Plaintiff v Defendants

2 Before 17 May 2022, two events of significance had occurred.

3 First, on 6 June 2020 George died. His son Nicholas Hycenko is the executor and trustee of the estate of his late father, having been granted probate on 8 September 2020.

4 Second, on 28 October 2021, Judge Burchardt of the Federal Circuit and Family Court of Australia (Division 2) made a sequestration order against Victor on the basis of a creditor's petition and subsequent bankruptcy notice that had been served by George ('the sequestration order'). The first defendant, Michael Badge was appointed as the trustee in bankruptcy. The order was stayed for a short time to allow Victor to appeal and later came into force in around the middle of November 2021. On 17 November Victor commenced an appeal in the Federal Court from the sequestration order and, on 7 December 2021, Bromberg J stayed 'all proceedings under the sequestration order' until the determination of the appeal.

5 By reason of the sequestration order, Victor was not heard on the application for the sale of the property. Mr Badge advised the Court that, in light of the order of Bromberg J staying any proceeding under the sequestration order, he would not participate in the proceeding.

6 As will appear in more detail below, on 9 September 2022, the Full Court of the Federal Court of Australia set aside the sequestration order on the basis that, at the time the order was made, the creditor's petition was stale ('the Full Court order').[1]

7 By a further amended summons dated 17 November 2022, Victor seeks orders setting aside the 17 May 2022 order on the basis that:

(a) the effect of the Full Court order was to set aside the sequestration order as if it had never been made;

(b) Victor was entitled as registered proprietor to be a party to and be heard on the application for judicial sale but was excluded because of the (invalid) sequestration order;

(c) the failure to hear from Victor constituted a breach of procedural fairness which is a basis to set aside the order which denied him the possibility of a different outcome on the application for sale; and

(d) no order for sale should now be made.

8 In answer to the amended summons, Nicholas submits:

(a) it is not open to a Judge of the Trial Division to set aside the 12 May 2022 order, which was regularly made and entered and which can only be challenged by an appeal to the Court of Appeal;

(b) there was no denial of procedural fairness because Counsel appeared for a related party (the trustee of the V Hrycenko Family Trust) who was heard on the application; and

(c) if the order is set aside, a new order for sale should be made.

9 For the reasons set out below, I accept Victor's submissions that by reasons of his exclusion from the sale proceeding based on an invalid sequestration order that was made by the Federal Circuit Court in the absence of jurisdiction, he was denied procedural fairness, the action was not properly constituted and the orders should be set aside. That leaves the application for sale undetermined.

10 Based on the evidence and submission presently before the Court, the re-enlivened applications for judicial sale must succeed. An order for judicial sale of the property will be made.

11 The effect of a sequestration order is to vest the property of the bankrupt in the trustee. At the time of the sequestration order, Victor was the registered proprietor of the property but by reason of the bankruptcy order he was not a party and did not participate in the proceeding.

12 The Full Court order included an order in the following terms: 'The sequestration order made on 28 October 2021 in the Federal Circuit Court of Australia in the estate of Victor Hrycenko is set aside'.

13 In Rangott v Marshall, Gyles J said the following as to the effect of setting aside a sequestration order:[2]

I am bound by Simon v Vincent J O'Gorman Pty Ltd[[3]] to conclude that the appellate provisions apply to a sequestration order. That being so, they cannot be read down. It would follow from the Full Court decision that the sequestration order made on 13 August 2002 and the consequent appointment of the applicant as trustee are set aside. If full effect is given to these provisions it is as if the sequestration order had never been made and the respondent had never been a bankrupt. On that basis the applicant is no longer trustee of the estate of the respondent and was not trustee at the date this proceeding was commenced.

14 That approach has been applied many times in the Federal Court. For example, in Pattison v Hadjimouratis, Nicholson J said the result of setting aside a sequestration was 'as if no valid sequestration order was ever made'.[4] In De Robillard v Carver Buchanan J (with whom Moore and Conti JJ agreed) said:[5]

In my respectful opinion the course followed by Gyles J was not only correct as a matter of precedent but was correct in law. The power of this Court on appeal to set aside a sequestration order with the result that 'it is as if no valid sequestration order was ever made' was also referred to, and not doubted, in [Pattison].

The consequence, for the present appeal, is that an order upholding the appeal and setting aside the sequestration order made by the primary judge will have the consequence that the appellant is not to be treated as bankrupt from the pronouncement of the sequestration order, notwithstanding the effect of s 43(2) of the Bankruptcy Act.

