Downey (Trustee), in the matter of Slender (Bankrupt) v Slender [2025] FedCFamC2G 544

Note: The form of the order is subject to the entry in the Court's records.

Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).

1. Before the Court is an application for orders requiring vacant possession and authorising the sale of a residential property of a former bankrupt who, since sequestration of her bankrupt estate and the vesting of her property in the trustee some 12 years ago, has not complied with requests of the trustee to aid the administration of the bankrupt estate.
2. The relevant parties to the proceedings are:

(a) James Patrick Downey, the appointed trustee of the bankrupt estate of Karen Gayle Slender and Applicant (the Trustee); and

(b) Karen Gayle Slender, the former bankrupt and Respondent.

1. The proceeding relates to the whole of the land in Certificate of Title Volume 2016 Folio 146 (the Land) and the house situated at and known as 144 Warton Road, Huntingdale in the State of Western Australia, 6100 (together with the Land, the Property).
2. For the reasons that follow, the Trustee's application is granted however the orders sought by the Trustee will take effect after a longer period of time so that Ms Slender has a reasonable opportunity to attend to her affairs and there will be liberty to apply by consent in the event of an alternate arrangement reached in the intervening period.

1. The application commencing these proceedings, accompanying affidavit of the Trustee and genuine steps statement were filed with the Court on 3 October 2024. By that original application, the Trustee sought a declaration of beneficial ownership of the Land and a suite of orders facilitating the sale of the Land under ss.30, 58, 77(1)(g) and 116 of the Bankruptcy Act 1966 (Cth) (Act).
2. There was no appearance for or on behalf of the Respondent at the initial directions hearing in the matter on 12 November 2024. On that day, the matter was adjourned for final hearing on 26 November 2024, to ensure that the Respondent was afforded a fair opportunity to participate. By order of the Court:

(a) The parties were notified that the purpose of the hearing on 26 November 2024 was for the Trustee's application for final orders to be made in the annexed form;

(b) The Respondent was ordered to file a notice of address for service by 4.00 pm on 19 November 2024;

(c) The Trustee was ordered to serve a copy of the Court's orders on the Respondent;

(d) The Court noted that the Respondent was invited to request to attend the hearing electronically;

(e) The Court noted rr.13.05 and 13.06 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (GFL Rules) and the likely consequences of any non-compliance with the Court's orders or failure to attend the hearing.

1. On 20 November 2024, the Respondent emailed the Court to foreshadow a request for an adjournment of the hearing listed for 26 November 2024. The Trustee consented to an adjournment. The matter was adjourned and re-listed for final hearing on 24 February 2025.
2. There was no appearance for or on behalf of the Respondent at the hearing of the matter on 24 February 2025. On that day, the matter was adjourned for final hearing on 27 March 2025, to ensure that the Respondent was afforded a fair opportunity to participate. By order of the Court:

(a) The parties were notified that the purpose of the hearing on 27 March 2025 was for the Trustee's application for final orders to be made in the annexed form;

(b) The Respondent was ordered to file a notice of address for service by 4.00 pm on 3 March 2025;

(c) The Trustee was ordered to serve a copy of the Court's orders on the Respondent;

(d) The Court noted that the Respondent was invited to request to attend the hearing electronically or in person at the Perth Registry;

(e) The Court noted rr.13.05 and 13.06 of the GFL Rules and the likely consequences of any non-compliance with the Court's orders or failure to attend the hearing.

1. On 27 March 2025, the Respondent appeared remotely at the final hearing by joining an electronic link.
2. At the time of hearing:

(a) In addition to the originating materials, the Court had received the following affidavits as evidence that the Trustee's originating application, filed materials, and each of the Court's orders outlined above, were served on the Respondent:

(i) Affidavit of Service of Ian Brent-White filed 7 November 2024;

(ii) Affidavit of Service of Ian Brent-White filed 21 November 2024;

(iii) Affidavit of Service of Anthony Serong filed 5 March 2025;

(iv) Affidavit of Service Anthony Serong filed 11 March 2025; and

(v) two Affidavits of Service of Ian Brent-White filed 17 March 2025.

