consideration
22 The applicant seeks the following orders pursuant to ss 30, 58, 77, 116 and 134(1)(a) of the Bankruptcy Act:
1. Pursuant to sections 58 and 116 of the Bankruptcy Act 1966 (Cth) ("the Act") a declaration that the Applicant be the beneficial owner of the land comprised in Certificate of Title Volume 11351 Folio 835 known as 43 Stonehill Drive, Maddingley Victoria 3340 ("the Property") as sole proprietor.
2. Pursuant to Section 134(1)(a) of the Act, the Applicant exercise a power of sale of the Property.
3. The Respondent and any other occupants of the whole Property, vacate the Property within fourteen (14) days after the date of this Order.
4. The Respondent surrender to the Applicant the duplicate Certificates of Title of the Property, if any, with [sic] fourteen (14) days after the date of this Order.
5. The Respondent deliver up all keys for all buildings and improvements on the Property to the Applicant within fourteen (14) days after the date of this Order.
6. A writ of possession issue forthwith in the event that the Respondent or any other occupant fail to provide vacant possession of the Property in accordance with order 2 above.
7. The Respondent must remove from the Property all personal property being vehicles, rubbish and chattels (personal property) which are not vested in the Applicant within fourteen (14) days after the date of this Order. The Applicant is authorised to sell and dispose of any personal property not removed from the Property after it is vacated.
8. The Applicant:
a. has the sole conduct of the sale of the Property and any personal property not removed and is authorised to instruct an agent or an auctioneer for that purpose;
b. is solely to decide whether the Property and any personal property not removed is to be sold by public auction or private treaty;
c. is solely to decide whether or not to set a reserve for any auction of the Property and any personal property not removed and, if so, at what price.
9. The Respondent do all things as may be reasonably required by the Applicant or their selling agent or their solicitor for the purpose of achieving a sale of the Property including providing access to the buildings on the Property and for the purpose of valuation and viewing by potential purchasers.
10. The net proceeds of the sale of the Property and any personal property not removed after payment of any monies due to any encumbrance or encumbrancers according to their priorities, the cost of these proceedings, and all other costs, charges and expenses of the sale of the Property and any personal property not removed, be paid to the Bankrupt Estate.
11. Liberty to any party to apply on three (3) days notice.
12. The Respondent shall pay the Applicant's costs of this proceeding.
13. Such further or other relief orders as the Court deems appropriate.
23 The court's general power in relation to bankruptcy is derived from s 30(1) of the Bankruptcy Act:
(1) The Court:
(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 cognizance 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.
24 When a person becomes a bankrupt, s 58 of the Bankruptcy Act vests the property of the bankrupt in the Official Trustee. Section 116 provides that all property of the bankrupt (subject to exceptions in the Act) is property divisible amongst the bankrupt's creditors. One of the categories of property that is excluded is household property of the bankrupt, which does not vest in the Official Trustee: Bankruptcy Act s 116(2)(b); Bankruptcy Regulations 2021 (Cth) Part 6 Div 3.
25 Section 77(1) of the Bankruptcy Act imposes various duties on the respondent as a bankrupt, including the duty to "give such information about any of the bankrupt's conduct and examinable affairs as the trustee requires" (s 77(1)(ba)) and to "aid to the utmost of his or her power in the administration of his or her estate" (s 77(1)(g)).
26 Section 134(1) of the Bankruptcy Act sets out the powers exercisable at the discretion of the trustee. Those powers include the power to "sell all or any part of the property of the bankrupt": s 134(1)(a).
27 I also note s 19 of the Bankruptcy Act, which sets out the duties of trustees, relevantly, as follows:
(1) The duties of the trustee of the estate of a bankrupt include the following:
…
(f) taking appropriate steps to recover property for the benefit of the estate;
(g) taking whatever action is practicable to try to ensure that the bankrupt discharges all of the bankrupt's duties under this Act;
…
(j) administering the estate as efficiently as possible by avoiding unnecessary expense; …
28 The Court's general power in relation to bankruptcy under s 30(1)(b) of the Bankruptcy Act must be exercised for the purpose of carrying out or giving effect to the Bankruptcy Act in the particular case. In Coshott v Prentice (2014) 221 FCR 450 (Coshott) at [92]-[94], the Full Court (Siopis, Katzmann and Perry JJ) set out the scope of s 30(1)(b) of the Bankruptcy Act as follows (citations in original; emphasis added):
[92] As is apparent, the power to make orders under s 30(1)(b) must be exercised for the purposes of carrying out or giving effect to the Act in the particular case. Those purposes, in common with any modern system of bankruptcy law, are to provide for the appropriation and equitable distribution of the assets of the insolvent debtor, and upon this, the debtor's release from future liability in respect of his or her existing debts: Storey v Lane (1981) 147 CLR 549 at 556 (Storey) (Gibbs CJ).
