Vince (Trustee), in the matter of Sopikiotis (Bankrupt) v Sopikiotis

REASONS FOR JUDGMENT 1 The Trustee, Peter Robert Vince ("the Trustee"), is the trustee in bankruptcy of the estate of Maria Sopikiotis. The Trustee was appointed on 5 July 2011. At that time, Ms Sopikiotis's property vested in the Trustee under s 58 of the Bankruptcy Act 1996 (Cth) ("the Act"). 2 Ms Sopikiotis is the sole registered proprietor of a property at 2A Trafalgar Road, Camberwell in the State of Victoria, being the property identified in certificate of title volume 9470, folio 676 ("the Camberwell property"). The Trustee seeks orders: requiring Ms Sopikiotis to deliver up to the Trustee the duplicate certificate of title to the Camberwell property; requiring Ms Sopikiotis to give vacant possession of the Camberwell property to the Trustee within 30 days; granting a warrant of possession in the event that Ms Sopikiotis fails to give vacant possession; and that the Trustee's costs of the application are proper costs in the bankruptcy. 3 The Trustee's application relies on the general power conferred by s 30 of the Act. That section gives the Court power to make such orders as the Court considers necessary for the purposes of carrying out or giving effect to the Act (s 30(1)(b)). More specifically, the Court may order a person to comply with a direction given by a trustee (s 30(5)). 4 Section 77 imposes various duties on Ms Sopikiotis as a bankrupt, including, by s 77(1)(g), that she aid, to the full extent of her power, the administration of the estate. When read in conjunction with s 77, s 30 empowers the Court to make orders requiring a bankrupt to take steps in furtherance of the administration. I am satisfied that the Court has power to grant the orders of the kind that the Trustee seeks in this proceeding: Horne (as trustee of the Bankrupt Estate of Sekulovski) v Sekulovski [2009] FCA 1164 at [7] (Tracey J); Pattison v McKinnon [2008] FCA 1624 at [2] (Jessup J); see also Official Receiver v Tregaskis [2006] FMCA 1915 at [9-11] (Lucev FM). 5 Owners Corporation Plan No RP017740 ("Owners Corporation") obtained judgment against Ms Sopikiotis in the Victorian Civil and Administrative Tribunal ("VCAT") on 21 April 2010 ("the VCAT decision"). Owners Corporation thereafter became the petitioning creditor and a bankruptcy notice was issued based on the VCAT judgment. On 5 July 2011 a sequestration order was made in respect of Ms Sopikiotis's estate. In addition to the debt owed to Owners Corporation, Ms Sopikiotis has other creditors. A total of $157,800 is being claimed by creditors of Ms Sopikiotis. 6 Ms Sopikiotis resides at the Camberwell property alone. On 27 October 2011, the Trustee wrote to Ms Sopikiotis informing her that he was prepared to allow her time to obtain a mortgage facility on the Camberwell property sufficient to obtain funds to pay out all creditors, or alternatively to vacate the property to allow the Trustee to sell the property with vacant possession. Ms Sopikiotis was advised that if she refused to obtain finance or vacate the property, the Trustee would commence eviction proceedings to ensure an orderly sale of the property. 7 The Australia and New Zealand Banking Group Limited ("ANZ") advised the Trustee that the duplicate certificate of title to the Camberwell property was released by the bank to Ms Sopikiotis in September 2011 and that ANZ had also released its mortgages on that property at that time. Ms Sopikiotis did not dispute that she holds the duplicate certificate of title. I am satisfied that Ms Sopikiotis holds the duplicate certificate of title to the Camberwell property. 8 On 11 November 2011, the Trustee wrote to Ms Sopikiotis demanding that she deliver the duplicate certificate of title for the Camberwell property. 9 Despite the demands made upon Ms Sopikiotis by the Trustee, Ms Sopikiotis has failed to deliver the duplicate certificate of title and has failed to vacate the Camberwell property in order to facilitate its sale. The Trustee considers that the most likely and efficient way in which he will be in a position to make a distribution to Ms Sopikiotis's creditors is by way of sale of the Camberwell property. The value of the property substantially exceeds Ms Sopikiotis's likely indebtedness. 10 On the basis of the material before me, I am satisfied that the Camberwell property has vested in the Trustee and that the Trustee has a right to possession of that property. Nothing has been submitted by Ms Sopikiotis which suggests that she has a right to remain in possession against the lawful demands of the Trustee. 