15 In my opinion, the reasoning applies with even greater force when the sequestration order is made by the Federal and Family Court (Division 2) which is an inferior court,[6] and the order is set aside on the basis of a jurisdictional error. An order made by an inferior court without jurisdiction is without legal effect.[7]

16 In that respect, I note that in the Full Court, McElwaine J held that the existence of a creditor's petition that has not lapsed is a jurisdictional condition to the exercise of the power to make a sequestration order pursuant to ss 43 and 52 of the Bankruptcy Act 1966 (Cth).[8] To similar effect, Bromberg J held that the existence or subsistence of a creditor's petition underpins the jurisdiction of a bankruptcy court to make a sequestration order.[9]

17 It follows that, in legal terms, the sequestration order never came into effect. The purported order did not have the legal effect of divesting Victor of his ownership of the property.

The consequences of the Full Court order on the 17 May 2022 order

18 The proceeding for orders for sale was commenced by Originating Motion on 3 February 2022. Mr Badge, in his capacity as trustee in bankruptcy of the estate of Victor, was the first defendant. Victor was not a party to the proceeding.

19 In a proceeding seeking orders for the sale of other properties owned by Victor, Derham AsJ set out a number of important principles that apply to such a proceeding.[10] He said:

Subject to specific rules of court to the contrary, it is a fundamental requirement for the exercise of a court's powers to order a judicial sale that a person whose rights will be affected by the order should be a party to the proceeding. That is because the court does not take away property rights of a person, without specific statutory authority, in proceedings to which that person is not a party.[11]

20 The failure to join Victor to the proceeding meant that the suit was not properly constituted as it failed to include a necessary party and Victor was denied the opportunity to participate as a party. He was denied procedural fairness, in the sense that he was not given an opportunity to be heard in respect of an order that directly affected his legal interests. The fact that this occurred unwittingly, and everyone proceeded on the basis that the sequestration order was effective, does not alter the fundamental position.

21 Nicholas submits that there was no practical injustice because Counsel appeared for Graeme Ritchie, in his capacity as trustee of the V Hrycenko Family Trust. That trust is associated with Victor. Before the associate judge, Counsel for Mr Ritchie submitted that the V Hrycenko Family Trust had a right of redemption in respect of the charge and was entitled to be heard on the sale order on that basis. Mathews AsJ held that the trust did not have a right of redemption and therefore did not have standing to appear. As the 17 May 2022 order records,[12] her Honour gave leave to Mr Ritchie to be heard as a contradictor in respect of the form of order. Counsel made submissions in relation to that issue.

22 In my view, the opportunity accorded to Mr Ritchie, who, it may be accepted acted in the interests of Victor, was not the same as Victor being a party. Indeed, standing was denied to the trustee. As a party to the proceeding Victor would have had the right to appear, adduce evidence, make submissions and appeal. The opportunity to Mr Ritchie was no substitute for those rights.

23 Nicholas further submits that any denial of procedural fairness was not material and therefore provides no basis to impugn the 17 May 2022 order.

24 The High Court has, in recent times, had a number of occasions to consider how questions of materiality impinge on a case brought on the basis of a denial of procedural fairness. In large part the debate has centred around whether it is incumbent on a plaintiff, as an element of making out its case, to show that the denial was material, or whether, having established a want of procedural fairness it is up to the defendant to show that it could not have made a difference.[13]

25 As it happens, the outcome of that controversy is not important in this case. That is because, regardless of who bears the onus, I am satisfied that by reason of him not being made a party Victor was denied the opportunity to put submissions that might have led to a different outcome. I am satisfied that there was a realistic possibility that the decision might have been different if the breach of procedural fairness had not occurred. In referring to a different outcome I include not only a refusal to make the sale order but the possibility that the application for judicial sale would have been adjourned or any order stayed.

26 In BP Australia Ltd v Brown, Spiegelman CJ said:[14]

An order of a superior court is not a nullity even if made in breach of [its obligation to obey the rules of procedural fairness]. Nevertheless, a person affected is entitled as of right to have any such order which affects that person set aside. The basic principle has been affirmed many times...

