The Official Trustee In Bankruptcy V. Mahmoud [2007] NSWSC 3

1 HIS HONOUR: The applicant on the notice of motion before the Court, Tosson Mahmoud, sought orders as set out in a notice o f motion filed in court on Tuesday 9 January 2007. The notice of motion was supported by an affidavit sworn by the applicant on the same date. 2 The order sought in the notice of motion was in the following terms:- "1. An order that the Writ of Possession and its execution and the Notice to vacate, a copy of which is annexed in the white folder and marked annex A, be stayed." 3 The applicant's affidavit referred to urgency based upon the fact that the Sheriff had served him with a notice to vacate his residential premises "before 9 January 2007". Annexed to the affidavit were medical reports by Dr. Makrim Girgis dated 10 April 2006, 17 April 2006, 29 December 2006 and 5 January 2007. 4 The Sheriff was due to evict the applicant at 12.00 pm on the date of hearing, 9 January 2007. By reason of the fact that the hearing could not be completed by that time, the respondent to the motion made arrangements cancelling the eviction of the applicant upon my indication that further time was required on that day to complete the hearing in circumstances in which there were other matters in the vacation Duty Judge list. 5 On 9 January 2007, I reserved judgment in the matter. 6 At the hearing, the applicant indicated that he wished to appeal or seek leave to appeal from an order of Rothman, J. made on 2 August 2006 and in respect of his Honour's judgment given on 14 November 2006. He handed a copy of a document entitled "Notice of Appeal" which was marked as MFI 1 in the present proceedings. 7 Later in his argument, the applicant sought to tender a number of documents which he says related to the proposed appeal proceedings in a white folder. The respondent objected to the documents in the folder being admitted on this application on the grounds of relevance. I proceeded upon the basis that I would receive the documents provisionally, that is to say, that the documents would be marked as an exhibit subject to relevance. The folder was marked as Exhibit A in the proceedings. 8 I had available to me, for the purposes of this application, a copy of the judgment of Rothman, J. in proceedings entitled The Official Trustee in Bankruptcy v. Mahmoud [2006] NSWSC 1194 and Ms. S. Nash, who appeared on behalf of the respondent, provided a copy of a judgment of the Federal Magistrates' Court of Australia in Mahmoud v. The Owners Corporation, Strata Plan No. 811 [3] [2006] FMCA 1742. The latter judgment of Lucev, FM. related to an application by Mr. Mahmoud for annulment of the sequestration order that had been made. The applicant had moved the Court on 25 October 2006 for the hearing of an application for the annulment of the sequestration order. 9 In the latter judgment, the learned magistrate concluded that there was no evidence that the sequestration order was not bound to be made and the application for annulment, accordingly, was dismissed. An order to that effect was made on 7 December 2006.