11 Ms Sopikiotis contended that the Court should refuse the relief sought by the Trustee. She relied on a number of matters which may be grouped into two classes - those relating to the validity of the debts claimed against her and those relating to the validity of her bankruptcy. 12 Ms Sopikiotis challenges the judgment debt obtained by the Owners Corporation pursuant to the order made by VCAT. The basis of her challenge includes assertions made by her that the fees charged by Owners Corporation were not supported by proper records and that the alleged debt was statute barred. Unsuccessful attempts have been made by Ms Sopikiotis to challenge the VCAT decision. On 2 December 2011, Deputy President Lulham of VCAT made an order refusing to list Ms Sopikiotis's application for review of the VCAT decision. Ms Sopikiotis thereafter unsuccessfully sought leave to appeal that decision in the Supreme Court of Victoria. Her application was dismissed on 10 August 2012. Ms Sopikiotis insists that she intends to appeal the judgment of the Supreme Court, although no such appeal has been lodged. 13 Ms Sopikiotis also disputed other debts claimed by her creditors including because of her claim that those creditors had not followed correct legal processes. None of the assertions made by Ms Sopikiotis were detailed or supported by any cogent evidence. In any event, the validity of the debts claimed against Ms Sopikiotis are matters for the Trustee and are not matters open to challenge in this proceeding. They do not give rise to any challenge to the right of the Trustee to possession of the Camberwell property. 14 As to the validity of the bankruptcy, Ms Sopikiotis alleges that she was never properly served with the bankruptcy notice and asserts that proper legal processes were not followed. I will refer to that matter again later. However, in the face of an extant sequestration order, I can only proceed on the basis that the matters raised by Ms Sopikiotis are closed and do not bare upon the Trustee's entitlement to the relief which he seeks. 15 Ms Sopikiotis has however sought to contest the sequestration order. Very shortly before the hearing of this application, Ms Sopikiotis filed an affidavit in which she deposed that she had filed in the Federal Magistrates Court an application for review of the sequestration order made on 5 July 2011. At the commencement of the hearing, Ms Sopikiotis applied for an adjournment relying upon her application for a review of the sequestration order. I refused that application and indicated that I would give my reasons for that refusal in these reasons for judgment. In the face of that refusal, the matters raised by Ms Sopikiotis remain closed and of no consequence to the grant of the relief which the Trustee seeks. 16 Ms Sopikiotis's application was refused for the reasons that follow. Although not expressed in those terms, I consider that Ms Sopikiotis's adjournment application should be treated as an application for a stay of proceedings pending the determination of Ms Sopikiotis's application to set aside the sequestration order. Given s 37(2)(a) of the Act, the Court does not have the power to suspend the operation of a sequestration order. However, the Court does have the power to suspend a proceeding (such as this), being a proceeding brought under the sequestration order: Richmond v BMW Australia Finance Ltd (No 1) [2009] FCAFC 24 at [3] (Black CJ with whom Jacobson and Rares JJ agreed). 17 However, that power is circumscribed by s 52(3) of the Act which provides: The Court may, if it thinks fit, upon such terms and conditions as it thinks proper, stay all proceedings under a sequestration order for a period not exceeding 21 days. 18 Ms Sopikiotis has not sought to limit any stay granted to 21 days. Ms Sopikiotis has not put before the Court any evidence in relation to her application for a review, beyond her statement that such an application has been made. There is no basis upon which I could have concluded that Ms Sopikiotis's application would be determined within 21 days. There was no apparent utility in the grant of a stay limited to 21 days. 19 In any event, including if it be the case that I have the power to grant a stay beyond the period specified in s 52(3) of the Act, I determined that no stay should be granted for discretionary reasons. The test for a stay under s 52(3) of the Act, where an appeal or other relevant application is pending, is whether there is an arguable point on the pending or proposed appeal or application and whether the balance of convenience favours the granting of a stay: Nolten v Groeneveld Australia Pty Ltd [2011] FCA 1494 at [24] (Kenny J). The conduct of an applicant for a stay, including any delay in bringing the application, may also be relevant to the exercise of that discretion. 