(b) The Respondent had not filed any response to the application and had not entered an address for service in accordance with the GFL Rules: rr.4.03 and 6.01.

1. Being satisfied that the Respondent had, by that time: been on notice of the proceedings since at least 20 November 2024; received the various Court orders but did not seek to put on materials; and (having been granted one prior adjournment) did not seek a further adjournment on 27 March 2025, the hearing proceeded on the basis of the materials before the Court. Oral submissions were made by the Trustee and the Respondent on that day.

1. The evidence before the Court as relevant to the application is summarised in the following paragraphs.
2. On 11 March 2013, a registrar of the Federal Magistrates Court (as it then was) made a sequestration order by which the Respondent to these proceedings became bankrupt. Those orders included orders for payment of the petitioning creditors' costs and appointment of the Official Trustee as trustee of the bankrupt estate of Karen Gayle Slender. A copy of the certificate of appointment of trustee dated 11 March 2013 was in evidence before the Court in these proceedings.
3. According to a Western Australia Titles Office search, at the time of bankruptcy, the Respondent was the sole proprietor of the land being Lot 903 on Plan of Subdivision 20147 (being the whole of the land in Certificate of Title Volume 2016 Folio 146 and the house situated at and known as 144 Warton Road, Huntingdale in the state of Western Australia 6100 (earlier defined as the Property). A copy of the titles search was in evidence before the Court in these proceedings.
4. On 9 April 2013, the Respondent filed a statement of affairs with the Insolvency and Trustee Services Australia (as it then was, now known as the Australian Financial Security Authority). A copy of the statement of affairs was in evidence before the Court in these proceedings. By that statement of affairs, the Respondent disclosed an interest in the Property (she estimated worth $420,000), 2 superannuation assets (with a notation that she hoped to get super to pay an Australian Taxation Office (ATO) debt) and 3 unsecured creditors (the ATO, Telstra and a local council). The Respondent also stated that she had operated a business in the 5 years prior with the following qualification:

I separated from ex-husband in 2004 and had nothing to do with the business but family law solicitor failed to lodge cessation of directorship form signed by me!!!

1. On 17 June 2013, the Official Trustee transferred the bankrupt estate to the Trustee under s.181A of the Act by which the Trustee became the trustee of the bankrupt estate of the Respondent. A copy of the certificate of appointment of trustee was in evidence before the Court in these proceedings.
2. On 10 April 2016, by operation of law, the Respondent was discharged from bankruptcy.
3. On 2 August 2016, the Trustee's lawyer sent a letter to the Respondent at the Property address. A copy of that letter was annexed to a subsequent letter of 4 April 2023 which was in evidence in these proceedings. On the face of that letter, it was explained to the Respondent that the Trustee remained the trustee of her bankrupt estate and the ownership of the Property remained vested in them notwithstanding that her bankruptcy had then ended. Further, the letter outlined a series of options including the Trustee's option to take Court action and the Respondent's options to cooperate or buy out their interest in the Property. A summary of the Trustee's then instruction as to the nature of the debt was included as follows:

[...]

We are instructed that:

• The petitioning creditor and your principal creditor is the Australian Taxation Office and that the debt due currently due to the Australian Taxation Office is in the vicinity of $138,156.77;

• The property at 144 Warton Road, Huntingdale, WA 6100 is likely to be worth approximately $600,000.00;

• There are currently borrowings against the property (from Westpac) of less than $90,000.00.

We understand from the trustee that there is a significant surplus of assets and liabilities and that, ultimately, your bankrupt estate is solvent.

The trustee calculates the amount required to discharge all liabilities due to your bankruptcy to be in the vicinity of $160,000.00. The trustee's calculations are set out below and include the amounts due to the Australian Taxation Office.

All calculations are provisional estimates only and liable to change as matters proceed.

