Dixon (Trustee) v Grant, in the matter of the bankrupt estate of Grant [2025] FCA 1440

1. Pursuant to ss 30 and 77(1)(e) of the Act, the respondent and any other occupants of the Property, within 28 days:

(a) vacate the Property and provide vacant possession to the applicant;

(b) deliver up to the applicant the keys for any buildings and improvements on the Property (if any); and

(c) remove all personal property, being vehicles, rubbish and chattels (Personal Effects) which are not vested in the applicant (if any).

1. Pursuant to s 30(1)(b) of the Act, the applicant have liberty to apply to the Court for a writ of possession for the Property in the event that the respondent does not deliver up vacant possession of the Property pursuant to order 1 above.
2. The applicant be authorised to sell the Property forthwith and be appointed as trustee for its sale.
3. The respondent do all things and sign all documents as may be necessary (if any) to effect a sale of the Property within such time as is nominated by the applicant, such documents to be provided and/or prepared by the applicant's solicitor and/or the purchaser's solicitor, as the case requires.
4. If the respondent does not do all things or sign such documents within such time as may reasonably be required by the applicant in default of compliance with order 4 above, the applicant be authorised and empowered forthwith to do all things and sign all documents on behalf of the respondent including by signing any contract of sale, discharge of mortgage, authority, transfer of land or other document required to effect a sale of the Property.
5. Pursuant to s 146 of the Act, the applicant be permitted to make a distribution of the estate of the respondent notwithstanding that the respondent has failed to file a statement of affairs.
6. The costs of and incidental up to the date of these orders be costs in the bankruptcy of the respondent.
7. Liberty to apply on 3 days' notice.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

(Delivered ex tempore; revised from transcript)

1. By originating application filed on 26 September 2025, the applicant seeks, in summary, the following relief:

(1) a declaration that the respondent's interest in the residential property at 75 Bettington Circuit, Charnwood ACT 2615 vested in the applicant pursuant to s 58 of the Bankruptcy Act 1966 (Cth) on the day that the respondent's sequestration took effect;

(2) that the respondent and any other occupants of the property within 28 days:

(a) vacate the property and provide vacant possession to the applicant;

(b) deliver up to the applicant the keys for any buildings and improvements on the property; and

(c) remove all personal property which is not vested in the applicant;

(3) that the applicant have liberty to apply for a writ of possession for the property in the event that the respondent does not deliver up vacant possession;

(4) that the applicant be authorised to sell the property forthwith and be appointed as trustee for its sale; and

(5) that under s 146 of the Act, the applicant be permitted to make a distribution of the estate of the respondent, notwithstanding that the respondent has failed to file a statement of affairs.

1. The applicant is the trustee of the bankrupt estate of the respondent, having been appointed on 29 November 2024, the date that the sequestration order was made by a Registrar of the Court. The effective sequestration date is 24 May 2024, being the date of the earliest act of bankruptcy, as referred to in s 115(1) of the Act. The sequestration order itself identifies that as the date.
2. The bankrupt is the sole registered proprietor of the property that is the subject of the orders that the applicant seeks. The property is currently the subject of a mortgage in favour of Westpac Banking Corporation in respect of a loan debt of approximately $500,000 (that figure having been obtained approximately a year ago). The property is also the subject of a charge in favour of the Commissioner for ACT Revenue in respect of a debt of approximately $1,000.
3. The trustee does not know whether the bankrupt still resides at the property. He has been unable to obtain a formal valuation or to inspect the internal condition of the property due to a lack of cooperation from the bankrupt. However, he has obtained a kerbside valuation which suggests that the property may sell for an amount between $700,000 and $750,000. It is accordingly likely that there is some equity in the property to the advantage of unsecured creditors.
4. The bankrupt has not responded to the trustee's numerous efforts at correspondence over a long period of time. She has failed to file a statement of affairs as required by s 54(1) of the Act. That is notwithstanding that that obligation arises as a matter of law following her sequestration and also that the correspondence from the trustee has informed her of her obligation to file a statement of affairs.
5. The evidence establishes that the bankrupt was personally served with the originating process on 30 September 2025. She failed to indicate her intention to appear or notify her opposition by filing a notice of appearance as required by rr 2.04 and 2.06(a) of the Federal Court (Bankruptcy) Rules 2016 (Cth) (Bankruptcy Rules). On 31 October 2025, she failed to appear at the first case management hearing. On that day, I made orders for substituted service of notice of the final hearing today by email and by registered post addressed to her at the property. That substituted service was undertaken on 31 October 2025. Notwithstanding that, the bankrupt has failed to file a notice of appearance or to appear today.
6. I am satisfied that the bankrupt has been properly served and is accordingly deemed to have notice of the hearing today, but she has failed to appear or to defend the proceeding at all. In those circumstances, she is a party in default as referred to in rr 5.22(c) and (d) of the Federal Court Rules 2011 (Cth) (FCR). The defaults are failing to attend a hearing and failing to defend the proceeding with due diligence. The result is that under r 5.23(2)(d), the Court may make "any other order" against the respondent; that is, any order other than those otherwise provided for in the rule and thus includes the orders sought by the applicant today.
7. This case illustrates a deficiency in the operation of the Bankruptcy Rules and the FCR in how they regulate the filing of a notice of appearance (rr 2.04 and 2.06(a) of the Bankruptcy Rules) or notice of address for service (rr 5.02 and 11.06 of the FCR) and notification of the first hearing date (Bankruptcy Rules) or the first directions hearing (FCR), as the case may be. As detailed above, the bankrupt was personally served with the originating process but failed to file a notice of appearance and thereafter failed to appear at the first hearing. Her failure to appear is not surprising since the originating process (an application) on Bankruptcy Rules Form B2 did not, and was not required to, notify her of the hearing - its date was in any event, as in the usual course, only fixed sometime after she had been served. Also, since she was not required to file a notice of appearance until three days before the date fixed for the hearing, she could not readily be given notice of that date because she had not filed such a notice identifying an address and email address at which she could be deemed to have been served (FCR rr 2.16 and 11.01). The rules thus contain within them a circularity problem leaving a respondent, and in particular a litigant in person, with no proper guidance or instructions on what they are required to do and no apparent obligation to do anything until they are notified of a hearing date. It also leaves an applicant with the problem of having to personally (or by substituted service) serve twice, once being service of the originating process and the second being service of notice of the date fixed for the hearing.
8. Returning to the relief in this case, in addition to being satisfied that the respondent is in default and that default orders can be made, I am in any event satisfied that the applicant has made out proper grounds for the orders, as I will explain.
9. Undoubtedly, the Court has the general power under s 30(1)(b) of the Act to make an order to the effect that the bankrupt deliver vacant possession of the after-acquired property to the trustee: see Joyce v Nguyen, in the matter of the Bankrupt Estate of Nguyen [2024] FCA 1248 at [4] and [12] per Feutrill J. Such an order follows from the vesting of the property in the trustee pursuant to s 58(1)(a) of the Act. For those reasons, I am satisfied that I should make the orders sought in relation to the property.
10. Turning now to the question of the respondent's failure to file a statement of affairs, s 146 of the Act provides that:

Where a bankrupt has failed to file a statement of his or her affairs as required by this Act, the Court may, on the application of the trustee, upon such terms as it thinks fit, order that distribution of dividends amongst the creditors who have proved their debts shall proceed in accordance with this Division as if the bankrupt had filed a statement of his or her affairs and those creditors had been stated to be creditors in it.

1. There are no express statutory requirements or limitations in respect of the exercise of the Court's power to make an order under that section. The exercise of the Court's discretion thus "depends upon what may be gleaned from the section and the statute as a whole": Official Trustee in Bankruptcy, in the matter of Shaw [1999] FCA 968 per Gyles J at [3]. His Honour went on to identify (at [4]) that the purpose of the section "is to give the Court the means of ensuring that the absence of a statement of affairs does not prejudice those with an interest in the bankrupt's affairs."
2. In that case, his Honour was satisfied that the principal purpose of the section had been satisfied because the trustee had examined each of the bankrupts. That was regarded as a satisfactory alternative to the filing of a statement of affairs, or it was at least the most satisfactory alternative available. His Honour identified that there was some importance in being able to identify creditors other than those who had proved debts.
3. It is obviously necessary that the Court "be satisfied that it is appropriate to make an order": Re Sturt; Ex parte Official Trustee in Bankruptcy [2001] FCA 1649; 117 FCR 1 at [19] per Sackville J. His Honour identified that "[t]he Court may need to be satisfied ... that creditors have been notified of the application and have had an opportunity to be heard (although ordinarily the application would be made in the interests of creditors)." Further, "the Court might require evidence that the trustee has taken appropriate steps to ascertain whether there are creditors, other than those who have come to its attention by filing a proof of debt or otherwise."
4. In the present case, it is relevant that the bankrupt has failed to cooperate with the trustee notwithstanding the trustee's many attempts to secure the bankrupt's cooperation. Further, the trustee has set out in a report to creditors dated 28 January 2025 what investigations he has undertaken in relation to the bankrupt's assets, or possible assets, as well as her debts. In relation to assets, he has made real estate searches and identified the property already referred to. He has also identified several motor vehicles and undertaken searches in relation to them. In a remuneration approval report, the trustee has further identified the work undertaken by him in investigating the bankrupt's affairs.
5. It is not known whether there are additional creditors of the bankrupt, but since the details of the sequestration are publicly recorded on the bankruptcy register maintained by the Australian Financial Security Authority, they have had the opportunity to identify that sequestration orders were made and to make themselves known to the trustee. There is no requirement under the Act that any creditors be served with the application: Roufeil (Trustee), in the matter of Jarvie (Bankrupt) [2015] FCA 232 at [12] per Gleeson J. It is therefore incumbent on creditors to take at least some responsibility to safeguard their own interests upon the occurrence of a sequestration.
6. Thus, in acting in the interests of creditors it is possibly more important than identifying creditors that the trustee identify assets. It is not known whether there are assets of the bankrupt available to the trustee to bring in that he has not already discovered and which would be identified in a statement of affairs were one to be filed by the bankrupt. I am however satisfied by the evidence already mentioned that the trustee has made reasonable inquiries and undertaken reasonable investigations and that it is unlikely that such further assets would be identified. But in any event, it is unlikely that the bankrupt will file a statement of affairs.
7. Further, to not make an order under s 146 would stifle the finalisation of the bankruptcy. To delay making it would likely merely require the trustee to come to court again for such an order sometime in the future, which would cause further costs to be incurred. That would not be to the benefit of creditors.
8. In all the circumstances, I am satisfied that it in the interests of the creditors as a group that the order under s 146 be made.
9. I will accordingly make orders as sought in the document handed up, save for some minor corrections and the deletion of order 7 dealing with the application of the proceeds of sale which is in any event governed by the Act and does not require an order.

I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Stewart.