20 The application made by Ms Sopikiotis for the review of the sequestration order came some 14 months after that order was made. An application for review must be brought within 21 days of the order made by the Registrar (Federal Magistrates Court (Bankruptcy) Rules 2006, r 2.03 (1)). At the hearing, Ms Sopikiotis confirmed that she had attended the hearing of the creditor's petition. I presume she was well aware of the making of the sequestration order as at or shortly after the time it was made. She sought to explain the 14 month delay by reference to difficulties she claimed she had experienced in obtaining documentation that she asserted was necessary to pursue her case. Her explanation was unsupported by any material and entirely unconvincing. I concluded that any application to extend time and permit Ms Sopikiotis to pursue her application would likely be refused. Further, even if it were presumed that such an application has a prospect of being granted, there was no material before me upon which I could have been satisfied that the application had even an arguable prospect of success. 21 Ms Sopikiotis contests the service upon her of a bankruptcy notice. She has deposed that she was not personally served and did not receive the bankruptcy notice. Her position proceeds firstly on a misunderstanding that a bankruptcy notice needs to be personally served and secondly that proof of non-receipt rather than proof of non-delivery is sufficient to displace the presumption of service: Skalkos v T & S Recoveries Pty Ltd (2004) 141 FCR 107 at [16]-[26] and [31] (Sundberg, Finkelstein and Hely JJ). I have proceeded on the basis that Ms Sopikiotis's challenge to the sequestration order is also based on her challenge to the judgment obtained by Owners Corporation. As I have earlier set out, Ms Sopikiotis failed in her application to have that judgment reviewed before VCAT and was also unsuccessful in her application in the Supreme Court of Victoria for leave to appeal. Neither that history, nor the material before the Court suggests any prospect of success on any application that might be heard to review the sequestration order by reason of the debt to the petitioning creditor. 22 The question of balance of convenience did not arise in the absence of Ms Sopikiotis establishing that there was an arguable point in the proposed application. Furthermore, I was of the view that Ms Sopikiotis's conduct, in terms of both delay and also her refusal to comply with orders made by the Court, required that the indulgence she sought should be rejected. 23 The hearing of the Trustee's application held on 2 October 2012 was first listed on 19 April 2012. By an Amended Notice of Grounds of Opposition dated 25 May 2012, Ms Sopikiotis contended that the bankruptcy should not have occurred and stated that she was seeking an annulment by an order of the Court. By reason of the inclusion of that ground, I listed the application and heard the parties on 15 June 2012. On that day, I determined that the Amended Notice of Grounds of Opposition should be struck out on the basis that it was not appropriate for any annulment application pursued by Ms Sopikiotis to be heard as part of Ms Sopikiotis's defence to this proceeding. Ms Sopikiotis was informed that any application for the bankruptcy to be annulled under s 153B of the Act would need to be made as a separate application and if made, consideration would be given as to whether the Trustee's application should be stayed pending the hearing and determination of the annulment application. The Court made it clear to Ms Sopikiotis on that occasion, that in the absence of any stay, the Trustee's application would be heard on its allocated date. 24 On 22 June 2012, Ms Sopikiotis filed an affidavit in this matter in which she confirmed her intent to seek an order from the Court to annul the bankruptcy. In submissions filed on 14 August 2012, Ms Sopikiotis indicated that she intended to seek an annulment "at an appropriate time". 