Pattison v McKinnon

REASONS FOR JUDGMENT 1 The applicant, Paul Pattison, is the trustee of the bankrupt estates of the respondents, Donald Neil McKinnon and Jeanette Beverley Dawn McKinnon. The application concerns two properties which were owned jointly by the respondents until their bankruptcy. Upon that event, the properties vested in the applicant pursuant to s 58 of the Bankruptcy Act 1966 (Cth) ("the Bankruptcy Act"). The respondents have, however, refused to vacate the properties. By application filed on 29 August 2008, the applicant sought orders that the respondents vacate the properties, in default of which that writs of possession should issue. 2 I am satisfied that the court has both the jurisdiction and the power to make the orders sought by the applicant: see ss 30 and 77(1)(e) and (g) of the Bankruptcy Act. In this respect, I acknowledge the following judgments of the Federal Magistrates Court: Cook v Tagamilitsky [2001] FMCA 117; Official Receiver v Tregaskis [2006] FMCA 1915; Pattison v Wates [2007] FMCA 1068. 3 The first property with which I am concerned is a farming property situated at Murtoa, and is the subject of Certificate of Title Volume 08756 Folio 178. There is no residence on that property, but there are crops standing there at present. The second property with which I am concerned is a farming property situated at Bellellen, and is the subject of Certificate of Title Volume 07677 Folio 014. It is the property upon which the respondents' residence stands. The applicant is the registered proprietor of both properties. 4 On 2 October 2007, the applicant wrote a letter to the respondents, in which he required them either to notify him in writing within 14 days that the respondents, or their family or friends, intended to purchase the properties from their bankrupt estates, or to vacate the properties within 30 days. The respondents did neither. They have remained in occupation of the properties, and have refused to give vacant possession to the applicant. 5 Broadly, the grounds upon which the respondents resist the making of orders as sought by the applicant fall into two categories. The first category relates to events which I am obliged to regard as closed. The respondents argued that they are, and have always been, solvent, and ought never to have been bankrupted. They do not accept the judgment of the Supreme Court of Victoria which formed the basis of their bankruptcy. I was told that they have only very recently filed, in the High Court of Australia, an application for special leave to appeal from a judgment of the Victorian Court of Appeal given in 2007, by which they were refused an extension of time to seek leave to appeal from a judgment of a Judge of that court in 2000 rejecting their application for a jury in that proceeding. As I have said, these are closed events. The applicant is the registered proprietor of the properties in question, and none of these events places his right to possession thereof in doubt. 6 The second category consists of complaints which the respondents make about the conduct of the applicant. They allege that some kind of conflict of interest arises by reason of the solicitor whom he has chosen to instruct for the purposes of these proceedings. They criticise the way the applicant has gone about introducing the subject properties to potential purchasers, and has obtained valuations in that regard. Although they strenuously resist the application now made, part of the respondents' criticism of the applicant is that he might have made the same application some time ago. None of these criticisms bears to any extent upon the applicant's entitlement to the relief which he seeks. 7 The respondents have been resisting the applicant's demand for vacant possession, and generally his attempts to deal with the properties as his own, for a long time. It is clear - and it was not seriously contested by the respondents - that they have no intention of voluntarily giving the applicant vacant possession. Neither has anything put to me by the respondents given rise to even the arguable suggestion that they might have a right to remain in possession, against the lawful demands of the applicant. I propose, therefore, to order that the respondents vacate the subject properties, as sought by the applicant. 8 The only issue of real concern to me is the determination of the period within which vacant possession must be given. In his application as filed, the applicant sought an order that the respondents vacate each property within 30 days of the date of the order. The applicant has since entered into contracts of sale with third parties with respect to each of the properties. The terms of those contracts, and the legitimate needs of the respondents, have made the timing of the operation of the proposed orders somewhat critical. 9 The contract of sale for the Murtoa property provided for settlement on 6 October 2008, but counsel for the applicant informed me that the contract provided for what he described as "an automatic extension" of a further 60 days, ie to 5 December 2008. Thereafter, according to counsel, the purchaser would have the right to terminate the contract within the next 120 days. The position is, therefore, that the applicant's sale of the property would be at risk if settlement has not occurred by 5 December 2008. 