence as referred to in the affidavit of Mr Yeo and Ms Wright emanating from the applicants to the respondents in the applicant’s attempts to efficiently realise the assets of the bankrupt estate, and the responses and subsequent lack of responses received by the respondents has increased the costs in the administration of the bankrupt estate and already caused delay which should no longer be extended. The first respondent’s conduct is such that only further delay and cost would be incurred in the administration of the bankrupt estate to the prejudice of the bankrupt’s creditors if the applicants were to further seek the respondents cooperation in the sale of the real property. I shall make the orders sought being satisfied that the respondents have been afforded procedural fairness in the matter and that the Court has the necessary power to make such orders in the absence of the respondents.

I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for judgment of Hartnett FM

Associate: 

Date:  19 November 2012

Corrections

1. Order 5.4 was amended pursuant to Rule 16.05(2)(e) of the Federal Magistrates Court Rules 2001 to read “subject to Order 8” instead of “subject to Order 9”.