The obligation to comply with procedural fairness imports a higher level of content when imposed on a court than in decision-making processes conducted by administrators or tribunals. It requires, in my opinion, that a person likely to be adversely affected by the order of the court is given an opportunity of making submissions to the court before any such order is made or if, exceptionally, an order is made without such an opportunity being given that, upon application, the person must be put in the same position as he or she would have been prior to the order being made. It is the inherent difficulty of achieving the latter that makes an ex parte order a course to be followed only in the case of necessity or other strong reason.

27 I agree that the range of matters that Victor could have called in aid in opposition to the sale order were limited, having regard to the following considerations:

(a) there was no ground to dispute that the charge which secured the debt in favour of George was valid. In that respect, I note that Victor, by his counsel, granted the charge as recorded and annexed to the orders of Zammit J on 16 May 2018. Derham AsJ expressly found the charge to be valid and ordered the sale of other property pursuant to the charge in VHY Enterprises which was not the subject of any appeal;

(b) the debt secured by the charge was a judgment debt arising from orders made by Lyons J from which an extension of time to appeal was refused;[15]

(c) there was valuation evidence;

(d) any sale would be conducted under Court supervision; and

(e) the sale order would not deny any right of redemption and in any event no steps had been taken to redeem.

28 Nevertheless, as a matter of principle and as a matter of fact, Victor was, through no fault of the trial judge, denied his rights as a party and this amounted to a material denial of procedural fairness that went to the root of the judicial process. There remains a real possibility that Matthews AsJ may not have made an order for sale on 17 May 2022. I will return to the strength of the application for a sale order and whether any of the matters that Victor might have relied on would necessarily have prevented a sale in due course.

29 To recapitulate, I am persuaded that the proceeding for judicial sale was not properly constituted, Victor who was a necessary party was not joined to the action and he was denied procedural fairness.

30 The observations of Gageler J in Kable to the effect that an invalid exercise of power may, in certain situations, still produce consequences does not change the conclusion that I have reached. As Gageler J explained:

The factual existence of the thing might be the foundation of rights or duties that arise by force of another, valid, law. The factual existence of the thing might have led to the taking of some other action in fact. The action so taken might then have consequences for the creation or extinguishment or alteration of legal rights or legal obligations, which consequences do not depend on the legal force of the thing itself.[16]

31 The decision to exclude Victor from the application for judicial sale was not merely a result of the fact that a sequestration order had been made but depended on its legal effect. As I have explained the purported order had no legal effect.

32 Nicholas submits that even if the grounds are capable of being made out, it is not open to the Trial Division to set aside a perfected order and the only remedy is an appeal. I note that, an appeal lies to the Court of Appeal (and not to the Trial Division) from the Trial Division constituted by an Associate Judge in respect of a matter referred to an Associate Judge under r 77.05 of the Supreme Court (General Civil Procedure) Rules 2015 ('Rules'). On 11 May 2022, John Dixon J referred the plaintiff's originating motion and summons filed on 3 February 2022 to an Associate Judge for hearing and determination. In 'Other matters', it is stated that the order is made pursuant to r 77.05 of the Rules.

33 It follows that any appeal would need to be brought in the Court of Appeal.

34 I also proceed on the basis that the 17 May 2022 order was a final order. In the VHY Enterprises reasons, Derham AsJ said:[17]

There is little doubt that an application by an equitable chargee of land for a judicial sale is an application for a final order, and not interlocutory one. It concludes the rights of the parties inter se. Campbell J concluded in King Investment Solutions v Hussain[[18]] that it is hard to think of a judgment more final than a judgment that, amongst other things, orders the defendant's land be sold.

35 As a general proposition a final order of a superior court of record that has been entered cannot be set aside other than by way of an appeal. There are exceptions to that rule, narrowly confined, including in the case of fraud.[19]

36 In Clone the High Court said 'the Court of Chancery recognised jurisdiction to set aside a perfected decree ... where the decree affected rights of parties who had not been joined'.[20] John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd was cited as authority for this proposition, where the High Court agreed with the following submission made by one of the parties:[21]

if a court makes an order affecting a person who should have been joined as a necessary party, while the order will not be a nullity, that person is entitled to have the order set aside, and is not limited merely to seeking the favourable exercise of a discretion, whether or not the person in question becomes a party.