1. On 17 August 2016, the Trustee's lawyers sent a further letter to the Respondent at the Property address. A copy of that letter was annexed to a subsequent letter of 4 April 2023 which was in evidence in these proceedings. On its face, that letter referred to the 2 August 2016 letter and a subsequent discussion at the Trustee's lawyers' office on 4 August 2016. By that letter, the Respondent was on notice of the Trustee's instructions that the Respondent had 14 days in which to vacate the Property and had over the keys or otherwise the Trustee would commence Court proceedings seeking orders for possession and such other orders as required to effect the sale as well as costs.
2. On 14 February 2018, the Trustee's lawyers sent a further letter to the Respondent at the Property address. A copy of that letter was annexed to a subsequent letter of 4 April 2023 which was in evidence in these proceedings. On its face, the letter observed that the Respondent's failure to deal with the Trustee was unexpected as, based on their calculations, there appeared to be sufficient equity in the Property to meet all known creditor claims and the Trustee's likely costs and expenses of administering the bankrupt estate which should leave a surplus available to the Respondent for distribution upon completion of a sale. That letter advised that it was an option to respond within 14 days and reach an agreement with the Trustee to avoid legal proceedings but if the Respondent did not respond to the Trustee within 14 days, then without further notice the Trustee required the Respondent to vacate the Property so they could proceed with a sale and commence recovery proceedings if necessary.
3. On 25 February 2022, the Trustee sent an email to the Respondent which attached an extension notice. A copy of those documents were in evidence before the Court in these proceedings. On its face, that extension notice:

(a) was issued pursuant to s.129AA of the Act;

(b) included an explanation that the Respondent's disclosed interest in the Property vested in the Trustee under ss.58 and 116 of the Act and, by s.129AA(3) of the Act would revest in the Respondent on the expiration of 6 years from the date of her discharge from bankruptcy unless a written extension notice was given under s.129AA(4) stating that a later revesting time applies; and

(c) gave notice that the vesting period of the Property was thereby extended from 10 April 2022 to 10 April 2025 pursuant to s.129AA(4) of the Act.

1. Also on 25 February 2022, the Respondent sent an email in response to the extension notice referred to above. A copy of that email was annexed to a subsequent letter of 4 April 2023 which was in evidence in these proceedings. On its face, the Respondent attached proof of her superannuation and inquired whether this could be full payment of what was owed.
2. The Trustee deposed that, also on 4 April 2023, their lawyers served the Respondent with a Notice to Quit at the Property address and sent a copy of the Notice to Quit and a letter to the Respondent by email and post to the Property address. A copy of the Notice to Quit, the letter and attachments were in evidence before the Court in these proceedings. The Notice to Quit provided that the Trustee required the Respondent to vacate the Property within 30 days of the date of the notice. And, by the attached letter, the Trustee referred to its prior correspondence and attached it again along with a Notice to Quit the Property dated 4 April 2023. The letter claimed that the Respondent had corresponded with the Trustee's office on or about 25 February 2022 about obtaining early access to her superannuation but had not since then responded to their attempts to gain proof of access to superannuation or questions about same. Further, by the contents of the letter, the Respondent was on notice that:

(a) notwithstanding the discharge of the Respondent's bankruptcy at law, the Property remained vested in the Trustee until 10 April 2025;

(b) the Trustee estimated the amount likely to be claimable against the Respondent's bankrupt estate including his costs and charges and likely creditor claims as at March 2023 as totalling $183,886; and

(c) it was an option to respond within 7 days and reach an agreement with the Trustee including a proposal for the timely payment of all identified liabilities but if the Respondent did not respond to the Trustee within 7 days, and refused to vacate the property in accordance with the stated time in the Notice to Quit, then without further notice the Trustee would lodge a transmission application to secure the registration of the title to the Property in the Trustee's name as registered proprietor, commence proceedings in this Court for orders for possession of the Property as well as any costs of the proceeding and proceed to sell the Property as registered owner to meet the claims in relation to the bankrupt estate.

