Kerr as trustee of the property of Janice Mary Kehlet (a bankrupt) v Kehlet

ROBERTSON J: 1 On 26 September 2019 I delivered reasons for judgment in this matter: Kerr as trustee of the property of Janice Mary Kehlet (a bankrupt) v Kehlet [2019] FCA 1572. 2 The order I then made was as follows: 1. Within seven days from the date of these orders, the parties are to send by email to my associate either an agreed form of orders or their competing orders to give effect to these reasons for judgment, including as to costs. 3 By consent, that order was varied on 1 October 2019 to extend time for compliance to 10 October 2019. 4 The solicitors for the applicant on 10 October 2019 forwarded by email to my associate proposed orders to give effect to the reasons for judgment. The parties were unable to reach agreement. 5 The solicitors for the respondent, by email to my associate dated 11 October 2019, asked for, in effect, an extension of time to 18 October 2019. This was opposed. Nevertheless I granted an extension until 18 October 2019 in light of the apparent ill-health of the respondent's principal solicitor. 6 By email dated 22 October 2019, my associate informed the practitioners for the parties that I did not propose to grant any further extension unless the respondent produced cogent evidence as to why further time was required. 7 By email to my associate dated 22 October 2019, the solicitors for the respondent put that settlement negotiations continued with the trustee, involving the Commonwealth Bank of Australia (CBA). In response, the solicitors for the applicant said that they were aware of the settlement negotiations between the bankrupt and the CBA however that was irrelevant, particularly given that the bankrupt and the CBA were not parties to the proceedings. 8 In these circumstances I consider that no further extension of time is warranted. There is no cogent evidence as to why further time is required. In particular, with reference to [63] of my earlier reasons for judgment, no reason has been given as to why the parties have not been able to agree on the amount the trustee must pay to the transferee, Mr Kehlet, as the amount equal to the value of the consideration he gave for the void transfers. 9 The applicant contends for the following orders to give effect to my reasons for judgment: The Court declares that: 1. the transfers made by Janice Mary Kehlet (Bankrupt) to the Respondent on 18 June 2015 (pursuant to transfer dealings numbered AJ587708X and AJ587709V) of the land described in Certificate of Title Folio Identifier 1856/752015, being the land situated and known as 275 Beauchamp Road, Matraville NSW 2036 (Property), are void as against the Applicant, in his capacity as the trustee of the property of the Bankrupt, by operation of sections 120 and 121 of the Bankruptcy Act 1966 (Cth). The Court orders that: 2. Within 14 days, the Respondent is to deliver to the Applicant a Memorandum of Transfer in the form which is Annexure A to these Orders (the "Transfer") by which the Property may be transferred to the Applicant and must otherwise do all things and execute all such documents as may be required to cause the Property to be registered in the name of the Applicant, subject to the registered mortgage no. AN67109 held by Westpac Banking Corporation (Westpac Mortgage). 3. In the event that the Respondent fails to execute and deliver to the Applicant the Transfer as required by order 2 hereof then the Registrar of the Court be and is hereby authorised to sign the Transfer. 4. Pending the registration of the Transfer in the NSW Land Registry Services, the Respondent be restrained from dealing with or further encumbering the Property. 5. Pursuant to section 120(4) of the Bankruptcy Act 1966 (Cth), the Applicant is to account to the Respondent for the amount of $780,998.15 to be paid from the proceeds of sale of the Property by the Applicant (Consideration). 6. The Consideration referred to in order 5 above may be paid by the Applicant towards discharge of any existing mortgage registered on the title to the Property. 7. The Respondent pay the costs of the Applicant as agreed or taxed. 8. Liberty to apply is granted to the Applicant in respect of any issue arising in respect of the implementation of these orders. 10 Subject to two matters, the orders proposed by the applicant need no further discussion as they give effect to my reasons for judgment given on 26 September 2019. 11 The first and minor matter is that I would delete from proposed order 8 the limitation that liberty to apply be granted only to the applicant. By deleting the words "to the Applicant" I would grant liberty to apply to either party in respect of any issue arising in respect of the implementation of the orders. 12 The second matter is the figure of $780,998.15 referred to in proposed order 5. This is the amount the trustee is required to pay to the transferee, Mr Kehlet, being an amount equal to the value of any consideration that the transferee gave for a transfer that is void against the trustee. 13 First, I would amend proposed order 5 to reflect the terms of ss 120(4) and 121(5), that is, rather than using the words "account to the Respondent" the more appropriate form is that the applicant "must pay to" the respondent. I would also include a reference to s 121(5), as s 121 was an alternative basis for my conclusion in the earlier judgment. 14 Second, as to the amount of that payment, I note that the applicant trustee does not contend for a lower amount he must pay, $650,000, being 50 percent of the agreed market value of the property as at the date of the transfers and the amount recorded as "consideration" in the second transfer form on that date. Next, it is clear on the evidence that the amount of $27,223.71 shown on the relevant reconciliation statement was transferred to the respondent, Mr Kehlet: he gave unequivocal evidence to that effect in cross-examination. The result is that the sum of $780,998.15 paid to the Commonwealth Bank to discharge the mortgage, the amount which the applicant contends he must pay to the respondent, was the consideration the transferee gave for the transfer. I would conclude that this amount includes the sum of $1 stated to be the consideration in the first transfer form. 15 I make orders in accordance with these reasons. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Robertson.