37 In Lollis v Loulatzis (No 3) Kaye J said:[22]

It is a well established principle that once an order of a Court has been perfected in a form which accurately expresses the intended form of the order (such as by being authenticated under the Rules of the Supreme Court), the Court which made that order has no jurisdiction to alter or rescind it, save in particular exceptional circumstances. Those exceptions are, in general, confined to circumstances which involve clarification of the recorded judgment, or to making minor alternations to a judgment which do not affect the operative and substantive part of the judgment, and to circumstances (such as fraud and breach of natural justice) which impeach the obtaining of the judgment or order.

38 In Onley v Commissioner of Australian Police Bathurst CJ said: 'it is well established that a person affected by an order in respect of which he or she has not been heard as a matter of general law is entitled as of right to have such order set aside'.[23] Bathurst CJ cited as authority for that proposition the well-known reasons for judgment of Rich J in Cameron v Cole:[24]

It is a fundamental principle of natural justice, applicable to all courts whether superior or inferior, that a person against whom a claim or charge is made must be given a reasonable opportunity of appearing and presenting his case. If this principle be not observed, that person is entitled, ex deibto justitiae, to have any determination which affects him set aside; and a court which finds that it has been led to purport to determine a matter in which there has been a failure to observe the principle has inherent jurisdiction to set its determination aside. In such a case there has been no valid trial at all. The setting aside of the invalid determination lays the ghost of the simulacrum of a trial, and leaves the field open for a real trial.

39 Based on that line of authority, it follows that:

(a) the Court as presently constituted has power, in the exercise of an inherent jurisdiction, to set aside the 17 May 2022 order;

(b) the denial of procedural fairness was material in the sense that Victor was denied a realistic possibility of a different outcome; and

(c) the 17 May 2022 order should be set aside.

40 It is not necessary to consider whether the power in r 49.02(2) of Rules, which operates where a party fails to appear is capable of application in circumstances where Victor was not a party.

41 As the 12 August 2022 order was ancillary to the sale order, it must also be set aside.

42 Against the possibility that the Court would set aside the 17 May 2022 order, Nicholas seeks that this Court make an order for sale.

43 As I have already observed, Derham AsJ set out, with, I may say with unfeigned respect, his customary clarity and erudition, the relevant principles that the Court must apply. I take the liberty of quoting from his Honour's reasons:[25]

There are matters that are relevant to the exercise of the discretion whether or not to order a judicial sale, as follows:

(a) A sale will usually not be ordered where there is no evidence of value of the property, although there are instances where that has happened. The reason is that without some evidence of the value of the property, it would not be possible to fix a reserve price for any sale, it would not be possible to form a view about whether it was appropriate to give the mortgagor time to pay before a sale could be made (and if so how long), and there would be serious difficulties in deciding who should have the conduct of the sale, and what conditions ought be imposed for the protection of the first mortgagee.

(b) If the Court is authorising the sale, it should exercise some control over the terms and manner of conduct of the sale, including the fixing of a reserve price, the timing of the sale, who has the conduct of the sale and whether there should be conditions for the protection of the first mortgagee.

(c) It is also usually important to know how much debt is secured by the property, before the order for sale is made.

In [Hussain] Campbell J said that

It is usual (as is recognised in the terms of section 103(3) Conveyancing Act 1919) for the Court to give consideration to what security a person seeking an order for sale should be required to provide ...

The terms of s 103(3) of the Conveyancing Act 1919 (NSW) are similar to s 91(3) of the Property Law Act 1958 (Vic). The provisions are each drawn from s 25 of the Conveyancing and Law of Property Act 1881 (Eng) (44 & 45 Vict c.41). His Honour analysed the cases and continued:

One risk against the possibility of which it may be appropriate that security should be provided, if a sale is ordered, is that the first mortgagee might be kept out of its money during the pendency of a suit for the specific performance of a contract for the sale of the mortgaged premises ...

The practical effect of the order for payment of the proceeds of sale into Court in the present case is that the first mortgagee will need to be involved in the proceedings to get the money out, and to establish the amount of its debt. It will inevitably incur expenses in the course of so doing. Part of the protection of the first mortgagee which the Court ought have considered is whether it should require that security be provided in relation to these expenses.

Thus, whether it is appropriate to require security to be given turns on the particular facts and circumstances of the case. ...

In relation to the fixing of the reserve price, where the sale is to be conducted by a second mortgagee or chargee, the reserve price should also be sufficient to cover the principal, interest and costs of the first mortgage.

