Francis v Eggleston Mitchell Lawyers Pty Ltd

REASONS FOR JUDGMENT 1 On 10 July 2013, the appellant, Louise Francis, filed a notice of appeal in respect of an order made by a judge of the Court on 5 July 2013 refusing an application to annul her bankruptcy. 2 Also on 10 July 2013, the appellant filed an interlocutory application in the appeal, seeking an order to restrain the trustees in bankruptcy, the second and third respondents, Gess Michael Rambaldi and Andrew Reginald Yeo, from selling a house at 203 Stanley Street, West Melbourne, until the hearing and determination of the appeal. The house is the only asset of the bankrupt estate. Unless restrained, the trustees intend to sell the house by auction. The auction is arranged to be conducted on 3 August 2013. 3 Whether the injunction should be granted depends upon whether there is a serious issue to be tried and whether the balance of convenience favours the grant of the injunction. 4 It is convenient to approach the application by assuming in favour of the appellant that the appeal raises a serious issue to be tried. The question then is whether the balance of convenience lies with the granting of the injunction. 5 Mr Ribbands who appeared as counsel on behalf of the appellant, submitted that the balance of convenience favoured the granting of the injunction. He explained that the appellant desires to retain the house to enhance its value. The value of the house has been estimated to be up to $690,000. The house is being advertised for auction at $490,000 plus. The house is unencumbered. 6 Counsel for the appellant submitted that there would be no prejudice to the trustees or creditors if the sale did not proceed. It was submitted that the equity in the house would cover the trustees' accrued remuneration and disbursements in the event that the bankruptcy is annulled. To date the remuneration and disbursements of the trustees is estimated to be $208,950.41. 7 Furthermore, it was suggested that the way in which the house has been advertised for auction demonstrated that the trustees were not pursuing the full value of the property. The discrepancy between the market appraisal which the trustees reported in the statement of affairs which estimated the value of the house on a low appraisal basis at $665,000 was contrasted with the advertised selling price of $490,000 plus. 8 Mr Agardy, who appeared as counsel on behalf of the trustees, contended that the balance of convenience favoured the auction proceeding. 9 He contended that the trustees have already incurred expenses relating to the sale. Mr Rambaldi acting as trustee swore an affidavit on 18 July 2013 in which he stated that the trustees have spent $17,679.71 on cleaning, on making the site safer, on insurance and on advertising and marketing the property for auction. 10 More importantly, Mr Agardy said that the trustees were appointed nearly two years ago on 25 July 2011. The administration commenced with a small amount of cash. The trustees' remuneration and disbursements to date is estimated to be $208,950.41. There was no fund from which the ongoing costs of the administration and most of the past costs of the administration could be funded. It was submitted that if the house is not sold, the trustees would have no money to pay the ongoing bills, such as for insurance and maintenance. 11 Further, the house involved is abandoned. The appellant does not reside in the house. It has been and may presently still be occupied by squatters. Photographs of the house indicate that its walls are covered with graffiti. It is apparently open to the elements. There is no security preventing access to it. 12 In written submissions, Mr Agardy also submitted that an injunction should not be granted on the basis that the appellant offered no undertaking as to damages. In the course of the hearing an undertaking was offered albeit in a limited sum. 13 In the end, the appellant has not made out a case in favour of the grant of an injunction. The balance of convenience does not favour the trustees being restrained from proceeding with the sale. The appellant did not suggest that this particular property had any special significance for her other than as a repository of value. That value will be retained in the form of a fund and that will be available to meet the costs of the administration. Any challenge to the trustees' remuneration and disbursements which the appellant has foreshadowed would be a matter for another day. No substantial case was put that any of the remuneration or disbursements of the trustees have been wrongly accrued or incurred. Consequently, the application is refused. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice North.