The proceedings by the Official Trustee in Bankruptcy 10 The proceedings determined by Rothman, J. on 14 December 2006 (No. 15839 of 2005) arose from an application by the Official Trustee in Bankruptcy for summary judgment for possession of land owned by the applicant. 11 The judgment noted that the applicant was an undischarged bankrupt and on 23 May 2005, the Registrar of the Federal Magistrates' Court of Australia issued a sequestration order. The Official Trustee in Bankruptcy acts as trustee in bankruptcy and sought possession of land for the purpose of realisation of assets in order to satisfy the debts of the applicant. 12 The respondent had filed a statement of claim on 12 December 2005 for the purposes of obtaining possession. The applicant filed a document by way of defence on or about 18 April 2006. 13 Rothman, J. observed (paragraph [8]) that the document that had been filed as an defence by the applicant disclosed no or no substantial defence and was in an inappropriate form and ought to be struck out. The applicant had been directed on 29 June 2006 to file and serve by 20 July 2006 any and all documents including affidavits upon which he sought to rely at the hearing. This was for the purpose of determining whether or not the applicant had an arguable defence. Rothman, J. observed that the defendant to those proceedings did not utilise the leave or take the opportunity to file, or seek to file, any amended defence. 14 The notice of motion by the Official Trustee in Bankruptcy partly relied upon the fact that the defence disclosed no defence and/or was an abuse of process and/or ought to be struck out. Rothman, J. concluded that the defence should be struck out and made an order accordingly. In those circumstances, the plaintiff to those proceedings was entitled to default judgment. Rothman, J. stated, in paragraph [18]:- "In this case the defendant has been given every opportunity and, at least on one view, greater opportunity than may have been warranted. There is evidence of the facts on which the Statement of Claim is based and, largely because the Statement of Claim is based upon the status of the defendant as an undischarged bankrupt and the position of the plaintiff as the Trustee in Bankruptcy, those facts are conceded by the defendant. Likewise, there is evidence by a responsible person that, in the belief of the person giving the evidence, the defendant has no defence. The Court determines that the pre-conditions to the granting of summary judgment have been made out." 15 Rothman, J., in granting the application, made orders:- "(1) Judgment for the plaintiff for possession of the whole of the land … Unit 16, 417 Liverpool Road, Ashfield … (2) Liberty is granted to the plaintiff to have a Writ issued in relation to the land described in order (1) … (3) The defendant pay the plaintiff's costs of and incidental to those proceedings as agreed or assessed." 16 Ms. Nash relied upon the provisions of s.58 of the Bankruptcy Act 1966 (Cth) whereby the property of a bankrupt vests in the Official Trustee and, subsequently, the Official Trustee became the registered proprietor of the property by way of a transmission application. 17 A writ of possession was issued on 16 November 2006 and the Sheriff gave notice of his intention to take possession by notice dated 18 December 2006. 18 Ms. Nash observed that the applicant is not in a position to refinance as he does not have ownership in property and also observed that there will not be a surplus on realisation of the assets. The Official Trustee (mis-named in the notice of motion as "The Insolvency Trustees Service Australia", has a statutory obligation under the Bankruptcy Act call in the assets of the bankrupt and to sell them. 19 In the circumstances in which the judgment of the Federal Magistrates' Court of Australia has rejected the applicant's application for an annulment of the sequestration order and the circumstances in which the applicant has not sought to challenge the judgment delivered by Rothman, J. in the Court of Appeal, there is no basis for the order sought in the notice of motion. 20 The applicant, as I have earlier indicated, relied upon the fact that he does intend to file process in the Court of Appeal. Copies of the documentation are contained, as earlier stated, in Exhibit A. 21 I have examined the medical reports, to which I have earlier referred. They do not, in my opinion, provide an explanation or justification for the applicant having been unable to attend to the filing of any process in the Court of Appeal by reason of a medical incapacity or disability. There is no explanation on this application as to why the applicant has delayed and not filed process within the time required for an appeal. I have had regard to the fact that he claims to have the intention of seeking leave to appeal out of time and for that purpose I have examined the documents in Exhibit A. 22 In relation to the merits of any appeal, it is relevant to have regard to the prospects of success of that appeal, at least upon the basis of the material that has been provided. The applicant has furnished in Exhibit A, a document entitled "Summary of the appellant's argument". The document runs to some 17 pages and has a number of annexures. The summary of the appellant's argument addresses both the order of Rothman, J. made 2 August 2006 (pp.5 to 13) and the substantive judgment of Rothman, J. given on 14 November 2006 (pp.13 to 17). 23 In relation to the latter judgment, the applicant has made a number of contentions including a contention that the applicant's notice of motion determined by his Honour was "illegal and must be dismissed" and states that summary judgment could not be sought "unless the claimant has been finally declared a bankrupt person and that isn't the case as the annulment application against the bankruptcy and against the sequestration order … is still proceeding before the Federal Magistrates' Court, the Federal Court and a vigorous defense (sic) in the form of an appeal to the High Court will definitely be taken by the claimant". 24 The summary refers to asserted error by Rothman, J. in a number of respects and asserts that the plaintiff was not entitled to execute a writ. 25 It is unnecessary for me to here set out the full details of the applicant's proposed "summary of argument" which he says he wishes to rely upon in the event that he were able to bring an appeal out of time. 26 On consideration, I am firmly of the view that the applicant has not established grounds for an order staying the writ of possession or its execution. 27 Accordingly, the notice of motion is dismissed. 28 I will hear the parties on the question of costs.

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Judgment (12 paragraphs)

Legislation Cited (1)

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