In relation to the timing of the judicial sale, the exercise of the discretion whether to order an immediate sale depends on whether the mortgagor or chargor should be given further time to redeem the mortgage or charge. As Campbell J observed in [Hussain], an analysis of the nineteenth century cases showed there are a variety of factors that were taken into account in determining whether to give further time to the mortgagor or chargor. Usually further time was given by analogy with the position facing a mortgagor under a foreclosure decree nisi (6 months or 3 months). However, an immediate sale may be appropriate where:

(a) all the parties interested in the equity of redemption are represented;

(b) the property is wholly unproductive;

(c) the rents are not enough to keep down the interest; and

(d) an immediate sale is 'more propitious', meaning the market conditions are more favourable.

Campbell J added:

The point, for present purposes, is not that the discretion to order a sale will necessarily be exercised in the twenty-first century in the same way as it was in the nineteenth. Rather, one point is that there is a discretion to be exercised, and without factual material by reference to which the discretion can be exercised, which includes at least the value of the property and the amount owing on the security of it, the exercise of the discretion itself is likely to miscarry. Another point is that the courts have exercised considerable caution in the making of orders for sale.

In relation to who should have the conduct of the sale, the Court has full discretion in the matter. Generally, the person who should be chosen is the person with the interest in obtaining the largest price for the property, rather than to those who are only interested in obtaining sufficient to cover their security, so:

(a) when the security is insufficient to cover all moneys secured, the mortgagee or chargee with the greatest interest in maximizing the sale price; and

(b) when the security is sufficient to cover all moneys secured, the mortgagor or chargor, because the mortgagee or chargee has not a sufficient interest in maximising the sale price.

An equitable charge does not give rise to a right to immediate possession of the charged property. A charge can be enforced only by application to a court for an order for the judicial sale of the charged property, or the appointment of a receiver, not by the chargee taking unilateral action out of court. Garfitt v Allen has long stood as authority for the proposition that an equitable charge was not entitled to possession without a court order. That, in my view, does not detract from the powers of the Court, including the powers under Order 55 of the Rules, to order possession or access to the Properties in favour of an appropriate person having the conduct of the sale.

44 As already foreshadowed, there is no dispute that:

(a) the charge is valid; and

(b) the judgment debt remains outstanding.

45 The solicitor for Nicholas has deposed that the judgment debt had been reduced to some extent by proceeds obtained from the sale of properties owned by VHY Enterprises Pty Ltd as trustee for the V Hrycenko Family Trust, ordered by Derham AsJ. He deposes that, as at 11 November 2022, the outstanding judgment debt is not less than $2,189,824.18.

46 Nicholas relies on valuation evidence that was before Mathews AsJ. That evidence is to the following effect:

(a) a sworn valuation of Christopher Ryan which valued the property at $2.6 million as at 19 September 2021; and

(b) a real estate agent Samantha Moffatt, appraised the property at being valued between $2.2-2.4 million on 23 December 2021. In an affidavit sworn on 9 May 2022, Ms Moffatt appraised the property at being valued between $2.3-2.5 million.

47 Victor has not adduced any valuation evidence on his own, nor has he sought, by cross examination or submission, to undermine the evidence that is before the Court.

48 In seeking to either defer or avoid the making of a sale order, Victor relies on two matters:

(a) his right of redemption; and

(b) his proceeding in the Court which seeks to remove Nicholas as trustee of George's estate and appoint an independent executor.

49 Victor has a right of redemption. This means that he could answer the claim by tendering the amount owing. He has shown no willingness and lacks the financial means to redeem. As Senior Counsel correctly described the matter, redemption remains a 'theoretical' possibility.

50 There are two reasons why the right of redemption provides no basis to adjourn the hearing or to stay any orders for sale. First, there is no evidence that even hints of the possibility that Victor might pay out the debt. He has had ample opportunity to do so. The evidence shows that he has no financial resources available to him to meet the liability.

51 Second, the right of redemption continues until a binding contract for sale is made. The period between the order that the Court might make and its culmination in an executed sale contract will continue to provide some time to Victor to redeem. The reality is that he is unable or unwilling to do so.

52 As already observed the judgment debt was obtained by George and is an asset of his estate. It appears that George's last will provides that Nicholas is entitled to the payment for a legacy of $1,000,000 and, once that is paid, the balance of the estate is to be divided between Nicholas and Victor in equal shares.

53 Nicholas contends that the only asset in the estate is the judgment debt. As the executor he is duty bound to realise the assets of the estate as a prelude to distribution in accordance with the will.