1. On 13 April 2023, the Trustee's lawyers sent an email to the Respondent in relation to the status of claims against her bankrupt estate. A copy of that email correspondence was in evidence before the Court in these proceedings. By that email, the Trustee sought to confirm the claim made by the Respondent in a discussion of that same day to the effect that, with the intervention of her local Federal Member of Parliament, the Respondent had negotiated for the ATO debt to be "written off". That email noted that the Respondent's statement of affairs had also referred to 2 other creditors, being Telstra and the local council, and that there remained a liability with regard to the Trustee's fees and expenses incurred since the date of commencement of the Respondent's bankruptcy. The Trustee also undertook to make their own inquiries about the status of these debts.
2. On 21 April 2023, following the lapse of a previous caveat filed by the Official Trustee in April 2013, the Trustee registered a caveat over the Property (No. P525279). A copy of the caveat was in evidence before the Court in these proceedings and the Trustee deposed in the original affidavit that it remained registered on the title of the Property.
3. On 3 May 2023, the Trustee sent an email to the Respondent in response to her request for an extension of time for the Notice to Quit. A copy of that email was in evidence before the Court in these proceedings. By that email, the Trustee's accountant recorded a phone request from the Respondent for such extension on the basis that her local Federal Member was making representations to the ATO on behalf of the Respondent. In the circumstances, the Trustee's accountant proposed to grant an extension to the Notice to Quit of 30 days to 3 June 2023 while he made further inquiries in relation to the creditors' claims and after which time the position would be reviewed.
4. On 10 May 2023, the Trustee caused an advertisement to be placed in the West Australian newspaper inviting any unproved creditors of the Respondent's bankrupt estate to prove their debts. A copy of that advertisement was in evidence before the Court in these proceedings. No additional or unproved creditor(s) came forward in response.
5. On 25 May 2023, the Trustee sent an email to the Respondent. A copy of that email was in evidence before the Court in these proceedings. By that email, the Respondent was advised that the costs to finalise her estate would be fixed if paid within 30 days, as follows:

[...]

1. Petitioner's Costs (as awarded by the Court at the time of your bankruptcy) $3,433

2. Legal fees incurred by me between 2014 and now, including a provision to finalise $12,500

3. Trustee's fees - my costs between 2014 and now, including a provision to finalise $32,000

4. AFSA Realisations charge - a Government levy of @ 7% on each of the above $3,355

5. Total (all including GST)

$51,288

(emphasis per original)

1. The Trustee sent follow up communication by email to the Respondent on 5 June 2023, 24 July 2023 and 3 August 2023. Copies of those communications were before the Court in these proceedings.
2. On 26 October 2023, a further Notice to Quit was served on the Respondent by post at the Property address. A copy was in evidence before the Court in these proceedings. By that Notice to Quit dated 26 October 2023 the Respondent was required to vacate the Property within 30 days of the date of the notice.
3. On 27 October 2023, the Trustee's lawyers sent the Respondent a letter by email and post to the Property address. A copy of that letter was in evidence before the Court in these proceedings. By that letter, the Respondent was advised of the recalculation of the amount likely to be claimable by her bankrupt estate (now totalling $53,291) and on notice that it was an option to respond within 7 days and reach an agreement with the Trustee including a proposal for the timely payment of all identified liabilities but if the Respondent did not respond to the Trustee within 7 days, and refused to vacate the property in accordance with the stated time in the Notice to Quit, then without further notice the Trustee would commence proceedings in this Court for orders for possession of the Property and ancillary orders as well as any costs of the proceeding, proceed with an application for registration of title in the Trustee's name and proceed to sell the Property as registered owner to meet the claims in relation to the bankrupt estate.
4. On 3 October 2024, the originating materials in this matter were filed with the Court. As outlined above, the Court has since received evidence of service on the Respondent at the Property address and by email to her known email address by which she has communicated in the past and in the course of these proceedings.
5. At the hearing before the Court on 27 March 2025, the Respondent orally opposed the application submitting that the underlying ATO debt, which had caused her bankruptcy, was no longer in existence and she should not be liable for the fees incurred by the Trustee. She told the Court that this was a continuation of the financial abuse by her former husband and that she would have no money and nowhere to go if forced to vacate the Property for sale by the Trustee.
6. Also at the hearing, noting the impending expiry of the extended vesting period, the Trustee undertook to ensure that a further extension notice issued under s.129AA of the Act would be sent to the Respondent forthwith, submitting that there was no limitation on the Trustee doing so. After conclusion of the hearing of the matter, on 28 March 2025, the Trustee sent an email to chambers which attached an extension notice dated 16 December 2024. A copy of that extension notice and email of 16 December 2024 was provided to the Court, which on its face, explained that the extension notice:

(a) was issued pursuant to s.129AA of the Act;

(b) the Respondent's disclosed interest in the Property vested in the Trustee under ss.58 and 116 of the Act and, by s.129AA(3) of the Act would revest in the Respondent on the expiration of 6 years from the date of her discharge from bankruptcy unless a written extension notice was given under s.129AA(4) stating that a later revesting time applies; and

(c) gave notice that the vesting period of the Land was thereby extended from 10 April 2022 to 10 April 2025 pursuant to s.129AA(4) of the Act.

1. Since the proceedings commenced, the Trustee withdrew their application for a declaration of vesting and continued to press their application orders for the vacant possession of the Property, removal of personal possessions, to exercise a sale of the Property and for the net proceeds of the sale to be paid to the Respondent's bankrupt estate after payment of all costs associated with the sale or these proceedings.
2. The Trustee's application proceeds on the general power conferred by s.30 of the Act, which provides that:

(a) Has full power to decide all questions, whether of law or of fact, in any case of bankruptcy or any matter under Part IX, X or XI coming within the cognisance of the Court; and

(b) may make such orders (including declaratory orders and orders granting injunctions or other equitable remedies) as the Court considers necessary for the purposes of carrying out or giving effect to this Act in any such case or matter.

(a) a bankrupt, a debtor or any other person has failed to comply with an order or direction of a Registrar, or with a direction or requirement of an Official Receiver or trustee, under this Act; or

(b) a trustee has failed to comply with an order, direction or requirement of a Registrar, or with a requirement or request of the Inspector‑General, under this Act;

the Court may, on the application of the Registrar, Official Receiver, trustee or Inspector‑General, as the case requires:

(c) order the person who has failed to comply with the order, direction, requirement or request, as the case may be, to comply with it; or

(d) if it thinks fit, make an immediate order for the committal to prison of that person.

(6) The power conferred on the Court by subsection (5) is in addition to, and not in substitution for, any other right or remedy in respect of the failure to comply with the order, direction, requirement or request, as the case may be.

1. The Trustee contends that an order under s.30 is justified in the present case, where: the Property vested in the Trustee upon her bankruptcy pursuant to s.58 of the Act; by s.116 the Property was therefore divisible amongst the Respondent (former bankrupt)'s creditors; the Trustee is empowered with the discretion to sell all or any part of the property of the Respondent (former bankrupt) pursuant to s.134(1)(a) of the Act; and there are various statutory duties at s.77 of the Act with which the Respondent (former bankrupt) is obliged to comply.
2. Relevantly, the duty at s.77(1)(g) of the Act provides that:

77 Duties of bankrupt as to discovery etc. of property

(1) A bankrupt shall, unless excused by the trustee or prevented by illness or other sufficient cause:

...

(g) aid to the utmost of his or her power in the administration of his or her estate.

1. Also relevant to the present case are the statutory duties of a trustee of the estate of a bankrupt which include the duties to take appropriate steps to recover property for the benefit of the estate, take whatever action is practicable to try and ensure the bankrupt discharges all of their duties under the Act and to administer the estate as efficiently as possible by avoiding unnecessary expense: s.19 of the Act, in particular at (1)(f), (g) and (j). As the Full Court in Davidson v Official Receiver [2021] FCAFC 73 (Allsop CJ, Markovic and Anastassiou JJ) at [50] clarified, those obligations of a trustee can continue for many years after effective discharge from bankruptcy where the Act recognises the trustee as the trustee of the estate of the bankrupt and trustee of the property of a bankrupt.
2. The Court was taken to the following authorities for the exercise of the s.30(1)(b) power: Michell (Trustee) v Sinnott, Re Sinnott [2023] FCA 464 (Button J) and Vince (Trustee), in the matter of Sopikiotis (Bankrupt) v Sopikiotis (No 2) [2012] FCA 1298 (Bromberg J).
3. As earlier identified, the Respondent did not avail of the opportunities provided to her to defend the application with evidence. The evidence was mostly understood to be uncontroversial, other than to the extent of some nuance in emphasis as to context which oral submissions of the Respondent are taken into account in the following reasons.