10 I was informed by the respondents that the Murtoa property is carrying no stock, but that there is a barley crop standing there. Mr McKinnon said that, in the normal course, the crop would be harvested any time between now and Christmas. I got the impression from what he said that the main use of the barley, when harvested, would be as fodder for the respondents' stock on the Bellellen property. The respondents submitted, in effect, that the applicant had entered into the contract of sale before he could know with confidence that he would have vacant possession on a particular date and, therefore, that he was in no position to rely upon the existence of that contract, and the settlement date or dates for which it provides, as a discretionary consideration by reference to which the court should fix a time within which the respondent should give vacant possession. 11 The application was not originally served on the respondents, the applicant apparently taking the view that the orders he seeks would be made ex parte. When the matter came before me on 1 September 2008, I refused to proceed on that basis, and required the respondents to be served. The hearing was adjourned until 29 September 2008. On that day, Mrs McKinnon sought on an adjournment on the ground of Mr McKinnon's absence by reason of an existing commitment. That adjournment was granted. The matter next came before me on 8 October 2008, at which time the respondents sought an adjournment to give them an opportunity to attempt to obtain legal representation. That adjournment was also granted. The matter next came before me on 30 October 2008, at which time the matter proceeded. The hearing was, therefore, adjourned twice for the convenience of the respondents. They knew from the outset (ie I infer, from no later than 14 days after 1 September 2008) that the applicant would seek the making of orders which required the properties to be vacated within 30 days thereafter. Had those adjournments not been granted, the respondents would have been required to vacate the Murtoa property a good deal earlier than they now will be. These circumstances, in my opinion, compromise somewhat the force which the respondents' arguments would otherwise have, to the extent that the respondents implicitly seek an opportunity to harvest the barley crop to which I have referred. 12 With respect to the date for vacation of the Murtoa property, both parties have legitimate interests which they pressed upon me. The applicant's interest relates to the final settlement date for which the contract of sale provides. The respondents' interest relates to the timing of the harvest of the crop which is standing on the property. It is, apparently, presently uncertain when that event will take place. Balancing these considerations as best I can, I am persuaded that I should make an order in the terms sought by the applicant, that is, one which provides for the property to be vacated within 30 days. As I calculate it, that would give the respondents until 30 November to vacate the property. Assuming that they did not do so until the last day, the applicant would then have a further five days to arrange for the issue, and the execution, of a warrant of possession. That will be a rather tight time-frame, for which reason I propose to order here and now that a warrant of possession issue, and that it lie in the registry until the applicant files, not before 1 December 2008, an affidavit stating that the respondents have not given vacant possession of the property. 13 The applicant has also entered into a contract of sale with respect to the Bellellen property. Relevantly to the present considerations, it is, I was told, in the same terms as the Murtoa contract. Settlement is fixed for 10 November 2008, but there is an "automatic" extension of 60 days (ie until 9 January 2009). After then, the contract will be at risk if vacant possession cannot be given. 14 The respondents relied upon the circumstance that their own residence stands on the Bellellen property. They have a family of five children, some of whom are still living there. They have personal possessions and effects accumulated over many years. They submitted that 30 days would be a manifestly inadequate time within which to require them to give vacant possession. 15 With respect to the Bellellen property, I propose to take the same approach as I did in relation to the Murtoa property. I propose to fix a time which expires about five days before the applicant's contract would be at risk of being lost. I will require the respondents to give vacant possession of the Bellellen property by no later than 4 January 2009. This will give them a little over two months to arrange their affairs, which I consider is reasonable in the circumstances. 16 Although the application was for a writ of possession, it is a warrant of possession which is the appropriate instrument: see Federal Court Rules, O 37 r 7 and Supreme Court (General Civil Procedure) Rules 2005 (Vic) r 66.03. The respondents expressed no opposition to the costs order sought by the applicant, and I shall make that order. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jessup.