54 On 25 February 2021, by Originating Motion, Victor commenced a proceeding in the Trial Division in respect of the estate ('the Executor Proceeding'). The only order sought was the removal of Nicholas as executor and trustee and the appointment of an independent trustee.

55 Victor seeks to either avoid or delay the making of a judicial sale order until the finalisation of the Executor Proceeding. It is unknown when that proceeding might be completed. The proceeding is not far advanced. The slow progress of the proceeding is no doubt due, at least in part, to the fact that Victor was made bankrupt and the sequestration order was not set aside until 9 September 2022.

56 It is not necessary to survey all of the evidence or foreshadow the arguments that might be made in the Executor Proceeding. It suffices to sketch out the complaints that Victor seeks to make.

57 Victor contends that there are substantial claims against Nicholas as executor to be investigated including:

(a) the circumstances in which George transferred ownership in a residential unit at 72 Richardson Street, Essendon to Nicholas' daughter;

(b) the circumstances in which Nicholas took ownership of a houseboat owned by a family trust established by George;

(c) Nicholas' conduct of various proceedings against Victor; and

(d) accounting for costs orders, including those made in the bankruptcy appeal in favour of Victor.

58 Victor submits that an independent executor would act impartially in relation to the following matters:

(a) to what extent it is necessary to recover the whole of the amount owing under the judgment having regard to Victor's entitlement under the will;

(b) whether there are claims against Nicholas and his legal advisers as a result of the flawed bankruptcy proceedings - which may reduce the amount required to be recovered from Victor;

(c) whether or not judicial sale of the Boneo Property (being Victor's family home) is necessary; and

(d) whether the sale of the Mount Martha Property (not being Victor's family home) would be sufficient and therefore preferable.

59 He says the 'washout' of the flawed bankruptcy proceedings is likely to include substantial costs orders against Nicholas and in favour of Victor - which Victor will contend ought not be paid out of the estate. He also contends that there is an issue as to capacity and/or undue influence by Nicholas in relation to the signing of the will - noting that these matters could be investigated by an independent administrator.

60 In relation to the Richardson Street unit, Victor submits that it was George's stated intention that Victor and Nicholas would share in the estate equally and that the Richardson Street unit would be a significant asset of the estate. He says that the gift of the unit during George's lifetime without a corresponding benefit to Victor is suspicious and requires investigation, which Nicholas, who has a vested interest, would not pursue. He relies heavily on various findings made by Lyons J in Hrycenko (by his Litigation Guardian Michael Kornitschuk) v Hrycenko[26] to the effect that for much of the recent past Nicholas and his father were estranged and that George maintained that he wished the two brothers to share equally in the estate.

61 Victor submits that until all of the assets of the estate are accounted for, including costs orders in favour of Victor arising from the bankruptcy proceeding, it is not possible to know whether the sale of the properly would be necessary or whether Victor could offset the judgment debt against receipts that he would be entitled to out of the estate.

62 Senior Counsel for Victor submitted that the investigations by an independent executor are essential before the sale of the property because once the estate assets are identified, there should be a reconciliation process which would net off the judgment debt. Senior Counsel submitted that the rule in Cherry v Boultbee[27] would require, or at least entitle, the executor to consider setoffs that are available before claiming the full amount of the judgment debt against Victor. He says that it would be far better for the estate to work out exactly how much it needs to recover from Victor before forcing the sale of his family home.

63 I recognise that some caution should be exercised before ordering a judicial sale. Nevertheless, I am persuaded that a sale order should be made.

64 There is no disputing the debt. The duty of the executor, whoever it may be, is to get in the assets of the estate and distribute the estate in accordance with the will. On any view the judgment debt is a substantial asset of the estate. The extent to which there may be other assets of value that may be recovered in the administration of the estate is speculative. The sale of the property would not prejudice the administration of the estate, nor would it affect the progress of the Executor Proceeding. Whatever criticisms are made of Nicholas, they do not undermine the validity of the judgment debt. Nor do they make the sale unreasonable or unfair.

66 I am satisfied that there is no means, other than by way of sale, for the judgment debt to be paid. I am not persuaded that there is any good reason why the estate should be further delayed in the recovery of its judgment debt in circumstances where there is no dispute as to the existence of the debt and the absence of any other means for recovery.