Should the Court make the orders sought by the Trustee?

1. It is well established that s.30(1)(b) is a facilitative provision which affords sufficient power to make orders against a bankrupt's estate for the vacation of property, issuing a warrant of possession and for the sale of property in circumstances where the bankrupt has not complied with their obligations under the Act: Coshott v Prentice [2014] FCAFC 88; (2014) 221 FCR 450 (Siopis, Katzmann and Perry JJ) at [92]-[94]. The case authorities make clear that the power to make orders under s.30(1)(b) of the Act must be exercised for the purposes of carrying out or giving effect to the Act in the particular circumstances of the case and is not to be construed narrowly. That is, where the purpose of the legislation relates to "appropriation of the assets of the debtor and their equitable distribution amongst [their] creditors, and for the discharge of the debtor from future liability for [their] existing debts": Storey v Lane [1981] HCA 47; (1981) 147 CLR 549 (Gibbs CJ, Mason, Murphy, Aickin, Wilson and Brennan JJ).
2. The evidence traversed above disclosed the unfortunate history of this matter.
3. In the time since sequestration of her bankrupt estate, long since discharged at law, the Respondent has managed to resolve the principal debt to the ATO and that of the 2 other creditors. On her submission, the Respondent inherited these debts through a financially abusive former marriage. The Respondent has denied the obligation to pay the Trustee because she considers she should never have been obligated to pay the creditors in the first place.
4. However, by order of the Court upon sequestration, the Official Trustee and shortly afterward the Trustee was appointed to administer the Respondent's bankrupt estate which order was not subject of appeal. By that appointment, the Trustee was obliged to perform its statutory duties and has incurred costs in doing so, which costs they are entitled to recover from the property of the bankrupt estate: s.60-5 of Schedule 2 of the Act.
5. There being no issue of co-ownership, on the evidence before the Court, the Land and house earlier defined as the Property originally vested in the Trustee on 17 June 2013 in accordance with s.58 of the Act and continues to so vest until 10 April 2026 by extension notices issued pursuant to s.129AA of the Act.
6. Prior to commencement of these proceedings, the Respondent was afforded numerous opportunities but at the time of hearing had failed to deliver the certificate of title to or vacate the Property in order to facilitate its sale. It is apparent that the time and opportunities afforded by the Trustee in the performance of their duty to administer the Respondent's bankrupt estate as efficiently as possible whilst avoiding unnecessary expense such as by commencing these legal proceedings has not ultimately assisted the Respondent - who, notwithstanding the likelihood of a solvent outcome, has persisted in not attending to her obligations under the Act over many years.
7. On the evidence and submissions before the Court, I am satisfied that orders substantially in the form sought by the Trustee in the discharge of his functions and duties under the Act are necessary and appropriate to further the administration of the bankrupt estate in the particular circumstances, with 2 substantive modifications. First, in acknowledgement of the hardship that the Respondent submitted she would face, I consider a reasonable period of time ought be afforded to the Respondent to secure alternate accommodation and that a period of 60 days rather than 28 days as the Trustee sought is reasonable. Second, I shall include an order that there be liberty to apply by consent within 45 days of these orders as to allow for the possibility that the parties are able to agree an alternate arrangement prior to crystallisation of the consequences of the orders made.

1. For the above reasons, the orders at [1] to [11] above are made on this day.

I certify that the preceding forty-nine (49) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Mansini.