[93] In line with these objects and the breadth of the language in s 30(1), it has been held that the provision should not be construed narrowly. As Neaves J observed in Re Bilen; Ex parte Sistrom (unreported, Federal Court, Neaves J, No NSW706 of 1983, 11 April 1985) in a passage quoted with approval by the Full Court in Talacko v Talacko (2010) 183 FCR 311 (Talacko) at 321, s 30(1):
… is a facultative provision giving the court full power, within the limits of its jurisdiction to be found elsewhere, to make such orders as it considers should be made in order to carry out and give effect to the Act. The words used are not words of limitation but of extension.
[94] Thus, the section has been held to provide sufficient power to make orders against a bankrupt for the vacation of property, issuing a warrant of possession and for the sale of a property in circumstances where the bankrupt is not complying with his or her obligations under the Act: see, eg, Vince (Trustee) v Sopikiotis v Sopikiotis (No 2) [2012] FCA 1298 at [4] (Bromberg J); Pattison v McKinnon [2008] FCA 1624 at [2] (Jessup J); Official Receiver v Fall (2008) 5 ABC(NS) 772 at [10]-[12] (Lucev FM (as his Honour then was)). It also expressly extends to ancillary relief such as injunctions and other equitable remedies to prevent the scheme of the Act from being defeated. Such ancillary orders are, as the Full Court observed in Talacko at [17], "neither novel or unusual": see also Storey at 557 (Gibbs CJ).
29 This court has, on several occasions, exercised the power conferred by s 30(1)(b) to make orders that are similar in substance to the orders sought by the applicant in this case: see, eg, Lo Pilato (Trustee), in the matter of Ghougassian (Bankrupt) v Ghougassian (No 3) [2022] FCA 1532 (Ghougassian); Ruhe (Trustee) v Australian Securities and Investments Commission [2022] FCA 354; Sellers, in the matter of Paksoy [2022] FCA 822; Vince (Trustee), in the matter of Sopikiotis (Bankrupt) v Sopikiotis (No 2) [2012] FCA 1298. The applicant's submissions drew attention to two decisions of the (then) Federal Magistrates Court of Australia: Pattison v Wates [2007] FMCA 1068; Official Receiver v Tregaskis [2006] FMCA 1915.
30 In Coshott, the Full Court held (at [100]) that the general power in s 30(1) of the Bankruptcy Act does not extend to the making of orders for the sale of property which is co-owned by a person who is not the bankrupt. There is no issue of co-ownership in this case, as the respondent was the sole proprietor of the Property before becoming a bankrupt and the applicant is now the sole proprietor of the Property.
31 I am satisfied that the court has the necessary power to make the orders sought by the applicant.
32 With the exception of the first order sought by the applicant, I am satisfied that it is appropriate that I make orders in substantially the terms sought by the applicant in order to give effect to the regime established by the Bankruptcy Act, and to support the applicant in the discharge of his functions and duties under that Act.
33 As noted, the applicant seeks an order declaring that, pursuant to ss 58 and 116 of the Bankruptcy Act, he is the beneficial owner of the Property as sole proprietor.
34 In Ghougassian, Markovic J declined to make an order declaring that the real property of the bankrupt vested in the trustee pursuant to s 58 of the Bankruptcy Act. Despite there being a history of litigation involving the trustee and the bankrupt in that case, Markovic J declined to grant declaratory relief on the basis that there was no contest or legal controversy about the property vesting in the trustee and therefore there was no utility in making the order. At [27]-[28] of her Honour's reasons, Markovic J said:
[27] In summary, a declaration should only be made if there is a legal controversy; the party seeking the declaration has a real interest in obtaining it; there is a proper contradictor; and the declaration serves a legitimate purpose and is of utility (perhaps in the sense that it will produce a foreseeable consequence for the parties). Declarations will not be made where they would have "no practical effect": see Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 582; Russian Commercial and Industrial Bank v British Bank for Foreign Trade [1921] 2 AC 438 at 448; and Lifeplan Australia Friendly Society Ltd v Ancient Order of Foresters in Victoria Friendly Society Limited (No 2) [2017] FCAFC 99 at [3].