67 I do not consider the rule in Cherry v Boultbee assists Victor. In Re Peruvian Railway Construction Co Ltd[28] Sargant J said where a person entitled to participate in a fund is also bound to make a contribution in aid of that fund, he cannot be allowed to participate unless and until he has fulfilled his duty to contribute.

68 In Pyrenees Vineyard Management Ltd v Frajman[29] Judd J explained that the principle underlying the rule in Cherry v Boultbee is that the person controlling a fund, whether as trustee, liquidator or in some other capacity, may deduct from the entitlement of a beneficiary any amount the beneficiary is obliged to contribute to the fund. The person administering the fund may invoke the rule to protect the fund from claims to a distribution by beneficiaries with an unsatisfied obligation to the fund.[30] Putting aside whether a beneficiary can rely on the rule,[31] its import is that before a distribution is made to a beneficiary the beneficiary must settle any debt to the fund. It provides no reason in this case to delay the executor getting in a debt owed by a beneficiary under the will.

69 There will be an order for judicial sale together with ancillary orders to allow that to happen.

(In his capacity as executor and trustee of the estate of the late GEORGE HRYCENKO deceased)

(In his capacity as trustee in bankruptcy of the estate of VICTOR HRYCENKO)

(in his capacity as trustee of the V Hrycenko Family Trust)

[1] Hrycenko v Hrycenko (by his legal representative Hycenko) [2022] FCAFC 152, [99] ('Full Court reasons').

[2] [2004] FCA 961; (2004) 139 FCR 14, 22-3 [29]; [2004] FCA 961.

[3] (1979) 41 FLR 95; [1979] FCA 112.

[4] (2006) 155 FCR 226, 232 [14]; [2006] FCAFC 153 ('Pattison').

[5] [2007] FCAFC 73; (2007) 159 FCR 38, 67-8 [149]-[150]; [2007] FCAFC 73 (citations omitted).

[6] Federal Circuit Court of Australia Act 1999 (Cth) s 8; Federal Circuit and Family Court of Australia Act 2021 (Cth) s 10.

[7] Pelechowski v Registrar, Court of Appeal (NSW) [1999] HCA 19; (1999) 198 CLR 435, 445 [27] (Gaudron, Gummow and Callinan JJ); [1999] HCA 19; Attorney-General (NSW) v Mayas Pty Ltd (1988) 14 NSWLR 342, 347 (Mahoney JA); New South Wales v Kable (2013) 252 CLR 118; [2013] HCA 26 ('Kable').

[10] Hycenko v VHY Enterprises Pty Ltd [2020] VSC 834 ('VHY Enterprises reasons').

[13] Most recently in Nathanson v Minister for Home Affairs [2022] HCA 26. See also Minister for Immigration and Border Protection v SZMTA (2019) 264 CLR 421; [2019] HCA 3 and MZAPC v Minister for Immigration and Border Protection [2021] HCA 17.

[14] [2003] NSWCA 216; (2003) 58 NSWLR 322, 348 [133]-[134]; [2003] NSWCA 216 (citations omitted) (emphasis in original).

[15] Hrycenko v Hyrcenko [2020] VSCA 324.

[16] Kable [2013] HCA 26; (2013) 252 CLR 118, 138-9 [52]; [2013] HCA 26.

[17] VHY Enterprises reasons, [49] (citations omitted).

[18] [2005] NSWSC 1076 ('Hussain').

[19] Clone Pty Ltd v Players Pty Ltd (In Liq) [2018] HCA 12; (2018) 264 CLR 165, 192 [54]; [2018] HCA 12 ('Clone').

[20] Ibid 192 [54] (Kiefel CJ, Gageler, Keane, Gordon and Edelman JJ).

[21] [2010] HCA 19; (2010) 241 CLR 1, 48 [137] (French CJ , Gummow , Hayne , Heydon and Kiefel JJ); [2010] HCA 19.

[22] [2008] VSC 231, [12].

[23] [2019] NSWCA 101, [214].

[24] [1944] HCA 5; (1944) 68 CLR 571, 589; [1944] HCA 5 (citations omitted).

[25] VHY Enterprises reasons, [40]-[48] (citations omitted).

[26] [2019] VSC 700.

[27] [1839] EngR 1099; (1839) 4 My & Cr 442; 41 ER 171 ('Cherry v Boultbee').

[28] [1915] 2 Ch 144.

[29] [2008] VSC 552.