25 By the date of the hearing, Ms Sopikiotis had made no application for the bankruptcy to be annulled. No explanation was given as to why. It may be that Ms Sopikiotis's intent to bring such an application was overtaken by her decision to file an application for a review of the sequestration order. However, as I have said already, Ms Sopikiotis's explanation for the 14 month delay in bringing that application was unsupported by any material and entirely unconvincing. 26 In refusing the indulgence sought by Ms Sopikiotis, I also took into account the failure of Ms Sopikiotis to comply with the Court's orders. Ms Sopikiotis has failed to file a completed Statement of Affairs in accordance with both her obligation under s 54(1) of the Act and also in accordance with orders that I made on 7 May 2012. In reasons for judgment published as Vince (Trustee), in the matter of Sopikiotis (Bankrupt) v Sopikiotis [2012] FCA 573, I outlined the failure of Ms Sopikiotis to file a completed Statement of Affairs despite a number of demands that she do so. I made orders requiring Ms Sopikiotis to file a Statement of Affairs and, in order to clearly identify the nature of the deficiencies in the information previously provided by Ms Sopikiotis, those orders identified with specificity the information which Ms Sopikiotis was required to include in that Statement of Affairs. 27 On 21 May 2012, Ms Sopikiotis filed with the Insolvency and Trustee Service Australia ("ITSA") a document which purported to be her Statement of Affairs. ITSA regarded the document to be incomplete and refused to accept the document for filing. On 12 June 2012, ITSA wrote to Ms Sopikiotis and advised her that the document filed by her had been rejected. Her failure to provide specific information and answer particular questions was specified in that correspondence. Assertions which had been made by Ms Sopikiotis that she was excused from providing information by reason of privacy considerations were rejected and an explanation was given to Ms Sopikiotis as to why privacy principles were inapplicable. 28 At the hearing on 15 June 2012, to which I earlier referred, I also informed Ms Sopikiotis that privacy considerations did not excuse her from compliance with the order the Court had made that she file a Statement of Affairs. 29 On 21 June 2012, the solicitors for the Trustee wrote to Ms Sopikiotis warning her about non-compliance with the orders made on 7 May 2012 and demanding that she comply. Beyond the document filed on 21 May 2012, Ms Sopikiotis has not filed any further document as her Statement of Affairs. The document filed on 21 May 2012 fails to include a range of information required, including a range of information specifically spelt out by the order of the Court made on 7 May 2012. I am satisfied that Ms Sopikiotis has substantially failed to comply with the order made by the Court on 7 May 2012. That non-compliance is outlined in Schedule 1 to this judgment. 30 At the hearing, Ms Sopikiotis continued to assert her right to not provide the information required, by reference to privacy considerations. 31 For all of those reasons, the stay application made by Ms Sopikiotis was rejected. 32 Ms Sopikiotis's refusal to co-operate with the demands made by the Trustee in relation to the provision by her of a Statement of Affairs (notwithstanding the orders made by the Court) serves to reinforce my view that I should reject her alternative submission that she ought not be ordered to vacate the Camberwell property until the date of settlement of any sale. I am satisfied, given Ms Sopikiotis's prior conduct, that there is an appreciable risk that Ms Sopikiotis would obstruct the sale of the Camberwell property should she be permitted to continue to reside there. 33 I have some sympathy for Ms Sopikiotis's request that she be provided more than 30 days to vacate her property. For that reason, the orders which the Court will make will require Ms Sopikiotis to vacate possession of the Camberwell property within 60 days of the making of those orders. 34 I am otherwise satisfied that the orders sought by the Trustee, in the terms in which they were sought, should be made. I assume that in seeking an order that the Trustee's costs of the application are "proper" costs in the bankruptcy, the Trustee simply seeks an order that its costs of the application be paid out of the bankrupt estate of Ms Sopikiotis. Given that the Trustee has succeeded in his application, it is appropriate that such an order be made. Lastly, I note that the declaratory relief sought by the Trustee in his application was not pressed at trial. I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bromberg.