[28] I accept that there has been a history of litigation between [the parties] and that there is an apparent lack of co-operation on [the respondent's] part in vacating the Property which I infer may have led the Trustee to seek relief by way of declaration. However, it is now clear that there is no dispute between the parties about the effect of s 58(1) of the Bankruptcy Act on the Property and that the Property has vested in the Trustee. The declaration is not required for any other identified purpose, beyond the understanding or apprehension by the Trustee that there was a dispute, and the balance of the relief sought by the Trustee in the amended summons is not dependent on the making of a declaration in the terms sought in circumstances where the effect of s 58(1) of the Bankruptcy Act is not in dispute. In those circumstances, there is no legal controversy to quell and no utility in making the declaration sought. It ought not to be made.
35 Similarly, in this case, the declaratory order sought by the applicant ought not to be made as it would be of no utility. There is no indication that there is any controversy at all concerning the applicant's title to the Property pursuant to s 58 of the Bankruptcy Act. Certainly, the respondent has raised no such issue. It is not in doubt that the Property has vested in the applicant as trustee pursuant to s 58 of the Bankruptcy Act, and that it is property divisible amongst the respondent's creditors pursuant to s 116. As the applicant noted in submissions, the respondent does not appear to seek to annul or set aside the bankruptcy. The applicant is registered as sole proprietor of the Property. Accordingly, there is no "controversy" which would be quelled by making a declaration in the terms sought.
36 The balance of the orders sought by the applicant, including the orders regarding the power of sale of the Property and the order for vacant possession, are not dependent on the making of the declaratory order.
37 I have made the balance of the orders sought by the applicant, save for the standalone order as to costs, with some minor amendments.
38 The applicant sought a period of 14 days for the respondent to vacate the property, deliver up duplicate Certificates of Title (if any) and keys to the Property, and to remove all personal property. Given the matters that came to light just prior to the hearing - in particular that the respondent still lives in the Property - the 14 day period of time sought by the applicant is inadequate. In her email sent on 11 May 2023, the respondent indicated that she continues to occupy the Property as her primary and only residence and that, if ordered to vacate the Property, she would need to find alternative rental accommodation. A reasonable period of time ought to be afforded to the respondent to secure alternative accommodation. I consider that a period of 60 days is a reasonable period, having regard also to the need to progress resolution of the affairs of the bankrupt estate.
39 While the applicant suggested a shorter period of 30 days (which I consider to be too short in the circumstances), no submissions were put to substantiate there being any prejudice to the administration of the estate by allowing 60 days. A somewhat speculative suggestion was made by the applicant that allowing 60 days would run up the costs of the administration of the estate, but no concrete example of how this would be so was proffered when the applicant's solicitor was invited to explain how the costs would increase. Nor was any submission put that allowing 60 days would affect the price that may be realised on the sale of the Property.
40 The respondent is a shift worker who works at night and sleeps during the daytime. While I consider it appropriate to make the applicant's proposed order requiring the respondent to do all things reasonably required by the applicant for the purpose of achieving a sale of the Property, the sale process may be unreasonably disruptive on the respondent's rest hours as a shift worker if it commences in earnest before the 60 days to provide vacant possession has expired. I have therefore adjusted the applicant's proposed order to provide that access to the Property by the applicant take account of the respondent's rest hours and that the Property not be made available for inspection by potential purchasers until 60 days after the date of the order.
41 The title search for the Property dated 10 May 2023 records a mortgage in favour of Bendigo and Adelaide Bank Ltd. As at 8 May 2023, the amount owing on the mortgage was $257,187.17. Given that the Bendigo and Adelaide Bank has an interest in the Property, I have included an order that a copy of the court's orders be served forthwith on the registered mortgagee of the Property.